Finding Text
2024-001 Segregation of Duties
Condition: Management is responsible for the design, installation and maintenance of an appropriate system of internal control. Proper segregation of duties is an important aspect of any control system.
The limited size of the District’s office staff prevents the ideal separation of functions. In addition, the Finance Administrator position is highly involved with the recording of daily activity of the District’s general ledger, has access to all phases of the District’s general ledger software, which includes the ability to create new vendors in the accounts payable module and the ability to create new employees and adjust wage rates in the payroll module, and has primary bank reconciliation responsibilities and administration of grant activity.
Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional or unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional.
Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties.
Cause: The lack of segregation of duties is due to the limited number of employees and the key role in which the Finance Administrator position serves in maintaining the District’s general ledger.
Recommendation: We recommend the Board of Education and the Finance Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure.
Response: We agree, and have implemented procedures to review overlapping internal control procedures to the extent possible. The Superintendent reviews the financial statement and performance vs. budget every two weeks on a detailed basis. The board reviews and approves the financial information monthly.