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<br />Finding <br /> <br />2005-1 <br /> <br />2005-2 <br /> <br />ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION <br />SCHEDULE OF FINDINGS <br />DECEMBER 31, 2005 <br /> <br />Description <br /> <br />Collateral Coverage <br /> <br />In accordance with Minnesota statute, section 118A.03, the Association is required to have pledged collateral <br />equal to 110 percent of the deposits not covered with insurance. At December 31,2005, the Association was <br />short $66,653 of collateral coverage. <br /> <br />~anagement~esponse <br /> <br />Management agrees that bank deposits need to be insured. They will more closely monitor the bank balance and <br />collateral coverage in 2006. <br /> <br />Segregation of Duties <br /> <br />Our study and evaluation disclosed that because of the limited size of your office staff, the City has limited <br />segregation of duties. A good internal control structure contemplates an adequate segregation of duties so that <br />no one individual handles transactions from inception to completion. While we recognize that the City is not <br />large enough to permit an adequate segregation of duties in all respects, it is important that you be aware of this <br />reportable condition. <br /> <br />~anagement ~esponse <br /> <br />Management recognizes that it is not economically feasible to correct this finding, is aware of the condition and <br />is relying on oversight by management and the Council to monitor this condition. In addition, the City has <br />implemented specific internal control policies to address segregation of duties issues. <br /> <br />-12- <br />