Federal Financial Assistance 12/31/1991

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For the purpose of this report, we have classified the significant internal control structure policies and procedures used in administering federal financial assistance programs in the following categories: General Requirements: Political Activity Civil Rights Cash Management Relocation Assistance and Real Property Acquisition Federal Financial Reports Allowable Costs/Cost Principles Drug -Free Workplace Act Administrative Requirements Specific Requirements: Types of Services Eligibility Reporting Special Tests and Provisions For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and determined whether they have been placed in operation, and we assessed control risk. During the year ended December 31, 1991, the City of Lino Lakes, Minnesota had no major federal financial assistance programs and expended 91.96% of its total federal financial assistance under the Community Development Block Grant Nonmajor Federal Financial Assistance Program. We performed tests of controls, as required by OMB Circular A -128, to evaluate the effectiveness of the design and operation of internal control structure policies and procedures that we have considered relevant to preventing or detecting material noncompliance with specific requirements, general requirements, and requirements governing claims for reimbursements that are applicable to the aforementioned nonmajor program. Our procedures were less in scope than would be necessary to render an opinion on these internal control structure policies and procedures. Accordingly, we do not express such an opinion. 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 City's ability to administer federal financial assistance programs in accordance with applicable laws and regulations. The City does not maintain complete accounting controls over quantities and costs of property and equipment. This affects the control and accountability function of property and equipment of the City. Additionally, a portion of the accounting functions are performed by a single employee. Ideal conditions call for segregation of duties to establish a system of internal testing of procedures performed. A material weakness is a reportable condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that noncompliance with laws and regulations that would be material to a federal financial assistance program may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions.