CITY OF FAITH

2021-001 FINDING: Financial Statement and Schedule of Expenditures of Federal Awards (SEFA) Preparation and Year-End Adjustments Federal Program Affected: Coronavirus Relief Funds (Assistance Listing #21.019). Compliance Requirement: Reporting Questioned Costs: None Condition and Cause: As in prior years, we were requested to draft the audited financial statements and related footnote disclosures and SEFA as part of our regular audit services. We also made adjustments to correct the Federal Universal Service Charge (FUSC) accrual, debt balances, due to federal government, and record capital assets. Ultimately, it is management?s responsibility to provide for the preparation of the City?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 City at the same time in connection with our audit. This is not unusual for us to do for municipalities of your size. Criteria and Effect: These deficiencies could result in material misstatements to the financial statements that would not have been prevented or detected by the City?s management. Recommendation: We have instructed management to review a draft of the auditor prepared financial statements and audit adjustments in detail for their accuracy; we have answered any questions they might have, and have encouraged research of any accounting guidance in connection with the adequacy and appropriateness of classification and disclosure in the City?s statements. We are satisfied that the appropriate steps have been taken to provide the City with the completed financial statements. It is the responsibility of management and those charged with governance 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 City?s Corrective Action Plan.

2021-003 FINDING: Written Uniform Guidance Policies Federal Program Affected: Water and Waste Disposal Systems for Rural Communities (Assistance Listing 10.760) Compliance Requirement: Allowable Costs/Cost Principles Questioned Costs: None Condition and Cause: The City does not have written policies for allowable costs/cost principles. Criteria and Effect: Uniform Guidance specifically requires entities to maintain written policies for allowable costs/cost principles. Not properly maintaining such policies leads to noncompliance and potential unallowable costs. Repeat Finding from Prior Year: Yes, prior year finding #2020-003. Recommendation: The City should create written policies for allowable costs/cost principles. Response/Corrective Action Plan: The City is in agreement with the finding. See City?s Corrective Action Plan.

#2020-003 FINDING: Written Uniform Guidance Policies Federal Program Affected: All major federal programs listed in Part A, #7 Compliance Requirement: Allowable Costs/Cost Principles Questioned Costs: None Condition and Cause: The City does not have written policies for allowable costs/cost principles. Criteria and Effect: Uniform Guidance specifically requires entities to maintain written policies for allowable costs/cost principles. Not properly maintaining such policies leads to noncompliance and potential unallowable costs. Repeat Finding from Prior Year: N/A Recommendation: The City should create written policies for allowable costs/cost principles. Response/Corrective Action Plan: The City is in agreement with the finding. See City?s Corrective Action Plan.