Finding Text
Segregation of Duties - Conditions and Criteria: The Borough is a small office with only a few employees. In such an environment, it is difficult, if not impossible to segregate duties of the general accounting from custody and control over assets such as cash. Cause and Effect: A fundamental element of an effective internal control system is the proper segregation of duties. Proper segregation of duties provides for a system of checks and balances and entails assigning responsibilities of authorizing and recording transactions among different people in the Borough. Generally, assigning different individuals the responsibilities of authorizing transactions, recording transactions, and maintaining custody of the related assets reduces the opportunities for any individual to both perpetrate and conceal errors or fraud in the normal course of business. A lack of segregation of duties increases the potential risk of misappropriation of assets due to fraud. Auditor’s recommendation: We recognize the Borough has attempted to segregate duties to the best of its ability. The Borough should continue to seek opportunities to segregate duties including involvement from Council Members. Borough’s Response: Because of the limited number of personnel in the office, the Borough recognizes the limitations with regards to segregation of duties and therefore will consider mitigating controls. The Borough will continue to seek involvement from the Borough Council in terms of reviewing financial information.