Finding Text
Condition: The District’s offices are not large enough to permit an adequate segregation of duties for effective
internal controls. Management has not separated incompatible activities of personnel, thereby
creating risks related to the safeguarding of cash and the accuracy of the financial statements.
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 District’s financial statements.
Cause: The concentration of closely related duties and responsibilities such as the recording and
processing of cash receipts, preparing grant expenditure reports, preparing financial information
for posting and analyzing financial information by a small staff makes it impossible to establish
an adequate system of automatic internal checks on the accuracy and reliability of the accounting
records.
Effect: This deficiency results in a reasonable possibility that the District would not be able to detect
misstatements that would be material in relation to the financial statements and/or federal award
programs in a timely period by employees in the normal course of performing their assigned
functions.
Recommendation: The District should review the operating procedures of the District offices to obtain the maximum
internal control possible under the circumstances utilizing currently available staff. While we do
recognize that the District is not large enough to permit a segregation of duties for effective internal
controls, we believe it is important the Board be aware that this condition does exist.
Repeat Finding: Yes.
Views of Responsible
Officials and Planned
Corrective Actions: Management is cognizant of this limitation and will implement additional procedures where
possible.