AP audit exposes Pennsylvania city’s insufficient controls

A recent accounts payable audit of Allentown, Pennsylvania, revealed numerous deficiencies in the city's financial controls, according to the Allentown Morning Call.

Outside auditors found that there were insufficient financial safeguards in place for the city's municipal golf course, as well as tax revenue and loans to the Allentown Redevelopment Authority. With regard to cash payments, the AP audit noted that the golf course "lacked segregation of duties," meaning that an adequate system of checks and balances was not in place. Additionally, duplicate payments and incorrect records were found in the Allentown redevelopment authority's loan oversight.

Empowering a single employee to collect, count and deposit money can make an organization vulnerable to both good faith accounting errors and embezzlement.

"Whoever is responsible for taking the cash shouldn't be responsible for checking it," said city controller Bill Hoffman, as quoted by the news source. "If someone wanted to steal money it could be as easy as apple pie."

In addition to establishing checks and balances, conducting regular AP audits can help municipalities identify irregularities and misappropriation. 

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