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CITY OF OEM LAKE. <br />Schedule of Findings and Responses <br />Year Ended December 31, 2021 <br />FINDINGS. - NIATERIAL WEAKNESS IN INTERNAL CONTROL OVER FINANCIAL <br />REPORTING <br />2021-Of}i ' ]INADEQUATE SEG.RECA'ClOIV O.r DLTIES <br />-Critgria — Internal. control over financial-xeporting: <br />Condition — ne City of Gem Lake, Minnesota (the City) has .limited segregation of duties in. <br />a number of areas, incluii ng,. -but not I'iinited to, controls over cash receipts, cash <br />disbursements, utility billing, and payroll. <br />Questioned Costs — Not applicable. <br />Context The condition applies to multiple areas-as.iioted above. <br />Repeat Finding �- This is a current year and* prior year finding. <br />Cause — The limited segregation of duties is primarily caused by the limited size of the City's <br />office staff. <br />Effect — Ohe impoFta t element of internal accounting controls is an adequate. segregation of <br />duties s igh that no one. individual have responsibility to execute a transaetion,.have physical <br />access: to. the related assets; .and. have responsibility or authority to record *the transaction. A <br />iack.df'segregation of duties subjects the City to. a higher risk that errors or fraud.. could occur <br />and not be detected in a timely nighner 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.limits.of what the. City considers to lze cost -beneficial. <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 to 1tnaximize 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.its finance department <br />stat~f in orderto further segregate accountingfunctions. <br />-35- <br />