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HomeMy WebLinkAboutLetter of Transmittal YY S 11 gat .-r"?i9Y.is: a M$ Ar ?i'"9i. x a :,072717 ninon 7 PSO. , SOWN - t , ? «aA: M.: '` # t n w $ r SS' 7 - 7 5W -1- 5 3 sr WEAT 11-A =3 :asi °_ xk . „s9b 3fE IS T .aE' - Es *� R w . iR _, ' , L! 7 TT77707ZTwj21 r ( ?1�'9, 'a..^ �... a�,:. , $C%n �E. � € };. .� ' �FGZ*S € _�>F' +� ., sx s�;4 �_ � � _ �'�d � € � $o '4 a, d, w.D , x =r it NAM LzA rj w v- to s T. ". �t .. _ At Li i Reconciliation of Utilitv Accounts Receivable. Monthly reconciliation of utility system to the general ledger is not performed. This may result in the lack of or the untimely detection of errors. We recommend the City staff perform monthly reconciliations. 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 management and others within the City of Oak Park Heights, Minnesota. However, this report is a matter of public record and distribution is not limited. Respectfully submitted, TAUTGES, REDPATH & CO., LTD. Certified Public Accountants February 20, 1997 i AR ,YkP d v .. kis N. 4! u 14 H 1 I s 5 s "k` 7 777 Y ,.4 E s e a SxYK #. «, :T S^.z;4 .e<, �-. maa: 'a,U >¢ t.i ,. #t �i'•a v'sy =.aa F:" .a 3. �::� ., €;� t� 6;a° :- s„�. ='vi:. a ( e azfi £ :,: - .fin 4'k $. °'r _ _ ." ,. — �„ =v- i E qt :?, .iv'+„ " -°rt 3 - To On a A, w 3r `� a } <_'3,_sr S�v �tv .� sr�5 ��� � � 5�.. . #. n� vk.`'�, � s ?Y#kkk ' -� Sew •r5. ' #ea .v�� <�$: �# ff ' �F 5 ,Ec .....: § � �� .� * " -fo ,a.r�,. - .��„�� sd �.•, � s. t�' � f,'a= kg �a'H'ar �x�`;;. [- . a &,�r.: _� !. #'S �. �.,':�ca�«iN -= OVA ., .7a& S -a c €o' Y� d 'r "st x i5 .'�``. ~P't Po 4' , ." eg ,'+ ya w i # . . *a r e"*���. .. Nk: 'k;dt� s s�arF - fe ;,. :r •.# sir. ';: ' §;'s =f: City of Oak Park Heights, Minnesota Legal Compliance Report, Page 2 FINDING: Deficiencies in collateral for deposits. CONDITION: At December 31, 1996, the City held eight certificates of deposit at Lake Elmo Bank totaling $3,330,000. Deposits up to $100,000 are insured by the FDIC. Deposits require collateral of at least ten percent more than the amount on deposit in excess of that covered by FDIC insurance. The collateral required was $3,553,000 ($3,230,000x 110 %). Collateral in the amount of $3,452,170 was provided, resulting in a collateral deficiency of $100,830. CRITERIA: Minnesota Statute 118 provides certain specific collateral requirements for deposits as follows: 118.01 DEPOSITORY BONDS AND COLLATERAL. Subd. l Any bank, trust company or thrift institution authorized to do business in this state may, in lieu of the corporate or personal surety bond required to be furnished to secure deposited funds, deposit with the custodian of the funds as collateral security: 1) certificates of deposit that are fully insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation; 2) notes secured by first mortgages of future maturity, upon which interest is not past due, on improved real estate free from delinquent taxes, within the county wherein the depository is located, or within counties immediately adjoining the county in the State of Minnesota; 3) obligations which are legally authorized investments for debt service funds under section 475.66, subdivision 3; and 4) qualified state or local government obligations acceptable to the treasurer or chief financial officer. Qualified obligations must be general obligations rated "A" or better by Moody's Investors Service, Inc. or Standard & Poor's Corporation. Subd. 2. Except for notes secured by first mortgages of future maturity, the total in amount of the collateral computed at its market value shall be at least ten percent more than the amount on deposit at the close of the business day, in excess of any insured portion, which would be permitted if a corporate or personal surety bond were furnished. The total amount of collateral consisting of notes secured by first mortgages of future maturity computed at its market value shall be at least 40 percent more than the amount on deposit at the close of the business day, in excess of any insured portion, which would be permitted if a corporate or personal surety bond were furnished. The depository may furnish both a bond and collateral aggregating the required amount. City of Oak Park Heights, Minnesota Legal Compliance Report, Page 3 Subd. 3. Any collateral so deposited shall be accompanied by an assignment thereof to the municipality from the depository. The assignment shall recite that the depository shall pay over to the treasurer or chief financial officer on demand, free of exchange or any other charges, except for early withdrawal penalties on time deposits, all money deposited therein at any time during the period the collateral shall be so deposited and shall pay the interest thereon when due at the agreed rate; and that, in case of any default upon the part of the depository, the governing body of the municipality or the treasurer or chief financial officer may sell the collateral, or as much thereof as may be necessary to realize the full amount due the municipality and to pay over any surplus to the depository or its assigns. Subd. 4. A depository may make withdrawals of excess collateral or substitute other collateral, as defined in subdivision 1, on receipt by the municipality of written notice from the depository. Authority is vested in the treasurer to return the collateral to the depository. All interest on the collateral shall be paid to the depository so long as it is not in default. Subd. 5. The closing of a depository shall be deemed a default on the part of the depository and no demand on the part of the municipality shall be necessary to establish the default. If a depository closes, any deposit placed therein shall immediately become due and payable. Subd. 6. All collateral shall be deposited with the treasurer or chief financial officer of the municipality or placed in safekeeping for the municipality in a financial institution approved by the governing body of the municipality or the treasurer or chief financial officer. The collateral shall not be redeposited in the bank, trust company or thrift institution furnishing it. RECOMMENDATION: We recommend that the City monitor amounts on deposit with each depository to insure that amounts on deposit do not exceed FDIC insurance limits or that sufficient collateral is pledged in cases where deposits exceed FDIC insurance limits.