Separation of Duties

Separation of duties is an internal-control principle under which incompatible responsibilities are assigned to different people or organizational roles. Because no single person controls a transaction from start to finish, checks and balances reduce the risk of error, fraud or misuse of funds.

In procurement, the principle keeps the people who request, buy, receive and pay for goods and services separate. NATO's procurement manual calls this the segregation, or in some cases separation, of procurement responsibilities. Canadian federal administration expresses the same idea as the separation of financial authorities, segregation of duties, or separation of incompatible authorities.

The five roles NATO keeps apart

NATO's procurement manual links the principle to NATO Financial Regulations and organizational checks and balances. It says the requisitioner, budget controller, buyer, receiver and payer should generally be separate roles.

NATO financial-audit material gives a related example. Fund managers request goods and services. Purchasing officers conduct the procurement after the financial controller approves. Fiscal staff verify invoices, and separate staff make payments and reconcile bank records.

Separation of financial authorities in the federal government

The Department of Justice audit guidance says that procurement, confirmation of receipt, account verification and payment certification should be separated where possible. Confirmation of receipt and contract performance falls under section 34 of the Financial Administration Act, and payment authority falls under section 33.

The same guidance describes the separation of incompatible authorities in delegation charts as a preventive control. It protects against errors, misappropriation and weak accountability for expenditures.

The Treasury Board's procurement-to-payment guidance covers the process from identifying a need through payment. It applies to operational or capital procurements that use purchase orders or other contracts.

An audit of the National Research Council of Canada found controls separating the people who create purchase orders from those who record receipt of goods and services in the financial system. Only Procurement Services had authority to create purchase orders. The finding is in the NRC audit report.

How PSPC and client departments divide the work

CanadaBuys publishes a division of responsibilities between Public Services and Procurement Canada (PSPC) and its client departments. The standard matrix can be adapted through a written agreement for a specific procurement, subject to legislation, regulations and policy.

PSPC states in its briefing material that it may negotiate and put contracts in place. Client departments are responsible for monitoring and certifying delivery of goods and services under a contract.

Separation in systems and security environments

The principle also applies outside purchasing. A NATO security document requires segregation between communication and information system administrators and the security organization. It also calls for further segregation among system, network, application and security administrators to be considered during accreditation.

What it means for a supplier

Suppliers deal with different government roles at different stages, and those roles are separate by design.

• Follow the solicitation's specified points of contact and approval process. Do not try to combine the buyer, recipient, certifier or payer roles.
• Send delivery and performance evidence to the official responsible for confirming receipt or contract performance.
• Submit invoices through the process the contract specifies. Invoice verification and payment are handled by personnel distinct from procurement or receipt.
• Where a solicitation asks for organizational separation, describe your relevant roles, access controls, approval steps and independent review.

The cited sources establish the control principle. They do not establish a single supplier form or clause that applies to every Canadian solicitation, so read each bid document for its own requirements.