CORRECTIVE ACTION PLAN Wednesday, January 4, 2023 Town of Dayton, Virginia respectfully submits the following corrective action plan for the year ended June 30, 2022. Name and address of independent public accounting firm: Brown, Edwards & Company, L.L.P. 1909 Financial Drive Harrisonburg, Virginia, 2280I Audit period: June 30, 2022 The findings from the June 30, 2022 Schedule of Findings and Questioned Costs (the "Schedule") are discusse d below. The findings are numbered consistently with the number assigned in the Schedule. FINDINGS- FINANCIAL STATEMENT AUDIT 2022-001: Segregation of Duties (Material Weakness) Condition: A fundamental concept of internal controls is the separation of duties. No one employee should have access to both physical assets and the related accounting records, or to all phases of a transaction. A proper segregation of duties has not been established in functions related to cash receipts, accounts receivable, cash disbursements, and accounts payable. Criteria: Not applicable. Cause: A proper segregat ion of duties has not been established in functions related to cash receipts, accounts receivable, cash disbursements, and accounts payable. Effect: The control environment is vulnerable. Recommendation: Steps should continue to be taken to eliminate perfonnance of conflicting duties where possible or to implement effective compensating controls. Corrective Action: While the Town of Dayton operates with a very small staff, management continues to implement policies, practices and procedures to eliminate conflicting duties when possible. Management understands the concern expressed with this finding and is working to correct these issues. 2022-002: Audit Adjustments (Material Weakness) Condition: Audit procedures resulted in material audit adjustments to the financial statements. Criteria: Not applicable. Cause: Year end accrual entries were not appropriately reflected in the trial balance. Effect: Financial information would be incorrect without adjustment. Recommendation: We recommend that the Town create monthly and annual checklists for accrual entries. Corrective Action: Staff will continue to be trained as to eliminate as many audit adjustments as possible for FY23. The Town underwent transitions in key personnel positions. Employees will continue to be trained and more prepared for the FY23 audit. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAM AUDIT 2022-003 : Coronavirus State and Local Fiscal Recovery Funds -AL# 21.027, Policies Condition: During the current audit, we noted that there were no written procurement policies specific to federal awards cost principle requirements under Uniform Grant Guidance. Criteria: Federal award recipients must have written policies, procedures, and standards of conduct as required by 2 CFR 200, subparts D and E. Cause: Required policies are not present. Effect: Lack of policies could create noncompliance with regulations as stated requirements may not be followed. Questioned Cost Amount: N/A Perspective Information: Impacts all federal award programs. Repeat Finding: N/A Recommendation: We recommend that procurement policies and financial policies are developed to meet federal standards. Corrective Action: A Federal Procurement Policy will be implemented prior to the end of FY23. If the Federal Audit Clearinghouse has questions regarding this plan, please call Susan Smith, Treasurer, at (540)879-2241. Sincerely yours, Susan Smith, Treasurer