What does 'segregation of duties' refer to in accounting?

'Segregation of duties' in accounting is a fundamental internal control principle that involves dividing responsibilities among different individuals to minimize the risk of error or fraud. This practice ensures that no single person has control over all aspects of any financial transaction. By separating duties, such as authorization, custody of assets, and record-keeping, organizations can promote accountability and create checks and balances within the financial system. If one individual were to have access to all stages of a transaction, it could potentially lead to undetected misappropriations or misstatements. Therefore, the correct answer emphasizes the importance of separate roles in maintaining the integrity and reliability of financial reporting and safeguarding assets. This approach fosters a collaborative environment where individuals are less likely to engage in deceitful practices, enhancing overall organizational oversight.