Finding Text
Criteria:
A fundamental concept of a system of internal controls is the segregation of incompatible duties.
Condition:
Due to the limited size of the Authority's business staff and related resources available, the Authority does not have adequate segregation of duties so that no on individual handles a transaction from its inception to its completion.
Effect:
The control deficiency could result in a misstatement to the financial statements that would not be prevented or detected in a timely manner.
Cause:
Limited number of staff and hours available preclude the Authority from ideal segregation of duties of separating the assignment of different staff people to authorize transactions, record transactions, and maintain custody of assets.
Recommendation:
Although it may not be economically feasible for the Authority to attain an ideal segregation of duties environment, the Authority can periodically observe and evaluate its current structure to make improvements when considered necessary.
Views of Responsible Officials and Planned Corrective Actions:
The Authority is in agreement with the finding. The Authority has determined the benefit of adequately segregating duties is less than the cost. Based on the assessment, the Authority is accepting the risk posed by the deficiency while also evaluating mitigating controls that will help reduce the risk of material misstatement of the financial statements. Management attempts to mitigate the associated risks by doing the following: 1. Identifies areas where lack of segregation of duties exists and where there are higher risks of error or fraud occuring. 2. Implements limited segregation to the extent possible to reduce risks without impairing efficiency. 3. Uses the knowledge that management and the Board of Directors have of operations by having them review certain accounting records and reports. 4. Monitors the effectiveness of the above actions and makes changes as considered necessary.