Finding Text
Criteria: The small size of the Boroughs office staff limits the extent of separation of duties. The
basic premise in an ideal accounting office is that no one employee should have access to both
physical assets and the related accounting records or to all phases of a transaction. Some examples
of lack of segregation of duties at the Borough are as follows:
An individual can process checks, initiate ACH payments, make journal entries, and have access to
the Borough's bank accounts.
An individual can accept cash receipts, enter transactions in the accounting system, initiate deposits,
make deposits at the bank, and reconcile bank statements.
Condition: The Borough has a limited number of staff responsible for or access to various stages of
the accounting processes.
Cause: The Borough does not have the number of employees necessary in the business office to
properly segregate all duties.
Recommendation: Ideally, the Borough would hire the number of staff necessary to segregate all
duties. However, we realize segregation of duties is not practical, if not impossible. Because of this
internal control situation, the responsibility of the Business Manager is greatly increased because the
Board must rely on his knowledge of the everyday operations to discover any material changes in the
Boroughs financial position.
Effect: A lack in separation of duties makes the Borough more susceptible to misappropriation of
Borough Assets.
Views of Responsible Official and Planned Corrective Action: See corrective action plan included
in this report package.