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Honorable Mayor and <br /> Members of the City Council <br />City of Lino Lakes <br />Page 2 <br />Qualitative aspects of accounting practices (continued) <br />Accounting estimates (continued) <br /> Management’s estimate of the allowance for doubtful accounts is based on a historical review of <br />delinquent accounts and subsequent collections and other collection options available to the <br />City. <br /> Management’s estimate of the amount of the year-end compensated absences payable to <br />employees is based on historical trends and anticipated leave time activity. <br /> Management’s estimate of the investments at fair value is based on published market values at <br />December 31, 2015. <br /> Management’s estimate of other postemployment benefits payable is based on an actuarial <br />study performed by an independent third-party and the City’s historical activity. We evaluated <br />the key factors and assumptions used to develop the other postemployment benefits payable in <br />determining that it is reasonable in relation to the financial statements taken as a whole. <br /> Management’s estimate of the net pension liability is based on an actuarial computed amount. <br />We evaluated the key factors and assumptions used to develop the net pension liability in <br />determining that it is reasonable in relation to the financial statements taken as a whole. <br />Change in Accounting Estimate <br />This year involved a change in accounting estimate when it comes to depreciation of fixed assets. In <br />prior years, there was no depreciation taken in the first year of acquiring an asset. Beginning in fiscal <br />year 2015, the City is depreciating assets immediately once acquired. <br />Financial statement disclosures <br />Certain financial statement disclosures are particularly sensitive because of their significance to <br />financial statement users. There were no particularly sensitive financial statement disclosures. <br />The financial statement disclosures are neutral, consistent, and clear. <br />Difficulties encountered in performing the audit <br />We encountered no significant difficulties in dealing with management in performing and completing our <br />audit. <br />Uncorrected misstatements <br />Professional standards require us to accumulate all misstatements identified during the audit, other <br />than those that are clearly trivial, and communicate them to the appropriate level of management. <br />Management did not identify and we did not notify them of any uncorrected financial statement <br />misstatements. <br />Corrected misstatements <br />None of the misstatements detected as a result of audit procedures and corrected by management <br />were material, either individually or in the aggregate, to the financial statements taken as a whole. <br />Disagreements with management <br />For purposes of this letter, a disagreement with management is a financial accounting, reporting, or <br />auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial <br />statements or the auditors’ report. No such disagreements arose during our audit.