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CCP 05-22-2006
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CCP 05-22-2006
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<br />m <br />L!{; <br />f'lL~ <br /> <br />City of Ardm Hills <br />Apnl ] 4,2006 <br />Page Six <br /> <br />. <br /> <br />Disagreements with Management <br /> <br />For purposes o[this letter, professional standards define a disagreement with management as a matter, whether or not resolved to <br />our satisfaction, concerning a financial accounting, reporting or auditing matter that could be signiflcam to Lhe financial <br />statements or the auditor's report. We are pleased to report that no such dlsagreements arose during the course of our audit. <br /> <br />Consultations with Other Independent Accountants <br /> <br />In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to <br />obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle 10 the City's <br />financial statements or a determination of the type of auditor's opinion that maY be expressed on those statements, our <br />professional standards require the consultjng accountant to check with us to determine that the consultant has a1l the relevant <br />facts. To our knowledge, there were no such consultations with other accountants. <br /> <br />Issues Discussed Prior to Retention of Independent Auditors <br /> <br />Vole generally discuss a variety of matters, including the application of accounting principles and auditing standards, with <br />management each year prior to retention as the City's auditors. However, these discussions occurrcd in the nonnal course of our <br />professional relationship and our responses were not a condition to our retention. <br /> <br />Difficulties Encou.otered in Performing the Audit <br /> <br />We encountered no significant difficulties in dealing with management jn performing our audit. <br /> <br />. <br /> <br />Other Matters <br /> <br />The following are areas that came to our attention during the audit that we fce! should be reviewed: <br /> <br />Financial Position and Results of Operations <br /> <br />General Fund <br /> <br />The General fund is used to account for resources traditionally associated with government, which are not requJred legally 01 <br />by sound principal management to be accounted for in another fund. The General fund balance decreased $44,149 rrom <br />2004. The fund balance of$1 ,270,780 is 40 percent of the 2006 budgeted expenditures. We recommend the fund balance be <br />maintained at a level suf1Jcient to fund operations until the major revenue sources are received in June. We feel a reserve of <br />approximately 40 to 50 percent of planned expenditures and transfers out is adequate to meet working capital and small <br />emergency needs. <br /> <br />The Minnesota Office ofthe State Auditor has classified cities' unreserved fund balance levels relative to expenditures as <br />follows: <br /> <br />Extremely low <br />Low <br />Acceptable <br />Moderately high <br />High <br />V cry high <br />Extremely high <br /> <br />Under 20% <br />2J - 34 <br />35 ~ 50 <br />5] ~ 64 <br />65 ~ 100 <br />]01 ~ ] 50 <br />Above 150 <br /> <br />The State Auditor does brrouP all General and special revenue funds of the City when making this calculation where our <br />calculation is based only on the General fund. Although there is no legislation regulating fund balance, it is a good policy to <br />designate intended use o-f fund balance. This helps address citizen concerns as 10 the use of fund balance and tax levels. <br /> <br />. <br /> <br />952.U35.90lJO . Fax 9S2.8:).').:t~hl <br /> <br />WWW.<lI:'JHl'j_M':'.l:IJ-m <br />
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