Segregation of duties insures that no single individual can have control over all phases of a transaction (i.e.
,
authorization, custody, and record keeping) without compensating controls. Adequate segregation of duties means
that at least two individuals are involved with every fiscal transaction to ensure it is accurate and proper. Ideally, there
should be at least two individuals involved with every fiscal transaction before it occurs to ensure adequate review for
accuracy and to reduce the risk of impropriety. Segregation of duties is considered as being a preventive control
because it prevents an event from occurring, rather than discovering an error after-the-act. The Finance System and
Human Resource Management System (HRMS) are designed to enforce this segregation of duties by separating the
key activities for fiscal transactions. Some of the key activity groupings within the Finance System are:
Input/Create and Approve authority for any type of Journal Entry, PO and SPO Requisitions, or Department POs
Approve PO and SPO Requisitions and Approve SPO Vouchers for Payment
Approve PO and SPO Requisitions and Receive POs
Approve Department POs and Receive POs
Creating a journal entry and opening a closed accounting period
Maintaining accounts receivable master data and posting receipts
Depositing Cash and reconciling bank statements
Completing goods transfer and adjusting physical inventory counts
Preparing an order and changing a billing document
Changing an order and creating a delivery
Creating general ledger accounts and posting journal entries
Maintaining bank account information and posting payments.
On the procure to pay side, no one should be able to enter/approve a supplier
Enter a voucher and run a paycycle
phases of a transaction (i.e.,
ate segregation of duties means
ccurate and proper. Ideally, there
urs to ensure adequate review for
d as being a preventive control
the-act. The Finance System and
ation of duties by separating the
n the Finance System are:
uisitions, or Department POs
Segregation of Duties Matrix
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Process COSO Procedure/Function Grp 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
R Create Requisition (ZZ Requisition Entry) 1
x x x x x
Approve Requisition (ZZ Purchasing
A Approval) 2
x x x x x COSO Category
R Create PO (ZZ Purchase Order Entry) 3 x x x x x R Record
A Approve PO (ZZ Purchasing Approval) 4 x x x x x A Authorize
Purchasing
R Create Voucher (ZZ Voucher Entry) 5 x x x x x C Custody
Approve Voucher (ZZ_AWE roles or ZZ
A Voucher Approval) 6
x x x x x RX Reconcile
C Cut Check (ZZ Payment Creation) 7 x x x x x x x x x x x
A Add/Edit Vendor (ZZ Supplier Entry) 8 x x x x x x x x SOD Risk Level
A Approve Vendor (ZZ Supplier Entry) 9 x x x x x x x x X Elevated Risk
Bank Reconciliation (ZZ Treasury Bank
Reconciliation
RX Processing) 10 x x x x x x x x x x x
R Enter JE (ZZ GL Journal Entry) 11 x x x x x
Journal Entry
A Approve JE (ZZ GL Journal Approval) 12 x x x x x x
Custody of Cash (ZZ Treasury
C Maintenance) 13 x x x x x x
Approval of Bank Deposit (ZZ Treasury
A Approvals) 14
x x x x x x
Cash Receipts
R Post Receipts (ZZ Treasury Processing) 15 x x x x x x
Add/Edit Customers (ZZ AR Customer
A Maintenance) 16 x x x
Purchasing Cash Receipts
on
Rec
Journal
Entry
