Spencer

SCHEDULE OF FINDINGS FOR THE YEAR ENDED JUNE 30, 2025Part I: Findings Related to the Financial Statements INTERNAL CONTROL DEFICIENCY:2025-001 Financial Reporting Criteria - A deficiency in internal control over financial reporting 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 and correct, misstatements of he financial statements on a timely basis. Properly designed policies and procedures and implantation of the policies and procedures are in integral part of ensuring the reliability and accuracy of the City's financial statements. Condition - A material amount of interest revenue was not posted to the General Ledger. Adjustments were subsequently made by the City to properly report these amounts in the City's financial statements. Cause - City policies do not require, and procedures have not been established to require interest income received from financial institutions to be compared to the accounting records by an independent person. Effect - Lack of policies and procedures resulted in City employees not detecting the errors in the normal course of performing their assigned functions and material adjustments to the City's financial statements were necessary. Recommendation - The City should implement procedures to ensure interest revenue is properly recorded in the City's financial statements. Interest revenue from financial institutions should be compared to the accounting records by an independent person and the evidence of review should be documented. Response - We will double check this in the future to ensure that interest revenue is properly recorded. Conclusion - Response accepted.Instances of Non-Compliance:No findings were noted.61 ### Page 66 CITY OF SPENCER SCHEDULE OF FINDINGS - ContinuedFOR THE YEAR ENDED JUNE 30, 2025Part II: Other Findings Related to Required Statutory Reporting2025-A Certified Budget - Disbursements during the year ended June 30, 2025 exceeded the final amounts budgeted in the public safety, community and economic development, debt service, and capital projects functions. Recommendation - The budget should have been amended in accordance with Chapter 384.18 of the Code of Iowa before disbursements were allowed to exceed the budget. Response - The City will make an effort to amend the budget before disbursements are exceeded, if applicable in the future. Conclusion - Response accepted. 2025-B Questionable Disbursements - We noted no disbursements for parties, banquets, or other entertainment for employees that we believe may not meet the requirements of public purpose as defined in an Attorney General's opinion dated April 25, 1979. 2025-C Travel Expense - No expenditures of the City for travel expenses of spouses of City officials or employees were noted. 2025-D Business Transactions - Business transactions between the City and City officials or employees are detailed as follows:Name, Title and Business Connection Donavon Wunschel, Council Member Partial owner of Midwestern Mechanical Partial owner of Copper CottageTransaction Description Supplies SuppliesAmount$223,822$ 10,908In accordance with Chapter 362.5(3)U) of the Code of Iowa, the transactions with the Council Member may represent a conflict of interest since total transactions with one of the businesses exceeded $6,000 during the fiscal year. Recommendation - The City should go through the bidding process for transactions that could exceed $6,000. Response - The amounts above are the cumulative total of several transactions throughout the year. Seven items over $6,000 went through the bidding process. Conclusion - Response accepted. 2025-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. 2025-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. 2025-G Council Minutes - No transactions were found that we believe should have been approved in the Council minutes but were not.62 ### Page 67 CITY OF SPENCER SCHEDULE OF FINDINGS - ContinuedFOR THE YEAR ENDED JUNE 30, 2025Part II: Other Findings Related to Required Statutory Reporting - Continued 2025-H Deposits and Investments - We noted one instance of noncompliance with the deposit and investment provisions of Chapter 128 and 12C of the Code of Iowa and the City's investment policy. The balance at one financial institution exceeded the maximum balance as established by the depository resolution. Recommendation - The City should adopt new limits for depository amounts that exceed the current resolution amount. Response - The City council adopted an updated resolution subsequent to year end. Conclusion - Response accepted. 2025-1 Revenue Notes - No instances of noncompliance with the revenue bond and note resolutions were noted. 2025-J Financial Assurance - As of June 30, 2025, the City has demonstrated financial assurance for closure and postclosure care by establishing a local government dedicated fund as provided in Chapter 567.113.14(6) of the Iowa Administrative Code. 2025-K Urban Renewal Annual Report - The urban renewal annual report for the fiscal year ended June 30, 2024 was approved and certified to the Iowa Department of Management on or before December 1, 2024.63