The Segregation of Duties is imperative. So is the balance for good logistics and efficency too. But how can finance departments manage these time pressures? |
Details, that's where!
The Devil is within the details. Yet, as its a case of details upon details, and time & time again, you may be too worried about the details and not the whole situation, regardless of how prepared you may be.
It is tough for even the competent preparer to eliminate cognitive bias (assuming you're right). Why? because it simply appears right.
It's also tough for anyone approving to eliminate cognitive bias - because not only does it look right to them too - however wasn't it done by a talented preparer?
Segregation of duties (or Separation of Duties) is essential to effective control because it reduces the chance of mistakes and inappropriate actions, and since it helps fight fraud by discouraging collusion.
The Segregation of Duties is important for the Audit trail function. for example, it ought to be possible for a reviewer (internal or external, like a hired Public Accountant) to recreate what went on by whom, when and how.
The second approver must fulfil consistent functions: to take up a ready reconciliation, check its details, and to drill all the way down to see what has been done and check it. If correct, the approver will securely sign it off.
But there has to be a balance. A between Segregation of Duties and therefore the enlarged effort and price it takes.
After the scandal of Enron, where the Sarbanes Oxley Act being a prime example of legal consequences for those within the financial department, it has become so crucial that reported numbers are correct.
Due to this importance, not only do they have to be correct, we also must be able to display that the procedures are too - any faults must be caught internally.
But we can't always do this.
Reconciliations are frequently processed in Excel. You might have read and write files, but is it one person processing the data?
How can you be safe in the knowledge that no-one else comes in and changes anything? How can you be sure numbers are not erased accidentally or tampered by someone else?
Some say it's printed and signed off reports that can prove this. But in order to properly check and approve the required documents, the calculations behind the end results, you will need to be able to go into that account details to check - and having it all on paper makes it very very time consuming.
Balancer from Adramatch can be used to dissolve all the needs described above, with a Segregation of Duties already built in.
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