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C[iftonLarsonAlien LLP avtvw.clif#onla wnalIen.caM CliftonLarsonAllen IINDEPEND ENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING 77-1 AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor and Members of the City Council City of Gem Lake, Minnesota. r, We have audited, in accordance with the auditing standards generally accepted in the United States of .America and the standards applicable to financial. audits contained. in Government Auditing Standards issued by the Comptroller Genera] of the United. States, 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, as of andfor the year ended December 31, 2012, and the related notes. to the financial statements, which collectively comprise. City of. Gem Lake's basic financial statements, and have issued our report thereon dated June 18, 2pt3. Internal Control Over Financial. Reporting In planning and performing our audit. of the fnancial.statements, we considered City of Genf Lake's internal control over financial reporting ('intemal control} to determine. the audit procedures. that are appropriate in the. circumstances 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 notexpress;ah 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 material weaknesses or significant deficiencies and. therefore, material weaknesses or signifcant.deficiencies may exist that. were not identified. However,. as described in the accompanying. Schedule of Findings and Responses, we identified a deficiency in internal control that we consider to be material weakness. 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 entity'.s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency finding number 2012-1 described in the accompanying Schedule of Findings and Responses to be. a material weakness. I M�mmbe ofN1 l arrtermYor4 ti [N T£R y'AT 10 pL (34)