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<br />5 <br />City of Elk River <br />Required Communication <br /> <br /> <br />Qualitative Aspects of the City's Significant Accounting Practices <br /> <br />Significant Accounting Policies <br />Management has the responsibility to select and use appropriate accounting policies. A summary of <br />the significant accounting policies adopted by the City is included in the notes to the basic financial <br />statements. There have been no initial selection of accounting policies and no changes to significant <br />accounting policies or their application during 2024. No matters have come to our attention that <br />would require us, under professional standards, to inform you about (1) the methods used to account <br />for significant unusual transactions and (2) the effect of significant accounting policies in <br />controversial or emerging areas for which there is a lack of authoritative guidance or consensus. <br /> <br />Significant Accounting Estimates and Related Disclosures <br />Accounting estimates and related disclosures are an integral part of the basic financial statements <br />prepared by management and are based on management's current judgements. Those judgements <br />are normally based on knowledge and experience about past and current events and assumptions <br />about future events. Certain accounting estimates are particularly sensitive because of their <br />significance to the basic financial statements and because of the possibility that future events <br />affecting them may differ markedly from management's current judgements. <br /> <br />The most sensitive estimate affecting the basic financial statements relate to: <br /> <br />Net Pension Liability, Deferred Outflows of Resources Related to Pensions and Deferred Inflows of <br />Resources Related to Pensions – These balances are based on an allocation by the pension plans <br />using estimates based on contributions. <br /> <br />We evaluated the key factors and assumptions used to develop the accounting estimates and <br />determined that they are reasonable in relation to the basic financial statements taken as a whole <br />and in relation to the applicable opinion units. <br /> <br />Financial Statement Disclosures <br />Certain basic financial statement disclosures involve significant judgment and are particularly <br />sensitive because of their significance to financial statement users. The basic financial statement <br />disclosures are neutral, consistent, and clear. <br /> <br />Significant Difficulties Encountered during the Audit <br />We encountered no significant difficulties in dealing with management relating to the performance <br />of the audit. <br /> <br />Uncorrected and Corrected Misstatements <br />For the purposes of this communication, professional standards require us to accumulate all known <br />and likely misstatements identified during the audit, other than those that we believe are trivial, <br />and communicate them to the appropriate level of management. Further, professional standards <br />require us to also communicate the effects of uncorrected misstatements related to prior periods on <br />the relevant classes of transactions, account balances or disclosures, and the basic financial <br />statements taken as a whole and each applicable opinion unit. <br /> <br />Management did not identify, and we did not notify them of any uncorrected financial statement <br />misstatements. <br /> <br />Page 380 of 637