CCP 05-24-2004 - Laserfiche WebLink

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. . . Ci1y of Arden Hills April L 2004 Page Three Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting malteTS, similar 10 obtaining a "second opinion" on certain situations. Ifa consultation involves application of an accounting principle to the City's general purpose financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to detemline that the consultant has L-lll the relevant facts. To our knowledge, there were no such consultations with other accountants. Issues Discussed Prior to Retention of Independent Auditors \Ve generally discllss 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 following are areas that came to our attention duting the audit that we feel should be reviewed: Financial Position and Results of Operations General Fund The general fund is used to account for resources traditionally associated with government, \vhich are nol required legally or by sound principal management to be accounted for in another fund. The general fund balance increased 5361,667 from 2002. The fund balance ofSl,1 14,839 is 38pereentofthe2004 budgeted expenditures. We recommend the fund balance be maintained at a level sufficient to fund operations until the major revenue sources are received in June. Vv'e feel a reserve of approximately 40 to 50 percent of planned expenditures and transfers oul is adequate to meet \vorking capital and small emergency needs. The Minnesota Office of the State Auditorhas classjf"ied cities' unreserved fund balance levels relative to expenditures as follows: Extremely low Low Acceptable Moderalely high High Very high Extremely high Under 20% 21 - 34 35 - 50 51 - 64 65 - 100 101 - 150 Above 150 The State Auditor does group all general and special revenue funds of the city when making this calculation where our calculation is based only on the general fund. Although there is no legislation regulating fund balance, it is a good policy to designate intended use of fund balance. This helps address citizen concerns as to the use of fund balance and tax levels. %2.83::'.9090 . Fax r).,)2.8:~.).:r26] wln.....aemcpas.eom