Finding Text
Finding 2022-002: Significant Deficiency - Separation of Duties Criteria: The origination and completion of single transactions should not be under the control of the same individual. Each transaction should pass through two or more individuals with the result that the work of one is under the review of another. Condition: While the Organization has a control structure designed to optimize segregation of duties where possible, it was noted there lacks complete and appropriate segregation of duties within the accounting and financial reporting functions. It is important for those charged with governance to be aware of this condition and realize that the concentration of duties and responsibilities in a limited number of individuals is not desirable from a control point of view. Cause: The size of the Organization does not have an adequate control structure to properly separate the various accounting functions, including recording journal entries, reconciling accounts, and preparing financial statement reports. Effect: Errors in the accounting records could occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Recommendation: The Organization should continue to perform certain review procedures which help mitigate risk associated with the lack of separation of duties. We suggest that management review the current control structure and implement controls to ensure manual journal entries are reviewed and approved by an appropriate individual. Management's Response: The Organization agrees with the recommendation and will implement additional formal review processes for manual journal entries.