KINGSTON — Auditors have found a few minor issues with the way the Luzerne County Transportation Authority manages its financial affairs.
During an authority work session on Tuesday, Patty Prociak, of Prociak Associates, reviewed the company’s findings in the authority’s 2011-2012 audit with the board.
Prociak said her firm found no “material weakness” — the level of most concern. However, on the second level of “significant deficiencies,” the audit found five.
“Four of them were repeats, and one was a new one, but they’ve all been addressed or are being addressed by management,” Prociak said.
According to the audit, the authority’s internal control system lacks a segregation of duties. In other words, some of the same people perform multiple parts of financial transactions, so there’s a greater risk to the authority’s assets if theft or embezzlement were to occur.
However, the audit recommends weighing the cost of hiring additional employees to segregate tasks among them against the possible benefits. And considering the authority’s relatively small size, the cost of more employees may greatly exceed the benefits of better segregation, Prociak said.
“It’s not cost effective for you to have a perfect internal control structure, to have everyone doing a different segment of a transaction. That’s a very standard comment and that’s in all small entities,” Prociak said.
Prociak said Executive Director Stanley Strelish’s and the board’s regular review of management reports “help to mitigate the risk of not having a perfect segregation of duties.”
Other findings include:
• Some line-item spending exceeded budgeted amounts. The auditor recommends budgetary transfers of funds with approval of the board to avoid exceeding budgeted spending. The authority responded that the budget is not amended unless a major change were to occur because the board reviews financial reports monthly.
• Inventories are not adequately safeguarded against theft, loss, physical deterioration or misuse — items are not kept in a locked enclosure, accessible only to authorized personnel. In response, management will begin studies to determine how inventories should be better safeguarded.
• The parts inventory includes obsolete items valued at their original cost rather than the estimated market value. Management will revise procedures to review inventory and value inventory at its worth.
• The authority did not submit pension program payments in the time allowed by law. Management will begin remitting employee pension contributions with each payroll. Management noted the problem arose with the addition of employees from the county shared ride program, which merged with the authority last year.