Which option is effective when segregation of incompatible duties is not feasible?

Segregation of incompatible duties is a fundamental internal control designed to reduce the risk of fraud and error by ensuring that no single individual has control over all aspects of a financial transaction. When it is not feasible to implement this segregation due to resource limitations or operational constraints, alternative measures need to be taken to maintain control and oversight.

Rotating duties is an effective approach in this context because it helps to prevent collusion and encourages transparency. By having employees take turns in performing different tasks, it becomes harder for any individual to manipulate a system without detection, thereby mitigating the risks associated with having one person responsible for an entire process.

Making comparisons over time contributes to monitoring and oversight. By reviewing the performance and results of activities periodically, anomalies and unexpected results can be identified, indicating potential problems or misconduct. This practice also reinforces a culture of accountability among employees, as they become aware that their work will be scrutinized over time.

The combination of these two strategies—rotating duties and making comparisons over time—provides a robust framework for compensating for the lack of segregation of duties. Together, they form a comprehensive approach to risk management, ensuring continued oversight and maintaining the reliability of financial reporting and operations even when ideal segregation cannot be achieved. Therefore, recognizing both