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 4 Qualitative Aspects of Accounting Practices Management is responsible for the 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 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year. We noted no transaction entered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the financial statements in a different period than when the transaction occurred. 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 assumption about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. Depreciation on capital assets is an estimate based on the planned useful lives of the City's capital assets. The disclosures in the financial statements are neutral, consistent, and clear. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. In total we proposed 22 journal entries and 5 of these would be considered audit adjustments. This is a significant improvement over the prior year when we reported 51 entries. The entries we consider audit adjustments are listed below: Adjusting Journal Entries JE # 6 Debit Credit To correct coding of recoding of expenses 101-46202-303 Engineering Fees $ 10,461 101-46210-303 Engineering Fees 2,698 452-10100 Cash 10,461 453-10100 Cash 2,698 101-10100 Cash $ 2,698 101-10100 Cash 10,461 452-43000-303 Engineering Fees 10,461 453-43000-303 Engineering Fees 2,698 Total S 26,318 S 26,318 952.835.9090 . Fax 952.835.3261 www.aemcpas.com