Which of the following is an example of a control activity?

• A. Separation of duties.
• B. Increasing personal access to cash.
• C. Performing all tasks by one employee.
• D. Avoiding an approvals process.

Answer: (A)

Control activities are specific actions implemented as policies and procedures to reduce risk and ensure management’s directives are followed. Separation of duties is a control activity because it divides responsibilities among multiple people so no one person can initiate, authorize, record, and custody a transaction or asset all by themselves. This creates checks and balances that make it harder to commit and conceal errors or fraud. For example, the person who handles cash receipts should not be the same person who records those receipts or approves disbursements.

The other options undermine control rather than support it: increasing personal access to cash raises risk by giving one person more opportunity to misappropriate funds; having one employee perform all tasks removes the necessary checks and verifications; and avoiding an approvals process eliminates the authorization step that helps prevent unauthorized or erroneous transactions.