Audit 396734

Due to a small staff size, the Agency does not have complete segregation of duties. The ideal internal control system would not allow one person to perform a transaction from beginning to end. There are insufficient personnel to properly segregate all financial functions of the Agency. An error in financial reporting may not be detected in a timely manner or the misappropriation of assets could be concealed. We recommend that the Board and management use supervisory reviews such as monitoring financial statements and budget reports, and segregate duties where cost beneficial to do so.

The Agency does not prepare its annual financial statements or note disclosures. The Agency staff works with the auditor in the preparation and subsequently reviews and approves the financial statements and note disclosures before issuance. Internal controls should be in place that provide reasonable assurance that the financial statements are free of material misstatements and that the independent auditor is not part of this control system. The Agency staff does not have time to prepare the Agency's financial statements efficiently. The Agency relies on the auditor to prepare the financial statements and the note disclosures and then the Agency review's the final product. Caution must be exercised so that the auditor is not deemed to be part of the control system. The Agency can accept this condition and concentrate on the review and approval process or prepare all financial statements and note disclosures in house or hire an outside source to prepare the financial statements and note disclosure.