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9 <br /> 1 the reporting of the opening net position balances of the County's Solid Waste Landfill Fund. An <br /> 2 audit adjustment totaling approximately $760,000 was needed to correct the County's opening <br /> 3 net position in the general ledger as of June 30, 2016. <br /> 4 <br /> 5 2016-003 Capital Asset Reporting <br /> 6 Internal controls should be in place to ensure the subsidiary ledgers for the County's capital <br /> 7 assets, both governmental and business-type activities, include all capital assets purchased or <br /> 8 constructed during the fiscal year. Additionally, subsidiary ledgers should be maintained to track <br /> 9 the capital assets by cost and calculate annual depreciation amounts for the capital assets. <br /> 10 Material misstatements were detected by County management in the reporting of the current <br /> 11 year additions to the County's capital asset balances, as well as some previously unrecorded <br /> 12 capital assets. Adjustments of approximately $4,140,000 were needed to correctly report the <br /> 13 capital assets, including $1,023,000 of capital assets previously expensed in prior periods. <br /> 14 <br /> 15 2016-005 Schedule of Expenditures of Federal and State Awards <br /> 16 2 CFR 200.302(b)(1) states that all nonfederal entities must identify in its accounts all federal <br /> 17 awards received and expended. The schedule of expenditures of federal and state awards <br /> 18 (SEFSA) should be derived from, and relate directly to, the underlying accounting and other <br /> 19 records used to prepare the financial statements for the County. During the preparation of the <br /> 20 schedule of expenditures of federal and state awards, it was noted the County was preparing <br /> 21 the report based on revenues, rather than expenditures. The majority of the County's federal <br /> 22 and state awards are related to health and human service grant activity, which is maintained <br /> 23 outside of the County's finance department. As such, the County did not have procedures in <br /> 24 place to permit for the reconciliation of the schedule of expenditures of federal and state awards <br /> 25 to the underlying expenditures of the County. Ultimately the County was able to internally <br /> 26 provide the necessary underlying records to support the expenditures reported on the schedule <br /> 27 of expenditures of federal and state awards, but the reconciliation was performed with the <br /> 28 Finance department and the department of Social Services working together to go through the <br /> 29 general ledger and supporting to reconcile the activity of the County to the SEFSA. This <br /> 30 process was not complete until January 2017. <br /> 31 <br /> 32 Significant Deficiency <br /> 33 2016-004 Segregation of Duties <br /> 34 Segregation of employees' duties is a common practice in an effective internal control structure. <br /> 35 Segregation of duties is achieved when specific employee functions related to important <br /> 36 accounting areas are separated among different individuals to significantly reduce the risk that <br /> 37 any one individual could intentionally or unintentionally misappropriate assets. Policies should <br /> 38 be in place requiring the segregation of certain duties. The County's payroll processing controls <br /> 39 did not provide the appropriate segregation of duties related to the payroll processing. One <br /> 40 individual at the County has the ability to input employee time, prepare the batch time entry <br /> 41 reports to post to the general ledger, and edit employee hours. We recommend these controls <br /> 42 either be segregated or compensating controls be implemented such as periodic reports <br /> 43 reviewed of all changes made to employee time entered, new employees created as compared <br /> 44 to reports from Human Resources, changes in employee benefits, earnings, or withholdings. <br /> 45 During our testing we noted at the Sheriff's Department the same individual was capable of <br /> 46 creating and approving a purchase requisition. Without some segregation of duties within these <br /> 47 functions, there is increased exposure that someone could intentionally or unintentionally <br /> 48 misappropriate assets of the County. Additionally, without additional internal controls related to <br /> 49 financial reporting, errors could occur and not be detected. <br /> 50 <br />