Comprehensive Annual Financial Report 12/31/1997

Home Search

Independent Auditor's Report on Compliance and on Internal Control Page 2 Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Lino Lakes, Minnesota's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgment, could adversely affect the City of Lino Lakes, Minnesota's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. Reportable conditions are described as follows: Control Environment Our understanding of the circumstances regarding the compliance finding listed previously in this report is that, possibly, this situation existed and continued due to a work environment which was not conducive to achieving the goals of internal control policies. Specifically, it appears that certain members of City management were aware of this situation. There are allegations that the work environment prevented staff from carrying out certain functions required for internal controls over financial reporting. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we consider the reportable condition listed above to be a material weakness. We also noted other matters involving the internal control over financial reporting which we have reported to the management of the City of Lino Lakes, Minnesota, in a separate report dated June 16, 1998. This report is intended for the information of the City of Lino Lakes, Minnesota's management. However, this report is a matter of public record, and its distribution is not limited. /4/ ,Rectec4< oe,<&' HLB TAUTGES REDPATH, LTD. Certified Public Accountants June 16, 1998