2020 Vol 14, Issue 4 September-October Gem Lake News

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Gem Lake News Page 2 of 6 The audit showed that management judgements and accounting estimates were reasonable and supported, there were no uncorrected adjustments and disclosures were adequate, clear and complete. Auditors pointed out several material weaknesses, which exist in Gem Lake and many other small cities in the State. A material weakness has to do with compliance and internal control over financial reporting. Note that there were five material issues in last year’s audit. 1. We lack complete segregation of duties on financial reporting duties, internal controls for utility reconciliation, and several other items. This is due to the small size of the staff available to perform the necessary tasks. 2. Material Audit Adjustments were needed to be posted to the City’s general ledger in order to arrive at the correct year-end balances. These included adjustments to beginning fund balances, accounts receivables, special assessments receivables and revenues, and deferred inflows of resources. Management is exploring ways to provide reconciliation between two different software systems. 3. Formal Utility Billing Reconciliation needs to be performed as the City transitions more responsibility to others. To account for total billings and receipts into City’s general ledger. The Minnesota Office of the State Auditor recommends that a city has a minimum of six months of general fund money available at any one time, to cover expenses while waiting for property tax revenue. Gem Lake had approximately 11 months of funds available at the point of the 2019 audit, or $481,000. This compares to $334,000 for the 2018 audit. The audit revealed that revenues for 2019 increased, due to increases in property taxes ($9,000), as well as licenses and permits ($46,000). Expenditures decreased, mostly due to decreases in public works ($17,000), and conservation and development ($52,000). 2019 Audit Complete, City’ Passes As a percentage of total revenues, property taxes made up 71% of the total in 2019, versus 73% of the total in 2018. Licenses and permit revenue increased from 10% of total revenue in 2018 to 19% in 2019. On the flip side, public safety and general government expenditures made up more of the total in 2019, versus 2018. For instance, public safety expenses (police and fire) made up 19% of the expenditure budget in 2018, increasing to 23% in 2019. General government expenditures made up 34% of the total in 2018 and increased to 41% in 2019. A complete and final copy of the audit is available at Heritage Hall. Neighbor Restores Sign When an important street sign in his neighborhood started looking a bit tired, Tim Heil took it upon himself to do a wonderful restoration. See the before and after below. Tim lives in the Big Fox/Little Fox Road area. Now the sign is much more visible to drivers in the area! Thank you for your efforts, Tim!