SEPARATION OF DUTIES: When Wearing Multiple Hats is Not a Good Thing

Many of us across the University wear multiple hats on a regular basis to ensure that the work gets done. But a recent article in the Lexington Herald-Leader revealed how that may not always be a good thing. The article was about a former executive with a real estate firm who admitted to stealing more than $1 million from its subsidiaries. How did he do it?

Because he was in the position to create accounts, accept checks, and make deposits, he was able to create false bank accounts with similar names as the real ones, request payments be sent directly to him, and divert those funds into these false bank accounts.

While it is unlikely that a lack of separation of duties would always amount to a fraud of this magnitude, one of UK Internal Audit’s (UKIA) priorities is to help the various units here at the University avoid the pitfalls that allow such situations to occur. In nearly every audit, we have identified inadequate separation of duties. Simply put, this is when the same person is responsible for multiple steps within a given activity.

We understand that many units are small and “wearing multiple hats” as is often necessary. And that may be true. But there are ways to mitigate the risks in those situations, too.

UKIA can work with you to help you determine when “wearing more than one hat” is ok – and when it is inappropriate. We can also help your unit establish proper duty separation protocols and/or implement suitable monitoring activities.

Want more information about how we can help your unit? Call us at 257-3126, or check out UKIA’s services here.