Segregation of duties in internal controls means what?

• A. One Person Handles Both Transactions and Recording
• B. One Person Handles Transactions and Another Records
• C. All Duties Are Performed by a Single Supervisor
• D. No Separation of Duties Is Necessary

Answer: (B)

Segregation of duties means distributing responsibilities so that no single person both initiates and records a transaction. This creates a check and balance: the person who handles the transaction is different from the person who records it, allowing independent verification and making it harder to commit and conceal errors or fraud. For example, one employee might handle the actual cash or approval of a payment, while a different employee enters the transaction into the accounting system and reconciles it to bank statements. This separation is what helps detect misstatements and irregularities. The described approach—one person handles transactions and another records—is the correct reflection of this principle. The other options either lump duties together, rely on supervision alone, or dismiss the need for separation, which weakens internal controls.