AHSTW Community School District

Segregation of Duties – The District did not properly segregate, record-keeping and reconciling functions for receipts and disbursements, including those related to federal programs.

AL Number 10.553: School Breakfast Program

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 District?s financial statements. Condition ? Investment transactions, reconciling, journal entry writing, approving and posting, and financial reporting are performed by the same person Cause ? The District 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 the District?s ability to prevent or detect and correct misstatements, errors or misappropriation on a timely basis by employee in the normal course of performing their assigned functions. Recommendation ? We realize segregation of duties is difficult with a limited number of office employees. However, the District should review its procedures to obtain the maximum internal control possible under the circumstances utilizing currently available staff, including elected officials. Response and Corrective Action Plan ? We will continue to review our procedures and implement additional controls where possible. Conclusion ? Response accepted.