Small Entities: Review of Checks

The OSA sometimes discovers evidence of theft that occurred in small entities with a limited number of office personnel because no oversight procedures were developed to counteract the lack of segregation of duties.

A timely review of bank statements and check images (or original checks, if returned by the bank) needs to be performed to detect problem checks. Specifically, the bank statements and check images should be compared to the claims list approved for payment at the prior board/council meeting(s). This brief review should be performed on a monthly basis by someone who is not involved in the writing of checks. For example, in small entities, it could be performed by a town supervisor or city council member.

The review could disclose bank encoding errors, but it could also detect the theft of public funds, such as the issuance of unauthorized checks or the alteration of the payee and/or amount of the check.

Date this Avoiding Pitfall was most recently published: 03/04/2022