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MINUTES <br />CITY COUNCIL <br />JULY 9, 2008 <br />Moeller reported that based on the tests performed, the City has one <br />finding ofnon-compliance for 2007. That finding was the City's lack of <br />an out-of--town travel policy for the City Council. The Council has now <br />adopted such a policy. <br />Moeller went on to explain the background on recent standard charges, <br />which lowered the threshold for reporting of internal control matters and <br />re-defined internal control deficiencies. She noted that the revised <br />definition of significant deficiency is much broader. Moeller pointed out <br />that certain deficiencies are now automatic findings and had not been <br />required to be communicated in the past. These include the lack of <br />financial statement preparation oversight, inadequate documentation of <br />internal control procedures, and audit adjustments. Little Canada received <br />two findings for 2007 (down from four in 2006). These findings included <br />audit adjustments and lack of segregation of duties. Moeller reported that <br />governmental accounting is extremely complex and almost every city <br />receives a finding of audit adjustments. This is especially true in the <br />smaller city. Additionally, due to Little Canada's small staff, it is <br />common to have a finding of lack of segregation of duties. <br />Moeller reported that the Communication With Those Charged With <br />Governance is a required report. She noted that the report documents that <br />there were no disagreements with management during the conduct of the <br />audit nor any difficulties encountered in performing the audit. <br />The Council asked about testing for fraud. Moeller reported that during <br />the audit there is testing for fraud done, and noted that should there be <br />collusion, fraud would be more difficult to find. However, this testing is <br />done. The City Adminisri•ator noted that given the small staff and the <br />difficulty is providing for segregation of duties, there is a greater risk of <br />fraud. Again, this testing is done as part of the audit. <br />The Administrator noted the more stringent auditing standards that have <br />developed over the years. He noted that as the City Auditor pointed out, <br />the findings identified would be typical of a city our size. <br />Moeller reported that the only new auditing standard that would impact <br />Little Canada in the next two years would be relative to the reporting of <br />post employment benefits. This would not be a huge issue for Little <br />Canada, however. <br />The Council thanked the City Auditor for her report. <br />There being no further business, the workshop was adjourned at 7:10 p.m. <br />2 <br />