Finding Text
Criteria: In small organizations opportunities to segregate duties are limited; therefore, effective oversight by those charged with governance is needed to mitigate risks associated with inadequate segregation of duties. According to Title 2 CFR ? 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Insufficient segregation of duties is not effectively mitigated by Board oversight or other procedures. Specifically, we noted that Fraternity House, Inc.?s Board Treasurer has responsibility for substantially all accounting duties and oversight. This included entering financial information into QuickBooks, processing disbursements and reconciliation of the bank accounts. Segregation of duties is participially mitigated by receipt and review of the monthly financial reports by the Board of Directors. Cause: Fraternity House?s internal controls are designed to have a Director of Finance & Development perform accounting duties with oversite and review of the Board Treasurer. The previous Director of Finance & Development left the Organization and the Organization has not been able to replace the Director of Finance & Development. Effect: Lack of segregation of duties increases the risk of inappropriate transactions being undetected. Board members may not be sufficiently knowledgeable about the operations to apply effective oversight. Recommendation: To improve internal controls, Fraternity House Inc should: 1. Ensure that a Director of Finance & Development is appointed.