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Elk River Fire Department Relief Association <br />May 12, 2009 <br />Page 2 <br /> <br /> <br />Summary of Prior Year Findings <br />2007-1: Limited Segregation of Duties over Cash Receipts and Disbursements <br />Condition: During our audit we reviewed procedures over cash disbursements and cash receipts and found the <br />Association to have limited segregation of duties related to these transaction cycles. <br />Criteria: There are four general categories of duties: authorization, custody, record keeping and <br />reconciliation. In an ideal system, different employees perform each of these four major functions. <br />In other words, no one person has control of two or more of these responsibilities. <br />Current year status: The Association implemented additional compensating controls during the year and this is not <br />reported as a finding for the 2008 audit. <br />Compliance <br />As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we <br />performed tests of compliance with certain provisions of laws, regulations, contracts and grants. However, the objective of <br />our tests was not to provide an opinion on compliance with such provisions. We noted no instances of noncompliance with <br />Minnesota statutes. <br />Planned Scope and Timing of the Audit <br />We performed the audit according to the planned scope and timing. <br />Qualitative Aspects of Accounting Practices <br />Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies <br />used by the Association are described in Note 1 to the financial statements. No new accounting policies were adopted and the <br />application of existing policies was not changed during the year. We noted no transactions entered into by the Association <br />during the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have <br />been recognized in the financial statements 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 <br />are particularly sensitive because of their significance to the financial statements and because of the possibility that future <br />events affecting them may differ significantly from those expected. The most sensitive estimate affecting the financial <br />statements was the actuarial accrued liability. This is based on the funding formula prescribed by the State of Minnesota. We <br />evaluated the key factors and assumptions used to develop the estimate in determining that it is reasonable in relation to the <br />financial statements taken as a whole. <br />The disclosures in the financial statements are neutral, consistent, and clear. <br />952.835.9090 Fax 952.835.3261 <br />www.aemcpas.com <br />