Finding Text
Finding #2022-001- Segregation of Duties (Prior Year Finding #2021-001) Condition: A properly designed system of internal control includes adequate staffing, policies, and procedures to properly segregate duties. This includes systems that are designed to limit access or control of any one individual to your government?s assets, and to achieve a higher likelihood that errors or irregularities in your processes would be discovered by your staff. There are key controls related to significant transaction cycles that are important in reducing the risk of errors or irregularities. At this time, the District does not have the following controls in place: -Persons processing accounts payable are not always separate from those ordering or receiving goods or services. -Persons initiating electronic fund transfers are not separate from those authorizing, confirming, or reconciling the transactions. -There are no procedures in place for review and approval of new vendors. -Persons preparing the payroll also maintain employee records, change employee rates, and change data in the payroll system. -The person reviewing free and reduced food service eligibility can also modify information entered into the system to determine eligibility. -Account reconciliations are not performed by someone independent of the processing of transactions in the account. Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties. Cause: Limited number of personnel. Criteria: Segregation of duties is an aspect of internal control intended to prevent or decrease opportunities of intentional and unintentional errors and fraud. Duties and responsibilities are properly segregated if no single individual either has control over all phases of a transaction or has the ability to both make and conceal an error, whether such error is intentional or unintentional. Recommendation: We recommend that the District consider the benefits of implementing additional policies and procedures to address key controls related to its significant transaction cycles as noted. Response: We agree with this finding but do not believe it is cost effective to increase the office staff in an attempt to bring about a more effective segregation of duties. The Building Principals and the Business Manager approve purchase orders and the Business Manager approves monthly accounts payable checks. Also, the Building Principals or department supervisors approve payroll timesheets prior to processing payroll. The payroll along with the time sheets are then approved by the Business Manager. The Business Manager, Building Principals, and department supervisors will continue to monitor transactions of the District.