Waverly Shell Rock Community School DistrictLocal Government

Segregation of DutiesCriteria - One important aspect of internal control is the segregation of duties among employees to prevent an individual employee from handling duties which are incompatible. Condition - We noted that the business manager and one other employee has the ability to set up new vendors within the accounting software and those same two employees each have the ability to generate checks which are electronically signed by the software. As a compensating control, the superintendent is obtaining the unopened bank statements each month and reviewing the items that clear the bank. The business manager makes all of the adjusting journal entries to the general ledger which are being reviewed and approved by the superintendent; however, there are no procedures in place to ensure that the superintendent is being provided all of the adjusting entries which were actually made to the general ledger. The business manager has full administrative rights within the accounting software which allows for the opportunity to make changes that would override other compensating controls that have been placed in operation. Cause - Limited number of business office employees and limitation of electronic data access controls. Effect or Potential Effect - The potential effect of this control weakness is that fraud or errors could occur and not be detected by management or others within the District in a reasonable period of time.Context - Pervasive.Identification of Repeat Finding - We found the same condition existed in our prior year audit.Auditor’s Recommendation - We realize segregation of duties is difficult with a limited number of business office employees. However, the District should continually review its procedures to obtain the maximum internal control possible under the circumstances utilizing currently available staff, including elected officials. The District should consider contacting its software vendor to discuss programming changes which could alert others within the District when changes are made by the business manager using the administrative rights; when new vendors are set up; when a transaction has been changed from its original recording; or when a payroll rate or salary amount is changed. Views of Responsible Officials and Planned Corrective Action - We will continue to review our procedures and implement additional controls where possible. Auditor’s Conclusion - Response accepted.

Segregation of DutiesCriteria - One important aspect of internal control is the segregation of duties among employees to prevent an individual employee from handling duties which are incompatible. Condition - We noted that the business manager and one other employee has the ability to set up new vendors within the accounting software and those same two employees each have the ability to generate checks which are electronically signed by the software. As a compensating control, the superintendent is obtaining the unopened bank statements each month and reviewing the items that clear the bank. The business manager makes all of the adjusting journal entries to the general ledger which are being reviewed and approved by the superintendent; however, there are no procedures in place to ensure that the superintendent is being provided all of the adjusting entries which were actually made to the general ledger. The business manager has full administrative rights within the accounting software which allows for the opportunity to make changes that would override other compensating controls that have been placed in operation. Cause - Limited number of business office employees and limitation of electronic data access controls. Effect or Potential Effect - The potential effect of this control weakness is that fraud or errors could occur and not be detected by management or others within the District in a reasonable period of time.Context - Pervasive.Identification of Repeat Finding - We found the same condition existed in our prior year audit.Auditor’s Recommendation - We realize segregation of duties is difficult with a limited number of business office employees. However, the District should continually review its procedures to obtain the maximum internal control possible under the circumstances utilizing currently available staff, including elected officials. The District should consider contacting its software vendor to discuss programming changes which could alert others within the District when changes are made by the business manager using the administrative rights; when new vendors are set up; when a transaction has been changed from its original recording; or when a payroll rate or salary amount is changed. Views of Responsible Officials and Planned Corrective Action - We will continue to review our procedures and implement additional controls where possible. Auditor’s Conclusion - Response accepted.

Segregation of DutiesCriteria - One important aspect of internal control is the segregation of duties among employees to prevent an individual employee from handling duties which are incompatible. Condition - We noted that the business manager and one other employee has the ability to set up new vendors within the accounting software and those same two employees each have the ability to generate checks which are electronically signed by the software. As a compensating control, the superintendent is obtaining the unopened bank statements each month and reviewing the items that clear the bank. The business manager makes all of the adjusting journal entries to the general ledger which are being reviewed and approved by the superintendent; however, there are no procedures in place to ensure that the superintendent is being provided all of the adjusting entries which were actually made to the general ledger. The business manager has full administrative rights within the accounting software which allows for the opportunity to make changes that would override other compensating controls that have been placed in operation. Cause - Limited number of business office employees and limitation of electronic data access controls. Effect or Potential Effect - The potential effect of this control weakness is that fraud or errors could occur and not be detected by management or others within the District in a reasonable period of time.Context - Pervasive.Identification of Repeat Finding - We found the same condition existed in our prior year audit.Auditor’s Recommendation - We realize segregation of duties is difficult with a limited number of business office employees. However, the District should continually review its procedures to obtain the maximum internal control possible under the circumstances utilizing currently available staff, including elected officials. The District should consider contacting its software vendor to discuss programming changes which could alert others within the District when things such as changes are made by the business manager using the administrative rights; when new vendors are set up; when a transaction has been changed from its original recording; or when a payroll rate or salary amount is changed. Views of Responsible Officials and Planned Corrective Action - We will continue to review our procedures and implement additional controls where possible. Auditor’s Conclusion - Response accepted.

