HomeMy WebLinkAboutReport on Internal Control Structure * TAUTGES,. REDPA TH & CO., L TD.
CERTIFIED PUBLIC ACCOUNTANTS
Independent Auditor's Report on the
Internal Control Structure
To the Honorable Mayor and
Members of the City Council
City of Oake Park Heights, Minnesota
We have audited the general purpose financial statements of the City of Oak Park Heights,
Minnesota as of and for the year ended December 31, 1993, and have issued our report thereon
dated February 18, 1994.
We conducted our audit in accordance with generally accepted auditing standards and Govmwwnt
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the general
purpose financial statements are free of material misstatement.
In planning and performing our audit of the general purpose financial statements of the City of Oak
Park Heights, Minnesota for the year ended December 31, 1993, we considered its internal control
structure in order to determine our auditing procedures for the purpose of expressing our opinion
on the general purpose financial statements and not to provide assurance on the internal control
structure.
The management of the City of Oak Park Heights, Minnesota is responsible for establishing and
E maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments
by management are required to assess the expected benefits and related costs of internal control
structure policies and procedures. The objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition, and that transactions are executed in accordance with
management's authorization and recorded properly to permit the preparation of general purpose
financial statements in accordance with generally accepted accounting principles. Because of
inherent limitations in any internal control structure, errors or irregularities may nevertheless occur
and not be detected. Also projection of any evaluation of the structure to future periods is subject
to the risk that procedures may become inadequate because of changes in conditions or that the
effectiveness of the design and operation or policies and procedures may deteriorate.
For the purpose of this report, we have classified the significant internal control structure policies
and procedures in the following categories: cash receipts, cash disbursements, fixed assets,
utilities and payroll.
For all of the internal control structure categories listed above, we obtained an understanding of the
design of relevant policies and procedures and whether they have been placed in operation, and we
assessed control risk.
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Internal Control Structure
Page 2
We noted certain matters involving the internal control structure and its operation that we consider
to be reportable conditions under standards established by the American Institute of Certified
Public Accountants. Reportable conditions involve matters coming to our attention relating to
significant deficiencies in the design or operation of the internal control structure that, in our
judgment, could adversely affect the entity's ability to record, process, summarize, and report
financial data consistent with the assertions of management in the general purpose financial
statements.
The accounting process is substantially performed by a single employee. Ideal conditions call for
segregation of duties to establish a system of internal testing of procedures performed. This
condition is common to cities of this size. Any modification of internal controls in this area must
be viewed from a cost/benefit perspective.
A material weakness is a reportable condition in which the design or operation of the specific
internal control structure elements does not reduce to a relatively low level the risk that errors or
irregularities in amounts that would be material in relation to the general purpose financial
statements being audited may occur and not be detected within a timely period by employees in the
normal course of performing their assigned functions.
Our consideration of the internal control structure would not necessarily disclose all matters in the
internal control - structure that might be reportable conditions and, accordingly, would not
necessarily disclose all reportable conditions that are also considered to be material weaknesses as
defined above. However, we believe none of the reportable conditions described above is a
material weakness.
This report is intended for the information of the City of Oak Park Heights, Minnesota. However,
this restriction is not intended to limit the distribution of this report, which is a matter of public
record.
A A
Tautges, Redpath & Co., Ltd.
Certified Public Accountants
February 18, 1994