BEACON HOUSING CORPORTIONNon-Profit

Segregation of Duties Criteria: Management is responsible for establishing and maintaining internal control. A good system of internal control provides for adequate segregation of duties so no one individual handles a transaction from its inception to completion. In order to maintain proper internal control, duties should be segregated so the authorization, custody and recording of transactions are not under the control of the same employee. This segregation of duties helps prevent losses from employee error or dishonesty and maximizes the accuracy of the financial statements. Condition: One individual has custody of receipts and performs all record-keeping and reconciling functions for the office, including those related to federal programs Cause: Beacon Housing Corporation has a limited number of employees and procedures have not been designed to adequately segregate duties or provide compensating controls through additional oversight of transactions and processes. Effect: Inadequate segregation of duties could adversely affect Beacon Housing Corporation?s ability to prevent for detect and correct misstatements, errors or misappropriation on a timely basis by employees in the normal course of performing their assigned functions.

A. Segregation of Duties Criteria: Management is responsible for establishing and maintaining internal control. A good system of internal control provides for adequate segregation of duties so no one individual handles a transaction from its inception to completion. In order to maintain proper internal control, duties should be segregated so the authorization, custody and recording of transactions are not under the control of the same employee. This segregation of duties helps prevent losses from employee error or dishonesty and maximizes the accuracy of the financial statements. Condition: One individual has custody of receipts and performs all record-keeping and reconciling functions for the office, including those related to federal programs Cause: Beacon Housing Corporation has a limited number of employees and procedures have not been designed to adequately segregate duties or provide compensating controls through additional oversight of transactions and processes. Effect: Inadequate segregation of duties could adversely affect Beacon Housing Corporation?s ability to prevent for detect and correct misstatements, errors or misappropriation on a timely basis by employees in the normal course of performing their assigned functions. Recommendation: Beacon Housing Corporation should review the operating procedures of the office to obtain the maximum internal control possible under the circumstances utilizing currently available staff, including Board members. Response: We will review operating procedures and make changes to improve internal control.