Top 7 Segregation of Duties Conflicts in ERP Systems and How to Mitigate Them

If you’ve ever sat in an audit review for your ERP system and heard the dreaded words “Segregation of Duties violation,” you know how quickly the room tenses up.

Segregation of Duties (SoD) is a cornerstone of internal controls in ERP systems like SAP, Oracle Fusion Cloud, Workday, and Microsoft Dynamics. It’s about ensuring that no single individual has enough access to perform and conceal a malicious or simply mistaken transaction.

When SoD conflicts exist, organizations face risks of fraud, compliance violations, audit findings, and even reputational damage. In this blog, we’ll break down the top 7 SoD conflicts every IT and cybersecurity professional should know and more importantly, how to mitigate them with practical, real-world strategies.

Why Segregation of Duties Matters

Before diving into the conflicts, let’s recap why SoD is non-negotiable:

• Regulatory compliance: SOX, GDPR, HIPAA, and other frameworks explicitly require strong internal controls.
  
  
• Fraud prevention: Fraudsters thrive when one person can both initiate and approve transactions.
  
  
• Operational integrity: Even well-meaning employees can make costly errors if they hold conflicting roles.
  
  
• Audit readiness: Clean SoD reports = happy auditors and lower risk ratings.

Think of SoD as your organization’s “checks and balances” system. Without it, you’re leaving the financial keys to the kingdom in the wrong hands.

The Top 7 Segregation of Duties Conflicts in ERP Systems

1, Procure-to-Pay Conflict: Create Vendor & Process Payment

The risk: An employee who can both create a vendor and process payments could set up a fake supplier and pay themselves.

Example: In one case, an accounts payable clerk in a large manufacturer created ghost vendors and routed payments worth millions.

Mitigation:

• Separate vendor master data maintenance from payment processing.
  
  
• Use workflow approvals for vendor creation.
  
  
• Run periodic vendor audits to detect duplicates or suspicious entries.

2. Order-to-Cash Conflict: Create Sales Order & Issue Credit Memo

The risk: If a user can both create customer orders and issue credit memos, they could manipulate sales and refunds.

Example: A retail ERP audit uncovered that one sales manager issued unauthorized credits to friends’ accounts.

Mitigation:

• Restrict credit memo authority to a different role.
  
  
• Implement approval workflows for credit adjustments.
  
  
• Monitor for unusual credit memo volumes by employees.

3. Payroll Conflict: Maintain Employee Records & Process Payroll

The risk: A user could add fake employees and then process payroll, funneling funds to ghost accounts.

Example: A healthcare provider discovered “phantom employees” receiving salaries, all tied back to one HR/payroll administrator.

Mitigation:

• Split HR master data management and payroll processing duties.
  
  
• Require dual approval for new hires or salary adjustments.
  
  
• Regularly reconcile active employees with HR records.

4. Inventory Conflict: Maintain Material Master & Post Inventory Adjustments

The risk: Someone with both privileges could manipulate stock records and cover up theft or mismanagement.

Example: In a distribution company, an employee adjusted inventory levels after stealing hardware components.

Mitigation:

• Assign material master maintenance to supply chain teams and adjustments to warehouse control teams.
  
  
• Run exception reports on frequent or large adjustments.
  
  
• Use cycle counts to validate accuracy.

5. General Ledger Conflict: Post Journal Entries & Approve Them

The risk: A finance user could create fictitious journal entries and approve them, hiding fraudulent activity.

Example: A finance analyst fabricated journal entries to conceal unauthorized transfers, uncovered only during an external audit.

Mitigation:

• Enforce “four-eyes” principle: no one should post and approve the same journal entry.
  
  
• Automate workflows requiring manager approval.
  
  
• Monitor high-value or unusual entries.

6. Asset Management Conflict: Create Fixed Assets & Dispose of Them

The risk: An employee could create fake assets and later “dispose” of them, writing off value while pocketing proceeds.

Example: A global bank discovered IT equipment listed as disposed when, in reality, it had been sold off by an insider.

Mitigation:

• Separate asset creation and disposal roles.
  
  
• Require independent review of disposals.
  
  
• Use asset verification audits to track physical existence.

7. Purchase-to-Pay Conflict: Create Purchase Order & Receive Goods

The risk: A user could create fraudulent POs and confirm receipt of goods never delivered.

Example: In an ERP fraud case, an operations manager approved fake POs and recorded receipt of goods, triggering payments to fraudulent suppliers.

Mitigation:

• Split PO creation and goods receipt across different roles.
  
  
• Require three-way match (PO, receipt, invoice).
  
  
• Audit for unfulfilled POs or unmatched receipts.

How to Detect and Monitor SoD Conflicts

Spotting SoD conflicts manually is nearly impossible in large ERP landscapes. Instead, organizations rely on:

• Automated SoD rule sets in SAP GRC, Oracle Risk Management Cloud, or third-party GRC tools.
  
  
• Risk-based dashboards highlighting critical conflicts.
  
  
• Exception reporting to flag high-risk transactions.
  
  
• Continuous monitoring instead of periodic reviews.

Automation ensures scalability whether you manage 500 or 50,000 users, you can catch conflicts without drowning in spreadsheets.

Real-World Case Study: From Audit Findings to Automation

A global logistics company faced repeated SOX audit findings for SoD violations. Their ERP had 12,000 active users, many with conflicting roles.

By implementing SAP GRC Access Control, they:

• Identified and remediated over 1,500 high-risk conflicts.
  
  
• Redesigned roles to eliminate toxic combinations.
  
  
• Automated quarterly reviews, cutting review cycles from 6 weeks to 2.

Result? Zero audit findings in the next cycle and significant trust gained with both auditors and executives.

Best Practices for Managing SoD Conflicts

To stay ahead of risks, follow these principles:

• Design roles with least privilege: Grant only what’s necessary.
  
  
• Use SoD rule libraries: Tailor them to your business processes.
  
  
• Automate user provisioning: Prevent conflicts at the point of access request.
  
  
• Review regularly: Run periodic or continuous SoD checks.
  
  
• Train managers: Help them understand why SoD matters, so they don’t just rubber-stamp reviews.

At TRPGLOBAL, we specialize in helping enterprises identify, remediate, and automate SoD controls across ERP systems like SAP and Oracle. With our RiskSuccess© methodology, we transform access risks into streamlined, audit-ready processes.

By understanding the top 7 conflicts and applying proven mitigation strategies like role redesign, workflow approvals, and continuous monitoring you can dramatically reduce risk.

The key? Don’t rely on manual checks. Invest in automation and governance frameworks like SAP GRC or Oracle Risk Management Cloud to ensure ongoing compliance, stronger controls, and a resilient organization.

Ready to eliminate SoD conflicts and strengthen your ERP security posture? Contact us today to schedule a consultation with our ERP risk experts.