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Segregation of Duties

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Segregation of Duties
One element of IT audit is to audit the IT function. While there are many important aspects of the IT function that need to be addressed in an audit or risk assessment, the fundamental element of internal control is the segregation of certain key duties, especially as it relates to risk. The basic idea underlying segregation of duties (SOD) is that no single employee should be in a position both to perpetrate and to conceal errors or fraud in the normal course of their duties. Similar to traditional SOD in accounting functions, SOD in IT plays a major role in reducing certain risk, and does so in a similar fashion as well.
Duties that should be segregated include:
1. Custody of the assets
2. Authorization
3. Recording transactions
If adequate segregation of duties does not exist, the following could occur:
1. Misappropriation of assets
2. Misstated financial statements
3. Inaccurate financial documentation (i.e. errors or irregularities)
4. Improper use of funds or modification of data could go undetected
5. Unauthorized or erroneous changes or modification of data and programs may not be detected As the figure 1 shows, there are some of the key roles and functions that need to be segregated.
1. IT Duties vs. User Departments
The most basic segregation is the segregation of the duties of the IT function from user departments. Generally speaking, this means the user department does not perform its own IT duties. While a department provides its own IT support, like the help desk, it should not do its own security, programming and other critical IT duties. Mixing critical IT duties with user departments would increase risk associated with errors, fraud and sabotage.
User departments should be expected to provide input into systems and application development (i.e., information requirements) and provide a quality assurance…...

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