Overview
During our review of internal controls, we inspected 150 vendor invoices, totaling $264,853, and found that 23 invoices, totaling $21,185, were missing preapproval signatures by a separate employee before the treasurer submitted those invoices on an accounts payable warrant to the BOD for final approval and payment. In practice, this means that a single employee, in this case, the treasurer, can cause a payment to be made to a vendor without review and certification by others that the vendor actually exists and that the goods were provided or services rendered.
We did not find evidence of misappropriation or mismanagement of funds; however, if SRA does not properly segregate managerial duties to ensure that vendor invoices receive preapproval signatures, then there is an increased opportunity for errors or other problems to go unnoticed and for unauthorized transactions to occur.
Authoritative Guidance
Chapter 3.4 of the US Government Accountability Office’s “Federal Information System Controls Audit Manual,” published February 2009, states,
Effective segregation of duties starts with effective entity wide policies and procedures that are implemented at the system and application levels. Work responsibilities should be segregated so that one individual does not control all critical stages of a process.
While SRA is not required to follow this manual, we believe it to be a best practice.
Reasons for Issue
SRA management stated that the land use administrator does not manage all SRA consultants or vendors (e.g., finance, insurance, information technology). As a result, the treasurer would be the primary approver for those invoices before submitting them to the board for final approval through an accounts payable warrant.
Recommendations
- SRA should ensure that all accounts payable vendor invoices have preapproval signatures by a separate employee before being submitted to the BOD for final approval and payment.
- SRA should create policies and procedures that detail specific requirements and responsibilities for all employees in the payment of vendor invoices process.
Auditee’s Response
The Authority is currently and will continue to have the Land Use Administrator provide a preapproval signature on all invoices on the accounts payable warrants, during the absence of an Executive Director, in addition to the Treasurer/Finance Director, providing dual review and approval prior to submittal of the accounts payable warrants to the Board of Directors for final approval.
Auditor’s Reply
SRA states that it is taking appropriate actions to address this finding.
| Date published: | December 20, 2024 |
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