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City Council City of Roseville, Minnesota Page Two Because of inh2rent limitations in any system of internal accounting and administrative controls used in administering fed- erai financial assistance programs, =rrors or irregularities may neve;theless occur and not be detected. Also, projection oz any evaluation of the systems to future periods is subject to the risk that nrocedures may become inadequate because of changes in conditions or that the degree of compliance with the procedures may deteriorate. Our study included all of the applicable control categories list- ed above, Durina the year ended December 31, 1969, the City of Roseville, Minnesota, had no major federal financial assistance programs and expended 88 percent of its total federal financial assistance under the following nonmajor federal financial assis- tance orogram: Housing Rehabilitation aad Social and Economic Development. With respect to internal control systems used in administering these nonmajor federal financial assistance pro- grams, our study and evaluation included considering the types of errors and irregularities tnat could occur, determining �ne in- ternal control procedures that should prevent or detect sucn errors and irregularities, determining whetner the necessary pro- cedures are prescribed and are being followed satisfactorily, and evaluating any weaknesses. With. resoect to the internal control systems used solely in ad- ministering the other nonmajor federal financial assistance pro- grams of the City of Roseville, Minnesota, our study and evalua- tion was limit�d to a preliminary review of the system �o obtain an understanding of the control environment and the �low oi transactions through the accounting system. Our study and evalu- ation of the internal control systems used solely in admiaister- ing these nonmajor financial assistance orograms of the City of Roseville, Minnesota, did not extend beyond this preliminarv review phase. Our study and evaluation was more limited than would be necessary to express an opinion on the internal control systems used in ad- ministering the federal financial assistance orograms of �ne City of Roseville, Minnesota. Accordingly, we do not express an opin- ion on the internal control systems used in administering the federal financial assistance programs of the City of Roseville, Minnesota. � Also, our examination, made in accordance with the standards men- tioned above, would not necessarily disclose material wea�nesses in the internal control systems, for which our study and evalua- tion was limited to a oreliminary review oi the systems, as dis- cussed in tne �ifth paragraph of this report. However, our study and evaluation and our examination disclosed no condition that we believe to be a material weaxness in rela- tion to a federal financial assistance orogram of the City of Roseville, idinnesota. 115