Sundance Times - Continuing the Crook County News Since 1884

County audit reveals no new concerns


January 16, 2020

Though the county was given a clean bill of financial health by auditors Leo Riley & Associates last week, as usual, the issue of separation of duties was brought up in the annual audit report.

“It’s been an ongoing issue for years,” explained Leonard Garcia as he presented the report. “It’s just something that happens in smaller companies.”

The problem does not concern the county itself, which Garcia described as “fairly well broken up” between the board of county commissioners, county clerk, county treasurer, county assessor and so on. It applies instead to the smaller component units overseen by the county, such as the fair board, library board and the weed and pest control district.

According to the audit report, an effective internal control structure must protect assets against theft and waste, ensure compliance with policies and procedures, evaluate personnel performance and ensure accurate and reliable data. The overall idea is to ensure that a number of different people have eyes on a single transaction to reduce the risk of fraud and mistakes.

Ideally, according to the report, a different person should be involved at each stage: initiating a transaction, approving it, recording it, reconciling balances and retaining custody of the asset.

This cannot be achieved by the county’s boards because the small number of personnel employed by each of them makes it impossible for a different person to handle each of these steps. Often times, notes the audit report, the same person must complete multiple steps, if not all of them.

The boards “have attempted to address the shortcomings of their internal control structure by involving the board of directors in the transaction cycle,” says the report.

“However, the board members’ limited understanding of their roles in the internal control system, their lack of experience, their lack of training and the volunteer nature of their service has resulted in an imperfect solution.”

Garcia’s recommendation, on behalf of Leo Riley & Associates, is to enhance the effectiveness of the boards themselves by ensuring that board members are made aware of how important their function is, providing training on preventing and detecting fraud and abuse, providing published material on the topic and removing any board members who “exhibit a cavalier attitude to their responsibilities” by missing meetings, failing to review expenditures and so on.

Garcia also recommended soliciting individuals with accounting backgrounds or business experience to serve on the boards and setting up a “hotline” so that anyone with information about fraud or ethical issues can report their concerns anonymously.

The county stated in its response that the commissioners and boards are aware of the situation but have no choice other than the compensating control now in place. It was noted that intensive board training has been implemented and that board members can now view accounts online and take an active involvement in reviewing transactions prior to payment.

No other financial issues were noted in the 2019 audit report.


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