Which control is commonly used to reduce fraud risk by separating duties?

• A. Segregation of duties
• B. Analytics
• C. Whistleblower channels
• D. Employee training

Answer: (A)

Segregation of duties is the practice of dividing key steps of a process among multiple people so that no single individual can both carry out and conceal a fraudulent action. By separating responsibilities—such as authorization, execution, and recordkeeping—a system gains built‑in checks and balances. This makes it much harder for someone to commit fraud without someone else noticing, and it increases the chance that irregularities are detected during reconciliations or reviews.

For example, in a payment process, the person who approves payments should not be the one who actually issues the payment or who records the transaction; having a different person handle each role creates a barrier to manipulation and oversight.

Other controls, like analytics, whistleblower channels, or employee training, are valuable but serve different purposes. Analytics help detect anomalies and can prevent losses after the fact or through early warning; whistleblower channels encourage reporting but don’t prevent the opportunity to commit fraud; training reduces errors and raises awareness but does not structurally limit an individual’s ability to control multiple steps in a process.

So, separating duties directly reduces fraud risk by limiting one person’s ability to both commit and hide improper activities.