CHEYENNE COUNTY, NEBRASKA

Criteria An adequate internal control system design should be designed to adequately segregate responsibilities of performing control functions sufficient to prevent circumvention of those controls by any one individual. Condition and Context The County has not employed an internal control system that sufficiently segregates accounting functions to a degree that reasonably reduces the risk that fraud could occur and not be detected. Cause of the Condition It appears that the County currently employs an insufficient number of financial personnel required to sufficiently segregate accounting functions. Effect of the Condition Internal controls may be circumvented to reduce the ability of those internal controls to detect fraud. Recommendation Although this condition is a serious defect in the design of the internal control system, we believe the financial and personnel resources necessary to adequately segregate accounting functions would outweigh the assurance provided. However, we also recommend that management and the Board of Commissioners be continuously aware of this condition, segregate high-risk functions when possible, implement alternative mitigating procedures, and rigorously investigate unusual transactions when discovered. Views of Responsible Officials and Planned Corrective Action We understand that an internal control system is inadequate without sufficient segregation of accounting functions. However, we believe that the required resources necessary to properly segregate accounting functions are beyond reasonable expectations, given the size and current resources of the County. We are aware of the risks of fraud associated with insufficient segregation of accounting functions and the County implements mitigating controls, when possible, and investigates unusual circumstances and transactions when encountered.