Comprehensive Annual Financial Report 2020

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Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Red Oak, Texas’ financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards, and which are described in the accompanying schedule of findings and responses as item 2020-001. City of Red Oak, Texas’ Response to Findings The City of Red Oak, Texas’ response to the findings identified in our audit is described in the accompanying schedule of findings and responses. The City’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Waco, Texas May 10, 2021 88
CITY OF RED OAK, TEXAS SCHEDULE OF FINDINGS AND RESPONSES SEPTEMBER 30, 2020 Item 2020-001 Criteria: Condition: Effect: Recommendation: Management’s Response: Before a municipality may enter into a contract that requires an expenditure of more than $50,000, the municipality must comply with State of Texas competitive bidding requirements (Local Government Code Chapter 252, Chapter 2269, or Chapter 2254). While the City’s purchasing policy includes guidance for competitive bids, the purchasing policy does not reflect the current process for procurement. Rapid growth in the City coupled with turnover in staff has led to the City’s purchasing policy becoming outdated. Expenditures were made with vendors who were not procured in accordance with State of Texas competitive bidding requirements noted above. The City should strengthen the internal controls governing the procurement process, including designing and implementing a purchasing policy that complies with state and federal procurement law. Management agrees with the auditor’s finding and recommendation. The City has developed the following corrective action plan to strengthen internal controls governing the procurement process. The City has engaged a purchasing specialist to provide a policy that will ensure purchasing requirements set by state and federal procurement laws are met. Once the policy is updated, the City will ensure that procurement processes align with the policy and will provide training to all City purchasers on both policy and process. The City will evaluate procurement related personnel duties and consider providing specific duties related to the review of purchasing requirements, providing guidance and support to department purchasers, and monitoring and reporting on all purchases applicable to competitive requirements from budget to expense. A review of current fiscal year purchases will be conducted and monitored to ensure that all competitive requirements are being met. 89
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City of Red Oak, Texas Comprehensiv
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Required Supplementary Information
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THE CITY The City of Red Oak (the
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INDUSTRY During 2020, Compass Datac
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In order to be awarded a Certificat
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Government Finance Officers Associa
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Other Matters Required Supplementar
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Both of the government-wide financi
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Changes in Net Position Governmenta
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Governmental Activities Business-ty
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Capital Projects Capital project fu
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CITY OF RED OAK, TEXAS STATEMENT OF
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CITY OF RED OAK, TEXAS BALANCE SHEE
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CITY OF RED OAK, TEXAS RECONCILIATI
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Governmental fund financial stateme
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The costs of normal maintenance and
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Committed fund balance includes fun
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V. CAPITAL ASSETS Capital asset act
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VII. LONG-TERM DEBT Long-term debt
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Bonds payable currently outstanding
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Revenue Bonds - Governmental Activi
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The actuarial assumptions were deve
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The City reported $384,378 as defer
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OPEB Expense, Deferred Outflows, an
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CITY OF RED OAK, TEXAS SCHEDULE OF
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CITY OF RED OAK, TEXAS SCHEDULE OF
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Comprehensive Annual Financial Report 2020

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