With the increasing number of fraud attempts, Segregation of Duties (SoD) must be a central part of your business strategy. The principle is simple: a critical task should never be performed by one person.
This dynamic process evolves thanks to the various controls and audits that will result in SoD reports allowing to report on the different actions and implement remediations in case of risk.
But what do these reports consist of? This is the question we will try to answer in this article.
What is the Segregation of Duties ?
Segregation of duties (SoD) is a principle used in the design of effective internal controls in an organization.
It is based on the idea that no single individual should have complete control over a particular process, but rather that multiple individuals or groups should be responsible for different parts of the process.
This helps to reduce the risk of errors or fraud by ensuring that there are checks and balances in place to prevent any one person from having too much power or control.
For example, in a financial system, an organization can use Segregation of Duties to ensure that no one person is responsible for recording, paying and refunding invoices at the same time.
SoD can be applied to many different types of processes, including financial, operational, and compliance-related processes.
It is an important element of effective internal controls, and is often used to help organizations comply with internal policies or external regulations.
The different Types of Reports and Stages of an Audit
SoD reports are not written by chance. In fact, there are certain steps to follow in order to obtain and use these reports effectively.
Step 1: The Internal Audit
The internal audit stage of a company is a key moment in the management of the security of your organization. It is carried out in phases or in an iterative way where priority risks must be addressed in order to ensure the security of your company.
An internal audit is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations.
It helps an organization accomplish its objectives by evaluating and improving the effectiveness of its risk management, control, and governance processes. Internal audits are conducted by internal auditors, who are employees of the organization being audited.
They can provide assurance that an organization’s internal control systems are functioning as intended and that the organization is in compliance with relevant laws, regulations, and standards.
Internal audits can cover a wide range of topics, including financial controls, information technology systems, business processes, and operations. They will, among other things, result in the creation of SoD reports.
Step 2: The SoD Report
One of the most important audit tools is the SoD report. A Segregation of Duties report is a document that describes the various tasks and responsibilities that have been assigned to different individuals or groups within an organization, in order to ensure that no one person has complete control over a particular process.
It may also include information about possible conflicts of interest between different roles or responsibilities.
Segregation of duties reports can be used to help organizations ensure compliance with internal policies or external regulations and can also be used as a risk management and internal control tool.
The report will be different depending on the needs and objectives of each company. This type of document should include all possible types of violations that you have previously scripted.
The Standard SoD Report
A standard SoD report is a document that describes the various tasks and responsibilities assigned within an organization. The purpose is to determine whether an individual or group has access to or must perform tasks that would give them complete control over a business process.
It is used to help organizations ensure compliance with various rules and to reduce the risk of error or fraud.
A standard SoD report typically includes a list of the various roles and responsibilities within the organization, along with a description of the tasks associated with each role. It may also include information on any overlap or conflicts that exist between different roles or responsibilities.
Risk Assessment SoD Report
A risk assessment SoD report is a document that identifies areas of an organization where there are significant risks associated with a lack of Segregation of Duties.
It is used to help organizations identify and manage potential risks by providing recommendations for addressing those risks.
In order to create a risk assessment SoD report, an organization will typically identify the various processes and activities that are critical to its operations and then assess the risks associated with those processes.
This may involve identifying potential vulnerabilities or weaknesses in the organization’s existing SoD controls, and evaluating the potential impact of those vulnerabilities on the organization’s operations.
Based on this analysis, the risk assessment SoD report will provide recommendations for addressing any identified risks, such as implementing additional controls or Segregation of Duties or modifying existing processes to reduce the risk of errors or fraud.
The report may also include a description of the potential consequences of not addressing the identified risks.
Compliance SoD Report:
The Compliance Segregation of Duties report is a document or report that outline the specific duties and responsibilities of individuals or departments within an organization in relation to compliance with all existing rules.
It is designed to ensure that no one person has too much control over a business process and to mitigate the risk of errors, fraud, and other compliance issues by separating key duties and responsibilities.
The report would typically identify the various roles and responsibilities related to compliance within the organization and how they are separated to prevent conflicts of interest and reduce the risk of errors or misconduct.
The report may be used as a reference tool for management, employees, and auditors to understand the allocation of duties and responsibilities related to compliance within the organization.
The Exception SoD Report
An Exception Segregation of Duties report is a report that lists exceptions or deviations from the normal segregation of duties within an organization.
It would typically list instances where an individual has been granted temporary or permanent waivers to perform duties that would normally be separated for control purposes.
These exceptions may be necessary for certain situations, such as when an organization is short-staffed or when an individual has unique skills or knowledge that are required to perform a particular task.
The Exception SoD report may be used to track and monitor these exceptions to ensure that they are properly justified and that the risks associated with them are being effectively managed.
It may be reviewed by management, internal auditors, or external regulators to ensure that the organization’s internal controls are effective and that any exceptions to the Segregation of Duties are adequately documented and controlled.
The Continuous monitoring SoD Report
A Continuous Monitoring Segregation of Duties report is a report that is used to monitor and track changes to the segregation of duties within an organization on an ongoing basis.
It usually lists the different functions and responsibilities within the organization and how they are separated.
It is updated regularly to reflect any changes, such as when new employees are hired or when existing employees are reassigned to different roles.
It can also be used to identify potential weaknesses or gaps in Segregation of Duties and to develop corrective action plans to address these issues.
Note that the specific format and content of different reports may vary depending on the needs and goals of the organization.
Some organizations may use a simple spreadsheet or table to describe the various roles and responsibilities, while others will use more complex software tools to create more detailed and comprehensive reports.
Why is the SoD Report Important?
SoD reports are important because they provide a summary of the segregation of duties controls in place in an organization.
These reports help management identify and correct control weaknesses that may exist, and ensure that the organization’s internal controls are effective in reducing the risk of errors, fraud, and other problems.
At VASPP, we offer a comprehensive tool that will not only allow you to generate SoD reports but also to track and assess SoD risks in real time.
With GRC Access Enforced and GRC Analytics, all information is centralized and can be shared with a few clicks, greatly reducing the risk of fraud and other violations.
Want to learn more about the Segregation of Duties? Check out our Complete Guide to SoD
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