Stratford

Schedule of Findings Year ended June 30, 2024Part 1: Findings Related to the Financial Statements:INSTANCES OF NON-COMPLIANCE:No matters were noted.INTERNAL CONTROL DEFICIENCIES:2024-00 I Segregation of Duties 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 financial statements. Condition - Various duties such as recording and processing cash receipts, preparing checks and bank reconciliations, preparing and posting general journal entries, preparation of journals and general financial information for ledger posting, and the analysis of financial information may be prepared by the same person. 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- Inadequate segregation of duties could adversely affect the City'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. Recommendation - We realize segregation of duties is difficult with a limited number of office employees. However, the City should review its procedures to obtain the maximum internal control possible under the circumstances utilizing currently available staff, including elected officials. 51 ### Page 57 City of Stratford, Iowa Schedule of FindingsYear ended June 30, 2024Response - We will continue to perform compensating controls among existing personnel to help make up for the absence of true segregation of duties. We will also continue to provide the council copies of financial reports. Conclusion - Response accepted.2024-002 Preparation of Financial Statements Criteria - Management is responsible for establishing and maintaining internal controls over financial reporting and procedures related to the fair presentation of the financial statements in accordance with the cash basis of accounting. Condition -The City does not have an internal control system designed to provide the preparation of the financial statements, including the accompanying footnotes, as required by generally accepted accounting principles. Cause - The staff has not obtained the expertise necessary to prepare the financial statements, including the accompanying footnotes. Effect - The audit finn was requested to draft the financial statements and accompanying notes to the financial statements, which is not unusual in an organization of your size. Recommendation - We realize that obtaining the expertise necessary to prepare the financial statements, including all necessary disclosures, in accordance with generally accepted acco)lnting principles can be considered costly and ineffective. However, it is the responsibility of the City's management and those charged with governance to make the decision whether to accept the degree of risk associated with this condition because of cost or other considerations. Response - Management feels that committing the resources necessary to remain current on GASB reporting requirements and corresponding footnote disclosures would lack benefit in relation to the cost but will continue evaluating on a going forward basis. Conclusion- Response accepted. 52 ### Page 58 City of Stratford, Iowa Schedule of FindingsYear ended June 30, 2024Part II: Other Findings Related to Required Statutory Reporting:2024-A Certified Budget - Disbursements during the year ended June 30, 2024, did not exceeded the amounts budgeted. 2024-B Questionable Disbursements - No disbursements were noted that may not meet the requirements of public purpose as defined in an Attorney General's opinion dated April 25, 1979. 2024-C Travel Expense- No disbursements of City money for travel expenses of spouses of City officials or employees were noted. 2024-D Business Transactions - No business transactions between the City and City officials were noted. 2024-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 oflowa. 2024-F Bond Coverage - Surety bond coverage of City officials and employees is in accordance with statutory provisions. The amount of coverage is reviewed annually to ensure that the coverage is adequate for current operations. 2024-G Council Minutes - No transactions were found that we believe should have been approved in the City Council minutes but were not. 2024-H Deposits and Investments - No instances of non-compliance with the deposit and investment provisions of Chapter 12B and 12C of the Code oflowa and the City's investment policy were noted. 2024-I Revenue Bonds and Notes- No instances of non-compliance with the revenue note resolutions were noted. 2024-J 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 and no exceptions were noted. 53