CCP 05-22-2006 - Laserfiche WebLink

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