Finding #2023-001 – Segregation of Duties (Prior Year Finding #2022-001)
Condition: Management is responsible for the design, installation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system.
The limited size of the District’s office staff prevents the ideal segregation of functions. The Business Manager is the only employee that records transactions in the general ledger, records cash receipt adjustments in the general ledger, prints accounts payable checks using electronic signatures, performs bank reconciliations, and has access to process payroll.
Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties.
Cause: Limited number of personnel.
Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional and unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional.
Recommendation: We recommend that the Board of Education and the District Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure.
Response: We agree with this finding but do not believe it is cost effective to increase the office staff in an attempt to bring about a more effective segregation of duties. The District Administrator approves purchase orders and the Board of Education approves monthly accounts payable checks. Also, the Building Principals review payroll timesheets prior to processing payroll. The Board of Education, District Administrator, and Building Principals will continue to monitor transactions of the District.
Finding #2023-002 – Material Adjustments (Prior Year Finding #2022-002)
Condition: Johnson Block and Company, Inc. proposed numerous adjusting journal entries to adjust District account balances. We deem these entries to be significant in relation to the financial statements. Since the District did not make these adjustments in the accounting system prior to the audit, a material weakness exists in the District’s internal controls.
Effect: This means that the proper recording and reporting of financial information may not occur within a timely manner.
Cause: Financial information was not recorded in a timely manner and material adjustments were needed in order to correct various transactions.
Criteria: Material adjusting journal entries not prepared by the District before the audit are considered an internal control weakness.
Recommendation: Policies and procedures should be implemented to ensure account balances are properly recorded in a timely manner.
Response: The District will work to establish policies and procedures to reduce the number of adjusting journal entries proposed by the auditor.
Finding #2023-003 – Cash Reconciliations (Prior Year Finding #2022-004)
Condition: The main checking account of the District was not reconciled to the general ledger throughout 2022-2023.
Effect: Not reconciling cash accounts on a timely basis could lead to errors or other problems not being recognized and resolved in a timely manner. General ledger cash balances should be reconciled to monthly bank statements shortly after bank statements are received.
Cause: The District’s main checking account was not reconciled to the general ledger at the time of the onsite audit. After all audit entries were recorded, no significant cash difference exists.
Criteria: Internal controls should be kept in place to make sure that cash is reconciled timely and that reconciliations are tied to the general ledger on a monthly basis.
Recommendation: We recommend the District develop procedures to reconcile all cash accounts to the general ledger in a timely manner. The reconciliations should be reviewed by someone other than the person preparing the reconciliation. The reviewer should initial and date the reconciliations when the review is complete.
Response: The District will begin reconciling cash to the general ledger on a timely basis during the 2023-2024 fiscal year.
Finding #2023-001 – Segregation of Duties (Prior Year Finding #2022-001)
Condition: Management is responsible for the design, installation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system.
The limited size of the District’s office staff prevents the ideal segregation of functions. The Business Manager is the only employee that records transactions in the general ledger, records cash receipt adjustments in the general ledger, prints accounts payable checks using electronic signatures, performs bank reconciliations, and has access to process payroll.
Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties.
Cause: Limited number of personnel.
Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional and unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional.
Recommendation: We recommend that the Board of Education and the District Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure.
Response: We agree with this finding but do not believe it is cost effective to increase the office staff in an attempt to bring about a more effective segregation of duties. The District Administrator approves purchase orders and the Board of Education approves monthly accounts payable checks. Also, the Building Principals review payroll timesheets prior to processing payroll. The Board of Education, District Administrator, and Building Principals will continue to monitor transactions of the District.
Finding #2023-002 – Material Adjustments (Prior Year Finding #2022-002)
Condition: Johnson Block and Company, Inc. proposed numerous adjusting journal entries to adjust District account balances. We deem these entries to be significant in relation to the financial statements. Since the District did not make these adjustments in the accounting system prior to the audit, a material weakness exists in the District’s internal controls.
