Intermediate level · Module 4: Financial Controls and Fraud Prevention · Lesson 1 of 3
Separation of Duties
Divide tasks so no single person controls a whole transaction.
In this lesson you will
- Apply separation of duties
- Use compensating controls in small teams
Key concepts
separation of dutiesauthorise, record, holdcompensating controlsreview
The lesson
No one person should authorise a payment, record it and handle the cash or bank access. Splitting these makes errors and fraud harder.
Small organisations may not have enough staff. Compensating controls help: the director reviews the bank statement monthly, two signatories approve payments, and the board reviews reconciliations.
Rotate duties and require staff to take leave so irregularities surface.
Step by step
- Map who does what in the payments process.
- Find conflicts.
- Reassign duties.
- Add compensating controls.
Practice activity
Map and improve separation of duties for the NGO.
Expected result: A revised duty map with compensating controls where needed.
Check your understanding
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Name the three duties that should be separated.
Show answer
Authorising, recording and holding cash or assets.
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Give one compensating control for a small team.
Show answer
Monthly review of bank statements by the director.
Taught live by an instructor — online or in person. Free course lessons are for self-study and do not lead to a certificate — see registration options.