City of Owen

Material Weakness – Annual Financial Reporting Under Generally Accepted Accounting Principles (GAAP) Criteria: The City is responsible for establishing and maintaining internal control and for the fair presentation of the City’s financial statements, disclosures, supplementary information, schedule of expenditures of federal awards, and schedule of state financial assistance in conformity with generally accepted accounting principles (GAAP) of the United States. Condition: The potential exists that a material misstatement of the City’s financial statements, disclosures, supplementary information, schedule of expenditures of federal awards and schedule of state financial assistance could occur and not be prevented or detected by the City’s internal control. Management has the requisite skills and knowledge to accept responsibility for these statements, however a stronger knowledge of GAAP on the part of management would be ideal. Cause: The City does not have staff trained to prepare GAAP financial statements, disclosures, supplementary information, schedule of expenditures of federal awards and schedule of state financial assistance.View of Responsible Official: We feel that the costs involved in educating staff to be adequately trained in GAAP would outweigh the benefit of possessing this knowledge. The financial statements, disclosures, supplemental information, schedule of expenditure of federal awards and schedule of state financial assistance are reviewed by management prior to issuance and we feel we possess enough financial knowledge to accept responsibility for these statements and we will continue to engage the auditing firm to prepare drafts of the financial statements, disclosures, supplemental information, schedule of expenditure of federal awards and schedule of state financial assistance. Questioned Costs: None. Effect: The City engages the audit firm to prepare drafts of its financial statements, disclosures, supplementary information, schedule of expenditures of federal awards and schedule of state financial assistance in accordance with GAAP based on information and trial balances provided by the City. Recommendation: The City should consider providing some basic financial statement training for accounting personnel.

Annual Financial Reporting Under Generally Accepted Accounting Principles (GAAP) Fiscal Year: 2022 City’s Response: We concur. Views of Responsible Officials and Corrective Action: We have determined we cannot afford to hire additional staff that is required to properly prepare financial statements, disclosures, supplemental information, schedule of expenditures of federal awards and schedule of state financial assistance per generally accepted accounting principles in the United States of America. We feel that it makes more sense to work closely with our auditors to meet that criteria. Name of Responsible Person: Tracy Rau, Clerk/Treasurer Projected Implementation Date: Estimated, July 2024