Finding Text
Condition
The Agency had a lack of segregation of duties during the year ended June 30, 2023.
Criteria
Federal grant guidelines require grantees to have systems in place that provide reasonable assurance that the
information is accurate, allowable, and compliant with the terms and conditions of each grant. Grantees must
also adequately safeguard all such property and must provide assurance that it is used solely for authorized
purposes. Internal control procedures require that accounting functions should be segregated so that one
person does not control more than one aspect of an accounting transaction. And when there are duties that
are not segregated, compensating controls should be in place to overcome the risks related to a lack of
segregation of duties.
Cause
Due to a limited number of accounting staff, the Finance Director is involved in many aspects of a
transaction. For example, in cash disbursement transactions, the Finance Director generally prepares the
checks and records the transactions.
Effect
The Finance Director performed most of the accounting functions, resulting in a lack of segregation of duties.
Recommendation
We recommend that the Agency hire a Fiscal Clerk or use existing staff to separate the accounting functions
of custody, recordkeeping and authorization. We also recommend that the Executive Director sign off on all
check requisitions, journal entries and bank reconciliations as a compensating control.
Views of Responsible Officials
Agree.