Finding Text
Condition: The City Secretary records all accounting transactions in the general ledger and makes general ledger adjustments. The City Secretary is responsible for depositing receipts, preparing checks, and processing ACH disbursements and payroll, and also has signature authority. Bank accounts are also reconciled by the City Secretary. The City Secretary is also responsible for filing required state, payroll, grant, and various other reports. As offsetting controls, dual signatures are required on all check disbursements and quarterly bank transactions are reviewed by the Mayor and Mayor Pro-Tem. Also, profit and loss budget performance reports are presented and reviewed at each Council meeting.Criteria: Proper segregation of duties is a key internal control to prevent errors or fraud by ensuring that no single individual has control over all aspects of a financial transaction.Cause: There is insufficient staffing to implement adequate segregation of duties.
Effect: The lack of segregation of duties increases the risk of misstatements, fraud, or unauthorized transactions going undetected. Material journal entries were required for the financial statements to be free of material misstatement. In addition, it was noted that wages reported to TMRS were understated in two months of the fiscal year.