Fraud Awareness Spotlight: Segregation of Duties
One key area of internal controls that auditors routinely test is segregation of duties, which requires checks and balances in daily operations. Auditors look for proof that these controls are actively functioning to ensure that multiple individuals are reviewing transactions and processes.
The goal of segregation of duties is to prevent opportunities for fraud by preventing any single individual from having complete control of all parts of a process or transaction without secondary review. If you can provide written or systemic documentation showing that at least two individuals participated in a procedure or transaction, segregation duties are met.
Action Steps
- Establish secondary review procedures to ensure that multiple staff members participate in the review and approval of obligations, transactions, and other activities that affect Commonwealth funds and resources.
- Have limited staff? Refer to How can you support segregation of duties with limited staff? and train employees to properly document review processes and signoffs
- Incorporate segregation of duties into staff training and oversight activities to ensure that it remains an integral part of daily operations.
Your Internal Control Officer (ICO) should review your written system of internal controls to ensure it is current and supports these training compliance goals. Your ICO can also help verify that the department head is accurately certifying compliance in the annual Internal Control Certification.
Bookmark our CTR Compliance Corner as your one-stop shop for alerts and success factors that you can integrate into your daily operations to keep you safe on your mission.