Segregation of Duties

A review of our audits of schools has revealed a common but significant issue in relation to enforcing segregation of duties in the procure-to-pay process.

Applying the concept of segregation of duties ensures that it is not possible for anyone individual to be able to undertake all of the key steps necessary in order to generate a payment.  Effective controls in this area serve to protect both the School & staff alike.

We appreciate that some schools may have always tried to ensure they have effective procurement controls by separating; the order raiser and order approver or alternatively; the order tasks and the invoice tasks. However these controls are not fully effective as it is possible for one person to make a payment using the non-order invoice route.

Highlighting this issue does not intend to cast doubt about the integrity of any member of staff.  However, trust is not a control and procedures must be designed without consideration of the person but rather by the task they perform.

Previous audits may not have always identified this issue but as our tools and understanding of FMS have improved we would now like to encourage a further refinement by separating the tasks of raising invoice and approving invoice.

Recommended Access Rights:

The table below provides our advice on how access rights in the schools financial system should be configured to provide the minimum level of control required.

Task

On FMS6?

Recommended Control

System Manager

Yes

Not Person 1

Raise Purchase Order

Yes

Person 1

Amend Purchase Order

Yes

Person 1

Approve Purchase Order

Yes

Person 2

Certify deliveries

No

Anyone in line with School Policy

Raise Invoice

Yes

Person 1

Amend Invoice

Yes

Person 1

Approve Invoice

Yes

Person 2

Process Cheque

Yes

Person 1

Authorise Cheque

No

2 or 3 Signatories in line with School’s Bank Mandate *

Often the role of person 1 is undertaken by the Bursar.

Often the role of person 2 is undertaken by the Headteacher or a senior member of staff who typically has budget responsibilities.

For more detailed explanation of the issues around Segregation of Duties please see Appendix A

As custodians of public funds we all have a responsibility to ensure that they are used directly for the purpose required and provide value for money.  A key component in achieving this objective is to have adequate internal controls and future audits will no longer provide a satisfactory opinion if this issue is not addressed.  Therefore I would urge you and the Governors to assess segregation of duties within your financial database and amend accordingly.  

 

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Last Updated: 30 November 2017