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<br /> <br />ABDO <br />EICK & <br />, MEYERSILP <br />CertifleJ. Puhltc Aammtants & Consultonts <br /> <br />May 4, 2006 <br /> <br />Grandview Square <br />5201 Eden Avenue <br />Suite 370 <br />Edina. MN 55436 <br /> <br />Honorable Mayor and Council <br />City of Centerville, Minnesota <br /> <br />We have audited the financial statements of the governmental activities, the business-type activities, each major fund and the <br />aggregate remaining fund infonnation of the City of Centerville, Minnesota (the City) for the year ended December 31,2005 and <br />have issued our report thereon dated May 4, 2006. Professional standards require that we provide you with the following <br />information related to our audit. <br /> <br />Our Responsibility Under Auditing Standards Generally Accepted in the United States of America <br /> <br />As stated in our engagement letter, our responsibility, as described by professional standards, is to plan and perform our audit to <br />obtain reasonable, but not absolute, assurance that the financial statements are free of material misstatement and are fairly <br />presented in accordance with accounting principles generally accepted in the United States of America. Because an audit is <br />designed to provide reasonable, but not absolute, assurance and because we did not perform a detailed examination of all <br />transactions, there is a risk that material errors, fraud or illegal acts may exist and not be detected by us. <br /> <br />In planning and perfonning our audit of the financial statements of the City, for the year ended December 31, 2005, we considered <br />its internal control in order to determine our auditing procedures for the purpose of expressing our opinion on the financial <br />statements and not to provide assurance on the internal control. However, we noted certain matters involving the internal control <br />and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified <br />Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the <br />design or operation of internal control that, in our judgment, could adversely affect the City's ability to record, process, <br />sunnnarize, and report financial data consistent with the assertions ofmanagernent in the financial statements. We noted the <br />following reportable condition: <br /> <br />Segregation of Duties <br /> <br />Our study and evaluation disclosed that because of the limited size of your office staff, the City has limited segregation of <br />duties. A good internal control structure contemplates and adequate segregation of duties so that no one individual handles <br />transactions from inception to completion. While we recognize that the City is not large enough to permit an adequate <br />segregation of duties in all respects, it is important that you be aware oftbis reportable condition. <br /> <br />Management Response <br /> <br />Management has implemented specific internal control policies to address segregation of duties issues. The City Council <br />approved a resolution in 2005 that addressed some areas of1imitation. The City will continue to review its systems annually to <br />try to improve internal controL <br /> <br />A material weakness is a reportable condition in which the design or operation of one or more of the internal control components <br />does not reduce to a relatively low level the risk that errors or fraud in amounts that would be material in relation to the financial <br />statements being audited may occur and not be detected within a timely period by employees in the normal course of performing <br />their assigned functions. <br /> <br />952.835.9090 . Fax 952.835.3261 <br />www.aemcpas.com <br />