The concept of segregation of duties, splitting up responsibilities between different people, is a very important part of an organizations anti-fraud programs and controls. Many times, the concept of segregation of duties is cited but it is not clear exactly what responsibilities are to be assigned to different employees. There are four responsibilities that must be divided up in a particular business function:

Authorization – having the authority and giving approval for a business transaction
Custody – being responsible for the physical keeping / safeguarding of something
Recordkeeping – recording a transaction on the organization’s book
Reconciliation – validating the balance of an account

Appropriately segregating responsibilities between employees can go a long way in preventing malfeasance.