Purpose

• Segregation of duties reduces the risk of employees making innocent mistakes or willingly engaging in inappropriate activity. The policy states that one individual should never be the only one able to handle all phases of a single transaction, such as payroll duties.
  
  

System of Checks and Balances

• Segregating duties is a way of installing a system of checks and balances in the workplace. Separating duties allows companies and institutions to safeguard their assets and make sure proper records are being kept.
  
  

Challenges

• Segregating duties effectively is difficult for small business that have small numbers of employees. When this is the case, a greater reliance on administrative oversight is necessary to ensure mistakes or intentional fraud is discovered quickly.