Finding Text
Criteria: The District should segregate accounting duties, at a minimum to separate the asset and the recordkeeping function, to minimize the opportunity for misstatements caused by error or fraud to occur and go undetected within a timely period by employees in the normal course of performing their assigned functions. Condition: The District does not have adequate segregation of duties in its accounting functions. Specifically, the payroll process, check cutting ability, and automatic signatures are shared by the Business Coordinator and the Assistant Bookkeeper. The Assistant Bookkeeper does the bank reconciliation as the Business Coordinator does a majority of the check writing and depositing. Cause: A small number of individuals within the District’s administration perform substantially all accounting functions and have control over both records and assets. Also, the District has not performed a formal review of internal controls to identify other mitigating and compensating controls which could be implemented to reduce the risk of errors or fraud. Effect or Potential Effect: The lack of segregation of accounting duties could create an opportunity for misstatements caused by error or fraud to occur and go undetected within a timely period by employees in the normal course of performing their assigned functions. Recommendation: Due to the size of the District, it is not practical to hire additional individuals in order to adequately segregate accounting duties; therefore, we recommend that the Administrator’s and School Board’s close supervision, review of accounting information and knowledge of matters relating to the District’s financial operations provide an effective means of preventing and detecting errors and irregularities. We also recommend the District review its current procedures to identify internal controls and opportunities to strengthen controls to reduce the risk of errors or fraud. Views of Responsible Officials and Planned Corrective Actions: The District agrees and intends to continue supervision and monitoring of accounting information and operations, including obtaining explanations for variances from unexpected results. The Superintendent will continue to sign off on all payroll check registers and journal entries.