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The importance of segregation of duties
May 20
The importance of segregation of duties
By: Admin
One of the key concepts in placing internal controls over a company’s assets is segregation of duties. Segregation of duties serves two key purposes: It ensures that there is oversight and review to catch errors. It helps to prevent fraud or theft because it requires two people to collude in order to hide a transaction. Segregation of duties: Safeguarding assets One of the key concepts in placing internal controls over a company’s assets is segregation of duties. Segregation of duties serves two key purposes:
    • It ensures that there is oversight and review to catch errors
    • It helps to prevent fraud or theft because it requires two people to collude in order to hide a transaction
Segregation of duties involves separating three main functions and having them conducted by different employees:
  • Having custody of assets
  • Being able to authorize the use of assets
  • Recordkeeping of assets
This segregation of duties is often difficult to achieve in small businesses but should be implemented as much as possible. In some cases, it may result in an employee from another department being responsible for one of the functions.

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