CITY OF DUMONTLocal Government

Audit Finding 2021-005 ? Water and Waste Disposal Systems for Rural Communities (CFDA 10.760): Grant Period - Year Ended December 31, 2021, Department of Agriculture - SCHEDULE OF FEDERAL EXPENDITURES PREPARATION Condition: The City does not have an internal control process in place over annual preparation of the Schedule of Expenditures of Federal Awards, therefore, the potential exists that a material misstatement of the schedule could occur and not be prevented or detected by the City?s internal controls. Criteria: The City must be able to prevent or detect a material misstatement in the Schedule of Expenditures of Federal Awards. Cause: The City does not have adequate staff to properly review the Schedule. Effect: Errors in the Schedule may be present and not detected by the City Staff. Recommendation: While I recognize the City?s office staff may not be large enough to permit an adequate segregation of duties in all respects for an effective internal control structure, it is important that the City be aware of this condition.

Audit Finding 2021-006 ? Water and Waste Disposal Systems for Rural Communities (CFDA 10.760): Grant Period - Year Ended December 31, 2021, Department of Agriculture - DOCUMENTATION OF POLICY ON FEDERAL AWARDS Condition: The City does not have a related written policy. Criteria: A good system of internal control requires an adequate segregation of duties so that no one individual has incompatible responsibilities. No one person should have more than one duty relating to the authorization (approval), custody of assets (check signers), record keeping, and reconciliation function. This should be documented in a written policy. Context: This finding impacts the internal control for all significant accounting functions. Effect: Inadequate segregation of duties could adversely affect the City's ability to detect misstatements in amounts that would be material in relation to the financial statements in a timely period by employees in the normal course of performing their assigned functions. Cause: The City does not maintain written internal control policies. Questioned Costs: None Recommendation: The accounting functions should be reviewed to determine if additional segregation of duties is feasible and to improve the efficiency and effectiveness of financial management and financial statement accuracy for the City. The City, if possible, should have a plan in place for temporary absences of current staff. The City should also adopt the policy in writing.