Finding Text
Check Signing and Authorization Criteria: A sound system of internal control over cash disbursements includes appropriate segregation of duties and independent authorization of payments. Condition: The District requires dual signatures for authorization of disbursements; however, one authorized signer is the Harbor Master, and the second authorized signer is a staff member subordinate to the Harbor Master. As a result, both signatories operate within the same reporting hierarchy, limiting independent oversight within the authorization process. Cause: The current authorization structure has not been formally evaluated to ensure adequate segregation of duties and governance-level oversight. Effect: Although dual signatures provide a control mechanism, assigning both signatories within the same reporting hierarchy reduces the effectiveness of the control and limits independent review of expenditures, particularly higher-dollar transactions. Recommendation: We recommend the District re-evaluate its check signing and disbursement authorization structure to strengthen segregation of duties and independent oversight. Specifically, we recommend retaining one operational signer within management while assigning the second approving authority to a governance-level position, such as a member of the Board of Commissioners. The District should also consider implementing approval thresholds requiring additional oversight for higher-dollar disbursements. Views of Responsible Officials and Planned Corrective Action: Management acknowledges the need to evaluate the current check signing and disbursement authorization structure and will consider incorporating governance-level participation and tiered approval thresholds to strengthen oversight.