Ever heard the saying, “Don’t put all your eggs in one basket”? When it comes to financial management, this couldn’t be more true. Segregation of duties is one of the most fundamental internal controls, designed to prevent fraud, errors, and financial mismanagement. Simply put, no single person should have complete control over a financial transaction from start to finish.

Imagine an employee who can create vendor invoices, approve payments, and reconcile bank statements. That’s a recipe for disaster. Without oversight, they could approve fake vendors, transfer funds to personal accounts, and cover their tracks—without anyone noticing until it’s too late.

The key to strong segregation of duties is breaking up responsibilities. The person who authorizes a transaction should not be the one processing the payment. The one recording financial entries shouldn’t be the one reconciling bank statements. Checks and balances like these make it much harder for fraud to go undetected.

For small businesses, segregation of duties can be challenging, but not impossible. If hiring multiple employees isn’t an option, consider using technology. Automated accounting systems can flag suspicious transactions, require dual approvals for payments, or limit user access based on roles. An external review by a trusted accountant or auditor can also serve as a safeguard.

Good internal controls aren’t about distrust—they’re about protecting the integrity of financial processes. When duties are properly separated, businesses gain transparency, reduce risk, and create a culture of accountability.

At Number Counts, we help businesses design and implement effective internal controls to safeguard their financial health. If you want to strengthen your financial security, let’s connect.