2018-06-13 CC Packet - Laserfiche WebLink

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Compliance and her Matters As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement,we performed tests of its compliance with certain provisions of laws, regulations,contracts,grant agreements, and other matters 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.While our audit provides a reasonable basis for our opinion, it does not provide a legal determination on the City's compliance with those requirements.The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported in accordance with Minnesota statutes. Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies.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 were not changed during the year ended December 31, 2017.We noted no transactions entered into by the City 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 depredation on capital,allocation of payroll expenses, other post-employment benefits and the liability for the Citys pensions, • 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. • The City's liability for other post-employment benefits was estimated to be zero primarily based on the assumption that employees,whom participate in the health insurance plan,will retire after the age of 65 and not continue to participate in the plan following retirement. • Management's estimate of its pension liability is based on several factors including, but not limited to, anticipated investment return rate, retirement age for active employees, life expectancy, salary increases and form of annuity payment upon retirement 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. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Uncorrected misstatements of the financial statements related to the GASB 68 pension liability allocated to the City in relations its participation in PERA. Management has determined that their effects are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate,to each opinion unit's financial statements taken as a whole. tf+ CIF01119 Bevolmh", 3 \tuhlms 146