06/04/2007 Council Packet (2) - Laserfiche WebLink

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As part of the audit, we proposed the following entries: - Reclassify bond proceeds in the Water Fund. Reclassify refunding debt service expenditures. Adjust accrued interest payable in the Water Fund. To record a delinquent special assessment receivable and offsetting deferred revenue. - To reclassify new bond issue costs and record 2006 amortization of bond issue costs in the Water Fund. To adjust net assets classification, Invested in Capital Assets Net of Related Debt in the business -type funds. The above entries relate to internal controls over the year -end close -out process. The absence of a complete control procedure or process in this area is considered a material weakness because the potential exists that a material misstatement of the financial statements could occur and not be prevented or detected by the City's internal control processes. During the course of our audit, several items came to our attention that we feel could be addressed by the City of Lino Lakes to more efficiently run the City's operations or improve its internal controls. We herein submit the following suggestions to the City of Lino Lakes for their consideration. Auditor Comments: Capital Project Deficits The financial statements for the capital project funds are presented in Statements 3, 5, 12 and 13 of the 2006 Annual Financial Report. As of December 31, 2006, three of the capital project funds have deficit fund balances equaling a combined deficit of $783,556. This compares to five capital project funds with a combined deficit fund balance of $859,840 as of December 31, 2005. We would like to recognize the significant improvements made related to fund balance deficits over the past three years. Of the three remaining funds with a deficit, one is very typical for any city operating a TIF fund (TIF 1 -11), one is simply a timing difference between expenditures and the related MSA funding source (CSAG 14/8 Reconstruction Project), and the last has specifically been addressed by the Council and a plan is being implemented to reduce the deficit over the near future (Dedicated Parks). SAC Revolving The SAC Revolving Fund was established in 1990 to account for a refund from the MCES (formerly MWCC) of past SAC charges which were paid by residents that had not hooked up to the sewer system. A summary of financial activity of this fund is as follows: Revenue SAC refund Investment earnings Total revenue Expenditures: Refunds Fund balance - December 31, 2006 (8) Prior Years 2006 Total $ 368,816 $ 263,155 15,657 631,971 15,657 $ 368,816 278,812 647,628 $ 259,994 $ 334,244 594,238 $ 53,390