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CITY OF GEM. LAKE <br />Schedule of Findings :and Responses <br />Year Ended December. 31, 2024 <br />FINDING — MATERIAL WEAKNESS IN INTERNAL CONTROL. OVER FINANCIAL <br />REPORTING <br />2024-001 IZ-4ADEQUATE;SEGREGATiON OF DUTIES <br />Criteria — Internal control dv* financial rep'ort.ir g.. <br />Condition — The City of Gem Lake, Minnesota (the City) has ]united segregation *of duties in <br />a number of areas. 'including. but *not limited to; controls over cash receipts, cash. <br />disburserrtenls,. utility billing; and pa}troll. <br />Questioned -Costs.— Not applicable. <br />Context — Tbe.condition applies to multiple areas as noted above: <br />Repeat Finding — This is a current. year and prior. year finding. <br />Cause —The limited segregation of. duties-is.primarilyd-4osed bythe limited size of'the City's <br />office staff. <br />Effect — One important element of internal accounting Controls is an adequate segregation of <br />duties such that no one individual. have responsibility to execute a transaction,.have physical. <br />access to the related assets, -and. have responsibility or authority to record the transaction. A <br />lack of segregation of duties Subjects the. City to a, h'igher-risk that errors bt fraud could occur <br />and not be detected in a timely manner in the*normal course of business: <br />Recommendation -- We recommend that the City continue its efforts to segregate duties as <br />.best it can within the Iimits: of what the City considers to be cost -beneficial. <br />Management Response —There is no disagreement with the audit finding. The -City reviews <br />and makesimprove tnents to its internal control structure orr aft ongoing basis to maximize the <br />segregation of duties in all areas within the limits of*the staff available::However, the .city <br />does not consider it cost -beneficial at this time to increase the. size of itss finance .department <br />staff' in order to further segregate accounting. -functions.. <br />-35- <br />