Addition_Abdo Eick & Meyers Proposal of Audit Services5201 Eden Avenue Suite 250 Edina, MN 55436
P: (952) 835.9090 • F: (952) 835.3261
100 Warren Street Suite 600 Mankato, MN 56001
P: (507) 625.2727 • F: (507) 389.9139
www.aemcpas.com
Proposal
for Audit
Services
City of
Scandia
November 2, 2020
Andrew K. Berg, CPA
(952) 715.3003
andrew.berg@aemcpas.com
November 2, 2020
City of Scandia
Attn:Ken Cammilleri,City Administrator
14727 209
th Street N
Scandia, Minnesota 55073
Dear Ken:
Thank you for the opportunity to submit this proposal to the City of Scandia (the City)for audit services.We
appreciate the opportunity to work with you.Based on our experience with clients like you,we are confident
that Abdo,Eick &Meyers, LLP (the Firm)would be a great fit.
We work hard for those who matter most -clients,employees,family,and community -and celebrate their
successes as our own.Our success has been driven by our philosophy of going beyond the numbers for our
clients.This belief is represented through our commitment to people and knowledge, process and you.We
will utilize staff that is experienced and dedicated in the area of government.Our Process is centered on
meeting your needs, exceeding your expectations, and incorporating technology to deliver unparalleled
solutions.This includes delivering prompt and effective service of the highest quality to you.The quality of
our service allows us an opportunity to be an integral part of your finance team.We believe this investment
should make a difference for you, our valued client.We focus on the challenges and needs that are relevant
to your City,which allows us to be thoughtful in our approach in providing you with the best solutions, and
leaves you assured in the value of our deliverable.
The attached proposal will demonstrate to you that we will be a great service provider and partner for your
City.We look forward to meeting with you to discuss our proposal, and appreciate this opportunity to present
our firm for your consideration.We will follow up with you within two weeks to answer any questions or
concerns you may have and to provide any further information you may need.
Sincerely,
ABDO, EICK &MEYERS,LLP
Certified Public Accountants &Consultants
Andrew K.Berg,CPA
Governmental Services Partner
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Table of Contents
Executive Summary 4
Government Experience 5
Audit Approach 6
Technology 10
Timeline 11
Your Team 12
Team Bios 13
Value 16
What Our Clients Say 17
Services Overview 18
Why AEM 19
Appendix A:
Proposer Guarantees and Warranties
Appendix B:
Peer Review Letter
Appendix C:
Sample Management Letter
3
Executive Summary
We are pleased to present our proposal for audit services to the City of Scandia.
We have prepared our proposal based on our understanding of your City’s needs from the request for proposal
we received and the very informational conversations we have had with Ken and Colleen, during which we
were provided with an opportunity to get to know you better.
We understand that the key requirements you have of your selected advisors include:
•Access to partners and staff for assistance in answering questions throughout the year
•Deliver both concise and informative information to the Council
•Demonstrate familiarity, knowledge and experience in the industry
•Provide proficiency with Banyon Fund Accounting
•Provide a timely and efficient audit
We understand that the requested work to be completed includes the following services:
•Annual Financial Statement Audit
•Single Audit (If applicable)
•Management Letter
•Presentation to the Council
Based on our work with more than 100 local governments similar to yours, we confidently believe we can meet
your requirements and exceed your expectations for the reasons listed below and referenced in our proposal.
•We provide timely services and currently adhere to an 18 day turnaround time from fieldwork for the delivery
of draft financial statements to the client.
•We have worked with numerous other entities with Banyon Fund Accounting.
•Our Council presentation uses ratios and comparisons of trends that give snapshots of metrics for your City
through graphs and charts.
•We have a dedicated team of 40 partners, managers and staff that serve governments exclusively.
•Our government experience extends beyond just audit and compliance. We also provide the following
services to government organizations.
o Human Resource solutions
o Long-term financial planning
o One-on-one personalized and group-focused training opportunities
o Process improvement-lean process and process evaluation
o Arbitrage services
•Integral to our mission is a philosophy that we help organizations reach their maximum potential through
open communications and teamwork. We enjoy answering questions any time of the year, and at no
cost!
We commit to providing an excellent level of client service and helping you move beyond the numbers through
communication, support and customized guidance. As you review the details of this proposal, please do not
hesitate to contact us with questions or for clarification. We look forward to partnering with the City of Scandia!
4
Government Experience
You can have confidence in our 56 years of quality
auditing services and partnership in the government
space.Since 1963,we’ve served cities just like yours.
With an unwavering commitment to streamlining
processes, training staff,and finding technology-based
solutions,we proudly offer excellence in city auditing.
Out of our 160-strong, talented staff,over 40 team
members are 100%focused on government clients,
including services for over 100 cities and various
municipalities.By serving cities across Minnesota,we
have become experts in the nuances of how to best
support your city.
Our expertise affords you an audit experience that’s
painless.We do this by communicating up front,coming
better prepared,and being available throughout the year
to support you.
OUR PROCESS
Our methods are centered around incorporating
technology to deliver unparalleled solutions for
government organizations.In addition to our audit
experience, our firm expertly performs outsourcing for
governments giving us a wealth of experience in a
finance director role.We don’t believe in a one-size-fits-
all mentality so together,we’ll focus on the needs that are
relevant to your city and provide the right services to
meet them with a tailored audit approach.We’re focused
on efficiency and deliver the audit draft within 3 weeks of
completing fieldwork is completed bringing you accuracy
and value.
OUR FOCUS
Through continuous training and growth opportunities,
we’ve established an environment with a focus on
serving city governments.We spend more than 100
hours training and onboarding to ensure success for our
clients.
We truly hope that you allow us to be your partner.
Together,we’ll go beyond the numbers to best support
your city.
OUR QUALIFICATIONS
GFOA and MnGFOA Association members
AICPA Government Audit Quality Control Member
We speak and train on government accounting and auditing topics
Audit services for over 100 cities
We’ve assisted many cities in preparing for the
GFOA’s Certificate of Achievement for Excellenceawards in financial reporting
Our clients represent top tier governments with 19 municipal clients receiving the GFOA’s Certificate
of Achievement for Excellence in Financial
Reporting
Audit services for EDA’s and HRA’s
5
Audit Approach
AUDIT SERVICES THAT MOVE THE CITY OF SCANDIA BEYOND THE NUMBERS
We deliver auditing services that are more than just a compliance service.We exceed what’s considered
“standard audit support,” placing a strong emphasis on a relationship-driven approach that facilitates a
partnership with your City.We work together to ensure we have a clear understanding of your City’s needs,
challenges and financial information.Together with your City’s team,we’ll help to leverage this information to
increase efficiency and effectiveness.
PARTNERSHIP
Integral to our mission is a philosophy that we help organizations reach their maximum potential through open
communication and teamwork.We enjoy answering questions any time of the year, and at no cost!We
also believe in:
•Consistent, clear, proactive communication that offers suggestions and makes your work easier
•Returning phone calls and questions promptly
•Gathering information through dialog, not checklists
•Conducting listening calls with you outside of the engagement to understand your City,build a long-term
relationship with you and learn how we can improve.
