Town of EdinburgLocal Government

B. Actions Planned or Taken: As of October 2024, the Town has adopted a Federal Procurement Policy.

2023-003

CORRECTIVE ACTION PLAN August 21, 2024 Daniel J. Harshman, Town Mayor respectfully submits the following corrective action plan for the year ended June 30, 2023. Name and address of independent public accounting firm: Brown, Edwards & Company, L.L.P. 1909 Financial Drive Harrisonburg, VA 22801 Audit period: June 30, 2023 The findings from the June 30, 2023 Schedule of Findings and Questioned Costs (the "Schedule") are discussed below. The findings are numbered consistently with the number assigned in the Schedule. FINDINGS -FINANCIAL STATEMENT AUDIT 2023-001: Material Audit Adjustments (Material Weakness) Condition: During the audit, we detected material misstatements in the trial balance. Generally accepted auditing standards dictate that detection of errors in an audit is a strong indicator of a significant deficiency or material weakness. Accordingly, we are required to communicate this finding as such. Recommendation: Material audit adjustments indicate that financial information presented to us for the audit was missing or inaccurate. We recommend that management implement processes to ensure accuracy of accounts. Corrective Action: The Town has engaged work to complete recurring adjustments on an annual basis for financial reporting. Audit adjustments reference work performed to differentiate proposed adjustments from regular entries recorded by the Town. 2023-002: Segregation of Duties (Material Weakness) Condition: Multiple duties in a transaction cycle are performed by the same individual. Consequently, errors or irregularities may occur and not be detected . The Town has segregated certain duties of its employees to help to prevent or promptly detect errors in financial reporting, however, not all areas are properly segregated due to the size of the Town. Recommendation: In an ideal system of internal controls, no individual would perform more than one duty in connection with any transactions or series of transactions. While we understand that limited staff can make this difficult, controls should be in place to mitigate the risk to the best extent possible. Limited use of financial systems, limited access and review of journal entries, and manual tracking of transactions increases risk for small towns. The Town currently does not utilize modified accrua l/accrual accounting financial records outside of the year end reporting process which can improve awareness over funds and liabilities. Corrective Action: This is a work in progress. The Town continues to segregate employee duties as much as possible. The Town Council and Officials are also actively involved in overseeing the Town's financial operations. Financial transactions are processed in public spaces with multiple staff present to increase awareness surrounding the disbursement and receipt of funds for bills and services rendered. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAM AUDIT 2023-003: Federal Procurement Policies (Material Weakness) Condition: There are no written procurement policies specific to the federal awards cost principal requirements under Uniform Grant Guidance. Existing procurement policies are minimal and do not meet federal requirements. Recommendation: We recommend the Town develop procurement policies and financial policies that meet federal standards. Corrective Action: The Treasurer has drafted a Procurement Policy for Counci1 to review and approve for implementation. If the Federal Audit Clearinghouse has questions regarding this plan, please call Mandy Roberts, Treasurer at 540-984-8521. Sincerely yours, Daniel J. Harshman Town Mayor Town of Edinburg, Virginia