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LarsonAllen* LLP CPAs, Consultants &. Advisors:. www.larsionallen.com REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASE© ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNM.ENTAUDITING STANDARDS Honorable Mayor and Members of the City Council City of Gem Lake,. Minnesota We have audited the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Gem Lake, Minnesota as of and for the year ended December 31, 2D1 g, which collectively comprise the City's basic financial statements and have issued our report thereon dated Jane 13, 2011. We conducted our audit 1n accordance. with 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 General of the United States. Internal Control Over Financial Reportinq In. planning and performing our audit, we considered the City's .internal control over financial reporting. as a basis for designing our auditing procedures. for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly; We do not express an opinion on the effectiveness of the entity's internal control over financial reporting. 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.:s a reasonable possibility that.a material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis.. Our consideration of the internal. control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. However, as described in the accompanying. Schedule of Findings and Responses, we identified a deficiency in internal control that we consider to be a material weakness: (31.) An independent membw of Nexia International INTLRNATIOvnz