Federal Financial Assistance 12/31/1993

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We noted certain matters involving the internal control structure and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general - purpose financial statements. The City does not maintain complete accounting controls over quantities and costs of property and equipment in the General Fixed Asset Account Group. This affects the control and accountability _. function of property and equipment of the City. A material weakness is a reportable condition in which the design or operation of the specific internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the general - purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However we believe none of the reportable conditions described above is a material weakness. This report is intended for the information of the City of Lino Lakes, Minnesota and the Federal Cognizant Audit Agency. This restriction is not intended to limit the distribution of this report, which is a matter of public record. TAUTGES, REDPATH & CO., LTD. Certified Public Accountants May 5, 1994