Effect: This means that the proper recording and reporting of financial information may not occur within a timely manner.
Cause: Financial information was not recorded in a timely manner and material adjustments were needed in order to correct various transactions.
Criteria: Material adjusting journal entries not prepared by the District before the audit are considered an internal control weakness.
Recommendation: Policies and procedures should be implemented to ensure account balances are properly recorded in a timely manner.
Response: The District will work to establish policies and procedures to reduce the number of adjusting journal entries proposed by the auditor.
Finding #2023-003 – Cash Reconciliations (Prior Year Finding #2022-004)
Condition: The main checking account of the District was not reconciled to the general ledger throughout 2022-2023.
Effect: Not reconciling cash accounts on a timely basis could lead to errors or other problems not being recognized and resolved in a timely manner. General ledger cash balances should be reconciled to monthly bank statements shortly after bank statements are received.
Cause: The District’s main checking account was not reconciled to the general ledger at the time of the onsite audit. After all audit entries were recorded, no significant cash difference exists.
Criteria: Internal controls should be kept in place to make sure that cash is reconciled timely and that reconciliations are tied to the general ledger on a monthly basis.
Recommendation: We recommend the District develop procedures to reconcile all cash accounts to the general ledger in a timely manner. The reconciliations should be reviewed by someone other than the person preparing the reconciliation. The reviewer should initial and date the reconciliations when the review is complete.
Response: The District will begin reconciling cash to the general ledger on a timely basis during the 2023-2024 fiscal year.
Finding #2023-001 – Segregation of Duties (Prior Year Finding #2022-001)
Condition: Management is responsible for the design, installation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system.
The limited size of the District’s office staff prevents the ideal segregation of functions. The Business Manager is the only employee that records transactions in the general ledger, records cash receipt adjustments in the general ledger, prints accounts payable checks using electronic signatures, performs bank reconciliations, and has access to process payroll.
Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties.
Cause: Limited number of personnel.
Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional and unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional.
Recommendation: We recommend that the Board of Education and the District Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure.
Response: We agree with this finding but do not believe it is cost effective to increase the office staff in an attempt to bring about a more effective segregation of duties. The District Administrator approves purchase orders and the Board of Education approves monthly accounts payable checks. Also, the Building Principals review payroll timesheets prior to processing payroll. The Board of Education, District Administrator, and Building Principals will continue to monitor transactions of the District.
Finding #2023-002 – Material Adjustments (Prior Year Finding #2022-002)
Condition: Johnson Block and Company, Inc. proposed numerous adjusting journal entries to adjust District account balances. We deem these entries to be significant in relation to the financial statements. Since the District did not make these adjustments in the accounting system prior to the audit, a material weakness exists in the District’s internal controls.
Effect: This means that the proper recording and reporting of financial information may not occur within a timely manner.
Cause: Financial information was not recorded in a timely manner and material adjustments were needed in order to correct various transactions.
Criteria: Material adjusting journal entries not prepared by the District before the audit are considered an internal control weakness.
Recommendation: Policies and procedures should be implemented to ensure account balances are properly recorded in a timely manner.
Response: The District will work to establish policies and procedures to reduce the number of adjusting journal entries proposed by the auditor.
Finding #2023-003 – Cash Reconciliations (Prior Year Finding #2022-004)
Condition: The main checking account of the District was not reconciled to the general ledger throughout 2022-2023.
Effect: Not reconciling cash accounts on a timely basis could lead to errors or other problems not being recognized and resolved in a timely manner. General ledger cash balances should be reconciled to monthly bank statements shortly after bank statements are received.
Cause: The District’s main checking account was not reconciled to the general ledger at the time of the onsite audit. After all audit entries were recorded, no significant cash difference exists.
Criteria: Internal controls should be kept in place to make sure that cash is reconciled timely and that reconciliations are tied to the general ledger on a monthly basis.
