Stoddard Co Public Water District #4Local Government

Criteria or Specific Requirement: In any system of internal control, one primary goal is adequate segregation of duties. Statement of Condition: The District has potentially conflicting duties in its revenue, cash receipts and accounts receivable and purchases, cash disbursements and accounts payable cycles which impact the financial statements. Statement of Cause: The size and budget constraints of the District limit the application of adequate segregation of duties. Statement of Effect or Potential Effect: Possible material misstatements in the financial statements, possible unauthorized, unallowable or unallowed expenditures, or material misappropriations of assets due to error or fraud could occur and not be prevented or detected in a timely manner. Perspective Information: An understanding of the District's internal controls was obtained through observation, inquiry and walkthroughs of key areas related to the financial statements. Identification of Repeat Findings: This is a repeat finding for financial statement purposes (2023-01) Recommendation: Management should periodically evaluate the costs versus the benefits of further segregation of duties or addition of monitoring or other compensating controls and implement those changes it deems appropriate for which benefits are determined to exceed costs. Views of Responsible Officials and Planned Corrective Actions: Management realizes the duties are reevaluated regularly and with the size of the District it is not feasible to add additional employees. They believe that they have adequate safeguards against material misstatements; however, they will continue to strive to improve this deficiency. Questioned Costs: None

Criteria or Specific Requirement: The District is responsible for meeting annual funding requirements. Statement of Condition: Annual replacement and extension fund deposits were underfunded by $23,749.38. Statement of Cause: Lack of oversight from the Board allowed noncompliance to occur. In addition, a cash deficit also reduced the ability to make required deposits. Statement of Effect or Potential Effect: The District did not comply with requirements regarding the replacement and extension fund account. Perspective Information: An understanding of the District's internal controls was obtained through observation, inquiry and walkthroughs of key areas related to the financial statements. Identification of Repeat Findings: This is a repeat finding for financial statement purposes. (2023-02) Recommendation: The Board should ensure that the manager deposits appropriate funds into the replacement and extension fund account and monitors the balance in relation to the requirements set forth in the loan agreement. A responsible member of the Board should be assigned the responsibility for reviewing deposit requirements and compliance for the replacement and extension fund account. Views of Responsible Officials and Planned Corrective Actions: The Board agrees with the finding and is responsible for evaluating the condition of the replacement and extension fund account. The funding of the account will be more closely controlled. A responsible member of the Board will be assigned to oversight responsibilities. Questioned Costs: None