5.1. ERMUSR 04-12-2011 - Laserfiche WebLink

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Elk River Municipal Utilities ~, ~ Apri14, 2011 Page 2 -I 1~.~' Compliance As part of obtaining reasonable assurance about whether the fmancial statements aze free of material misstatement, we performed tests of compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit. The results of our tests disclosed no instances of noncompliance or other matters that aze required to be reported under statutes set forth by the State of Minnesota. Planned Scope and Timing of the Audit We performed the audit according to the planned scope and timing. Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Utilities are described in Note 1 to the fmancial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year. We noted no transactions entered into by the governmental unit during the yeaz for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the fmancial statements in the proper period. Accounting estimates aze an integral part of the fmancial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particulazly sensitive because of their significance to the fmancial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the fmancial statements were capital asset basis, depreciation, compensated absences and other postemployment benefits. We evaluated the key factors and assumptions used to develop these accounting estimates in determining that it is reasonable in relation to the fmancial statements taken as a whole. The disclosures in the fmancial statements are neutral, consistent, and clear. Certain fmancial statement disclosures aze particulazly sensitive because of their significance to fmancial statement users. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit's fmancial statements taken as a whole. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a fmancial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the fmancial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. 9.12.8359090 Fax 9i?.835.8261 www.acnu•.pas.enm