The Pros and Cons of Sepration of Duties

PROS AND CONS OF SEPARATION OF DUTIES 1
Pros and Cons of Separation of Duties
[Name]
[Institution]
Different companies use different procedures for the sake of ensuring the safety of their records
and assets. The processes with which they attempt to do so are known as internal controls. One
such control is known as the separation/segregation of duties. Separation of duties means
assigning the duties of recordkeeping, custody of assets and authorization of assets to different
employees. Dividing these duties minimize frauds. Different companies have policies and
regulations regarding the separation of duties (segregation of duties SoD).
Separation/segregation of duties requires more than one employee to complete a task. More than
one person is responsible for control. The main objective of such policy is to maintain strict
check and balance on the activities of the employees. R.A Botha and J. H. P Eloff describe
separation of duties as:
“Separation of duty, as a security principle, has as its primary objective the prevention of
fraud and errors. This objective is achieved by disseminating the tasks and associated
privileges for a specific business process among multiple users. This principle is
demonstrated in the traditional example of separation of duty found in the requirement of
two signatures on a cheque” (Botha & Eloff, 2001).
Some common examples of segregation of duties are;
 Same person should not be allowed to make an order and approve it.
 Bank reconciliation and vendor payments should both be done by different employees.
 The person who creates acquisition should not approve it.
Segregation of duties is essential for internal control in an organization. One person places an
order; another records the transaction. That’s how it works. One person should not be allowed to
manage multiple function because of the risk of abuse of power.

There are both positive and negative sides to the segregation or separation of duties. It is
a good way of preventing fraud in an organization or company (Rojas, 2017). For instance, it
would be safe to not allow employees who handle cash to have access to cash records. Internal
control is necessary even for small companies. It allows the companies to minimize fraud. If the
problem still persists, they can implement other solutions, such as security cameras. Another
reason why separation of duties is necessary is the presence of human error. Separation of duties
policies require more than one individual to perform certain duties. Therefore, if one person does
an error the others might highlight it and correct it. If only one person was responsible for the
job, then the error might have been missed. Imagine if one person has complete access to nuclear
weapon system. What can happen? The person might commit an error, be blackmailed or forced,
and the consequences of that would be beyond repair. Segregation of duties, therefore, is
extremely necessary, especially in situations where the jobs are of secret, risky or complex
nature.
Despite these advantages there are also some disadvantages of separation of duties and
strict internal control. There is a risk of employee apathy in cases of bad planning. Too rigid
internal control systems are very difficult to sustain. People like work environments that are less
rigid and easily adaptable. Over-dependence on the internal control system is also a problem.
Employee and management might underestimate the occurrence of fraud and errors. Another
major problem associated with separation of duties is the duplication of work. There would be
more employees in the company. Some companies, especially small ones might not be in a
position to afford large numbers of employees. The staff might also be demotivated because
there are so many people responsible for the same job. Work might also delay because it’d have
to pass through many stages and people before it is regarded as complete. Usual transactions
might be overlooked because the internal control is too concerned with routine transactions. If
the system is too broad and complex, there are chances that it might not be handled properly.
There might also be less connection between people who are responsible for different
parts/stages or aspects of a job. Apart from that, in some cases they might come together, plan
and still commit frauds. Separation of duties minimizes frauds committed by single employees
but it doesn’t provide a solution for the cases of frauds where many individuals are involved.
There is, therefore, the risk of collusion. Different employees might collaborate and beat the
system and engage in fraudulent activities. Problems with the documentation, filing and
recording system might disrupt the whole process. If there is a problem at one level of a job, all
other levels might be affected because, even though separate, they are interdependent.
Segregation of duties alone cannot reduce frauds and errors. Competent supervision and control
systems must also be in place. There should be a separate department that deals with frauds and
biases. Although, segregation of duties might reduce the risk of frauds to some extent, it makes
simple jobs much complex and time consuming and also costly.
References:
Botha, R., & Eloff, J. (2001, March 01). Separation of duties for access control enforcement in
workflow environments. Retrieved March 04, 2021, from
https://dlnext.acm.org/doi/abs/10.1147/sj.403.0666
Rojas, E. (2017, November 21). The pros & cons on requiring reports on internal control.
Retrieved March 04, 2021, from https://smallbusiness.chron.com/pros-cons-requiring-
reports-internal-control-45533.html

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PROS AND CONS OF SEPARATION OF DUTIES 1

Pros and Cons of Separation of Duties

such control is known as the separation/segregation of duties. Separation of duties means

regulations regarding the separation of duties (segregation of duties SoD).

separation of duties as:

demonstrated in the traditional example of separation of duty found in the requirement of

two signatures on a cheque” (Botha & Eloff, 2001).

Some common examples of segregation of duties are;

 The person who creates acquisition should not approve it.

manage multiple function because of the risk of abuse of power.

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