Recommendation: We recommend the District develop procedures to reconcile all cash accounts to the general ledger in a timely manner. The reconciliations should be reviewed by someone other than the person preparing the reconciliation. The reviewer should initial and date the reconciliations when the review is complete.
Response: The District will begin reconciling cash to the general ledger on a timely basis during the 2023-2024 fiscal year.
Finding #2023-001 – Segregation of Duties (Prior Year Finding #2022-001)
Condition: Management is responsible for the design, installation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system.
The limited size of the District’s office staff prevents the ideal segregation of functions. The Business Manager is the only employee that records transactions in the general ledger, records cash receipt adjustments in the general ledger, prints accounts payable checks using electronic signatures, performs bank reconciliations, and has access to process payroll.
Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties.
Cause: Limited number of personnel.
Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional and unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional.
Recommendation: We recommend that the Board of Education and the District Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure.
Response: We agree with this finding but do not believe it is cost effective to increase the office staff in an attempt to bring about a more effective segregation of duties. The District Administrator approves purchase orders and the Board of Education approves monthly accounts payable checks. Also, the Building Principals review payroll timesheets prior to processing payroll. The Board of Education, District Administrator, and Building Principals will continue to monitor transactions of the District.
Finding #2023-002 – Material Adjustments (Prior Year Finding #2022-002)
Condition: Johnson Block and Company, Inc. proposed numerous adjusting journal entries to adjust District account balances. We deem these entries to be significant in relation to the financial statements. Since the District did not make these adjustments in the accounting system prior to the audit, a material weakness exists in the District’s internal controls.
Effect: This means that the proper recording and reporting of financial information may not occur within a timely manner.
Cause: Financial information was not recorded in a timely manner and material adjustments were needed in order to correct various transactions.
Criteria: Material adjusting journal entries not prepared by the District before the audit are considered an internal control weakness.
Recommendation: Policies and procedures should be implemented to ensure account balances are properly recorded in a timely manner.
Response: The District will work to establish policies and procedures to reduce the number of adjusting journal entries proposed by the auditor.
Finding #2023-003 – Cash Reconciliations (Prior Year Finding #2022-004)
Condition: The main checking account of the District was not reconciled to the general ledger throughout 2022-2023.
Effect: Not reconciling cash accounts on a timely basis could lead to errors or other problems not being recognized and resolved in a timely manner. General ledger cash balances should be reconciled to monthly bank statements shortly after bank statements are received.
Cause: The District’s main checking account was not reconciled to the general ledger at the time of the onsite audit. After all audit entries were recorded, no significant cash difference exists.
Criteria: Internal controls should be kept in place to make sure that cash is reconciled timely and that reconciliations are tied to the general ledger on a monthly basis.
Recommendation: We recommend the District develop procedures to reconcile all cash accounts to the general ledger in a timely manner. The reconciliations should be reviewed by someone other than the person preparing the reconciliation. The reviewer should initial and date the reconciliations when the review is complete.
Response: The District will begin reconciling cash to the general ledger on a timely basis during the 2023-2024 fiscal year.
Finding #2023-001 – Segregation of Duties (Prior Year Finding #2022-001)
Condition: Management is responsible for the design, installation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system.
The limited size of the District’s office staff prevents the ideal segregation of functions. The Business Manager is the only employee that records transactions in the general ledger, records cash receipt adjustments in the general ledger, prints accounts payable checks using electronic signatures, performs bank reconciliations, and has access to process payroll.
Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties.
Cause: Limited number of personnel.
Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional and unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional.
Recommendation: We recommend that the Board of Education and the District Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure.
Response: We agree with this finding but do not believe it is cost effective to increase the office staff in an attempt to bring about a more effective segregation of duties. The District Administrator approves purchase orders and the Board of Education approves monthly accounts payable checks. Also, the Building Principals review payroll timesheets prior to processing payroll. The Board of Education, District Administrator, and Building Principals will continue to monitor transactions of the District.
