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2023 Other Required Reports —ƓĻĞƆ µĞƅƚĿƆĞĖ µĞƂŨƆƓƊ City of Albertville, Minnesota Other Required Reports Table of Contents For the Year Ended December 31, 2023 Page No. Other Required Reports on Minnesota Legal Compliance 3 Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 4 Schedule of Finding and Response 6 2 ONMINNESOTA LEGAL COMPLIANCE Honorable Mayor and City Council City of 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 governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of theCity of Albertville, Minnesota (the City) as of and for the year ended December 31, 2023, and the related notes to the financial statements, and have issued our report thereon dated April 16, 2024. In connection with our audit, nothing came to our attention that caused us to believe that the City failed to comply with the provisions of the contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financingsections of the Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minn. Stat. § 6.65, insofar as they relate to accounting matters. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, noncompliance with the above referenced provisions, insofar as they relate to accounting matters. This report is intended solely for the information and use of those charged with governance and 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. Abdo Minneapolis, Minnesota April 16, 2024 3 INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERSBASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor and City Council City of Albertville, 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 statementsof the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of theCity of Albertville,Minnesota (the City), as of and for the year ended December 31, 2023 statements, and have issued our report thereon datedApril 16, 2024. 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) as a basis for designing 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 o 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 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. 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 deficienciesmay exist that have not been identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses.Weidentified a certain deficiency in internal control, described in the schedule of finding and responseas item2023-001 thatwe consider to be a significant deficiency. 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 financial statements. 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 testsdisclosed noinstancesof noncompliance or other matters that are required to be reported under Government Auditing Standards. 4 the Finding wasnot 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 results report isan integral part of an audit performed in accordance with Government Auditing Standards in considering the Abdo Minneapolis, Minnesota April 16, 2024 5 City of Albertville, Minnesota Schedule of Finding and Response For the Year Ended December 31, 2023 FindingDescription 2023-001 Limited Segregation of Duties Condition: During our audit, we reviewed procedures over major transaction cycles and found the City to have limited segregation of duties related to cash disbursements, payroll, utility billing, and receipting. Criteria: There are four general categories of duties: authorization, custody, record keeping and reconciliation. In an ideal system, different employees perform each of these four major functions. In other words, no one person has control of two or more of these responsibilities. Cause: As a result of the limited number of staff, the City is not able to completely segregate all accounting functions. All cycles have the same person performing or access to some of the authorization, custody, and recording functions. Effect: The existence of this limited segregation of duties increases the risk of fraud. Recommendation: While we recognize the number of staff is not large enough to eliminate this deficiency, we recommend that the City evaluate the current procedures and segregate duties where possible and implement any compensating controls. We are aware some compensating controls are in place; however, it is important that the City Council is aware of this condition and monitor all financial information. Management Response: Management 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. 6