Separation of duties is one of the six key elements of a strong system of internal controls. These six elements are

1) Employing competent, trustworthy people with clear lines of authority and responsibility

2) Having adequate separation of duties

3) Having proper procedures for authorizing business transactions

4) Maintaining adequate documents and records

5) Having appropriate physical controls over assets and records

6) Conducting independent checks on performance

http://www.ucsc.edu/finaff/cc/tips/sepduty.htm


If two elements of a transaction are processed by different individuals, each person provides a check over the other. Separation of duties also acts as a deterrent to fraud or concealment because collusion with another individual is required to complete the fraudulent act. Separating responsibility for physical security of assets from related record keeping is a critical control.

http://www.bc.edu/offices/audit/controls/sepduties/