In a business, it is important to separate employee duties as it can help safeguard your assets among many other beneficial components. Separation of duties can help you place internal controls over the assets of your company. Separation of duties can help you practice bookkeeping more efficiently and effectively as it prohibits the allocation of responsibilities to one person.
Application in General Business and Accounting
In general business and accounting, segregation of duties serves two key purposes. These purposes include assurance that you are able to review and catch errors easily if there is an oversight and it also prevents theft and fraud. Separation of duties is an important phenomenon as it is involves the separation of three main functions: 1. Custody of assets 2. Authorized use of assets 3. Keeping records of assets. Although separation of duties is difficult to achieve in small business, it should be implemented as much as possible to improve the performance of the employees in the organization.
Application in Information Systems
Business owners never wan fraud to occur in their company. However, it can occur when a single person handles more than one step of the transaction style. This often happens in small businesses as there aren’t many employees. That is why it is essential to set clear roles and responsibilities for each job. This gives employees a thorough list of the tasks they are expected to do, when they should perform them, and who will be reviewing their work. It plays an pivotal role in the accountability of employees. Without various levels of accountability, even the best organizations can be rendered meaningless. By separating the duties of employees, work performance is enhanced. Business owners should separate the duties of each employee so that their skills can be polished and to deter the staff from committing fraud.
When this process is implemented, the credibility of accurate financial reporting is vastly increased. This reduces the risk of fraud as it assures the creation of a culture of accountability. It protects the business from any type of unnecessary or unplanned loss. Separation of duties can increase efficiency towards the aims and objectives of an organization. This assures that your employees are not burdened with huge workloads and you are providing a stress-free environment. Involving multiple employees in a single task can prevent any type of potential error. Involving more than one person in the transaction cycle can prevent one person from gaining complete control over a single process. Therefore, the opportunity fraudulent behavior is reduced.
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