Finding Text
Criteria: An adequate segregation of duties is a critical element of an effectively designed internal control system, to provide assurance of the prevention and detection of potential material misstatements in the financial statements. Condition: Due to the small size of the organization, there is a lack of segregation of duties. Cause: Due to the size of the organization, and limited staff, duties cannot be effectively segregated. Effect: The entity will have limited assurance of the prevention and detection of potential material misstatements in the financial statements. Context: One individual is responsible for the approval of the expenditures, the payment of the expenditures, the recording of the expenditures in the general ledger, and the reconciliation of the bank statements. Identification of repeat finding: Due to the small size of the organization, it is not economically feasible to completely correct the issue. This is a repeat finding. Recommendation: The Board of Directors should evaluate the feasibility of additional steps to segregate duties in a way which would minimize the exposure of the organization to the potential for internal control failures, and implement sufficient compensating controls to overcome the limitations of the organization’s size. Views of responsible officials: Due to the small size of the organization and budget constraints, it is not economically feasible to correct this issue.