Rock Rapids

Schedule of Findings and Questioned Costs ___________________________________________________________________________________________ Schedule of Findings Year Ended June 30, 2025 Findings Related to the Financial Statements: INTERNAL CONTROL DEFICIENCIES: I-24-A 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 ofthe City’s financial statements. Condition – The City has two employees who are involved in the financial accounting procedures of the City. Generally, one or both of these individuals may have control over areas which no compensating controls exist, including performing all record-keeping and reconciling functions for the office, including cash receipts collection, making bank deposits, check preparation and signing, recording of journal entries, payroll processing, and posting of cash receipts and cash disbursements in the accounting system. 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 that with a limited number of office employees, segregation of duties is difficult. However, the City should review its control procedures to obtain the maximum internal control possible under the circumstances. An independent person could be used to regularly check paychecks for accuracy, verify vacation and sick leave, examine employee expense reimbursements, periodically examine investments, review invoices, and review the financial records. Response – We will continue to investigate the options we have within economic constraints in order to segregate duties to the extent possible with existing personnel of the City. Conclusion – Response accepted. It is important that you continue to attempt to implement these recommendations. INSTANCES OF NON-COMPLIANCE No matters were noted. ### Page 45 Other Findings Related to Required Statutory Reporting: II-25-A Certified Budget – Disbursements during the year ended June 30, 2025, did not exceed the amount budgeted for any function. II-24-B Travel Expense – No disbursements of City money for travel expenses of spouses of City officials or employees were noted. II-24-C Business Transactions – Business transactions between the City and City officials or employees are detailed as follows: In accordance with Chapter 362.5(3)(j) of the Code of Iowa, the transactions with the Mayor do not appear to represent conflicts of interest since total transactions with each individual were less than $6,000 during the fiscal year. II-24-D 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. II-24-E 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. II-24-F City Council/Library Board Minutes – No transactions were found that we believe should have been approved in the City Council minutes but were not. II-24-G Deposits and Investments – No instances of non-compliance with the deposit and investment provisions of Chapter 12B and 12C of the Code of Iowa and the City’s written investment policywere noted. II-24-H 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. ### Page 46 CITY OF ROCK RAPIDS