Finding 1080533 (2023-001)

Significant Deficiency Repeat Finding
Requirement
P
Questioned Costs
-
Year
2023
Accepted
2024-10-29
Audit: 326496
Organization: Rccc Villa (IA)

AI Summary

  • Core Issue: One individual has too much control over key financial processes, risking unauthorized spending.
  • Impacted Requirements: Segregation of duties is not effectively implemented, weakening internal controls.
  • Recommended Follow-Up: The Board should regularly review bank statements and enhance oversight to prevent misappropriation of assets.

Finding Text

1)      Segregation of duties: We noted that from time to time one individual within the management company of the Organization has control over each of the following areas: 1) Disbursements –invoice processing, check writing, mailing, reconciling and recording. 2) Financial Reporting and Budgeting – preparing and reconciling. Criteria: An important aspect of internal control is the segregation of duties among employees to prevent an individual employee from handling duties which are incompatible. We noted during the audit that the management agent has complete access to check/electronic debit initiating and dual authorization is not needed. While all purchasing decisions are segregated from the management agent, there is still opportunity for unauthorized spending. Cause: There is a limited staff size that makes having an appropriate segregation of duties difficult for the Organization. Effect: The Organization’s internal control system is not as strong as it could be with a proper segregation of duties. A lack of oversight could result in a failure to detect or remedy an improper action taken by the management agent. Recommendation: The Board of Directors has a responsibility to ensure there is proper oversight of all disbursements, financial reporting, reconciling, etc. The Board should be as involved as much as possible to ensure there is not an opportunity for misappropriation of assets. We recommend that the board review bank statements regularly each month to ensure there is no improper spending. Response: The Organization will review its control procedures to obtain the maximum internal control possible under the circumstances posed by being comprised of a very small population. The Board of Directors will take appropriate steps to ensure there is proper oversight in all suggested areas. Conclusion: Response accepted.

Categories

Internal Control / Segregation of Duties Reporting

Other Findings in this Audit

  • 504091 2023-001
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
14.157 Section 202 Capital Advance $1.74M
14.195 Project Rental Assistance Contract $26,222