Laserfiche WebLink
<br />Finding <br /> <br />2007-2 <br /> <br />CITY OF CENTERVILLE, MINNESOTA <br />SCHEDULE OF FINDINGS AND RESPONSES - CONTINUED <br />DECEMBER 31,2007 <br /> <br />Description <br /> <br />Preparation of Financial Statements <br /> <br />Condition: As in prior years, we were requested to draft the audited financial statements and <br />related footnote disclosures as part of our regular audit services. Recent auditing <br />standards require auditors to communicate this situation to the Council as an internal <br />control deficiency. Ultimately, it is management's responsibility to provide for the <br />preparation of your statements and footnotes, and the responsibility of the auditor to <br />determine the fairness of presentation of those statements. It is our responsibility to <br />inform you that this deficiency could result in a material misstatement to the <br />[mancial statements that could have been prevented or detected by your <br />management. Essentially, the auditors can not be part of your internal control <br />process. <br /> <br />Criteria: Internal controls should be in place to provide reasonable assurance over [mancial <br />reporting. <br /> <br />Cause: From a practical standpoint we do both for you at the same time in connection with <br />our audit. This is not unusual for us to do with an organization of your size. <br /> <br />Effect: The effectiveness of the internal control system relies on enforcement by <br />management. The effect of deficiencies in internal controls can result in undetected <br />errors in financial reporting. <br /> <br />Recommendation: It is your responsibility to make the ultimate decision to accept this degree of risk <br />associated with this condition because of cost or other considerations. As in prior <br />years, we have instructed management to review a draft of the auditor prepared <br />financials in detail for their accuracy; we have answered any questions they might <br />have, and have encouraged research of any accounting guidance in connection with <br />the adequacy and appropriateness of classification of disclosure in your statements. <br />We are satisfied that the appropriate steps have been taken to provide you with the <br />completed financial statements. While the City is reviewing the financial statements <br />we recommend that a disclosure checklist be utilized to ensure all required <br />disclosures are presented and the City should agree its [mandaI software to the <br />numbers reported in the [mancial statements. <br /> <br />Management Response: For now, the City's management accepts the degree of risk associated with this <br />condition and thoroughly reviews a draft of the [mancial statements. <br /> <br />-65- <br />