HomeMy WebLinkAboutReport on Compliance December 31, 2009Tautges Redpath, Ltd.
Certified Public Accountants and Consultants
REPORT ON COMPLIANCE WITH MINNESOTA LEGAL COMPLIANCE
AUDIT GUIDE FOR LOCAL GOVERNMENT
To the Honorable Mayor and
Members of the City Council
City of Oak Park Heights, Minnesota
We have audited the financial statements of the City of Oak Park Heights, Minnesota, as of
and for the year ended December 31, 2009 and have issued our report thereon dated
March 15, 2010.
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America and the provisions of the Minnesota Legal Compliance Audit Guide
for Local Government promulgated by the State Auditor pursuant to Minnesota Statutes
Section 6.65. Accordingly, the audit included such tests of the accounting records and such
other auditing procedures as we considered necessary in the circumstances.
The Minnesota Legal Compliance Audit Guide for Local Government covers seven
categories of compliance to be tested: contracting and bidding, deposits and investments,
conflicts of interest, public indebtedness, claims and disbursements, miscellaneous
provisions, and tax increment financing. Our study included all of the listed categories.
The results of our tests indicate that for the items tested, the City of Oak Park Heights,
Minnesota complied with the material terms and conditions of applicable legal provisions,
except as described in the accompanying schedule of findings and responses.
This report is intended solely for the information and use of the City of Oak Park Heights,
Minnesota's City Council and management and is not intended to be, and should not be, used
by anyone other than these specified parties.
A -/ rA
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HLB TAUTGES REDPATH, LTD.
White Bear Lake, Minnesota
March 15, 2010
4810 White Bear Parkway White Bear Lake, Minnesota 55110 I 651 426 7000 651 426 5004 fax I www.hlbtr.com
HLB Tautges Redpath, Ltd, is a member of M International, a world -wide organization of accounting firms and business advisors. I Equal Opportunity Employer
CITY OF OAK PARK HEIGHTS, MINNESOTA
SCHEDULE OF FINDINGS AND RESPONSES
For The Year Ended December 31, 2009
20094 Forms of Collateral
Criteria: Minnesota statutes require that if funds on deposit at a financial
institution exceed available federal deposit insurance, the City shall require the
financial institution to furnish collateral security or a corporate surety bond. MN
Statute 118A.03, Subd. 2 states the allowable forms of collateral which can be
furnished.
MN Statute 118A.03, Subd. 2. In lieu of surety bond.
The following are the allowable forms of collateral in lieu of a corporate surety bond: (1) United States
government Treasury bills, Treasury notes, Treasury bonds; (2) issues of United States government
agencies and instrumentalities as quoted by a recognized industry quotation service available to the
government entity; (3) general obligation securities of any state or local government with taxing powers
which is rated "A" or better by a national bond rating service, or revenue obligation securities of any
state or local government with taxing powers which is rated "AA" or better by a national bond rating
service; (4) general obligation securities of a local government with taxing powers may be pledged as
collateral against funds deposited by that same local government entity; (5) irrevocable standby letters of
credit issued by Federal Home Loan Banks to a municipality accompanied by written evidence that the
bank's public debt is rated "AA" or better by Moody's Investors Service, Inc., or Standard & Poor's
Corporation; and (6) time deposits that are fully insured by any federal agency.
Condition: One of the forms of collateral provided by First State Bank and Trust was
a general obligation security of a school district. The security is rated Baal by
Moody's, which is less than the "A" or better rating required by part (3) of the statute
above.
Cause: First State Bank and Trust was unaware of the rating requirement of the
statute.
Effect: By furnishing collateral with a lower rating, there is an increased risk that the
City would not be able to retrieve its funds from First State Bank and Trust in the
event of a bank failure.
Recommendation: We recommend the City remind all banks of the collateral
requirements as stated in MN Statute 118A.03 and verify any collateral pledged to the
City is complying with these requirements.
Views of Responsible Officials and Corrective Action Plan: The Finance Director
spoke with a representative from First State Bank and Trust who stated the collateral
with the Baal rating will be replaced by collateral with a rating of A or better. The
representative will also verify all other collateral furnished by First State Bank and
Trust meets the requirements of MN Statute 118A.03.