Finding Reference Number: 2024‐001 Description of Finding: There were 72 audit adjustments and closing entries posted during the audit to report the Town’s financial statements in accordance with Generally Accepted Accounting Principles (GAAP). The large number of adjustments identified during the c...
Finding Reference Number: 2024‐001 Description of Finding: There were 72 audit adjustments and closing entries posted during the audit to report the Town’s financial statements in accordance with Generally Accepted Accounting Principles (GAAP). The large number of adjustments identified during the course of the audit indicates that the Town does not have internal controls in place to prevent or detect misstatements on a timely basis. Areas where accounts and transactions were not adequately reconciled and evaluated for proper recording prior to the start of the audit fieldwork and areas that require improvement included in the following: - Procedures to ensure beginning fund balance/net position roll-forward to prior year audited financial statements. - Procedures for ensuring revenue received in advance of qualifying expenditures are properly deferred. - Procedures to ensure retentions payable are properly accrued. - Procedures to ensure accounts payable are properly accrued. - Procedures to ensure compensated absences and payroll accruals are prepared accurately and on a timely basis. - Procedures to ensure that pension and other post-retirement entries are calculated and prepared accurately. - Procedures for tracking grant expenditures to ensure revenue is accrued to the extent of reimbursable expenditures incurred and evaluation of proper accounting treatment of transactions as earned, unearned, or unavailable revenue. - Procedures to ensure capital outlay is properly reconciled to capital asset additions. - Procedures to ensure all loans issued by the Town are properly recorded in the general ledger. Corrective Action: The audit period occurred during a significant organizational transition. Much of the Finance team was newly hired, and the department was operating without full historical knowledge of certain complex, multi-year projects. During this same period, the Town was implementing a new account structure and adapting to revised financial coding practices, changes that naturally created temporary gaps in continuity and processing. These combined circumstances contributed to delays in reconciliations, and a higher number of audit adjustments. As staff continue to gain experience, workflows are stabilizing, and historical project information is aligning within the new structure, we expect these issues to diminish significantly. To accelerate this progress, the Town is actively seeking additional consultants to support staff training, provide technical guidance, and assist with strengthening financial reporting procedures. This investment will help ensure internal controls are reinforced and future financial statements are prepared accurately and timely, with fewer adjustments required during the audit process. Name of Contact Person: Aimee Beleu, Finance Director, (530) 872-6291, abeleu@townofparadise.com Projected Completion Date: March 1, 2026