Which practice best promotes segregation of duties in cash handling?

• A. Separating responsibilities such as cash receipts, deposits, and reconciliations to reduce fraud risk.
• B. Consolidating all cash-related tasks under one manager to speed processing.
• C. Outsourcing all cash handling to third parties.
• D. Maintaining only one signatory for all cash activities.

Answer: (A)

Separating duties in cash handling means dividing the steps of processing money so no one person controls receipts, deposits, and reconciliations. This creates checks and balances that make fraud or errors much harder to conceal. Assigning different staff to each step—receiving cash, recording and depositing it, and reconciling the bank statements—allows independent review and detection of discrepancies. If one person handles everything, opportunities for misappropriation increase and mistakes can go unnoticed. Keeping key tasks in separate hands, rather than concentrating them under one manager, outsourcing, or relying on a single signatory, strengthens internal controls and the accuracy of the cash process.