Finding Text
Criteria: 2 CFR 200 §200.303 Internal Controls requires that the grant recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable
assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Based on our walkthrough of internal controls, we have identified that the bank reconciliations are not performed timely and had several material errors. In addition, the District had a lack of segregation of duties related to bank account management and lacked proper internal controls over payroll registers prior to processing. A District employee (business manager) that was responsible for processing payables and payroll for the District was also a signer on District’s bank accounts, which creates a lack of segregation of duties. Cause: The District did not have proper internal controls designed over bank accounting management and internal controls over payroll. This finding is primarily related to the fiscal year ended June 30, 2024. The District experienced turnover in the business office with key personnel and may have already implemented additional processes to mitigate the issues in this finding. Effect: The District’s lack of segregation of duties related to bank account management could potentially cause significant errors and potential fraud. Repeat Finding: No. Recommendation: We recommend that the District evaluate and segregate duties related to bank account signers for employees at the District. In addition, we recommend that the District remove signing authority from the individuals in charge of managing the District’s accounting records. Lastly, we recommend that the District perform a secondary review of each payroll register prior to payroll processing to strengthen the District’s internal controls.