Audit 402106

Criteria Segregation of duties should be in place to ensure appropriate checks and balances and to mitigate incompatible duties being performed by one individual over key financial and compliance functions. Condition The Authority does not maintain sufficient segregation of duties to prevent one individual from having control over each of the following areas. Cash receipts – detailed recordkeeping, custody, reconciling, and posting to the general ledger. Disbursements – check preparation including payroll, and posting to and maintaining the general ledger. Federal compliance requirements – eligibility determinations, special tests and provisions, and reporting. Cause The Authority does not have sufficient staffing to ensure multiple individuals are involved in all significant accounting controls and transaction cycles Effect One individual may have complete control over certain transactions and compliance determinations without adequate checks and balances or reviews being implemented Recommendations Resolving the deficiency may require the Authority to hire additional personnel necessary to adequately separate accounting responsibilities. This solution may result in a substantial increase in operating costs. The other action would be to accept that by definition there is a significant deficiency in internal control and the cost of eliminating that deficiency may exceed the benefit. Response and Corrective Action Plan The Authority has attempted to segregate accounting duties by having a person who does not initiate, prepare or post disbursements review the bank statements and co-sign all checks. The Authority will continue to monitor its policies and procedures in an effort to improve control efficiencies, however, at this time, the Authority has determined that the cost of eliminating the deficiency would exceed its benefit. Conclusion Response accepted.

Criteria Procedures over the disbursement cycle should include processes to ensure all invoices are confirmed for validity and that invoice constitutes a verified outstanding obligation of the Authority prior to payment. Condition During the course of our audit procedures, we identified one instance in which an invoice was invoice in question was not identified by either staff or the vendor as being a duplicated payment. Cause The vendor appears to have submitted two invoices to the Authority in error. The Authority paid both invoices without validating they constituted genuine obligations of the Authority. Effect The Authority overpaid the vendor for services provided. A credit was not applied to the Authority's account until identified during our audit procedures. Recommendations Procedures should be implemented to verify that all invoices represent genuine obligations of the Authority prior to payment Response and Corrective Action Plan The Authority acknowledges the duplicate payment identified during the audit. The duplicate payment resulted from the vendor issuing the same invoice twice as part of a transition in their billing process. Both invoices appeared valid at the time of payment and were processed accordingly. Upon notification during the audit, the Authority promptly contacted the vendor, and the overpayment was fully refunded. The vendor has confirmed that the billing issue has been corrected and that updates have been made to their billing process to prevent similar occurrences. The vendor also indicated that similar billing issues had impacted other clients during this transition period. To strengthen internal controls, the Authority will implement an additional review step within the process to identify potential duplicate invoices prior to payment. This will include verifying invoice numbers, amounts, and service periods against previously processed invoices. The Authority believes this additional step will further reduce the risk of duplicate payments in the future. Conclusion Response accepted. INSTANCES OF NONCOMPLIANCE No matters were noted.