Finding Text
Segregation of Duties Criteria ? Management is responsible for establishing and maintaining internal control. A good system of internal control provides for adequate segregation of duties so no one individual handles a transaction from its inception to completion. 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 ? One individual may perform two or more functions in each of the following areas for the District. 1) Cash ? bank reconciliations, cash receipts, disbursements and approval functions 2) Inventories ? purchasing, recording and maintaining inventory records 3) Capital assets ? responsibility for assets and periodic testing 4) Receipts ? recording, depositing, posting and reconciling 5) Disbursements ? check preparation, signing checks, voucher preparation and reconciling disbursements to the check register 6) Payroll ? approval of and payment of payroll taxes, write checks, sign checks, and post payroll to the general ledger 7) Long-term debt ? maintain records and performs cash functions 8) Transfers ? authorization, recording and approval 9) Wire transfers ? processing and approving 10) Financial reporting ? preparing, reconciling and approving 11) Computer systems ? performing and controlling all general accounting functions 12) Journal entries ? posting and approval Cause ? The District has a limited number of employees and procedures have not been designed to adequately segregate duties or provide compensating controls through additional oversight of transactions and processes. 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 and Corrective Action Planned ? We will continue to review our procedures and implement additional controls where possible. Conclusion - Response accepted.