PEOPLE
Our value comes from our experience and the education we can provide.Our professionals go beyond the
required standards to make sure we have a clear understanding of your City.We work with your management
team to leverage this information to increase efficiency and profitability.You can learn more about your audit
team in the team section.
PROCESS
While we will audit the financial statements of your City for the year ended December 31,2020,2021 and
2022,in accordance with the applicable regulatory standards,our process is designed to go far beyond that.
Our process enables us to gain a thorough understanding of the processes, procedures, and general
operations of your City.
1. Client Understanding 2. Planning & Interim Fieldwork 3. Year-end Audit Fieldwork 4. Reporting
6
Audit Approach continued
Your leadership team plays an important role in your financial reporting.We always begin our process with a
face-to-face conversation to gain a thorough understanding of your City,internal controls, processes and
procedures.Our experience with cities like yours allows us to develop a customized audit and
communications plan.We will prepare an audit timeline detailing significant steps in the audit process from
beginning to end.
.
1. Client Understanding
2. Audit Strategy Design
Your City is unique and therefore your audit plan will be tailored to your operations and will include the
relevant and appropriate standards.Your audit strategy is based on our understanding of your City.It will also
encompass:
•Leadership concerns and expectations
•Risk Assessment
•Testing
•Understanding of internal controls
3. Audit Plan Execution
Our execution of your audit strategy begins with fieldwork and ends with a presentation of your draft financial
statements.Your team,including partners and managers,will be present during fieldwork and we’ll be in
continuous communication with your staff.
Fieldwork is where we document internal controls, conduct walkthroughs,and obtain audit evidence to
support financial statement amounts and disclosures.Our paperless audit approach allows us to do much of
the fieldwork from our office.We will discuss your preference for the amount of onsite work and agree on a
mutually beneficial schedule.
During fieldwork,we will discuss any potential audit adjustments with your staff to ensure we agree on the
need for the audit adjustment and amount.We will also address any potential internal control deficiencies to
verify our understanding and discuss potential solutions.We want to be problem solvers, not problem
reporters.
After reviewing the financial statements, notes and supplementary schedules,if any,we prepare a draft of the
financial statements for your review and approval.We will also send a list of audit adjustments noting the
reasons for each adjustment.
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Audit Approach continued
After the previous segments mentioned are complete,we will be ready to finalize the audit.We will report the
results of your audit to the finance committee.We will also deliver a management letter that identifies critical
financial trends and recommendations for improvement, provides required communications, and discusses
changes in the environment in which your City operates.
During this stage we will also complete the following procedures:
•Complete subsequent events review procedures and review legal and representation letters
•Complete final overall analytical review procedures
•Communicate significant deficiencies and material weaknesses
•Conduct an exit conference
•Issue an audit opinion
Analytical Procedures
Analytical procedures are defined in Statement on Auditing Standards No.56,“Analytical Procedures” as
evaluations of financial information made by a study of plausible relationships around both financial and non-
financial data.They are required in the planning and final review stage, but our Firm encourages staff to use in
substantive testing where possible.Our Firm management directs the use of analytical procedures as follows:
Planning
The objective for analytical procedures at this stage is to direct attention to likely misstatements.We use trend
analysis to meet our objective in planning.Examples of trend analysis would be a comparison to the budget for
funds that adopt a budget and/or comparison to prior year.We also may consider a comparison among three
to five years.Additional testing may result if the expectations established at the start of the trend analysis are
not met.
Substantive Testing
The objective of analytical procedures at this stage is to support or refute financial statement account
balances.We have found that analytical procedures are more efficient and can be more effective than tests of
details.Depending on the make-up of the account,we will use trend analysis,ratio analysis and/or modeling.
Final Review
The objective is to review the reasonableness of financial statement account balances.We use trend analysis
to meet our objectives.This trend analysis is completed on final audited amounts.
4. Audit Completion
5. Additional Approach Details
8
Audit Approach continued
Approach to be Taken to Gain and Document an Understanding of the City’s Internal Control Structure
Our goal in preliminary fieldwork is to gain a thorough understanding of your internal controls,processes,and
procedures.The completion of these elements allows us to minimize the fieldwork required to complete the
audit.
Approach to be Taken in Determining Laws and Regulations Subject to Audit Test Work
We are required to obtain an understanding of the possible financial statement effect of laws and regulations
that have a direct and material effect on the determination of financial statement amounts.The determination
of laws and regulations are addressed in the planning stage through reading available grant documentation,
client inquiries, and a preliminary review of finance system accounts and search of the City Council minutes.
We also have a working knowledge of the types of laws and regulations Minnesota governments operate
under.Further discussion is provided in the section Firm Qualifications and Experience.In addition,we obtain
further information about federal laws and regulations through the Catalog of Federal Domestic Assistance
(CFDA)and the U.S.Office of Management and Budget (OMB)Compliance Supplement.
Approach to be Taken in Drawing Audit Samples for Purposes of Tests of Compliance
Since each program or grant agreement is different,we use a variety of statistical designs in our compliance
testing.The size of the sample considers many program factors;size,maturity,complexity,level of oversight
and prior audit findings.Ultimately,our professional judgment determines that a representative number of
transactions have been selected.You can be confident in our judgment because only senior level (partner,
president, manager, and supervisor) staff makes decisions on planned compliance testing.
Identification of Anticipated Potential Audit Problems
At this time,we do not anticipate any potential audit problems.If problems did arise,we carefully work with the
City to resolve the matter.
5. Additional Approach Details (Continued)
9
Technology
AEM Technology
We believe technology should enhance our service offerings,making our work less intrusive, our time with
you more productive and keep everyone’s data more secure.Our use of technology in financial statement
preparation enables us to streamline our work.It also helps us to automate certain functions of our audit,so
we are free to spend more time analyzing our results and working directly with you.
Some of the technology we use to enhance our client experience are:
•Utilize Engagement Organizer for customized to-do lists via a secure online web based portal.
•MindBridge is a data analytics software used to quickly identify unusual transactions and potential errors.
•Utilize Zoom technology to enhance remote work relationships with clients and team members.
AEM takes the security of our data and our client’s data very seriously.Many systems are in place to ensure
the safety of your City’s data with us.We operate in a completely remote hosted environment.This not only
allows to work from any computer, anywhere, any time,but also provides large scale, cutting edge
technology and security for your data.Your data is housed in a secure data warehouse,not on laptops or
local servers.
It also means:
•All firm staff use dual authentication for every login to our remote environment
•Our data is saved on redundant servers so if one server fails the other will immediately take over
•Our data is backed up continually
•All email and embedded links are scanned for viruses prior to landing in our inbox
10
Your Team
In assembling our team to serve the City of Scandia, we have assigned experienced individuals who know and
understand your unique financial accounting and audit needs. Our proposed delivery team has substantial
experience working with cities similar to yours, including audit and accounting experience. Our team members
and their respective experience are briefly profiled below. Full biographies for the staff members are located
on the following pages.
