2022 08-08 CC PACKET - Laserfiche WebLink

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FOLLOW-UP ON PRIOR YEAR'FINDiNGS AND RECOMMENDATIONS. Asa part of our audit of the City's f naricial statements.for the year ended December 31;2021, we performed (� procedures to follow-up on the fndings and recommendations that resulted from the .prior year audit. The prior auditor reported the following findings that. are no longer findings in the. current year -audit of the City: • Minnesota Statutes require the governing body of the City to annually delegate the authority .to' make electronic funds transfers to a designated.business administrator or chief financial officer or the officer's designee. The City did notcomplete. this .delegation -.for the year ended December31, 2020. This is not a finding in .the current year. • Minnesota Statutes require payroll time sheet approval for employees. The prior year audit reported the time sheet for the City's one employee, did not contain a declaration indicating that the- facts recited on the payroll are correct to the best ofthe employee's information and belief. This is-tiot a finding in. the current year. • Minnesota. Statutes require unclaimed property held for.: more than three years (or one year for unpaid compensation) to be reported and paid or delivered to the state Commissioner of Commerce each year. This. requirement was not met by the City for the prior audit year. This is not a finding. in the current year. OTHER.OBSERVATIONS .AND RECOMMENDATIONS Reconciliation of Salary Expenditures to Quarterly Payroll Tax Returns One ofthe- audit procedures we routinely perform is to review a reconciliation ofthe salary expenditures.to the four quarterly tax returns (federal Form 941) filed covering the:fiscal year. During our audit, we. noted that the reconciliation performed by the City had a larger unexplained variance than we typically see. We. test this: reconciliation. as support for the salaries being reported>irr the financial statemets, and to verify the. -City is. reporting and submitting -salary withholding appropriately. While we. Were. able to.satisfy that this variance was not..indiok ive of a material misstatement in the financial statements; we recommend. the City work to verify salaries are being calculated:and reported. properly on these quarterly tax returns. SIGNIFICANT ACGOuNTiNG POLICIEs Management is responsible for the selection and .use of appropriate accounting policies. The significant accounting policies used by the-0ty are described in Note 1 of the.nptes to basic financial statements..No new accounting policies were adopted and the application of existing policies was not changed, during the year ended December 31, 2021. We noted no transactions entered into by the City during the year for which there -is a lack of authoritative guidance or consensus. All, significant transactions have. been recognized in the financial statements in the proper period. ACCOUNTING ESTIMATES AND MANAGEMENT JUDGMENTS. 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. assumptions.abotit future events. Certain accounting estimates are particularlysensitive-berause of their significance to the financial statements and because*of the possibility that. future. events affecting them.may differ significantly from those expected. The most sensitive estimate affecting this financial statements was: • The. depreciation of capital. assets involves estimates pertaining to useful lives. -2-