Management Report and Recommendations 12/31/1982

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City of Lino Lakes Management Report, Page 43 Current auditing standards require an auditor to communicate any material weaknesses in internal accounting controls directly to City Council and /or City Administrator. Our IIexamination for 1982, disclosed no material deficiencies in the City's system of inter- nal controls not identified in this report to the City Council. Financial Management Requirements Our audit proposal of November 5, 1982 included a section regarding Financial Management Requirements /Environment. This section deals with significant changes IIeffecting Minnesota cities and more specifically the City of Lino Lakes, Minnesota. For your reference, we have repeated this section in this report. 1 • 1 1 1 1 1 1 1 Financial management requirements for all Cities (Nationally) have increased tremen- dously during the past several years. Prior to 1970, most Minnesota Cities reported their financial activity substantially on the basis of cash receipts and cash disbursements. The financial management of a City was limited to budgetary controls to assure that cash disbursements did not exceed budget, for the budgetary funds. This control was considered effective as long as the City limited its financial activities to the budgetary funds and all expenditures were paid promptly. Such controls are still used by small and /or out -state communities. During the early 1970's the "New York situation" (plus subsequent events) created a completely new environment for governmental financial management. Organizations nor- mally not aware of sound financial management are now greatly concerned in this area. Organizations which were concerned with sound financial management are now more aware and more concerned. The new environment is such that financial management controls con- sidered to be adequate in the past are now considered to be inadequate or minimal. Future standards are expected to increase the level of financial management. 1 1 1