Segregation of Duties: Practical Approaches for Small Teams

Maintaining strong internal controls with limited staffing can be a challenge. However, effective segregation of duties (SoD) remains essential to safeguarding assets, ensuring accurate financial reporting, and reducing the risk of fraud. There are scalable SoD models for entities with varying staffing levels—demonstrating that even with only two people, it's possible to implement meaningful controls.

Leverage your team

For entities with four people available to share financial responsibilities, duties can be broadly distributed across roles, including the owner, accounting staff, and two other trained individuals (such as administrative staff). In this structure, tasks such as writing checks, performing reconciliations, and distributing payroll are allocated to different individuals, while the owner retains oversight responsibilities like reviewing account activities and approving high-level decisions.

In a three-person scenario, responsibilities become more consolidated, but strategic division is still feasible. The accounting clerk handles transactional work like writing checks and reconciling bank statements, while an administrative staff processes vendor invoices and performs analytical reviews. Oversight functions such as approving payroll and reviewing reconciliations are assumed by the owner, creating a structure where no single person controls all aspects of any transaction cycle.

When only two individuals are available, segregation must be thoughtfully balanced. In this scenario, the accountant or professional staff member is responsible for most day-to-day functions such as reconciling accounts, disbursing petty cash, and approving payments. Meanwhile, the owner focuses on oversight—reviewing bank reconciliations, approving vendor invoices, and discussing financial matters with trusted third-party advisors. Even with minimal staff, this model maintains a dual-control environment that upholds accountability and transparency.

The key to effective segregation of duties lies in thoughtful role design and a culture of accountability, regardless of an organization’s size. By using available personnel strategically and ensuring regular oversight by management or ownership, the company can strengthen their internal controls without adding headcount. With proper planning, even small teams can achieve adequate internal controls.

When designing a SoD strategy for your entity, the game plan must be realistic and well thought out. Contact us for help with the analysis of control needs and help with implementation.