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<br />City of Arden Hills Page 4
<br />Octobcr 2.t, 2006 .
<br />An audit is not designcd to provide assurance on internal control or to identify reportable conditions. .
<br />Ilowevcr. we win inl()f[n the governing body or audit committee of any matters involving internal control
<br />and its operation that we consider to be reportable conditions under standards established by the
<br />American Institute of Certified Public Accounts. Reportable conditions involve matters coming to our
<br />ath:ntion relating to significant ddiciencies in the design or operation of the internal control that, in our
<br />judgment, could adycrsely affect the City's ability to record, process, summarize, and report linancial data
<br />consislcnt with the assertions of management in the financial statements. We will also inform you of any
<br />Ilonrcportahle conditions or othcr matters involving internal control, if any, as required by Government
<br />.4udilil/g Stundards.
<br />Audit Procedures - Complianc{~
<br />Identifying and ensuring that the City complies with the proVISIOns of Jaws, regulations, contracts,
<br />agreements, and grants is the responsibility of management. As part of obtaining reasonable assurance
<br />about whether the lin;mcial statements arc free of material misstatement, we will perfonn tests of the
<br />('ity's compliance with the provisions of applicable laws, rcgulations, contracts, agreements, and grants.
<br />IloweYLT, the ohjective of our audit will not bc 10 provide an opinion OJl overall compliance and we will
<br />IIllt express such an opinion.
<br />Audit Administration, Fccs, and Other
<br />Thc ;lssistillKe to be supplied by your personnel, including the preparation of scheduks and analysis of
<br />accounts, typing all cash or other continnations we request, and locating any invoices selected hy us for
<br />lesting, will he discussed and coordinated with you. .
<br />The audit documentation for this engagement is the property of Malloy, Montague, Karnowski,
<br />Radosevich &. Co., P.l\. (MMKR) and constitutes confidential information. I Iowever, pursuant to
<br />authority given by law or regulation, we may be requested to make certain audit documentation available
<br />to a regulatory agency or its designee, a federal agency providing direct or indirect funding, or the U.S.
<br />(iovernment Accountability Office for the purposes of a quality review of the audit, to resolve audit
<br />iindings, or to carryout oversight responsibilities. We will notity you of any such request. If requested,
<br />access to such audit documentation will be provided under the supervision of MMKR personnel.
<br />Furthermore, upon request, we lIlay provide copies of selected audit documcntation to the aJ()rcmentioned
<br />partics, These pal1ies Illay intend, or decide, to distribute the copies or in/i.mnation contained therein to
<br />others. including other governmental agencies.
<br />The audit documentation for this engagement will be retained for a minimum of live years after the report
<br />n:lease date or for any additioJlal period requested by the regulatory agency. If we are aware that a
<br />kderal awarding agency or auditee is contesting an audit finding, we will contact the party(ies) contesting
<br />the audit tinding Ii.l[ guidance prior to destroying the audit documentation.
<br />()ur fees fi.lr these services will he hased on the actual time spent at our standard hourly rates. We will
<br />also bill you 11..)1' travel and other out-of-pocket costs such as report production, typing, postage, etc. Our
<br />standard hourly rates vary according to the degree of responsibility involved and the experience level of
<br />the personncl assigned to your audit. Our invoices f()r these fees will be rendered each month as work
<br />progresses and arc payable upon presentation. Unless additional work is requested, or circumstances
<br />reqUIre additional work, our fees (including the preparation of a management report ) It)r the
<br />December 31, 2006 audit will he as described in our proposal for professional auditing services.
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