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CITY OF LAKE ELMO, MINNESOTA <br />SCHEDULE OF FINDINGS AND RESPONSES <br />FOR THE YEAR ENDED DECEMBER 31, 2023 <br /> <br /> <br />135 <br />FINANCIAL STATEMENT FINDINGS IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS <br /> <br />Finding 2023-001 Limited Segregation of Duties <br /> <br />Condition: Throughout the year, the same employee was often responsible for preparing and reviewing bank <br />reconciliations, as well as recording and approving adjusting journal entries. Additionally, the <br />individual primarily responsible for completing bank reconciliations was also an authorized signer <br />for the City’s checking account. <br /> <br />Criteria: The City should adopt an internal control structure that properly segregates the various functions of <br />each accounting cycle. This means no single person should be in a position to both initiate and <br />approved a transaction, as well as have access to the related physical assets involved with the <br />transaction. In other words, an employee should not be in a position to both commit an irregularity <br />and cover it up. <br /> <br />Cause: Limited number of staff members in the finance department, as well as temporary vacancies in the <br />Finance Director and City Administrator roles. <br /> <br />Effect: The lack of ideal segregation of duties could expose the City to heightened risk that errors or fraud <br />could occur and not be detected in a timely manner. <br /> <br />Recommendation: We recommend the City review and evaluate current procedures for the purpose of implementing <br />additional oversight and segregation of duties to the extent that is determined to be feasible. <br /> <br />Views of Responsible <br />Officials And Planned <br />Corrective Actions: Management agrees with the recommendation. See corresponding Corrective Action Plan.