Finding Text
Segregation of Duties Criteria ? Management is responsible for establishing and maintaining internal control. A good system of internal control provides for adequate segregation of duties so no one individual handles a transaction from its inception to completion. In order to maintain proper internal control, duties should be segregated so the authorization, custody and recording of transactions are not under the control of the same employee. This segregation of duties helps prevent losses from employee error or dishonesty and maximizes the accuracy of the District?s financial statements. Condition ? An independent person does not open the mail and prepare an initial listing of the checks received and later compare the listing to the receipts issued. Also, vouchers are processed, disbursements are recorded and checks are prepared by the same person. In addition, preparing and reconciling of financial reporting, and preparing and entering of adjusting journal entries are all done by the same person. Cause ? The District has a limited number of employees and procedures have not been designed to adequately segregate duties or provide compensating controls through additional oversight of transactions and processes. Effect ? Inadequate segregation of duties could adversely affect the District?s ability to prevent or detect and correct misstatements, errors or misappropriation on a timely basis by employees in the normal course of performing their assigned functions. Auditor?s Recommendation ? I realize segregation of duties is difficult with a limited number of office employees. However, the District should review its procedures to obtain the maximum internal control possible under the circumstances utilizing currently available staff, including elected officials. Response ? The district has made several process changes to improve the segregation of duties. Management continues to review procedures and implement additional controls where possible. Auditor?s Conclusion ? Response accepted.