5.1. ERMUSR 04-13-2010 - Laserfiche WebLink

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Compliance Elk River Municipal Utilities April 6, 2410 Page 2 As pa~•t of obtaining reasonable assurance about whether the financial statements are fi•ee of material misstatement, we performed tests of compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts.- However, providing an opinion on compliance with those provisions was not an objective of our audit, The results of our tests disclosed no instances of noncompliance or other matters that are requll•ed to be reported under statutes set forth by the State of Minnesota, Summary of Prior Year Findings 200$-~ Control over Year~End Processing Condition; Atypical expectation for year-processing is that all general ledger accounts are reconciled and in agreement with supporting schedules, During our audit, adjustments were needed to correct coding and reclassify amounts in accounts receivable, accounts payable and debt, Criteria; The Utilities should have intel•nal control procedures that ensure all balance sheet accounts are reconciled and agreed to the general ledger.. Cur~•ent Yeaf~ Status; The Utilities llnplemented control procedures over the month end and year end closing process and a complete tie out of all balance sheet accounts was completed at year end, As a result of the steps taken, this fuading was removed in 2009. 2048-2 Ueclaration far Payment Condition; Auditing for legal compliance requires a review of the Utilities deposits and investments. Qur study indicated an instance of noncompliance that we believe is required to be remedied. The Utilities' vendor checks do not carry a required declaration on the back of the check. Ct~ite~ia; Minnesota statute 471,38 requires that each declaration far payment be signed to the effect that such acco~uat, claim, or demand is just and correct and that no part of it has been paid. The statute is satisfied if on the back of Utilities checks is a declaration as defined in Minnesota statute 471.391 reading "I declare under the penalties of law that this account, claim or demand is just and correct and that no part of it has been paid." Cur~~ent Year Status; When management was notified of the noncompliance issue they immediately remediated the issue by utilizing a stamp with the proper declaration, As a result of the steps taken by management, this f~.ding was removed in 2009. Planned Scope and Timing of the .Audit We performed the audit according to the planned scope and timing, Qualitative Aspects ag Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Utilities are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year, Vie noted no transactions entered into by the governmental unit during tlae year for which there is a lack of authoritative guidance or consensus, All significant transactions have been recog~aized in the frnancial statements in the proper period, ~.+11~.4.11~l1.f 1~./o , A~i~A ~~7~~.~i~ ~.,3~~7 ~. 11~ I1 ~1K.1~~~i ~~~~~ifG7~.5~~~A11