Finding Text
Criteria/Specific Requirement: The Organization is responsible for establishing and maintaining an internal control system over receipts and disbursements sufficient to prevent unintentional or intentional errors, misappropriations of assets, and fraud. Condition: The Organization has a lack of segregation of duties over its receipts and disbursements as one individual is responsible for virtually all duties. Effect: Lack of effective internal control procedures could result in unintentional or intentional errors or misappropriations of assets, in which the errors or fraud could affect the financial statements and may not be detected in a timely manner by employees in the normal course of performing their assigned duties. Cause: Limited staff Auditor’s Recommendation: A good system of internal control provides for a proper segregation of the accounting functions. Proper segregation is not always possible in a small organization; however, limited segregation of duties can and should be implemented to reduce the risk of errors or fraud. Management’s Response and Plan: Management agrees with the finding.