Criteria for substantiating the expediency of Segregation of Duties (SoD) when conducting an audit of commercial organizations

Abstract

Segregation of Duties (SoD) is a key element of the internal control system, designed to prevent situations in which a single individual can initiate, authorize, execute, and record a business transaction without the involvement of another person, as well as conceal such actions. In the context of the digitalization of accounting processes and the increasing reliance of financial statements on information systems, the assessment of SoD becomes particularly relevant in external audits. The aim of this study is to develop criteria to substantiate the feasibility and depth of SoD assessment as part of the evaluation of the internal control system during an external audit. Based on an analysis of international and Russian standards, empirical research on internal control deficiencies, and professional guidance on access management, the need for a formalized approach to deciding whether to include SoD assessment procedures in the audit plan is justified. Three criteria for determining the appropriateness and depth of such assessment are identified: the complexity of the auditee's organizational structure, the presence of significant organizational changes during the audited period, and the degree of reliance of financial statements on information systems. For practical application of the proposed criteria, a matrix has been developed that enables, through a scoring system for each criterion, the determination of the required level of detail for SoD procedures — ranging from no need for assessment to in-depth verification. The matrix is intended for use at the audit planning stage and can serve as a tool for documenting the auditor's professional judgment when justifying the scope of procedures related to the evaluation of the internal control system.

To cite: Sorokoumov V.S. Criteria for substantiating the expediency of Segregation of Duties (SoD) when conducting an audit of commercial organizations. Research in Economic and Financial Problems. 2026;1:3. https://doi.org/10.31279/2782-6414-2026-1-3