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Home My WebLink AboutUntitled � � BOECKERMANN HEINEN & MAYER, P.A. IncludingtheformerAPPLE & APPLE Certified Public Accountants � , ' � To the Honorable Mayor and Members of the City Council 1 City of Rosemount, Minnesota � In planning and performing our audit of the general purpose financial statements of the City of Rosemount, Minnesota for the year ended December 31, 1998, we considered the City's internal control to determine our auditing procedures for the purpose of expressing an opinion � on the general purpose financial statements and not to provide assurance on the internal control. 1 The memorandum that accompanies this letter summarizes our current year comments and includes some graphic analysis. This letter does not affect our report dated March 5, 1999 on the general purpose financial statements of the City of Rosemount, Minnesota. rWe want to take this opportunity to express our sincere appreciation for the courtesies and cooperation extended to us by the City's personnel during the audit. We look forward to working with you in the future. � �� , � BOECKERMANN, HEINEN & MAYER, P.A. Certified Public Accountants ' Minneapolis, Minnesota March 5, 1999 � � ' � � � ' � ' � ' � ' , f ' 1 I � � ' i I 1 I 1 1 1 1 � Cit of Rosemount Minnesota y , Report to Council ' Current Year Comments December 31, 1998 � PerFection of Collateral � As stated last year, the Federal Court of Appeals stated three steps are required to perfect a security interest in the pledge of collateral under federal law: � 1. The assignment must be in writing. 2. The depository's board of directors or loan committee must have approved the assignment. 3. The assignment needs to have been continuously, from the time of its execution, an official � record of the depository. Without perfection, there is a possibility the assignment could be defeated if the depository fails. Currently, the first perFection step is required by Minnesota State Statutes. The second and ' third steps require a governmental entity to obtain a certification of adoption of the depository's loan committee or board's resolution. This resolution states the details of pledge as specified in the assignment and pledges the resolution shall be an official record of the institution. This � certification is to be signed by the secretary and president or other officer of the depository. To ensure the City's collateral is perFected under federal law, we recommend the City obtain ' minutes from its official depository or a board resolution outlining the collateral pledged to the City. 1 The City will not lose perfection of collateral through substitution of collateral. Substitution of similar collateral with similar dollar amounts in the normal course of business is allowable. Therefore in the example listed above, the bank would not need to perfect collateral every time � there was a change in collateral. We recommend that you contact us if you have further questions or have your bank contact the Minnesota Bankers Association. ' Inventory Controls ' During the audit, we performed an observation of the public works facilities and inquired about internal controls over inventory items. We recommend that the City implement controls over the purchase and usage of inventory ' items in the public works facilities. These items include auto and machine parts and water meters. At the present time the inventory amounts are immaterial. We anticipate that these amounts will grow as the City grows and matures. 1 Signature Cards ' During our audit of cash we observed and recommend that the City's signature cards be updated. � ' ' Boeckermann, Heinen & Mayer, P.A. 2 1 Cit of Rosemount, Minnesota Re ort to Council Y p Current Year Comments December 31, 1998 � ' Required Communications , We have audited the financial statements of the City of Rosemount, Minnesota (the "City") for the year ended December 31, 1998, and have issued our report thereon dated March 5, 1999. Professional standards require that we provide you with the following information related to our 1 audit. Our Responsibilitv Under Generallv Accepted Standards As stated in our engagement letter dated December 14, 1998, our responsibility, as described � by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance that the general purpose financial statements are free of material misstatement and are fairly presented in accordance with generally accepted accounting , principles. Because of the concept of reasonable assurance and because we did not perform a detailed examination of all transactions, there is a risk that material errors, fraud, or other illegal acts may exist and not be detected by us. � As part of our audit, we considered the internal control of the City. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance � concerning such internal control structure. Siqnificant Accountinq Policies Management has the responsibility for selection and use of appropriate accounting policies. In , accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies � used by the City are described in the Notes to the financial statements. We noted no transactions entered into by the city during the year that were both significant and unusual, and of which under professional standards, we are required to inform you, or transactions for which there was a lack of authoritative guidance of consensus. ' Accountinq Estimates Accounting estimates are an integral part of the financial statements prepared by management ' and are based upon management's current judgments. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from management's , current judgments. Management's estimate of the allowance for doubtful accounts receivable is based on a review � of outstanding accounts receivable at December 31, 1998. This review included an aging analysis as well as payments received during 1998. We evaluated the key factors and assumptions used to develop the allowance for doubtful accounts in determining that it is � reasonable in relation to the financial statements taken as a whole. , ' ' Boeckermann, Heinen & Mayer, P.A. 3 , Cit of y Rosemount, Minnesota Report to Councii � Current Year Comments December 31, 1998 � Required Communications (Continued) , Siqnificant Audit Adiustments For the purposes of this letter, professional standards define a significant audit adjustment as a proposed correction of the financial statements that, in our judgment, may not have been ' detected except through our auditing procedures. These adjustments may include those proposed by us but not recorded by the City that could potentially cause future financial statements to be materially misstated, even though we have concluded that such adjustments , are not material to the current financial statements. We proposed no audit adjustments that could, in our judgment, either individually or in the 1 aggregate, have a significant effect on the City's financial reporting process. Disaqreements With Manaqement For purposes of this letter, professional standards define a disagreement with management as a ' matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. ' Consultation with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and , accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's general purpose financial statements, our professional standards require the consulting accountant to � check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. � Issues Discussed Prior to Retention of Indeqendent Auditors We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and � our responses were not a condition to our retention. Difficulties Encountered in Performinq the Audit � We encountered no significant difficulties in dealing with the management relating to the performance of the audit. 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