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2013-001 Limited segregation of duties - cash disbursements and cash receipts <br />Condition: During our audit we reviewed procedures over cash disbursements and cash receipts and found the <br />Organization to have limited segregation of duties related to these procedures. <br />Criteria: <br />Cause: <br />There are four general categories of duties: authorization, custody, record keeping and <br />reconciliation. In an ideal system, different employees perform each of these four major functions. In <br />other words, no one person has control of two or more of these responsibilities. <br />As a result of the limited number of staff, the Organization is not able to completely segregate all <br />accounting functions. For both transaction cycles, one person is performing two or more of the major <br />functions described above. <br />Effect: The existence of this limited segregation of duties increases the risk of fraud and errors. <br />Recommendation: While we recognize the current staff is not large enough to eliminate this deficiency, we recommend <br />the following compensating controls be implemented by the Organization. For cash disbursements, <br />we suggest that the Administrator be removed as an authorized signatory. For cash receipts, we <br />suggest that someone other than the Administrator either prepare the deposit slip or take it to the <br />bank. <br />Management response: <br />Efforts have been made to increase the internal control available by segregating duties. A part-time Bookkeeper <br />reconciles bank statements, prepares checks and monthly financial reports. The Program Coordinator or Water Resource <br />Technician opens and initials bank statements. The Administrator reviews payments and reports, makes deposits and can <br />be one of two required signatures on checks. Monthly expenditures within budget are authorized by the Technical <br />Commission at their monthly meeting. The Board officers are check signers and the Board of Directors must approve <br />any changes to budgeted expenses. <br />For now, the Organization accepts the degree of risk associated with any further segregation of duties. <br />-2- <br />People <br />+Process. <br />Going <br />Beyondthe <br />Numbers <br />