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GliftcriamonAllen LLP YNAv_difto nlarsonailen.com CliftonLarsonAllen REPORT ON INTERNAL~ CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL. STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNNIENTAUDITING STANDARDS Honorable Mayor and Members of the City Council City of Gem Lake, Minnesota In planning and performing our audit of the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of:City of Gem Lake (the City) as of and for the year ended December 31, 2011, in accordance with :auditing standards generally accepted in the United States of America, we considered City of Gem Lake's internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the. purpose of expressing an. opinion on the effectiveness of the. City's internal control. Accordingly, we do not express an opinion on .the effectiveness of the City's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be significant deficiencies or m.ateria] weaknesses and, therefore, there can. be. no assurance that all such deficiencies have been identified. However, as discussed below, we identified: certain deficiencies in internal control that we consider to be material weaknesses. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in. the normal course of performing their assigned functions to prevent.; or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control,.such that there is a reasonable possibility that a material misstatement of the. City's financial statements will not be prevented, a detected and corrected on a timely basis. Our consideration. of the internal. control aver financial reporting was for the limited. purpose described in the fimt paragraph of this. section and was not designed to identify :all deficiencies in internal control over financial reporting that might he deficiencies, significant deficiencies, or .material weaknesses.. However, as. described in. the accompanying Schedule: of Findings and Responses, we identified deficiencies.in internal control. that we consider to be material weaknesses. W)