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#1167944 - 04/22/09 03:40 PM Segregation of Duties concern
whistler Offline
Junior Member
Joined: Jun 2008
Posts: 39
We are a small institution (less than $250m). We have one individual who does the majority of our bookkeeping/accounting function which includes entries to the general ledger and various balancing responsibilites. The same individual is also responsible for creating new customer's on our core banking system.

Potential problem, or not? How risky is this?

Personally, I don't believe this person should have access to maintenance customer accounts, but can't seem to link together a persuasive argument, other than simply stating fraud potential.

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Audit
#1168734 - 04/23/09 02:41 PM Re: Segregation of Duties concern whistler
GoneToTexas Offline
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Joined: Jul 2007
Posts: 130
Texas
This sounds like a disaster waiting to happen. This person has a hand in everything from start to finish - setting up accounts, performing maintenance, making general ledger entries, and even balancing. Segregation of duties does not eliminate the possibility of fraud, but it does reduce the opportunity for a person to commit and/or conceal fraudulent activities or errors.

It doesn't matter that this person is honest and trustworthy. I can't count the number of times I've heard people say "I never would have dreamed this person was capable of something like this!" One of the reasons people commit fraud is opportunity, and I'd say this person has plenty of that.

I would think your examiners and external auditors would have something to say about this as well.

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#1169001 - 04/23/09 05:23 PM Re: Segregation of Duties concern GoneToTexas
RR Sarah Offline
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RR Sarah
Joined: Mar 2004
Posts: 2,486
Up North
If it is not possible to segregate duties (as is sometimes the case in smaller institutions), do you have compensating controls in place?
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Sometimes you have to burn a few bridges to keep the crazies from following you.

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#1169059 - 04/23/09 05:56 PM Re: Segregation of Duties concern RR Sarah
A_G Offline
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Joined: Jul 2004
Posts: 18,958
Is there someone reviewing the reconciliations?
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With the lights out, it's less dangerous.

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#1169465 - 04/23/09 09:49 PM Re: Segregation of Duties concern A_G
whistler Offline
Junior Member
Joined: Jun 2008
Posts: 39
IMO we have people whose time is not fully utilized that could set up new customers.

Compensating controls smile

Some reconciliations are reviewed, some not. Report review is minimal and seems to be of the minimal scan and sign method. The supervisor of this individual is stretched thin acting as CFO, head cashier, lender, manager, as well as deposit account maintenance so based on that my gut reaction is, in general, the activity bankwide is not properly scrutinized by management.

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#1169546 - 04/24/09 12:29 PM Re: Segregation of Duties concern whistler
DerrickAuditor Offline
Member
Joined: Mar 2008
Posts: 91
USA
It would be best for the duties to be segregated. If that is not possible, there needs to be a detailed meaningful review of all of her work.

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