ICC Again

The maintaining of a system of effective internal control does require appropriate separation of responsibilities. For internal control to be effective, there needs to be an adequate division of responsibilities among those who perform accounting procedures or control activities and those who handle assets.

The purpose of segregating duties is to insure that no one individual is in a position that allows such an individual to both commit an irregularity and then conceal that irregularity. Certainly in a large community with multiple employees within a department, there is ample opportunity to segregate functions so that employees, performing their routine duties, serve as a check on one another. But even in small town situations, internal controls must be implemented to insure that adequate checks and balances continually occur.

Segregation of duties
involves separating job functions so that ideally no one individual is able to 1) authorize a transaction, 2) record the transaction in the accounting records, and 3) maintain custody of the asset resulting from that transaction.

SEGREGATION OF DUTIES
Five-person Segregation of Duties

· Bookkeeper, City Clerk-HR, Deputy City Clerk, Treasurer-Finance Director and City Manager
· Post accounts receivable
· Distribute payroll slips
· Complete deposit slips
· Sign checks
· Reconcile petty cash
· Open mail / receive cash
· Gives credits and discounts
· Sign employee contracts
· Write checks Record initial charges & pledges
· Prepare invoices
· Custody of securities
· Post general ledger
· Complete check log
· Approve payroll
· Approve employee timesheets
· Post credits / debits
· Disburse petty cash
· Approve invoices for payment
· Reconcile bank statements
· Mail checks
· Authorize purchase orders
· Authorize check requests
· Perform inter-fund transfers