CCP 05-15-2006 - Laserfiche WebLink

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~ r~t r'lL~ City of Arden Hills . April 14, 2006 Page Two As part of obtaining reasonable assurance about whether the financial statements are free ofmatenal misstatement, we perfonned tests of compliance with certain provisions of laws, regulations, contracts and grants_ However, the objective of our tests was not to provide an opinion on compliance with such provisions_ We noted one instances of noncompliance with Minnesota statutes as fa11aws: Declaration for payment Minnesota statute 471.38 requires that each declaration for payment be signed to the effect thatsuch account, claim, or demand is just and correct and that no part of it has bet.'11 paid. The statute is satisfied jf on the hack of City checks is a declaration as defined in Minnesota statute 471.39] reading "I declare under the penalties of law that this account, claim or demand is just and correct and that no pan of it has been paid." The City did not have the required statement on the back of their check in 2005, Management Response Management understands the finding and has slnce taken steps to correct the noncompliance. Significant Accounting Policies Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the tenns of our engagement letter, we will advise management about the appropriateness of accounting policies and thelr application. The significant accounting policies used by the City are described in Note 1 to the financial statements. The City implemented the requirements of GASB Statement No. 40 - Deposit and Investment Risk Disclosures - an amendment of CASB Statement No.3 during 2005. We noted no transactions entered into by the City during the year that were both significant and unusual, and of which, under professional standards, we are required to infonn you, or transactions for which there is a lack of authoritative guid.aiice or consensus. . Accounting Estimates Accounting estimates are an integral pan of the 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 financial statements and because of the possibil1ty that future events affecting them may differ significantly from those expected. The most significant estimates affecting the financial statements were capital asset basis and depreciation. Management's estimate of depreciation is based on estimated useful lives of the assets. We evaluated the key factors and assumptions used to develop these accounting estimates in dctcnnining that it is reasonable in relation to the financial statements taken as a whole. Audit Adjustmeuts For purposes of this letter, professional standards define an audit adjustment as a proposed correction of the financial statements that, in our judgment, may not have been detected except through our auditing procedures. An audit adjustment mayor may not indicate matters that could have a significant effect on the City's financial reporting process (that is, cause future financial statements to be materially misstated). In our judgment, none of the adjustments we proposed, whether recorded or unrecorded by the City, either individually or in the aggregate, indicate matters that could have a significant effect on the City's financial reporting process. We did propose 3] journal entries, which we considered 22 as year end accounting entries that a City should make in order to have accurate records before an audit begins. We encourage the City to reduce the accounting entries necessary to adjust year end balances. We reported no uncorrected misstatements. . 952.835.9Q90 . Fax 952.83;).3261 www.aenwpas.eQJH