Finding 12439 (2022-001)

2022-001 ? Lack of Adequate Segregation of Duties Identification of Federal Program: Name of Program: Shuttered Venue Operators Grant Program Assistance Listing Number: 59.075 Award Year: 2022 Pass-Through Entity: Direct Name of Federal Agency: U.S. Small Business Administration Criteria: 2 CFR Part 200 Subpart F requires auditors to perform procedures to obtain an understanding of internal control over Federal programs sufficient to plan the audit to support a low assessed level of control risk of noncompliance for major programs. Internal control should be implemented to the degree possible to assign to different individuals the responsibility for approving, executing and recording transactions. The basic premise is that no one individual should have access to both physical assets and the related accounting records or to all phases of a transaction. Condition: It was noted that expenditure transactions had the potential to be initiated, paid and entered into the Association?s general ledger by the same individuals, resulting in inadequate segregation of duties to support a low control risk assessment. Cause: The inadequate level of segregation of duties is due to the limited number of staff and volunteers which the Association has involved in the processing of financial transactions. Effect: Because of the failure of segregation of duties, internal control structure elements do not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the Statement of Expenditures of Federal Awards being audited may occur and not be detected within a timely period by management in the normal course of performing assigned functions. Recommendation: The Association should involve additional personnel (volunteers or board members) in reviewing and approving grant expenditures, and then document the segregation, in order to ensure that expenditures are not processed by one individual that has access to all phases of a transaction. Views of Responsible Officials: Management of the Association concurs with the audit finding. Subsequent to year end the Association has developed and implemented accounting policies and procedures to help increase segregation of duties.