What control mechanism can help prevent fraudulent payments in accounts payable?

Segregation of duties is an essential control mechanism in preventing fraudulent payments in accounts payable. By dividing responsibilities among different individuals, an organization can minimize the risk of fraud or error, as no single individual has control over all aspects of a transaction. For instance, one person may be responsible for processing invoices, while another handles approval and a third manages payments. This separation creates a system of checks and balances, making it more difficult for any one individual to execute and conceal fraudulent activities.

The effectiveness of segregation of duties lies in reducing opportunities for collusion among employees, as individuals must coordinate their actions, which inherently involves more complexity and oversight. In accounts payable, strong control systems can significantly deter potential fraud by ensuring that multiple sets of eyes are involved in the disbursement process.

The other options, while they may contribute to overall operational effectiveness, do not specifically address the direct prevention of fraud in payments as effectively. For instance, consolidation of purchasing functions can enhance efficiency but may lead to a concentration of power if not handled with adequate oversight. Automated systems can streamline processes but may also be vulnerable to manipulation if internal controls are insufficient. Lastly, frequent audits of payroll can help catch discrepancies but do not prevent fraud directly in the accounts payable process.