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HomeMy WebLinkAboutLetter of Transmittal I .a I - 1 -a I II 4 - I I ' Aoi �1 c o v s 9 WAmJ Y; vm old at M%wmba*m mg bvb* =x*T= _ - + w PL ryy - 4 Tautges Redpath, Ltd. Certified Public Accountants and Consultants April 8, 2003 Governmental Information Division Office of the State Auditor 525 Park Street, Suite 400 St. Paul, MN 55103 Enclosed is a copy of the 2002 Annual Financial Report and a copy of the Independent Auditor's Report on Compliance with Minnesota Legal Compliance Audit Guide for Local Government for the City of Oak Park Heights, Minnesota. If you have any questions, please call the undersigned. Sincerely, 11LB fAUTGES REDPAI H, LTD. David J. MoL, CPA DJM /clg Enclosure cc: City of Oak Park Heights, Minnesota 4810 White Bear Parkway, White Bear Lake, Minnesota 55110, USA Telephone: 651 426 7000 Fax: 651 426 5004 Hn3 lautges Redpath, Ltd is a member of N International A world -wide organization of accounting firms and business advisers 290263.1 a. 211 Independent Auditor's Report on Compliance and on internal Control Page 2 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. March 13, 2003 HLB TAUTGES RE DPATH, LTD. Certified Public Accountants 41 14 City of Oak Park Heights, Minnesota Independent Auditor's Report on Compliance, Page 2 FINDING° Deficiencies in collateral for deposits. CONDITION- At December 31, 2002, the City of Oak Park Heights, Minnesota held cash and investments at Central Bank totaling $1,117,218. 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 $1,118,940 ($1,017,218 x 110 %). Collateral in the amount of $1,010,541 was provided, resulting in a collateral deficiency of $108,399. CRITERIA- Minnesota Statute 1 I AA provides certain specific collateral requirements for deposits as follows: 118A. 03 WHEN AND WHAT COLLATERAL REQUIRED. Subdivision 1. For deposits beyond insurance. To the extent that funds deposited are in excess of available federal deposit insurance, the government entity shall require the financial institution to furnish collateral security or a corporate surety bond executed by a company authorized to do business in the state. 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) irrevocable standby letters of credit issued by Federal Home loan Funks 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 (5) tirne deposits that are fully insured by the Federal Deposit Insurance Corporation. Subd. 3. Amount. The total amount of the collateral computed at its market value shall be at least ten percent more than the amount on deposit plus accrued interest at the close of the business day. 'The financial institution may furnish both a surety bond and collateral aggregating the required amount. Subd. 4. Assignment. Any collateral pledged shall be accompanied by a written assignment to the government entity from the financial institution. 'The written assignment shall recite that, upon default, the financial institution shall release to the government entity on demand, free of exchange or any other charges, the collateral pledged. Interest earned on assigned collateral will be remitted to the financial institution so long as it is not in default. The government entity may sell the collateral to recover the amount due. Any surplus from the sale of the collateral shall be payable to lire financial institution, its assigns, or both. City of Oak Park Heights, Minnesota Independent Auditor's Report on Compliance, Page 3 Subd. 5. Withdrawal of excess collateral. A financial institution may withdraw excess collateral or substitute other collateral after giving written notice to the governmental entity and receiving confirmation. The authority to return any delivered and assigned collateral rests with the government entity. Subd. 6. Default. For purposes of this section, default on the part of the financial institution includes, but is not limited to, failure to make interest payments when due, failure to promptly deliver upon demand all money on deposit, less any early withdrawal penalty that may be required in connection with the withdrawal of a time deposit, or closure of the depository. If a financial institution closes, all deposits shall be immediately due and payable. It shall not be a default under this subdivision to require prior notice of withdrawal if such notice is required as a condition of withdrawal by applicable federal law or regulation. Subd. 7. Safekeeping, All collateral shall be placed in safekeeping in a restricted account at a Federal Reserve Bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. The selection shall be approved by the government entity. 1IIST: I996 c 399 art I s 4 .RECOMMENDATION: We recommend that the City of Oak Park I-Icights, Minnesota monitor amounts on deposit with the 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.