Separation-of-Duties (SoD), also known as Segregation-of-Duties, is a security principle that is used by organizations to prevent fraud and error. Because of that, SoD is a critical component of many regulatory mandates such as Sarbanes-Oxley and the Gramm-Leach-Bliley Act. However, with the increase in systems that organizations use to run their business; creating, maintaining and policing SoD policies has become difficult at best and impossible at worst. Learn how implementing proper SoD controls can reduce risk, improve compliance, and increase operational efficiencies.
What is Separation-of-Duties (SoD)?
Separation-of-Duties is an internal control that relies on role-based access controls (RBAC) to prevent error. With SoD, different user identities (whether individual, team-based, or third-party) have distinct roles, each with separate duties within a transactional workflow. A common example is when people are handling money and there are separate teams that receive funds from vendors versus a team that distributes funds to vendors. By separating these tasks across two different teams, organizations can avoid a single party committing fraud and thus minimizing the risk of a crime.
What is a Separation-of Duties Policy?
SoD policies are the processes, guidelines and/or rules that an organization has created to make sure security controls are in place while also balancing operational efficiencies and costs. Initially, organizations had to manually create and manage these policies and then manually audit them to maintain compliance. This led to SoD policies that were out of date and inaccurate while also increasing employee time trying to maintain and fix the policies. Today, there are tools that allow organizations to easily create, maintain and audit SoD policies using automation and analytics.
What are SoD Violations?
If a user exploits their given access by performing actions prohibited by company policy or industry regulations, it’s considered a violation. However, violations technically occur when a user gains control of more than one stage of a workflow that they should not have. This could be having the ability to perform both buyer setup and enter vendor invoice, bank reconciliation and vendor payment approval, or product ordering and accounting inventory, among others. SoD, when applied correctly, uses internal controls to prevent these conflicts of interest and improve security and compliance.
Why is SoD Important for Compliance?
Separation-of-duties inherently improves compliance as it removes the possibility of single-source control and encourages internal process evaluation. By limiting each user’s access to only what is required, organizations can better mitigate risk. Of course, this process can quickly become complicated, especially in the assignment of roles—so organizations should create a set of standard roles for each type of activity (e.g., accounting, management, etc.) and not get carried away. SoD also allows you to detect and address violations early—including those regarding specific practices, like SOX or GDPR—to avoid more significant issues moving forward. Finally, practicing continuous audit is crucial for an effective implementation. With the proper software tools and processes such as SoD risk analysis and detailed audit controls, organizations can anticipate possible violations and identify unseen violations quickly and efficiently.
See how SoD policy management can prevent conflicts of interest, build and enforce custom policies across applications, and meet your organization’s compliance needs.
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