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City of Lino Lakes, Minnesota <br />Management Report, Page 36 <br />Also, projection of any evaluation of the system to future periods is subject <br />to the risk that the procedures may become inadequate because of changes in con- <br />ditions and that the degree of compliance with the procedures may deteriorate. <br />Our study and evaluation made for the limited purpose described in the first <br />paragraph would not necessarily disclose all material weaknesses in the system. <br />Accordingly, we do not express an opinion on the system of internal accounting <br />control of the City of Lino Lakes taken as a whole. However, our study and eva- <br />luation disclosed that a substantial portion of the accounting processes are per- <br />formed by a single employee. Ideal conditions call for segregation of duties to <br />establish a system of internal testing of procedures performed. Additionally, <br />our evaluation disclosed that the City does not maintain a system of control over <br />fixed assets. These conditions are common to cities of this size. Any modifica- <br />tion of internal controls in these areas must be viewed from a cost /benefit <br />perspective. <br />These conditions were considered in determining the nature, timing, and <br />extent of the audit tests to be applied in our examination of the December 31, <br />1984 financial statements, and this report does not affect our report on the <br />financial statements dated February 12, 1985. <br />This report is intended solely for the use of the City of Lino Lakes and <br />should not be used for any other purpose. <br />Pre- Dating of Checks <br />Several checks which were prepared in January, 1985 were pre -dated to December 31, <br />1984. This practice was apparently designed to match the transaction with the year to <br />which it relates. There are other methods of accomplishing this match (i.e., the <br />recording of payables) during the year -end closing process. <br />Pre - dating (or post- dating) of checks reduces the reliability on the overall <br />integrity of the disbursing system. We recommend, therefore, that such practices <br />cease. <br />