Finding Text
Criteria: The Governing Board and management are responsible for establishing and maintaining internal controls over financial reporting to prevent misstatements in their financial reporting. Condition: During our audit, we noted that many of the accounting functions are performed by a few individuals, including opening the mail, recording receipts, recording vendors invoices, transporting the bank deposit, preparing checks, and mailing the checks. These same individuals have the ability to record journal entries and reconcile accounts. Cause: Limited staff is available to properly segregate duties. Effect: Because of the lack of segregation of duties, unauthorized transactions or misstatements as a result of errors could occur. Recommendation: The Organization is not large enough to make the employment of additional persons for the purpose of segregation of duties practical from a financial standpoint. Therefore, the Governing Board should rely on its direct knowledge of the Organization’s operations and thoroughly review financial reports to control and safeguard assets and insure accurate financial reporting. Management’s Response: The Organization’s Governing Board will continue to rely on its direct knowledge of daily operations and direct contact with employees to control and safeguard assets.