March 19, 2026 Greg Lunsford, Town Manager, respectfully submits the following corrective action plan for the year ended June 30, 2025. Name and address of independent public accounting firm: Brown, Edwards & Company, L.L.P. 1909 Financial Drive Harrisonburg, VA 22801 Audit period: June 30, 2025 The findings from the June 30, 2025 Schedule of Findings and Questioned Costs (the "Schedule") are discussed below. The findings are numbered consistently with the number assigned in the Schedule. Findings - Financial Statement Audit 2025-001: Material Audit Adjustments (Material Weakness) Condition During the audit, we detected material misstatements in the trial balance. Generally accepted auditing standards dictate that detection of errors in an audit is a strong indicator of a significant deficiency or material weakness. Accordingly, we are required to communicate this finding as such. Criteria The financial statements must be presented fairly, in all material respects. Cause The Town does not have a formal process for annual and monthly entries. Effect The financial information presented to us for the audit was missing or inaccurate. Recommendation We recommend that management implement processes to ensure accuracy of accounts. View of The Treasurer has drafted a Monthly Close Process and has been following it each month Responsible without fail. This has provided the opportunity to find errors and get them corrected in a Officials timely manner, which alleviates issues during the audit review. 2025-002: Segregation of Duties {Material Weakness) Condition Multiple duties in a transaction cycle are performed by the same individual. Consequently, errors or irregularities may occur and not be detected. Criteria Ideally, no individual would perform more than one duty in connection with any transaction or series of transactions. In particular, no one individual should have access to both physical assets and the related accounting records. Cause Incompatible duties and the limited number of staff. Effect A lack of separation of duties could allow error or fraud to go undetected. Recommendation While we understand that limited staff can make this difficult, controls should be in place to mitigate the risk. We have suggested specific controls in a separate communication. View of This continues to be a work in progress. The Treasurer has divided up the duties among her Responsible employees. Now one employee is processing the utility bills and two other employees are Officials collecting/inputting payments. 2025-003: Annual and Monthly Close Process (Material Weakness) Condition The Town does not have a complete monthly or annual close process in place that accurately reflects all needed adjustments. Criteria Each period should be closed to properly reflect accruals or other transactions not previously recorded to ensure the period reporting is materially correct. Cause The annual and monthly close process does not currently capture adjustments needed for all accruals. Effect Material audit adjustments were required. Recommendation We recommend the Town improve a monthly and annual close process to ensure financial records are accurate and complete. View of The Treasurer has drafted a Monthly Close Process and has been following it each month Resp onsi ble without fail. This has provided the opportunity to find errors and get them corrected in a Officials timely manner, which alleviates issues during the audit review. The Treasurer is also drafting an Annual Close Process that will assist with collecting information for review by the auditing firm. Findings and Questioned Costs - Major Federal Award Programs Audit 2025-004: Federal Procurement Policies Condition The policy created in 2024 specific to the federal awards cost principle requirements under Uniform Grant Guidance is not compliant. Criteria Federal award recipients must have written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D and E. Cause Certain required policies under 2 CFR 200, Subparts D and E are not present. Effect Lack of compliant policies may create noncompliance with regulations as stated requirements may not be followed. Recommendation Develop compliant procurement policy that meets federal st an dards . View of The Treasurer will review the Policy and submit recommended edits to the Town Council for Responsible review and approval. Officials If the Federal Audit Clearinghouse has questions regarding this plan, please call Donna Curry, Treasurer at 540-298-1951.