Fraud and error risks rise significantly when individuals can both initiate and approve payments. That is why segregation of duties (SoD) remains one of the most scrutinized areas during internal payment audits. Effective preparation ensures that organizations can demonstrate strong SoD practices supported by evidence.
The foundation lies in a role-based access matrix. Organizations should map out who has authority to initiate, approve, and reconcile payments. This mapping must align with policy and be reflected in system permissions. Auditors often request this documentation as a first step in assessing SoD.
Next, organizations should conduct periodic access reviews. Even if access rights were correctly configured initially, staff movements, role changes, or system upgrades can create conflicts. Preparing for an audit requires demonstrating that access reviews are performed regularly and that conflicts are promptly remediated.
Another area of focus is dual authorization controls. High-value or high-risk payments should require more than one approver, ideally from different reporting lines. Documenting thresholds, exceptions, and actual approval logs is critical evidence for auditors.
Technology also plays a role in SoD preparation. System-enforced controls reduce reliance on manual monitoring. For example, payment platforms should block users from approving their own transactions. Demonstrating these automated safeguards gives auditors confidence in control strength.
Audit readiness should include testing for SoD violations. Internal teams can perform simulations or analytics to identify cases where an individual’s actions breached defined roles. Highlighting findings and corrective measures shows auditors that management takes SoD seriously.
In addition, compensating controls should be documented. Small organizations may not have enough staff to fully segregate duties. In these cases, oversight mechanisms such as post-payment reviews, independent reconciliations, or audit trails must be in place.
Clear communication is equally important. Staff involved in payments should understand why SoD matters and how their roles contribute to fraud prevention. Training materials and attendance records can further support audit preparation.
When organizations prepare effectively around SoD, they not only reduce audit risk but also protect against fraud, error, and reputational damage. Strong SoD demonstrates to auditors and stakeholders that payment processes are designed with integrity at their core.
