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City of Centerville <br /> March 20, 2013 <br /> Page 2 <br /> Compliance and Other Matters <br /> As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests <br /> of compliance with certain provisions of Minnesota statutes. However, the objective of our tests was not to provide an opinion on <br /> compliance with such provisions. While our audit provides a reasonable basis for our opinion, it does not provide a legal <br /> determination on the City's compliance with those requirements. We noted no instances of noncompliance with Minnesota statues. <br /> Planned Scope and Timing of the Audit <br /> We performed the audit according to the planned scope and timing previously communicated to you. <br /> Qualitative Aspects of Accounting Practices <br /> Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by <br /> the City are described in Note 1 to the financial statements. The requirements of GASB statements No. 63 and 65 were adopted for <br /> the year ended December 31, 2012. We noted no transaction entered into by the governmental unit during the year for which there is a <br /> lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper <br /> period. <br /> Accounting estimates are an integral part of the financial statements prepared by management and are based on management's <br /> knowledge and experience about past and current events and assumption about future events. Certain accounting estimates are <br /> particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting <br /> them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were capital asset <br /> basis, and depreciation. <br /> Management's estimate of depreciation is based on estimated useful lives of the assets. The estimate of historical cost is based on <br /> engineers' estimates and deflated current value. We evaluated the key factors and assumptions used to develop these estimates in <br /> determining that they are reasonable in relation to the financial statements taken as a whole. <br /> The disclosures in the financial statements are neutral, consistent, and clear. Certain financial statement disclosures are particularly <br /> sensitive because of their significance to financial statement users. <br /> Difficulties Encountered in Performing the Audit <br /> We encountered no significant difficulties in dealing with management in performing and completing our audit. <br /> Corrected and Uncorrected Misstatements <br /> Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that <br /> are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In <br /> addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either <br /> individually or in the aggregate, to each opinion unit's financial statements taken as a whole. <br /> 952.835.9090 • Fax 952.835.3261 <br /> www.aemepas.com <br /> 113 <br />