Finding Text
U.S. Department of Health and Human Services The Substance Abuse and Mental Health Services Administration Block Grants for Prevention and Treatment of Substance Abuse ? Recovery Community Organization Grant Assistance Listing # 93.959 2022-001 MATERIAL WEAKNESS Inadequate Segregation of Duties Criteria: In an Organization such as Sunrise Community for Recovery and Wellness, Inc., with a limited number of personnel for certain functions, there are inherent limitations on the effectiveness of certain controls due to the lack of segregation of duties among personnel. Condition: Inadequate segregation of duties was noted to exist in the following areas: (1) Bank reconciliations are reviewed and approved by an individual that is not involved in the preparation of the bank reconciliation but there is no formal documentation to indicate the review and approval. (2) Bank statements are reviewed by the Board Treasurer but there is no formal documentation to indicate such review. (3) Journal entries, auto drafts, and ACH payments are not formally reviewed and approved by an individual that is not involved in the preparation and posting of journal entries. (4) While payroll rate changes are approved they are not formally documented in each employee?s personnel file. (5) There are no formalized accounting policies and procedures. Effect: Sunrise Community for Recovery and Wellness, Inc. runs the risk of employees and contractors committing potential fraud. Cause: Financial outlay necessary to employ additional persons to segregate all incompatible duties is not currently economically feasible. Recommendation: We encourage the Organization to restructure job responsibilities when possible to further segregate incompatible job functions. We realize that the financial outlay necessary to employ additional persons to segregate all incompatible duties is not currently economically feasible, but any actions taken to further segregate incompatible job functions will benefit the Organization. We further recommend that management and the Board formalize its policies and procedures and implement formal sign offs to indicate review and approval for the monitoring process that is crucial for internal control. Views of responsible officials and planned corrective actions: Management of Sunrise Community for Recovery and Wellness, Inc. agrees with this finding. Management of Sunrise Community for Recovery and Wellness, Inc. will continue to further segregate incompatible job functions that will benefit the Organization. An accounting assistant has been hired and some duties will be delegated to her that will also assist with segregation of incompatible job functions. In addition, review and approval processes will be formalized by documentation of review and approval. Policies and procedures will be formalized as well.