Finding Text
Criteria or specific requirement: Internal controls should be designed to allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements and safeguard assets. A concept in a good system of internal control is adequate segregation of duties. Condition: A limited number of employees have the primary responsibility for performing most of the accounting and financial duties including key functions of recording, reconciling, and reporting cash transactions. This structure reduces certain aspects of the internal control system which rely on adequate segregation of duties. Context: All District accounting and financial records are maintained by a limited number of employees. Effect: Limited segregation of duties increases the risk that employees, in the normal course of performing their assigned functions will not prevent or detect misstatements and safeguard assets. Cause: A limited number of employees have the ability to complete and record accounting functions which ideally would be segregated. Recommendation: Segregation of duties is normally difficult to accomplish with a small governmental entity. Management should be mindful of areas that could be improved including, but not limited to, hiring additional personnel. Management's response: Currently, the District relies on management oversight and budgetary controls to help mitigate the effects of a limited number of accounting personnel. The District will review the internal control system annually and when the benefits of hiring additional personnel can be realized on a cost effective basis, the District will pursue this option.