MEMBER TITLE YEARS OF EXPERIENCE
Andy Berg, CPA Partner 26
Brad Falteysek, CPA Partner 23
Bonnie Schwieger, CPA Manager 9
Justin Nilson, CPA Manager 9
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Team Bios
Team Member Background & Expertise
Andy Berg, CPA
Government Partner
andrew.berg@aemCPAs.com
Direct Line (952) 715.3003
Andy Berg joined the Firm in 1994 after graduating Cum Laude from
Gustavus Adolphus College and is registered and licensed to practice as a
CPA in Minnesota. His experience includes auditing municipalities, school
districts, and nonprofits under government auditing standards and single
audits under Uniform Guidance.
Andy stays current on issues affecting his clients by staying involved in
several industry organizations. He participates on the special review
committee for the Government Finance Officers Association. This committee
reviews reports for acceptance into the Certificate of Achievement for
Excellence in Financial Reporting program.
Education
•Bachelor of Science in Accounting, Gustavus Adolphus College
•Continuing professional education as required by AICPA
Professional Memberships
•American Institute of Certified Public Accountants (AICPA)
•Minnesota Society of Certified Public Accountants
•Minnesota Government Finance Officers Association
•Minnesota Association of School Business Officials
•Government Finance Officers Association
Qualifications
•26 years of experience auditing local governments in Minnesota
•Over 95 percent of billable time relates to governmental clients
•Participates on the special review committee for the Government
Finance Officers Association (GFOA). This committee reviews reports
for acceptance into the Certificate of Achievement of Excellence in
Financial Reporting program
•Experienced in Municipal Government Long Term Financial Plans
•Previous MN GFOA presenter on GASB Update and CAFR review
•Previous MNCPA City Report Review Committee
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Team Bios
Team Member Background & Expertise
Brad Falteysek, CPA
Government Partner
brad.falteysek@aemCPAs.com
Direct Line (952) 715.3004
Mr. Falteysek joined the firm in 1998. He graduated Cum Laude from
Winona State University, and worked for two years with the Minnesota
Office of the Legislative Auditor’s Office. He is registered and licensed to
practice as a CPA in Minnesota. His work includes audit and accounting for
many of the Firm’s governmental clients including audits regulated under
Uniform Guidance.
Education
•Graduated Cum Laude from Winona State University
Bachelor of Science in Accounting
Minor in Economics
•Continuing professional education as required by AICPA
Professional Memberships
•American Institute of Certified Public Accountants (AICPA)
•Minnesota Society of Certified Public Accountants (MNCPA)
•Minnesota Association of School Business Officials (MASBO)
•Minnesota Government Finance Officers Association (MNGFOA)
Qualifications
•23 years of experience auditing local governments in Minnesota
•Over 90 percent of billable time relates to governmental clients
•Experienced in municipal government Utility Rate Studies
•Presented at the Minnesota Association of School Business Officials
Annual Conference, the Minnesota Government Finance Officers
Association Annual Conference, and the Minnesota Clerks and Finance
Officers Association Annual Conference
•Experienced in municipal government Long-term Financial Plans
•MSRB Municipal Advisor Qualified Representative (Series 50)
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Team Bios
Team Member Background & Expertise
Bonnie Schwieger, CPA
Manager
bonnie.schwieger@aemCPAs.com
Direct Line (952) 715.3065
Ms. Schwieger joined the Firm in 2012 after graduating from Minnesota
State University, Mankato. Her work includes assisting in the audits of
several municipal, school district and Single Audits.
Education
•Bachelor of Science in Accounting, Minnesota State University,
Mankato
•Associate of Arts in Accounting, South Central College, Mankato
•Continuing professional education as required by AICPA and
Government Accountability Office
Professional Memberships
•Minnesota Government Finance Officers Association
•Minnesota Society of Certified Public Accountants (MNCPA)
Qualifications
•9 years of experience auditing local government in Minnesota
•Over 90 percent of billable time relates to governmental clients
•Certified in Microsoft Excel
14
Team Bios
Team Member Background & Expertise
Justin Nilson, CPA
Manager
justin.nilson@aemCPAs.com
Direct Line (952) 715.3011
Mr. Nilson joined the Firm in 2012 after graduating with an accounting
degree from St. John’s University. His work experience includes assisting in
the audits of several municipal, school district and Single Audits.
Education
•Bachelor of Arts in Accounting, Saint John’s University
•Continuing professional education as required by AICPA and
Government Accountability Office
Professional Memberships
•American Institute of Certified Public Accountants (AICPA)
•Minnesota Society of Certified Public Accountants (MNCPA)
•Minnesota Government Finance Officers Association
Qualifications
•9 years of experience auditing local government in Minnesota
•Over 90 percent of billable time relates to governmental clients
•Experienced in municipal government long-term financial plans
•Experienced in models for various municipal government specific areas
such as utility rate, tax levy, and debt analysis
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Value
We at AEM help our clients improve their city and achieve their financial goals. We heard you say that the
following factors were important in our relationship.
•Assistance through-out the year –we are here to answer simple questions to larger projects. We want to
help the City meet is goals.
As we have described in the pages preceding this section, we will deliver services that will deliver on these
factors that are important to you.
Our fees range from $95 to $365 per hour based upon the experience and level of the individuals to be
assigned to perform the audit. Fees are also based on the assumption that your City’s staff will be assisting us
whenever possible with audit schedules. We will provide a detailed audit plan and prepare a list of requested
schedules upon proposal acceptance.
We do not believe in charging for a phone call, emails, etc. at any time during the year. We encourage clients
to call us for questions, advice, or just update us on what is happening in their organization throughout the
year.We want to be a resource for you throughout the year without consideration of whether or not the meter
is running. When our communications identify additional service needs, we will provide you with an expected
fee range.
We have not anticipated any additional hours for new audit or accounting standards. Accounting or audit
standard changes may result in increased hours.
SUMMARY SCHEDULE OF PROFESSIONAL FEES
Year End
December 31 2020 2021 2022
Audit $ 23,000 $ 23,500 $ 24,000
OSA Reporting Form $ 775 $ 800 $ 825
Total $ 23,775 $ 24,300 $ 24,825
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“”
What Our Clients Say
Client References
We have long-term relationships with many cities in Minnesota.Our clients listed below would be a good
representation of audit clients.All have partner, president, manager or supervisor staffing for the fieldwork
process.
I have worked with Abdo, Eick and Meyers since 1997. They are extremely
helpful and easy to work with. They strive to do the best for their clients in
every way. I would highly recommend them!
~ City of St. Francis –Darcy Mulvihill, Finance Director
City of Chisago City City of Lindstrom City of St. Francis
Cassie Gemuenden | 651-257-4162
Audit year 2019 | 170 Hours
Engagement partner -Brad Falteysek
Kay Mattson | 651-257-0807
Audit year 2019 | 200 Hours
Engagement partner -Andrew Berg
Darcy Mulvihill | 763-753-2630
Audit year 2019 | 180 Hours
Engagement partner –Andrew Berg
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Services Overview
Strategic Planning
We provide strategic planning in numerous areas to
maximize and protect business value.Areas include
cash flow modeling and analysis,growth and
profitability strategies,key employee incentives,
management consulting as well as succession and
exit planning strategies.
