Segregation of Duties Analysis
Download the Segregation of duties matrix evaluator here: Segregation of Duties Evaluator
One of the biggest problems that organizations of all sizes face is segragtion of duties. This basically means that an employee has duties that conflict which would allow the employee to commit fraud or make a mistake that would go unnoticed. In order for companies to avoid these risks they should implement proper segregation of duties. In the consulting projects that I have been involved with, we are often asked to do segregation of duties analysis for the clients.
This can be a very dificult and time consuming task, as most companies have many job roles, all of which have different duties. In addition, the same company may have different entities or different locations, all of which follow different processes and assign different duties to their respective employees. Case in point – it is very dificult to analyze all of a companies job roles for segregation of duties. To make matters worse, there are a ton of potential segregation of duties violations, or ways that an employee can commit fraud if they are given the ability.
To mitigate risk, companies must evaluate the key potential factors associated with their specific industry and business processes. The following excel tool helps identify some higher level segregation of duties violations that may exist in your company. Use this segregation of duties evaluator to help your company find key risk areas that may need to be addressed. This tool was obtained from the auditnet.org website, a great resource for many audit programs and other audit tools. This segregation of duties tool can be used in any size organization from a small business, to a large corporate enterprise. It also works in any vertical as there are basic business processes that take place despite the business. It outlines some of the fundamental segragation of duties issues that exist in businesses and companies. This tool can be used as a template or matrix to create a segregation of duties plan or conflict matrix for your company or business.
In many cases, smaller retail businesses or family owned businesses such as dentists or doctors offices are at high risk for segregation of duties violations. This is because they have a lower number employees, and employees often wear several hats or take on many responsibilities in their day to day duties. In these cases, the business owner has decided that the risk of fraud or error from improper segragation of duties is too low to justify hiring another employee to fill that role or the risk is less than the salary of a new employee.
Further information about the Segregation of Duties tool and more segregation of duties matrix can be found at auditnet.org. As an auditor I found the easiest way for clients to meet the segregation of duties requirements of Sarbanes Oaxley was for them to make a segregation of duties matrix. The tool above creates a matrix by showing what conflicts with what. We would have each employee fill out the evaluator, or we would map an employees job duties to the evaluator and we would see what conflicts arose. The client could then list off why the conflict was not an issue for them, or they could identify a mitigating control or a complimentary control that lowered the risk of the segregation of duties violation and should provide the necessary information to the auditor. A decent audit manager will realize that every company is willing to take on some risk known as risk appetite. They however want to see that your company is aware of any potential fraud risk and that you have considered mitigating controls to help lower the risk of fraud.
This tool is also very useful in helping businesses understand the potential fraud opportunities that exist in their company.
