A fundamental element of internal control is SOD, and the underlying idea is that no employee or group of employees should be in a position to both perpetrate and conceal errors or fraud in the normal course of their duties. The principal duties typically outlined as incompatible and which should be segregated are:
• Custody of assets
• Authorization or approval of related transactions affecting those assets
• Recording or reporting of related transactions
Traditional internal control relies on assigning certain responsibilities to different individuals or segregating incompatible functions. Several prominent documents highlight the principles of SOD requirements including: PCAOB AS5; AICPA Auditing Standard 99; SEC Guidance on Management requirements of internal control over financial reporting. This has resulted in some overly complex systems of internal control that become difficult to maintain and result in reduced focus on higher risk areas. This course will provide you with a better understanding of SOD along with ideas and best practices around managing SOD at your company.
It is imperative organizations take a fresh look at their SOD assignments and measure and prioritize risk areas impacted. With changing business processes along with businesses reliance on Information technology, the inability to maintain proper and efficient SOD can hamper an organizations ability to deliver service efficiently.
Publication Date: March 2019
Designed For
Accountants and Finance professionals, Internal auditors/Professionals considering the role of internal audit, Executive management/ Board members and Audit Committee members, and Legal and Compliance professionals.
Topics Covered
- SOD Criticality and Control Environment
- SOD and Fraud
- Roles related to SOD
- SOD In Processes
- SOD in Specific Processes
- SOD Procure to Pay
- SOD Disbursements/AP
- SOD Payroll
- SOD AR/Sales/Receipting
- SOD Treasury & Investments
- SOD Inventory
- Financial Statement Close
- SOD IT Processes
- Enforcing SOD
Learning Objectives
- Recognize criticality of SOD principles for finance, accounting and the office of the CFO when attesting to a positive control environment
- Describe the concept of SOD and fraud considerations
- Identify critical SOD for specific processes
- Recognize and apply procedures to enforce SOD
- Recognize which portion of the fraud triangle can be mitigated by segregation of duties
- Identify why it is difficult to have a standardized checklist for the segregation of duties
- Describe what is typically segregated in the procure to pay process
- Recognize which duty is typically performed by payroll in the payroll process
- Identify which process is acceptable to be performed by the same individual
- Recognize who is not responsible for the internal controls within the organization
- Describe how an organization needs for good internal controls
- Identify what software developers should not do for proper segregation duties
Level
Basic
Instructional Method
Self-Study
NASBA Field of Study
Business Management & Organization (2 hours)
Program Prerequisites
None
Advance Preparation
None
Instructor
Lynn Fountain
Lynn Fountain has over 38 years of experience spanning public accounting, corporate accounting and consulting. 20 years of her experience has been working in the areas of internal and external auditing and risk management. She is a subject matter expert in multiple fields including internal audit, ethics, fraud evaluations, Sarbanes-Oxley, enterprise risk management, governance, financial management and compliance. Lynn has held two Chief Audit Executive (CAE) positions for international companies. In one of her roles as CAE, she assisted in the investigation of a multi-million-dollar fraud scheme perpetrated by a vendor that spanned 7 years and implicated 20 employees. The fraud was formally investigation by the FBI and resulted in 5 indictments estimating a $13M fraud loss.
Ms. Fountain is currently engaged in her own consulting and training practice. She is a highly sought-after trainer and international speaker. In addition, Ms. Fountain has assisted numerous companies with enterprise risk management frameworks, internal audit processes and financial accounting. She also serves as a discussion leader for the AICPA for numerous classes finance, accounting and risk management topics.
Ms. Fountain is the author of three separate technical books. Her first book released in 2015 by the Institute of Internal Auditors Foundation is entitled “Raise the Red Flag – The Internal Auditors Guide to Fraud Evaluations”. Her second book “Leading the Internal Audit Function” was released in October 2015 by Taylor & Francis Publications. This book serves as the initial launch for a series of leading practice internal audit and information technology publications. Her third book “Ethics and the Internal Auditor’s Dilemma” was released in December 2016.
Ms. Fountain obtained her BSBA from Pittsburg State University and her MBA from Washburn University in Kansas. She has her CPA, CGMA, CRMA credentials.