Finding 13105 (2022-005)

Significant Deficiency
Requirement
P
Questioned Costs
-
Year
2022
Accepted
2023-09-28
Audit: 17459
Organization: Borough of Berwick (PA)

AI Summary

  • Core Issue: Limited personnel are handling multiple accounting tasks, leading to a lack of segregation of duties.
  • Impacted Requirements: This situation weakens the Borough's internal control system, increasing the risk of errors or fraud.
  • Recommended Follow-Up: Consider implementing additional procedures and evaluate the cost-benefit of hiring more staff to improve segregation of duties.

Finding Text

2022-005 General - Segregation of Duties A limited number of personnel are involved in accounting functions in which they are responsible for all related transactions (i.e. the same person recording transactions, preparing checks, recording cash disbursements, mailing checks and reconciling bank accounts, etc.). Effect: A lack of segregation of duties results in a weakness within the Borough?s internal control system. Cause: The Borough has only a limited number of employees within the business office to assign duties. Additionally, various employees? capabilities restrict the Borough?s options, in addition to weighing the additional costs of employing new personnel against the expected benefits to be derived. Population and Items Tested: N/A; Finding is based upon the understanding and review of the internal control system. Auditor's Recommendation: A greater segregation of duties can be achieved by the implementation of additional procedures that utilize current and new personnel. However, in evaluating this need, the Borough must weigh the cost of employing additional personnel against the expected benefits to be derived. The Borough?s planned corrective action is in its Corrective Action Plan at the end of this report.

Corrective Action Plan

Finding 2022-005 Grant Program/CFDA#: COVID-19 Local Fiscal Recovery Funds, 21.027 Federal Agency/Pass-Through Entity: United States Department of Treasury Finding - Segregation of Duties: A limited number of personnel are involved in accounting functions in which they are responsible for all related transactions (i.e. the same person recording transactions, preparing checks, recording cash disbursements, mailing checks and reconciling bank accounts, etc.). This lack of segregation of duties results in a weakness within the Borough?s internal control system. It was recommended by the auditors that a greater segregation of duties can be achieved by the implementation of additional procedures that utilize current and new personnel. However, in evaluating this need, the Borough must weigh the cost of employing additional personnel against the benefits to be derived there from. Borough Response: The Borough understands that it only has a limited number of employees within the business office to assign certain duties. Additionally, it understands the various employees? capabilities restrict its options to achieve an optimal segregation of duties. Consequently, the Borough has determined that with its current checks and balances in place, it feels it has achieved its optimal segregation of duties. It does not expect to generate any future benefit by expending additional funding to achieve a greater segregation of duties.

Categories

Internal Control / Segregation of Duties

Other Findings in this Audit

  • 13104 2022-004
    Material Weakness
  • 589546 2022-004
    Material Weakness
  • 589547 2022-005
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $1.65M
14.239 Home Investment Partnerships Program $263,907
16.710 Public Safety Partnership and Community Policing Grants $141,274
14.218 Community Development Block Grants/entitlement Grants $70,927