Finding 497332 (2023-001)

Condition: During audit fieldwork, our testing resulted in a restatement of fund balance in order to correct liability insurance improperly recorded in prior years. Criteria: A good system of internal controls would provide for accurate recording and reporting of liability insurance expenses on a regular basis in order to provide for accurate financial reporting. Cause: Year-end entries related to liability insurance were required in order to accurately present the City’s financial statements. Effect: A material adjustment to the City’s beginning fund balance was required to properly state liability insurance. 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 and finance director will implement internal controls to properly record liability insurance expenses, payables, and prepaid expenses on a timely basis prior to audit fieldwork.