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Elk River Municipal Utilities <br />Apri19, 2009 <br />Page 3 <br />Compliance <br />As part of obtaining reasonable assurance about whether the financial statements are free 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 not <br />to provide an opinion on compliance with such provisions. We noted the following instance ofnon-compliance with Minnesota <br />Statutes during our audit. <br />2008-2 Declaration for Payment <br />Condition: Auditing for legal compliance requires a review of the Utilities deposits and <br />investments. Our study indicated an instance ofnon-compliance that we believe is <br />required to be remedied. The Utilities' vendor checks do not carry a required <br />declaration on the back of the check. <br />Criteria: Minnesota statute 471.38 requires that each declaration for payment be signed to the <br />effect that such account, claim, or demand is just and correct and that no part of it <br />has been paid. The statute is satisfied if on the back of Utilities checks is a <br />declaration as defined in Minnesota statute 471.391 reading "I declare under the <br />penalties of law that this account, claim or demand is just and correct and that no <br />part of it has been paid." <br />Cause: The Utilities did not have monitoring procedures to consider the statute <br />requirements. <br />Effect: The Utilities was out of compliance with this State statute. <br />Recommendation: The Utilities has a stamp with the declaration, which we recommend using until new <br />checks with the pre printed declaration are available. <br />Management Response: Management agrees with the finding and will use the stamp until new check stock is <br />ordered. <br />952.835.9090 Fax 952.835.3261 <br />www.aemepas.com <br />