SCHOOL DISTRICT OF HORICON

Reference Number: 2021-002 Description: Segregation of Duties Criteria: Statements on Auditing Standards AU ?325.29 states it is a deficiency in the design of controls to have absent or inadequate segregation of duties within a significant account or process. Condition: Many of the accounting functions are performed by a few individuals, including: ? Opening the mail ? Handling cash receipts ? Processing cash receipts ? Recording vendor invoices ? Preparing checks ? Mailing checks ? Processing payroll These same individuals have the ability to record journal entries and reconcile accounts. Cause: Limitations in staff size Effect: Potential for financial statement misstatement caused by error or fraud that would not be detected or prevented by District staff in a timely matter. Repeat Finding: This is a repeat finding, see 2020-002. Auditors? Recommendation: It is important for management to be aware of this condition and to realize that the concentration of duties and responsibilities in one or two individuals is not desirable from a control standpoint. Under these conditions, the most effective controls rest in management?s knowledge and monitoring of matters relating to the District?s financial affairs. Views of Responsible Officials and Planned Corrective Actions: See District?s corrective action plan.

Reference Number: 2021-003 Description: Audit Adjustments Criteria: Statements on Auditing Standards AU ?314.41 states it is the responsibility of management to implement proper internal controls to provide reasonable assurance about the achievement of the entity?s objectives with regard to the reliability of financial reporting. Condition: One or more audit adjustments were required to prevent the District?s financial statements from being misstated. Cause: Inadequate controls to ensure the proper recording of all of the District?s financial transactions in accordance with accounting principles generally accepted in the United States of America. Effect: Without the audit adjustment(s), the financial statements of the District would have been misstated. Repeat Finding: This is a repeat finding, see 2020-003. Recommendation: We recommend management review the nature of these entries in order to determine if these types of adjustments could be made during the year as part of the ordinary financial reporting process. This would reduce the likelihood of this comment in the future and also increase the accuracy of interim financial statements. Views of Responsible Officials and Planned Corrective Actions: See District?s corrective action plan.