Audit 403648

Lack of Segregation of Duties Condition: The County does not have enough staff to implement certain internaL controls that would be preferred to provide optimum segregation of duties. Criteria or Specific Requirement: A good system of internal control allows for segregation of duties between authorization, custody, record-keeping, and reconciliation. Context: Although there is oversight from Board members, and there is division of certain duties within the various offices, the Treasurer is still able to perform and oversee most accounting functions, including receipting and depositing of revenue, initiating and approving invoices, writing and signing checks, and preparation and review of financial reports. Effect: When one individual is able to perform all accounting functions, without oversight on a day-to-day basis, intentional or unintentional errors could be made and not detected, transactions could be reported in improper categories, and steps could be taken to cover up fraud. Cause: The County has limited staffing resources with skills, experience, and competency to participate in the financial reporting process. Recommendation: While additional staff would be ideal to segregate the duties to a fuller extent, we realize that may not be possible due to limited resources. Therefore, we recommend that the Board and Treasurer continue to review, implement and monitor their financial procedures to segregate duties to the extent possible. We also encourage Board involvement in oversight, questioning transactions, and reviewing the financial reports monthly. Response: The County will continue to monitor and review their financial procedures and policies, incorporating Board oversight as much as possible. Adding additional staff to provide a more robust system of internal control is not practical.

Financial Reporting Condition: The County does not have the accounting expertise to provide the Board with reasonable assurance that the County's financial statements and related disclosures are presented in accordance with the applicable accounting principles. Criteria or Specific Requirement: Management is responsible for establishing and maintaining internal controls that should include the fair presentation of financial statements, including the notes to the financial statements, in conformity with the cash basis of accounting. Context: The County has requested that the auditor draft the financial statements and accompanying notes, to ensure they meet the required applicable standards, as the County personnel lacks the expertise to prepare these without assistance. Effect: Financial statements prepared by the County could contain errors that might not be detected by the County. Cause: The County has limited staffing resources with skills, experience, and competency to prepare the financial statements in conformity with the basis of accounting described in Note 1. Recommendation: The County should carefully review the adjustments proposed by the auditor, and should evaluate the adequacy of the financial statements prior to approving the final financial statements. Response: The County Board of Supervisors, along with the Clerk and the Treasurer, will carefully review the financial statements drafted by the auditor, prior to issuing their final approval. The Board and management will also review the audit adjustments, and discuss any questions they may have with the auditor.