Finding 1081806 (2023-001)

Finding 2023 – 001: Restatement to Net Position Condition: During audit fieldwork, our testing resulted in a restatement of Sewage Disposal net position in order to correct the recording of ARPA deferred revenues. Criteria: A good system of internal controls would provide for accurate recording and reporting of ARPA funding in order to provide for accurate financial reporting. Cause: Year-end entries related to ARPA deferred revenues were required in order to accurately present the City’s financial statements. Effect: A material adjustment to the City’s beginning net position was required to properly state for ARPA deferred revenues. Recommendation: We recommend the City implement effective internal controls in order to provide an accurate assessment of reporting requirements for ARPA reporting purposes. This implementation of improved controls would result in the appropriate recognition for financial reporting requirements. Corrective Action Plan: The City Finance Director will implement internal controls to review all ARPA receipts and expenses and record accordingly prior to audit fieldwork.