Audit 399819

Criteria: In an ideal accounting department, all accounting and financial responsibilities would be segregated. Condition: During the audit, we noted that there is a concentration of duties with respect to certain District functions. Cause: There are some functions within the District in which a concentration of duties exists. For instance: • One person has the ability to initiate and authorize internal bank transfers or make electronic payments. • One person has access to the accounting system, reconciling bank statements, and posting journal entries. • One person can process payroll, generate payroll liabilities, generate signed payroll checks, initiate ACH payments, and edit the master payroll file. Effect: District assets could be misappropriated or financial statements could be misstated. Recommendation: We recommend that the District segregate all duties to ensure no single employee has access to assets and record keeping of those assets. Because oflimited staff, we realize segregation of the above duties is not practical, if not impossible. Therefore, the responsibility of the Business Manager is greatly increased because the Board must rely on his knowledge of the everyday operations to discover any material changes in the District's financial position.