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2021-001Material Audit Adjustments <br />Condition:During our audit, material adjustmentswereneeded to correct the debt and utility revenue <br />activity. <br />Criteria: <br />accounting system need to agree to the underlying supporting documentation. <br />Cause:City staff did not prepare a year end trial balance reflecting all necessary accounting entries in the <br />areas noted above. City staff provided preliminary 2021general ledger information electronically <br />that wasused to generate a trial balance.Additional entries fordebt and utility revenue activity <br />were added to the audit entries during the audit. <br />Effect: <br />control. <br />Recommendation:We recommend management review the related journal entries, obtain an understanding of why <br />the entries were necessary and modify current procedure to ensure that future corrections are not <br />needed. <br />Management Response: <br />The finance director will review each journal entry in an effort to better understand the reason the modification as <br />necessary in an effort to limit future corrections. <br />Compliance and Other Matters <br />misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, grant <br />agreements, and other matters noncompliance with which could have a direct and material effect on the financial <br />statements. However, providing an opinion on compliance with those provisions was not an objective of our audit. While <br />with those requirements. The results of our tests disclosed no instances of noncompliance or other matters that are <br />required to be reported in accordance with Minnesota statutes. <br />Qualitative Aspects of Accounting Practices <br />Management is responsible for the selection and use of appropriate accounting policies. The significant accounting <br />policies used by the City are described in Note 1 to the financial statements. No new accounting policies were adopted <br />and the application of existing policies were not changed during the year ended December 31, 2021. We noted no <br />transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus.All <br />significant transactions have been recognized in the financial statements in the proper period. <br />Accounting estimates are an integral part of the financial statements prepared by management and are based on <br />accounting estimates are particularly sensitive because of their significance to the financial statements and because of <br />the possibility that future events affecting them may differ significantly from those expected. The most sensitive <br />estimates affecting the financial statements include depreciation on capital, allocation of payrollexpenses, other post- <br />. <br />is <br />calculated using the straight-line method. <br />City. These <br />allocations are also used in allocating accrued compensated absences payable. <br />3 <br /> <br />