Peosta

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: This finding impacts the internal control for all significant accounting functions. Additionally, this control deficiency contributed to a material audit adjustment identified during the audit. Because key accounting functions were not adequately segregated, management did not detect the misstatement through its normal review and reconciliation processes. As a result, a material adjustment was required to correct the financial statements. This indicates existing controls were not operating effectively to prevent or detect material misstatements on a timely basis. 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. During the current year, this control deficiency contributed to a material audit adjustment required to correct the financial statements. Recommendation: The City should segregate accounting duties to the extent possible. ### Page 54 City of Peosta Schedule of Findings and Responses SECTION I – FINDINGS RELATED TO THE BASIC FINANCIAL STATEMENTS (CONTINUED) 2026-001 Lack of Segregation of Accounting Duties (Continued) 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 55