2002-08-12 CC Worksession - Laserfiche WebLink

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... City of Centerville March 29, 2002 Page Three Disagreements with Management For purposes oflhis lelter, professional standards defme a disagreement with management as a malter, whether or not resolved to our satisfaction, concerning a fmancial accounting, reporting or auditing malter that could be significant to the general purpose financial statements or the auditors' report. Weare pleased to report that no such disagreements arose during the course of our audit. Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting malters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's general purpose fmancial statements or a determination of the type of auditors' opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Issues Discussed Prior to Retention of Independent Auditors We generally discuss a variety of malters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing our audit. Other Matters The following are areas that came to our altention during the audit that we feel should be reviewed: Financial Position and Results of Operations General Fund Overall, the fund balance decreased $128,074 during 2001. The total fund balance is $713,080, which is approximately 35 percent of current year expenditures and transfers out. We recommend fund balance be maintained between 40 percent to 50 percent of planned expenditures and transfers out. So at the current level, the fund balance is below what is normally reconnnended as a minimum. The State has recently indicated they may consider reviewing fund balance reserves of local governments when adjusting the local government aid formulas. This may negatively impact the City if reserves in excess of the amount needed for working capital are not designated. A designation indicates intended use of fund balance. We reconunend the City make designations for intended use of fund balance when the amount is above the 50 percent threshold for working capital. The table below summarizes fund balance and expenditures from the last five years. Fund Balance Expenditures as a Fund and Percent of Balance Transfers Out Expenditures 2001 $ 713,080 $ 2,051,024 34.8% 2000 841,154 1,817,891 46.3 1999 1,051,596 1,322,194 79.5 1998 905,692 962,961 94.1 1997 621,746 861,815 72.1