Glossary term
Maker-Checker Principle
Subject: Governance, Internal Control and Audit
Also known as: Four-Eyes Principle
The maker-checker principle requires one person to prepare or initiate a transaction or change, and a different person to review and approve it before it takes effect, so that no one acts alone.
Explanation
The person who creates the entry is the maker. A second person with the right authority, the checker, reviews it against the supporting documents and either approves or rejects it. The two cannot be the same individual, and systems usually enforce this by blocking users from approving their own entries. It is used for payments, account opening, changes to customer or supplier details, limit changes, journal entries and system configuration. The principle catches honest mistakes and makes fraud harder, since it would need two people to cooperate. It is a specific form of segregation of duties, applied to a single transaction. Weaknesses appear when the checker approves without looking, when the same pair always work together, or when privileged users can bypass the step. It has long been standard banking practice. Of all the controls available, a second reviewer is among the cheapest to run.
Example
In bank operations, a clerk enters a request to raise a corporate customer's daily transfer limit from 50,000 to 500,000. The system holds the request until a supervisor reviews the signed application and approves it. When the supervisor notices that the signature differs from the specimen, she rejects the request and notes the reason.
Not to be confused with
- Segregation of Duties (SoD)
- Segregation divides incompatible roles across a whole process. Maker-checker adds a second reviewer to a single transaction or change.