By the term Separation of duties we mean that one person s work serves as a complimentary check on another s. Implied in this definition is the concept that no one person should have complete control over any transaction from initialization to completion. Having adequate segregation of duties has a major impact on ensuring that transactions are valid and properly recorded. There are two primary reasons why separation of duties is important within every financial process.
People are an integral part of every financial process.
They authorize, generate, and approve each transaction. Having different people engaged in critical positions within the process is a common, sensible business practice that ensures consistent and successful execution of the process. People have their shortcomings. People are human which means they occasionally make mistakes. The complimentary check by another individual means that there is an opportunity for someone to catch an error before a transaction is fully executed and before a decision is made based on potentially erroneous data.