Audit 401659

SEGRATION OF DUTIES: CRITERIA: AN EFFECTIVE INTERNAL CONTROL STURCTURE OF AN ORGANIZATION WILL INCLUDE PROCEDURES AND ACTIONS TO: 1 PROTECT THE ASSETS ATAINST THEIFT AND WASTE. 2 ENSURE COMPLIANCE WITH THE ORGANIZATIONS'S POLICIES, PROCEDURES, AND STATUTORY REQUIREMENTS. 3 EVALUATE THE PERFORMANCE OF PERSONNEL TO PROMOTE EFFICIENT OPERATIONS. 4 ENSURE ACCURATE AND RELIABLE OPERATING AND ACCOUTING DATA. SEPARATION OF DUTIES REQQUIRES THAT SOMEONE OTHER THAN THE EMPLOYEE RESPONSIBLE FOR SAFEGUARDING THE ASSET MUST MAINTAIN THE ACCOUNTING RECORDS FOR THAT ASSET. WHEN AN ORGANIZATION SEPARATES DUTIES OF THE EMPLOYEES, IT MINIMIZES THE PROBABLITIY OF AN ERROR OR IRREGULARITY OCCURING AND NOT BEING TIMELY DETECTED. CAUSE: DUE TO THE SMALL SIZE OF SOME DEPARTMENTS OF THE TOWN OF EVANSVILLE, WYOMING, THE POSSIBILTY OF ADEQUATE SEPARATION OF DUTIES OVER CERTAIN TRANSACTION CYCLES IS LIMITED. EFFECT: THE POTENTIAL EFFECT OF THE INTERNAL CONTROL DEFICIENCY IS AN INCREASE IN THE RISK OF FRAUD AND UNDETECTED ERRORS IN THE PROCESSING OF FINANCIAL TRANSACTIONS. RECOMMENDATION: WHILE I RECOGNIZE THAT IS IS IMPRACTICAL FOR THE TOWN TO ACHIEVE THE COMPLETE SEPARATION OF DUTIES OVER ALL TRANSACTIONS WITHIN THE TOWN, IT IS IMPORTANT THAT THE BOARD BE AWARE OF THE CHANCE OF ERRORS AND IRREGULARTIEIS, NOT BEING TIMELY DETECTED IS ELEVATED.