Bonding
Accounting glossary · Understand, connect, apply
In an internal-control context, bonding commonly means obtaining fidelity protection against specified losses caused by employee dishonesty, subject to the policy’s terms.
Example
A business obtains coverage for certain cash-handling employees as one part of its risk-management process.
Remember the difference
Bonding does not prevent all fraud or replace segregation of duties. Coverage limits and exclusions matter.
Updated 3 November 2026. Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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