Management Report and Recommendations 12/31/1989

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City of Lino Lakes, Minnesota Management Report, Page 48 Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. However, our consideration of the internal control structure disclosed the following conditions that we believe to be material weaknesses at December 31,1989. A substantial portion of certain accounting processes are performed by a single employee. Ideal conditions call for segregation of duties to establish a system of internal testing of procedures performed. Additionally, our audit disclosed that the City does not maintain a system of control over General Fixed Assets. These conditions are common to cities of this size. Any modification of internal control structure in this area, however, must be viewed from a cost/benefit perspective. This report is intended for the information of management and others within the City of Lino Lakes, Minnesota. This restriction is not intended to limit the distribution of this report, which is a matter of public record. Section 89 The Tax Reform Act of 1986 created qualifications and discrimination provisions for employee benefit plans under Section 89. The legislation requires: 1) employee notification of essential features of plans; 2) a "written plan" for which a definition has not yet been provided; and, 3) testing for discrimination between "highly compensated" employees and other employees. Regulations have been repealed. Forfeiture of Property - Public Safety The 1988 legislature passed laws which allow local police departments to seize property which is used during a crime associated with controlled substances. There is a variety of rules and regulations included in Minnesota Statutes Section 609.53 related to circumstances under which property may be forfeited and procedures regarding disposition of forfeited property. There are several areas which may impact the financial accounting records of the City, as follows: 1. Certain property may be retained by the law enforcement agency for official use by the agency or prosecuting agency. Under certain circumstances, the City may be required to add these assets to any fixed assets records which the City retains including insurance of such property. 2. 70% of the money or proceeds from the sale of the forfeited property may be retained by the City for use in its operating fund or similar fund for use in law enforcement. Certain other amounts must be forwarded to the County Attorney or other prosecuting agency and 10% must be forwarded to the State Treasury for crime victim and witness account.