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Vadnais Lake Area Water Management Organization <br />March 24, 2010 <br />Page 5 <br />Compliance <br />As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed <br />tests of compliance with certain provisions of Minnesota statutes. However, the objective of our tests was not to provide an <br />opinion on compliance with such provisions. We noted no instances of noncompliance with Minnesota statutes. <br />Summary of Prior Year Findings <br />2008-4 Declaration for Payment <br />Condition: <br />Criteria: <br />Auditing for legal compliance requires a review of the Organization's deposits and <br />investments. Our study indicated an instance of non-compliance that we believe is <br />required to be remedied. <br />Minnesota statute §471.391 requires that each declaration for payment be signed to <br />the effect that such account, claim, or demand is just and correct and no that no part <br />of it has been paid. The statute is satisfied if on the back of Organizations checks is a <br />declaration as defined in Minnesota statute §471.391 reading "I declare under the <br />penalties of law that this account, claim or demand is just and correct and that no part <br />of it has been paid." <br />Current Year Status: The Organization eliminated this finding during 2009 by including the appropriate <br />declaration on the back of their checks. <br />Planned Scope and Timing of the Audit <br />We performed the audit according to the planned scope and timing. <br />Qualitative Aspects of Accounting Practices <br />Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used <br />by the Organization are described in Note 1 to the financial statements. No new accounting policies were adopted and the <br />application of existing policies was not changed during the year ended December 31, 2009. We noted no transactions entered into <br />by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. All significant <br />transactions have been recognized in the financial statements in the proper period. <br />Accounting estimates are an integral part of the financial statements prepared by management and are based on management's <br />knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are <br />particularly sensitive because of their significance to the financial statements and because of the possibility that future events <br />affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were <br />capital asset basis and depreciation. <br />Management's estimate of these accounting estimates is based on estimated or actual historical cost and the estimated useful lives <br />of capital assets. We evaluated the key factors and assumptions used to develop these accounting estimates in determining that it <br />is reasonable in relation to the financial statements taken as a whole. <br />The disclosures in the financial statements are neutral, consistent, and clear. Certain financial statement disclosures are particularly <br />sensitive because of their significance to financial statement users. <br />952.835.9090 • Fax 952.835.3261 <br />www.aemepas.com <br />