Internal Control Tools: Segregation of Duties
Examples: The boxes below identify some of the potential key (and high risk) transaction types with general guidelines for segregating duties for illustrative purposes. This is a conceptual overview; it may not reflect actual controls built into our financial systems.
| Initiates | Authorizes | Records | Reconciles ** | Controls (Custody) | |
|---|---|---|---|---|---|
| Purchase of goods | Issues Requisition - Person A | Approves P.O./Invoice - Person B | University Records - Accounting/Accounts Payable | Budget Report - Person C | Receives Goods - Person C or D |
| Purchase of Services | Issues Requisition - Person A | Approves Payment & Verifies Receipt of Services - Person B | University Records - Accounting/Accounts Payable | Budget Report - Person C | Disburses Check - Accounting/Accounts Payable |
| Cash Receipts | Opens Mail, Lists Checks, Restrictively Endorses - Person A & B (Dual Custody at all times) | Make Deposit - Person A & B (Dual Custody at all times) | University Records & Department Records - Accounting & Person B | ank Acct/Deposits to Checklist Accounting Budget Report - Person C | N/A |
| Payroll | Employee’s Time Report | Approves Time Report and Payroll Data Changes - Person A | University Records - Accounting/Payroll Policy Office | Budget Report Review - Person B | Distributes Payroll Checks - UC Path Center or Direct Deposit |
| Inventory* | Issues Requisition - Person A | Approves P.O./Invoice - Person B | University Records & Department Records (Issues & Receipts) - Accounting | Departmental Records to Budget Reports & Physical Counts - Person C (Custodian Manager) | Receives & Disburses Goods - Person A |
* Physical Counts should not be under the control of persons responsible for custody recording
** For Budget Report Reviews, this might be the Divisional Finance Leader (DFL) through the review of the required quarterly financial reviews; however, budget reviews may also be performed on a more frequent basis by department heads at the discretion of the DFL.