Pol-Segregation of Duties
policy Segregation Duties modified Tue Oct 18 2022 10:22:06 GMT-0400 (Eastern Daylight Time)
University of Louisville
Segregation of Duties
March 1, 2015
This policy applies to University Employees (administrators, faculty, and staff).
REASON FOR POLICY
Segregation of duties is a fundamental component of an effective system of internal control within a business or organization. This policy addresses the segregation of duties as they relate to financial transactions and custody of assets.
Departmental business functions should be distributed between departmental staff to ensure that adequate segregation of duties exist within the University’s business units, service centers, or other internal operations which have the responsibility and authority to:
- Access cash.
- Make purchases through accounts payable or procurement cards.
- Manage payroll.
- Authorize disbursements.
- Manage revenues, billing, sales, collection of receivables or assets.
Segregation of duties is broadly defined as the separation of the custodial, record-keeping and authorization functions of a business process to ensure that no individual employee has the ability to initiate, approve, record, and reconcile departmental transactions or possess overall control over major functions within a business unit.
In situations where staff may have over-lapping duties or the confidentiality of transactions are in question, more reliance on departmental oversight is mandated to ensure internal control is monitored and maintained for the unit. In addition to strengthening internal controls, shared responsibilities and reporting oversight often produce benefits such as process improvements, greater transaction and reporting accuracy, training opportunities and measured accountability.
In summary, no single employee should have the authority to conduct two or more of the following business functions without the implementation of a compensating/mitigating controls, such as supervisor review and oversight of the work performed by that individual:
- Initiate a transaction.
- Approve a transaction.
- Record a transaction into the University financial system.
- Reconcile accounts.
- Maintain assets.
Departmental procedures should describe the roles, responsibilities, and approval authority assigned to employees that clearly defines the segregated duties. These procedures should also identify the system controls in place to adequately segregate access to transaction processing within the University financial system.
Vice President for Finance and Chief Financial Officer
RESPONSIBLE UNIVERSITY DEPARTMENT/DIVISION
Service Complex, Louisville, KY 40292
*This policy was approved by the Finance Committee on July 12, 2018 and the Board of Trustees on July 19, 2018.
Revision Date(s): May 3, 2020
Reviewed Date(s): May 3, 2020
The University Policy and Procedure Library is updated regularly. In order to ensure a printed copy of this document is current, please access it online at http://louisville.edu/policies.