2006-06-28 CC Packet - Laserfiche WebLink

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II I City of Centerville May 4, 2006 Page Two Our consideration of internal control would not necessarily disclose all matters in internal control that might be reportable conditions and, accordingly, wot1ld not necessarily disclose all reportable conditions that are also considered to be material . weaknesses as defined above. However, the reportable condition described above is not believed to be a material weakness. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of compliance with certain provisions of laws, regulations, contracts and grants. However, the objective of our tests was not to provide an opinion on compliance with such provisions. We noted one instance of non-compliance with Minnesota statutes. Broker Certifications Minnesota statute 118.A04 subdivision 9, requires the City to obtain broker certification from investment brokers annually. The 2005 broker certifications were not completed. Significant Accounting Policies Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by the City are described in Note I to the fInancial statements. The City implemented the requirements of GASB Statement No. 40 - Deposit and Investment Risk Disclosures - an amendment of GASB Statement No.3 during 2005. We noted no transactions entered into by the City during the year that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is a lack of authoritative guidance or consensus. Accounting Estimates 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 signfficance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most significant estimate affecting the financial statements were capital asset basis and depreciation on capital assets. Management's estimate of depreciation is based on estimated useful lives of the assets. Management's estimated historical cost is based on current replacement cost deflated to the year acquired. We eval!l8ted the key factors and assumptions used to develop this estimate in detennining that it is reasonable in relation to the financial statements taken as a whole. 952.835.9090 . Fax 952.835.3261 www.aemcpas.com