TOWN OF STONVEILLE

MATERIAL WEAKNESS 2021 ? 001 Prior Year Auditors Adjusting Entries Criteria: The beginning balances in the General Ledger should agree with the prior year audited financial statements. Condition: Auditors adjusting entries for the previous year <6-30-2020> were not recorded in the General Ledger. Effect: Interim financial reports may be misleading. The current year audit cannot effectively begin until beginning balances are corrected. Cause: The Finance Officer did not receive the auditors? adjustments for the year ended June 30, 2020. Recommendation: This year?s adjusting entries should be posted to the General Ledger by the Finance Officer immediately upon receiving them from the auditor. View of responsible officials and planned corrective actions: The Town agrees with this finding. The adjusting journal entries will be posted to the General Ledger immediately after receiving them from the auditor.

MATERIAL WEAKNESS 2021 ? 002 Failure to Record Material Grants, Notes and Capital Expenditures Criteria: All transactions including those in which the Town Attorney serves as Trustee should be properly recorded in the General Ledger of the Town of Stoneville. Condition: On September 23, 2020, the USDA made two loans and two grants totaling $376,000 to the Town of Stoneville for Capital Outlay Expenditures. On both transactions the Town Attorney served as Trustee. The Town Attorney received the funds from the USDA and paid the invoices directly to the vendors for the capital outlay items. The Town Attorney serving as Trustee, prepared a settlement statement that was signed by both the Mayor pro term and by the Finance Officer. However, neither the capital outlay nor the grants and loans were recorded in the General Ledger of the Town of Stoneville. Effect: Failure to properly record capital assets, and grants and loans on the General Ledger could possibly lead to a material misstatement on the financial statements. Cause: The Finance Officer did not retain a copy of the settlement statements and did not properly record the acquisition of capital assets and loans payable to and grants received from the USDA. Recommendation: We recommend that all transactions including those in which the Town Attorney served as Trustee be immediately recorded in the General Ledger when the Town receives the settlement statement from the Attorney-trustee. View of responsible officials and planned corrective actions: We concur with this finding. In the future, the Finance Officer will immediately record all transactions in the General Ledger upon receipt of the settlement statement.

MATERIAL WEAKNESS 2021 ? 003 Excess of Expenditures over authorized appropriations: Criteria: G.S. 159-28(a) states that no obligation maybe incurred in a function accounted for in a fund included in the budget ordinance unless the budget ordinance includes an appropriation authorizing the obligation. Condition: The Town of Stoneville expenditures in the General Fund exceeded authorized appropriations by $108,761. The Town of Stoneville expenditures in the Water and Sewer Fund exceeded authorized appropriations by $197,789. Effect: Money was spent that had not been obligated and appropriated. Cause: The Town received on September 23, 2020, both a grant and a loan from the USDA for both General Fund and Water and Sewer Fund Capital Outlay expenditures. The Town Attorney served as a Trustee for these transactions. These transactions were not properly budgeted or recorded in the General Ledger. Recommendation: Before an obligation is to increase that will exceed the amount that was previously approved in the Budget Ordinance, an amendment to the budget should be adopted. View of responsible officials and planned corrective actions: The Town agrees with this finding. Budget Amendments will be adopted prior to making expenditures that exceed budgeted amounts.