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CITY OF GEM LAKE <br />SCHEDULE OF FINDINGS AND RESPONSES (CONTINUED) <br />YEAR ENDED DECEMBER 31, 201.4 <br />OTHER ITEM FOR CONSIDERATION — MINNESOTA LEGAL COMPLIANCE <br />2014-002: Collateral CoVerage <br />Condition: Minnesota Statute §118A,03, requires that, to. the. extent that deposited funds exceed. <br />federal deposit insurance, the City must obtain an assignment of pledged. collateral in an amount equal <br />to.110 percent of the amount on deposit plus accrued: interest. <br />Criteria: At December 31, 2014, the City did not meet the 11.0% collateraiization requirement. $2,141 <br />of deposits were not fully collateralized due to timing of receipts.at the end of the Year. <br />Effect: The. City is not in compliance with Minnesota Statutes. <br />Causer Unknown <br />Recommendation: We recommend. City management be constantly aware .of collateral requirements <br />at its depository to ensure compliance with state statutes. <br />Management. Response: <br />City management is aware of this requirement and will continue to monitor. the collateral requirements <br />for the.City's general checking account: <br />2014-003: Payment Declaration <br />Condition: Minnesota Statute §471.391, subdivision2, requires each check. by which a claim is paid <br />have printed on the reverse side, above the space for endorsement thereof, the following statement: <br />"The undersigned payee, in endorsing this. check. declares. that the same is received in payment of a <br />just and correct claim against the. city, and that no part of it has. heretofore been paid." <br />Criteria: During 2014 it was noted checks issued in the second half of the year, the required <br />declaration was not included on checks. <br />Effect: The City is not in compliance with Minnesota Statutes: <br />Cause: Turnover in staffing, <br />Recommendation: We recommend the City implement policies and procedures to ensure the <br />declaration is included as required by state statute: <br />Management Response; <br />City management is aware of this. requirement and will ensure the statute is met going forward, <br />including when (if) turnover occurs in the future. <br />(38) <br />