Finding Text
Criteria: The District should segregate duties, at a minimum to separate the asset and the recordkeeping function, to minimize the opportunity for misstatements caused by error or fraud to occur and go undetected within a timely period by employees in the normal course of performing their assigned functions. Condition: The District does not have adequate segregation of duties in its accounting functions. Specifically, one employee has the ability to cut checks, perform bank reconciliations for the general fund and enter transactions in the accounting software. Another employee has the ability to cut payroll checks, perform bank reconciliations for the payroll account and enter transactions in the accounting software. Cause: A small number of individuals within the District’s administration perform substantially all accounting functions and have control over both records and assets. Effect or Potential Effect: The lack of segregation of accounting duties could create an opportunity for misstatements caused by error or fraud to occur and go undetected within a timely period by employees in the normal course of performing their assigned functions. Recommendation: Due to the size of the District, it is not practical to hire additional individuals in order to adequately segregate accounting duties; therefore, we recommend that the Administrator’s and School Board’s close supervision, review of accounting information and knowledge of matters relating to the District’s financial operations provide an effective means of preventing and detecting errors and irregularities.