Finding Text
Condition: During our audit, it was noted that the organization has limited segregation of duties related to cash receipts transaction cycle.
Criteria: There are three general categories of duties in the cash receipts cycle: custody, record keeping and reconciliation. In an ideal system, different
employees perform each of these three major functions. In other words, no one person has control of two or more of these responsibilities.
Cause:The Accountant had responsibilities over all areas of custody, record keeping and reconciliation. While there is some review of transactions by
the Chief Financial Officer, there is more than a remote likelihood that a misstatement of the Organization’s financial statements that is more
than inconsequential could go undetected.
Effect: The effectiveness of the internal control system relies on enforcement by management. The effect of deficiencies in segregation of duties and
internal controls can result in undetected errors or misappropriation of assets of the Organization.
Recomendation: Under these circumstances the most effective controls lie in 1) managements knowledge of the Organization's financial operations and 2)
striving to obtain as much segregation of duties as possible so that no one person has complete control of any type of financial transaction.
We recommend the Organization evaluate its controls and make any changes considered necessary. It is the responsibility of management and
those charged with governance to make the decision whether to accept the degree of risk associated with this condition because of cost and
other considerations.