The responsibility for keeping the records for an asset should be separate from the physical custody of that asset.

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The question asks about the principle of responsibility for keeping asset records versus physical custody of the asset.
Option True: In internal control and asset management, it is a best practice to separate duties so that the person who keeps the records (the records custodian) is different from the person who has physical custody of the asset. This separation helps prevent and detect theft, misappropriation, or errors because it requires collaboration between two individuals and provides a checks-and-balances mechanism. By separating record-keeping from custody, the organization reduces the risk that someone can both hide and conceal discrepancies.
Option False: If someone who physically handles and possesses the asset also maintains its records, there is a greater chance for concealment of shortages, fictitious entries, or unauthorized use. This lack of separation undermines the control environment and weakens the ability to independently verify that the asset exists, is accurate in records, and is properly accounted for. The statement about separation is generally advocated precisely to mitigate these risks.
In summary, the principle described aligns with established control practices that promote accountability and reduce opportunities for irregularities by splitting responsibilities between custody and recording tasks.

ACCT 200 Q #19 Internal Control

The responsibility for keeping the records for an asset should be separate from the physical custody of that asset.

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