Finding 513575 (2024-001)

Finding 2023-001 Segregation of Duties Condition:During our review of internal controls, the existing procedures are evaluated in order to determine that incompatible duties, from a conctrol standpoint, are not performed be the same employee. This segregation of duties helps to prevent losses from employee error or dishonestly and therefore maximizes the accuracy of Northeast Iowa Mental Health Center's financial statements. The financial, grant and payroll reporting is primarily the responsibility of one person. As a result, interruption of some accounting functions could occur if they were unable to perform their duties. Criteria: A property designed segregation of duties allows entities to initiate, authorize, record, process, and report financial data reliably in accordance with generatlly accepted accounting principles. Cause: The concentration of closely related duties and responsibilities such as the recording and processing of cash receipts, payroll processing, preparing grant expenditure reports, preparing financial information for posting and analyzing financial information by a small staff makes it impossible to establish an adequate system of automatic internal checks on the accuracy and reliability of the accounting records. Effect: This deficiency results in a reasonable possibility that the organization would not be able to detect misstatements that would be material in relation to the financial statements and/or federal award programs in a timely period by employees in the normal course of performing their assigned functions. Recommendation: We realize that with a limited number of office employees, segregation of duties is difficult. However, the Center should review the operating procedures to obtain the maximum internal control possible under the circumstaces. The Center should also consider the potential consequence of reliance on one personl for financial, grant and payroll reporting. Repeat Finding: yes. Views of Responsible Officals and Planned Corrective Actions: This issue is reviewed annually through the audit review with the Board of Directors. The size of the Center prevents further segregation of duties.