Maintaining segregation of duties (SoD) within an organization is not just a best practice; it is a mandatory requirement for robust internal controls and compliance with various regulations. SoD plays a crucial role in preventing fraud, ensuring accountability, and safeguarding the integrity of financial and operational processes. Regulations such as the Sarbanes-Oxley Act, Payment Card Industry Data Security (PCI DSS) Standard, Health Insurance Portability and Accountability Act (HIPPA), General Data Protection Regulation (GDPR), Basel II and III, and International Standards for Assurance Engagements mandate the implementation of SoD to protect stakeholders, customer data, and ensure regulatory compliance.
However, choosing the right SoD solution can be a challenging task. With numerous options available, organizations must navigate through various considerations to select an effective SoD solution that aligns with their specific compliance needs. In this blog post, we will walk you through the essential steps to help you navigate compliance and make an informed decision when selecting an SoD solution.
Here are the 8 steps that you should consider while selecting a Segregation of Duties solutions to meet various compliance requirements.
Step 1: Assess Your Compliance Requirements
The first crucial step is to assess your organization’s compliance requirements. For example, in the United States, publicly traded companies must comply with the Sarbanes-Oxley Act (SOX), which requires the implementation of strong internal controls, including segregation of duties. Other compliance mandates, such as the Payment Card Industry Data Security Standard (PCI DSS), the Health Insurance Portability and Accountability Act (HIPAA), and the General Data Protection Regulation (GDPR), may also apply depending on your industry and geographical location. Understanding these requirements will help you identify the specific segregation of duties guidelines you need to follow.
Step 2: Identify Key Risks and Control Objectives
Next, identify the key risks associated with your business processes. For example, in the finance department, a key risk could be the possibility of an employee initiating and approving financial transactions without adequate oversight. Determine the control objectives that need to be addressed through effective segregation of duties, such as preventing unauthorized access, ensuring data integrity, and minimizing the risk of conflicts of interest. This step will enable you to prioritize your requirements and focus on the critical areas that require the strongest controls.
Note: While many Segregation of Duties solutions provide ready-to-use rulebooks with standard conflicts, it is important to consider the level of flexibility offered for customizations. Each organization may have unique requirements and specific conflicts that need to be addressed. Therefore, it is crucial to validate the extent to which the SoD solution allows for customization to accommodate your organization’s specific needs.
Step 3: Evaluate Your Existing Processes and Systems
Evaluate your current processes and systems to identify any existing gaps or limitations in segregation of duties. For example, not all the SoD solutions support IS-Utilities Rulesets. Engage your internal/external audit firm to assess the effectiveness of the solution and validate the effectiveness of the solution with your existing process. Further, understand how roles, responsibilities, and access permissions are currently managed within your organization. This evaluation will provide insights into the specific areas where an SoD solution can bring significant value.
Step 4: Research and Shortlist SoD Solutions
Now that you have a clear understanding of your compliance requirements and existing gaps, it’s time to research and shortlist potential SoD solutions. Look for solutions that offer robust features such as role-based access control, mitigation control implementation, monitoring and reporting capabilities, integration with your existing systems, customizations, costs etc., For example, a Risk analysis solution that is available on the cloud may not allow customizations or add various additional costs. Few other questions to ask are:
- Can the solution evaluate risks at the Fiori apps level?
- Is the solution scalable to S/4 HANA systems?
- Does the solution allow for setting up alerts for key risk areas?
- Does the solution support multiple rulesets?
- Can the solution handle approval workflows for key master data changes, such as Risk and Mitigation Control?
- Does the solution provide robust change logs to ensure data integrity?
- Lastly, is the solution provider GDPR compliant if the data is hosted in their system? Keep in mind that SoD analysis may involve accessing Personally Identifiable Information (PII) data.
Consider other factors such as scalability, flexibility, ease of implementation, and user-friendliness. Some popular SoD solutions in the market include SAP GRC (Governance, Risk, and Compliance) Access Risk Analysis, SAP Cloud IAG, RSA Archer, and ToggleNow’s Verity.
ToggleNow’s Verity solution offers a seamless implementation process, specifically designed for ECC/S4 systems, without the requirement for additional infrastructure or software licenses. Built on ABAP, this user-friendly solution can be readily implemented within a short timeframe of 7-10 days. One of the notable advantages of Verity is its affordability, with significantly low implementation and support costs. By choosing Verity, organizations can swiftly integrate robust Segregation of Duties controls into their existing systems while keeping implementation and maintenance expenses at a minimum.
Step 5: Request Demonstrations
Request demonstrations from the shortlisted SoD solution providers. This will allow you to evaluate their functionalities in a real-world setting and assess how well they meet your specific requirements. During this phase, involve key stakeholders, such as compliance officers, IT personnel, and end-users, to gather their feedback and perspectives. Ensure that the solutions address the specific compliance mandates and audit requirements applicable to your organization.
Our experts are delighted to answer your questions about Verity solution, provide detailed insights, and guide you through the evaluation process of Verity. Don’t miss this opportunity to explore how Verity can enhance your organization’s internal controls and ensure compliance with ease. Book your slot.
Step 6: Perform Cost-Benefit Analysis
Perform a comprehensive cost-benefit analysis of the shortlisted solutions. Consider the upfront implementation costs, ongoing maintenance and support fees, training requirements, and the potential return on investment. Look beyond the immediate financial aspects and consider the long-term benefits, such as improved compliance, reduced risk exposure, and enhanced operational efficiency. Factor in the potential savings from avoiding fines, penalties, and reputational damage resulting from non-compliance.
An additional and crucial point to consider is the availability and size of the support team. While there are numerous providers in the market offering SoD solutions, it is essential to validate whether they have adequate support capabilities. Some providers may have limited teams, often consisting of only 1 or 2 members, which can hinder their ability to provide timely and efficient support. It is crucial to understand the size of the support team to ensure that your investment in the SoD solution is well-supported, avoiding any potential waste of resources/investments.
Step 7: Seek References and Reviews
Before making a final decision, seek references and reviews from existing clients of the shortlisted SoD solution providers. Reach out to organizations similar to yours in size and industry to understand their experiences with the solution. This step will provide valuable insights into the solution’s performance, reliability, customer support, and overall satisfaction. Consider engaging with industry experts, consultants, or audit firms for their recommendations and expertise in SoD solutions.
Step 8: Make an Informed Decision
After completing the previous steps, you are now equipped to make an informed decision. Evaluate all the gathered information, feedback, and insights to select the SoD solution that best aligns with your compliance requirements, addresses your key risks, and fits within your budget and operational constraints. Ensure that the solution meets the specific audit requirements applicable to your organization, such as the need for detailed audit logs, automated reporting, and periodic attestation capabilities.
Selecting an effective segregation of duties solution requires careful consideration and a systematic approach. By following the essential steps outlined in this blog post, organizations can navigate compliance and choose a solution that not only meets their specific requirements but also strengthens their internal controls and ensures regulatory compliance. Remember, the right SoD solution is an investment in the long-term success and security of your organization. Stay proactive, regularly review and update your SoD controls, and adapt to evolving compliance requirements to maintain a robust and effective system of segregation of duties.