Protecting your Company: Segregation of Duties

Dawn Loeffler, BA (Hons), CPA, CA Staff Accountant, Gilmour Knotts
Dawn Loeffler, BA (Hons), CPA, CA Staff Accountant, Gilmour Knotts
Dawn Loeffler, BA (Hons), CPA, CA
Staff Accountant, Gilmour Knotts

Tax Question:

What duties should be segregated to help prevent fraud?


Segregation of duties means that key duties are divided among two or more people so that no one person has control of company assets.


Below is a discussion of the key duties that should be segregated:

  • Receipt of customer payments: The receipt of payments and preparing and depositing the bank deposit should all be segregated. This ensures more than one person is involved with the collecting, recording and depositing of funds.
  • Vendor payments: The authorization of vendor payments should be segregated from the duties of preparing and sending the payments. This will help detect and prevent fictitious vendors.
  • Receipts of goods: The process of receiving goods should be segregated from the recording and payment of the invoices to help ensure all goods are received and are business related.
  • Payroll: The record keeping of payroll should be segregated from the approval of payroll. This helps to detect and prevent fictitious employees and to keep information confidential.

Implementing rotation of duties and ensuring that when staff is absent, someone else is able to step in and complete their duties, will also help to prevent and detect fraud.

Staff logins with access controls can also help segregate duties by limiting database access and securing confidential information.

Dawn Loeffler, BA (Hons), CPA, CA
Manager, Gilmour Group CPA’s
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