Board treasurer flags audit ‘significant deficiency’ in segregation of duties; auditor agrees to test

Board Treasurer Julie raised concerns about a significant deficiency reported in the district’s recent audit that described "limited segregation of duties in several areas, including the processing of cash receipts and payroll transactions," and asked the auditor to test whether the assumption was supported.

Julie said she was surprised the auditor had treated the issue as an assumption rather than verifying controls, noting the district’s $60 million budget and the need to understand material impact. She told the board she had asked the audit firm to perform procedures to determine whether the deficiency is present and how pervasive it is.

The treasurer recounted that last year the district had a material weakness for a large accrual that staff corrected, and that the current auditor view of segregation of duties rose to the level of a "significant deficiency." She said the firm indicated the limited size of the business office had driven the finding. Julie told the board she expected auditors to test the control environment and not rely on assumptions.

Chair and board members thanked Julie for pursuing the issue; Julie said the auditor agreed to do further procedures and that the board should expect an update during the audit process. The matter was discussed as an information item; no formal board action was recorded beyond the request for additional testing.

Julie also praised improvements staff had made in internal controls, such as reducing duplicate payments and addressing voided checks, and said she was encouraged by the district’s recent hire of a deputy director of finance with government accounting experience.

The board acknowledged the conversation and requested continued follow-up with the auditor and finance staff.