Finding Text
Conditions and Criteria: We noted that one individual is primarily responsible for the record keeping and financial reporting functions. Cause and Effect: A fundamental element of an effective internal control system is the proper segregation of duties. Proper segregation of duties provides for a system of checks and balances and entails assigning responsibilities of authorizing and recording transactions among different people in the District.
Auditor’s recommendation: The District should attempt to separate many of the ancillary duties of record-keeping including: opening the mail and maintaining a cash receipts log; signing of checks, distribution of payroll checks, and bank reconciliation preparation. In addition, financial information such as check registers, payroll registers and cash receipts journals should be reviewed by someone independent of the preparer or the Board of Education. Lastly, because of the lack of certain segregation of duties, we recommend that those individuals who are responsible for handling financial transactions are appropriately covered by a fidelity bond.
District’s Response: The District understands the importance of having strong segregation of duties and will attempt to separate certain responsibilities as outlined above