Authorization of transactions is considered a key control in most organizations.Authorizations…

Authorization of transactions is considered a key control in most organizations.Authorizations should not be made by individuals who have incompatible functions.


Indicate the individual or function (for example, the head of a particular department) that should have the ability to authorize each of the following transactions. Briefly indicate the rationale for your answer


1. Writing off old accounts receivable

2. Committing the organization to acquire another company that is half the size of the existing company

 3. Paying an employee for overtime

4. Shipping goods on account to a new customer

5. Purchasing goods from a new vendor

6. Temporarily investing funds in common stock investments instead of money market funds

7. Purchasing a new line of manufacturing equipment to remodel a production line at one of the company’s major divisions (The purchase represents a major new investment for the organization.)

8. Replacing an older machine at one of the company’s major divisions

9. Rewriting the company’s major computer program for processing purchase orders and accounts payable (The cost of rewriting the program will represent one quarter of the organization’s computer development budget for the year.).

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