2003-03-26 CC Packet - Laserfiche WebLink

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~4 ..~ . February 6, 2003 Gnmdview Square 5201 Eden Avenue Suite 370 Edina. MN 55436 Members of the City Council City of Centerville, Minnesota We have audited the general purpose financial statements of the City of Centervi11e, Minnesota for the year ended December 31, 2002 and have issued our report thereon dated February 6, 2003. Professional standards require that we provide you with the following information related to our audit Our ResponsibUity Under Auditing Standards Generally Accepted in the United States of America As stated in our engagement letter, our responsibility, as descn'bed by professional standards, is to plan and perform our audit to obtain reasonable, but not aOsolute, assurance that the financial statements are free of material misstatement and are fairly presented in accordance with accounting principles generally accepted in the United States of America. Because an audit is designed to provide reasonable, but not absolute, assurance and because we did not perform a detailed examination of all transactions, there is a risk that material errors, fraud or illegal acts may exist and not be detected by us. In planning and performing our audit of the general purpose financial statements of the City, for the year ended December 31, 2002, we considered its intemal control in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on the internal controL However, we noted certain matters involving the internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public AccountaJits. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of internal control that, in our judgment, could adversely. affect the City's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements. We noted the following reportable condition. Segregation of Duties Our study and evaluation disclosed that because of the limited size of your office ~ the City bas limited segregation of duties. Good internal control contemplates an adequate segregation of duties so that no one individual bandles a transaction from inception to completion. While we recognize that the City is not large enough to permit an adequate segregation of duties in all respects, it is important, however, that you be aware of this condition. The City bas made significant improvement in internal control during 2002. Establishing written policies and implementing more thorough reconciliation processes bas helped provide better financial information. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that errors or fraud in amounts that would be material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of internal control would not necessarily disclose all matters in internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, the reportable condition descn'bed above is not believed to be a material weakness. 952.835.9090 Fax 952.835.3261 www lleI1ICpllS com