Management Report and Recommendations 12/31/1982

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I City of Lino Lakes Management Report, Page 44 This new and changing environment places a greater burden upon the elected and appointed officials of all governmental units, especially upon the finance departments. How these burdens (or challenges) are addressed today will have a significant effect IIupon the City's ability to meet the standards to be imposed in the future. The Cities of Minnesota have not ignored these challenges. During 1978, (in response to the new environment) the State Legislature enacted the City Financial Reporting Act of 1978. Subsequent thereto, the Minnesota State Auditors Office issued its "Minimum Reporting Requirements - City Financial Reporting ". This document (which was effective for Minnesota Cities for 1978) incorporates changes and requirements to be enforced on non - Minnesota Cities for 1980. As usual, Minnesota Cities are meeting the new challenges. This aggressive approach will assure that Minnesota communities will be able to meet the standards to be imposed in the future. The City of Lino Lakes, also, has not ignored these challenges. The City's current Annual Financial Reports incorporate the changes and modifications required by the new "Minimum Reporting Requirements - City Financial Reporting ". We commend the City for this achievement; however, there are improvements to internal systems which will facili- tate a more efficient and timely control over the financial records of the City. The City now employs a hand posted accounting system. The general ledger use is generally limited to cash and investment accounts. The effect of this is to maintain minimal general ledger control. In effect the City is operating the accounting system on a cash basis with accrual /modified accrual entries made on year -end audit workpapers. The third party Annual Financial Reports of the City are, however, issued on the generally accepted accrual /modified accrual basis. This difference between the internal and external basis of accounting causes undue complexity in the year -end closing process II and limits the effectiveness of the overall system of accounting and reporting.