CCP 05-30-2000 - Laserfiche WebLink

Home Browse Search

. . . City of Arden Hills March 31, 2000 Page Two Accounting Estimates Accounting estimates are an integral part of the combined fmancial 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 fmancial statements and because of the 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 of the 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 defme a significant audit adjustment as a proposed correction of the general purpose fmancial statements that, in our judgment, may not have been detected except through our auditing procedures. We proposed no material audit adjustments. Disagreements with Management For purposes of this letter, professional standards defme a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a fmancial accounting, reporting or auditing matter that could be significant to the general purpose fmancial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Issues Discussed Prior to Retention of Independent Auditors We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing our audit. Other Matters The folIowing are areas that came to our attention during the audit that we feel should be reviewed: General Fund The fund balance in the General fund increased $26,171 during 1999. Actual revenue was greater than budget by $285,107. The total variance represents 11.2% of budget. The area with the greatest variance was nonbusiness licenses and permits with a variance of $183,692. Expenditures were less than budget by $155,660. The total variance represents 6.6% of budget. Total transfers out totaled $598,500 or $415,950 more than budget. Most of the general fund revenue comes from property taxes and property tax credits. They represent 72% of 1999 revenue. This type of revenue is received during the second half of the year. As a result, a reserve for working capital needs to be established equal to about 35 - 45% of planned expenditures and transfers out. The City has excellent reserves for working capital from several sources. The amount designated for working capital in the general fund is $579,742. In addition to the fund balance in the general fund, the City can also draw working capital from one of several permanent capital projects funds which total about $8,100,000. DRAFT