Audit 404246

FY End

2024-12-31

Total Expended

$1.64M

Findings

2

Programs

1

Organization: CITY OF ADAMS (WI)

Year: 2024 Accepted: 2026-06-22

Auditor: JOHNSON BLOCK & COMPANY INC

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
1218081	2024-001	Material Weakness	Yes	P
1218082	2024-005	Material Weakness	Yes	P

ALN	Program	Spent	Major	Findings
66.468	DRINKING WATER STATE REVOLVING FUND	$1.64M	Yes	2

Contacts

Name	Title	Type
L1BWVM52T8D8	Jerri Johnson	Auditee
6083396516	Shawn Roelli	Auditor
No contacts on file

Notes to SEFA

The accompanying schedule of expenditures of federal awards includes the federal grant activity of the City of Adams, Wisconsin.

In accordance with the Uniform Guidance, the determination of when federal awards are expended for loan programs is based on the requirements of 2 CFR 200.502(b). Under this provision, the value of federal awards expended for loan and loan guarantee programs includes: • The value of new loans made or received during the audit period, • The beginning-of-period loan balance for loans from prior years for which the Federal Government imposes continuing compliance requirements, and • Any interest subsidy, cash, or administrative cost allowance received during the fiscal year. For the year ended December 31, 2024, the following amounts were included in the schedule of expenditures of federal awards for the Capitalization Grants for Drinking Water State Revolving Loan Fund, Assistance Listing Number #66.468: • New Loans Received During the Year: $557,345 • Beginning Loan Balance Subject to Federal Compliance Requirements: No balance • Interest Subsidies / Administrative Cost Allowances Received: None The total federal awards expended for this loan program, as included on the schedule of expenditures of federal awards, were therefore $557,345, representing the sum of the components listed above. For loan programs where the entity does not originate loans—such as certain student loan programs at institutions of higher education—only the value of loans made during the audit period is reported as federal awards expended, and prior-year loan balances are not included in accordance with 2 CFR 200.502(c). The City was approved by the Environmental Protection Agency, the Wisconsin Department of Natural Resources, and the Wisconsin Department of Administration to receive a loan totaling $1,645,295 to improve its water system through the Safe Drinking Water Loan Program. The amount listed above ($557,345) for this loan includes the proceeds used during the year. The outstanding loan balance as of December 31, 2024 was $557,345.

No amounts were passed through to subrecipients.

Finding Details

Finding 2024-001

Finding #2024-001 – Material Audit Adjustments Criteria: Proper financial closing and year-end reconciliation procedures should be in place to identify and adjust the financial records to ensure the financial statements are fairly stated. Condition: The auditors proposed audit adjustments that, if not made, would have resulted in the financial statements being materially misstated. Cause: Financial information was not recorded in a timely manner and material adjustments were needed in order to correct various transactions. Effect: The City’s system of internal control may not prevent, detect, or correct misstatements in the financial statements. Financial reports generated by the accounting system may not provide an accurate reflection of the City’s financial position or activities. Not reconciling accounts on a timely basis could lead to errors or other problems not being recognized and resolved. Recommendation: The auditors recommend that policies and procedures should be implemented to ensure account balances are properly recorded and reconciled in a timely manner. Response: The City acknowledges their responsibility for the financial statements and recording of the current year activity. Going forward, the City will work toward verifying that all activity is completely and accurately recorded in the financial records and reflected on the financial statements.

Finding 2024-005

Finding #2024-005 – Lack of Written Grant Procedures over Federal Programs Criteria: Under Federal Uniform Guidance, all non-Federal subrecipient entities must establish and maintain written policies and procedures over Federal programs. Written grant procedures are required in the areas of verifying allowable costs, cash management, and conflicts of interest, while procurement, subrecipient monitoring, and reporting procedures should also be included. Condition: During their audit procedures, the auditors noted that the City did not have comprehensive written grant procedures governing key compliance areas. Cause: The City’s management has relied on informal practices and institutional knowledge rather than formulating a grant procedures manual. Effect: Without written procedures, there is an increased risk of noncompliance with Uniform Guidance, including improper cost charging, non-compliant procurement, untimely drawdowns or cash on hand, inadequate subrecipient oversight, and ineffective internal controls. This exposes the City to the risk of questioned costs, potential repayment of federal funds, audit findings, and other possible impacts. Recommendation: The auditors recommend that the City develop, approve, and implement a consolidated Federal grant procedures manual. The procedures should not be a replication of the Federal requirements but instead step-by-step processes that are necessary to be in compliance with the Federal guidelines. Response: The City will begin the process of drafting and approving a Federal grant procedures manual in order to be in compliance with Federal requirements going forward.