Segregation of duties is an effective way to prevent fraud in your organization.
Learn more about it and its elements in this video.
If you prefer reading, you can find the transcription below the video.
segregation of duties
Hi, everyone. It’s Irfanali with RMI Professional Corporation once again. Hope you guys have had a fantastic week.
I know in the news today, there’s been a lot of information about fraud and how businesses can get attacked from different ways of fraud.
So, I want to touch on a topic that can help prevent some of it. And this is specifically called segregation of duties.
Key elements of segregation of duties
When we’re looking at the segregation of duties from an accounting standpoint, we’re talking about the potential to avoid internal fraud from your organization.
And there are three key elements to this.
- Record keeping
- Access to assets
- An authorization
accounting internal controls
I’ll touch on each of those a little bit here.
So, when we’re talking about record keeping, we’re talking about access to the books. Who’s actually making the entries? Who’s actually doing the bookkeeping, the day-to-day bookkeeping, for an organization.
When we’re talking about authorization, we’re simply talking about who’s authorized to do a transaction. Who can either sign off on the checks, who can sign off to approve a payable or who can actually make an order when we’re talking about dealing with suppliers.
And then the last one is access to assets and that’s very simple. Who can actually access the bank account, right? Who can actually access the physical inventory?
When we’re talking about those different elements, if we can keep somebody different on each of those pieces, it will help eliminate the ability for fraud in the organization.
Get help with segregation of duties in your business
So, to sum it up, the three key points is record keeping or your day-to-day bookkeeping, access to assets, and then who has the authorization to do transactions.
Once again, it’s Irfanali with RMI and I hope you have a fantastic week.