Finding 8497 (2022-003)

Significant Deficiency Repeat Finding
Requirement
ABCEGHLN
Questioned Costs
-
Year
2022
Accepted
2024-01-15

AI Summary

  • Core Issue: Key accounting duties are concentrated in a few individuals, limiting effective internal controls.
  • Impacted Requirements: Lack of adequate segregation of duties increases the risk of errors and irregularities.
  • Recommended Follow-Up: The Board and CEO should actively review financial statements and consider restructuring duties to enhance internal controls.

Finding Text

Condition: The duties of preparing deposits, investigating discrepancies, maintaining master files, maintaining the general ledger, making deposits, reconciling the bank accounts, investigating problems with payables and resolving inquiries and editing the payroll master file are concentrated iIi one person's duties. The duties of opening the mail, authorizing write-offs, authorizing and signing checks and authorizing payroll are concentrated in another person's duties. The duties of recording receipts, updating accounts and pledges receivable, initiating checks for expenditure, updating accounts payable and preparing checks are concentrated in another person's duties. The duties of recording receipts, updating accounts and pledge receivable, initiating checks and updating accounts payable are concentrated in another person's duties. The duties of preparing payroll and resolving inquiries and editing payroll master file are concentrated in another person's duties. Criteria: Internal controls should be in place that provide an adequate segregation of duties that separates initiating, processing, recording and reconciling a transaction. Cause: The size of the Organization's accounting staff precludes certain internal controls that would be preferred if staff were large enough to provide optimum segregation of duties. Effect: Without a separation of duties, errors or irregularities can occur and not be discovered in the nonnal course of business. Recommendation: This deficiency is the result of the limited accounting staff of the Organization. We recommend that the Board and CEO continue active involvement by reviewing operating statements, comparisons to budget, receivables, receipts and disbursements, to add to existing internal controls in the Organization. Response: This will be reviewed and assessed to find where duties can be separated and independently perfonned within staff.

Corrective Action Plan

Significant Deficiency Segregation of Duties -Internal controls should be in place that provide Finding: an adequate segregation of duties that separates initiating, processing, recording and reconciling a transaction. Questioned None Costs Status Sustained Corrective Additional positions/roles will be created or redesigned and implemented Action so that the duties required involve more participants and would include the following suggested plan: 1. Cash Receipts a. All mail will be opened by the Executive/Administrative Assistant and cash receipts recorded by the Administrative Specialist. b. All other accounts receivables (AR) will be collected by Administrative Specialist and recorded by Executive/Administrative Assistant. c. The cash receipts journal will be totaled by the Chief Financial Officer (CFO), Administrative Specialist will prepare the corresponding deposit and CFO will deposit cash receipts. d. Executive/Administrative Assistant will reconcile the depository bank receipt with the cash receipts journal to verify that all funds are deposited. e. CFO will review AR ledger. f. CEO will authorize write-offs of delinquent accounts. g. CFO will independently investigate AR discrepancies. h. CEO will maintain or authorize AR adjustments. i. Administrative Specialist will edit the AR master file. j. Executive/Administrative Assistant will process customer service calls and CEO will handle complaints. k. CFO will investigate discrepancies or issues related to revenue and CEO will authorize adjustments as needed. I. CFO will reconcile bank accounts. 2. Accounts Payable a. Vendor payments will be initiated by Executive/Administrative Assistant. 1 b. Checks will be prepared by Administrative Assistant. c. CEO will review and authorize/sign checks or approve electronic payments. d. Checks $1000 or greater require 2 signatures. The second signer (an Executive Committee member of tBoard of Directors) will also review and authorize/sign checks or approve electronic payments. e. Executive/Administrative Assistant will mail checks. f. Administrative Specialist will edit the vendor master file. g. CFO will investigate discrepancies or issues involving expenditures. h. Executive/Administrative Assistant will open the mail or copy checks received. i. CFO will reconcile bank accounts. 3. Payroll a. Human Resources (HR) Director will prepare payroll checks. b. CEO will sign payroll checks. c. CFO will review and authorize electronic payroll disbursements. d. CFO will resolve employee payroll inquiries. e. HR Director will edit the payroll master file. f. Executive/Administrative Assistant will open the mail or copy checks received. 4. Other a. CFO is required to take 1 full week of vacation a year and will not enter the building for at least 10 days. b. A budget is prepared by CEO/CFO and approved annually by the Operations Committee and the Board of Directors. c. Budget revisions are prepared by CEO/CFO and approved by the Operations Committee and the Board of Directors d. An Income Statement Report is prepared monthly by CFO and reviewed by the CEO, Operations Committee and Board of Directors. e. A Balance Sheet report is prepared quarterly by CFO and reviewed by CEO, Operations Committee and the Board of Directors f. A Budget Variance report is prepared monthly and per department quarterly by CFO, reviewed by CEO, Operations Committee and Board of Directors.

Categories

Internal Control / Segregation of Duties

Other Findings in this Audit

  • 8498 2022-004
    Material Weakness
  • 8499 2022-005
    Material Weakness
  • 8500 2022-003
    Significant Deficiency Repeat
  • 8501 2022-004
    Material Weakness
  • 8502 2022-005
    Material Weakness
  • 584939 2022-003
    Significant Deficiency Repeat
  • 584940 2022-004
    Material Weakness
  • 584941 2022-005
    Material Weakness
  • 584942 2022-003
    Significant Deficiency Repeat
  • 584943 2022-004
    Material Weakness
  • 584944 2022-005
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
16.575 Crime Victim Assistance $488,768
16.540 Juvenile Justice and Delinquency Prevention_allocation to States $190,695
16.736 Transitional Housing Assistance for Victims of Domestic Violence, Dating Violence, Stalking, Or Sexual Assault $144,077
93.671 Family Violence Prevention and Services/domestic Violence Shelter and Supportive Services $102,912
93.558 Temporary Assistance for Needy Families $69,632
14.218 Community Development Block Grants/entitlement Grants $66,300
10.558 Child and Adult Care Food Program $49,014
93.575 Child Care and Development Block Grant $27,853
14.231 Emergency Solutions Grant Program $25,933
97.024 Emergency Food and Shelter National Board Program $15,800
16.588 Violence Against Women Formula Grants $10,091
16.017 Sexual Assault Services Formula Program $5,443
14.267 Continuum of Care Program $4,308
10.569 Emergency Food Assistance Program (food Commodities) $2,074