Audit 393795

2025-001 Material Weakness in Internal Control over Financial Reporting – Material Adjusting Journal Entries Criteria: Under professional standards, a material weakness exists when material misstatements are not identified through an entity’s system of controls. Condition: During the audit, there were several material adjusting journal entries proposed to management to issue an unmodified opinion. Cause: Procedures are in place for the review of the ledger on a regular basis and for monthly and annual reporting, but due to the increased activity from grant funding that is outside the Town’s normal operations and the compressed time to review end of year financial reports, there were material adjustments proposed to management to issue an unmodified opinion. Effect: There is more than a remote chance that material misstatements could occur without detection. Context: The Town had several federally funded projects during 2025. The funding structure was complex and funding sources unexpectedly changed during the year. The Town does not normally receive a significant amount of federal grant funds, so they were not familiar with the reporting effects. Recommendation: Management has discussed the reporting differences and is now familiar with the proper and timely accounting for these transactions. Views of Responsible Officials and Planned Corrective Actions: The Town feels that these are isolated instances due to the increased funding and funding changes during the year. Management has reviewed the accounting requirements and is confident that they can correct these deficiencies during the year.

2025-002 Material Weakness in Internal Control over financial Reporting – Lacks Ability to Prepare Financial Statements Criteria: Under professional standards, management is responsible for the fair presentation in the financial statements of financial position, results of operations, and cash flows, including the notes to financial statements, in conformity with U.S. generally accepted accounting principles. Condition: During the audit, we noted that the Town employees lack the expertise to prepare financial statements in accordance with GAAP. Cause: During the audit, we noted that the Town employs competent personnel who understand the Town’s operations. While they record the Town’s day-to-day transactions in a consistent manner, they lack the expertise to ensure all transactions are properly recorded in the financial statements in accordance with GAAP. Effect: There is more than a remote chance that material misstatements could occur without detection. Context: As is common in small operations, the Town’s personnel work only part-time and do not have the experience and training needed. Remediation of this material weakness would be cost prohibitive to the Town. Recommendation: We recommend that management assess the time requirements of the Treasurer position and the capabilities of accounting employees and either (a) develop a training program to ensure that they obtain the skills and knowledge necessary to prepare financial statements in accordance with GAAP or (b) hire accounting personnel with the requisite knowledge and skill to do so. Views of Responsible Officials and Planned Corrective Actions: The Town feels that this year presented reporting requirements under the Uniform Guidance, understands that these requirements will continue for the near future, and plans to have employees receive the necessary training required for proper financial statement presentation.