Finding 35400 (2022-001)

Significant Deficiency Repeat Finding

Requirement

Questioned Costs

Year

2022

Accepted

2023-07-12

Audit: 27867

Organization: Chisholm-Hibbing Airport Authority (MN)

Auditor: Sterle & CO LTD

AI Summary

Core Issue: There is a significant deficiency due to a lack of segregation of duties in financial processes.
Impacted Requirements: Effective control systems require division of accounting duties to prevent errors or fraud.
Recommended Follow-Up: Board members should enhance oversight by reviewing bank activities, general ledger entries, and conducting on-site inspections of assets and records.

Finding Text

2022-001 Lack of segregation of duties - significant deficiency Condition: Lack of segregation of duties over financial processes. Criteria: For an effective control system, division of accounting duties should exist to prevent errors or misappropriations from going undetected in the course of employees performing their assigned duties. Context: The lack of segregation of duties exists within the Authority as a whole over all of its accounting and reporting functions. This is a common circumstance in governments of similar size. Effect: Errors or misappropriations could occur and go undetected for a period of time. Questioned Costs: Not applicable Cause: Limited number of staff available to appropriately divide duties. Recommendation: The Authority's board members need to be cognizant of the issue and provide appropriate oversight. Such oversight includes careful review of bank activity as well as general ledger and journal entries. The board members should also periodically perform on site inspections of assets and financial records. Views of Responsible Officials and Corrective Actions: The Authority agrees with the recommendations.

Corrective Action Plan

2022-001 INADEQUATE SEGREGATION OF DUTIES Actions Planned ? The Authority is not in position to hire additional staff members for the sole purpose of eliminating the ?segregation of duties? finding from our audit. The Airport Office Administrator communicates with the Executive Director and commission members regarding all major account transactions, including the recording of recurring and non-recurring journal entry adjustments. The commission meets monthly and closely monitors the financial information provided to them. Official Responsible ? Airport Office Administrator Planned Completion Date ? On-going monitoring Disagreement with Finding ? None ? The Authority concurs with the finding. Plan to Monitor ? The Authority is aware of the situation and will monitor, as it deems appropriate. Monitoring will include commission member oversight for the interim and year-end reporting.

Other Findings in this Audit

35401 2022-001

Significant Deficiency Repeat
35402 2022-001

Significant Deficiency Repeat
35403 2022-001

Significant Deficiency Repeat
611842 2022-001

Significant Deficiency Repeat
611843 2022-001

Significant Deficiency Repeat
611844 2022-001

Significant Deficiency Repeat
611845 2022-001

Significant Deficiency Repeat

Programs in Audit

ALN	Program Name	Expenditures
20.106	Airport Improvement Program	$1.09M