West Branch

Schedule of Findings and Responses SECTION I – FINDINGS RELATED TO THE BASIC FINANCIAL STATEMENTS 2026-001 Lack of Segregation of Accounting Duties Criteria: An effective internal control system provides for adequate segregation of duties so no one individual handles a transaction from its inception to completion. In order to maintain proper internal control, duties should be segregated so the authorization, custody and recording of transactions are not under the control of the same employee. The segregation of duties helps prevent losses from employee error or dishonesty and maximizes the accuracy of the City's financial information. Condition: The City has a lack of segregation of accounting duties due to a limited number of office employees. The lack of adequate segregation of accounting duties could adversely affect the City's ability to initiate, record, process and report financial data consistent with the assertions of management in the financial statements. This lack of segregation can be demonstrated in the following areas, which is not intended to be an all-inclusive list: - - • The Finance Officer, who is able to handle receipts and disbursements, also receives the bank statements and completes the bank reconciliation. - - • The Finance Officer has access to all areas of the accounting system. - - • The City Clerk and Deputy Clerk are able to make Utility Billing Adjustments without review. - - • The Finance Officer is able to record journal entries without review. This finding impacts the internal control for all significant accounting functions. Cause: The City has a limited number of employees and procedures have not been designed to adequately segregate duties or provide compensating controls through additional oversight of transactions and processes. Effect or Potential Effect: Inadequate segregation of duties could adversely affect the City's ability to prevent or detect and correct misstatements, errors or misappropriations on a timely basis by employees in the normal course of performing their assigned functions. Recommendation: The City should segregate accounting duties to the extent possible. Views of Responsible Officials: The City continues to improve where we can in the area of segregation of duties. With limited staff available, it makes it hard to be efficient as well as consistent with our accounting functions. Conclusion: Response accepted. ### Page 60 City of West Branch Schedule of Findings and Responses SECTION II – OTHER FUNDINGS RELATED TO REQUIRED STATUTORY REPORTING 2026-A - Certified Budget Disbursements for the year ended June 30, 2026, did exceed budgeted amounts in the debt service function. Recommendation: The City should ensure the budget is amended prior to exceeding budgeted expenditures. Response: The City will ensure budget amendments are done in the future. Conclusion: Response accepted. 2026-B - Questionable Disbursements We noted no material expenditures which did not appear to meet the requirements of public purpose as defined in an Attorney General's opinion dated April 25, 1979. 2026-C - Travel Expense No disbursements of City money for travel expenses of spouses of City officials or employees were noted. 2026-D - Business Transactions Business transactions between the City and City officials or employees of the City are detailed as follows: In accordance with Chapter 362.5(3)(h) of the Code of Iowa, the above transactions with the Volunteer Fire Chief does not appear to represent a conflict of interest since the agreements were with a volunteer fire fighter. In accordance with Chapter 362.5(3)(j) of the Code of Iowa, the above transaction with Laughlin Design does not appear to represent a conflict of interest since the request for services was published in a newspaper and no other responses were received. Recommendation: The City should consult legal counsel to determine the disposition of this matter. ![P760#yIS1]() ### Page 61 City of West Branch Schedule of Findings and Responses SECTION II – OTHER FUNDINGS RELATED TO REQUIRED STATUTORY REPORTING (Continued) 2026-D - Business Transactions (Continued) Response: We solicited quotes for this project from eight local contractors. Two quotes were received, and we chose the lowest quote. Conclusion: Response accepted. 2026-E - Restricted Donor Activity No transactions were noted between the City, City officials, City employees and restricted donors in compliance with Chapter 68B of the Code of Iowa. 2026-F - Bond Coverage Surety bond coverage of City officials and employees is in accordance with statutory provisions. The amount of coverage should be reviewed annually to ensure that the coverage is adequate for current operations. 2026-G - Council Minutes No transactions were found that we believe should have been approved in the Council minutes but were not. 2026-H - Deposits and Investments No instances of noncompliance with the deposit and investment provision of Chapter 12B and 12C of the Code of Iowa and the City's investment policy were noted. 2026-I - Revenue Bonds and Notes No instances of non-compliance with the revenue bond and note resolutions were noted. 2026-J - Tax Increment Financing The Special Revenue, Tax Increment Financing (TIF) Fund properly disbursed payments for TIF loans and rebates. Also, the City of West Branch properly completed the Tax Increment Debt Certificate Forms to request TIF property taxes. 2026-K - Annual Urban Renewal Report The Annual Urban Renewal Report was properly approved and certified to the Iowa Department of Management on or before December 1 as required by Chapter 384.22(2)(a) of the Code of Iowa. However, we noted that the beginning and ending obligation balance amounts reported on the AURR Levy Authority Summary Form do not agree to the City's accounting records. Recommendation: The City should ensure the amounts reported on the AURR Levy Authority Summary Form are supported by the City's records. Response: These items will be corrected on next year's report. Conclusion: Response accepted. ### Page 62 City of West Branch Schedule of Findings and Responses SECTION II – OTHER FUNDINGS RELATED TO REQUIRED STATUTORY REPORTING (Continued) 2026-L – Unclaimed Property Chapter 556.11 of the Code of Iowa requires all cities to report and remit outstanding obligations, including checks, trusts and bonds held for more than two years to the Office of Treasurer of State annually. The City did not remit all outstanding obligations held for more than two years to the Office of Treasurer of State annually. Recommendation: Outstanding obligations should be reviewed annually and amounts over two years old should be remitted to the Office of Treasurer of State. Response: We will implement this recommendation. Conclusion: Response acknowledged. 2026-M – Tax Increment Financing Agreements During our review of the Tax Increment Financing (TIF) Agreements, some TIF agreements with the developers do not address the base valuation. It would appear this information should be included in the TIF agreements so that all parties involved know all the parameters of the agreements. Recommendation: The City should consult with their City Attorney in relation to these issues. Response: We will implement this recommendation. Conclusion: Response acknowledged.