CLAY COUNTY WATER AUTHORITYLocal Government

2021-01 - Segregation of Duties Criteria: Segregation of employee's duties is a common practice in an effective internal control structure. Segregation of duties is when specific employee functions related to important accounting areas are separated among different individuals to reduce the risk that any one individual could intentionally or unintentionally misappropriate assets. Policies should be in place requiring the segregation of certain duties. Condition: The limited number of employees and the resulting overlapping of duties causes segregation of duties to be difficult. Context/Cause: During the course of our test work, we noted several areas in which the segregation of duties could be improved. The following are controls or practices which should be in place to ensure adequate segregation of duties, but aren't at the Board. ? Persons responsible for review, authorization, and signing of checks are not independent from those who initiate checks, prepare checks, and those who are responsible for investigation discrepancies or issues involving the expenditures. ? There should be proper segregation or compensating controls when individuals have access to the cash collections duties; preparation of deposits; posting cash collections and reconciliation of the bank statements. Effects: Without some segregation of duties within these functions; there is increased exposure that someone could intentionally or unintentionally misappropriate assets of the Board. Recommendation: We recommend the Board review its processes and determine where it ?can effectively segregate duties or have compensating controls to reduce the risks associated with lack of segregation of duties. Auditee's Response: The Board will review our processes and integrate additional controls and segregation of duties.

Criteria: Segregation of employee's duties is a common practice in an effective internal control structure. Segregation of duties is when specific employee functions related to important accounting areas are separated among different individuals to reduce the risk that any one individual could intentionally or unintentionally misappropriate assets. Policies should be in place requiring the segregation of certain duties. Condition: The limited number of employees and the resulting overlapping of duties causes segregation of duties to be difficult. Context/Cause: During the course of our test work, we noted several areas in which the segregation of duties could be improved. The following are controls or practices which should be in place to ensure adequate segregation of duties, but aren't at the Board. ? Persons responsible for review, authorization, and signing of checks are not independent from those who initiate checks, prepare checks, and those who are responsible for investigation discrepancies or issues involving the expenditures. ? There should be proper segregation or compensating controls when individuals have access to the cash collections duties; preparation of deposits; posting cash collections and reconciliation of the bank statements. Effects: Without some segregation of duties within these functions; there is increased exposure that someone could intentionally or unintentionally misappropriate assets of the Board. Recommendation: We recommend the Board review its processes and determine where it can effectively segregate duties or have compensating controls to reduce the risks associated with lack of segregation of duties. Auditee's Response: The Board will review our processes and integrate additional controls and segregation of duties.

Criteria: The USDA grant and bond agreements require that the annual financial statement audit be issued within 6 months of year end. Condition: The financial statement audit for the year ending December 31 , 2019 was issued February 15, 2021. This date is 13.5 months subsequent to year end. Context/Cause: The late issuance date of the annual financial audit and the single audit report is in violation of the grant and bond agreements and with the Uniform Code. Effects: Late issuance could jeopardize both the current grant and bonds and any future grants. Recommendation: We recommend the Board works with their auditor to ensure that the deadlines for issuance are met. Auditee's Response: The Board and staff will work with the auditor to ensure that filing deadlines are met.

Criteria: The Uniform Code requires that the single audit report be issued and filed with the Federal Single Audit Clearinghouse within 9 months of year end and within 30 days of the financial statement date. Condition: The financial statement audit for the year ending December 31 , 2019 was issued February 15, 2021. This date is 13.5 months subsequent to year end. Context/Cause: The late issuance date of the annual financial audit and the single audit report is in violation of the grant and bond agreements and with the Uniform Code. Effects: Late issuance could jeopardize both the current grant and bonds and any future grants. Recommendation: We recommend the Board works with their auditor to ensure that the deadlines for issuance are met. Auditee's Response: The Board and staff will work with the auditor to ensure that filing deadlines are met.