1992 Audited Financial Statements Letter J
CITY OF ALBERTVILLE
P. O. Box 131
ALBERTVILLE, NIINNFSOTA 55301
PHONE: (612) 497 -3384
Gruys Borden Carlson & Associates P.A.
1111 Highway 25 North
Buffalo, MN 55313
In connection with your audit of the general purpose financial statements of
the City of Albertville as of December 31, 1991, and for the year then ended
for the purpose of expressing an opinion as to whether the financial
statements present fairly, in all material respects, the financial position of
the City of Albertville and the results of its operations, and the changes in
financial position of its proprietary fund types in conformity with generally
accepted accounting principles, we confirm, to the best of our knowledge and
belief, the following representations made to you during your audit.
1. We are responsible for the fair presentation in the financial
statements of financial position and results of operations of the City
of Albertville and changes in financial position of its proprietary
fund types in conformity with generally accepted accounting principles.
The financial statements include all properly classified funds and
account groups of the oversight unit and all component units required
by generally accepted accounting principles to be included in the
financial reporting entity.
2. We have made available to you all -
a. Financial records and related data.
b. Minutes of meetings of the City of Albertville or summaries of
actions of recent meetings for which minutes have not yet been
prepared.
3. There have been no -
a. Irregularities involving management or employees who have
significant roles in the system of internal accounting control.
b. Irregularities involving other employees that could have a material
effect on the financial statements.
c. Communications from regulatory agencies concerning noncompliance
with, or deficiencies in, financial reporting practices that could
have a material effect on the financial statements.
4. We have no plans or intentions that may materially affect the carrying
value or classification of assets and liabilities.
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Gruys Borden Carlson & Associates P.A.
Page Two
5. The following have been properly recorded or disclosed in the financial
statements:
a. Related party transactions and related accounts receivable or
payable, including revenues, expenditures, loans, transfers,
leasing arrangements, and guarantees.
b. Arrangements with financial institutions involving compensating
balances, or other arrangements involving restrictions on cash
balances and line -of- credit or similar arrangements.
c. Agreements to repurchase assets previously sold.
6. There are no -
a. Violations or possible violations of budget ordinances, or laws or
regulations (including those pertaining to adopting and amending
budgets) whose effect should be considered for disclosure in the
financial statements or as a basis for recording a loss
contingency.
b. Other material liabilities or gain or loss contingencies that are
required to be accrued or disclosed by Statement of Financial
Accounting Standards No. 5.
7. There are no unasserted claims or assessments that our lawyer has
advised us are probable of assertion and must be disclosed in
accordance with Statement of Financial Accounting Standards No. 5.
8. There are no material transactions that have not been properly recorded
in the accounting records underlying the financial statements.
9. The City of Albertville has satisfactory title to all owned assets, and
there are no liens or encumbrances on such assets nor has any asset
been pledged.
10. We have complied with all aspects of contractual agreements that would
have a material effect on the financial statements in the event of
noncompliance.
11. No events have occurred subsequent to the balance sheet date that would
require adjustments to, or disclosure in, the financial statements.
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Signed: �� / ' " Signed: 6 4 jer1
Title: 97
Title • ` Q�� l 2 ce-w s
Date: /17,' 9 --9if..--- Date: - '7 - ? z-
Certified Public 611 'alnut St. P.O. Box 417, Suite 1 Plaza Professional Bldg., 1111 Hwy. 25 No.
BOrClell Accountants and Monticello, MN 55362 295 -5871 Buffalo, MN 55313 682 -1762 473 0036
1
Business Consultants Briar Bend Offices, 13762 Renner Drive
C arlson Maple Grove, MN 55369 420 -788(1
oc. Associates Y.A.
February 24, 1992
To the City Council
City of Albertville
Albertville, Minnesota
We have audited the financial statements of the City of Albertville for the
year ended December 31, 1991, and have issued our report thereon dated
February 24, 1992. During our audit we became aware of several matters that
are opportunities for strengthening internal controls and operating
efficiency. Our comments and suggestions regarding those matters are as
follows:
1. The following significant management points from the 1990 audit have been
implemented and /or resolved:
a. Payroll tax payments were made and returns filed on a timely basis in
1991. The City is close to final resolution regarding payment of
penalties and interest on 1988, 1989 and 1990 payroll taxes paid late
and returns filed late. The IRS has abated all penalties and the
remaining interest will total approximately $4,000.
b. Excess city funds were invested in certificates of deposit in 1991
earning the City $146,820 in interests ompared to $132,072 in
1990. A
c, Sewer billings for 1991 weFesent out on a timely basis. All sewe
billings for rental pro .`ties are in the name of the property ov
to ensure collectib li;yy of delinquent bills.
d. Monthly financial statements were available for the Council bt
in the summer of 1991 after the Fund Balance software was in'
e. Cash receipts were generally deposited daily (unless recei•
minimal) and at the very least on a weekly basis.
f. The 1991 minutes were signed and a better job was done
for the check sequence in the minutes.
g. Council and staff have taken measures to understand
process and prepare a reasonable budget for 1992.
control over total amount of the 1991 budget, sin
by the previous administration. The 1991 budget
without current accounting information and thus
work with a budget which was significantly dec
years.
