The first step to Business growth starts with separate roles and responsibilities in a startup. Separating duties means no one has the ultimate control over the whole process and everyone has their role in achieving the result or target, also known as business growth. Most small businesses don’t create teams and neglect segregating duties, which clutter the desks, causing more stress and less energy.
Separating duties in your business from the beginning can help strengthen the internal control over your assets. It can also make task performance more efficient and quicker. It helps manage your startup more efficiently by tracking the strengths, gaps, or upcoming opportunities and then hiring people with that specific skill. Although it is difficult to accomplish in small businesses, making efforts to implement it can improve the performance of the employees in your industry.
Why is it important?
“It would be meaningless to call it a business without separating roles and responsibilities.” Separating duties means separating three main functions:
- Custody of assets
- Authorized use of assets
- Keeping records of those assets
Assets, such as financial transactions, can be anything associated with your business growth. The custody of these assets should be in the management’s hands. And its authorized use should only be granted to personnel with the acquired merit. Keeping a record of these assets means monitoring all these activities and reviewing them to prevent any unforeseen loss. All of this could be hectic to manage by a single person, right? Separating duties in a startup can also minimize the chances of fraud and losses.
Clause 10.1 of ISO 27001 (operational procedures and responsibilities) states that: “duties and responsibilities should be segregated to reduce opportunities for unauthorized or unintentional modification or misuse of the organization’s assets.”
Segregating duties serve two primal functions in a startup
Number one, it assures that you can quickly go through your work if there is an oversight. And number two is that it prevents thefts and fraud.
An individual is delegated to a specific job depending on their expertise and knowledge, which gives assurance to your business. Errors and frauds often occur When a single person is responsible for more than one or all activities in an organization (mostly in small ventures since there are few employees), setting clear aims and responsibilities for every job. That individual, head authority, or the owner can go through that work to see any possible mistakes making the work system more systematic and straightforward. It also gives an idea to the employee about the tasks they are required to do, creating a sense of accountability in them.
The monetary unit of your business is the heart of the company and must be shielded from fraud risks, errors, and inefficiency. These risks are overcome by dividing duties and responsibilities in the accounting department.
For example, one person opens an envelope with checks in cash transactions, and another person records them in the accounting system. It decreases the risks of checks being removed from the company and deposited in a personal checking account. In the payroll unit, if a payroll compiles the data on gross pay or net pay and another person verifies their calculations, it discourages the payroll clerk from artificially increasing the salaries of some workers. Hence segregating duties can create a sense of financial accountability in your business.
The segregation of duties ensures that your employees do not feel the burden of the workload. It maximizes work efficiency and a stress-free environment. A team performing a single task can prevent any potential error. Holding more than one person responsible for a job can forbid one person from gaining complete control over that single process. Therefore, it reduces the possibility of fraudulent behavior. It lays the foundation of accountability.No matter the scale of business, separating duties is significant for every business. It enhances work efficiency, maximizes profitability, stops hidden fraud behavior, and sets a clear goal with responsibilities. Hence there is no drawback to separating duties among employees in a business. About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.