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9.a) 2014 Report to the Members of Governance - FinalCITY OF SCANDIA, MINNESOTA REPORT TO MEMBERS OF GOVERNANCE MARCH 24, 2015 CITY OF SCANDIA, MINNESOTA TABLE OF CONTENTS IntroductoryLetter......................................................................................................................................................1 RequiredCommunications..........................................................................................................................................2 Exhibit A — Summary of Recorded Audit Adjustments SCHLENNER WENNELR&CO. CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS CONSULTANTS March 24, 2015 Members of Governance City of Scandia Scandia, MN 55073 We are pleased to present this report related to our audit of the basic financial statements of the City of Scandia (the City) for the year ended December 31, 2014. 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 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 An Independently Owned Member, McGladrey Alliance • - St. Cloud Little Falls Albany Maple Lake Monticello 630 Roosevelt Rd. Ste. 201 109 E. Broadway 115 6th St. 220 Hwy. 55 North, Ste. 4 114 W. 3rd St. P.O. Box 1496 P.O. Box 365 P.O. Box 268 P.O. Box 385 P.O. Box 755 St. Cloud, MN 56302 Little Falls, MN 56345 Albany, MN 56307 Maple Lake, MN 55358 Monticello, MN 55362 320.251.0286 320.632.6311 320.845.2940 320.963.5414 763.295.5070 CITY OF SCANDIA, MINNESOTA REQUIRED COMMUNICATIONS Generally accepted auditing standards (AU -C260, 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 observations arising from our audit that are significant and relevant to your responsibility to oversee the financial reporting process. Auditor's Responsibility under Professional Standards Our responsibilities under auditing standards generally accepted in the United States of America have been described to you in our arrangement letter dated October 22, 2013. Overview of the Planned Scope and Timing of the Financial Statement Audit We have issued a separate communication regarding the planned scope and timing of our audit and have discussed with you our identification of and planned audit response to significant risks of material misstatement. Accounting 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 polices during the current period. Significant or Unusual Transactions We did not identify any significant or unusual transactions or significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Alternative Treatments Discussed with Management We did not discuss with management any alternative treatments within generally accepted accounting principles for accounting policies and practices related to material items during the current audit period. 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 compute and record these accounting estimates. There are no accounting estimates that we have deemed significant to the financial statements. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Uncorrected misstatements related to a General Fund receivable that was overstated at December 31, 2013, which has a direct impact on the net change in fund balance for the year ended December 31, 2014. Audit adjustments recorded by the Organization are shown on the attached Exhibit A. CITY OF SCANDIA, MINNESOTA REQUIRED COMMUNICATIONS 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 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. Difficulties Encountered in Performing the Audit We did not encounter any difficulties in dealing with management during the audit. Letter Communicating Significant Deficiencies and Material Weaknesses We have separately communicated the material weaknesses and a significant deficiency identified during our audit of the financial statements, and this communication is included within the compliance section of the City's financial report for the year ended December 31, 2014. Certain Written Communications Between Management and Our Firm We have requested certain representations from management that are included in the management representation letter dated March 24, 2015. EXHIBIT A SUMMARY OF RECORDED AUDIT ADJUSTMENTS Client: City of Scandia Engagement: 12-14 AUD - City of Scandia Period Ending: 12131/2014 Workpaper: Adjusting Journal Entries Report Account Description Adjusting Journal Entries JE # 1 To tie out beginning fund balance in the general fund to the 2013 ending fund balance. Resulting from an entry posted to fund balance during 2014. 