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Honorable Mayor and Members of the City Council City of Lino Lakes, Minnesota INDEPENDENT AUDITORS' REPORT Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business type activities, each major fund, and the aggregate remaining fund information of the City of Line Lakes, Minnesota as of and for the year ended December 31, 2015, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for tile Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of Internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility . Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement An audit involves performing procedures to obtain audit evidence about the amounts and disck>sures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Uno Lakes as of December31, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted In the United States of America. Emphasis of Mailers During fiscal year ended December 31, 2015, the City of Uno Lakes, Minnesota adopted the provisions of Government Accounting Standards Board Statement (GASB) No. 68, Accounting and Financial Reporting for Pensions and the related GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date -an amendment of GASB Statement No. 68. As a result of the implementation of these standards, the City of Uno Lakes, Minnesota reported a restatement for the change in the accounting principle (see Note 19). Our auditors' opinion was not modified with respect to the restatement. Oilier Mailers Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison information, and schedule of funding progress to postemployment benefit plan, as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with managemenfs responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with suffident evidence to express an opinion or provide any assurance. Other lnfomratron Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Uno Lakes' basic financial statements. The combining fund financial statements and other supplementary financial and other Information, the introductory section, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. Other lnfmmation (Continued) The combining fund statements, special revenue fund -program recreation schedule of revenues, expenditures, and changes in fund balance -budget and actual, the combining schedule of indebtedness, schedule of deferred tax levies, and the debt seNice payments to maturity -all bonds schedule are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the undertying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in acc;ordance with auditing standards generally accepted in the United States of America. In our opinion, the combining fund statements, special revenue fund -program recreation schedule of revenues, expenditures, and changes in fund balance -budget and actual, the combining schedule of indebtedness, schedule of deferred tax levies, and the debt service payments to maturity -all bonds schedule are fairty stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section, schedule of insurance in force, schedule of taxable valuations, tax levies, and tax rates, and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 16, 2016, on our consideration of the City of Uno Lakes' internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the result of that testing, and not to provide an opinion on Internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Uno Lakes' Internal control over financial reporting and compliance. CliftonlarsonAIIen LLP Minneapolis, Minnesota May 16,2016 IV-2