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CITY OF GEM LAKE <br />SCHEDULE OF FINDINGS AND RESPONSES <br />YEAR ENDED DECEMBER 31, 2016 <br />MATERIAL WEAKNESS. <br />2016_001: Limited Segregation of Duties <br />Condition:. Due to the small. size of the City's staff, there is by definition a lack of segregation of the <br />accounting functions that is necessary to ensure adequate. internal accounting control. While we realize <br />this scenario is common for. small entities, we are .required. to report this issue and to advise. thata <br />concentration of duties and responsibilities in a limited number of individuals is not desirable from an <br />internal Control perspective, <br />Criteria: Generally, a system of internal control contemplates separation of duties such that: no <br />individual has responsibility to execute a transaction, have physica[access to the. related assets,. and <br />have responsibility or authority to record the transaction. <br />Effect: The City is unable to maintain segregation of incompatible duties. <br />Cause: The condition is due. to a limited number of :personnel involved in receipt and disbursement <br />processes. <br />Recommendation: Controls should be reviewed periodica[iy'ar d consideration given to improving the <br />segregation of duties.. In making this review; it>is important to consider the benefit derived as weighed <br />against the cost of the improvements. <br />Management Response: <br />Management. has decided, due' to 'the small size' of the City's staff, that the additional costs of <br />implementing the necessary coritro[s`oiatweigh the'benefits that would be deriver, <br />(35) <br />