Segregation of duties (also called separation of functions) is indispensable in an internal control system. There are two common applications of this principle:
- Different individuals should be responsible for related activities.
- The responsibility for record keeping for an asset should be separate from the physical custody of that asset.
The rationale for segregation of duties is this: the work of ne employee should, without a duplication of effort, provide a reliable basis for evaluating the work of another employee.