10.a.3 2023 Report to Members of Governance - Scandia
City of Scandia,
Minnesota
Report to the Members of
Governance
April 12, 2024
CITY OF SCANDIA, MINNESOTA
TABLE OF CONTENTS
Introductory Letter...................................................................................................................................................... 1
Required Communications ......................................................................................................................................... 2
Exhibit A – Representation Letter
An Independently Owned Member, RSM US Alliance
RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member
firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International.
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www.schlennerwenner.cpa
Members of Governance
City of Scandia, Minnesota
We are pleased to present this report related to our audit of the basic financial statements of the City of Scandia (the
City) as of and for the year ended December 31, 2023. This report summarizes certain matters required by professional
standards to be communicated to you in your oversight responsibility for the City’s financial reporting process.
This report is intended solely for the information and use of the members of governance and management and is not
intended to be, and should not be, used by anyone other than these specified parties. It will be our pleasure to respond
to any questions you have regarding this report. We appreciate the opportunity to continue to be of service to the City.
SCHLENNER WENNER & CO.
St. Cloud, Minnesota
April 12, 2024
CITY OF SCANDIA, MINNESOTA
REQUIRED COMMUNICATIONS
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Auditing standards generally accepted in the United States of America (AU-C 260, The Auditor’s Communication
With Those Charged With Governance) require the auditor to promote effective two-way communication between the
auditor and those charged with governance. Consistent with this requirement, the following summarizes our
responsibilities regarding the financial statement audit as well as observ ations arising from our audit that are
significant and relevant to your responsibility to oversee the financial and related compliance reporting process.
Our Responsibilities With Regard to the Financial Statement and Compliance Audit
Our responsibilities under auditing standards generally accepted in the United States of America and Government
Auditing Standards issued by the Comptroller General of the United States have been described to you in our
engagement letter dated January 4, 2024. Our audit of the basic financial statements does not relieve management or
those charged with governance of their responsibilities, which are also described in that letter.
Overview of the Planned Scope and Timing of the Financial Statement Audit
We have issued a separate communication dated February 23, 2024 regarding the planned scope and timing of our
audit and identified significant risks.
Accounting Policies and Practices
Preferability of Accounting Policies and Practices
Under accounting principles generally accepted in the United States of America, in certain circumstances,
management may select among alternative accounting practices. In our view, in such circumstances, management has
selected the preferable accounting practice.
Adoption of, or Change in, Accounting Policies
Management has the ultimate responsibility for the appropriateness of the accounting policies used by the City.
The City did not adopt any significant new accounting policies, nor have there been any changes in existing significant
accounting policies during the current period.
Significant Accounting Policies
We did not identify any significant accounting policies in controversial or emerging areas for which there is a lack of
authoritative guidance or consensus.
Significant Unusual Transactions
We did not identify any significant unusual transactions.
Management’s Judgments and Accounting Estimates
Accounting estimates are an integral part of the preparation of financial statements and are based upon management's
current judgment. The process used by management encompasses their knowledge and experience about past and
current events and certain assumptions about future events. You may wish to monitor throughout the year the process
used to determine and record these accounting estimates. The only estimates we have deemed significant to the
financial statements are estimates associated with the following balances reported at year-end:
• Net pension asset/liability and related deferred outflows/inflows of resources
Audit Adjustments and Uncorrected Misstatements
Audit adjustments, other than those that are clearly trivial, proposed by us and recorded by the City are shown
following the attached representation letter at Exhibit A.
We are not aware of any uncorrected misstatements other than misstatements that are clearly trivial.
CITY OF SCANDIA, MINNESOTA
REQUIRED COMMUNICATIONS
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Departure From the Auditor's Standard Report
During the year ended December 31, 2023, the City determined an adjustment to beginning equity was necessary to
correct an error identified in the City’s prior year financial statements. In light of this matter, we will include an
emphasis-of-matter paragraph in the auditor’s report. Below is the paragraph included in the auditor’s report:
Emphasis of Matter
As discussed in Note 6.D. to the financial statements, the 2022 financial statements have been restated to
correct a misstatement. Our opinion is not modified with respect to this matter.
Observations About the Audit Process
Disagreements with Management
We encountered no disagreements with management over the application of significant accounting principles, the
basis for management’s judgments on any significant matters, the scope of the audit, or significant disclosures to be
included in the basic financial statements.
Consultations with Other Accountants
We are not aware of any consultations management had with other accountants about accounting or auditing matters.
Significant Issues Discussed with Management
No significant issues arising from the audit were discussed or were the subject of correspondence with management.
Significant Difficulties Encountered in Performing the Audit
We did not encounter any significant difficulties in dealing with management during the audit.
Difficult or Contentious Matters That Required Consultation
We did not encounter any significant and difficult or contentious matters that required consultation outside the
engagement team.
Shared Responsibilities for Independence
Independence is a joint responsibility and is managed most effectively when management, audit committees (or their
equivalents), and audit firms work together in considering compliance with American Institute of Certified Public
Accountants (AICPA) and Government Accountability Office (GAO) independence rules. For Schlenner Wenner &
Co. to fulfill its professional responsibility to maintain and monitor independence, management, the audit committee
(when applicable), and Schlenner Wenner & Co. each play an important role.
Our Responsibilities
• AICPA and GAO rules require independence both of mind and in appearance when providing audit and other
attestation services. Schlenner Wenner & Co. is to ensure that the AICPA and GAO’s General Requirements
for performing non-attest services are adhered to and included in all letters of engagement.
• Maintain a system of quality control over compliance with independence rules and firm policies.
CITY OF SCANDIA, MINNESOTA
REQUIRED COMMUNICATIONS
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The City’s Responsibilities
• Timely inform Schlenner Wenner & Co., before the effective date of transactions or other changes, of the
following:
o New affiliates, members of governance, or person in financial reporting and compliance oversight
roles.
o Changes in the reporting entity impacting affiliates such as related entities, investments, joint
ventures, component units, and jointly governed organizations.
• Provide necessary affiliate information such as new or updated structure charts, as well as financial
information required to perform materiality calculations needed for making affiliate determinations.
• Understand and conclude on the permissibility, prior to the City and its affiliates, members of governance, or
persons in a decision-making capacity, engaging in business relationships with Schlenner Wenner & Co.
• Not entering into arrangements of non-audit services resulting in Schlenner Wenner & Co. being involved in
making management decisions on behalf of the City.
• Not entering into relationships resulting in Schlenner Wenner & Co., Schlenner Wenner & Co. covered
persons or their close family members, temporarily or permanently acting as a member of governance or
person in an accounting, financial reporting or compliance oversight role at the City.
Internal Control and Compliance Matters
We have separately communicated any significant deficiencies and material weaknesses in internal control and
compliance findings over financial reporting identified during our audit of the basic financial statements, as required
by Government Auditing Standards. This communication is included within the compliance section of the City’s
financial report for the year ended December 31, 2023.
Significant Written Communications Between Management and Our Firm
Copies of significant written communications between our firm and the management of the City of Scandia, including
the representation letter provided to us by management, are attached as Exhibit A.
EXHIBIT A
REPRESENTATION LETTER