Issuance of Checks

Governmental units need to be aware that allowing employees direct access to vendor payments creates higher risks that need to be mitigated with additional internal controls. Many larger governmental units segregate duties so one employee (or department) requests vendor payments, and another employee (in a different department) issues/mails the check to the vendor. Our Statement of Position on the Importance of Internal Controls has more information about the segregation of incompatible duties.

Funds may be improperly diverted if an employee requesting a vendor payment is allowed to physically pick up the requested check. To view two examples of the risks created when employees requesting vendor payments were allowed to pick up the vendor checks, see our Independent School District 625 (St. Paul Public Schools) Investigative Report and the Office of the Legislative Auditor’s Fraud at the Minnesota Department of Human Services Memorandum.

Date this Avoiding Pitfall was most recently published: 11/8/2024