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Elk River Fire Department Relief Association <br /> May 1,2013 <br /> M id 7M Page 2 <br /> c0 <br /> Compliance <br /> As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement,we performed tests <br /> of compliance with certain provisions of laws,regulations,contracts and grants.However,the objective of our tests was not to provide <br /> an opinion on compliance with such provisions.We noted no instances of noncompliance with Minnesota statutes. <br /> Planned Scope and Timing of the Audit <br /> We performed the audit according to the planned scope and timing. <br /> Qualitative Aspects of Accounting Practices <br /> Management has the responsibility for selection and use of appropriate accounting policies.In accordance with the terms of our <br /> engagement letter,we will advise management about the appropriateness of accounting policies and their application.The significant <br /> accounting policies used by the fire relief are described in Note 2 to the financial statements.The requirements of GASB statements <br /> No. 63 and 65 were adopted for the year ended December 31,2012.We noted no transactions entered into by the Association during <br /> the year that were both significant and unusual,and of which,under professional standards,we are required to inform you,or <br /> transactions for which there is a lack of authoritative guidance or consensus. <br /> Accounting estimates are an integral part of the financial statements prepared by management and are based on management's <br /> knowledge and experience about past and current events and assumptions about future events.Certain accounting estimates are <br /> particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting <br /> them may differ significantly from those expected.The most sensitive estimate affecting the financial statements was the actuarial <br /> accrued liability.This is based on the funding formula prescribed by the State of Minnesota.We evaluated the key factors and <br /> assumptions used to develop the estimate in determining that it is reasonable in relation to the financial statements taken as a whole. <br /> The disclosures in the financial statements are neutral,consistent,and clear. <br /> Difficulties Encountered in Performing the Audit <br /> We encountered no significant difficulties in dealing with management in performing and completing our audit. <br /> Corrected and Uncorrected Misstatements <br /> Professional standards require us to accumulate all known and likely misstatements identified during the audit,other than those that <br /> are trivial,and communicate them to the appropriate level of management.There were no misstatements noted during the audit <br /> Disagreements with Management <br /> For purposes of this letter,professional standards define a disagreement with management as a financial accounting,reporting,or <br /> auditing matter,whether or not resolved to our satisfaction,that could be significant to the financial statements or the auditor's report. <br /> We are pleased to report that no such disagreements arose during the course of our audit. <br /> Management Representations <br /> We have requested certain representations from management that are included in the management representation letter dated <br /> May 1,2013. <br /> 952.835.9090 • Fax 952.835.3261 <br /> w ww.aemcpas.coin <br />