Accounting Information System Report: Segregation of Duties Analysis

This report provides an analysis of the concept of segregation of duties within an accounting information system. It focuses on a case study involving a small business, Smith Enterprises, and examines how the implementation of segregated duties can prevent fraud and errors. The report discusses the roles of different employees in the business, including those involved in inventory management, payments, and sales, highlighting how the separation of tasks helps maintain internal controls. The report also references key sources like Accounting Tools and the Association of International Certified Professional Accountants to support the analysis of the importance of segregation of duties in accounting practices and its role in mitigating financial risks. The report concludes that the business has implemented segregation of duties to prevent fraud and is following the best practices to prevent any type of fraudulent activity.

Running head: ACCOUNTING INFORMATION SYSTEM
Accounting Information System
8/18/2019

ACCOUNTING INFORMATION SYSTEM 1
Segregation of Duties
Segregation of duties is said to be the concept of hiring more than one employee to finish
a project or task. In case of business, dividing by sharing of more than one task is an internal
control planned to avert fraud and mistake (Ballesteros, Pan and Batten, 2015). There are
three functions into the procedure that split among different people:
 Record maintenance of the asset
 Approval to obtain or dispose of the asset
 Asset’s Physical custody (Accounting Tools, 2018)
In case of Smith Enterprises, the small business with 6 employees has restructured its
business by segregating the duties between different staff. Two of its employees operate in
the warehouse for sending an accepting the deliveries and maintaining the records of
movement of the inventory, other two employees receive, send invoices and receive and
make payments. Besides this, the two of its employees are sales staff and the owner that is
Smith oversees purchases. From the analysis, it could be said that Smith Enterprises has
adopted this concept of segregation of duties under which the owner has allowed its
employees to receive the products from the suppliers in the warehouse but has not allowed
signing the checks for the payment. Besides this, the employees responsible for maintaining
the inventory of the business are not allowed to have physical possession of the stock.
Further, the employee who is involved in selling the products could not record the sale or
take payment from the customer or other business partners (Association of International
Certified Professional Accountants, 2019).

ACCOUNTING INFORMATION SYSTEM 2
References
Accounting Tools. (2018). Segregation of Duties. Retrieved from
https://www.accountingtools.com/articles/segregation-of-duties.html
Association of International Certified Professional Accountants. (2019). Segregation of
Duties. Retrieved from
https://www.aicpa.org/interestareas/informationtechnology/resources/value-strategy-
through-segregation-of-duties.html
Ballesteros, S., Pan, L., & Batten, L. (2015). Segregation-of-duties Conflicts in the Insider
Threat Landscape-An Overview and Case Study. International Conference on
Education Reform and Modern Management, 367-370. DOI: 10.2991/ermm-
15.2015.96