101-24400 Fund Balance For Quinnell 101-25300 Unreserved Fund Balance 101-28400 Reserved for Quinnell 101-41000-36210 Interest Income Total Adjusting Journal Entries JE # 2 To tie out special assessments. 307-22200 Special Assessment Revenue 602-12300 Special Assess Rec-Deferred 307-12300 Special Assess Rec-Deferred 602-43210-36100 Special Assessments Total Adjusting Journal Entries JE # 3 To record Business -type capital asset addition. 602-16400 Machinery and Equipment 602-43210-530 Capital Impr Other Than Bldgs Total Adjusting Journal Entries JE # 4 To record proprietary fund depreciation. 602-43210-420 Depreciation Expense 612-43210-420 Depreciation Expense 602-16310 Accumulative Depreciation 612-16310 Accumulative Depreciation Total Debit 403.00 403.00 806.00 15,727.00 233.00 Credit 403.00 403.00 806.00 15, 727.00 233.00 15,960.00 15,960.00 21,275.00 21,275.00 30,236.00 4,876.00 21,275.00 21,275.00 30,236.00 4,876.00 35,112.00 35,112.00 Adjusting Journal Entries JE # 5 To adjust accounts receivable. 602-10425 Misc Receivables 896.00 602-43210-34401 Sewer User Fees & Hookup 896.00 Total 896.00 896.00 Adjusting Journal Entries JE # 6 To adjust driveway deposits to actual. 101-41910-32210 Building Permits 7,045.00 101-20202 Deposits Payble 4,945.00 101-41910-439 Refunds Issued 2,100.00 Total 7,045.00 7,045.00 1 of 7 Client: City of Scandia Engagement: 12-14 AUD - City of Scandia Period Ending: 12131/2014 Workpaper: Adjusting Journal Entries Report Account Description Adjusting Journal Entries JE # 7 To adjust prepaid health insurance 101-15601 Prepaid Insurance 101-21706 Accrued Medical Ins 101-41000-131 Employer Paid Health 101-43000-131 Employer Paid Health Total Adjusting Journal Entries JE # 8 To record unearned revenue for hall rental receipts. 101-45000-34790 Recreation Programs 101-45180-34750 Facilities Rental 101-22202 DEFERRED REVENUE Total Adjusting Journal Entries JE # 9 To adjust inventory to actual. 101-43000-229 Salt 101-14100 Inventory Total Adjusting Journal Entries JE # 10 To adjust delinquent taxes. 101-22201 Deferred Rev Delinquent Tax 101-10700 Taxes Receivable -Delinquent Total Adjusting Journal Entries JE # 11 To adjust miscellaneous receivables 101-10425 Misc Receivables 101-41000-36250 Misc. Refund 101-41910-34103 Zoning and Planning 101-41910-34103 Zoning and Planning 101-41910-34103 Zoning and Planning 101-41910-34103 Zoning and Planning 101-43000-31701 Gravel Taxes 101-43000-34106 Engineering Fees 101-43000-34106 Engineering Fees Total Debit 4,818.00 Credit 669.00 833.00 3,316.00 4,818.00 4,818.00 1,709.00 935.00 2,644.00 2,644.00 2,644.00 2,583.00 2,583.00 2,583.00 2,583.00 10, 346.00 10,346.00 17, 376.00 10, 346.00 10,346.00 500.00 94.00 210.00 559.00 1,000.00 14,240.00 313.00 460.00 17,376.00 17,376.00 2 of 7 Client: City of Scandia Engagement: 12-14 AUD - City of Scandia Period Ending: 12131/2014 Workpaper: Adjusting Journal Entries Report Account Description Adjusting Journal Entries JE # 12 To record repayment of interfund loan. 401-10100 Cash 612-23901 LONG-TERM LIABILITY 401-10600 DUE FROM OTHER FUNDS 612-10100 Cash Total Adjusting Journal Entries JE # 13 To reverse client posted A/P 101-20200 Accounts Payable 101-20200 Accounts Payable 602-20200 Accounts Payable 612-20200 Accounts Payable 101-41000-200 Office Supplies 101-41000-210 Operating Supplies 101-41000-210 Operating Supplies 101-41000-300 Assessor 101-41000-304 Legal Services 101-41000-313 Committee & Commission Reimbur 101-41000-317 Employee Training 101-41000-321 Telephone 101-41000-351 Legal Notices Publishing 101-41000-361 Liability/Property Ins 101-41000-438 Misc. Contractual 101-41000-439 Refunds Issued 101-41910-311 Contract Permit Inspections 101-41910-312 Planning Services 