University System of Georgia

Separation of Duties Matrix

Introduction
The concept of Segregation of Duties is to separate the major responsibilities of authorizing
transactions, custody of assets, recording of transactions and reconciliation/verifcation of transactions
for each business process. From a separation of duties perspective, the completion of more than one of
these functions would be considered performing "incompatible duties". n other words, no one
employee should have responsibility to complete two or more of these major responsibilities. !owever,
sta" limitations may ma#e this impractical and that is when $ompensating controls must be considered.
The attached matrices have been developed to assist you in structuring proper separation of duties and
identifying areas where separation of duties is lac#ing. They will cover the most common processes that everyone
should have %$ash, &etty $ash, nvestments and Treasury, &urchasing, &ayroll, nventory, Fi'ed (ssets and )eneral
*edger+.
,hen completing these forms, if you identify employees who perform two or more tas#s for each
business process area, you will need to determine if those tas#s would be considered a performance of
"incompatible duties". f so, you will need to consider compensating controls or revise duties.
,e should always strive for the optimum degree of segregation of duties. !owever, due to limited sta" sizes at
some schools, optimum separation of duties cannot be achieved. n those circumstances you should at least
strive for an acceptable%minimal+ level of segregation of duties which when combined with compensating controls
will minimize the impact of control defciencies and e'posure to errors or irregularities. ( minimal level of
segregation of duties could possibly be achieved by verifying that no one employee performs more than two of the
"incompatible duties". For e'ample, an employee might perform the authorization and verifcation/reconciliation
functions but they should not record the transaction or maintain custody of assets. ( compensating control would
be managerial review.
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Cash/Check andling !"eceipts# Dis$ursements# "econciliation%
&% "eceives Cash/Deposits
'% "econciles Cash "eceipts to Daily Cash
(% )repares *ank Deposit
+% Takes Deposit to *ank
,%
"ecords Deposit Transaction into *anner !or other Su$sidiary ledger%
-% "econciles Deposits to amounts recorded in G/.
/% "evie0s Cash "econciliations
1%
2% )repares Check "e3uests
&4% 5pproves Checks for )ayment and affixes signature
&&% Mails 6endor Checks
&'% 7nitiates 8ire Transfers
&(% 5pproves 8ire Transfers
&+% Creates postive pay file and transfers to *ank
&,% )osts Dis$ursements to Su$sidiary ledger
&-% "econciles Dis$ursements from Su$diary ledger to G/.
&/% "evie0s G/. reconciliations
&1% Maintains Check Stock
&2% Maintains Signature Stamp
'4% "econciles *ank Statements
'&% 5pproves *ank "econciliations
Suggestions for Best Practices
Compensating
Controls
)repares 6oucher )ackage for payment !Match )4# receiving evidence#
invoice%
-est practices for separating duties for the receipting function would be to ensure that the responsibilities of
receiving cash, deposit preparation and posting activity to the general ledger are separated.
-est practices for the disbursing of funds would be to ensure that the responsibilities of preparing voucher
pac#ages, preparing chec# re.uests, approving chec#s for payment and mailing chec#s are separated.
-an# reconciliations should be prepared by someone who is not involved in the cash receipts or
disbursement function if at all possible. (lso, ban# reconciliations should always be approved by supervisory
level personnel who are not involved in the daily cash activities.
,hen sta" size limits separation of duties, the following compensating controls may help limit the severity of
control wea#nesses/
0ome of the non1technical duties, such as ta#ing deposits to the ban#, maintaining chec# stoc#, etc.,
could be performed by administrative sta" not involved in cash or accounting related functions,
possibly even sta" from other departments.
2onitoring and review of receipting and disbursement activity by supervisory personnel not directly
involved with daily processing could be added as compensating controls.
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Compensating Controls
)etty Cash
&% Dis$urses )etty Cash
'% "econciles )etty Cash
(% "eplinshes )etty Cash fund
+% )osts )etty Cash 5ctivity to G/.
Suggestions for Best Practices

)enerally one person should be designated as petty cash custodian. This person
disburses petty cash and turns in vouchers to have fund reimbursed.
&etty cash custodian should not have access to post activity to general ledger or
replenish petty cash fund.
&etty cash counts should be made on periodic basis by someone independent of
petty cash process.
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7nvestments and Treasury
&% 7nitiates re3uest to open $ank accounts
'% 5uthori9es opening of ne0 $ank accounts
(% 5dds ne0 account information to G/.