2022-001 Segregation of Duties Criteria - One important aspect of internal control is the segregation of duties among employees to prevent an individual employee from handling duties which are incompatible. Condition - We noted that the business manager and one other employee has the ability to set up new vendors within the accounting software and those same two employees each have the ability to generate checks which are electronically signed by the software. As a compensating control, the superintendent is obtaining the unopened bank statements each month and reviewing the items that clear the bank. The business manager makes all of the adjusting journal entries to the general ledger which are being reviewed and approved by the superintendent; however, there are no procedures in place to ensure that the superintendent is being provided all of the adjusting entries which were actually made to the general ledger. The business manager has full administrative rights within the accounting software which allows for the opportunity to make changes that would override other compensating controls that have been placed in operation. Cause - Limited number of business office employees and limitation of electronic data access controls. Effect or Potential Effect - The potential effect of this control weakness is that fraud or errors could occur and not be detected by management or others within the District in a reasonable period of time. Context - Pervasive. Identification of Repeat Finding - We found the same condition existed in our prior year audit. Auditor?s Recommendation - We realize segregation of duties is difficult with a limited number of business office employees. However, the District should continually review its procedures to obtain the maximum internal control possible under the circumstances utilizing currently available staff, including elected officials. The District should consider contacting its software vendor to discuss programming changes which could alert others within the District when things such as changes are made by the business manager using the administrative rights; when new vendors are set up; when a transaction has been changed from its original recording; or when a payroll rate or salary amount is changed. Views of Responsible Officials and Planned Corrective Action - We will continue to review our procedures and implement additional controls where possible. Auditor?s Conclusion - Response accepted.

Part III: Findings and Questioned Costs for Federal Awards Instances of Noncompliance There were no reported instances of noncompliance. Internal Control Deficiencies All programs listed in the schedule of expenditures of federal awards. 21-III-A Segregation of Duties - As previously identified in the fiscal year 2020 audit report as item (2021-001) 2020-001, one important aspect of internal control is the segregation of duties among employees to prevent an individual employee from handling duties which are incompatible. See Finding 21 II-A for additional information. Part II: Findings Related to the Financial Statements Instances of Noncompliance There were no reported instances of noncompliance. Internal Control Deficiencies 21-II-A Segregation of Duties Criteria - One important aspect of internal control is the segregation of duties among employees to prevent an individual employee from handling duties which are incompatible. Condition - We noted that the business manager and one other employee has the ability to set up new vendors within the accounting software and those same two employees each have the ability to generate checks which are electronically signed by the software. As a compensating control, the superintendent is obtaining the unopened bank statements each month and reviewing the items that clear the bank. The business manager makes all of the adjusting journal entries to the general ledger which are being reviewed and approved by the superintendent; however, there are no procedures in place to ensure that the superintendent is being provided all of the adjusting entries which were actually made to the general ledger. The business manager has full administrative rights within the accounting software which allows for the opportunity to make changes that would override other compensating controls that have been placed in operation. Cause - Limited number of business office employees and limitation of electronic data access controls. Effect or Potential Effect - The potential effect of this control weakness is that fraud or errors could occur and not be detected by management or others within the District in a reasonable period of time. Context - Pervasive. Identification of Repeat Finding - We found the same condition existed in our prior year audit. Auditor?s Recommendation - We realize segregation of duties is difficult with a limited number of business office employees. However, the District should continually review its procedures to obtain the maximum internal control possible under the circumstances utilizing currently available staff, including elected officials. The District should consider contacting its software vendor to discuss programming changes which could alert others within the District when things such as changes are made by the business manager using the administrative rights; when new vendors are set up; when a transaction has been changed from its original recording; or when a payroll rate or salary amount is changed. Views of Responsible Officials and Planned Corrective Action - We will continue to review our procedures and implement additional controls where possible. Auditor?s Conclusion - Response accepted.

20-III-A Segregation of Duties - As previously identified in the fiscal year 2019 audit report as item (2020-001) 2019-001, one important aspect of internal control is the segregation of duties among employees to prevent an individual employee from handling duties which are incompatible. See Finding 20 II-A for additional information.Internal Control Deficiencies 20-II-A Segregation of Duties Criteria - One important aspect of internal control is the segregation of duties among employees to prevent an individual employee from handling duties which are incompatible. Condition - We noted that the business manager and one other employee has the ability to set up new vendors within the accounting software and those same two employees each have the ability to generate checks which are electronically signed by the software. As a compensating control, the superintendent is obtaining the unopened bank statements each month and reviewing the items that clear the bank. The business manager makes all of the adjusting journal entries to the general ledger which are being reviewed and approved by the superintendent; however, there are no procedures in place to ensure that the superintendent is being provided all of the adjusting entries which were actually made to the general ledger. The business manager has full administrative rights within the accounting software which allows for the opportunity to make changes that would override other compensating controls that have been placed in operation. Cause - Limited number of business office employees and limitation of electronic data access controls. Effect or Potential Effect - The potential effect of this control weakness is that fraud or errors could occur and not be detected by management or others within the District in a reasonable period of time. Context - Pervasive. Identification of Repeat Finding - We found the same condition existed in our prior year audit. Auditor?s Recommendation - We realize segregation of duties is difficult with a limited number of business office employees. However, the District should continually review its procedures to obtain the maximum internal control possible under the circumstances utilizing currently available staff, including elected officials. The District should consider contacting its software vendor to discuss programming changes which could alert others within the District when things such as changes are made by the business manager using the administrative rights; when new vendors are set up; when a transaction has been changed from its original recording; or when a payroll rate or salary amount is changed. Views of Responsible Officials and Planned Corrective Action - We will continue to review our procedures and implement additional controls where possible. Auditor?s Conclusion - Response accepted.

19-III-A (2019-001) Segregation of Duties - As previously identified in the fiscal year 2017 audit report as item 2017-001, one important aspect of internal control is the segregation of duties among employees to prevent an individual employee from handling duties which are incompatible. See Finding 19-II-A for additional information.

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