101-41910-319 Other Services 101-41910-319 Other Services 101-41910-438 Misc. Contractual 101-41910-439 Refunds Issued 101-42100-318 Police Contract 101-42200-209 Medical Supplies 101-42200-210 Operating Supplies 101-42200-211 Cleaning Supplies 101-42200-212 Fuel 101-42200-217 Turnout Gear & Uniforms 101-42200-240 Small Tools and Minor Equip 101-42200-309 Software Support & Maintenance 101-42200-309 Software Support & Maintenance 101-42200-319 Other Services 101-42200-361 Liability/Property Ins 101-42200-381 Utilities -Electric & Gas 101-42200-384 Refuse/Garbage Disposal 101-42200-401 Building Maintenance/Repairs 101-42200-404 Repair Machinery/Equipment 101-43000-200 Office Supplies 101-43000-210 Operating Supplies 101-43000-212 Fuel Debit 2,640.00 2,640.00 5,280.00 3,546.00 151,850.00 4,577.00 1,886.00 Credit 2,640.00 2,640.00 5,280.00 13.00 9.00 80.00 9,880.00 2,613.00 60.00 15.00 64.00 56.00 2,593.00 858.00 2,500.00 3,662.00 1,863.00 78.00 3,546.00 738.00 30.00 62,653.00 523.00 1,766.00 111.00 194.00 44.00 290.00 16.00 2,400.00 50.00 8,647.00 1,243.00 62.00 755.00 2,984.00 26.00 1,103.00 1.567.00 3 of 7 Client: City of Scandia Engagement: 12-14 AUD - City of Scandia Period Ending: 12131/2014 Workpaper: Adjusting Journal Entries Report Account Description Debit Credit 101-43000-221 Equipment Parts 128.00 101-43000-221 Equipment Parts 3,361.00 101-43000-224 Materials for Road Maintenance 110.00 101-43000-229 Salt 3,440.00 101-43000-240 Small Tools and Minor Equip 312.00 101-43000-303 Engineering Fees 1,782.00 101-43000-319 Other Services 168.00 101-43000-321 Telephone 170.00 101-43000-331 Travel Expenses 51.00 101-43000-361 Liability/Property Ins 11,504.00 101-43000-381 Utilities -Electric & Gas 842.00 101-43000-384 Refuse/Garbage Disposal 41.00 101-43000-387 Street Light Utilities 705.00 101-43000-401 Building Maintenance/Repairs 178.00 101-43000-405 Contractual Road Maint/Repair 2,334.00 101-43000-438 Misc. Contractual 1,440.00 101-45000-141 Unemployment Compensation 1,053.00 101-45000-210 Operating Supplies 815.00 101-45000-212 Fuel 17.00 101-45000-319 Other Services 12.00 101-45000-340 Advertising 150.00 101-45000-353 Sales Tax 7.00 101-45000-361 Liability/Property Ins 5,784.00 101-45000-381 Utilities -Electric & Gas 421.00 101-45000-385 Sewer Pumping & Maintenance 365.00 101-45000-401 Building Maintenance/Repairs 523.00 101-45000-401 Building Maintenance/Repairs 592.00 101-45000-404 Repair Machinery/Equipment 10.00 101-45000-439 Refunds Issued 118.00 101-45000-440 Events 115.00 101-45180-210 Operating Supplies 150.00 101-45180-361 Liability/Property Ins 2,720.00 101-45180-381 Utilities -Electric & Gas 1,230.00 101-45180-384 Refuse/Garbage Disposal 123.00 101-45180-385 Sewer Pumping & Maintenance 597.00 101-45180-401 Building Maintenance/Repairs 936.00 602-43210-317 Employee Training 34.00 602-43210-321 Telephone 120.00 602-43210-361 Liability/Property Ins 792.00 602-43210-381 Utilities -Electric & Gas 182.00 602-43210-404 Repair Machinery/Equipment 2,450.00 602-43210-530 Capital Impr Other Than Bldgs 999.00 612-43210-317 Employee Training 11.00 612-43210-381 Utilities -Electric & Gas 148.00 612-43210-404 Repair Machinery/Equipment 186.00 612-43210-530 Capital Impr Other Than Bldgs 1,541.00 Total 161,859.00 161,859.00 4 of 7 Client: City of Scandia Engagement: 12-14 AUD - City of Scandia Period Ending: 12131/2014 Workpaper: Adjusting Journal Entries Report Account Description Debit Adjusting Journal Entries JE # 14 To record accounts payable 101-41000-151 Worker s Comp Insurance Prem 109.00 101-41000-200 Office Supplies 13.00 101-41000-210 Operating Supplies 80.00 101-41000-300 Assessor 8,380.00 101-41000-304 Legal Services 2,613.00 101-41000-313 Committee & Commission Reimbur 60.00 101-41000-317 Employee Training 15.00 101-41000-321 Telephone 64.00 101-41000-351 Legal Notices Publishing 56.00 101-41000-361 Liability/Property Ins 234.00 101-41000-438 Misc. Contractual 9.00 101-41000-438 Misc. Contractual 858.00 101-41000-439 Refunds Issued 2,500.00 101-41910-311 Contract Permit Inspections 3,662.00 101-41910-312 Planning Services 1,863.00 101-41910-319 Other Services 