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08-17-2020-WS
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08-17-2020-WS
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CITY OF ARDEN HILLS <br /> <br />Schedule of Findings and Responses <br />Year Ended December 31, 2019 <br /> <br /> <br /> <br />-4- <br />FINDINGS – MATERIAL WEAKNESS IN INTERNAL CONTROL OVER FINANCIAL <br /> REPORTING <br /> <br />2019-001 SEGREGATION OF DUTIES <br /> <br />Criteria – Internal control over financial reporting. <br /> <br />Condition – The City of Arden Hills, Minnesota (the City) has limited segregation of duties <br />in a number of areas. <br /> <br />Context – This is a current year and prior year finding. <br /> <br />Cause – The limited segregation of duties is primarily caused by the limited size of the City’s <br />finance department staff. <br /> <br />Effect – One important element of internal accounting controls is an adequate segregation of <br />duties such that no one individual should have responsibility to execute a transaction, have <br />physical access to the related assets, and have responsibility or authority to record the <br />transaction. A lack of segregation of duties subjects the City to a higher risk that errors or <br />fraud could occur and not be detected in a timely manner in the normal course of business. <br /> <br />Recommendation – This condition is common to organizations of your size. We recommend <br />that the City segregate duties as best it can within the limits of the staff available. Any <br />modifications in internal control in this area should be viewed from a cost-benefit <br />perspective. <br /> <br />Management Response – There is no disagreement with the audit finding. The City reviews <br />and makes improvements to its internal control structure on an ongoing basis and attempts to <br />maximize the segregation of duties in all areas within the limits of the staff available. <br />However, the City does not consider it cost-beneficial at this time to increase the size of its <br />staff in order to further segregate accounting functions.
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