Segregation of duties reduces the chance that one person can initiate, conceal and complete an unauthorised treasury transaction. This guide explains the mechanics, evidence, risks and controls a UK business should understand before relying on the process.
What treasury segregation of duties means in practice
Segregation of duties reduces the chance that one person can initiate, conceal and complete an unauthorised treasury transaction. For a business, the important point is when that rule changes cash availability, authority, settlement or access to funding.
The classic control separates dealing, confirmation or control, settlement and reconciliation, but smaller teams may need compensating review by an independent senior manager. That wording should be translated into a short internal test showing the trigger, deadline, decision owner and evidence required for the business to proceed.
How treasury segregation of duties works from start to finish
Before action is taken, treasury should verify who can trade, who can change bank details, who can approve settlements, who receives confirmations, who reconciles accounts and which system roles each person holds. The review should use source evidence and not a manually copied summary that may be stale.
Sequence matters. Treasury should know what must happen before commitment, what can happen in parallel and what evidence proves completion, because reversing an external payment or contractual commitment may be difficult or impossible.
The data and evidence that matter
Where several legal entities are involved, the evidence should identify the entity whose cash, debt or authority is affected. Group-level visibility is useful, but it should not blur which company actually owns the account or obligation.
An effective record should also make the exception path visible. If the normal rule cannot be met, the team should capture who approved the deviation, how long it applies and what evidence will close it. For treasury segregation of duties, that distinction prevents a temporary workaround from becoming an undocumented permanent practice.
Where the process can fail
If the same user can agree an FX trade, amend the settlement account, approve the payment and reconcile the bank entry, both fraud and error can remain hidden. The financial exposure can grow quickly when the issue is discovered close to settlement, drawdown or payment day.
Another common weakness is status confusion: teams treat 'submitted', 'approved', 'accepted' and 'settled' as if they mean the same thing. For cash control, those states must remain distinct until the final outcome is evidenced.
Worked example: test the mechanics
A two-person treasury team cannot create four separate roles. One practical design is for the treasurer to execute trades, the controller to confirm and settle them, and the CFO to review the daily bank reconciliation and any master-data change independently.
This example is a method rather than a universal rule. The business should replace every illustrative figure with its own contractual terms, bank data and dates, then test the result before assuming that cash or authority is available.
Governance and controls for treasury segregation of duties
Document incompatible duties, configure access accordingly and require an independent review wherever headcount makes full separation impossible. The procedure should identify the primary owner, reviewer and escalation contact so an absence does not suspend a material payment or funding decision.
Useful reporting should expose concentration and dependency as well as volume. A process can look efficient while depending on one approver, one bank channel or one manual spreadsheet that has no tested fallback.
Training should use real examples from the company's own workflow. Staff remember why a control exists more reliably when they can see how a missing field, late notice or wrong status could affect actual cash.
Decision records should separate three layers: what the governing document or payment scheme allows, what the bank or counterparty operationally supports, and what internal policy permits. Those layers can produce different answers, and treasury segregation of duties is safest when the difference is explicit before the transaction proceeds. For treasury segregation of duties, the specific checkpoint is this: Document incompatible duties, configure access accordingly and require an independent review wherever headcount makes full separation impossible.
Before approving a material treasury segregation of duties action, the reviewer should challenge the assumption most likely to change the cash outcome rather than merely confirm that every box has been ticked. The review should use who can trade, who can change bank details, who can approve settlements, who receives confirmations, who reconciles accounts and which system roles each person holds and should identify which item would force the team to pause, obtain consent or change the planned date. A useful challenge question is whether the transaction would still be safe if if the same user can agree an FX trade, amend the settlement account, approve the payment and reconcile the bank entry, both fraud and error can remain hidden.
Editorial Verdict
BanksGB's editorial view is that treasury segregation of duties should be managed as a practical cash-and-control issue. Segregation of duties reduces the chance that one person can initiate, conceal and complete an unauthorised treasury transaction. The strongest process connects the governing rule to the amount, timing, legal entity and external status instead of relying on the product label.
The final test is whether a second person could explain the transaction from the retained record: what triggered the action, which data was used, who approved it, what the bank or lender did and what remains outstanding. If that cannot be answered, the control around treasury segregation of duties is weaker than it appears. In this workflow, the supporting record should cover who can trade, who can change bank details, who can approve settlements, who receives confirmations, who reconciles accounts and which system roles each person holds.
Sources
- Association of Corporate Treasurers, The Treasurer's Global Guide to Investing Cash: https://www.treasurers.org/ACTmedia/Treasurers_Global_Guide_to_Investing_Corporate_Cash_ACT_2017.pdf
- NCSC, guidance for organisations: https://www.ncsc.gov.uk/section/information-for/organisations