Finding Text
Finding 2025-002. Auditor Prepared Financial Statements and Related Footnotes Condition: The City does have an internal control in place for the review of the drafted financial statements, however, the City does not have an internal control system designed to provide for the preparation of the related notes being audited. Based on the degree of complexity and level of detail needed to prepare the financial statement disclosures in accordance with accounting principles generally accepted in the United States of America (GAAP), the City has requested the auditors prepare them. Criteria The preparation of the financial statements and the related notes are the responsibility of management. Cause: The City has informed us they do not have the expertise to prepare the annual financial statement disclosures, although the City has reviewed and approved the annual financial statements as prepared by the audit firm. Effect: This could result in a material omission of a disclosure that would not be prevented or detected and corrected as a result of the City’s current internal control. Recommendation: The City should continue to request assistance to draft the financial statements and related notes and thoroughly review these financial statements after they have been prepared so the City can take responsibility for them.