POWDER HOUSE PASS COMMUNITY IMPROVEMENT DISTRICT

Finding No. 2023-001: Financial Statement and Schedule of Expenditures of Federal Awards Preparation Federal Program Affected: Capitalization Grants for Clean Water State Revolving Funds (ALN 66.458) Compliance Requirement: Reporting Questioned Costs: None Condition and Cause: We were requested to draft the audited financial statements and related footnote disclosures as part of our regular audit services. Ultimately, it is management’s responsibility to provide for the preparation of the District’s statements and footnotes, and the responsibility of the auditor to determine the fairness of presentation of those statements. From a practical standpoint, we do both for the District at the same time in connection with our audit. This is not unusual for us to do this with districts of your size. Additionally, we prepared the Schedule of Expenditures of Federal Awards (SEFA). Criteria and Effect: It is our responsibility to inform the Board of Supervisors that this deficiency could result in a material misstatement to the financial statements that could have been prevented or detected by the District’s management. Repeat Finding from Prior Year: Yes, prior year finding #2022-001. Recommendation: We have instructed management to review a draft of the auditor prepared financials and SEFA in detail for their accuracy, we have answered any questions they might have, and we have encouraged research of any accounting guidance in connection with the adequacy and appropriateness of classification and disclosure in your statements. We are satisfied the appropriate steps have been taken to provide the District with the completed financial statements. It is the responsibility of management and the District Board of Supervisors to make the decision whether to accept the degree of risk associated with this condition because of cost or other considerations. Response/Corrective Action Plan: See District’s Corrective Action Plan.

Finding No. 2023-001: Financial Statement and Schedule of Expenditures of Federal Awards (SEFA) Preparation The District has accepted the risk associated with Finding #2023-001 regarding the preparation of the financial statements and SEFA, and will continue to have the independent auditor prepare the annual financial statements and SEFA. For future audits, Jay Headley will continue to monitor the financial statement preparation and determine if any modification is necessary.