An Audit Handbook for Segregation of Duties

• Ineffective segregation of duties (SoD) in enterprise applications can lead to operational losses, financial misstatements, and fraud.
• SoD controls are essential for preventing a single person from completing multiple critical tasks in a business process, thus mitigating risks of fraud, waste, and error.
• A risk-based access controls design matrix helps assess the risk associated with user entitlements. This matrix categorizes potential conflicts and assigns a risk level to them, enabling auditors to test the effectiveness of SoD controls.

Ineffective segregation of duties (SoD) in enterprise applications can lead to operational losses, financial misstatements, and fraud. The rapid addition of users to enterprise applications increases the risk of SoD violations, especially when default roles are not well-configured to prevent such violations. Business managers often struggle to obtain accurate security privilege-mapped entitlement listings from enterprise applications, making it challenging to enforce SoD policies. This is compounded by the fact that many IT service management and identity management tools do not effectively control SoD risks at the privilege level within enterprise applications.

SoD controls are essential for preventing a single person from completing multiple critical tasks in a business process, thus mitigating risks of fraud, waste, and error. Job duties are categorized into authorization, custody, record keeping, and reconciliation. Adequate SoD controls often require a combination of sequential, individual, spatial, and factorial separation of duties. Implementing these controls in ERP systems can be challenging due to the complexity and variety of applications and requires a thorough analysis of user roles and responsibilities.

A risk-based access controls design matrix helps assess the risk associated with user entitlements. This matrix categorizes potential conflicts and assigns a risk level to them, enabling auditors to test the effectiveness of SoD controls. The audit process involves creating a comprehensive access rule report, scoping sensitive access rules, gathering user role entitlements, identifying exceptions, and applying rule logic to detect violations. Analyzing these violations and implementing remediation plans ensures that security configurations are corrected without disrupting business processes.

Violation analysis involves creating a scorecard that summarizes user and role violations, helping prioritize remediation efforts. Effective remediation requires root-cause analysis of security defects and testing user access before deploying changes. Understanding the security models of widely used enterprise applications is crucial for preparing an audit plan. Security models typically follow a hierarchy starting with the user, including roles and permissions assignments. This structured approach ensures that SoD controls are maintained effectively, reducing the risk of security breaches.

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