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segregation of duties (SoD)

Segregation of duties (SoD) is an internal control designed to prevent error and fraud by ensuring that at least two individuals are responsible for the separate parts of any task.

SoD involves breaking down tasks that might reasonably be completed by a single individual into multiple tasks so that no one person is solely in control. Payroll management, for example, is an administrative area in which both fraud and error are risks. A common segregation of duties for payroll is to have one employee responsible for the accounting portion of the job and someone else responsible for signing the checks. 

Although it improves security, breaking tasks down into separate components can negatively impact business efficiency and increase costs, complexity and staffing requirements. For that reason, most organizations apply SoD to only the most vulnerable and the most mission critical elements of the business.

Segregation of duties is also known as separation of duties.

See also: four eyes principle, risk avoidance, corporate governance, accounting error, regulatory compliance, compliance burden

This was last updated in January 2014

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