Which principle ensures that only authorized individuals handle assets and transactions?

The principle of segregation of duties is fundamental in ensuring that only authorized individuals manage assets and transactions. This principle works by dividing responsibilities and tasks among different individuals or groups within an organization, which helps to prevent any single individual from having full control over any critical asset or transaction. This division creates checks and balances, minimizing the opportunity for errors or fraudulent activities because it requires collaboration across different roles for any transaction to be completed or any asset to be handled.

For example, in a financial context, if one person is responsible for both authorizing a transaction and recording it, there is a risk that they could manipulate the outcomes to their advantage without detection. By implementing segregation of duties, an organization ensures that one individual cannot approve and execute a transaction alone, effectively safeguarding assets and promoting accountability.

The other principles mentioned, such as risk management, financial reporting, and asset management, contribute to the overall governance and health of an organization but do not specifically focus on restricting access and responsibilities regarding asset handling in the same direct manner that segregation of duties does.