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The management of the City of Rosevilie, Minnesota is responsible for establishing and maintaining intemal control systems used in administering federal financial assistance programs. In fulfilling tha[ responsibility, estimates and judgmenu by management are required to assess the expected benefiu and related costs of control procedures. The objectives of intemal control systems used in administering federal financial azsistance programs are to provide management with reasonable, but not absolute, assurance that, with respect to federal financial assistance programs, tesource use is consistent with laws, regula[ions and policies; resources are safeguazded against waste, loss and misuse; and reliable data aze obtained, maintained and fairly disclosed in reports. Because of inherent limitations in any system of internal accounting and administrative conhols used in administering federal financial assistance programs, errors or irregulazities may nevertheless occur and not be detected. Also, projection of any evaluation of the systems to future periods is subject to the risk that procedures 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 listed above. During the yeaz ended December 31, 1993, the City of Roseville, Minnesota had no major fedecal financial assistance programs and expended 58 percent of iu total federal financial assistance under the following nonmajor federal financial assistance program. State and Local Narcotics Assistance With respect to intemal control systems used in administering the above listed nonmajor federal financial assistance program, our study and evaluation included considering the types of ertors and irregularities that could occur, determining the intemal control procedures that shouid prevent or detect such errors and irregularities, determining whether the necessary procedures are prescribed and are being followed satisfactorily, and evaluating any weaknesses. With respect to the intemai control systems used solely in administering the nonmajor federal financial assistance programs of the City of Roseville, Minnesota, that aze not listed above, our study and evaluation was limited to a preliminary review of the systems to obtain an understanding of the control environment and the flow of transactions through the accounting system. Our study and evaluation of the intemal control systems used solely in administering these nonmajor federal financial assistance programs of the City did not extend beyond this preliminary review phase. Our study and evaluation was more limited than would be necessary to express an opinion on the intemal control systems used in administering the federal financial assistance programs of the City of Roseville, Minnesota. Accordingty, we do not express an opinion on the internal control systems used in administering the federal financial assistance programs of the City. Also, our audit, made in accordance with the standards mentioned above, would not necessarily disclose materiat weaknesses in the intemal controf systems for which our study and evaluation was timited to a preliminary review of the systems as discussed in the sixth paragraph of this report. However, our study and evatuation and our audit disclosed no condition that we believe to be a material weakness in relation to a federal financial assistance program of the City of Roseville, Minnesota. This report is intended for the information of Management, the City Council, state agencies, the Federal Cognizant Audit Agency and other federal agencies. However, this report is a matter of public record and iu distribution is not limited. �c�G �-F'��lh`�c' � L', March 25, 1994 Minneapolis, Minnesota 11A