Finding #2025-001 – Material Audit Adjustments Condition: The auditor proposed adjusting journal entries during the audit process to adjust City account balances. We deem these entries to be significant in relation to the financial statements. Since the City did not make these adjustments in its accounting system prior to the audit, a material weakness was determined to exist in the City’s internal controls. Effect: Financial reports generated by the accounting system may not provide an accurate reflection of the City’s financial position or activities. Cause: Financial information was not recorded in a timely manner and numerous adjustments were needed in order to correct account balances. Criteria: Material adjusting journal entries not prepared by the City before the audit are considered an internal control weakness. Recommendation: Policies and procedures should be implemented to ensure account balances are properly recorded in a timely manner. Response: The City will establish policies and procedures to reduce the number of adjusting journal entries proposed by the auditor in future years.