Finding 1150177 (2023-002)

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 Authority’s financial statements. Condition: An adequate segregation of duties was not present related to the accounting and financial duties. As a result, many of those aspects of internal control procedures which rely upon an adequate segregation of duties are, for all practical purposes, missing. Cause: The operating budget for an organization the size of the Authority does not allow for the hiring of additional accounting personnel to further segregate incompatible accounting duties. Effect: One individual may have complete control over certain transactions without adequate checks and balances or reviews being performed. This could adversely affect the Authority’s ability to prevent, or detect and correct, misstatements, errors or misappropriation on a timely basis by employees in the normal course of performing their assigned functions. Recommendation: We realize segregation of duties is difficult with a limited number of employees. However, the Authority should review its procedures to obtain the maximum internal control possible under the circumstances, utilizing currently available staff to provide additional control through review of financial transactions, reconciliations and reports. These independent reviews should be documented by the signature or initials of the reviewer and the date of the review. Views of Responsible Officials and Planned Corrective Action: The Authority will continue to monitor its policies and procedures in an effort to improve control efficiencies, however, at this time, the Authority has determined that the cost of eliminating the deficiency would exceed its benefit. Conclusion Response accepted. INSTANCES OF NONCOMPLIANCE No matters noted.