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HomeMy WebLinkAbout2013 Legal Compliance Report MINNESOTA LEGAL COMPLIANCE REPORT 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, 2013 and have issued our report thereon dated March 31, 2014. We have audited, in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States the financial statements of City of Oak Park Heights, Minnesota as of and for the year ended December 31, 2013, and the related notes to the financial statements, and have issued our report thereon dated March 31, 2014. TheMinnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the State Auditor pursuant to Minn. Stat. § 6.65, contains 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 audit considered all of the listed categories. In connection with our audit, nothing came to our attention that caused us to believe that City of Oak Park Heights, Minnesota failed to comply with the provisions of the Minnesota Legal Compliance Audit Guide for Political Subdivisions.However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the City of Oak Park Heights, Minnesota’s noncompliance with the above referenced provisions. The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and not to provide an opinion on compliance. Accordingly, this communication is not suitable for any other purpose. HLB TAUTGES REDPATH, LTD. March 31, 2014 4810 White Bear Parkway White Bear Lake, MN 55110 651.426.7000 651.426.5004 fax www.hlbtr.com Equal Opportunity Employer 100-Percent Employee-Owned HLB Tautges Redpath is a member of HLB International, a world-wide network of independent accounting firms and business advisors. INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Mayor, Members of the City Council and Management City of Oak Park Heights, Minnesota We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Oak Park Heights, Minnesota as of and for the year ended December 31, 2013, and the related notes to the financial statements, which collectively comprise the City of Oak Park Heights, Minnesota’s basic financial statements, and have issued our report thereon dated March 31, 2014. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City of Oak Park Heights, Minnesota’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Oak Park Heights, Minnesota’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City of Oak Park Heights, Minnesota’s internal control. Adeficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying schedule of findings and questioned costs to be a material weakness, finding 2013-1. Asignificant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 4810 White Bear Parkway White Bear Lake, MN 55110 651.426.7000 651.426.5004 fax www.hlbtr.com Equal Opportunity Employer 100-Percent Employee-Owned HLB Tautges Redpath is a member of HLB International, a world-wide network of independent accounting firms and business advisors. Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Page 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Oak Park Heights, Minnesota’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. City of Oak Park Heights’ Response to Finding TheCity of Oak Park Heights, Minnesota’s response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. The City of Oak Park Heights, Minnesota’s response was not subject to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. Purpose of This Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City of Oak Park Heights, Minnesota’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Oak Park Heights, Minnesota’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. HLB TAUTGES REDPATH, LTD. March 31, 2014 CITY OF OAK PARK HEIGHTS, MINNESOTA SCHEDULE OF FINDINGS AND RESPONSES For The Year Ended December 31, 2013 2013-1 Prior Period Adjustment Criteria: A City’s internal controls should allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. Condition: During 2013, the City detected misstatements to charges for service revenues that resulted in a prior period adjustment, as described in Note 17 to the financial statements. Cause: The City was not charging two major developers a servicing fee for conduit debt that the developers had in the City’s name as per their agreement. The City was also not charging these developers their portion of expenditures relating to EMS-911 service calls in a timely manner. Effect: Previously reported charges for service revenue in the General Fund was understated by $81,525. The City has invoiced the developers who were under charged. Recommendation: We recommend the City continue to review its procedures, verify charges are correct for similar services, and strengthen internal controls to prevent a reocurrence. Management’s Response Corrective Action Plan (CAP): Ensure that services that are available to be charged are calculated and charged on a timely manner. Explanation of agreement or disagreement: Management agrees with the finding. Official responsible for ensuring CAP: Betty Caruso Planned completion date for CAP: Informed and Billed – Loan servicing fee 07/2013 Informed and Billed – EMS charges 01/2014 Plan to monitor completion for CAP: Review of developers agreements for special charges will be made with management.