Final answer:
The lack of segregation of duties is shown when one person is responsible for ordering, receiving, and paying for merchandise, which undermines internal controls and increases the risk of fraud and errors.
Step-by-step explanation:
Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them shows a lack of the internal control principle known as segregation of duties. This principle is vital for preventing fraud and errors since it ensures that no single individual has control over all aspects of any financial transaction.
This separation of responsibilities reduces the risk of incorrect or unauthorized transactions as it requires more than one person to collaborate to misappropriate assets or misstate a financial statement. Common practice would involve different individuals being responsible for authorizing transactions, recording them, and reviewing the related assets.