Segregation of Duties (SoD)

Category: legal

An internal control policy designed to prevent fraud and errors by distributing critical tasks among multiple personnel.

SoD is the architectural cornerstone of corporate fraud prevention. A secure financial workflow ensures that no single individual has the sole authority to execute more than one phase of a transaction lifecycle: Custody of assets, Authorization of payments, Recording transactions, and Reconciliation of balances. Splitting these duties forces internal collusion for fraud to occur.

Common Examples

• We enforced strict segregation of duties by ensuring the system engineer who writes our database code cannot also approve outbound marketing payments.
• A lack of segregation of duties inside the startup's accounting office allowed a single clerk to both print checks and reconcile the monthly bank statements.