DALLAS DEVELOPMENT FUND

Criteria: Internal controls over financial reporting should exist to ensure that material misstatements are prevented, or detected and corrected, by management in a timely manner. COSO/Internal Control Framework defines control activities as "policies and procedures that help to ensure management's directives are carried out." Management review controls are defined as, "the activities of a person, different than the preparer, through analyzing and performing oversight activities performed, and is an integral part of any internal control structure." COSO/Internal Control Framework state that control activities must be in place for there to be adequate internal control procedures over financial reporting. Furthermore, these control activities should be performed timely to ensure financial transactions are recorded in the correct reporting period in compliance with Generally Accepted Accounting Principles ("GAAP") and the standards set by the Governmental Accounting Standards Board ("GASB"). Condition: The accounting records for the Small Business Continuity Fund loan and grant program required adjustments to be proposed and recorded in order for the consolidated financial statements to be fairly presented in accordance with accounting principles generally accepted in the United States of America. This adjustment consisted of a correction to grant income in the amount of $373,241 related to the understatement of Small Business Continuity Fund grant income. Cause: Management did not have sufficient procedures in place to ensure the accounting for the Small Business Continuity Fund program was in accordance with generally accepted accounting principles. Effect: Management may produce interim or annual financial statements that are misstated. Recommendation: We have the following recommendations related to the internal control processes that impact revenue recognition for the Small Business Continuity Fund program: ? We recommend that the Company ensure the individuals responsible for both the recording and approval processes related to revenue recognition in the Small Business Continuity Fund program have a sufficient understanding of the laws, agreements and accounting principles pertinent to this new program. ? We recommend that, no less than quarterly, the Company review the activity recorded to the Small Business Continuity Fund program and reconcile it to the related loan and grant funding requests and performance obligations as described in the Small Business Continuity Program Management Agreement. We recommend that the review and reconciliation process be documented. View of Responsible Officials: This issue was brought on this year due to the quick acceleration and integration of the Small Business Continuity Fund, a new COVID-19 relief program providing loans and grants to small businesses with funds sourced from the City of Dallas, while management was in the process of implementing internal control policies and procedures for the new program. Management will review the grant agreements and related accounting principles and implement proper policies and procedures to ensure the Small Business Continuity Fund grant income is properly recognized. In addition, management will reconcile the program activity quarterly against the financial system and ensure revenue is recognized properly at year-end.

Condition: The accounting records for the Small Business Continuity Fund loan and grant program required adjustments to be proposed and recorded in order for the consolidated financial statements to be fairly presented in accordance with accounting principles generally accepted in the United States of America. This adjustment consisted of a correction to grant income in the amount of $373,241 related to the understatement of Small Business Continuity Fund grant income. Corrective Action: This issue was brought on this year due to the quick acceleration and integration of the Small Business Continuity Fund, a new COVID-19 relief program providing loans and grants to small businesses with funds sourced from the City of Dallas, while management was in the process of implementing internal control policies and procedures for the new program. Management will review the grant agreements and related accounting principles and implement proper policies and procedures to ensure the Small Business Continuity Fund grant income is properly recognized. In addition, management will reconcile the program activity quarterly against the financial system and ensure revenue is recognized properly at year-end.