Finding 1179355 (2025-001)

Material Weakness Finding 2025 – 001: Restatement to Fund Balance/Net Position Condition: During audit fieldwork, our testing resulted in a restatement of fund balance in order to correct retainage payable and capital assets that were improperly recorded in prior years. Criteria: A good system of internal controls would provide for accurate recording and reporting of retainage payable and capital assets on a regular basis in order to provide for accurate financial reporting. Cause: Year-end entries related to retainage payable and capital assets were required in order to accurately present the City’s financial statements. Effect: A material adjustment to the City’s beginning fund balance/net position was required to properly state retainage payable and capital assets. 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 Finance Department will implement internal controls to properly record retainage payable and capital assets on a timely basis prior to audit fieldwork.