What is the main reason to avoid having the signer also perform recordkeeping or custodial duties?

What is the main reason to avoid having the signer also perform recordkeeping or custodial duties?

• A. To maintain internal controls.
• B. To speed up payments.
• C. To reduce bank fees.
• D. To centralize power.

Answer: (A)

Separating signing/authorization from recordkeeping and custodial duties strengthens internal controls. When the same person both approves payments and handles records or funds, there’s an opportunity to conceal errors or fraud because there’s no independent check on the transactions. Keeping these duties with different people creates checks and balances: the signer relies on someone else’s records, and an auditor or supervisor can verify that the paperwork matches the cash or assets. This separation improves accountability, makes discrepancies easier to detect, and provides a clear audit trail. It’s not about speeding payments or centralizing power; it’s about reducing risk through proper controls.

Separating signing/authorization from recordkeeping and custodial duties strengthens internal controls. When the same person both approves payments and handles records or funds, there’s an opportunity to conceal errors or fraud because there’s no independent check on the transactions. Keeping these duties with different people creates checks and balances: the signer relies on someone else’s records, and an auditor or supervisor can verify that the paperwork matches the cash or assets. This separation improves accountability, makes discrepancies easier to detect, and provides a clear audit trail. It’s not about speeding payments or centralizing power; it’s about reducing risk through proper controls.