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COUNCIL COMMUNICATION <br />TO: MAYOR AND CITY COUNCIL <br />FROM: MALCOLM FLEMING, CITY MANAGER <br />DATE: AUGUST 16, 2010 <br />SUBJECT: 2009 AUDIT LETTERS <br />ORIGINATING <br />DEPARTMENT: FINANCE <br />SUMMARY: <br />Attached are two communications from the City’s external auditor. These communications are <br />required per Statements on Auditing Standards No. 114 and No.115. David DeZutter from <br />Eide Bailly will be at the meeting to present and discuss the letters with the Committee. <br />The first attachment is the 2010 Audit Management Letter. One of the purposes of an audit <br />management letter is to inform management of issues noted during the auditors’ review and <br />offer suggestions for improvements. In the attached letter, the auditors’ commented on three <br />areas: <br />1. Material Audit Adjustments - Restatement of Beginning Net Assets <br />2. Segregation of Duties <br />3. Journal Entries <br />Management has reviewed and discussed each of the auditors’ comments. Below are the <br />auditors’ comments and management’s response to each comment: <br />Material Audit Adjustments – Restatement of Beginning Net Assets <br />Auditor’s Comment: <br />We recommend City Finance personnel review the nature of all interfund transfers to <br />determine the appropriate legal and accounting treatment of such transfers from <br />compliance with provisions of the Charter. <br />Management’s Response: <br />The specific transactions under discussion are the 2008 and 2009 transfers from the <br />Wastewater Utility Fund to the Golf Course Fund. In 2008, the City classified these <br />transactions as interfund transfers in both the City’s 2008 Operating and Capital Budget <br />SUBJECT <br />2009 AUDIT LETTERS <br />ë <br /> <br />