Enforce Governance and meet Compliance for a zero-trust, least-privilege security posture
Segregation of duties (SoD) is a control mechanism that ensures critical tasks within a business process are divided among different employees. For example, no single employee can create a vendor, approve an invoice, and then release a payment to that vendor. The risk is high in this situation because there is a low chance of detecting fraud when it is committed by a single individual.
Most companies know that this risk exists. But, enforcing SoDs has proven to be difficult for various reasons, including employee turnover, the accumulation of access permissions from previous roles, and frequent changes in job responsibilities within the organization.
IGA (Identity Governance & Administration) systems enforce segregation of duties by evaluating access requests, roles, and entitlements against defined SoD policies across the identity lifecycle. It helps organizations enforce Segregation of Duties effectively.
Segregation of duties is an internal check that breaks important jobs into pieces and assigns them to different people, ensuring no single person controls an entire process. Involving at least two people reduces the chances of undetected fraud. Effective SoD frameworks separate responsibilities between 4 independent functions:
When one individual is responsible for two or more functions for the same process, there is no way to verify the accuracy of those functions independently. Therefore, fraudulent behavior or mistakes may go undetected for a long period. IGA tools like RoboMQ’s Hire2Retire help prevent this by automating access control and enforcing proper role-based separation.
The segregation of duties in accounting is where most of the financial fraud begins. For example, the employee who sets up a vendor should not be the same employee who approves the payment to that vendor. Also, the employee who creates a journal entry should not be the same employee who approves it. These reasons reveal some of the common scenarios where businesses lose money through fraud.
The ACFE estimates that organizations lose an estimated 5% of annual revenue to fraud annually, with a median loss of $145,000 per case. Proper SoD controls are specifically designed to prevent these losses.
The same logic applies to the segregation of duties in accounts receivable. The employee responsible for posting customer payments should not also perform account reconciliations or issue credit memos. When an employee has sole control over all three functions, he or she can easily skim (steal) customer payments or erase customer balances without anyone else knowing about it. The following are the most common permission conflicts that give rise to fraud risk:
| Conflicting Permissions | Business Area | Risk |
|---|---|---|
| Create Vendor + Approve Payment | Finance / ERP | Fraudulent vendor payments |
| Post AR Payment + Reconcile AR Ledger | Accounts Receivable | Payment skimming |
| Developer Access + Production Deployment | IT / DevOps | Bypassing quality checks |
| Access Provisioning + Access Certification | IAM / IGA | Self-approving elevated access |
| Journal Entry + Journal Approval | Accounting | Manipulating financial records |
Segregation of duties is easy to understand but hard to manage manually. With more systems, roles, and individuals (as your business expands), manually tracking who has what access is no longer feasible. In fact, 32% of occupational fraud cases trace back to a lack of internal controls, the biggest challenge organizations face, as per the ACFE. IGA tools exist precisely to close that gap.
SoD risks arise during access requests, approvals, provisioning, and as users accumulate permissions across roles over time. Every access request and provisioning event is evaluated against SoD policies before access is granted.
Identity Governance Administration (IGA) platforms like Hire2Retire ensure that Segregation of Duties (SoD) policies are reviewed whenever access is requested or granted. They manage this throughout the entire lifecycle of a user account, from joining to leaving.
The segregation of duties (SoD) Control Matrix outlines each combination of roles and permissions that should never coexist. Whenever a user requests access to a specific role, an IGA solution will refer to the SoD Control Matrix. If the IGA finds a conflict in an access request based on the SoD Control Matrix, it can either:
As a result, IGA solutions automate the segregation of duties process by:
Businesses can prevent segregation of duties issues (SoD) in two ways. They can use preventive controls, where the IGA system blocks access that creates a conflict, or detective controls, which identify existing violations through automated checks. Both are necessary: one to stop new occurrences from happening, and the other to remediate existing occurrences.
There is a need for SoD control in every major compliance framework. Here is what each one expects:
SoD policies are crucial, but they aren’t enough. You also need to ensure that they are working. This is because auditors wish to view access logs, certification records, and proof that violations were checked and resolved. While it’s hard to rely on a manual process here, an IGA platform can do it all automatically.
To know if your systems are functioning properly, you must test them against the processes and procedures in place. To do this, you should:
The implementation of IGA tools will automate much of this validation. Instead of taking weeks to perform these steps manually, you can get a report that shows your status anytime you need it.
Having manual control over SoD doesn’t scale. With a growing workforce, there are more systems and, therefore, many more gaps. Hire2Retire eliminates this issue with a built-in ability to create SoD as part of every identity event rather than as an add-on solution. Here’s what Hire2Retire does:
At the enterprise level, segregation of duties is a requirement, not an option. It provides protection against fraud, encourages accountability, and offers a defensible position in an audit, but only if it is enforced continuously.
Organizations that successfully achieve SoD view it as part of their Identity Governance and Administration (IGA) processes. Hire2Retire makes that shift easy to implement. Want to know how? Talk to our experts today and see how automated SoD enforcement works in practice.
Role-Based Access Control (RBAC) defines what users can access; segregation of duties defines the rules around how many users/roles a person can have access to sensitive processes. RBAC is the tool used to define a person’s access, while SoD is the policy that governs the use of the RBAC tool.
To test segregation of duties, start by mapping current user access to your SoD Matrix to identify conflicts. Then verify that the system denies access to all known toxic combinations. Finally, review the access log, run a certification campaign, and confirm that compensating controls are in place for any approved exceptions. When utilizing an IGA solution, this process becomes automated and available on demand.
The four-eyes principle in segregation of duties states that you must have at least two individuals give their consent before completing a critical process. The four eyes principle is one of the simplest methods to implement SoD – there is no single individual who can approve any item.
Yes, small businesses can implement SoD. Although it appears differently than it would in a larger company. Certain small businesses may not have enough employees to create proper role separation. In these cases, it’s possible to implement compensating controls, such as a weekly review of transactions by management.
At a minimum, SoD should be evaluated annually via formal access audits. Additionally, high-risk roles (i.e., finance, IT admin, HR, etc.) should be evaluated quarterly. Within an IGA solution, automatic evaluation of these controls occurs continually without any manual intervention.
