Adel

Schedule of Findings and Questioned Costs Year ended June 30, 2025 Part I: Summary of the Independent Auditor's Results: (a) Unmodified opinions were issued on the financial statements prepared on the cash basis of accounting, which is a basis of accounting other than generally accepted accounting principles in the United States of America. (b) A material weakness in internal control over financial reporting was disclosed by the audit of the financial statements. (c) The audit did not disclose any non-compliance which is material to the financial statements. (d) No material weaknesses in internal control over the major program were noted. (e) An unmodified opinion was issued on compliance with requirements applicable to the major program.(1) The audit disclosed no audit findings which are required to be reported in accordance with the Uniform Guidance, Section 200.516. (g) The major program was Assistance Listing Number 20.205 — Highway Planning and Construction. (h) The dollar threshold used to distinguish between Type A and Type B programs was $750,000. (i) The City of Adel did not qualify as a low-risk auditee. -46- ### Page 47 City of Adel Schedule of Findings and Questioned Costs Year ended June 30, 2025 Part II: Findings Related to the Financial Statements: INTERNAL CONTROL DEFICIENCIES: 2025-001 Segregation of Duties (Repeat of 2024-001) Criteria — Management is responsible for establishing and maintaining internal control. A good system of internal control 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. This segregation of duties helps prevent losses from employee error or dishonesty and maximizes the accuracy of the City's, the Friends of Adel Library Foundation's, and the Fire Association's financial statements. Condition — Generally, one or two individuals have control over each of the following areas for the City: (1) Cash — handling, reconciling and recording. (2) Receipts — collecting, preparing deposits and reconciling. In addition, the mail is not opened and distributed by someone other than accounting personnel. (3) Investments — recordkeeping, investing and reconciling earnings. (4) Payroll - recordkeeping, preparation and distribution. (5) Long-term debt — recordkeeping and debt payment processing. For the Friends of Adel Library Foundation (Library Foundation), one individual has control over each of the following areas: (1) Cash — handling, reconciling and recording. (2) Receipts — collecting, depositing, posting and reconciling. (3) Disbursements — preparing, signing of checks, and reconciling. For the Fire Association, one individual has control over each of the following areas: (1) Cash — handling, reconciling and recording. (2) Receipts — collecting, depositing, posting and reconciling. (3) Disbursements — preparing, signing of checks, and reconciling. Cause — The City, Library Foundation and Fire Association have 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 — Inadequate segregation of duties could adversely affect the City's, the Library Foundation's and the Fire Association's ability to prevent or detect and correct misstatements, errors or misappropriation on a timely basis by employees in the normal course of performing their assigned functions. -47- ### Page 48 City of Adel Schedule of Findings and Questioned Costs Year ended June 30, 2025 Recommendation — The City, the Library Foundation and Fire Association should review its control activities to obtain the maximum internal control possible under the circumstances utilizing currently available staff. City Response — The City continues to search for ways to maximum segregation of duties with limited staff. We recognize the importance of this issue. Library Response — The Library Foundation had no employees and, due to its limited size and reliance on volunteers, procedures to adequately segregate duties or provide compensating controls through additional oversight of transactions and processes were difficult to implement. Library staff completed several processes to help address this issue. The Library Foundation continually reviewed its control procedures to obtain the maximum internal control possible under the circumstances utilizing available volunteers and library staff. The Library Foundation dissolved following the fiscal year ended June 30, 2025 and is no longer functioning. Fire Association Response — The Fire Association maintains dual control on disbursement activities per the Association's Financial & Accounting Policies. Furthermore, account balances are reported at every monthly Association business meeting to our membership. Documentation is provided at the meeting if any member would like to review the monthly transactions or account balances. The Association will continue to ensure proper policies are maintained given our staffing levels and transaction volumes. Conclusion — Response acknowledged. INSTANCES OF NON-COMPLIANCE: No matters were noted. -48- ### Page 49 City of Adel Schedule of Findings and Questioned Costs Year ended June 30, 2025 Part III: Findings and Questioned Costs for Federal Awards: INSTANCES OF NONCOMPLIANCE: No matters were noted. INTERNAL CONTROL DEFICIENCIES: No matters were noted. ### Page 50 City of Adel Schedule of Findings and Questioned Costs Year ended June 30, 2025 Part IV: Other Findings Related to Required Statutory Reporting: 2025-A Certified Budget — Disbursements during the year ended June 30, 2025 did not exceed the amounts budgeted. 2025-B Questionable Disbursements — No disbursements we believe may not meet the requirements of public purpose as defined in an Attorney General's opinion dated April 25, 1979, were noted. 2025-C Travel Expense — No disbursements of City of Adel (City) money for travel expenses of spouses of City officials or employees were noted. 2025-D Business Transactions — No business transactions between the City and City officials or employees were noted. 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 City Council Minutes — No transactions were found that we believe should have been approved in the City Council minutes but were not. 2025-H Deposits and Investments — No instances of non-compliance with the deposit and investment provisions of Chapter 12B and Chapter 12C of the Code of Iowa and the City's investment policy were noted. 2025-I Revenue Notes — No instances of noncompliance with the revenue note resolutions were noted. 2025-J Annual Urban Renewal Report (AURR) — The AURR 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 and no exceptions were noted. 2024-K Tax Increment Financing (TIF) — Chapter 403.19 of the Code of Iowa provides a municipality may certify loans, advances, indebtedness and bonds (indebtedness) to the County Auditor which qualify for reimbursement from incremental property tax. The County Auditor provides for the division of property tax to repay the certified indebtedness and provides available incremental property tax in subsequent fiscal years without further certification by the City until the amount of certified indebtedness is paid. Indebtedness incurred is to be certified to the County Auditor and then the divided property tax is to be used to pay the principal of and interest on the certified indebtedness. Chapter 403.19 of the Code of Iowa requires the date the City Council initially approved the debt be included on the TIF certification. We noted that the TIF debt certifications to the County Auditor were overstated by approximately $15,000. Recommendation — The City should consult TIF legal counsel to determine the disposition of this issue. The City should ensure the TIF debt certification complies with Chapter 403 of the Code of Iowa. -50- ### Page 51 City of Adel Schedule of Findings and Questioned Costs Year ended June 30, 2025 Response — The City will consult TIF legal counsel, make corrections to the TIF certification and ensure the future certifications are in compliance with the Code of Iowa requirements. Conclusion — Response acknowledged. -51-