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Home My WebLink AboutLegal Compliance Audit Letter Year Ended December 31, 1986 VOTO, TAUTGES, REDPATH & CO., LTD. CERTIFIED PUBLIC ACCOUNTANTS \W� / Birch Lake Professional Building • 1310 E. Hwy. 96 9 White Bear Lake, MN 55110 Phone 426 -3263 \ ROBERT J. VOTO, CPA ROBERT G. TAUTGES, CPA JAMES S. REDPATH, CPA To the Honorable Mayor and City Council City of Oak Park Heights, Minnesota We have examined the combined financial statements of the City of Oak Park Heights, as of and for the year ended December 31, 1986, and have issued our report thereon dated March 13, 1987. Our examination was made in accordance with generally accepted auditing standards and the provisions of the Legal Compliance Audit Guide promulgated by the Legal Compliance Task Force pursuant to Minnesota Statutes Section 6.65. Accordingly, the examination included such tests of the accounting records and such other auditing procedures as we con- sidered necessary in the circumstances. The Legal Compliance Audit Guide covers five main categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, and claims and disbursements. Our study included all of the above listed categories. The results of our tests indicate that for the items tested, the City of Oak Park Heights complied with the material terms and conditions of applicable legal provisions except'as described below: MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS • PRIVATE COMPANIES PRACTICE SECTION MINNESOTA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS GOVERNMENT FINANCE OFFICERS ASSOCIATION • MINNESOTA ASSOCIATION OF SCHOOL BUSINESS OFFICIALS City of Oak Park Heights, Minnesota Legal Compliance Audit, Page 2 FINDING: Untimely Reporting of Outstanding Obligations to County Auditor CONDITION: On or before February 1st of each year, the City of Oak Park Heights is required to report to the County auditor, the total amount of outstanding obligations as of December 31st of the preceding year. The City of Oak Park Heights filed this report on February 2, 1987. CRITERIA: Minnesota Statute 471.70 reads as follows: 471.70 REPORTING OF OBLIGATIONS BY CITIES, TOWNS, SCHOOL DISTRICTS, AND BODIES CORPORATE AND POLITIC. For the purposes of this section "municipality" means a city, however organized; a school district, however organized; a town; or any other body corporate and politic created under Minnesota law. An "obligation" as used in this section means an obligation as defined in chapter 475. On or before February first each year, it shall be the duty of the principal accounting officer of each municipality to report to the auditor of each county in which such municipality is situate, the total amount of outstanding obligations, and the purpose for which issued as of December thirty -first of the preceding year. Such report shall be kept by the auditor of each county in a suitable record. On March first each year, it shall be the duty of the audi- tor of each county to make report to the state auditor of such obli- gations as reported to him by the principal accounting officer of the municipality, together with the amount and character of all outstanding obligations issued by the county of which he is the auditor. RECOMMENDATION: We recommend that the City file this report on a timely basis in future years. City of Oak Park Heights, Minnesota Legal Compliance Audit, Page 3 FINDING: Lack of Declaration Form on Claims by Vendors CONDITION: The City did not have vendors consistently sign a declaration to the effect that such account, claim, or demand is just and correct and that no part of it has been paid. CRITERIA: Minnesota Statute 471.38, Subd. 1 is as follows: Subdivision 1. Itemization; declaration. Except as provided in subdivision 2, where an account, claim or demand against any county, county welfare board, county board of education for unorga- nized territory, school district, town or home rule charter city of the second, third or fourth class, or any park district, for any property or services can be itemized in the ordinary course of business, the board or officer authorized by law to audit and allow claims shall not audit or allow the claim until the person claiming payment, or his agent, reduces it to writing, in items and signs a declaration to the effect that such account, claim, or demand is just and correct and that no part of it has been paid. The board or officer may in its discretion allow a claim prepared by the clerk or secretary of such board or officer prior to such declara- tion by the claimant if the declaration is made on the check or order -check by which the claim is paid, as provided in section 471.391, subdivision 2. RECOMMENDATION: In accordance with Minnesota State Statute 471.391, the check by which the claim is paid should have printed on its reverse side, above the space for endorsement by the payee, the following statement: "The undersigned payee, in endorsing this check declares that the same is received in payment of a just and correct claim against the City, and that no part of it has heretofore been paid." When endorsed the state- ment will operate and shall be deemed sufficient as the required declaration form. The City has corrected this situation in 1987. City of Oak Park Heights, Minnesota Legal Compliance Audit, Page 4 FINDING: Lack of Endorsement on Claims CONDITION: The City does not employ a claim system. This is not uncommon for Minnesota cities. There is a statutory requirement which outlines the disbursing process and refers to approvals based on a claim system. The City does have alternate approval mechanisms which provide reaso- nable assurances that authorized amounts are disbursed. The lack of claim procedures as referred to in Minnesota statutes may be considered non - compliance with statutes. CRITERIA: MS 412.271 reads in part as follows: 412.271 DISBURSEMENTS. Subd. 3. Endorsement on claims. The clerk shall endorse on each claim required to be audited by the council the word "disallowed" if such be the fact, or, "allowed in the sum of $ ," if approved in whole or in part, specifying in the latter case the items rejected. Each order shall be so drawn that when signed by the treasurer in an appropriate space, it becomes a check on the city depository. Such order -check may have printed on its reverse side, above the space for endorsement thereof by the payee, the following statement: "The undersigned payee, in endorsing this order - check, declares that the same is received in payment of a just and correct claim against the city of ......, and that no part of such claim has heretofore been paid." When endorsed by the payee named in the order - check, such statement shall operate and shall be deemed sufficient as the required declaration of the claim. Any order presented to the treasurer and not paid for want of funds shall be so marked and paid in the order of its presentation with interest from the date of pre- sentation at the rate of five percent or such lower rate as is fixed by the council prior to its issuance. RECOMMENDATION: Our office has requested clarification of this issue from the Office of the State Auditor regarding the applicability of the MS 412.271. Pending the result of this request, we will advise the City of required corrective actions (if any). City of Oak Park Heights, Minnesota Legal Compliance Audit, Page 5 Based on our examination and the procedures previously referred to, nothing came to our attention to indicate that the CITY OF OAK PARK HEIGHTS, MINNESOTA had not complied with such legal provisions for the year ended December 31, 1986. This report is intended solely for the use of the City of Oak Park Heights and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report, which is a matter of public record. Respectfully submitted, VOTO, TAUTGES, REDPATH & CO., LTD. Certified Public Accountants April 13, 1987