What does it mean?
Segregation of duties is an internal-control practice that divides key financial responsibilities among more than one person. For an association, recording transactions, handling money, approving payments, and reviewing bank reconciliations should be separated when practical so one person does not control an entire transaction from beginning to review.
Related names and search phrases: separation of duties, financial duty separation. Usage can vary.
ILLUSTRATIVE COMMUNITY EXAMPLE
What it can look like
A fictional self-managed HOA has its treasurer prepare the monthly reconciliation while another board member compares it with the bank statement, spot-checks supporting documents, and records questions for follow-up.
Why your board should care
Dividing incompatible financial tasks can make errors or unauthorized activity easier to prevent or detect and gives future volunteers a documented review process.
Keep the distinction clear
Small boards may not be able to separate every task. Document compensating reviews with an accountant or adviser, and follow applicable law, governing documents, bank controls, and association policy.
Sources & scope
Sources consulted . These references support the explanation’s background; the examples and board questions are original editorial illustrations.
- Internal Revenue Service: Executing the Examination — Internal Controls ↗
Federal examination guidance describing segregation of financial responsibilities and reconciliation controls; it is not an HOA-specific nationwide requirement.
- National Park Service Reference Manual 32: Cooperating Associations ↗
Government internal-control guidance for cooperating associations, including separate recording/review roles and timely bank reconciliations.
General educational explanations for HOA, POA, and condominium boards. Terms and procedures vary by state and governing documents. Examples are fictional. For a specific legal, tax, accounting, or property decision, consult a qualified adviser.
Prepared with AI assistance and source checking. Not represented as an attorney or accountant review.