Audit 384411

2025-001: Segregation of Duties Condition: Management is responsible for the design, implementation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system. The following duties lack adequate segregation of duties: • The same individual that reconciles the bank accounts also approves and codes invoices, creates deposits and processes and initiates debt payments. • This individual is also the primary staff who compiles and reviews grant claims. 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 Superintendent 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 Board of Education approves monthly accounts payable checks and the Superintendent reviews payroll timesheets prior to processing payroll. The Superintendent also approves journal entries before they are posted to the accounting ledger. The Board of Education and Superintendent will continue to monitor transactions of the District.