Finding Text
Criteria: A control deficiency exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent or detect misstatements of the financial statements on a timely basis. A control deficiency that typically is considered significant is the identification by the auditor of a material misstatement in the financial statements that was not initially identified by the City's internal control. Condition: During our audit, we proposed numerous adjustments that resulted in significant changes to the City's financial statements. Questioned Costs: N/A Context: The City's limited size and training and qualifications of business office personnel have precluded the City from the ability to properly identify and correct financial misstatements. Effect: The City's inability to detect misstatements in the financial statements increases the likelihood that the financial statements may not be fairly presented. Cause: Inadequate internal controls and monitoring of internal controls by qualified City personnel. Recommendation: We recommend that the City review internal controls currently in place, then design and implement procedures to improve internal controls over financial reporting to detect misstatements in the financial statements.