What Is Separation Of Duties - Controller's Office

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Recommended Separation of Duties Controls:Procurement Process (BFSv9)UC BerkeleySeparation of duties has the primary objective of preventing fraud and errors. Separation of duties is achieved by assigning thetasks and associated privileges for a specific business process across multiple functions. General categories of separatedfunctions are: Recording Authorizing Taking custody of (or receiving) the asset Monitoring / reviewTable 1 presents the UC Berkeley separation-of-duties matrix for the procurement process under BFSv9.Eight roles were addressed in the development of the UCB separation-of-duties rules. Each role is introduced in the following list,along with a brief description (detailed information about role activities and responsibilities is provided in Table 2).1. Requisition Creator—The person who creates a requisition in BFSv9.2. Requester—A BFSv9 system role linking an organizational node (processing unit) with one or more people; used toidentify approval routing and, when a buyer is involved, who the buyer should contact to get questions answered.3. Requisition Approver—The person who approves the requisition, generating a purchase order.4. Authorizer—The unit manager or principal investigator (or designee) who authorizes the transaction’s business purposeand expenditure.5. Additional Approver—An optional additional approver defined by the unit.6. Receiver—The person who physically receives the goods. The receiver may indicate receipt in BFSv9.7. Inspector—An optional additional receiver defined by the unit who assesses the goods for technical adequacy and acceptsthem in BFSv9.8. Key Controls Performer (SAS-115)—The person who performs the monthly, departmental financial key controls.Note regarding the shopper role: Every transaction starts with a shopper, someone who wants / needs something purchased.The shopper makes a list, either on paper, via e-mail, or when using e-procurement (once catalogues are rolled out). Theshopper then communicates with the requisition creator (role no. 1).Note regarding the buyer role: Although buyers are not included in the above list or discussed below, they are part of theprocurement process and are expected to be independent of all other roles. Because they are attached to ProcurementServices, whether embedded in departments or located centrally, and perform only the buyer role, they are not included on theseparation-of-duties matrix. When Procurement Services buys goods for itself, it is expected to follow the guidelines in thematrix.(Ver. 9: 02-04-2011)Page 1 of 8Office of the Controller

Recommended Separation of Duties Controls:Procurement Process (BFSv9)UC torKey ControlsPerformerTable 1: UC Berkeley Separation-of-Duties Matrix—Procurement Process Key NNY**YNYYYYYYYYYYNYNYYYYY yes to both roles; N no to both roles*Smaller departments having fewer staff may have difficulty separating the requisition creator and receiver roles. Although this separation isstrongly encouraged, if a department cannot separate them, then it becomes all the more important that the key controls performer be someonenot involved in either the requisition creator or receiver roles.**A person having these two roles in a transaction does not enhance separation of duties.(Ver. 9: 02-04-2011)Page 2 of 8Office of the Controller

Recommended Separation of Duties Controls:Procurement Process (BFSv9)UC BerkeleyTable 2: Description of Procurement Roles, Responsibilities, and Separation-of-Duties he requisition creator is theperson who enters theshopper’s purchaseinformation and enters it intoBFSv9 to create a requisition.Requisition creators can createrequisitions for any processingunit across the campus.(Ver. 9: 02-04-2011)Responsibilities andKnowledge RequiredThe requisition creator will: Enter the shopper-providedinformation into BFSv9. Identify the proper buyer. Assign the proper chart string. Indicate how the requisition willbe routed for approval. Indicate if an additionalapprover and/or inspector isrequired for the transaction.The requisition creator should: Know campus procurementpolicy. Know relevant laws andregulations. Know campus- or systemapproved vendors and attendantapproval requirements. Note any unusual activity on thepart of the shopper. Note and question any unusualitem(s) in the shopping cart. Know when an authorizer,buyer, or inspector needs to n of DutiesFunction / ControlsBecause the requisition creator entersthe specifications, quantity, and priceof the goods or services, someoneindependent of that role must reviewand approve the requisition. As aresult, the requisition creator cannotalso be the requisition approver orthe additional approver.Moreover, someone other than therequisition creator should be thereceiver. Separating the requisitioncreator and receiver roles addsgreater control against a requisitioncreator’s being able toinappropriately alter a shopper’s listand then receive the goods that wereordered with the altered amounts.Smaller departments may need to setpeople up in BFSv9 as receiverseven though they have requisitioncreator access. In such situations thesystem will not prevent a personfrom receiving the order he or shecreated, so individuals will need toseparate themselves from performingthe two roles for a single transaction.The key controls performer shouldnot be the requisition creator orrequisition approver, because therequisition creator and requisitionapprover will likely have beeninvolved in most or all departmentPage 3 of 8Separation-of-DutiesFunction: RecorderRequisitionCreator RequisitionApprover(Automated): Thesystem will not allow arequisition creator toapprove his / herrequisition.RequisitionCreator Receiver(Manual): A requisitioncreator should not receivehis/her own order.(Although BFSv9 willallow these two roles forthe same transaction.)Key ControlsPerformer (Manual):The person performingthe key controls shouldbe different from therequisition creator.(There is a need for anew detective key controlenabling the review ofany transactions wherethe requisition creatorand receiver are the sameperson.)Office of the Controller

