Separation of Duties Prevents Fraud in Accounting

Steps:

• Identify the role of a sales ledger control account: it reconciles the total of individual customer balances with the general ledger.
• Recognize that the sales ledger is maintained by staff handling daily transactions like invoices and payments.
• Understand internal control principles require separating duties to avoid manipulation.
• Conclude that independent preparation detects irregularities and deters fraudulent alterations.

Why A is correct:

• Internal control systems mandate separation of duties to prevent fraud, as one person handling both ledger and control could conceal errors or theft (per accounting standards like SOX principles).

Why the others are wrong:

• B: Control accounts help locate errors through reconciliation, but separation isn't primarily for that—it's a byproduct.
• C: Control accounts do provide totals, but this doesn't require different staff; it's an inherent function.
• D: Preparation by different staff slows, not speeds, financial statements due to added checks.

Final answer: A