Finding #2023-002 – Material Adjustments (Prior Year Finding #2022-002)
Condition: Johnson Block and Company, Inc. proposed numerous adjusting journal entries to adjust District account balances. We deem these entries to be significant in relation to the financial statements. Since the District did not make these adjustments in the accounting system prior to the audit, a material weakness exists in the District’s internal controls.
Effect: This means that the proper recording and reporting of financial information may not occur within a timely manner.
Cause: Financial information was not recorded in a timely manner and material adjustments were needed in order to correct various transactions.
Criteria: Material adjusting journal entries not prepared by the District before the audit are considered an internal control weakness.
Recommendation: Policies and procedures should be implemented to ensure account balances are properly recorded in a timely manner.
Response: The District will work to establish policies and procedures to reduce the number of adjusting journal entries proposed by the auditor.
Finding #2023-003 – Cash Reconciliations (Prior Year Finding #2022-004)
Condition: The main checking account of the District was not reconciled to the general ledger throughout 2022-2023.
Effect: Not reconciling cash accounts on a timely basis could lead to errors or other problems not being recognized and resolved in a timely manner. General ledger cash balances should be reconciled to monthly bank statements shortly after bank statements are received.
Cause: The District’s main checking account was not reconciled to the general ledger at the time of the onsite audit. After all audit entries were recorded, no significant cash difference exists.
Criteria: Internal controls should be kept in place to make sure that cash is reconciled timely and that reconciliations are tied to the general ledger on a monthly basis.
Recommendation: We recommend the District develop procedures to reconcile all cash accounts to the general ledger in a timely manner. The reconciliations should be reviewed by someone other than the person preparing the reconciliation. The reviewer should initial and date the reconciliations when the review is complete.
Response: The District will begin reconciling cash to the general ledger on a timely basis during the 2023-2024 fiscal year.
Finding #2023-001 – Segregation of Duties (Prior Year Finding #2022-001)
Condition: Management is responsible for the design, installation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system.
The limited size of the District’s office staff prevents the ideal segregation of functions. The Business Manager is the only employee that records transactions in the general ledger, records cash receipt adjustments in the general ledger, prints accounts payable checks using electronic signatures, performs bank reconciliations, and has access to process payroll.
Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties.
Cause: Limited number of personnel.
Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional and unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional.
Recommendation: We recommend that the Board of Education and the District Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure.
Response: We agree with this finding but do not believe it is cost effective to increase the office staff in an attempt to bring about a more effective segregation of duties. The District Administrator approves purchase orders and the Board of Education approves monthly accounts payable checks. Also, the Building Principals review payroll timesheets prior to processing payroll. The Board of Education, District Administrator, and Building Principals will continue to monitor transactions of the District.
Finding #2023-002 – Material Adjustments (Prior Year Finding #2022-002)
Condition: Johnson Block and Company, Inc. proposed numerous adjusting journal entries to adjust District account balances. We deem these entries to be significant in relation to the financial statements. Since the District did not make these adjustments in the accounting system prior to the audit, a material weakness exists in the District’s internal controls.
Effect: This means that the proper recording and reporting of financial information may not occur within a timely manner.
Cause: Financial information was not recorded in a timely manner and material adjustments were needed in order to correct various transactions.
Criteria: Material adjusting journal entries not prepared by the District before the audit are considered an internal control weakness.
Recommendation: Policies and procedures should be implemented to ensure account balances are properly recorded in a timely manner.
Response: The District will work to establish policies and procedures to reduce the number of adjusting journal entries proposed by the auditor.
Finding #2023-003 – Cash Reconciliations (Prior Year Finding #2022-004)
Condition: The main checking account of the District was not reconciled to the general ledger throughout 2022-2023.
