Which internal control helps prevent fraud in public procurement by ensuring no single individual handles all phases of a transaction?

Which internal control helps prevent fraud in public procurement by ensuring no single individual handles all phases of a transaction?

• A. Separation of Duties
• B. Excessive approvals
• C. Single-person Processing
• D. Minimal documentation

Answer: (A)

Separating duties is an internal control that prevents fraud by dividing responsibilities so no one person handles every step of a transaction—from initiation and authorization to execution and recording. In public procurement, different people should be involved in tasks such as initiating a purchase, evaluating bids, approving contracts, signing agreements, and processing payments. When these phases are handled by separate individuals, there’s a built-in checks-and-balances system: one person cannot single-handedly initiate, approve, and finalize a procurement, making it much harder to commit and conceal fraud. This arrangement also creates clearer accountability and helps auditors trace actions through an independent trail. While excessive approvals or minimal documentation have their own downsides, they don’t inherently provide the same protection against opportunistic or collusive fraud as distributing duties does.

Separating duties is an internal control that prevents fraud by dividing responsibilities so no one person handles every step of a transaction—from initiation and authorization to execution and recording. In public procurement, different people should be involved in tasks such as initiating a purchase, evaluating bids, approving contracts, signing agreements, and processing payments. When these phases are handled by separate individuals, there’s a built-in checks-and-balances system: one person cannot single-handedly initiate, approve, and finalize a procurement, making it much harder to commit and conceal fraud. This arrangement also creates clearer accountability and helps auditors trace actions through an independent trail. While excessive approvals or minimal documentation have their own downsides, they don’t inherently provide the same protection against opportunistic or collusive fraud as distributing duties does.