Finding Text
Finding No. 2023-001: Financial Statement and Schedule of Federal Awards (SEFA) Preparation
Federal Program Affected: Disaster Grants - Public Assistance (Presidentially Declared Disasters)
Compliance Requirement: Reporting
Questioned Costs: None
Condition and Cause: We were requested to draft the audited financial statements, related footnote disclosures, and SEFA as part of our regular audit services. Ultimately, it is management’s responsibility to provide for the preparation of the City’s statements, SEFA and footnotes and the responsibility of the auditor to determine the fairness and presentation of those statements. From a practical standpoint, we do both for the City at the same time in connection with our audit. This is not unusual for municipalities of your size.
Criteria and Effect: It is our responsibility to inform the Council that this deficiency could result in a material misstatement to the financial statements or the SEFA that could have been prevented or detected by the City’s management.
Repeat Finding from Prior Year: Yes, prior year finding #2022-001.
Recommendation: As in prior years, we have instructed management to review a draft of the auditor prepared financial statements and SEFA in detail for their accuracy, we have answered any questions they might have, and have encouraged research of any accounting guidance in connection with the adequacy and appropriateness of classification and disclosure in the City’s statements. We are satisfied that the appropriate steps have been taken to provide the City with the completed financial statements and SEFA. It is the responsibility of management and those charged with governance to make the decision whether to accept the degree of risk associated with this condition because of cost or other considerations.
Response/Corrective Action Plan: The City agrees with the above finding. See Corrective Action Plan.