Finding Text
Significant Deficiency
Criteria – Management is responsible for establishing and maintaining internal control. A good system of internal control provides for adequate segregation of duties so no one individual handles a transaction from its inception to completion. In order to maintain proper internal control, duties should be segregated so the authorization, custody and recording of transactions are not under the control of the same employee. This segregation of duties helps prevent losses from employee error or dishonesty and maximizes the accuracy of the organization’s financial statements.
Conditions – The external auditor could not verify who reviewed or who approved certain transactions.
Cause – The implemented formal review and approval process sometimes was not followed.
Effect – Not consistently adhering to review and approval processes could impact the Organization’s ability to promptly identify and address potential misstatements, or errors that may arise during the course of regular operations.
Repeat Finding – This was partially corrected. See finding 2023-001.
Recommendation – The Organization should review its procedures to address significant oversights in internal controls and ensure all internal control processes are properly documented. When the Organization has a process to cross-check among two or more individuals, it should be properly documented by having the initial or signature of the 2nd individual.