{"id":1179,"date":"2021-06-03T20:32:00","date_gmt":"2021-06-03T20:32:00","guid":{"rendered":"https:\/\/alminawi.com\/?p=562"},"modified":"2025-09-27T12:59:56","modified_gmt":"2025-09-27T12:59:56","slug":"internal-audit-function-episode-18-segregation-of-duties","status":"publish","type":"post","link":"https:\/\/e.americanpro.org\/?p=1179","title":{"rendered":"Internal Audit Function: Episode 18, Segregation of Duties"},"content":{"rendered":"<p data-start=\"66\" data-end=\"528\">An internal auditor is responsible for assessing the effectiveness of internal controls, and a key control principle is <em data-start=\"187\" data-end=\"216\">segregation of duties (SoD)<\/em>. SoD helps prevent fraud and error by ensuring that no single individual has control over all aspects of a financial transaction. There are four key functions that must be separated: <strong data-start=\"400\" data-end=\"427\">custodianship of assets<\/strong>, <strong data-start=\"429\" data-end=\"458\">recording of transactions<\/strong>, <strong data-start=\"460\" data-end=\"493\">authorization of transactions<\/strong>, and <strong data-start=\"499\" data-end=\"527\">reconciliation of assets<\/strong>.<\/p>\n<ul>\n<li data-start=\"530\" data-end=\"824\">\n<p data-start=\"532\" data-end=\"560\">Effective segregation means:<\/p>\n<ul data-start=\"563\" data-end=\"824\">\n<li data-start=\"563\" data-end=\"628\">\n<p data-start=\"565\" data-end=\"628\">A person who <strong data-start=\"578\" data-end=\"592\">authorizes<\/strong> a payment should not <strong data-start=\"614\" data-end=\"624\">record<\/strong> it.<\/p>\n<\/li>\n<li data-start=\"631\" data-end=\"708\">\n<p data-start=\"633\" data-end=\"708\">An employee who <strong data-start=\"649\" data-end=\"660\">records<\/strong> a sale should not also <strong data-start=\"684\" data-end=\"697\">reconcile<\/strong> inventory.<\/p>\n<\/li>\n<li data-start=\"711\" data-end=\"824\">\n<p data-start=\"713\" data-end=\"824\">Someone with <strong data-start=\"726\" data-end=\"737\">custody<\/strong> of cash should not also <strong data-start=\"762\" data-end=\"775\">authorize<\/strong> disbursements or <strong data-start=\"793\" data-end=\"806\">reconcile<\/strong> the bank account.<\/p>\n<\/li>\n<\/ul>\n<\/li>\n<li data-start=\"826\" data-end=\"1301\">\n<p data-start=\"828\" data-end=\"1301\"><em data-start=\"828\" data-end=\"837\">Example<\/em>: In a small retail business, if the same employee can approve vendor payments (authorization), write checks (custodianship), enter the payments into the accounting system (recording), and reconcile the bank statements (reconciliation), this creates a high risk of undetected fraud. An internal auditor would flag this lack of segregation and recommend assigning these duties to different staff members or implementing mitigating controls like independent reviews.<\/p>\n<\/li>\n<li data-start=\"1303\" data-end=\"1464\" data-is-last-node=\"\">\n<p data-start=\"1305\" data-end=\"1464\" data-is-last-node=\"\">Proper SoD reduces the risk of misappropriation and ensures that errors or fraud are detected promptly, protecting organizational assets and maintaining trust.<\/p>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>An internal auditor is responsible for assessing the effectiveness of internal controls, and a key control principle is segregation of duties (SoD). SoD helps prevent fraud and error by ensuring that no single individual has control over all aspects of a financial transaction. There are four key functions that must be separated: custodianship of assets, [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":838,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[17],"tags":[],"class_list":["post-1179","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-internal-audit"],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/e.americanpro.org\/wp-content\/uploads\/2025\/06\/GIF-20.gif","_links":{"self":[{"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/posts\/1179","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1179"}],"version-history":[{"count":1,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/posts\/1179\/revisions"}],"predecessor-version":[{"id":2138,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/posts\/1179\/revisions\/2138"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/media\/838"}],"wp:attachment":[{"href":"https:\/\/e.americanpro.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1179"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1179"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1179"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}