Audit 561

2022-002 Segregation of Duties. Condition:The size of the office staff precludes a proper segregation of functions to assure adequate internal control. Criteria:Lack of segregation of duties. Cause: The limited number of office staff results in incompatible functions being performed by the same individuals. Effect:There may be inappropriate transactions recorded and assets may not be adequately safeguarded.Recommendations: This is not unusual for a Village your size, but the Common Council Members and management should continue to be aware of this condition and to realize that the concentration of duties and responsibilities of a limited number of individuals is not desirable for an effective system of internal control. Under these conditions, the most effective controls lie in the Common Council Member’s and management’s knowledge of matters relating to the Village’s operations. Management Views and Corrective Action Plan: See corrective action plan 2022-002.

2022-003 Financial Reporting for Federal and State Assistance. Conditions: The Uniform Guidance and the State Single Audit Guidelines requires the Village to prepare appropriate financial statements, including the schedules of expenditures of federal awards. While the current staff of the Village maintains financial records supporting amounts reported in the schedules of expenditures of federal awards, the Village contracts with its auditor to compile the data from these records and prepare the single audit report for the Village. Criteria: Having staff with expertise in federal reporting to prepare the Village’s single audit report is an internal control intended to prevent, detect and correct a potential misstatement in the schedules of expenditures of federal awards, or accompanying notes to the schedule. Cause:The additional cost associated with hiring staff sufficiently experienced to prepare the Village’s single audit report, including the additional training time, outweigh the derived benefits. Effect: Because management relies on its auditor to assist with the preparation of the financial statements, including single audit reports, the Village’s system of internal control may not prevent, detect or correct misstatements in these financial statements. Recommendation: We recommend Village personnel continue reviewing the Village’s single audit report prepared by its auditor. While it may not be cost beneficial to hire additional staff to prepare these items, a thorough review of this information by appropriate staff of the Village is necessary to ensure all federal programs are properly reported in the Village’s single audit report. Management Views and Corrective Action Plan: See corrective action plan 2022-003.

2022-002 Segregation of Duties. Condition:The size of the office staff precludes a proper segregation of functions to assure adequate internal control. Criteria:Lack of segregation of duties. Cause: The limited number of office staff results in incompatible functions being performed by the same individuals. Effect:There may be inappropriate transactions recorded and assets may not be adequately safeguarded.Recommendations: This is not unusual for a Village your size, but the Common Council Members and management should continue to be aware of this condition and to realize that the concentration of duties and responsibilities of a limited number of individuals is not desirable for an effective system of internal control. Under these conditions, the most effective controls lie in the Common Council Member’s and management’s knowledge of matters relating to the Village’s operations. Management Views and Corrective Action Plan: See corrective action plan 2022-002.

2022-003 Financial Reporting for Federal and State Assistance. Conditions: The Uniform Guidance and the State Single Audit Guidelines requires the Village to prepare appropriate financial statements, including the schedules of expenditures of federal awards. While the current staff of the Village maintains financial records supporting amounts reported in the schedules of expenditures of federal awards, the Village contracts with its auditor to compile the data from these records and prepare the single audit report for the Village. Criteria: Having staff with expertise in federal reporting to prepare the Village’s single audit report is an internal control intended to prevent, detect and correct a potential misstatement in the schedules of expenditures of federal awards, or accompanying notes to the schedule. Cause:The additional cost associated with hiring staff sufficiently experienced to prepare the Village’s single audit report, including the additional training time, outweigh the derived benefits. Effect: Because management relies on its auditor to assist with the preparation of the financial statements, including single audit reports, the Village’s system of internal control may not prevent, detect or correct misstatements in these financial statements. Recommendation: We recommend Village personnel continue reviewing the Village’s single audit report prepared by its auditor. While it may not be cost beneficial to hire additional staff to prepare these items, a thorough review of this information by appropriate staff of the Village is necessary to ensure all federal programs are properly reported in the Village’s single audit report. Management Views and Corrective Action Plan: See corrective action plan 2022-003.