Effect: Not reconciling cash accounts on a timely basis could lead to errors or other problems not being recognized and resolved in a timely manner. General ledger cash balances should be reconciled to monthly bank statements shortly after bank statements are received.
Cause: The District’s main checking account was not reconciled to the general ledger at the time of the onsite audit. After all audit entries were recorded, no significant cash difference exists.
Criteria: Internal controls should be kept in place to make sure that cash is reconciled timely and that reconciliations are tied to the general ledger on a monthly basis.
Recommendation: We recommend the District develop procedures to reconcile all cash accounts to the general ledger in a timely manner. The reconciliations should be reviewed by someone other than the person preparing the reconciliation. The reviewer should initial and date the reconciliations when the review is complete.
Response: The District will begin reconciling cash to the general ledger on a timely basis during the 2023-2024 fiscal year.
Finding #2023-001 – Segregation of Duties (Prior Year Finding #2022-001)
Condition: Management is responsible for the design, installation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system.
The limited size of the District’s office staff prevents the ideal segregation of functions. The Business Manager is the only employee that records transactions in the general ledger, records cash receipt adjustments in the general ledger, prints accounts payable checks using electronic signatures, performs bank reconciliations, and has access to process payroll.
Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties.
Cause: Limited number of personnel.
Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional and unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional.
Recommendation: We recommend that the Board of Education and the District Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure.
Response: We agree with this finding but do not believe it is cost effective to increase the office staff in an attempt to bring about a more effective segregation of duties. The District Administrator approves purchase orders and the Board of Education approves monthly accounts payable checks. Also, the Building Principals review payroll timesheets prior to processing payroll. The Board of Education, District Administrator, and Building Principals will continue to monitor transactions of the District.
Finding #2023-002 – Material Adjustments (Prior Year Finding #2022-002)
Condition: Johnson Block and Company, Inc. proposed numerous adjusting journal entries to adjust District account balances. We deem these entries to be significant in relation to the financial statements. Since the District did not make these adjustments in the accounting system prior to the audit, a material weakness exists in the District’s internal controls.
Effect: This means that the proper recording and reporting of financial information may not occur within a timely manner.
Cause: Financial information was not recorded in a timely manner and material adjustments were needed in order to correct various transactions.
Criteria: Material adjusting journal entries not prepared by the District before the audit are considered an internal control weakness.
Recommendation: Policies and procedures should be implemented to ensure account balances are properly recorded in a timely manner.
Response: The District will work to establish policies and procedures to reduce the number of adjusting journal entries proposed by the auditor.
Finding #2023-003 – Cash Reconciliations (Prior Year Finding #2022-004)
Condition: The main checking account of the District was not reconciled to the general ledger throughout 2022-2023.
Effect: Not reconciling cash accounts on a timely basis could lead to errors or other problems not being recognized and resolved in a timely manner. General ledger cash balances should be reconciled to monthly bank statements shortly after bank statements are received.
Cause: The District’s main checking account was not reconciled to the general ledger at the time of the onsite audit. After all audit entries were recorded, no significant cash difference exists.
Criteria: Internal controls should be kept in place to make sure that cash is reconciled timely and that reconciliations are tied to the general ledger on a monthly basis.
Recommendation: We recommend the District develop procedures to reconcile all cash accounts to the general ledger in a timely manner. The reconciliations should be reviewed by someone other than the person preparing the reconciliation. The reviewer should initial and date the reconciliations when the review is complete.
Response: The District will begin reconciling cash to the general ledger on a timely basis during the 2023-2024 fiscal year.
Finding #2023-001 – Segregation of Duties (Prior Year Finding #2022-001)
Condition: Management is responsible for the design, installation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system.
The limited size of the District’s office staff prevents the ideal segregation of functions. The Business Manager is the only employee that records transactions in the general ledger, records cash receipt adjustments in the general ledger, prints accounts payable checks using electronic signatures, performs bank reconciliations, and has access to process payroll.
Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties.
Cause: Limited number of personnel.
Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional and unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional.
Recommendation: We recommend that the Board of Education and the District Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure.
Response: We agree with this finding but do not believe it is cost effective to increase the office staff in an attempt to bring about a more effective segregation of duties. The District Administrator approves purchase orders and the Board of Education approves monthly accounts payable checks. Also, the Building Principals review payroll timesheets prior to processing payroll. The Board of Education, District Administrator, and Building Principals will continue to monitor transactions of the District.
Finding #2023-002 – Material Adjustments (Prior Year Finding #2022-002)
Condition: Johnson Block and Company, Inc. proposed numerous adjusting journal entries to adjust District account balances. We deem these entries to be significant in relation to the financial statements. Since the District did not make these adjustments in the accounting system prior to the audit, a material weakness exists in the District’s internal controls.
Effect: This means that the proper recording and reporting of financial information may not occur within a timely manner.
Cause: Financial information was not recorded in a timely manner and material adjustments were needed in order to correct various transactions.
Criteria: Material adjusting journal entries not prepared by the District before the audit are considered an internal control weakness.
Recommendation: Policies and procedures should be implemented to ensure account balances are properly recorded in a timely manner.
Response: The District will work to establish policies and procedures to reduce the number of adjusting journal entries proposed by the auditor.
Finding #2023-003 – Cash Reconciliations (Prior Year Finding #2022-004)
Condition: The main checking account of the District was not reconciled to the general ledger throughout 2022-2023.
Effect: Not reconciling cash accounts on a timely basis could lead to errors or other problems not being recognized and resolved in a timely manner. General ledger cash balances should be reconciled to monthly bank statements shortly after bank statements are received.
Cause: The District’s main checking account was not reconciled to the general ledger at the time of the onsite audit. After all audit entries were recorded, no significant cash difference exists.
Criteria: Internal controls should be kept in place to make sure that cash is reconciled timely and that reconciliations are tied to the general ledger on a monthly basis.
Recommendation: We recommend the District develop procedures to reconcile all cash accounts to the general ledger in a timely manner. The reconciliations should be reviewed by someone other than the person preparing the reconciliation. The reviewer should initial and date the reconciliations when the review is complete.
Response: The District will begin reconciling cash to the general ledger on a timely basis during the 2023-2024 fiscal year.
Finding #2023-001 – Segregation of Duties (Prior Year Finding #2022-001)
Condition: Management is responsible for the design, installation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system.
The limited size of the District’s office staff prevents the ideal segregation of functions. The Business Manager is the only employee that records transactions in the general ledger, records cash receipt adjustments in the general ledger, prints accounts payable checks using electronic signatures, performs bank reconciliations, and has access to process payroll.
Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties.
Cause: Limited number of personnel.
Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional and unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional.
Recommendation: We recommend that the Board of Education and the District Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure.
Response: We agree with this finding but do not believe it is cost effective to increase the office staff in an attempt to bring about a more effective segregation of duties. The District Administrator approves purchase orders and the Board of Education approves monthly accounts payable checks. Also, the Building Principals review payroll timesheets prior to processing payroll. The Board of Education, District Administrator, and Building Principals will continue to monitor transactions of the District.
Finding #2023-002 – Material Adjustments (Prior Year Finding #2022-002)
Condition: Johnson Block and Company, Inc. proposed numerous adjusting journal entries to adjust District account balances. We deem these entries to be significant in relation to the financial statements. Since the District did not make these adjustments in the accounting system prior to the audit, a material weakness exists in the District’s internal controls.
Effect: This means that the proper recording and reporting of financial information may not occur within a timely manner.
Cause: Financial information was not recorded in a timely manner and material adjustments were needed in order to correct various transactions.
Criteria: Material adjusting journal entries not prepared by the District before the audit are considered an internal control weakness.
