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County fails key fraud-risk assessment question; controller credits candor from new treasurer
Summary
Davis County failed a central question on its annual fraud risk assessment about separation of duties. Committee members praised the new treasurer's candid reporting and discussed mitigation and follow-up.
Davis County's controller told the Internal Audit Committee on March 5 that the county failed a key question on its annual fraud-risk assessment filed with external auditors and the State Auditor's Office because staff who can collect cash can also adjust customer accounts.
Controller Curtis Pope said the questionnaire offers 395 possible points and the county failed the "200" question on adequate separation of duties. "We answered it honestly," he said, adding that previous answers to that question had been incorrect in past filings. Pope said the county has "super users" in the treasurer's system and lacked mitigating controls last year.
The new treasurer's candid answer prompted discussion among commissioners about accountability and how to establish mitigating controls while the software limitations are addressed. Commissioners praised the treasurer's integrity for answering honestly and discussed accompanying the fraud-risk filing with a letter from the commission to provide context.
Why it matters: separation of duties is a fundamental internal control that reduces opportunities for undetected error or misappropriation. Failing the separation-of-duties question can affect state auditor reviews and prompts the county to design and document mitigating controls.
Next steps: committee members asked controller and internal audit staff to document options for mitigating controls (system restrictions, audit procedures, or manual compensating controls) and to bring recommendations to the commission and to the audit committee in future meetings.
