Audit 53201

"Lack of Segregation of Duties Criteria or Specific Requirement: A good system of internal control has the proper segregation of duties between authorization, custody, record keeping and reconciliation so that no one individual handles a transaction from inception to completion. Condition: Our audit disclosed that due to the limited number of personnel within the accounting department, Three Rivers Public Health Department?s accounting and administrative staff are precluded from implementing certain internal controls that would be preferred if the office staff were large enough to provide optimum segregation of duties to assure adequate internal controls for financial reporting. Context: The Executive Director is able to perform and oversee most accounting functions, including receipting and depositing of revenue, initiating and approving invoices, writing and signing checks, coding and posting transactions in Quickbooks, and preparation and review of financial reports. There are some mitigating controls where the bookkeeper is performing most of the posting of transactions and some reconciliations and the Executive Director reviews the bank statements and reconciliations. Also, the Board members review financial statements every month. Effect: When one or even two individuals are responsible for all accounting functions on a day to day basis, without adequate oversight: ? Intentional or unintentional errors could be made and not detected. ? Transactions could be coded in the wrong accounts or classes. ? Entries could be made to cover up fraud (fraudulent financial reporting or misappropriation of assets). Cause: The Department has limited staffing resources with skills, experience, and competency to participate in the financial reporting process. Recommendation: We highly recommend the Board and Executive Director continue to review, implement and monitor their financial policies and procedures to segregate duties to the extent possible and to implement additional oversight of the Executive Director?s duties, including maximizing the Board involvement in oversight, questioning transactions and reviewing the general ledger monthly. "" "

"Lack of Segregation of Duties Criteria or Specific Requirement: A good system of internal control has the proper segregation of duties between authorization, custody, record keeping and reconciliation so that no one individual handles a transaction from inception to completion. Condition: Our audit disclosed that due to the limited number of personnel within the accounting department, Three Rivers Public Health Department?s accounting and administrative staff are precluded from implementing certain internal controls that would be preferred if the office staff were large enough to provide optimum segregation of duties to assure adequate internal controls for financial reporting. Context: The Executive Director is able to perform and oversee most accounting functions, including receipting and depositing of revenue, initiating and approving invoices, writing and signing checks, coding and posting transactions in Quickbooks, and preparation and review of financial reports. There are some mitigating controls where the bookkeeper is performing most of the posting of transactions and some reconciliations and the Executive Director reviews the bank statements and reconciliations. Also, the Board members review financial statements every month. Effect: When one or even two individuals are responsible for all accounting functions on a day to day basis, without adequate oversight: ? Intentional or unintentional errors could be made and not detected. ? Transactions could be coded in the wrong accounts or classes. ? Entries could be made to cover up fraud (fraudulent financial reporting or misappropriation of assets). Cause: The Department has limited staffing resources with skills, experience, and competency to participate in the financial reporting process. Recommendation: We highly recommend the Board and Executive Director continue to review, implement and monitor their financial policies and procedures to segregate duties to the extent possible and to implement additional oversight of the Executive Director?s duties, including maximizing the Board involvement in oversight, questioning transactions and reviewing the general ledger monthly. "" "