Finding Text
#2025-002: Audit Adjustments Federal Program Affected: All Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting Questioned Costs: None. Condition and Cause: During the course of our engagement, we proposed material audit adjustments resulting in an increase in fund balance of approximately $779,000. Additionally, we annually calculate and record the City’s portion of pension activity from the Wyoming Retirement System and the compensated absence liability as part of the audit process. Criteria and Effect: These adjustments would not have been identified as a result of the City’s existing internal controls, and therefore, could have resulted in a material misstatement of the City’s financial statements. Repeat Finding from Prior Year: Yes, prior year finding #2024-003. Recommendation: We recommend the following: • Items exceeding the $5,000 capitalization policy and having a useful life of more than one year should be capitalized, including construction projects. General fund additions should be coded to capital outlay. • Debt payments within enterprise funds should be posted against the corresponding debt liability, rather than within expenses. • Adjust compensated absences, including taxes and benefits, to agree to their corresponding funds in the general ledger. • Record revenue received in appropriate fund and account, such as grant receipts and sales taxes. • Prepaid expenses should be recorded for amounts paid prior to the fiscal year they pertain to. • Adjust unbilled utility receivables to encompass all of the last month of the fiscal year. • Interest income earned on certificates of deposit should be recorded at least annually. • Revenues received, but not yet spent, should be considered unearned revenue. • Federal grants received and spent should be considered revenue. Response/Corrective Action Plan: See Corrective Action Plan