Requiring a single signature to withdraw funds from an investment account is a good example of a system of internal checks and balances to protect association investments.

• A. True
• B. False
• C. Sometimes true
• D. Not applicable

Answer: (B)

Internal controls rely on checks and balances, such as requiring more than one person to authorize withdrawals, to prevent misuse or errors. When only a single signature is needed to withdraw funds, there’s a single point of control, which reduces oversight and increases the risk of improper transfers going unnoticed. Without at least dual authorization, there’s less independent verification of the withdrawal’s amount, purpose, and legitimacy, making it easier for misappropriation to occur. That’s why this setup does not exemplify strong internal checks and balances for protecting association investments. A better practice would include requiring two distinct approvals for withdrawals (dual signatures) along with other controls like regular reconciliations, restricted access, and audit trails.