Our accounting staff has the experience and diverse
skills to help identify areas of interest and strategies
to achieve desired goals.We strive to build a
reliable and confidential relationship, and desire to
become a trusted advisor that is accessible
throughout the year with any planning needs that
may arise.
Accounting & Attest
Our accounting staff performs audits,reviews and
compilations and also assists our clients with all of
their accounting and bookkeeping needs including
adjusting entries,software issues,etc.Our goal is to
maintain a close and constructive relationship with
you at all times
AEM Workforce Solutions
AEM Workforce Solutions, LLC, helps businesses
and nonprofit agencies better support their most
valuable resource -their people.AEM Workforce
Solutions is a full service human resources and
payroll provider to assist mid-size business with all
of their HR and payroll needs.
Growth can’t happen without the right team in place.
But making decisions about people can be stressful
and time consuming,not to mention emotional.
Having clear and consistent HR practices,that best
suit the individuality of each business,is key.And
because the right policies are just as important,we
lend our HR expertise to help you strategically plan
for your future.
As your partner,we can even help you evaluate and
manage the myriad of risks associated with
employer liability or handle the minutiae of your
regulatory process -we’re here to make your job
easier so you can focus on growing your business.
Management
Our management consulting goes above and
beyond to help management improve performance.
This happens through a collaborated effort that
involves problem identification and development of
improvement plans.We recognize that our most
important product is prompt and effective service
and strive to address all of management’s needs.
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Why AEM
WE LISTEN
You will know you’re in the
right hands well before
delivery, but be assured
that we will get you a great
value for the investment of
your time.
WE ENGAGE
Active engagement with DFK
International and domestic
industry associations allows
us to provide maximum
value to your City.
WE DELIVER
Combining our internal
expertise and technological
resources with what we’ve
learned about you allows
us to deliver a solution that
exceeds your expectations.
Abdo,Eick &Meyers, LLP, established in 1963,has a
professional staff of more than 150 in its Edina and
Mankato offices.The two offices serve clients of all
sizes and industries.Our services include audits,
reviews and compilations, monthly accounting,tax
planning and preparation, and management advisory
services.In addition, Abdo,Eick &Meyers, LLP is
recognized as one of the Top 150 firms in the United
States and the 11th largest firm in Minnesota.
We're here because our clients need solutions to their
challenges--not a commodity product.Through our
dedication to teamwork, development and relationships,
we will help our clients thrive.The investments into our
People +Process make a difference for you, our valued
client.We focus on the challenges and needs that are
relevant to your business or government agency.This
allows us to be thoughtful in our approach in providing
you with the best solutions, and leave you assured in
the value of our deliverable.
The Firm is a member of the American Institute of
Certified Public Accountants Division of Firms and has
received an unmodified opinion on its Peer Review.Our
Peer Review, was completed in 2017 and resulted in a
pass rating. A copy of this letter can be found in
Appendix B.
The Firm has not had any federal or state desk reviewsorfieldreviewsofitsauditsinthelastthree years.Wehave had no disciplinary action taken or pending againsttheFirmduring the past three years with stateregulatory bodies or professional organizations.
We maintain library facilities which include current
professional literature and specific information for the
industries we serve.The Firm library is also reviewed as
part of the external quality review program.The Firm
has in-house training programs specific to our
government clients.We also perform auditing and
accounting updates for our clients that are organized by
our staff.These practices ensure the quality of our staff
over the term of engagement.
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Appendix A
Proposer Guarantees and Warranties
1.Proposer warrants that it is willing and able to comply with State of Minnesota Laws with respect to
foreign (non-State of Minnesota) corporations.
2.Proposer warrants that it is willing and able to obtain an “errors and omissions” insurance policy
providing a prudent amount of coverage for the willful or negligent acts, or omissions of any officers,
employees or agents thereof.
3.Proposer warrants that it will not delegate or subcontract its responsibilities under an agreement
without the prior written permission of the City of Scandia.
4.The proposer certifies that it can and will provide and make available at a minimum, all services set
forth in Section II, Nature of Services Required.
5.Proposer warrants that all information provided in this proposal is true and accurate.
Signature of Official
Name (typed)Andrew K. Berg, CPA
Title Partner
Firm Abdo, Eick & Meyers, LLP
Date November 2, 2020
Appendix B
REPORT ON THE FIRM’S SYSTEM OF QUALITY CONTROL
January 30, 2018
To the Partners of
Abdo, Eick and Meyers, LLP
and the Peer Review Committee of the Minnesota Society
of Certified Public Accountants
We have reviewed the system of quality control for the accounting and auditing practice of
Abdo, Eick & Meyers, LLP (the firm) in effect for the year ended May 31, 2017. Our peer review
was conducted in accordance with the Standards for Performing and Reporting on Peer
Reviews established by the Peer Review Board of the American Institute of Certified Public
Accountants (Standards).
A summary of the nature, objectives, scope, limitations of, and the procedures performed in a
System Review as described in the Standards may be found at www.aicpa.org/prsummary. The
summary also includes an explanation of how engagements identified as not performed or
reported in conformity with applicable professional standards, if any, are evaluated by a peer
reviewer to determine a peer review rating.
Firm’s Responsibility
The firm is responsible for designing a system of quality control and complying with it to provide
the firm with reasonable assurance of performing and reporting in conformity with applicable
professional standards in all material respects. The firm is also responsible for evaluating
actions to promptly remediate engagements deemed as not performed or reported in conformity
with professional standards, when appropriate, and for remediating weaknesses in its system of
quality control, if any.
Peer Reviewer’s Responsibility
Our responsibility is to express an opinion on the design of the system of quality control and the
firm’s compliance therewith based on our review.
Required Selections and Considerations
Engagements selected for review included engagements performed under Government Auditing
Standards, including a compliance audit under the Single Audit Act; audits of employee benefit
plans, an audit performed under FDICIA and an examination of a SOC 2 service organization.
As a part of our peer review, we considered reviews by regulatory entities as communicated by
the firm, if applicable, in determining the nature and extent of our procedures.
Opinion
In our opinion, the system of quality control for the accounting and auditing practice of Abdo,
Eick & Meyers, LLP in effect for the year ended May 31, 2017, has been suitably designed and
complied with to provide the firm with reasonable assurance of performing and reporting in
conformity with applicable professional standards in all material respects. Firms can receive a
rating of pass ,pass with deficiency(ies) or fail. Abdo, Eick & Meyers, LLP has received a peer
review rating of pass.
Brady Martz and Associates, P.C.
