Comprehensive Annual Financial Report 12/31/2011

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WPM WEEP IIMPII Honorable Mayor and Members of the City Council City of Lino Lakes, Minnesota 6, CliftonLarsonAllen INDEPENDENT AUDITORS' REPORT CliftonLarsonAllen LLP www.diftonlarsonallen.com We have audited the accompanying financial statements of the governmental activities, the business - type activities, each major fund, and the aggregate remaining fund information of the City of Lino Lakes, Minnesota, as of and for the year ended December 31, 2011, which collectively comprise the — City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used — and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. — In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Lino Lakes, as of December 31, — 2011, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1Q to the basic financial statements, an error resulting in the understatement of capital assets due to not recording previously donated land as of December 31, 2010, was discovered by management. The financial statements include a restatement of beginning net assets to correct this error. As discussed in the notes to the basic financial statements, the City adopted the provisions of Government Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, as of and for the year ended December 31, 2011. The statement results in the City reporting nonspendable, restricted, committed, assigned, and unassigned fund — balances in its governmental funds. 9