Earling

SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the year ended June 30, 2024- 34 -I. SUMMARY OF AUDIT RESULTSFinancial StatementsType of auditors’ reports issued: UnmodifiedInternal controls over financial reporting: Material weaknesses identified: 2024-001 Significant deficiencies identified: None reportedNoncompliance material to financial statements noted: None reportedFederal AwardsInternal control over major programs: Material weaknesses identified: None reported Significant deficiencies identified: None reportedType of auditors’ report issued on compliance for major programs: UnmodifiedAny audit findings disclosed that are required to Be reported in accordance with Section 200.516 of Uniform Guidance: 2024-002Identification of major programs: Assistance Listing Numbers Name of Federal Program or Cluster 10.760 Water and Waste Disposal Systems for Rural Communities Dollar threshold used to distinguish between Type A and Type B programs: $750,000Audit qualified as low-risk auditee: No ### Page 38 City of Earling SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the year ended June 30, 2024- 35 -II. FINDINGS - FINANCIAL STATEMENTS2024-001 MATERIAL WEAKNESSEstablish Internal Control Over Financial Statements Preparation and ReviewCondition: The City of Earling, Iowa does not have a system of internal controls that would provide management with reasonable assurance that the City’s financial statements and related disclosures are complete and presented in accordance with the cash basis of accounting described in Note A. As such, management requested its auditor firm to assist them in the preparation of a draft of the financial statements, including related disclosures.Criteria: Management is responsible for establishing and maintaining internal controls, including monitoring for the fair presentation of the financial statements, including the notes to the financial statements in conformity with the cash basis of accounting described in Note A.Cause: Management relies on auditor assistance in the preparation of the financial statements and related disclosures in conformity with the cash basis of accounting described in Note A.Effect: The potential exists that a material misstatement of the financial statements, and related footnotes, could occur and not be prevented or detected by the City’s internal control processes and procedures.Recommendation: Management should carefully review financial statements including disclosures and understand the relationship to the underlying data. All proposed adjustments should be understood and approved.Management Response: The City of Earling, Iowa is in agreement with the finding and is in the process of resolving the item noted above. Their full response can be found in their corrective action plan on page 39.2024-002 COMPLIANCE - LATE FILING OF ANNUAL FINANCIAL REPORTCondition: The City did not file its Annual Financial Report (AFR) with the Iowa Auditor of State by the required filing deadline. The AFR for the fiscal year ended June 30, 2024, was filed on August 31, 2026, which was after the required due date.Criteria: Iowa Code Section 384.22 requires cities to file an annual financial report with the Auditor of State not later than December 1 following the fiscal year-end. The report is to be prepared in accordance with forms and instructions prescribed by the Auditor of State.Cause: Management did not establish procedures to ensure the Annual Financial Report was completed and submitted by the statutory filing deadline. Staffing limitations, turnover, competing priorities, or oversight contributed to the delayed filing.Effect: Failure to comply with statutory filing requirements may result in reduced transparency and accountability to taxpayers and regulatory agencies. Additionally, Iowa Code provides for certain financial consequences when required reports are not timely filed. ### Page 39 City of Earling SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the year ended June 30, 2024- 36 -Recommendation: The City should establish and monitor procedures to ensure all required reports are prepared, reviewed, approved, and filed by statutory deadlines. A compliance calendar identifying reporting requirements and due dates should be maintained and periodically reviewed by management and the City Council.Management Response: The City of Earling, Iowa is in agreement with the finding and is in the process of resolving the item noted above. Their full response can be found in their corrective action plan on page 39. III. FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS None reported ### Page 40 City of Earling SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS For the year ended June 30, 2024 - 37 - II. FINDINGS - FINANCIAL STATEMENTS2023-001 MATERIAL WEAKNESSEstablish Internal Control Over Financial Statements Preparation and Review Condition: The City of Earling, Iowa does not have a system of internal controls that would provide management with reasonable assurance that the City’s financial statements and related disclosures are complete and presented in accordance with the cash basis of accounting of accounting described in Note A. As such, management requested its auditor firm to assist them in the preparation of a draft of the financial statements, including related disclosures. Criteria: Management is responsible for establishing and maintaining internal controls, including monitoring for the fair presentation of the financial statements, including the notes to the financial statements in conformity with the cash basis of accounting described in Note A. Cause: Management relies on auditor assistance in the preparation of the financial statements and related disclosures in conformity with the cash basis of accounting described in Note A. Effect: The potential exists that a material misstatement of the financial statements, and related footnotes, could occur and not be prevented or detected by the City’s internal control processes and procedures. Recommendation: Management should carefully review financial statements including disclosures and understand the relationship to the underlying data. All proposed adjustments should be understood and approved. Follow up: This is a repeated finding as there was not time to correct the matter prior to the following year being issued. Management Response: The City of Earling, Iowa is in agreement with the finding and is in the process of resolving the item noted above. Their full response can be found in their corrective action plan on page 39. 2023-002 COMPLIANCE - LATE FILING OF ANNUAL FINANCIAL REPORT Condition: The City did not file its Annual Financial Report (AFR) with the Iowa Auditor of State by the required filing deadline. The AFR for the fiscal year ended June 30, 2023 was filed on August 31, 2026, which was after the required due date. Criteria: Iowa Code Section 384.22 requires cities to file an annual financial report with the Auditor of State not later than December 1 following the fiscal year-end. The report is to be prepared in accordance with forms and instructions prescribed by the Auditor of State. Cause: Management did not establish procedures to ensure the Annual Financial Report was completed and submitted by the statutory filing deadline. Staffing limitations, turnover, competing priorities, or oversight contributed to the delayed filing. ### Page 41 City of Earling SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS For the year ended June 30, 2024 - 38 - Effect: Failure to comply with statutory filing requirements may result in reduced transparency and accountability to taxpayers and regulatory agencies. Additionally, Iowa Code provides for certain financial consequences when required reports are not timely filed. Follow up: This is a repeated finding as there was not time to correct the matter prior to the following year being issued. Recommendation: The City should establish and monitor procedures to ensure all required reports are prepared, reviewed, approved, and filed by statutory deadlines. A compliance calendar identifying reporting requirements and due dates should be maintained and periodically reviewed by management and the City Council. Management Response: The City of Earling, Iowa is in agreement with the finding and is in the process of resolving the item noted above. Their full response can be found in their corrective action plan on page 39.III. FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS None reported ### Page 42