Once the accounting software was up and rur
the Council began receiving current accour
them to control expenditures. However,
begin with, there was no way to run the C.
budget.
Members;
Private Companies Practice Section of American Institute Minne+a
of Certified Public Accountants
City of Albertville
February 24, 1992
Page 2
The Council is to be commended for spending much time in the fall of
1991 learning the budget process and preparing a reasonable 1992
budget.
h. The Special Revenue Fire Fund was eliminated and fire department
activities were accounted for as a department of the General Fund in
1991 per Council resolution.
i. Fraser Steel agreed to pay $15,448 of expenses incurred by the City
in 1990 relating to the Fraser Steel Project which were not billed as
required by the developer's agreement. Payment is expected by the
end of April, 1992.
j. Council determined that constructing a new maintenance /fire hall
building was not feasible in the nea5 future, and costs totalling
$44,220 which had been shown as defred expenses in 1990 were
expensed in the General Fund in r`1.
k. After discussions with the`C ..roil and City Attorney's office,
$30,462 was transferred rom the TIF District #5 capital project fund
(Westside Drainage CNzoial Project Fund) to the Park Fund in 1991 to
pay for a portiCn 'sit e $81,647 of capital outlay for the Four
Seasons Park,.fl ovements in 1990. Council felt that the intent of
the original. E' document was to pay some of these costs from TIF
monies and the city attorney determined that this would be an
allowable expense for the TIF District.
1. Property taxes for TIF District #2 are current and there should be
sufficient funds for future bond payments for TIF Districts #2, 3,
and 4 if taxes are remitted on time.
m. Council has levied taxes for 1992 in the General and 1988 Refunding
Bond Debt Service Funds to eliminate the deficit balances showing at
December 31, 1991.
n. The 1988 -1A and 3A capital project fund deficit balance has been
closed out by a transfer of $16,735 from the General Fund and $22,495
from the 1988 Bonds debt service fund. Interest of $22,495 was
erroneously paid out of the capital project fund in 1988.
2. The following 1990 management letter points have not yet been implemented
and /or resolved:
a. No guidelines have been established by the City for use of revolving
loan funds.
b. An amended budget and plan for TIF District #5 has not been
finalized. Disposition of funds remaining in the capital project
fund for TIF Districts #2, 3, and 4 has not been resolved. A meeting
is scheduled for May, 1992 to resolve these issues.
City of Albertville
February 24, 1992
Page 3
In addition to the matters discussed above the following are our comments and
suggestions regarding other items which we became aware of during the 1991
audit:
1. In 1991 the City worked more closely with the bank to ensure that
pledged collateral would be sufficient. However, there was insufficient
pledged collateral for two of the four periods tested in 1991. At the
end of December, 1991 the City received proceeds from two bond issues
and additional pledged collateral was not put in place until January,
1992.
Sufficient pledged collateral has been a recurring problem at the City
over the years. The City might consider purchasing certificates of
deposit from more than one financial institution.,'thus requiring less
pledged collateral at a particular financial institution.
2. We did make a large number of adjusting journal entries (96) during the
1991 audit. Many of these entries were reclassifications due to
miscodings within a particular funds ther than items coded to the wrong
fund. Some of these miscodings se the result of working with new
software this year In some instances we found that one account name
had two account numbers We could not normally make audit entries to
reclassify and combine such items into one account, but we did make
these reclassifications so that 1991 amounts would be available for
comparative purposes in 1992.
Now that the clerk /treasurer has worked with this accounting system for
a year and is more familiar with fund accounting, we expect that the
number of adjusting journal entries will significantly decrease in 1992.
3. The following funds showing deficit fund balances at December 31, 1991:
General fund - unreserved $(19,170)
Sewer Intercept project $(39,393)
50th Street Improvement project $(17,610)
1988 Refund Bond debt service fund $(38,518)
The Sewer Intercept capital project expenses include preliminary study costs
for the new high school sewer trunk line and the 50th Street Improvement
project expenses include preliminary engineering fees. Both projects are
expected to be bonded for at a later date.
Council has made provisions in the 1992 budget to levy sufficient taxes to
eliminate the General Fund and 1988 Refunding Bond Fund deficits.
4. A charge for property taxes on the clinic building totalling $228 and one
fiscal charge of $57.50 were not billed to Health One. According to the lease
agreement the City should be reimbursed for all expenses associated with this
building including bond principal and interest payments, fiscal charges and any
other property related expenses.
City of Albertville
February 24, 1992
Page 4
5. We found that the Council did not approve a change order for Parksedge
Improvement Project 1990 -1 for extra work done. All change orders must be
formally approved by the Council and documented in the,„minutes.
6. The staff prepared some of the schedules needed for the 1991 audit. With the
new filing system which staff st_m taff im lemented they P l ire able to locate invoices and
various other documents which we required conduct our audit quickly. We
appreciate the assistance from the stafThis enables us to audit more
efficiently.
F' t •
We appreciate the opportunity to serve'x;you and look forward to reviewing this
management letter and the audit report with you.
This report is intended solely for the use of the City Council and management.
Sincerely,
Gruys Borden Carlson & Associates P.A.
Certified Public Accountants