Appendix C
Appendix D
City of Sample
City, Minnesota
For the Year Ended
December 31, 20xx
Management Communication
Sample
Date
Management, Honorable Mayor and City Council
City of Sample, Minnesota
We have audited the financial statements the governmental activities, the business-type activities, the discretely presented
component units, each major fund and the aggregate remaining fund information of the City of Sample, Minnesota (the
City) for the year ended December 31, 20xx. Professional standards require that we provide you with information about
our responsibilities under generally accepted auditing standards, Government Auditing Standards, as well as certain
information related to the planned scope and timing of our audit. We have communicated such information in our letter to
you dated October 3, 20xx. Professional standards also require that we communicate the following information related to
our audit.
Our Responsibility under Auditing Standards Generally Accepted in the United States of America Government
Auditing Standards
As stated in our engagement letter, our responsibility, as described by professional standards, is to express opinions
about whether the financial statements prepared by management with your oversight are fairly presented, in all material
respects, in conformity with accounting principles generally accepted in the United States of America. Our audit of the
financial statements does not relieve you or management of your responsibilities.
Our responsibility is to plan and perform the audit to obtain reasonable, but not absolute, assurance that the financial
statements are free of material misstatement. As part of our audit, we considered the internal control over financial
reporting (internal control) of the City. Such considerations were solely for the purpose of determining our audit
procedures and not to provide any assurance concerning such internal control. We are responsible for communicating
significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing
the financial reporting process. However, we are not required to design procedures specifically to identify such matters.
Significant Audit Findings
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 entity’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.
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.
Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be
material weaknesses. However, material weaknesses may exist that have not been identified.
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Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free of material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, grant
agreements, and other matters 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. While our audit provides a reasonable basis for our opinion, it does not provide a legal determination on the
City’s compliance with those requirements. The results of our tests disclosed one instance of noncompliance or other
matters that is required to be reported in accordance with Government Auditing Standards or Minnesota statutes.
2018-001 Internal Control Procedures
Condition: During our audit we noted internal control procedures that were not in compliance with Minnesota
Statutes. The Liquor Stores were making inventory transfers from one store to another.
Criteria: Providing alcohol beverages to other retail locations is considered a sale for resale in violation of
Minnesota Statute Chapter 340A.415 and 340A.505. Providing the product to other retail
locations would also be considered an unlicensed wholesale transaction under the provision of
Minnesota Statute 340A.301.
Cause: City staff are not abiding by Minnesota Statutes as noted above.
Effect: The City liquor operations are in violation of the statutes noted above.
Recommendation: We recommend the City follow Minnesota Statutes by not making any transfers from one liquor
store to the other.
Management Response:
Management plans to follow the recommendations described above.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting
policies used by the City are described in Note 1 to the financial statements. The City changed accounting policies during
20xx related to accounting and financial reporting for other postemployment benefits (GASB 75). We noted no
transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All
significant transactions have been recognized in the financial statements in the proper period.
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Accounting estimates are an integral part of the financial statements prepared by management and are based on
management’s knowledge and experience about past and current events and assumption about future events. Certain
accounting estimates are particularly sensitive because of their significance to the financial statements and because of the
possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates
affecting the financial statements include depreciation on capital assets, allocation of wage expenses, liability for the City’s
pension, and the liability for the City’s other postemployment benefits (OPEB).
•Management’s estimate of depreciation is based on estimated useful lives of the assets. Depreciation is
calculated using the straight-line method.
•Allocations of gross wages and payroll benefits are approved by the City Council within the City’s budget and are
derived from each employee’s estimated time to be spent serving in the respective function of the City. These
allocations are also used in allocating accrued compensated absences payable.
•Management’s estimate of its pension liability is based on several factors including, but not limited to, anticipated
investment return rate, retirement age for active employees, life expectancy, salary increases and form of annuity
payment upon retirement.
•Management’s estimate of its OPEB liability is based on several factors including, but not limited to, anticipated
retirement age for active employees, life expectance, turnover, and healthcare cost trend rates.
We evaluated the key factors and assumptions used to develop these estimates in determining that they are reasonable
in relation to the financial statements as a whole. The disclosures in the financial statements are neutral, consistent, and
clear. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement
users.
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. Management has corrected all such
misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by
management were material, either individually or in the aggregate, to the financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a financial accounting,
reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our
audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter
dated May 30, 20xx.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar
to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the
City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements,
our professional standards require the consulting accountant to check with us to determine that the consultant has all the
relevant facts. To our knowledge, there were no such consultations with other accountants.
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Other Matters
We applied certain limited procedures to the required supplementary information (RSI) (Management’s Discussion and
Analysis, the Schedules of Employer’s Share of the Net Pension Liability, the Schedules of Employer’s Contributions and
the Schedule of Changes in the City's OPEB Liability and Related Ratios), which is information that supplements the basic
financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the
information and comparing the information for consistency with management’s responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit
the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the supplementary information (combining and individual fund financial statements and
schedules), which accompany the financial statements but are not RSI. With respect to this supplementary information,
we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to
determine that the information complies with accounting principles generally accepted in the United States of America, the
method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation
to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying
accounting records used to prepare the financial statements or to the financial statements themselves.
We were not engaged to report on the introductory or statistical sections, which accompany the financial statements but
are not RSI. We did not audit or perform other procedures on this other information and we do not express an opinion or
provide any assurance on them.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with
management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal
course of our professional relationship and our responses were not a condition to our retention.
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Future Accounting Standard Changes
The following Governmental Accounting Standards Board (GASB) Statements have been issued and may have an impact
on future City financial statements: (1)
GASB Statement No. 83 - Certain Asset Retirement Obligations
Summary
This Statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a
legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal
obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability
based on the guidance in this Statement.
This Statement establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding
deferred outflow of resources for AROs. This Statement requires that recognition occur when the liability is both incurred
and reasonably estimable. The determination of when the liability is incurred should be based on the occurrence of
external laws, regulations, contracts, or court judgments, together with the occurrence of an internal event that obligates a
government to perform asset retirement activities. Laws and regulations may require governments to take specific actions
to retire certain tangible capital assets at the end of the useful lives of those capital assets, such as decommissioning
nuclear reactors and dismantling and removing sewage treatment plants. Other obligations to retire tangible capital assets
may arise from contracts or court judgments. Internal obligating events include the occurrence of contamination, placing
into operation a tangible capital asset that is required to be retired, abandoning a tangible capital asset before it is placed
into operation, or acquiring a tangible capital asset that has an existing ARO.
This Statement requires the measurement of an ARO to be based on the best estimate of the current value of outlays
expected to be incurred. The best estimate should include probability weighting of all potential outcomes, when such
information is available or can be obtained at reasonable cost. If probability weighting is not feasible at reasonable cost,
the most likely amount should be used. This Statement requires that a deferred outflow of resources associated with an
ARO be measured at the amount of the corresponding liability upon initial measurement.