78.00 101-41910-438 Misc. Contractual 738.00 101-41910-439 Refunds Issued 30.00 101-42100-318 Police Contract 62,653.00 101-42200-151 Worker s Comp Insurance Prem 541.00 101-42200-209 Medical Supplies 523.00 101-42200-210 Operating Supplies 1,766.00 101-42200-211 Cleaning Supplies 111.00 101-42200-212 Fuel 194.00 101-42200-217 Turnout Gear & Uniforms 44.00 101-42200-309 Software Support & Maintenance 2,417.00 101-42200-319 Other Services 50.00 101-42200-361 Liability/Property Ins 721.00 101-42200-381 Utilities -Electric & Gas 1,243.00 101-42200-384 Refuse/Garbage Disposal 62.00 101-42200-401 Building Maintenance/Repairs 290.00 101-42200-401 Building Maintenance/Repairs 755.00 101-43000-151 Worker s Comp Insurance Prem 1,970.00 101-43000-200 Office Supplies 26.00 101-43000-210 Operating Supplies 1,103.00 101-43000-212 Fuel 1,567.00 101-43000-221 Equipment Parts 3,489.00 101-43000-224 Materials for Road Maintenance 110.00 101-43000-229 Salt 3,440.00 101-43000-240 Small Tools and Minor Equip 312.00 101-43000-303 Engineering Fees 1,782.00 101-43000-319 Other Services 168.00 101-43000-321 Telephone 170.00 101-43000-331 Travel Expenses 51.00 101-43000-361 Liability/Property Ins 959.00 101-43000-381 Utilities -Electric & Gas 842.00 101-43000-384 Refuse/Garbage Disposal 41.00 101-43000-387 Street Light Utilities 705.00 101-43000-401 Building Maintenance/Repairs 177.00 Credit 5 of 7 Client: City of Scandia Engagement: 12-14 AUD - City of Scandia Period Ending: 12131/2014 Workpaper: Adjusting Journal Entries Report Account Description 101-43000-405 Contractual Road Maint/Repair 101-43000-438 Misc. Contractual 101-45000-141 Unemployment Compensation 101-45000-151 Worker s Comp Insurance Prem 101-45000-151 Worker s Comp Insurance Prem 101-45000-210 Operating Supplies 101-45000-212 Fuel 101-45000-319 Other Services 101-45000-340 Advertising 101-45000-353 Sales Tax 101-45000-361 Liability/Property Ins 101-45000-381 Utilities -Electric & Gas 101-45000-385 Sewer Pumping & Maintenance 101-45000-401 Building Maintenance/Repairs 101-45000-404 Repair Machinery/Equipment 101-45000-439 Refunds Issued 101-45000-440 Events 101-45180-361 Liability/Property Ins 101-45180-361 Liability/Property Ins 101-45180-381 Utilities -Electric & Gas 101-45180-384 Refuse/Garbage Disposal 101-45180-385 Sewer Pumping & Maintenance 101-45180-401 Building Maintenance/Repairs 602-43210-151 Liability/Property Insurance 602-43210-317 Employee Training 602-43210-321 Telephone 602-43210-361 Liability/Property Ins 602-43210-381 Utilities -Electric & Gas 602-43210-404 Repair Machinery/Equipment 602-43210-404 Repair Machinery/Equipment 612-43210-151 Property/Liability Insurance 612-43210-317 Employee Training 612-43210-361 Liability/Property Ins 612-43210-381 Utilities -Electric & Gas 612-43210-404 Repair Machinery/Equipment 101-20200 Accounts Payable 602-20200 Accounts Payable 612-20200 Accounts Payable Total Adjusting Journal Entries JE # 15 To adjust payroll accruals to actual. 101-21600 Accrued Wages & Salaries Payab 101-41000-101 Regular Wages & Salaries 101-43000-101 Regular Wages & Salaries 101-45000-101 Regular Wages & Salaries Total Debit 2,334.00 1,400.00 1,053.00 1.00 94.00 815.00 17.00 12.00 150.00 7.00 482.00 421.00 365.00 1,115.00 10.00 118.00 115.00 150.00 227.00 1,230.00 119.00 597.00 936.00 121.00 34.00 120.00 66.00 182.00 999.00 2,450.00 40.00 11.00 16.00 148.00 1,541.00 Credit 121,412.00 3,972.00 1,756.00 127,140.00 127,140.00 2.096.00 733.00 1,153.00 210.00 2,096.00 2,096.00 6 of 7 Client: City of Scandia Engagement: 12-14 AUD - City of Scandia Period Ending: 12131/2014 Workpaper: Adjusting Journal Entries Report Account Description Adjusting Journal Entries JE # 16 To record due to, due from related to negative cash. 101-10600 DUE FROM OTHER FUNDS 612-10100 Cash 101-10100 Cash 612-23000 DUE TO OTHER FUNDS Total Adjusting Journal Entries JE # 17 To close 310 fund. 307-10100 Cash 310-47000-720 Operating Transfers 307-47000-39203 Transfers from Other Funds 310-10100 Cash Total Debit 2,300.00 2,300.00 4,600.00 19, 321.00 19, 321.00 38,642.00 Credit 2,300.00 2,300.00 4,600.00 19,321.00 19, 321.00 38,642.00 7 of 7