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<br />LJ <br />i <br />City of Elk River <br />'.19arch 13, 2008 <br />Page 2 <br />Compliance <br />' As part of obtaining reasonable assurance about whether the financial statements are frea of material misstatement, we performed <br />tests of compliance with certain provisions of laws, regulations, contracts and grants. However', the objective of our tests was noY <br />to provide an opinion on compliance with such provisions. W e noted no instances of noncompliance with Minnesota statutes. <br />Planned Scope and Timing of the Audit <br />We performed the audit according to the plarmed scope and timing. <br />~~ Qualitative Aspects of Accounting Practices <br />Management is responsible for the selection and use of appropriate accounting policies. In accordance with the terns of our <br />engagement letter, we will advise management about the appropriateness of accounting policies and tlteir application. The <br />sib rif3cant accounting policies used by the City are described in Note 1 to the financial statements. No new accounting policies <br />were adopted and the application of existing policies was not changed during the year. We noted no transactions entered into by <br />the Ciry doting the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that <br />have been recognized in the financial statement in a different period than when the transaction occurred. <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 ar <br />particularly sensitive because of their significance to the financial statements and because of the possibility that future events <br />affecting them may differ significantly from those expected. The most significant estimate affecting the financial statements w <br />depreciation on capita] assets. <br />Management's estimate of depreciation is based on estimated useful lives of the assets. We evaluated the key factors and <br />' assumptions used to develop depreciation in determining that it is reasonable in relation to the financial statements taken as a <br />whole. <br />' The disclosures in the financial statements are neutral, consistent, and clear. Certain financial statement disclosures are <br />particularly sensitive because of their significance to financial statement users. <br />DifSculties Encountered in Performing the Audif <br />We encountered no significant difficulties in dealing with management in performing and completing our audit. <br />1 <br />e <br />as <br /> <br /> <br />LJ <br /> <br /> <br />952.835.9090 F x 9.13.835.:1261 <br />cvww.acmcpa=_.com <br />