This Statement requires the current value of a government's AROs to be adjusted for the effects of general inflation or
deflation at least annually. In addition, it requires a government to evaluate all relevant factors at least annually to
determine whether the effects of one or more of the factors are expected to significantly change the estimated asset
retirement outlays. A government should remeasure an ARO only when the result of the evaluation indicates there is a
significant change in the estimated outlays. The deferred outflows of resources should be reduced and recognized as
outflows of resources (for example, as an expense) in a systematic and rational manner over the estimated useful life of
the tangible capital asset.
A government may have a minority share (less than 50 percent) of ownership interest in a jointly owned tangible capital
asset in which a nongovernmental entity is the majority owner and reports its ARO in accordance with the guidance of
another recognized accounting standards setter. Additionally, a government may have a minority share of ownership
interest in a jointly owned tangible capital asset in which no joint owner has a majority ownership, and a nongovernmental
joint owner that has operational responsibility for the jointly owned tangible capital asset reports the associated ARO in
accordance with the guidance of another recognized accounting standards setter. In both situations, the government's
minority share of an ARO should be reported using the measurement produced by the nongovernmental majority owner or
the nongovernmental minority owner that has operational responsibility, without adjustment to conform to the liability
measurement and recognition requirements of this Statement.
In some cases, governments are legally required to provide funding or other financial assurance for their performance of
asset retirement activities. This Statement requires disclosure of how those funding and assurance requirements are
being met by a government, as well as the amount of any assets restricted for payment of the government's AROs, if not
separately displayed in the financial statements.
This Statement also requires disclosure of information about the nature of a government's AROs, the methods and
assumptions used for the estimates of the liabilities, and the estimated remaining useful life of the associated tangible
capital assets. If an ARO (or portions thereof) has been incurred by a government but is not yet
recognized because it is not reasonably estimable, the government is required to disclose that fact and
the reasons therefor. This Statement requires similar disclosures for a government's minority shares of
AROs.
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Future Accounting Standard Changes (Continued)
Effective Date
The requirements of this Statement are effective for reporting periods beginning after June 15, 2018. Earlier application is
encouraged.
How the Changes in This Statement Will Improve Financial Reporting
This Statement will enhance comparability of financial statements among governments by establishing uniform criteria for
governments to recognize and measure certain AROs, including obligations that may not have been previously reported.
This Statement also will enhance the decision-usefulness of the information provided to financial statement users by
requiring disclosures related to those AROs.
GASB Statement No. 84 - Fiduciary Activities
Summary
The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and
financial reporting purposes and how those activities should be reported.
This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the
criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries
with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and
postemployment benefit arrangements that are fiduciary activities.
An activity meeting the criteria should be reported in a fiduciary fund in the basic financial statements. Governments with
activities meeting the criteria should present a statement of fiduciary net position and a statement of changes in fiduciary
net position. An exception to that requirement is provided for a business-type activity that normally expects to hold
custodial assets for three months or less.
This Statement describes four fiduciary funds that should be reported, if applicable: (1) pension (and other employee
benefit) trust funds, (2) investment trust funds, (3) private-purpose trust funds, and (4) custodial funds. Custodial funds
generally should report fiduciary activities that are not held in a trust or equivalent arrangement that meets specific criteria.
A fiduciary component unit, when reported in the fiduciary fund financial statements of a primary government, should
combine its information with its component units that are fiduciary component units and aggregate that combined
information with the primary government’s fiduciary funds.
This Statement also provides for recognition of a liability to the beneficiaries in a fiduciary fund when an event has
occurred that compels the government to disburse fiduciary resources. Events that compel a government to disburse
fiduciary resources occur when a demand for the resources has been made or when no further action, approval, or
condition is required to be taken or met by the beneficiary to release the assets.
Effective Date
The requirements of this Statement are effective for reporting periods beginning after December 15, 2018. Earlier
application is encouraged.
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement will enhance consistency and comparability by (1) establishing specific criteria for
identifying activities that should be reported as fiduciary activities and (2) clarifying whether and how business-type
activities should report their fiduciary activities. Greater consistency and comparability enhances the value provided by the
information reported in financial statements for assessing government accountability and stewardship.
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Future Accounting Standard Changes (Continued)
GASB Statement No. 87 - Leases
Summary
The objective of this Statement is to better meet the information needs of financial statement users by improving
accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments’
financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified
as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of
the contract. It establishes a single model for lease accounting based on the foundational principle that leases are
financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability
and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow
of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities.
Effective Date and Transition
The requirements of this Statement are effective for reporting periods beginning after December 15, 2019. Earlier
application is encouraged.
Leases should be recognized and measured using the facts and circumstances that exist at the beginning of the period of
implementation (or, if applied to earlier periods, the beginning of the earliest period restated). However, lessors should not
restate the assets underlying their existing sales-type or direct financing leases. Any residual assets for those leases
become the carrying values of the underlying assets.
How the Changes in This Statement Will Improve Accounting and Financial Reporting
This Statement will increase the usefulness of governments’ financial statements by requiring reporting of certain lease
liabilities that currently are not reported. It will enhance comparability of financial statements among governments by
requiring lessees and lessors to report leases under a single model. This Statement also will enhance the decision-
usefulness of the information provided to financial statement users by requiring notes to financial statements related to the
timing, significance, and purpose of a government’s leasing arrangements.
GASB Statement No. 88 - Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements
Summary
The primary objective of this Statement is to improve the information that is disclosed in notes to government financial
statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments
should include when disclosing information related to debt.
This Statement defines debt for purposes of disclosure in notes to financial statements as a liability that arises from a
contractual obligation to pay cash (or other assets that may be used in lieu of cash) in one or more payments to settle an
amount that is fixed at the date the contractual obligation is established.
This Statement requires that additional essential information related to debt be disclosed in notes to financial statements,
including unused lines of credit; assets pledged as collateral for the debt; and terms specified in debt agreements related
to significant events of default with finance-related consequences, significant termination events with finance-related
consequences, and significant subjective acceleration clauses.
For notes to financial statements related to debt, this Statement also requires that existing and additional information be
provided for direct borrowings and direct placements of debt separately from other debt.
Effective Date and Transition
The requirements of this Statement are effective for reporting periods beginning after June 15, 2018. Earlier application is
encouraged.
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Future Accounting Standard Changes (Continued)
How the Changes in This Statement Will Improve Accounting and Financial Reporting
The requirements of this Statement will improve financial reporting by providing users of financial statements with
essential information that currently is not consistently provided. In addition, information about resources to liquidate debt
and the risks associated with changes in terms associated with debt will be disclosed. As a result, users will have better
information to understand the effects of debt on a government’s future resource flows.
GASB Statement No. 89 - Accounting for Interest Cost Incurred before the End of a Construction Period
Summary
The objectives of this Statement are (1) to enhance the relevance and comparability of information about capital assets
and the cost of borrowing for a reporting period and (2) to simplify accounting for interest cost incurred before the end of a
construction period.
This Statement establishes accounting requirements for interest cost incurred before the end of a construction period.