+% 7nitiates invesment transactions
,% "evie0s and approves investment transactions
-% )osts investment activity to the G/.
/%
"econciles 7nvestment 5ccounts to amounts reported on G/.
1%
Maintains investments !ie# stock certificates# cd:s# etc%
Suggestions for Best Practices
3nly members of senior management should be able to authorize opening of new ban# accounts.
4mployee responsible for reconciling investment activity should be independent of investment process.
Compensating
Controls
Treasury type activities such as opening ban# accounts and authorizing signatories should not be performed
by employees involved in daily cash activities.
4mployee entering investment activity into the )eneral *edger should not be same person that
initiated and authorized the transactions.
nvestments should be maintained by someone who is not directly involved in day to day investment process.
This might be an area for senior management, because they are usually not directly involved with day to day
processing.
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)urchasing
&% 7nitiates )urchase ;rder "e3uisitions
'% 5pproves )urchase "e3uisitions
(% )repares )urchase ;rder
+% 5pproves )urchase ;rder
,% Modifies Master 6endor file
-% "eceives goods from 6endor
/% Modifies or "econciles 7nventory "ecords
1% 5pproves 6endor 7nvoices for )ayment
Suggestions for Best Practices
,hen sta" size limits separation of duties, the following compensating controls may help limit the severity of control wea#nesses/
!ave person independent of purchasing process chec# bills of lading and receiving evidence to inventory records.
Compensating
Controls
f &urchase 5e.uisitions are utilized, they should be reviewed and approved by someone other than
employee initiating the re.uisition.
For most e"ective separation of duties, employees involved in the purchasing function %initiating
re.uisitions, creating purchase orders, approving purchase orders+ should not have disbursement related
responsibilities. These employees should not be able to approve invoices for payment, record invoices,
receive goods, maintain inventories, or modify 6endor 2aster fles.
&roduce reports of purchase orders and subse.uent payments from the accounting system and have a
supervisory level employee independent of the purchasing function review the reports for accuracy. !ave
employee pay particular attention to payments to new vendors.
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)ayroll
&% "esponsi$le for Modifying <mployee Master =ile
'% 5pproves modifications to <mployee Master =ile
(% )repares payroll file for processing
+% 5pproves payroll file
,% Generates )ayroll Checks
-% Distri$utes )ayroll checks or initiates direct deposits
/% "evie0s and approves final payroll report
1% "ecords payroll expense in G/.
2% "econciles payroll su$sidiary module to G/.
Suggestions for Best Practices
&rocessing of payroll should be separated from approval function.
4mployee not involved in payroll functions should investigate and reconcile returned payroll chec#s or rejected direct deposits.
4mployee outside of direct payroll functions should post payroll journal %initiate jounal generation+ to general ledger.
5econciliations should be performed by employee who does not have ability ma#e journal entries or otherwise modify payroll.
,hen sta" size limits separation of duties, the following compensating controls may help limit the severity of control wea#nesses/
Compensating
Controls
7o one employee should have total responsibility for modifcations to the 2aster fle. 3ne employee should initiate the change and a
second employee should review and authorize the change. The employee who initiated the change could then ma#e the change. 0ince
this employee has access to the 4mployee 2aster fle, this employee should not be directly involved in payroll process.
,hen a third party service provider is used, best practices would suggest that changes to 2aster fle data should be communicated to the
third party by employee who is not involved in recording of payroll activity, preparing reconciliations or chec# distribution.
!ave supervisory level employee who is not directly involved with the payroll process review and approve payroll fles prior to and
after fnal processing.
8tilize (nalyticals to verify accuracy of wages by reconciling gross wages to 9:; reports and ,1<=s. (lso, payroll e'penses could be
compared to budgeted amounts on periodic basis.
f an employee involved in the payroll process also maintains the 4mployee 2aster fle, consider generating a report of all payroll
changes and have supervisory level employee review the changes against &ersonnel (ction 5e.uest forms.
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7nventory
&% "eceives goods from 6endor
'% )erforms physical inventory counts
(% Modifies inventory records
+%
"econcilies physical inventory counts to inventory records
,% "econciles inventory records to G/.
-% "evie0s reconciliation of inventory records to G/.
/% Disposes of o$solete !scrap% inventory
1%
"ecords ad>ustments !>ournal entries% to inventory records and G/.
