What is Segregation of Duties?

Segregation of Duties (SoD) is a fundamental principle of internal control that prevents fraud and errors by dividing critical functions among different individuals or departments. No single person should be able to initiate, authorize, record, and reconcile a transaction. This helps to ensure that no single individual has enough control to commit fraud or make errors without detection. Common examples include separating the duties of approving invoices from paying them, or separating the duties of creating vendor records from creating purchase orders.