Such interest cost includes all interest that previously was accounted for in accordance with the requirements of
paragraphs 5–22 of Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-
November 30, 1989 FASB and AICPA Pronouncements, which are superseded by this Statement. This Statement
requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in
which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a
result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital
asset reported in a business-type activity or enterprise fund.
This Statement also reiterates that in financial statements prepared using the current financial resources measurement
focus, interest cost incurred before the end of a construction period should be recognized as an expenditure on a basis
consistent with governmental fund accounting principles.
Effective Date and Transition
The requirements of this Statement are effective for reporting periods beginning after December 15, 2019. Earlier
application is encouraged. The requirements of this Statement should be applied prospectively.
How the Changes in This Statement Will Improve Accounting and Financial Reporting
The requirements of this Statement will improve financial reporting by providing users of financial statements with more
relevant information about capital assets and the cost of borrowing for a reporting period. The resulting information also
will enhance the comparability of information about capital assets and the cost of borrowing for a reporting period for both
governmental activities and business-type activities.
GASB Statement No. 90 - Majority Equity Interests
Summary
The primary objectives of this Statement are to improve the consistency and comparability of reporting a government’s
majority equity interest in a legally separate organization and to improve the relevance of financial statement information
for certain component units. It defines a majority equity interest and specifies that a majority equity interest in a legally
separate organization should be reported as an investment if a government’s holding of the equity interest meets the
definition of an investment. A majority equity interest that meets the definition of an investment should be measured using
the equity method, unless it is held by a special-purpose government engaged only in fiduciary activities, a fiduciary fund,
or an endowment (including permanent and term endowments) or permanent fund. Those governments and funds should
measure the majority equity interest at fair value.
For all other holdings of a majority equity interest in a legally separate organization, a government should report the
legally separate organization as a component unit, and the government or fund that holds the equity
interest should report an asset related to the majority equity interest using the equity method. This
Statement establishes that ownership of a majority equity interest in a legally separate organization
results in the government being financially accountable for the legally separate organization and,
therefore, the government should report that organization as a component unit.
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Future Accounting Standard Changes (Continued)
This Statement also requires that a component unit in which a government has a 100 percent equity interest account for
its assets, deferred outflows of resources, liabilities, and deferred inflows of resources at acquisition value at the date the
government acquired a 100 percent equity interest in the component unit. Transactions presented in flows statements of
the component unit in that circumstance should include only transactions that occurred subsequent to the acquisition.
Effective Date and Transition
The requirements of this Statement are effective for reporting periods beginning after December 15, 2018. Earlier
application is encouraged. The requirements should be applied retroactively, except for the provisions related to (1)
reporting a majority equity interest in a component unit and (2) reporting a component unit if the government acquires a
100 percent equity interest. Those provisions should be applied on a prospective basis.
How the Changes in This Statement Will Improve Accounting and Financial Reporting
The requirements of this Statement will improve financial reporting by providing users of financial statements with
essential information related to presentation of majority equity interests in legally separate organizations that previously
was reported inconsistently. In addition, requiring reporting of information about component units if the government
acquires a 100 percent equity interest provides information about the cost of services to be provided by the component
unit in relation to the consideration provided to acquire the component unit.
(1)Note. From GASB Pronouncements Summaries. Copyright 2018 by the Financial Accounting Foundation, 401 Merritt 7,
Norwalk, CT 06856, USA, and is reproduced with permission.
* * * * *
Restriction on Use
This communication is intended solely for the information and use of the City Council, management and the Minnesota
Office of the State Auditor and is not intended and should not be used by anyone other than those specified parties.
Our audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of the
accounting records and related data. The comments and recommendations in the report are purely constructive in nature,
and should be read in this context.
If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your
convenience. We wish to thank you for the continued opportunity to be of service and for the courtesy and cooperation
extended to us by your staff.
ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota
May 30, 20xx
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City of Sample
20xx Financial Statement Audit
Sample
Introduction Audit Opinion and Responsibility
General Fund Results
Other Governmental Funds
Enterprise Funds
Ratios
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Audit Results
Auditor’s Opinion
Minnesota Legal Compliance
3
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Audit Results
2018 Audit
Findings
•Legal Compliance Finding
Liquor Store Transfers
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General Fund -
Fund Balances
50.0%49.4%49.1%51.3%49.4%
$12,932,561 $13,406,613 $13,768,216 $14,160,066 $14,456,520 $15,581,996
35%35%35%35%35%
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
2014 2015 2016 2017 2018 2019
Unassigned Fund Balance Budget Fund Balance Policy
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General Fund
Budget to
Actual
Actual Variance with
Original Final Amounts Final Budget
Revenues 14,255,020$ 14,400,314$ 15,454,557$ 1,054,243$
Expenditures 14,456,520 14,943,984 14,706,435 237,549
Excess of Revenues
Over Expenditures (201,500) (543,670) 748,122 1,291,792
Other Financing Sources (Uses)
Sale of capital assets 1,500 1,500 2,040 540
Transfers in 200,000 338,000 338,000 -
Transfers out - - (740,000) (740,000)
Net Change in Fund Balances - (204,170) 348,162 552,332
Fund Balances, January 1 7,452,744 7,452,744 7,452,744 -
Fund Balances, December 31 7,452,744$ 7,248,574$ 7,800,906$ 552,332$
Budgeted Amounts
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General Fund
Revenues by
Type
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
Taxes Licenses and
Permits Intergovernmental
Charges for
services
Other
2016 2017 2018
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General Fund
Expenditures
by Type
