Finding Text
Segregation of Duties
Condition – Segregation of duties provides stronger internal controls by not allowing one
person to have control and responsibility over a complete accounting system (cash
receipts, cash disbursements, payroll and purchasing, receiving, and accounts payable). It
was noted that certain individuals in the Organization have significant responsibilities or
access within the information systems to many of the financial accounting cycles such as
accounts payable, payroll, financial accounting, and reporting, which creates a concern
over segregation of duties. This was particularly noted within the Adoray organization,
where due to the small staff size in the accounting and financial services areas, a lack of
segregation of duties exists.
Criteria – The lack of proper segregation of duties is considered an internal control
weakness.
Effect – As a result of not having a sufficient number of individuals in the accounting
department to segregate duties, risk of misappropriation and fraudulent transactions in
financial reporting increases.
Recommendation – We encourage the Board of Directors and management to strengthen
internal controls or implement mitigating controls where possible.
Management’s Response – In 2023, the Organization implemented a new accounting
information system at Adoray, as well as reviewing job responsibilities and duties, to
create opportunities for segregation of duties and separation of incompatible functions in
the future. Management plans to continue this process and review and provide additional
updates in 2024.