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Segregation of duties

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This is a basic building block of internal control, implicit in everything, but a term often used without context or explanation.

The idea is that the more people that are involved in processing transactions, the less likely it is that a problem will occur.

If one person deals end-to-end with a transaction, for example the purchase of a desk - from making the initial request, through acknowledging delivery, to recording it in the books - there is more potential for error and also possibly exposure to fraud. 

This sounds obvious, but in a small organisation you may find it difficult to achieve, and let things slip because you have one key individual who deals with everything.  In this situation you need to take a risk-based approach when you design your financial processes and identify what leaves you most exposed, then design actions to compensate - the most common being dual signatories on payments. 

The policy is to remind people of the principle when they are designing processes.


NCVO members can download our financial procedures manual templates.

Page last edited May 30, 2019

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