Segregation of Duties - Part I

When employee responsibilities are arranged so that the work of one employee is checked by another, it is called “segregation of duties.”

Ideally, no single official or employee should be able to:

  1.  Authorize a transaction;

  2.  Record the transaction in the entity’s books; and

  3.  Obtain custody of the item resulting from the transaction.

 

Examples of incompatible duties that should be performed by separate individuals include:

• Receipting collections, posting collections to registers, and making bank deposits; or
• Signing checks and reconciling the bank accounts.

To put it another way, a person should not be in a position to commit an irregularity and cover it up.

Date this Avoiding Pitfall was most recently published: 04/13/2018