Audit 386409

Criteria Accounting and financial duties should be segregated to reduce to a low level the ability of individuals to both commit and conceal instances of fraud. Condition and Context Proper segregation of accounting and financial duties are not sufficiently segregated to reduce the risk of fraud to an acceptable low level. Cause The District has a limited number of personnel involved in the accounting functions. Potential Effect Improper segregation of duties could cause misstatements, caused by error or fraud, to occur and not be detected. Recommendation The cost of additional personnel to properly segregate accounting and financial responsibilities would appear to outweigh the benefits received. However, management and the Board of Education should constantly be aware of the possibility that errors or fraud could occur and continue current practices mitigating these possibilities and examine and implement other mitigating controls when appropriate. Views of Responsible Officials and Planned Corrective Action The District understands the inherent risks associated with lack of segregation of accounting functions. The District requires monthly reporting to the Board of Education and the District superintendent to ensure transactions are recorded, and potential errors and irregularities are identified on a timely basis. The District has implemented procedures to limit the existence of, and mitigate risks associated with, nonsegregated accounting functions. The District has assessed the benefits and costs associated with additional requirements necessary to assure proper segregation of duties and has determined that cost would outweigh any benefits received.