Finding Text
Criteria:
A proper segregation of duties is an important component of a system of strong internal controls and should be implemented, if possible.
Condition:
There is minimal segregation of duties among personnel involved in the accounting function. A lack of proper segregation of duties could allow errors or irregularities to occur and go undetected. Due to budgetary constraints imposed by HUD, small projects, for sound economic conditions, must function with a small number of office personnel and correction of this condition would require the employment of additional office personnel. Consequently, corrective action may not be practical.
Cause:
For sound economic reasons, the Corporation and the management company must function with a small number of office personnel, and correction of this condition would require the employment of additional office personnel. Consequently, corrective action may not be practical.
Effect:
A lack of segregation of duties increases the risk that errors or fraud may occur and not be prevented or detected on a timely basis.
Recommendation:
When this condition exists, management’s close supervision and review of accounting information is the best means of preventing or detecting errors and irregularities.
Management Response:
We agree and will continue to monitor monthly financial results and accounting information as correction is not practical.