Finding Text
Condition: Individuals at the City have responsibilities over more than one phase of a transaction. Criteria: Generally, a system of internal control contemplates separation of duties such that no one individual has responsibility to authorize approval of a transaction, have physical access to the related assets, have responsibility or authority to record the transaction in the accounting system, and perform reconciliation of accounts. Cause: The limited number of office personnel precludes a segregation of accounting functions that is necessary to ensure adequate internal accounting control. As a result, the city clerk/treasurer has access to all phases of transactions. Effect: Lack of segregation of duties could result in a financial statement misstatement, caused by error or fraud, that would not be detected or prevented by the City. Recommendation: The City should continue to evaluate its staffing in order to segregate incompatible duties whenever possible. Also, the Mayor and City Council should always be cognizant of this condition and oversee the financial operations of the City as closely as possible.