Build Controls That Limit Owner Override

01Segregation of duties, scaled down

The control that fails in every small-business fraud is segregation of duties — the same person authorizes, records, and reconciles. In a closely held company you cannot always separate roles, but you can separate the critical steps: the person who signs checks does not reconcile the bank statement, and the person who reconciles does not have the ability to initiate payments.

• Dual authorization for every payment above a set threshold.
• Bank statements delivered unopened to a partner who does not write the checks.
• A monthly reconciliation reviewed and signed by a second owner.
• User access logs reviewed for after-hours and weekend entries.

02Limit override

Owner override is the control that defeats all other controls. The strongest defense is a rule the owner cannot silently waive: every journal entry above a threshold carries a second signature, and every vendor setup requires approval from someone other than the person who will pay the vendor.