Recommended Separation of Duties Controls:Procurement Process (BFSv9)UC BerkeleyResponsibilities andKnowledge ionSeparation of DutiesFunction / Controlsprocurement transactions, which thekey controls performer will reviewfor the month.The requester role serves twopurposes:2.3.RequesterRequisitionApprover(1) from a system perspective(BFSv9), the requester is thecombination of an org nodelevel (processing unit) with aname that determines how therequisition will be routed tothe requisition approver (notethat a requester can beassociated with more than oneorg node level);(2) the requester is the nameof the person able to answertechnical questions from therequisition approver and/orcampus buyer about the goodsordered. As a result, therequester has no active roleunless contacted by therequisition approver and/orbuyer. The requester can besomeone who does not haveaccess to BFSv9.The requisition approver is theperson who reviews therequisition prepared by therequisition creator and, if all iscorrect, approves it in thesystem. The requisition(Ver. 9: 02-04-2011)The requester should be the person inthe unit who is most able to answertechnical questions regarding thepurchase.The requester should be available toanswer any questions the buyer mayhave, or refer the buyer to theappropriate person.A requester might need to beassociated with more than one orgnode level for requisitions to berouted to the proper approver.The requisition creator may selecthimself / herself as the requestor.Because the requisition creator willoften select himself or herself as therequester, the requester cannot beapprover because the requisitioncreator cannot be the approver.The requisition approver should: Review and approve theprocurement request forappropriateness, validity,reasonableness, adequate funding,The requisition approver must bedifferent from the person whocreated the requisition as well as(ideally) from the person who carriesout the key control review.Page 4 of 8Separation-of-DutiesFunction: AuthorizationRequisitionApprover RequisitionCreator (Automated):Office of the Controller

Recommended Separation of Duties Controls:Procurement Process (BFSv9)UC BerkeleyResponsibilities andKnowledge RequiredDescriptionRoleapprover is typically a seniorlevel administrative manager. accurate account coding, andappropriate supportingdocumentation.Review for allowability under thefunding source.Review for compliance with laws,regulations and policies.Ensure funding is available to coverthe on of DutiesFunction / ControlsHowever, if department size requiresthat someone having one of theseroles (requisition creator orrequisition approver) perform thekey controls, select the requisitionapprover rather than the requisitioncreator, since the requisition creatorhas more opportunity to manipulatetransactions.The system will not allowa requisition creator toapprove his / herrequisition.Because the requisition creator willoften select himself or herself as therequester, the approver cannot be therequester because the approvercannot be the requisition creator.4.5.AuthorizerAdditionalApproverWhile not a BFSv9-definedrole, the authorizer is thesenior-management person orprincipal investigator (PI) inthe unit who typicallyauthorizes the businesspurpose of an expenditurerequest, and authorizes theexpenditure of department orproject funds for that request.The additional approver is anoptional role that departmentscan assign. The additionalapprover role can be used forexpenditures that exceed the(Ver. 9: 02-04-2011)Separation-of-DutiesFunction: AuthorizationTypically, the authorizer is a unithead or principal investigator whoapproves the business case andexpenditure of funds.The authorizer should ensure thepurchase is necessary, appropriate andreasonable for the department or project.Based on department preferences,risk tolerances, and the materiality ofthe expenditure, the authorizer hasthe ability to delegate a level ofsigning authority to the requisitionapprover.The authorizer role can beincorporated into the additionalapprover role.The additional approver should approvepurchases over the delegated budgetauthority of the requisition approver.The authorizer role can beincorporated as the additionalapprover role.This role can be used to meet thePage 5 of 8Key ControlsPerformer (Manual):The person performingthe key controls shouldbe different from therequisition approver.Controls around theauthorizer are defined atthe unit level, but shouldgenerally identify whenthe authorizer needs to beinvolved (e.g., over whatdollar threshold). Also,units should identify howand when authorizer’sapproval will bedocumented.Separation-of-DutiesFunction: AuthorizationIf this role is set up for atransaction, the P.O. willOffice of the Controller

