2007 Management Letter - Year End 12-31-2007

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I I I I I I I I I I I I I I I I I I I City of Centerville May 29, 2008 Page 25 GASB Statement No. 51 - Accounting and Financial Reportingfor Intangible Assets This statement was issued in June 2007 and is effective for periods beginning after June 15,2009. The new standard characterizes an intangible asset as an asset that lacks physical substance, is nonfinancial in nature, and has an initial useful life extending beyond a single reporting period. Examples of intangible assets include easements, computer software, water rights, timber rights, patents, and trademarks. This statement requires that intangible assets be classified as capital assets (except for those explicitly excluded from the scope of the new standard, such as capital leases). Relevant authoritative guidance for capital assets should be applied to these intangible assets. The statement provides additional guidance that specifically addresses the unique nature of intangible assets, including: . Requiring that an intangible asset be recognized in the statement of net assets only if it is considered identifiable . Establishing a specified-conditions approach to recognizing intangible assets that are internally generated (for example, patents and copyrights) . Providing guidance on recognizing internally generated computer software . Establishing specific guidance for the amortization of intangible assets. * * * * * * This report is intended solely for the information and use of Council, management, others within the City, and the Minnesota Office of the State Auditor, and is not intended to be and should not be used by anyone other than these specified parties. Our audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of the accounting records and related data. The comments and recommendations in the report are purely constructive in nature, and should be read in this context. If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your convenience. We wish to thank you for the opportunity to be of service and for the courtesy and cooperation extended to us by your staff. May 29,2008 Minneapolis, Minnesota , ~U :~/LLP ABDO, EICK & MEYERS, LLP Certified Public Accountants 952.835.9090 . Fax 952.835.3261 www.aemcpas.com