Finding Text
Criteria: The Organization lacked adequate segregation of duties within the journal entry and account reconciliation processes for the year ended May 31, 2022.
Condition: Manual journal entries and account reconciliations prepared by the Director of Finance lacked a designated reviewer.
Cause: The Organization lacked policies and procedures to ensure appropriate segregation of duties in the preparation and review of journal entries and account reconciliations. Additionally, the accounting department was not sufficiently staffed with personnel possessing the necessary skills and expertise, resulting in the Director of Finance both preparing and reviewing these entries and account reconciliations.
Effect or Potential Effect: Without proper segregation of duties, there is an increased risk of errors in the financial statements and potential override of existing internal controls.
Recommendation: We believe that the Organization should establish policies and procedures and add additional resources to its accounting department to allow for appropriate segregation of duties.
Views of Responsible Officials:
The Organization acknowledges the deficiencies with the Organization’s segregation of duties during the period ended May 31, 2022. The Organization has been proactive in attempting to resolve these matters on a go forward basis. In October 2024, an accounting firm was engaged to manage the Organization’s accounting and financial reporting. This firm is working closely with the Organization to establish appropriate policies and procedures to ensure there is appropriate segregation of duties.