5.1. ERMUSR 05-14-2013 - Laserfiche WebLink

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Elk River Municipal Utilities May 6,2013 Page 2 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 Ito the financial statements.The requirements of GASB statements No.63 and 65 were adopted for the year ended December 31,2012.The application of existing policies was not changed during the year. We noted no transactions entered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial 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 particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial 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 financial statements taken as a whole. The disclosures in the financial statements are neutral,consistent, and clear. Certain financial statement disclosures are particularly sensitive because of their significance to financial 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 financial statements taken as a whole. Disagreements with Management For purposes of this letter,professional standards define a disagreement with management as a financial accounting,reporting,or auditing matter,whether or not resolved to our satisfaction,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. Management Representations We have requested certain representations from management that are included in the management representation letter dated May 6,2013. Management Consultations 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 financial statements or a determination of the type of auditor's opinion that may be expressed on those 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. Other Audit Findings or Issues 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 Utilities' auditors. However,these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. 952.835.9090 • Fax 952.835.3261 www.aemcpas.com