Due to system limitations, segregation of duties (SoD) cannot be enforced in an accounts payable system. Which of the following is the IS auditor's BEST recommendation for a compensating control?
A.
Require written authorization for all payment transactions.
B.
Review payment transaction history.
C.
Reconcile payment transactions with invoices.
D.
Restrict payment authorization to senior staff members.
The correct answer is C because there is no dual control due to system limitation, the only compensating control here is to reconcile each transaction with the invoice inorder to ensure the accuracy of the transaction processed.
In system environments where SoD is not possible,
Independent and periodic review of payment history is the most realistic and effective compensation control.
This is useful for detecting user abuse and curbing the occurrence of fraud.
When segregation of duties can't be enforced, the best compensating control is implementing robust and regular reconciliations (option C) to independently verify the accuracy, validity, and authorization of accounts payable transactions.
Reconciliation is typically a post-transaction control and might not catch fraud or errors in the payment process before the transaction is authorized. Hence the answer is A.
I go with A. It says there is a system limitation, meaning they will have to use what they already have. Can't assign more work or responsibility since they got no people. Hence, best option is to create a authorization system in between.
They mentioned that SoD cannot be carried out, hece D cannot be the answer.
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