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. .~:~i,~_ j ---" , ;~ _:~_\~:~: '---~'.^: RfCEIVEO JUN 03 1998 Certified Public Arrmmtrmt.\ & r;(!IISUllan(~ GrttlfARll6l!ffl1() 72-11 Ohm;;, Lane Suitt>20{l \,[illlltCiJIHJ1iS, \'1\ ;').')4."39 May 14, 1998 Members of the City Council City of Arden Hills, Minnesota Professional standards require that we provide you with the following information related to our audit Our Responsibility Under Generallv Accepted Auditing Standards and Government Auditing Standards As stated in our engagement letter, our responsibility, as described by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance that the fmaneial statements are free of material misstatement and are fairly . presented in accordance with generally accepted accounting principles. Our audit is designed to provide reasonable assurance of detecting misstatements that, in our professional judgment, would have a material effect on the [mandai statements taken as a whole. Consequently, our audit will not necessarily detect misstatement less than this materiality level that might exist due to error, fraudulent [mancial reporting or misappropriation of assets. As part of our audit, we considered the internal control of the City. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of compliance with certain provisions of lawsl regulations, contracts and grants. However, the objective of our tests was not to provide an opinion on compliance with such provisions. Accounting Estimates Accounting estimates are an integral part of the combined financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the general purpose financial statements and because ofthe possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements was depreciation on fixed assets. Management's estimate of depreciation is based on estimated useful lives ofthe assets. We evaluated the key factors and assumptions used to develop this estimate in determining that it is reasonable in relation to the financial statements taken as a whole. Significant Audit Adjustments For purposes of this letter, professional standards define a significant audit adjustment as a proposed correction of the general purpose financial statements that, in our judgment, may not have been detected except through our auditing procedures. We proposed no material audit adjustments. . 612.835.9090 . Fax ()12.R.):).:~2(j1