Finding 50424 (2022-003)

2022-003 Segregation of Duties Year ended December 31, 2022 Conditions and Criteria: The Lyons Fire District is a small organization with only one individual involved in the cash receipt and disbursement functions. In addition, this person performs general ledger record keeping and financial reporting functions. Cause: The Fire District is a small organization with a limited number of personnel. 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 Fire District. A lack of proper segregation of duties increases the exposure to potential risk of error or fraud. Auditors? Recommendation: The Fire District should continue to obtain involvement from the Board of Fire Commissioners in reviewing monthly financial reports and approving expenditures. In addition, the Fire District should consider having a Board member prepare or review bank reconciliations for each of its bank accounts. Fire District Response: We will continue to have the Board review monthly reports and approve expenditures. Further, the Fire District will consider having its bank reconciliations reviewed by a Board member.