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ELK RIVER MUNICIPAL UTILITIES <br />ELK RIVER, MINNESOTA <br />SCHEDULE OF FINDINGS AND RESPONSES <br />DECEMBER 31, 2008 <br />F~ Description <br />2008-1 Control over Year-End Processing <br />Condition: Atypical expectation for year-processing is that all general ledger accounts are <br /> reconciled and in agreement with supporting schedules. During our audit, <br /> adjustments were needed to correct coding and reclassify amounts in accounts <br /> receivable, accounts payable and debt. <br />Criteria: The Utilities should have intemal control procedures that ensure all balance sheet <br /> accounts are reconciled and agreed to the general ledger. <br />Cause.• It appears that detail schedules were prepared but not agreed to the general ledger. <br />Effect: This indicates that it would be likely that a misstatement may occur and not be <br /> detected by the Utilities system of internal control. The audit firm cannot serve as a <br /> compensating control over this deficiency. <br />Recommendation: We recommend that management implement control procedures over the month end <br /> and year end closing process. This requires that all general ledger accounts are <br /> reconciled and agreed to the general ledger. <br />Management Response: Management agrees with the fmding and believes that adequate corrections were <br /> implemented immediately after notice of the fmding. There will be more frequent <br /> reconciliation of all general ledger amounts and a more complete tie out of all <br /> balance sheet accounts at year end. <br />-41- <br />