Manager, Corporate Compliance

Segregation of duties вЂ" a summary:

A fundamental element of internal control is the segregation of certain key duties. Segregation of duties consists of controls that represent the separation of incompatible business duties and/or responsibilities. Adequate segregation of duties reduces the likelihood that errors (intentional or unintentional) will remain undetected by providing for separate processing by different individuals at various stages of a transaction and for independent reviews of the work performed. More specifically, segregation of duties helps to ensure that one person is not able to:

• Conceal errors/irregularities;

• Cause the inaccurate or incomplete reporting of financial information; and

• Commit fraud, theft, or other illegal acts.

In addition, the segregation of duties provides a safeguard to staff against the possibility of unintentional damage through accident or incompetence - 'what they are not able to do (on the system) they cannot be blamed for'.

Finally, the Sarbanes-Oxley Act of 2002 (“SOx”) specifically states the need for good segregation of duties controls. As part of its assessment regarding internal controls, management must demonstrate that it has contemplated the segregation of duties in the design, documentation, and testing of its internal control environment.

The basic idea underlying segregation of duties is that no employee should be in a position both to perpetrate and to conceal errors or fraud in the normal course of their duties. In general, the principal incompatible duties to be segregated are:

• Custody of assets вЂ" access to and/or control of physical assets;

• Authorization