Description
Segregation of Duties (SoD) is a fundamental concept in Governance, Risk Management, and Compliance (GRC) that aims to prevent fraud and errors by distributing tasks and responsibilities among multiple people. This practice ensures that no single individual has control over all aspects of any critical process, especially in financial transactions. For instance, one person may be responsible for initiating a payment, while another person must approve it. By separating these duties, organizations can create a system of checks and balances that helps to identify and mitigate potential risks. SoD is particularly important in industries such as finance, healthcare, and government, where the implications of fraud or error can be significant. When implemented effectively, SoD not only enhances compliance with regulations but also fosters a culture of accountability and transparency within the organization.
Examples
- In a bank, the person who processes loan applications is different from the person who approves them, reducing the risk of fraudulent approvals.
- In a healthcare setting, the staff member who orders medical supplies does not have the authority to pay invoices, ensuring financial oversight.
Additional Information
- Segregation of Duties is often required by regulations such as Sarbanes-Oxley (SOX) for publicly traded companies.
- Implementing SoD can be facilitated through technology, such as GRC software that helps manage user roles and permissions.