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City of Lino Lakes, Minnesota <br />Management Report <br />Capital Project Funds <br />th regard to the first item, we have expanded audit procedures to allow for the issuance <br />of an unqualified opinion on the 1997 financial statements of the City. Expanded procedures <br />included the following: <br />• Analysis of the 1987 Sanitary Sewer and Water Main Extension and Service Agreement <br />and amendments thereto <br />• Meetings with City representatives regarding calculating and recording of liability <br />relative to the Agreement contract <br />• Expanded confirmation procedures <br />• Financial statement modifications <br />The earliest years of the agreement reflected relatively minimal activity. In the first three <br />years in which the agreement was in effect, a total of $18,927 of connection charge liability <br />accrued. A summary of connection charges due the neighboring city from the inception of the <br />agreement is as follows: <br />Connection Charges <br />Annual Cumulative <br />12/31/87 $6,204 $6,204 <br />12/31/88 - 6,204 <br />12/31/89 12,723 18,927 <br />12/31/90 26,890 45,817 <br />12/31/91 44,242 90,059 <br />12/31/92 26,785 116,844 <br />12/31/93 36,569 153,413 <br />12/31/94 37,438 190,851 <br />12/31/95 50,280 241,131 <br />12/31/96 33,767 274,898 <br />12/31/97 18,482 293,380 <br />5/1/98 4,410 297,790 <br />With respect to the events which resulted in contract noncompliance, the City's internal <br />control failed regarding follow -up procedures to comply with an identified contractual <br />noncompliance issue. <br />Page 39 <br />