HomeMy WebLinkAbout2019 MANAGEMENT LETTER( iiftcnLarsoriklen LLP
CLAconnec: com
Management
City of Gem Lake
Gem Lake, Minnesota
In planning and performing our audit of the financial statements of the City of Gem Lake (the City) as of
and for the year ended December 31, 2019, in accordance with auditing standards generally accepted
in the United States of America, we considered the City's internal control over financial reporting
(internal control) as a basis for designing audit procedures that are appropriate in the circumstances 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. Accordingly, we do not express an opinion
on the effectiveness of the City's internal control.
However, during our audit we became aware of matters that are opportunities to strengthen your
internal control and improve the efficiency of your operations. Our comments and suggestions
regarding those matters are summarized below. A separate communication dated August 28, 2020,
contains our written communication of any significant deficiencies and material weaknesses in the
City's internal control. This letter does not affect our communication dated August 28, 2020.
Employment Policy
During our audit procedures, we noted that there was no policy that dictates whether City employees
can accrue vacation from year-to-year. CLA recommends that there be a formal policy implemented
which details out the benefits of each employee position at the City, including the year-end accrual of
any vacation or other compensated absences.
Contract for Financial Services
During our audit procedures, we noted that the City entered into a new contract with White Bear
Township to provide accounting services, dated in the fall of 2019. The contract was signed by the City,
but contained no signature from White Bear Township officials. We recommend that the City ensure all
contracts with external parties be signed by both the City and the external party.
Capitalization Policy
During our audit procedures we noted that the City does not have an official capitalization policy. The
City could miss capitalizing items in capital outlay without a standard amount or capitalize trivial items
on an inconsistent basis. This can lead to inconsistencies in the matching of the expense to the life of
the asset. We recommend that the City create a capitalization policy with a threshold somewhere in the
range of $$2,500 to $10,000 for capital outlay expenditures.
We will review the status of these comments during our next audit engagement. We have already
discussed many of these comments and suggestions with various City personnel, and we will be
pleased to discuss them in further detail at your convenience, to perform any additional study of these
matters, or to assist you in implementing the recommendations.
A ^ ember of
RN
.) Nexia
International
Management
City of Gem Lake
Page 2
This communication is intended solely for the information and use of management and others within the
City, and is not intended to be, And should not be, used by anyone other than these specified. parties.
zL
CliftonLarsonAllen LLP
Minneapolis, Minnesota
August.28, 2020