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June 1, 2009

What is separation of duties?

The separation of duties is one of several steps to improve the internal control of an organization’s assets. For example, the internal control of cash is improved if the money handling duties are separated from the record keeping duties. By separating these duties the likelihood of theft is reduced because it will now require two dishonest people working together to admit to each other that they are dishonest, plan the theft, and to then carry out the theft. One person will have to remove the cash and the other person will have to falsify the records.

Without the separation of duties, the theft of cash is easier. One dishonest person can steal the money and enter a fictitious amount into the records—thereby concealing the theft.

Another step in improving internal control over cash is to use a cash register, issue receipts, and have two people present when cash is  handled.

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Comments

10 Responses to “What is separation of duties?”

  1. janeth on June 10th, 2009 4:00 am

    WHAT ARE THE INTERNAL CONTROLS OVER BANK ACCOUNTS UP TO RECONCILIATION STAGE

  2. halima on June 14th, 2009 3:13 am

    internal control are all of company transaction as assets, cash and control all mony of the company

  3. kundan on June 21st, 2009 10:39 am

    What is this Sales Invoice

  4. kundan on June 21st, 2009 10:43 am

    What Is this F & A .

  5. kundan on June 21st, 2009 10:46 am

    What is this tally

  6. lya on July 16th, 2009 6:56 am

    who are the internal users of accounting information? briefly explain.

  7. janeth on August 10th, 2009 12:47 am

    internal controls over bank accounts:
    1. make sure each item concerning cash/cheque is recorded immediately after receiving/ issuing in the bank account and checked by a separate person each day.
    2. recocile the account immedeately after end of the month.

  8. Ogbozor on August 14th, 2009 6:05 am

    Good day sir, please how can i subscriber for these textbook. Am a student of an accountancy here in Nigeria under Enugu State University of science and Technology(ESUT). Am account lover, if you can reply me back, i will very glad.
    thanks

  9. Lisa on November 2nd, 2009 3:12 pm

    Internal controls over bank account:
    1. One person handles cash, applies payments, makes deposits
    2. Another person reconciles the bank account.

    This insures that if the receiver of cash does not deposit and/or apply the payment, the second person will find it when doing the bank reconcillation.

  10. CJ on November 7th, 2009 1:47 am

    I work directly for a CFO that is rather weak in managing the accounting department. As a Staff Accountant and working for him about a year and a half, I decided to implement separation of duties. I felt that the woman handling AP, also deposited cash and did the bank reconciliation was a problem. I saw sloppy accounting and red flags when she never seemed to deposit the cash. Today my boss, the CFO yelled at me for 1hour about how bad I made him look to the President of the company since I now brought it to the Presidents attention.
    Please help me know I did the right thing and how can I keep my job secure at this point?

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