City of McDonough, GeorgiaLocal Government

2025.002 RECORDING OF ACCOUNTS PAYABLE-REPEATFINDING Condition: Criteria: Effect: Cause: The City under-reported accounts payable as of June 30, 2025 in the amount of $947,618 which is material to the City's financial statements. In addition, $699,877 of the $947,618 was costs related to major federal awards programs with reporting requirements under the single audit act. All expenditures / expense~ should be recorded in the period the corresponding purchase/ service is incurred. The City's liabilities and expenditures/ expenses for 2025 were understated by the above-mentioned amounts. The lack of training and over-sight of employees responsible for recording expenditures/ expenses is the main reason for the under-reporting of accounts payable. Recommendation: Management should provide the necessary training and over-sight of employees responsible for recording accounts payable. View of responsible officials and planned corrective action: Management agrees with the finding. Management will ensure the employees with the responsibility over the recording of accounts payable are properly trained and supervised so that accounts payable and expenditures / expenses are properly stated on the financial statements.

2025.003 PROPER DOCUMENTATION AND NECESSARY CALCULATIONS FOR NEWLY IMPLEMENTED ACCOUNTING STANDARDS Condition: Criteria: Effect: Cause: The lack of proper documentation and the ability to make timely calculations in the value of lease and subscription assets and liabilities that are required under relatively new accounting standards resulted in the audit being completed and filed in an untimely manner. Documentation such as contracts, invoices, purchase orders etc. should be obtained and maintained by the accounting department so that proper information is available to make proper calculations of the value of assets and liabilities that may be necessary under such documents. In addition, a program should be available to accounting personnel to be able to make such calculations. The audit was significantly late in being issued due to the City not being able to implement a new accounting standard in a timely manner. The late issue date could cause compliance issues with granting agencies, including single audit submissions and the Georgia Department of Audits and Accounts. Documentation and a process/program needed to make the necessary calculations under the new accounting standards for leases and subscriptions were not readily available to the accounting department. Recommendation: Management needs to ensure that proper documentation is required to be maintained by the accounting department for all contracts, agreements etc. In addition, management needs to make available processes/ programs that are necessary to make calculations of values under such contracts and agreements. View of responsible officials and planned corrective action: Management agrees with the finding. Management will emphasize the need for the accounting department to obtain and maintain documentation necessary that will provide information to make the necessary calculations for values of assets and liabilities associated with lease and subscription agreements. Management will also ensure that a process / program is in place that is required to make such calculations.

2022.004 RECORDING OF ACCOUNTS PAYABLE-REPEAT FINDING Condition: Criteria: Effect: Cause: The City under-reported accounts payable as of June 30, 2022, 2023 and 2024 in the amounts of$673,150, $886,252 and $1,919,207 which are material to the City's financial statements. In addition, $1,200,327 of the $1,919,207 was costs related to a major federal awards program with reporting requirements under the single audit act. All expenditures / expenses should be recorded in the period the corresponding purchase/ service is incurred. The City's liabilities and expenditures I expenses for 2022 tlu·ough 2024 were understated by the above-mentioned amounts. The lack of training and over-sight of employees responsible for recording expenditures / expenses is the main reason for the under-repo1ting of accounts payable. Recommendation: Management should provide the necessary training and over-sight of employees responsible for recording accounts payable. View of responsible officials and planned corrective action: Management agrees with the finding. Management will ensure the employees with the responsibility over the recording of accounts payable are properly trained and supervised so that accounts payable and expenditures/ expenses are properly stated on the financial statements.

2023.002 NEED FOR A FULL-TIME ACCOUNTING SUPERVISOR/ CONTROLLER - REPEAT FINDING Condition: Criteria: Effect: Cause: For 2023, the City did not have an accounting supervisor/ controller with the necessary skill-set to provide the City with accurate and timely financial reports or over-sight of the accounting staff. The City did hire a full-time accounting supervisor in October 2024 which resulted in the audit for the year ended June 30, 2024 also being filed late. An accounting supervisor/ controller should be able to provide the City with I) accurate and timely financial reports; 2) oversight of the accounting staff including implementation and monitoring of the accounting control system; 3) timely in1plementation of new accounting standards; and 4) recommendations for any new accounting policies and procedures. The audit was significantly late in being issued due to the City not being able to implement a new accounting standard in a timely manner. The late issue date could cause compliance issues with granting agencies, including single audit submissions and the Georgia Department of Audits and Accounts. The City has not been able to hire a full-time accounting supervisor/ controller for the last two years. Recommendation: Management needs to hire a qualified / experienced controller for the City. View of responsible officials and planned corrective action: Management agrees with the finding. Management has attempted to hire an accounting supervisor/ controller with the skill set that would allow for the oversight and proper managing of the accounting department. The City did accomplish this task in October 2024.