Finding Text
Segregation of Duties Criteria: We noted during our audit the district did not properly segregate payroll and journal entries including those related to federal programs. In order to maintain proper internal control, duties should be segregated so the authorization, custody and recording of transactions are not under the control of the same employee. This segregation of duties helps prevent losses from employee error or dishonesty and maximizes the accuracy of the District?s financial statements. Condition: The District has primarily one employee who is involved in the writing, posting an approval of journal entries, which are incompatible internal controls. The District has primarily one employee who is involved in recording, approving pay rates and deductions, recordkeeping , preparation, posting and distribution of payroll, which are incompatible internal controls. Cause: The District has a limited number of employees and some procedures have been designed to adequately segregate duties or provide compensating controls through additional oversight of transactions and processes. However, adequate segregation of duties has not been achieved. Effect: Inadequate segregation of duties could adversely affect the District?s ability to prevent or detect and correct misstatements, errors or misappropriation on a timely basis by employees in the normal course of performing their assigned functions. Recommendation: We realize segregation of duties is difficult with a limited number of office employees. However, the District should review its procedures to obtain the maximum internal control possible under the circumstances utilizing currently available staff, including elected officials. Response: We will continue to review our procedures and implement additional controls where possible. Conclusion: Response accepted.