2009-08-06 Legal Compliance
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Expert advice. When you need it.SM
REPORT ON LEGAL COMPLIANCE
April 6, 2009
Honorable Mayor and Members
of the City Council
City of Albertville
Albertville, Minnesota
We have audited the financial statements of the governmental activities, the business-type
activities, each major fund and the aggregate remaining fund information of the City of
Albertville, Minnesota, for the year ended December 31, 2008, which collectively comprise the
City's basic financial statements and have issued our report thereon dated April 6, 2009.
We conducted our audit in accordance with U.S. generally accepted auditing standards and the
provisions of the Minnesota Legal Compliance Audit Guide for Local Government, promulgated
by the State Auditor pursuant to Minnesota Statute Sec. 6.65. Accordingly, the audit included
such tests of the accounting records and such other auditing procedures as we considered
necessary in the circumstances.
The Minnesota Legal Compliance Audit Guide for Local Government covers seven main
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 study included all of the listed categories.
The results of our tests indicate that for the items tested, the City complied with the material
terms and conditions of applicable legal provisions, except as listed on the Schedule of Findings
on Legal Compliance.
This report is intended solely for the information and use of the City Council, management and
the Office of the State Auditor, and is not intended to be and should not be used by anyone other
than those specified parties.
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KERN, DEWENTER, VIERE, LTD.
Minneapolis, Minnesota
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CITY OF ALBERTVILLE
Wright County, Minnesota
SCHEDULE OF FINDINGS ON LEGAL COMPLIANCE
December 31, 2008
CURRENT YEAR LEGAL COMPLIANCE FINDINGS:
Audit Finding 08-01 - Public Purpose Expenditures
According to Attorney General Publications 442a-17, January 17, 1938; 59a-22, November 23,
1966; 270-D, August 12, 1977,' and 174E, a city must refrain from paying for Christmas parties
and other employee social events, unless the celebrations are a form of compensation, as
described in the city's personnel manual.
During our audit, we noted the City paid for an employee event. In addition, it was noted the
City made donations to an entity that serves a private purpose rather than a public purpose.
We recommend the City refrain from paying for such activities.
Managements Response:
The January employee recognition event was not a celebration, social or holiday event. The
recognition event was held to acknowledge years of service, attendance awards, CPR saves and
other employee accomplishments. As the event was held over the dinner hour, a meal was
provided.
The City has changed the policy for donations and will refrain from donating to an entity that
serves a private purpose rather than a public purpose.
Audit Finding 08-02 - Update Collateral Assignment Agreement
Minnesota Statutes 118A.03, subd. 4 requires 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.
It was noted during our legal compliance audit, one of the City's collateral assignment
agreements did not require the release of collateral upon default.
We recommend the City update its assignment agreements in order to be in compliance with
Minnesota Statutes.
Managements Response:
The City contacted Premier Bank and it is being updated to state collateral will be released
immediately upon default.
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CITY OF ALBERTVII.LE
Wright County, Minnesota
SCHEDULE OF FINDINGS ON LEGAL COMPLIANCE
December 31, 2008
PRIOR YEAR LEGAL COMPLIANCE FINDINGS:
Out of State Travel Policy
The City does not have a policy regarding travel outside of Minnesota. Minnesota Statutes
471.664 states all cities must have an approved policy that controls travel outside of the state of
Minnesota which specifies when out of state travel is appropriate, the expense limits of out of
state travel and procedures for approval of the travel.
Obtain Sufficient Collateral on Deposits
Minnesota Statutes 118A.03 provides all deposits with financial institutions must be
collateralized in an amount equal to 110% of deposits in excess of Federal Deposit Insurance
Corporation (FDIC) insurance. If irrevocable standby letters of credit from federal home loan
banks are used, the collateral amount must be equal to the amount of the excess deposit plus
interest at the close of the banking day.
Deposits at Premier Bank were undercollateralized by $ 27,008 at December 31, 2007.
Both these issues were resolved in 2008.
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