Etini
Valued Contributor
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.
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.