Finance Committee Agenda and Packet 2009 07 20

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SUBJECT: 2008 AUDIT MANAGEMENT LETTER DATE: J U LY 20, 2009 Sales Tax Audits Auditors' Comment: We understand that the City has hired a sales tax auditor and has developed a set of procedures to follow for sales tax audits subsequent to year -end. We commend the City on being proactive and encourage regular sales tax audits of the City's business owners. Capital Assets Auditors' Comment: We recommend that the City assign a salvage value to all new assets purchased after 2008 to more accurately reflect asset values. Likewise, the City should determine a schedule to perform capital asset inventory counts on an annual basis to ensure that the assets owned by the City are accurately reflected in its records. This procedure will ensure compliance with Colorado State Statutes. Management's Response: The Finance Department, with assistance from other departments, will estimate a salvage value on all assets purchased after 2008. In addition, the Finance Department, with assistance from other departments, will perform a complete capital asset count prior to the 2009 audit. Auditors' Comment: We recommend the City consult with other governments who operate libraries and with GASB to obtain information on the allowable methods used to account for library books and determine the allowable method that will meet the City's needs in order to comply with GASB 34. Based on this research, the City should develop a process to capitalize and depreciate library books over a reasonable useful life. Management's Response: The Finance Department will research the proper accounting /capitalization of library books and work with the Library Department to comply with GASB 34 by the end of 2009.