Audit 407516

2025-001 Capital Asset Accounting and Reporting Criteria: Capital assets should be reported at historical cost. The cost of a capital asset should include ancillary charges necessary to place the asset into its intended location and condition for use. Ancillary charges include costs that are directly attributable to asset acquisition - such as freight and transportation charges, site preparation costs, and professional fees. Interest costs incurred before the end of a construction period should not be capitalized as part of the asset's historical cost. (GASB Cod. 1400.102) MCA 20-9-207 requires districts to “provide sufficient documentation for each expenditure of district money”. Condition: The Town of Denton is only required to be audited when revenues or federal expenditures exceed $750,000. As such, we were unable to verify the beginning balances for certain capital assets previously purchased. The Town could not provide appropriate supporting documentation to enable the audit of certain assets; however, the Town does maintain a detailed listing and depreciation schedule for the assets. Effect: The value of capital assets reported has not been verified by an independent auditor. Context: Fund Reported % Audited % Unaudited Governmental $ 2,115,436 4% 96% Water 7,520,285 34% 66% Sewer 5,262,322 41% 59% Cause: Due to its small size, the Town is not subject to audit requirements in Montana on a regular basis. Management has previously elected to not incur the costs to get the assets reported verified. Recommendation: We recommend the Town continue its effort to locate supporting documentation for capital assets included in its capital assets subsidiary ledger.