Finding Text
Condition: The Organization has not established proper segregation of duties with one employee performing substantially all accounting functions without any independent review or oversight. This results in lack of internal controls over financial reporting. Identification as a Repeat Finding: Finding 2021-001 was reported in the immediate prior year. Criteria: The Organization is responsible for the design, implementation, and maintenance of effective internal control over financial reporting, including proper segregation of duties and sufficient oversight over accounting function to ensure the accuracy of the financial reporting. Cause: Failure to establish proper oversight over financial reporting and proper segregation of duties is the result of the turnover in property management company personnel during the period and due to limited number of employees in the Organization. Effect or Potential Effect: The lack of proper oversight over financial reporting could result in general ledger and interim financial statements being materially misstated. A lack of segregation of duties could result in erroneous postings, inaccurate financial reporting as well as create opportunities for fraudulent activities. Recommendation: We recommend that the accounting function prepares detail reconciliations of all material accounts and then perform a review of the final trial balance to ensure that all significant journal entries are posted. We also recommend that the segregation of duties be reviewed and adjusted where possible to strengthen the system of internal control. The Organization may consider engaging an outside CFO or another individual within the Organization possessing sufficient expertise to provide an oversight and review of the financial reporting performed by the bookkeeper as well as to assume responsibility for performance of certain accounting functions to enhance the segregation of duties. Views of Responsible Officials: The Organization personnel will prepare detail reconciliations of all material accounts and then perform a review of the final trial balance to ensure that all significant journal entries are posted. The Organization will develop procedures to allow for greater segregation of duties over financial reporting or establish mitigating controls concerned with review and oversight.