Laserfiche WebLink
CITY OF GEM LAKE <br />J <br />Schedule of Findings and Responses <br />Year Ended December 31, 2025 <br />A. FINDINGS — MATERIAL WEAKNESSES IN INTERNAL CONTROL OVER FINANCIAL <br />REPORTING <br />2025-001 INADEQUATE SEGREGATION OF DUTIES <br />Criteria — Internal control over financial reporting. <br />Condition — The City of Gem Lake, Minnesota (the City) has limited segregation of duties in <br />a number of areas, including, but not limited 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 noted 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 — 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 higher risk that errors or 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 limits 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 makes improvements to its internal control structure on an 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 its finance department <br />staff in order to further segregate accounting functions. <br />RD11 <br />