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Section 1.2
Page 1 of 2
SECTION 1.2 – INTERNAL CONTROLS
INTRODUCTION
Internal control is a plan of organization under which employees’ duties are arranged
and records and procedures are designed to make it possible to exercise effective
accounting control over assets, liabilities, revenues, and expenditures. Good internal
controls are designed to:
•
Safeguard assets
•
Ensure the accuracy and reliability of accounting data
•
Promote operational efficiency
•
Ensure adherence to managerial policies and state and federal statutes
WRITTEN POLICIES AND PROCEDURES
The District has developed written policies and procedures and this ASB Manual
for the ASB. Board Policies and Procedures provide Board authorization and
framework for ASB activities. The ASB Manual provides informational references,
the details of the necessary procedures and organizational guidelines and
instructions in the correct method for processing transactions and identifying critical
checks and balances that must be included to ensure accuracy.
SEPARATION OF DUTIES
Employee responsibilities should be subdivided so that no single employee is
responsible for authorizing, processing, recording and reviewing a single transaction.
This system helps ensure that errors and irregularities do not occur or that if they do
occur, they are identified and corrected promptly. In a one-person office, it is critical
to have routine reviews by management or supervisors and to have management or
supervisory involvement in approving individual transactions to maintain the required
separation of duties.
DOCUMENTATION
All ASB transactions should be promptly and accurately recorded within district
authorized systems and/or on pre-numbered documents as appropriate. The
numeric sequence of documents should be controlled and accounted for.
ROUTINE RECONCILIATIONS
An independent party should routinely compare recorded figures to actual assets.
Some reconciliations such as deposit reconciliations and bank reconciliations are
prepared on a monthly basis by building and/or district personnel. Other
reconciliations are the responsibility of an independent, outside party such as routine
reviews by internal auditors or state examiners. All reconciliations are designed to
ensure that documents accurately reflect the value of district assets.
SECURITY
Physical access to cash, checks, pre-numbered documents, fundraising
products, ASB records, and other ASB assets should be limited to authorized
individuals. Limited access protects assets and assigns responsibility in the event
of missing items.
REV 09/05
Section 1.2
Page 2 of 2
RECORDS RETENTION
The Washington State Division of Archives and Records Management establishes
the time period for retaining all documents. Retention of documents is necessary for
future review by state examiners and to provide supporting documentation for future
research of previous transactions.
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