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
General
government
Public safety Culture and
recreation
Public works Other
2016 2017 2018
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Capital Projects
Fund Balances
$(6,000,000)
$(4,000,000)
$(2,000,000)
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
Nonspendable Restricted Assigned Unassigned
2016 2017 2018
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Special
Revenue Fund
Balances
$(1,000,000)
$(500,000)
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
Nonspendable Restricted Committed Unassigned
2016 2017 2018
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Debt Service
Funds
Total Total Bonds Year of
Cash Assets Outstanding Maturity
General Obligation Bonds
2006C/2017B Recreation Refunding 408,866$ 412,285$ 1,245,000$ 02/01/2022
2009A G.O. Street Reconstruction/CIP 469,381 524,214 2,275,000 02/01/2025
2010A G.O. Build America Bonds 829,642 881,953 2,505,000 02/01/2026
2010D Improvement and Refunding 558,582 1,243,134 695,000 03/01/2019
2011A G.O. Street Reconstruction/CIP 615,928 734,074 2,990,000 02/01/2027
2012A G.O. Bonds 100,502 361,411 2,440,000 02/01/2028
2013A G.O. Bonds 554,932 781,658 3,565,000 02/01/2029
2013B G.O Refunding 413,227 525,717 248,000 02/01/2021
2014A G.O. Bonds 667,833 773,884 2,345,000 02/01/2030
2014B Advance Refunding 925,313 925,313 4,890,000 02/01/2027
2015A G.O. Obligation 636,157 900,503 3,450,000 02/01/2031
2015B Crossover Refunding 617,699 725,401 1,800,000 02/01/2022
2016A G.O. Street Improvement 389,273 422,562 3,045,000 02/01/2032
2017A G.O. Street Improvement 647,838 1,741,101 3,095,000 02/01/2033
2018A G.O. Street Improvement 435,797 435,797 3,200,000 02/01/2034
2018B G.O. Refunding (2007B/2008A)250,863 378,019 1,220,000 02/01/2024
Capital lease 29,338 29,338 1,385,000 02/01/2029
Debt Service Revolving Fund 802,536 2,407,528 -
Total Debt Service funds 9,353,707$ 14,203,892$ 40,393,000$
Total Remaining Interest Payments 7,423,721$
Debt Description
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Debt Service
Funds
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Principal Interest
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Water and
Sewer Fund -
Cash Flows from
Operations and
Cash Balances $-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
2015 2015 2016 2016 2017 2017 2018 2018
Operating costs Debt payments Operating receipts
$8,328,601
$7,240,177
$7,936,293
$6,685,909
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
2015 2016 2017 2018
Unrestricted Cash
Minimum target balance (six months of operating costs plus debt service)
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Storm Water
Fund -
Cash Flows from
Operations and
Cash Balances
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
2015 2015 2016 2016 2017 2017 2018 2018
Operating receipts Debt payments (including related transfers)Operating costs
$5,815,470 $5,750,497
$5,016,037 $5,405,770
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
2015 2016 2017 2018
Unrestricted Cash
Minimum target balance (six months of operating costs plus debt service)
14
Sample
Municipal
Liquor Store
Fund -
Change in Net
Position and
Cash Balances
Total Total Total
Sales 3,719,308$ 100.0 %4,794,923$ 100.0 %5,239,748$ 100.0 %
Cost of Sales 2,873,784 77.3 3,710,540 77.4 4,105,625 78.4
Gross Profit 845,524 22.7 1,084,383 22.6 1,134,123 21.6
Other Revenue 84,426 2.3 92,865 1.9 101,532 1.9
Operating Expenses (994,530) (26.7) (1,171,384) (24.4) (1,080,836) (20.6)
Operating Income (Loss)(64,580) (1.7) 5,864 0.1 154,819 2.9
Nonoperating Revenues 368 - - - - -
Nonoperating Expenses (41,963) (1.5) (79,333) (2.1) (12,658) (0.3)
Change in Net Position (106,175)$ (3.2) %(73,469)$ (2.0) %142,161$ 2.6 %
Cash Balance (55,892)$ (408,095)$ (293,021)$
2016 2017 2018
Percent Percent Percent
15
Sample
Municipal
Liquor Store
Fund -
Comparative Analysis
of Operations and
Cash Balances
Sales 100.0 %100.0 %100.0 %
Cost of Sales 74.3 75.6 75.9
Gross Profit 25.7 24.4 24.1
Operating Expenses 17.6 26.1 24.0
Operating Income 8.1 (1.7) 0.1
Nonoperating Revenue (Expense)- (1) (1.6)
Income Before Transfers 8.1 %(2.8) %(1.5) %
Source: Analysis of Municipal Liquor Store Operations, for the year ended December 31, 2017.
Published by the Minnesota Office of the State Auditor
of Sales of Sales of Sales
2015 2016 2017
Percent Percent Percent
Off Sale Only Stores
$(73,707)$(55,892)
$(408,095)
$(293,021)
$(450,000)
$(400,000)
$(350,000)
$(300,000)
$(250,000)
$(200,000)
$(150,000)
$(100,000)
$(50,000)
$-
2015 2016 2017 2018
Cash Balances
16
Sample
Street Light
Fund -
Cash Flows from
Operations and
Cash Balances $-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
2015 2015 2016 2016 2017 2017 2018 2018
Operating costs Operating receipts
$295,016
$332,206 $328,891 $319,692
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
2015 2016 2017 2018
Unrestricted Cash Minimum target balance (six months of operating costs)
17
Sample
Sports Center
Fund -
Cash Flows from
Operations and
Cash Balances
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
2015 2015 2016 2016 2017 2017 2018 2018
Operating costs Debt payments (including related transfers)Operating receipts
$128,597
$1,454 $4,050 $966
$(10,000)
$10,000
$30,000
$50,000
$70,000
$90,000
$110,000
$130,000
$150,000
2015 2016 2017 2018
Unrestricted Cash Minimum target balance (six months of operating costs and debt service)
18
Sample
Cash and
Investments
Balances by
Fund Type
$48,179,243
$44,146,081 $43,520,280
$-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
2016 2017 2018
General Fund Capital Projects Funds Special Revenue Funds
Debt Service Funds Enterprise Funds Internal Service Fund
19
Sample
Key Ratios
2015 2016 2017 2018
43.5%44.0%43.9%N/A
55.2%55.5%55.0%N/A
51.7%49.9%47.8%47.1%
0.0%
Class 2 Cities
Cities in County
City of Sample
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Tax Rates
2015 2016 2017 2018
$502 $519 $542 N/A
$527 $536 $559 N/A
$560 $559 $565 $567
$-
Class 2 Cities
Cities in County
City of Sample
$100
$200
$300
$400
$500
$600
Taxes Per Capita
20
Sample
Key Ratios
2015 2016 2017 2018
$1,148 $1,233 $1,208 N/A
$2,192 $2,194 $1,978 N/A
$2,505 $2,065 $1,952 $1,725
$-
Class 2 Cities
Cities in County
City of Sample
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Debt Per Capita
21
Sample
Key Ratios
2015 2016 2017 2018
$631 $638 $666 N/A
$506 $510 $544 N/A
$431 $458 $466 $483
$-
Class 2 Cities
Cities in County
City of Sample
$100
$200
$300
$400
$500
$600
$700
Current Expenditures Per Capita
2015 2016 2017 2018
$288 $287 $269 N/A
$319 $461 $313 N/A
$244 $412 $319 $282
$-
Class 2 Cities
Cities in County
City of Sample
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
Capital Expenditures Per Capita
22
Sample
Key Ratios
General
Government Public Safety Public Works Culture and
Recreation
Community
Development
Capital
Outlay Transfers Out
$106 $280 $103 $97 $40 $269 $123
$131 $232 $81 $79 $17 $313 $211
2017 Class 2 Cities
2017 Cities in County
City of Sample $91 $217 $82 $60 $33 $282 $117
$-
$50
$100
$150
$200
$250
$300
$350
Expenditures by Program Per Capita
Taxes Special
Assessments
Licenses and
Permits
Inter-
governmental
Charges for
Services
Fines and
Forfeitures
Interest on
Investments Miscellaneous Transfers In
$542 $55 $45 $150 $111 $8 $12 $26 $144
$559 $53 $41 $113 $92 $5 $7 $43 $224
2017 Class 2 Cities
2017 Cities in County
City of Sample $567 $41 $38 $66 $36 $4 $12 $34 $134
$-
$100
$200
$300
$400
$500
$600
Per Capita Revenues by Source
23
Sample
Questions?
24
Sample