The Procurement Glossary » Segregation of Duties (SoD)

Segregation of Duties (SoD)

Compliance & Risk

Also known as: SoD

Definition

A control principle that splits critical steps among different people so no one individual controls a whole transaction.

Explanation

SoD prevents fraud and error by ensuring, for example, that whoever raises a PO cannot also approve and pay it. It is a foundational financial control, enforced through system roles and permissions.

Example

SoD rules mean the person who creates a vendor record cannot also approve its payments.

Related terms

• Internal Controls — The policies, procedures and system checks that safeguard assets, ensure accurate records and prevent fraud.
• Procurement Fraud — Dishonest activity to gain improperly from the buying process — such as kickbacks, phantom vendors or invoice fraud.
• Delegation of Authority (DOA) — The formal policy defining who can approve spend and up to what value, at each level of an organisation.
• Audit Trail — A complete, time-stamped record of the steps and approvals in a transaction, showing who did what and when.

Frequently Asked Questions

What is Segregation of Duties (SoD)?

A control principle that splits critical steps among different people so no one individual controls a whole transaction. SoD prevents fraud and error by ensuring, for example, that whoever raises a PO cannot also approve and pay it. It is a foundational financial control, enforced through system roles and permissions.

Can you give an example of Segregation of Duties (SoD)?

SoD rules mean the person who creates a vendor record cannot also approve its payments.

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