Overview
In our review of 20 bank statement reconciliations, we found that 19 reconciliations had an average elapsed time of 198 days between the bank statement date and a board member’s signatory review, the least being 71 days after a bank statement date and the most being 370 days. Further, 1 out of the 20 reconciliations was missing signature approval.
Without timely reviews of the bank statement reconciliation process, SRA may suffer financial loss in the event of an error in the reconciliation process. With the departure of SRA’s executive director in April 2019, the BOD has taken on some of managerial roles and duties that would normally be required of an executive director. If the BOD is overly involved in roles that should be typically performed by management, in this case the timely review of the reconciliations, then the BOD may not be able to provide enough oversight on more important policy matters, and the risk of a conflict of interest may arise.
Authoritative Guidance
Section 8 of Article 1 of the “Southfield Redevelopment Authority Board of Directors By-Laws” states,
The Executive Director of the Authority shall have general supervision over the administration of its business and affairs, subject to the direction of the Authority. The Executive Director shall have oversight of all funds of the Authority and shall inspect monthly and annual reporting and reconciliations.
Reasons for Issue
SRA management stated that bank reconciliations by the treasurer are typically done 30 to 60 days out from their receipt of bank statements. When the executive director left SRA, the BOD expanded its involvement in day-to-day operations, performing more of the managerial duties that would normally be required of an executive director. This included a signatory review of bank statement reconciliations. Only one board member has been assigned the task of reviewing and signing on these reconciliations. Depending on the availability of this board member, it can take additional time to complete this task.
Recommendation
SRA should perform timely reviews of bank reconciliations, and the BOD should ensure that SRA is staffed with a sufficient number of employees who can fully manage SRA’s daily operations.
Auditee’s Response
The Authority is currently and will continue to complete bank reconciliations within 30 to 60 days. This timeframe will be included in the Internal Control Plan, and the updated Policies and Procedures Manual of the Authority. In addition, the Authority will assign an alternate board member to provide signatory review of bank reconciliations when necessary to stay within the 30 to 60 day timeframe.
Auditor’s Reply
SRA states that it is taking appropriate actions to address this finding.
| Date published: | December 20, 2024 |
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