07-11-07 Council Minutes - Laserfiche WebLink

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MINUTES CITY COUNCIL JULY 11, 2007 4. Public Indebtedness; 5. Claims and disbursement; 6. Miscellaneous provisions; 7. Tax increment financing. Moeller indicated that based on the tests performed, there were no findings of noncompliance for 2006. Moeller reported that the 2006 Audit Report is based on new standards. These are SAS 112 which lowered the threshold for reporting of internal control matters and re-defined internal control deficiencies. She indicated that based on these changes, most cities will have more findings in their audit reports. Moeller indicated that four common findings are: 1. Lack of financial statement preparation oversight; 2. Inadequate documentation of internal control procedures; 3. Misstatements not detected by City personnel; 4. Lack of journal entry approval. Moeller reported that Little Canada received four findings for 2006 including the second and third listed above. Moeller then informed that in preparing the Audit Management Letter, the Auditor comments on whether there are disagreements with management or difficulties encountered in performing the audit. She noted that there were none with the Little Canada audit. Blesener asked how the City Auditor would consider the City's finances. Moeller replied that Little Canada received a clean audit opinion, but noted that there are more internal control findings as a result of the new SAS 112 standards. Moeller pointed out that the City must consider these findings from a cost/benefit basis. McGraw asked if there was any consideration given to smaller cities when these new accounting standards were developed. Moeller reported that the AICPA developed the new standards and while they recognize that the standards are a hardship to smaller entities, they do not give small cities a pass on these standards. Blesener noted that the City is currently developing financial policies. The City Administrator indicated that some of the internal control issues can be addressed through clarification of duties in job descriptions. Moeller reported that there are several ways to document internal controls, and most cities are just addressing this issue this year.