If internal control is well designed, two tasks that should be performed by different persons are:
A. Posting of amounts from both the cash receipts journal and cash payments journal to the general ledger.
B. Approval of bad debt write-offs, and reconciliation of the accounts payable subsidiary ledger and controlling account.
C. Distribution of payroll checks and approval of sales returns for credit.
D. Recording of cash receipts and preparation of bank reconciliations.
The Answer is D, but I have a question about option B. What if I change the answer to Approval of bad debt write-offs, and reconciliation of the accounts RECEIVABLE (not AP) subsidiary ledger and controlling account
Can an independent employee of AR department perform write-off bad debt and then reconcile AR account?
My personal thinking is that it is acceptable because the person doesn't have physical access to the assets. But my concern is that write-off something and then reconcile it again, may ignore some mistakes made by the person himself/herself.
The original answer says reconcile AP is acceptable because it is related to a liability account. I attached the official explanation below:
Answer (B) is incorrect.
There is no conflict between writing off bad debts (accounts receivable) and reconciling accounts payable, which are liabilities