Which principle of internal control helps prevent errors and fraud by separating key duties among different people?

• A. Centralized approval by a single manager
• B. Rotating duties among employees without documentation
• C. Segregation of duties to separate authorization, custody, and record-keeping
• D. No formal controls

Answer: (C)

Segregation of duties means dividing key tasks so that no single person handles all steps of a transaction. By separating authorization, custody of assets, and recording, you create checks and balances that reduce the chance of errors or fraud slipping through. For example, the person who approves a purchase should not be the same person who handles the cash or records the payment, and each step is reviewed by different individuals.

Having a single manager approve everything concentrates control and raises the risk of undiscovered errors or misappropriation. Rotating duties without proper documentation undermines accountability, and no formal controls leave processes unmonitored. So the principle described is segregation of duties to separate authorization, custody, and record-keeping.