Finding 404935 (2023-003)

Criteria and Condition : Internal controls should be in place that provide for properly documented review and approval of federal expenditures by an appropriate level of management outside of the accounts payable and cash disbursement process. Context: During our audit, we noted that there is a lack of segregation of duties in the accounts payable and cash disbursement process. We noted that one employee had the ability to receive invoices, record expenses in the general ledger, write and sign checks, and reconcile internal accounting records. Additionally, our test of cash disbursements identified 5 out of 8 federal expenditures tested that lacked proper approval by an appropriate level of management outside of the cash disbursements accounting function. Cause: Due to a limited number of staff, incompatible work functions in the accounts payable and cash disbursements process were performed by the same individual and lacked the appropriate review and approval by an individual outside of that immediate accounting function. Effect : Cash disbursements were processed for payment that lacked a documented review and approval by management personnel. Recommendations: We recommend that the functions associated with accounts payable and cash disbursements process be segregated to the extent possible. All invoices should have a documented approval for payment by management personnel outside of the accounts payable and cash disbursements function.