Recommendation: Policies and procedures should be implemented to ensure account balances are properly recorded in a timely manner.
Response: The District will work to establish policies and procedures to reduce the number of adjusting journal entries proposed by the auditor.
Finding #2023-003 – Cash Reconciliations (Prior Year Finding #2022-004)
Condition: The main checking account of the District was not reconciled to the general ledger throughout 2022-2023.
Effect: Not reconciling cash accounts on a timely basis could lead to errors or other problems not being recognized and resolved in a timely manner. General ledger cash balances should be reconciled to monthly bank statements shortly after bank statements are received.
Cause: The District’s main checking account was not reconciled to the general ledger at the time of the onsite audit. After all audit entries were recorded, no significant cash difference exists.
Criteria: Internal controls should be kept in place to make sure that cash is reconciled timely and that reconciliations are tied to the general ledger on a monthly basis.
Recommendation: We recommend the District develop procedures to reconcile all cash accounts to the general ledger in a timely manner. The reconciliations should be reviewed by someone other than the person preparing the reconciliation. The reviewer should initial and date the reconciliations when the review is complete.
Response: The District will begin reconciling cash to the general ledger on a timely basis during the 2023-2024 fiscal year.
Finding #2023-001 – Segregation of Duties (Prior Year Finding #2022-001)
Condition: Management is responsible for the design, installation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system.
The limited size of the District’s office staff prevents the ideal segregation of functions. The Business Manager is the only employee that records transactions in the general ledger, records cash receipt adjustments in the general ledger, prints accounts payable checks using electronic signatures, performs bank reconciliations, and has access to process payroll.
Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties.
Cause: Limited number of personnel.
Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional and unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional.
Recommendation: We recommend that the Board of Education and the District Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure.
Response: We agree with this finding but do not believe it is cost effective to increase the office staff in an attempt to bring about a more effective segregation of duties. The District Administrator approves purchase orders and the Board of Education approves monthly accounts payable checks. Also, the Building Principals review payroll timesheets prior to processing payroll. The Board of Education, District Administrator, and Building Principals will continue to monitor transactions of the District.
Finding #2023-002 – Material Adjustments (Prior Year Finding #2022-002)
Condition: Johnson Block and Company, Inc. proposed numerous adjusting journal entries to adjust District account balances. We deem these entries to be significant in relation to the financial statements. Since the District did not make these adjustments in the accounting system prior to the audit, a material weakness exists in the District’s internal controls.
Effect: This means that the proper recording and reporting of financial information may not occur within a timely manner.
Cause: Financial information was not recorded in a timely manner and material adjustments were needed in order to correct various transactions.
Criteria: Material adjusting journal entries not prepared by the District before the audit are considered an internal control weakness.
Recommendation: Policies and procedures should be implemented to ensure account balances are properly recorded in a timely manner.
Response: The District will work to establish policies and procedures to reduce the number of adjusting journal entries proposed by the auditor.
Finding #2023-003 – Cash Reconciliations (Prior Year Finding #2022-004)
Condition: The main checking account of the District was not reconciled to the general ledger throughout 2022-2023.
Effect: Not reconciling cash accounts on a timely basis could lead to errors or other problems not being recognized and resolved in a timely manner. General ledger cash balances should be reconciled to monthly bank statements shortly after bank statements are received.
Cause: The District’s main checking account was not reconciled to the general ledger at the time of the onsite audit. After all audit entries were recorded, no significant cash difference exists.
Criteria: Internal controls should be kept in place to make sure that cash is reconciled timely and that reconciliations are tied to the general ledger on a monthly basis.
Recommendation: We recommend the District develop procedures to reconcile all cash accounts to the general ledger in a timely manner. The reconciliations should be reviewed by someone other than the person preparing the reconciliation. The reviewer should initial and date the reconciliations when the review is complete.
Response: The District will begin reconciling cash to the general ledger on a timely basis during the 2023-2024 fiscal year.