Finding 561440 (2023-004)

Criteria: The small size of the City’s office staff limits the extent of separation of duties. The basic premise of an ideal accounting office is that no one employee should have access to both physical assets and the related accounting records or to all phases of a transaction. Condition: The City has a limited number of staff responsible for or access to various stages of the accounting processes. Cause: The City does not have the number of employees necessary in the business office to segregate all duties properly. Recommendation: Ideally, the City would hire the number of staff necessary to segregate all duties. However, we realize this is not practical, if not impossible. Because of this internal control situation, the responsibility of the management is greatly increased because the City Council must rely on his/her knowledge of everyday operations to discover any material changes in the City’s financial position. Effect: A lack of separation of duties makes the City more susceptible to misappropriation of City Assets.