CLINTON — Iowa State Auditor Rob Sand released an audit report last week for Clinton County that shows some offices have been not meeting segregation of duty requirements.
Sand reported seven findings related to receipt and expenditure of taxpayer funds, a June 30 news release states. The findings address issues including lack of segregation of duties, material amounts of inventory, receivables, capital assets and payables not properly recorded in the county’s financial statements and disbursements exceeding amounts appropriated, the release states.
A summary of the independent auditor’s results was provided in the schedule of findings and questioned costs. The summary notes a significant deficiency and material weaknesses in internal control over financial reporting was disclosed by the audit of the financial statements. The audit did not disclose any non-compliance material to the financial statements and no material weakness in internal control over the major program was noted, according to the summary.
The schedule of findings identifies segregation of duties as an internal control deficiency. Mail was not opened by someone independent of the receipts process in the Conservation, Emergency Management and Recorder’s offices, the findings state. One individual may have control over collecting, depositing, posting, maintaining receivable records and daily reconciling of receipts for which no compensating controls exist in the Conservation, Emergency Management, Recorder and Sheriff’s offices, the findings state.
The findings add bank accounts were not reconciled by an individual who does not sign checks, handle or record cash, and bank reconciliations were not reviewed periodically by an independent person for propriety in the Conservation, Recorder and Sheriff’s offices.
The findings state that in the County Sheriff’s Office, all individuals had the ability to void receipts, including individuals who perform daily balancing, and voided receipts were not reviewed periodically by an independent person for propriety.
The findings note the county offices have a limited number of employees and procedures have not been designed to adequately segregate duties or provide compensating controls through additional oversight of transactions and processes.
“We realize segregation of duties is difficult with a limited number of office employees,” the findings state. “However, each official should review the operating procedures of their office to obtain the maximum internal control possible under the circumstances. The official should utilize current personnel, including elected officials and personnel from other county offices, to provide additional control through review of financial transactions, reconciliations and reports. Such reviews should be performed by independent persons to the extent possible and the reviews should be documented by the signature or initials of the reviewer and the date of the review.”
Clinton County Conservation stated due to small office size, segregation of duties is difficult, the findings state. Clinton County Conservation will continue to segregate duties to the best of their abilities, they said. The County Recorder’s Office noted it is a big office with a small staff. The intention is to split the duties as much as possible but it does have constraints, the findings stated.
The sheriff’s office noted independent reviews of the monthly bank reconciliations, receipts and disbursements were done by the sheriff or chief deputy, who had no involvement in the cash receipts or disbursement cycles. They noted they were aware of the segregation of duties deficiencies and would do their best to separate as much as possible with the limited number of staff and efficiency concerns, they stated.
Clinton County Emergency Management also noted with the limited number of people in the office, it is difficult to meet segregation of duties requirements. Emergency Management only has a handful of checks that come into the office each year, according to the response listed in the schedule of findings.
When a check comes in, they fill out an incoming funds form and give the check to the Clinton County Treasurer’s Office. At the end of the month, the budget director sends an expenditure report for the month and then one person from the Emergency Management Office reconciles that with the record of the deposit.
The schedule of findings acknowledged the responses.
“Each official should continue to monitor internal controls to obtain the maximum control possible,” the schedule of findings states. “In addition, bank reconciliations should be reviewed by an independent person monthly.”
The schedule of findings notes material amounts of inventory, receivables, capital assets and payables were not properly recorded in the county’s financial statements. Adjustments were subsequently made by the county to properly include the amounts in the financial statements, the findings state. A lack of policies and procedures resulted in county employees not detecting the errors in the normal course of performing assigned functions, according to the schedule of findings.
“The County should establish procedures to ensure all inventory receivables, capital assets and payables are identified and properly reported in the County’s financial statements,” the schedule of findings states.”
The schedule of findings notes Clinton County accepted the recommendations. In the county’s response, it states the county will review its procedures and make appropriate changes, the schedule of findings states. The response was accepted.
The news release states the county’s revenues for the 2020 fiscal year totaled over $36.5 million, a 3% increase over the prior year. The county’s expenses for county operations for fiscal year 2020 were over $33.2 million, an increase of 11.7% over the prior year, according to the news release.
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