Segregation of duties when some of the duties belong to an agent

Segregation of duties exists to prevent any one person from both creating and approving a transaction. It is a cornerstone control, and the obvious question when you introduce agents is whether they break it. They do not have to. But you have to think it through rather than assume it.

The principle, restated

SoD is about separating incompatible responsibilities so that fraud or error requires collusion rather than a single actor. The relevant separation is between the party that prepares or initiates and the party that reviews or approves. Whether the preparer is a person or an agent, the approver must be a different party with real authority to say no.

How it maps to agents

• The agent prepares — matches, drafts, assembles — but does not approve its own work.
• A human with appropriate authority approves before anything touches the ledger.
• The agent’s permissions are scoped to its task, enforcing least privilege.

The advantage agents bring

Because every agent action is logged with who, what, and when, the separation is not just designed — it is provable. An auditor can see that preparation and approval were distinct, every time, without sampling and hoping. The control becomes continuously evidenced rather than periodically tested.

The mistake to avoid is letting an agent both initiate and approve in the name of efficiency. The whole point of automation in finance is that the routine work disappears while the controls get sharper. Collapsing approval into preparation throws away the second half of that bargain.