Audit 388144

2025-2 Limited Staff Condition: The District has a limited staff responsible for or access to: a. posting to the general ledger b. check writing c. payroll processing Criteria: The small size of the District’s office staff limits the extent of separation of duties. The basic premise in an ideal accounting office is that no one employee should have access to both physical assets and the related accounting records or to all phases of a transaction. Some examples of lack of segregation of duties at the District are as follows: An individual can process invoices, override purchase order amounts, prepare checks, mail checks, edit the vendor master file, as well as open the mail for checks received. An individual initiates payroll checks as well as prepares payroll checks, has printer sign payroll checks (electronic signature), reviews and authorizes electronic payroll disbursements, prepares distributions of payroll checks (rubber bands by building and mail man disburses) throughout the buildings (all sealed by machine), controls unclaimed paychecks, resolves employee payroll inquiries, and edits the payroll master file. Cause: The District does not have the number of employees necessary in the business office to properly segregate all duties. Recommendation: Ideally, the District would hire the number of staff necessary to segregate all duties. However, we realize segregation of duties is not practical, if not impossible. Because of this internal control situation, the responsibility of the Business Manager is greatly increased because the Board must rely on his knowledge of the everyday operation to discover any material changes in the District’s financial position. Effect: A lack of separation of duties makes the School District more susceptible to a misappropriation of District assets. Questioned Costs: None identified. Views of Responsible Official and Planned Corrective Action: See corrective action plan included in this report package.