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VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION <br />VADNAIS HEIGHTS, MINNESOTA <br />SCHEDULE OF FINDINGS AND RESPONSES - CONTINUED <br />DECEMBER 31, 2007 <br />F Description <br />2007-4 Material Audit Adjustments <br />Condition: During our audit adjustments were needed to adjust beginning balances, correct <br />entries, reclassify escrow deposit payable activity and adjust deferred revenue. <br />Criteria: The financial statements are the responsibility of the Organization's management. <br />Cause: <br />Effect: <br />Recommendation: <br />The Organisation's staff has not prepared a year-end trial balance reflecting all <br />necessary accounting entries. <br />This indicates that it would be likely that a misstatement may occur and not be <br />detected by the Organization's system of internal control. The audit firm can not <br />serve as a compensating control over this deficiency. <br />We recommend that management review each journal entry, obtain an understanding <br />of why the entry was necessary and modify current procedures to ensure that future <br />corrections are not needed. <br />-23- <br />