Finding Text
Criteria
Segregation of duties should be in place to ensure appropriate checks and balances and to mitigate incompatible duties being performed by one individual over key financial and compliance functions.
Condition
The Authority does not maintain sufficient segregation of duties to prevent one individual from having control over each of the following areas.
1) Cash receipts – detailed recordkeeping, custody, reconciling, and posting to the general ledger.
2) Disbursements – check preparation including payroll, and posting to and maintaining the general ledger.
3) Federal compliance requirements – eligibility determinations, special tests and provisions, and reporting.
Cause
The Authority does not have sufficient staffing to ensure multiple individuals are involved in all significant accounting controls and transaction cycles.
Effect
One individual may have complete control over certain transactions and compliance determinations without adequate checks and balances or reviews being implemented.
Recommendations
Resolving the deficiency may require the Authority to hire additional personnel necessary to adequately separate accounting responsibilities. This solution may result in a substantial increase in operating costs.
The other action would be to accept that by definition there is a significant deficiency in internal control and the cost of eliminating that deficiency may exceed the benefit.