Finding Text
Condition: During audit fieldwork, our testing resulted in a restatement of fund balance in order to correct
retainage payable improperly recorded in prior years.
Criteria: A good system of internal controls would provide for accurate recording and reporting of
retainage payable on a regular basis in order to provide for accurate financial reporting.
Cause: Year-end entries related to retainage payable were required in order to accurately present the City’s
financial statements.
Effect: A material adjustment to the City’s beginning fund balance was required to properly state retainage
payable.
Recommendation: We recommend the City implement effective internal controls in order to provide an
accurate assessment of reporting requirements. This implementation of improved controls would result in
the appropriate recognition for financial reporting requirements.
Corrective Action Plan: The City and finance director will implement internal controls to properly record
retainage payable on a timely basis prior to audit fieldwork