2015-12-31 City Audit Compliance Letter
City of Albertville
Wright County, Minnesota
Reports on Compliance with
Government
and
Auditing Standards
Minnesota Legal Compliance
December 31, 2015
City of Albertville
Table of Contents
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 1
Report on Legal Compliance 3
Schedule of Findings and Responses
on Legal Compliance and Internal Control 4
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
Independent Auditor's Report
Honorable Mayor and Members
of the City Council
City of Albertville
Albertville, Minnesota
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 the governmental activities, the business-type activities, each major fund, and
the aggregate remaining fund information of the City of Albertville, Minnesota as of and for
the year ended December 31, 2015, and the related notes to financial statements, which
collectively comprise the City's basic financial statements, and have issued our report
thereon dated April 6, 2016.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City'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's internal control. Accordingly, we do not express an opinion on the effectiveness of
the City's internal control.
A deficiency 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 City's financial statements will
not be prevented, or detected and corrected on a timely basis. A significant 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.
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Internal Control over Financial Reporting (Continued)
Our consideration of internal control was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control
that might be material weaknesses or significant deficiencies and therefore, material
weaknesses or significant deficiencies may exist that were not identified. Given these
limitations, during our audit we did not identify any deficiencies in internal control,
considered to be material weaknesses. We did identify certain deficiencies in internal
control, described in the accompanying schedule of findings and responses on legal
compliance and internal control, that we consider to be a significant deficiency, listed as
audit finding 2014-001.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City'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's Response to Findings
The City's response to the findings identified in our audit are described in the accompanying
schedule of findings and responses on legal compliance and internal control. The City's
response was not subjected 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 result of that testing, and not to provide an opinion on the
effectiveness of the City'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's internal control and compliance. Accordingly, this communication is not suitable for
any other purpose.
Minneapolis, Minnesota
April 6, 2016
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Report on Legal Compliance
Independent Auditor's Report
Honorable Mayor and Members
of the City Council
City of Albertville
Albertville, Minnesota
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 the governmental activities, the business-type activities, each major fund and
the aggregate remaining fund information of the City of Albertville, Minnesota as of and for
the year ended December 31, 2015, and the related notes to financial statements, and have
issued our report thereon dated April 6, 2016.
The Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor
pursuant to Minnesota Statutes § 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 the
City of Albertville failed to comply with the provisions of the Minnesota Legal Compliance
Audit Guide for Cities. 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's noncompliance with the
above referenced provisions.
This report is intended solely for the information and use of those charged with governance,
management of the City and the State Auditor and is not intended to be and should not be used
by anyone other than these specified parties.
Minneapolis, Minnesota
April 6, 2016
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City of Albertville
Schedule of Findings and Responses
on Legal Compliance and Internal Control
CURRENT AND PRIOR YEAR INTERNAL CONTROL FINDING
Significant Deficiencies
Audit Finding 2014-001 Lack of Segregation of Accounting Duties
Four areas related to each transaction cycle should be segregated: authorization, custody, recording, and
reconciliation. During the year ended December 31, 2015, the City had a lack of segregation of
accounting duties due to a limited number of office employees. The lack of adequate segregation of
accounting duties could adversely affect the City's ability to initiate, record, process, and report financial
data consistent with the assertions of management in the financial statements. This lack of segregation of
accounting duties can be demonstrated in the following areas, which is not intended to be an all-
inclusive list:
The Finance Director is able to receive cash receipts at the front window and has read/write
access to the general ledger.
The Finance Director verifies purchase orders to invoices and can also enter disbursements into
the accounts payable module. Additionally, the Finance Director can print checks, is an
authorized signer, and reconciles the bank accounts.
The Finance Director has the ability to post utility billing information into the general ledger,
makes adjustments to bills, and maintains customers and rates.
The Administrative Assistant II imports, calculates and sends out the utility billings, maintains
customer accounts, enters the billing payments, posts receipts to the general ledger, and
maintains the billing register.
The Finance Director sets up/maintains employee payroll records, posts payroll to the general
ledger, issues direct deposits, reconciles the bank account, prepares the payroll taxes, prepares all
W-2s, as well as maintains all data files and the payroll program.
The Building Technician fills out permit fees schedules, sends out all accounts receivable
invoices, has access to receive payments, and scans all permits and/or inspections into a house
file.
The Finance Director enters all accounts receivable invoices, maintains the accounts receivable
billings, reports all outstanding bills to the City Council and can post payments to the general
ledger.
The Administrative Assistant II collects fines and fees, receives payments, and enters them into
the POS module.
We recommend management, along with the City Council, remain aware of this situation, and look for
opportunities to provide additional segregation.
City's Response
The City is aware of the lack of segregation, which is due to limited office staff, and continues to look
for opportunities to provide additional segregation in a cost effective manner.
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