Finding Text
Finding 2025-001: Segregation of Duties and Staffing Continuity Condition During the fiscal period covered by the audit, Home Start, Inc. experienced personnel turnover that resulted in certain critical positions within the program and finance functions being vacant for periods of time. The turnover created gaps in key roles responsible for the processing, oversight, and monitoring of program funding. As a result, appropriate segregation of duties was not consistently maintained, and there was limited continuity in responsibilities for financial processing and program funding oversight during portions of the fiscal year. Criteria Effective internal control requires that duties be appropriately segregated to reduce the risk of errors or irregularities. Internal control principles established in the COSO Internal Control Framework, which is referenced in Government Auditing Standards (Yellow Book), 2018 Revision, Paragraph 6.04, emphasize the importance of assigning responsibilities to ensure that no single individual has control over all phases of a transaction. Cause Personnel turnover during the fiscal year resulted in vacancies in key positions responsible for financial and program oversight. During these periods, responsibilities were redistributed among remaining personnel, which limited the Organization’s ability to maintain consistent segregation of duties and continuity of oversight functions. Effect The lack of consistent segregation of duties and staffing continuity increased the risk that errors or irregularities in the processing and monitoring of program funding could occur and not be detected in a timely manner. Recommendation We recommend that management evaluate staffing levels and internal control procedures to ensure that key financial and program oversight responsibilities remain appropriately segregated, even during periods of personnel transition. Management should consider implementing compensating controls, such as documented supervisory reviews, cross-training of personnel, and clearly defined backup responsibilities for critical functions. Establishing these procedures will help maintain effective internal control over program funding and financial processing during periods of staff turnover.