2014-04-09 CC Packet - Laserfiche WebLink

Home Browse Search

2013-001Material audit adjustment Condition: During analytical testing of expenditures, it was noted that a capital asset was recorded as an expense. Criteria: Accounting principles require that capitalrelated activity be recorded as an asset and not an expense. Cause: The asset was not contemplated with the year-endaccounting entries. Effect: This omission indicates that the City’s system of internal controldid not identify a necessary adjustment. Recommendation: We recommend that management maintain a list of projects in process the identified capital related activity and then evaluates the status of the projects at year end. Management response : TheCity staff has acknowledged that the capital asset activity should have been recorded and has corrected for 2013. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance Planned Scope and Timing of the Audit We performed the audit according to the planned scope and timing previously communicated to you. Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accountingpolicies.The significant accounting policies used by the City are described in Note 1 to the financial statements.No new accounting policies were adopted and the application of existing policies was not changed during the year.We noted no transactionentered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part 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 possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements include depreciation on capital assets andallocation of payroll. Management’s estimate of depreciation is based on estimated useful lives of the assets. Depreciation is calculated using the straight-line method. Allocations of gross wages and payroll benefits are approved by City Council within the City’s budget and are derived from each employee’s estimated time to be spent servicing the respective functions of the City. These allocations are also used in allocating accrued compensated absences payable. We evaluated the key factors and assumptions used to develop these estimates in determining that they are reasonable in relation to the financial statements taken as a whole. The disclosures in the financial statements are neutral, consistent, and clear. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users.