CCP 05-19-2003 - Laserfiche WebLink

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City of Arden Hills April 10, 2003 Page Two . As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we performed tests of compliance with certain provisions oflaws, regulations, contracts and grants. How"ever, the objective of our tests was not to provide an opinion on compliance with such provisions. We noted one instance of non- compliance with a J\.1innesota Attomey General's opinion. Payment of Bonuses During 2002, the City completed three Personnel Action Fonns authorizing additional payments to employees. These types of payments appear to be bonuses as defIned by the Minnesota Attorney General. Under a Minnesota Attorney General Opinion dated January 22, 1980, these payments would be considered gifts and thus unlawful City expenditures. A City has an option of adopting performance or merit pay systems to acconnnodate what may have been intended, but the City of Arden Hills has not adopted such a policy. Significant Accounting Policies Management has the responsibility for selection and use of appropriate accOlmting policies. In accordance with the tenus of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The signifIcant acconnting policies used hy the City are described in Note 1 to the general purpose fInancial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2002. We noted no transactions entered into by the City during the year that were botli signifIcant and unusual, and of which, under professional standards, we arc required to inform you, or transactions for which there is a lack of authoritative guidance or consensus. . Accounting Estimates Accounting estimates are an integral part of the combined fInancial statements prepared by management and are based on managemenfs 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 of the possibility that future events affecting them may differ signifIcantly from those expected. The most signifIcant estimate 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 [mancial statements taken as a whole. .