Simbi Michael



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Question 3.

The internal control weakness in D limited is the lack of segregation of duties in the company. Good internal controls do not permit a single employee too much responsibility over business transactions & processes which was the case with D limited. This gives one person too much fixed responsibility which leads to the committing & concealing of fraud – which is exactly what David was doing.

For D Limited, functions & processes should’ve been allocated to different individuals who would handle different duties in the company. They should have different staff for custody of resources such as cash, stock, another individual for recording of transactions & preparation of financial documents. Authorisation is another duty that should hold separate responsibility from the other duties.

It is essential to separate employee duties in a business to help safeguard assets, among many other beneficial components. Separation of duties can help D Limited to place internal controls over the assets of the company. Division of responsibilities can help them practice bookkeeping more efficiently and effectively as it prohibits the allocation of duties to one person.



D limited should also hold audits occasionally to check the validity of their financial records. If they had implemented this David would’ve been caught earlier.
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