Segregation of Duties – What is that?
Let’s suppose your company runs branch offices or subsidiaries in different locations or even countries around the world. With rising income and expenditure bills security concerns will rise as well. The need for risk management is then due to the widespread nature of the company. Sooner than later the internal processes of a business call for shared responsibilities. If one person is responsible for every key, code and lock required for a process, that can lead to serious difficulties. Emotion, human error and disinformation are far more likely to alter the outcome of financial transactions. And also, more difficult to correct afterwards. With the separation of critical functions fraud and error risks become calculable and therefore manageable. Preventing unilateral actions from occurring in key processes helps to reduce irreversible affects that are financially intolerable for the company.
While SOD seems a simple principle, not properly following it can lead to disastrous consequences. Implementing SOD within your organization is a key aspect of managing risks. And it can help you to win over trust from your clients as well as customer’s businesses.
We will continue this soon with a case study, concretizing how reorganizing responsibilities can help to detect and get rid of fraudulent practices.
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