Finding Text
Finding 2024-002: Segregation of Duties Federal Program: Rural Rental Housing Loans – Assistance Lising #10.415 Federal Agency: U.S. Department of Agriculture - Rural Development Award Period: 2024 Material Weakness As discussed at Finding 2024-001, the Authority has limited staffing resources, and therefore key accounting functions over cash receipts and disbursements are not adequately segregated. Without adequate segregation of duties, there is an increased risk that errors or fraudulent activity could occur and remain undetected. This could impact the accuracy and integrity of the compliance reporting. Segregation of duties should be strengthened by either reallocating responsibilities among existing staff or implementing periodic independent reviews. Finding 2024-001: Segregation of Duties Finding resolution status Unresolved Information on universe and population size The universe consisted of all receipts and disbursement transactions during the fiscal year. Sample size information These errors were not discovered as a result of the sampling approach, but through observation of processes and interviews with staff. Identification as a repeat finding This is not a repeat finding. Criteria Internal control best practices, including those outlined in the COSO Framework, recommend segregation of duties so that no single individual has control over all phases of a financial transaction. This control is essential to prevent and detect errors or irregularities in a timely manner. Statement of condition During our review of internal control procedures, we noted that key accounting functions over cash receipts and disbursements are not adequately segregated. Cause The Authority has limited staffing resources, resulting in the assignment of incompatible duties to a single employee without sufficient compensating controls. Effect Without adequate segregation of duties, there is an increased risk that errors or fraudulent activity could occur and remain undetected. This could impact the accuracy and integrity of the financial statements. Auditor non-compliance code S – Internal Control Deficiency