Recommended Separation of Duties Controls:Procurement Process (BFSv9)UC BerkeleyResponsibilities andKnowledge RequiredDescriptionRoleapproval limit of the approver.Also, the role of the additionalapprover can be used for theauthorizer role.6.7.ReceiverInspector(Optional)The inspector role has twocomponents: (1) the physicalinspection of the goods, and(Ver. 9: 02-04-2011)not be generated until theadditional approval isindicated in system. Anydelays in this additionalapproval will delay theprocurement process.The additional approver should notbe the requisition creator. (Seecreator role.) The receiver compares thegoods received against thepurchase order (or against therequisition in some cases) todetermine if what UCBreceived is what was ordered,then enters the appropriateinformation into BFSv9.Separation of DutiesFunction / Controlsapproval needs of PIs.The receiver should:The receiver role has twocomponents: (1) the physicalreceiving of the goods, and (2)the indication in BFSv9 of thereceipt of the goods.Separation-of-DutiesDiscussion Compare the package contents withthe specifications and quantity of thegood(s) indicated on the PO and thepacking slip to ensure UCB receivedwhat was ordered and what thevendor sent.Obtain and file or forward, asappropriate per unit procedures, theappropriate documentation.Note: Online receiving andinspection in BFS is available, but isnot mandatory. The absence ofonline receipt or inspection does notstop approved PO vouchers frombeing paid, and receiving andinspection match exceptions do notappear on the AP Match ExceptionReport.The inspector should:Someone other than the requisitioncreator should be the receiver.Separating the requisition creator andreceiver roles adds greater controlagainst a requisition creator’s beingSeparation-of-Dutiesable to inappropriately alter aFunction: Custody ofshopper’s list and then receive theAssetsgoods that were ordered with thealtered amounts.RequisitionSmaller departments may need to set Creator Receiver(Manual): A requisitionpeople up in BFSv9 as receiverscreator should not receiveeven though they have requisitioncreator access. In such situations the his/her own order.(Although BFSv9 willsystem will not prevent a personallow these two roles forfrom receiving the order he or shethe same transaction.)created, so individuals will need toseparate themselves from performingthe two roles for a single transaction.If the actual receiver does not haveBFSv9 access, someone with BFSv9access can act in his/her stead, afterreceiving appropriate documentationthat the goods have been received.If the actual inspector does not haveBFSv9 access, someone with BFSv9Page 6 of 8Monitoring should occurwhenever the requisitioncreator does receive theitems ordered.Separation-of-DutiesFunction: Custody ofAssetsOffice of the Controller

Recommended Separation of Duties Controls:Procurement Process (BFSv9)UC BerkeleyResponsibilities andKnowledge RequiredDescriptionRole(2) the indication in BFSv9that the vendor has fulfilled allspecified requirements of thepurchase.The optional inspector roleassesses the technical qualityof the goods against the orderspecifications. This role ismost likely to be required forequipment of a technical /scientific nature that needs tobe set up or installed as part ofthe contract, or in order todetermine acceptability. Possess sufficient technical expertiseto inspect the goods.Determine if the goods are in goodcondition and functioning asspecified.Also see “note” in this column forthe Receiver (No. 6 above).Separation-of-DutiesDiscussionSeparation of DutiesFunction / Controlsaccess can act in his/her stead, afterreceiving appropriate documentationof the inspection.If this role is set up for atransaction, payment tothe vendor will notoccur until the inspectoraccepts the goods inBFSv9.There are no Separation-of-Dutiesrestrictions on who can act as theBFSv9 inspector.Because the key control is the lastchance to spot fraud or errors, theperson performing the key controlsshould be independent of the peoplewho enter and approve the he key controls performer isa senior-level manager on theaccounting / finance oradministrative / academic sideof the department.See links on the Controller’s Officewebsite for information related to keycontrols performance.The key controls performer shouldnot be the requisition creator orrequisition approver, because theywill likely have been involved inmost or all department procurementtransactions that the key controlsperformer will review for the month.However, if department size requiresthat someone having one of theseroles (requisition creator orrequisition approver) perform thekey controls, select the requisitionapprover rather than the requisition(Ver. 9: 02-04-2011)Page 7 of 8AuthorizationSeparation-of-DutiesFunction: Monitoring /ReviewSomeone other than unitrequisition creators andrequisition approverslooks at the big pictureand questions anomalies.Office of the Controller

Recommended Separation of Duties Controls:Procurement Process (BFSv9)UC BerkeleyRoleDescriptionResponsibilities andKnowledge RequiredSeparation-of-DutiesDiscussionSeparation of DutiesFunction / Controlscreator, since the requisition creatorhas more opportunity to manipulatetransactions.(Ver. 9: 02-04-2011)Page 8 of 8Office of the Controller

Separation of duties has the primary objective of preventing fraud and errors. Separation of duties is achieved by assigning the tasks and associated privileges for a specific business process across multiple functions. General categories of separated functions are: Recording Authorizing Taking custody of (or receiving) the asset

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