Suggestions for Best Practices
&hysical nventory counts should be performed by someone who does not have custody of inventory.
Compensating
Controls
-est practices suggest that employees who receive goods from vendors should not be involved in purchasing or cash
disbursement functions.
4mployee who has access to ma#e modifcations to inventory system should not have access to ma#e adjustments
to general ledger
5econciliation of inventory system to physical counts and the general ledger should be performed by someone not
responsible for maintaining the inventory system.
3n inventory disposals, one employee should not be able to initiate and approve the disposal and also record these
adjustments on the inventory system and the general ledger.
,hen sta" size limits separation of duties, the following compensating controls may help limit the severity of control
wea#nesses/
f physical counts cannot be performed by employee independent of the inventory process, then spot chec#s
of inventory counts should be made by employee who is not custodian of inventory assets or responsible for
recording inventory on accounting records.
f unable to ade.uately separate duties of maintaining inventory system from reconciliation and posting, one
suggestion would be to have supervisory personnel receive reports of changes to inventory balances, paying
particular attention to manual changes and adjustments.
f disposal activities cannot be ade.uately separated, a supervisory level employee could review and approve
a listing of items identifed for disposal against actual disposals recorded and income received from scrap
sales.
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Compensating Controls
Capital 5ssets
&%

'% 5pproves )urchase of Capital 5ssets
(% 5pproves Capital 5sset Disposals
+% Disposes of Capital 5ssets
,%
"ecords Capital 5sset additions and disposals in 5sset Management module
-% )erforms periodic physical counts of Capital 5ssets
/%
"econciles physical Capital 5sset counts to 5sset Management su$?system
1% Makes ad>ustments to 5sset Management su$?system
2% "econciles 5sset Management su$?system to G/.
&4%
"evie0s reconciliation of 5sset Management su$?system to G/.
&&%
Suggestions for Best Practices
0ome entities hire outside inventory service agencies if sta" is not ade.uate.
7nitiates )urchase of Capital 5ssets !This may $e covered in )urchasing 5rea
a$ove%
Maintains Capital 5sset su$?system !updates Master file for asset categories#
useful lives and depreciation ta$les%
2aster fles of asset categories and depreciation tables should be restricted and not available to employees who are
authorizing, recording and reconciling f'ed assets.
4mployees responsible for authorizing purchases or disposals of capital assets should not have access to recording
transactions in f'ed assets ledger.
&eridic physical counts should not be performed by person%s+ with authorization or record #eeping responsibilities.
(djustments to the f'ed assets system should be reviewed and approved by a supervisory level employee not involved
in maintaining f'ed assets.
(sset management sub1system should be reconciled to general ledger by someone not responsible for the f'ed assets
sub1system.
,hen sta" size limits separation of duties, the following compensating controls may help limit the severity of control
wea#nesses/
f purchasing and disposition procedures cannot be ade.uately separated, system reports of all f'ed asset
additions, deductions and disposals could be reviewed and approved by a supervisory level employee not involved
in the f'ed assets process.
f recording and reconciliation procedures cannot be ade.uately separated, a supervisory level employee not
involved in the f'ed asset process could review reconciliations of the f'ed assets sub1system to the general
ledger as well as reviewing a system generated report of all adjustments made to correct discrepiencies between
the sub1system and the general ledger to help substantiate accuracy of recorded amounts.
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General .edger
&%
"esponsi$le for modifying !adding# deleting# mapping % G/. accounts '%
(% 5pproves changes to G/. accounts
+% )repares >ournal entries for posting
,% 5pproves >ournal entries
-% )osts >ournal entries
/% )repares financial statements from G/.
1% 5pproves financial statements
Suggestions for Best Practices
4mployees responsible for preparing/initiating a journal entry should not be able to approve or record the journal entries.
)enerally, the $hief Financial 3>cer, $ontroller and accounting department personnel should not have access to modify
general ledger accounts or change mappings for these accounts. 7ormally these changes should be made by T
personnel after approval by $F3 or $ontroller.
Financial statements should be approved by supervisory personnel at a higher authority level than person preparing the fnancial
statements.
f the general ledger system is confgured so that journals cannot be approved prior to posting a compensating control
would be to print a report of all journal entries at the end of each period and have a supervisory level employee who
does not have access to record transactions review and approve the transactions that have been recorded.
Compensating Controls
Financial statements should be approved by supervisory personnel at a higher authority level than person preparing the fnancial