Fall 2012 issue of Horizons

HOSPITALITY & GAMING

Internal Controls for Private Clubs by Jeff Sackman, CPA

“ There is a lack of segregation of duties within your accounting department.” It can be a frequent occurrence for a private club to receive the above statement in its audit firm’s management letter. While the implied hiring of more employees could alleviate the problem, there are also other solutions that can address this concern effectively. First, it’s important to understand why your accounting firm issues such a statement and what it means.

Auditors’ Responsibilities Contrary to popular belief, it is not an auditor’s responsibility to find fraud. In fact, an external audit detected fraud less than 5% of the time. Auditors must consider and obtain an understanding of the club’s internal control over financial reporting (internal control) as a basis for designing their audit procedures, but not for the purpose of expressing an opinion on the effectiveness of the club’s internal control.

page 20 | horizons Fall 2012