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CITY OF SAN LEANDRO <br />MEMORANDUM ON INTERNAL CONTROL <br />SCHEDULE OF SIGNIFICANT DEFICIENCY <br />2018-01 Access to and Review of the Vendor Database <br />Criteria: Staff responsible for processing disbursements should be segregated from the function <br />of maintaining vendor database. <br />Condition: Currently, the Accounts Payable Clerks who process disbursements are also <br />responsible for maintaining vendor database. The Deputy Finance Director reviews a monthly <br />report that indicates changes and edits in the database. However, this report is manually prepared <br />by the Accounts Payable Clerks. <br />Effect: Although the Deputy Finance Director reviews the manually generated report, there is a <br />risk of unauthorized changes to vendor database not being detected. <br />Cause: The City’s accounting system cannot generate a report that shows database’s audit trail <br />history. Additionally, due to limited staff size, the City believes that it cannot segregate the duties <br />of maintaining the vendor database from the Accounts Payable Clerks. <br />Recommendation: The City should work with its accounting software vendor for the possibility <br />of generating audit trail history reports of the vendor database. If that is not possible, an employee <br />who does not have edit rights to the vendor database should conduct a random audit periodically <br />to ensure that the information on the database is accurate and vendor details supported. <br />Management Response: As noted, the City’s Finance Department is limited due to staff <br />size. While we understand the need for segregation of duties as it relates to changes and edits to <br />the vendor database, implementing such a process would be inefficient for operations. A risk <br />mitigation step currently being followed is the weekly review and approval of vouchers and <br />disbursements by both the Assistant Finance Director and the Assistant City Manager. Going <br />forward, to ensure the vendor database is accurate and supported, the Finance Department will <br />conduct a completeness and existence review of the database on a monthly basis. <br />3491