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INDIAN RIVER COUNTY, FLORIDA SHERIFF <br />® Schedule of Findings and Responses <br />For the Year Ended September 30, 2014 <br />2014-002 - Journal Entry Review and Support <br />Finding Type. Significant Deficiency in Internal Control over Financial Reporting. <br />Criteria. Journal entries represent an area of significant risk in the financial statements. They provide a <br />mechanism by which financial statements can be altered outside of standard transaction processes. For <br />this reason, internal control practices require that journal entries be reviewed by someone other than the <br />individual who prepares and posts the entry. <br />Condition. Through the audit process, we identified inconsistency in the review and approval of journal <br />entries. Additionally, source documentation was not consistently housed with the journal entry forms. <br />Cause. During FY14, there was an initiative toward automation and a more paperless environment. <br />While these are worthwhile endeavors, the result was that review and approval of journal entries and <br />maintenance of related documentation were not consistent. <br />Effect. As a result of this condition, the Sheriff experienced an increased risk that misstatements in the <br />accounting records, whether caused by error or fraud, would not be detected and corrected on a timely <br />basis. <br />Recommendation. We recommend that the Sheriff establish a journal entry approval procedure to <br />ensure that every journal entry is reviewed and approved prior to posting, and that impacted accounts <br />are reconciled after posting. Additionally we recommend that the Sheriff create an electronic file where <br />all journal entries and original source documents are housed. <br />View of Responsible Officials. <br />As I indicated above, I have established a system of Internal Controls over Financial Reporting which <br />includes a process to review and approve journal entries prior to posting in the accounting records. As a <br />natural evolution of this procedure, not only accounts affected by journal entries, but all relevant general <br />ledger accounts will be reconciled periodically. <br />345 <br />