3.2 Roles and responsibilities

The general principles that govern effective separation of duties can be summarised as follows:

• separate custody of assets from accounting
• separate authorisation of transactions from custody of related assets
• separate duties within the accounting function
• separate operational responsibility from record keeping responsibility.

The term ‘separation of duties’ implies that one person’s work serves as a complementary check on another’s. This definition covers the concept that no one person should have complete control over any transaction from initialisation to completion. Having adequate separation of duties has a major impact on ensuring that transactions are valid and recorded properly.

Adhering to all these principles may not be possible due to resource limitations or other considerations. In these cases, the risk resulting from inadequate separation of duties should be assessed to ensure that the level of exposure is acceptable to CO management. In many cases, compensating controls exist to reduce risk. In other cases, additional resources may need to be sought to increase controls.

The core financial structure should provide for the following:

• Approval-The person who reviews a transaction for accuracy, validity, appropriateness and proper authorisation. The approver determines if a transaction should continue. For some types of transactions, there may be more than one approver.
• Authorisation-The person responsible for authorising a transaction, such as purchase requisitions, purchase order, journal voucher, payroll and payroll adjustments. Special attention must be given to ensure that the correct accounting information (including references to donor budget line item number) and documentation is provided.
• Cashier-The person who receives cash or cheque payments on behalf of CARE from employees and/or other external parties.
• Data entry-The person responsible for entering a transaction into the Financial Information System.
• Ledger reconciliation-The person who reviews and reconciles the general ledger every month to identify errors or discrepancies, and either resolves them or brings them to the attention of supervisors.
• Financial reporting-The person responsible for ensuring quality and completeness of financial data that is submitted to the office/location where consolidation takes place.

The following table presents the recommended separation of responsibilities consistent to the roles and principles of separation of duties: