Finding Text
Finding 2023-002:
Criteria: Formal segregation of duties is a form of risk management that requires record keeping, custody of assets, and authorization for the use of assets be fully segregated functions.
Condition and Context: During the audit, we observed that the Executive Director has both signature authority and direct access to financial recording.
Cause: The Executive Director has authorization for the use of assets and access to the financial records.
Effect: The lack of segregation of duties increases the risk to the Village.
Recommendation: We recommend implementing appropriate segregation of duties associated with control of cash assets in the accounting system, which could include implementation of an electronic payables system or positive pay system.
Responsible Official’s Response: Management will modify its internal control practices to ensure proper segregation of duties as soon as reasonably practicable and upon the hiring of a Controller which will allow access to the financial accounting system by the Business Manager and the Controller and restricting the Executive Director’s access to “view only.” Additionally, management will evaluate the implementation of an electronic payables system and a positive pay system with its banks to enhance segregation of duties.
Planned Implementation Date of Corrective Action: Management will implement this change immediately.
Person Responsible for Corrective Action: Executive Director with advice from the Board of Directors.