Management Report and Recommendations 12/31/1987

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City of Lino Lakes, Minnesota Management Report, Page 47 Our study and evaluation made for the limited purpose described in the first paragraph would not necessarily disclose all material weaknesses in the system. Accordingly, we do not express an opinion on the system of internal accounting control of the City of Lino Lakes taken as a whole. However, our study and eva- luation disclosed that a substantial portion of the accounting processes are per- formed by a single employee. Ideal conditions call for segregation of duties to establish a system of internal testing of procedures performed. Additionally, our evaluation disclosed that the City does not maintain a system of control over fixed assets. These conditions are common to cities of this size. Any modifica- tion of internal controls in these areas must be viewed from a cost /benefit perspective. These conditions were considered in determining the nature, timing, and extent of the audit tests to be applied in our examination of the December 31, 1987 financial statements, and this report does not affect our report on the financial statements dated May 27, 1988. This report is intended solely for the use of the City of Lino Lakes and should not be used for any other purpose. Budgeting The City currently budgets certain revenues on a combined basis. Additionally, as discussed earlier in this report, certain debt levies are not clearly segregated from operating levies in the budget. Also, the City may be budgeting in the General Fund certain capital outlay which is scheduled to be funded by equipment certificates (i.e., Capital Project Fund). We recommend that in conjunction with the computer acquisition that budgeting practices be reviewed and automated on the new system. Utility Billing System During 1987 the City did not reconcile utility payments from the utility system to the general ledger. This was due primarily to a turnover in the utility clerk position. During our examination of the utility billing system, it was discovered that payments were not being posted to the utility system in a timely manner. We recommend that the City post payments to the utility system on a timely basis and reconcile payments to the general ledger.