TOWN OF PIERPONTLocal Government

Internal Control-Related Findings ? Material Weakness: Finding Number 2020-001: A material weakness in internal controls was noted due to a lack of proper segregation of duties for revenues. Major Federal Program: The major federal program affected is the CFDA Number 10.760 ? Community Facilities Loans and Grants. Criteria: Proper segregation of duties results in increased reliability of reported financial data and decreased potential for the loss of public assets. Condition: The Finance Officer processes all revenue transitions from beginning to end. The Finance Officer also receives money and issues receipts. The Finance Officer records receipts, posts receipts in the accounting records, prepares bank deposits, reconciles bank statements, and prepares financial statements. Cause: The Town has a limited number of office personnel and, accordingly, does not have adequate internal accounting controls in the revenue function due to a lack of segregation of duties. Effect: As a result, there is an increased likelihood that errors could occur and not be detected in a timely manner by employees in the ordinary course of performing their duties. Recommendation: We recommend that the Town of Pierpont officials be cognizant of this lack of segregation of duties for revenues and attempt to provide compensating internal controls whenever, and wherever, possible and practical. Views of responsible officials: See the Town?s corrective action plan on page 12.

Internal Control-Related Findings ? Significant Deficiencies: Finding Number 2020-002: Criteria: The Town?s internal control structure should be designed to provide for the preparation of the annual financial report, which includes having an adequate system for recording and processing entries material to the annual financial reports being audited in accordance with generally accepted accounting principles. Condition: We noted the following significant reporting errors within the annual report prepared by the Town ? a. Receipt from the Construction loan was posted to the expense account for the construction project. b. Receipts for the Line of Credit loan and the federal grant loan were posted to the same loan revenue account. c. All interest income was posted to the General Fund which does not comply with the generally accepted accounting principles requiring the interest to be recorded in the Fund in which the interest was earned and then transferred to the General Fund. d. The budget for the General Fund was over spent in two functions, they did not authorize a transfer from the Contingency or amend the budget during the year to cover the over expenditure. Cause: The Town does not have an adequate internal control system designed to provide for the preparation of the annual financial report in accordance with generally accepted accounting principles. (They were able to prepare their own Schedule of Expenditures of Federal Awards.) Effect: Inaccurate and incomplete information was presented to the users of the annual financial reports. Recommendation: We recommend the Town of Pierpont strengthen internal controls over financial reporting. Views of responsible officials: See the Town?s corrective action plan on page 12.