Why is segregation of duties critical for internal controls in grant administration?

• A. To speed up the grant approval process.
• B. To consolidate authority in the Certifying Officer.
• C. To avoid the need for audits.
• D. To reduce the risk of errors or fraud by ensuring no single person controls all aspects of a financial transaction; typically separation among authorization, custody, and record-keeping.

Answer: (D)

Segregation of duties is a key control in grant management because it prevents any one person from having complete control over a financial transaction. In practice, different people handle authorization, custody of funds or assets, and recording of the transaction. This separation creates checks and balances: if a disbursement is inappropriate, someone who reviews or handles funds isn’t the same person who approved or recorded it, making it harder to misstate or steal. It also provides an clear audit trail since multiple, independent actions are documented and can be reconciled, making irregularities easier to detect.

The other ideas don’t fit because speed of processing isn’t the goal, concentrating authority undermines the control, and avoiding audits is not achieved by dividing duties.