Segregation of Duties (SoD) is a principle in governance and internal control aimed at preventing conflicts of interest and fraud by dividing responsibilities among different individuals or teams within an organization. SoD ensures that no single person or group has complete control over a critical process or transaction from beginning to end, reducing the risk of errors, fraud, or abuse. Key objectives of SoD include:
- Preventing fraud and errors: By separating key duties, SoD reduces the likelihood of unauthorized actions or mistakes going undetected.
- Enhancing accountability: SoD helps clarify roles and responsibilities, making it easier to identify who is responsible for specific tasks or decisions.
- Supporting compliance: SoD helps organizations meet regulatory requirements by ensuring that critical functions are appropriately controlled and monitored. Examples of segregation of duties include separating the roles of initiating transactions, approving transactions, and recording transactions in financial systems. Effective implementation of SoD requires a thorough understanding of organizational processes, clear delineation of roles and responsibilities, and ongoing monitoring and enforcement of controls.
