Finding Text
Finding #2022-001- Segregation of Duties (Prior Year Finding #2021-001) Condition: The available office staff precludes a proper segregation of duties in the control areas reviewed. 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 Board of Education and the District Administrator continue to monitor the transactions and the financial records of the District. We also encourage the District to continue to identify cost effective opportunities to improve the design of the internal control structure. Response: The Business Office has been working on adding more oversight to accounting functions that occur in the District by training employees in different areas and by following a schedule of monthly and annual informational reporting and approval. The Business Manager reports to the Board of Education each month on total revenues and expenditures for the year in comparison to trends from the previous year. The Board also receives detailed reports each month to review and approve all checks that were processed in the month prior. Beyond that, all payment requests in the District require two administrators to sign off on them to ensure more than one person reviews and approves the request. Payroll sends cash reconciliation statements to the Business Manager each month for review and approval and the Bookkeeper sends check summary reports to the Business Manager for approval each time a batch of checks is processed. Each member of our Business Office staff is trained in another area of the Business Office (e.g. Business Manager can process payroll, Payroll Specialist can cut checks, and our Bookkeeper can submit financial reports to DPI). However, due to the limited number of staff in our District, some accounting functions in the Business Office do not have as much segregation as recommended by our auditors. In the future, we will continue to try to segregate more duties to help alleviate the financial risk in the District.