Segregations of Duties (SoD) are a primary internal control intended to prevent or decrease the risk of errors or irregularities, identify problems, and ensure corrective action is taken.

This is achieved by assuring no single individual has control over all phases of a business transaction.

There are four general categories of duties:

In an ideal system, different employees perform each of these four major functions. In other words, no one employee has control of two or more of these responsibilities.

The more negotiable the asset, the greater the need for proper segregation of duties, most significantly when dealing with cash, negotiable checks, and inventories.

In certain business areas SoDs are highly important. For example, this is the case in businesses where there is cash handling, as cash is a highly liquid asset, which means it is easy to take money and spend it without leaving a trail of where it went. Any department that accepts funds, has access to accounting records, or has control over any type of asset should be concerned with implementing SoDs.

Some examples of incompatible duties are:

SoDs can be challenging to achieve in a small operation, as it is not always possible to have enough staff to properly segregate duties. In those cases, management may need to take a more active role to achieve separation of duties by checking the work done by others, or by using other mitigating controls to minimize risks.