Exam CISA topic 1 question 999 discussion

The BEST way to prevent fraudulent payments is to implement segregation of duties between the vendor setup and payment processing. Segregation of duties is a fundamental internal control measure that helps prevent fraud and errors by dividing responsibilities among different individuals or departments. By separating the tasks of setting up vendors and processing payments, organizations create a system of checks and balances. This separation reduces the risk of fraudulent activities, as no single individual or department has end-to-end control over the payment process. It ensures that multiple parties are involved in critical financial transactions, making it more difficult for an individual to manipulate the process for fraudulent purposes.

D. payment processing. Segregation of duties is a fundamental principle in internal controls that helps prevent fraud and errors by dividing tasks and responsibilities among different individuals or departments. In this case, by separating vendor setup from payment processing, you create a system where different people or teams are responsible for different parts of the payment process. This makes it more difficult for any single individual to manipulate or carry out fraudulent payments without detection. Option D, payment processing, is the most critical step in preventing fraudulent payments because it directly relates to the disbursement of funds. By ensuring a clear separation between those who set up vendors and those who process payments, you can establish checks and balances that help mitigate the risk of fraudulent payments.