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18 <br /> 81AULDIN N4920shl-1, <br /> -1 ENKINS <br /> Comments, Recommendations, ORANGE COUNTY <br /> and Other Issues (Continued) NORTH CAROLINA <br /> Significant Deficiency <br /> 2016-004 Segregation of Duties <br /> Segregation of employees' duties is a common practice in an effective internal control structure. Segregation of duties <br /> is achieved when specific employee functions related to important accounting areas are separated among different <br /> individuals to significantly reduce the risk that any one individual could intentionally or unintentionally misappropriate <br /> assets. Policies should be in place requiring the segregation of certain duties. The County's payroll processing <br /> controls did not provide the appropriate segregation of duties related to the payroll processing. One individual at the <br /> County has the ability to input employee time, prepare the batch time entry reports to post to the general ledger, and <br /> edit employee hours. We recommend these controls either be segregated or compensating controls be implemented <br /> such as periodic reports reviewed of all changes made to employee time entered, new employees created as <br /> compared to reports from Human Resources, changes in employee benefits, earnings, or withholdings. During our <br /> testing we noted at the Sheriff's Department the same individual was capable of creating and approving a purchase <br /> requisition. Without some segregation of duties within these functions, there is increased exposure that someone could <br /> intentionally or unintentionally misappropriate assets of the County. Additionally, without additional internal controls <br /> related to financial reporting, errors could occur and not be detected. <br /> 14 <br />