"Mastering Segregation of Duties with Minimal Staff"
Having worked in banking and finance, I can tell you that one of the first things they teach you is segregation of duties or dual control. It's counting your cash drawer, entering a transaction, and then having someone else review and check your work.
These steps help keep everyone honest and allow for verification that everything is accurate (or inaccurate). However, this arrangement becomes difficult for small businesses because there are not always enough people to achieve traditional segregation of duties.
No matter the size of the business, there are critical processes that you must protect.
As a small business owner, your role in achieving this with minimal staff is crucial. Let's explore how you can make this happen.
Well, let's walk through a few options.
If you've been with me for a while, you'll have seen this article on the overall concepts of segregation of duties here. But today, we'll delve into a bit more detail on how this might work for your small business. A few things to consider:
Critical processes: The first thing to consider are the processes that, if done incorrectly or nefariously, could cost you a lot of money. These usually involve money, your team, and vendors. If someone can create a vendor, input a payment, and sign a check, they can falsify many records and steal a lot of money.
Oversight: Where do you, as a business owner, fit in these processes? Have you just turned it over? Do you know what's happening in your business? If you don't, then look at how you can frequently review this process yourself.
Functionality: What is the assigned function of the person completing the tasks? Do they have related functions that allow them to control or manipulate upstream or downstream functions fully? If so, then you should do some reconfiguration or insert some oversight.
Implementing stop gaps or segregation of duties may seem daunting, but with some practical ideas, it's entirely feasible. Let's explore these solutions together.
If you can't have more than one person doing a task, there are not enough people, or it just doesn't make sense. Then, make sure you have frequent reconciliations as a business owner. If it's a bank reconciliation, a payroll reconciliation, or even a review of employee records, you must ensure you're reviewing them.
Remember, segregation of duties is more than just signing off on tasks. It's about fostering open communication within your team. Encourage them to ask questions, challenge the norm, and always be vigilant. This is how these concepts truly come to life.Finally, if you want to outsource critical processes, you'll still need to have oversight within the process itself. Turning them over is still a risk to you and your business.
Want to know more about how to protect your business? Check out our Segregation of Duties eguide! Get it here.
