Segregation of duties can help the financial health of a company.

[Etini]

Often times, we hear of companies and businesses going bankrupt. This could be caused by either financial management or financial manipulation. In this post, we would examine how financial manipulation can be eliminated with the use of segregating duties in the accounting and financial department.

Most times, when one person handles a service that is wide and far reaching, they tend to know the loopholes on how to manipulate it to their advantage.

Segregation of duties would help to curtail such powers and loopholes and it is necessary for the finance and accounting department of any business.

1) You don't give approval for purchase orders you generate: An accounting staff might sneak in his or her own interest in a purchase order. It should be approved by another person who would vet and strike out any unnecessary order.

2) Reconciling accounts should be separate from the person who makes purchases: When the same person who reconciles accounts is the same person that purchases, he or she can easily embezzle company funds and cover it up while balancing the account. A seperate person should ideally balance the account to identify any misappropriation that might sneak in.

 

[Mikes smithen]

It is totally not a good idea when business owners and managers have the policy of allowing one employee to handle all activities concerning cash handling submission documentation and authorization. This could obviously increase the chances for a particular individual to misbehave that is to solicit some of this funds for his or her own personal use. Segregation of duty simply means The separation of duties which obviously implies that a business organization must have various employees for different purposes. The employee who authorizes the issuing of cash must be a different employee from the individual or employee who actually uses the cash.