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City of Elk River <br /> March 19, 2004 <br /> Page Four <br /> <br />The following are areas that came to our attention during the audit that we feel should be reviewed: <br /> <br />Financial Position and Results of Operations <br /> <br />Governmental funds <br /> <br />As mentioned above a feature of the new reporting model is a focus on major funds in the fund statements of the City. Major <br />funds are determined by whether the funds assets, liabilities, revenue or expenditures exceed 10 percent of the total for each <br />category in the governmental view and five percent of the total for each category on an entity basis. The City also has the <br />option of specifying a fund as major and the general fund is always considered major. The following graph gives an <br />indication of the fund balance for the major funds and the non-major funds by fund type: <br /> <br />Governmental Fund Balances 2002 and 2003 <br /> (percent of total) <br /> <br /> '40% ~ <br /> 20% ~ <br />0% ~ <br />-20% <br /> 2002 2003 <br />· Non-maj or capital projects $3,266,591 $4,862,601 <br />· Non-major debt service $1,689,854 $1,650,253 <br />· Non-maj or special revenue $10,4g0,372 $10,236,174 <br />[] Public Safety/City Hall Facility $5,221,063 $(277,051) <br />· Improvement Bonds $ 3,606,646 $4,106,149 <br />· General I $3,190,589 $3,732,049 <br /> <br />· Although the non-major special revenue fimds make up nearly 40 percent of the total fired balance, this balance is <br /> comprised of sevenleen individual special revenue funds. The largest fund balance within this total is the Landfill fund <br /> which has a fund bglance of just over $1.9 million. <br /> / <br /> <br />· The ,six non-major ~ebt service funds along with the Improvement Bonds are established to provide for repayment of the <br /> City s long term de~t of governmental activities which totals $22,600,450. All debt service funds have a positive fund <br /> balance and appear to be generating sufficient resources to provide for their repayment. <br /> / <br /> <br />· Although the Publi~ <br /> expenditure activit~ <br /> funds is the Capital <br /> <br />952.835.9090 ° Fax 952.835.3261 <br />www. aemcpas.com <br /> <br />Safety/City Hall Facility has a deficit at year end this fund was determined to be major because of its <br />· The non-major capital projects fimds are comprised of seven individual funds. The largest of these <br />Projects which has an ending fund balance of $2,833,067. <br /> <br /> <br />