Finding 1078551 (2024-001)

2024-001 – Significant deficiency – segregation of duties Criteria – Good internal control requires a segregation of duties and responsibilities such that no one employee has access to both physical assets and the related accounting records, or to all phases of a transaction. Condition – The Cooperative has one employee that performs day to day management and accounting functions. Cause – The size of the Cooperative’s accounting and administrative staff precludes certain internal controls that would be preferred if the office staff were large enough to provide optimum segregation of duties. Effect – The lack of segregation of duties may result in undetected errors in financial statements and increases the possibility of misappropriation of Cooperative assets. Repeat Finding – This finding was reported in the prior year as finding 2023-001. Recommendation – The Board of Directors should remain involved in the financial affairs of the Cooperative on a regular ongoing basis to provide oversight and independent review functions and mitigate the weakness created by the lack of segregation. Auditee’s comment – The Board of Directors is and will remain involved in the financial affairs of the Cooperative. Status – Resolved. Management hired an employee separate from management to perform day to day functions. Auditor’s non-compliance code – S – Internal Control Deficiencies