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HomeMy WebLinkAboutVLAWMO Annual Financial Report 2003VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION ANNUAL FINANCIAL REPORT December 31, 2003 - This page intentionally left blank - VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION TABLE OF CONTENTS Organization Independent Auditor's Report Introductory Section Financial Statements General Purpose Financial Statements: Balance Sheet - All Fund Types and Account Groups Statement of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund Notes to Financial Statements Other Reports Independent Auditor's Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor's Report on Compliance With Minnesota Legal Compliance Audit Guide For Local Government Ref No. Page No. 3 5 Statement 1 8 Statement 2 9 11 21 25 - This page intentionally left blank - 1 1;, ri a i 1 a ri Members Gem Lake Lino Lakes North Oaks St. Paul Regional Water Service Vadnais Heights White Bear Lake White Bear Township Al Roleck Director of Finance City of Lino Lakes 600 Town Center Parkway Lino Lakes, MN 55014 April 7, 2004 Dear Mr. Roleck: The Vadnais Lake Area Water Management Organization (VLAWMO) in order to provide clear reporting to our member communities and to comply with Minnesota Statute 103B.231, has conducted an independent audit of it's financial records for fiscal year 2003. The financial report and a management letter are furnished for your information. Please contact the VLAWMO office with questions or comments, 651-429-8522 or office@vlawmo.org. Sincerely, Stev - Haselmann Secretary / Treasurer A ez-i-e-e_c-5 a e Stephanie McNamara Administration / Wetland Specialist 4701 Highway 61, White Bear Lake, MN 55110; 651-429-8522, Fax: 651-429-8500 website: www.vlawmo.orq; email: office@vlawmo.org INTRODUCTORY SECTION 1 - This page intentionally left blank - 2 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION ORGANIZATION December 31, 2003 Name Board of Commissioners: Mark Burch Steve Haselmann John Youngstrom Rocky Keehn Roger Ramthun Paul Emeott Dana Vanderbosch Position Chair Person Secretary/Treasurer Member Member Member Member Member Governmental Unit City of White Bear Lake St. Paul Regional Water Services City of North Oaks City of Lino Lakes City of Vadnais Heights City of Gem Lake White Bear Township 3 z a - This page intentionally left bleak - F a 6 a a 4 HLB Tautges Redpath, Ltd. Certified Public Accountants and Consultants INDEPENDENT AUDITOR'S REPORT To the Board of Commissioners Vadnais Lake Area Water Management Organization White Bear Lake, Minnesota We have audited the accompanying general purpose financial statements of the Vadnais Lake Area Water Management Organization as of and for the year ended December 31, 2003, as listed in the table of contents. These general purpose financial statements are the responsibility of the Vadnais Lake Area Water Management Organization's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose 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 opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the Vadnais Lake Area Water Management Organization as of December 31, 2003, and results of its operations for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated March 6, 2004 on our consideration of the Vadnais Lake Area Water Management Organization's intemal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. March 6, 2004 -1-(&6 Vtditefth 4- . HLB TAUTGES REDPATH, LTD. Certified Public Accountants White Bear Lake Office: 4810 White Bear Parkway, White Bear Lake, Minnesota 55110, USA Telephone: 651 426 7000 Fax: 651 426 5004 Hastings Office: 1303 South Frontage Road, Suite 13, Hastings, MN 55033, USA Telephone: 651 480 4990 Fax: 651 426 5004 HLB Tautges Redpath, Ltd. is a member of i i i.n International. A world-wide organization accounting firms and business advisers. - This page intentionally left blank - 6 FINANCIAL STATEMENTS 7 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS December 31, 2003 Statement 1 Assets Cash Due from other governments General fixed assets Total assets Liabilities and Fund Equity Liabilities: Accounts payable Due to other governments Deposits payable Total liabilities Governmental Fund Type Account Group Totals General (Memorandum Only) General Fixed Assets 2003 2002 $305,236 $ - $305,236 $153,212 30,234 5,740 5,740 5,915 $305,236 $5,740 $310,976 $189,361 $4,136 $ $4,136 $3,324 37,288 - 37,288 33,530 29,484 29,484 18,774 70,908 0 70,908 55,628 Fund equity: Investment in general fixed assets 5,740 5,740 5,915 Fund balance: Unreserved: Designated for Lambert Creek Project 204,328 204,328 86,218 Designated for Whitaker Weir Project 30,000 30,000 30,000 Designated for cash flow - - - 11,600 Total fund equity 234,328 5,740 240,068 133,733 Total liabilities and fund equity $305,236 $5,740 $310,976 $189,361 The accompanying notes are an integral part of these financial statements. 8 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND For The Year Ended December 31, 2003 Statement 2 2003 Over (Under) Budget Actual Budget 2002 Actual Revenue: Intergovernmental: Member assessments $46,900 $46,900 $ - $46,900 Grants 4,500 136,500 132,000 102,036 Charges for services 500 1,040 540 600 Investment income 1,000 501 (499) 920 Other revenue - - 623 Total revenue 52,900 184,941 132,041 151,079 Expenditures: Salaries 51,380 46,360 (5,020) 42,272 Payroll processing 560 539 (21) 547 Office expenses 3,100 3,089 (11) 2,530 Technical consulting 800 651 (149) 744 Audit 2,500 5,000 2,500 Insurance 2,600 2,441 (159) 2,590 Training 700 415 (285) 803 Legal 500 (500) 139 Information systems 1,000 1,722 722 600 Education 1,000 - (1,000) 85 Projects 1,500 17,093 15,593 14,799 Miscellaneous 1,000 1,121 121 1,300 Total expenditures 66,640 78,431 11,791 66,409 Revenue over (under) expenditures ($13,740) 106,510 $120,250 84,670 Fund balance - January 1 127,818 43,148 Fund balance - December 31 $234,328 $127,818 The accompanying notes are an integral part of these financial statements. 9 a - This page intentionally leis blank - 1 1 1 1 1 1 1 1 a 10 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2003 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the Vadnais Lake Area Water Management Organization conform to generally accepted accounting principles as applied to governmental units by the Govemmental Accounting Standards Board (GASB). The following is a summary of significant accounting policies. A. FINANCIAL REPORTING ENTITY The Vadnais Lake Area Water Management Organization was created in the exercise of joining powers to meet the requirements of the Metropolitan Surface Water Management Act, re -codified as Minnesota Statutes chapters 103B and 103D. Its general purpose is to establish an organization to jointly and cooperatively develop a water management plan and program to (1) protect, preserve, and use natural surface and groundwater storage and retention systems; (2) minimize capital expenditures necessary to correct flooding and water quality problems; (3) identify and plan for means to effectively protect and improve surface and groundwater quality; (4) establish more uniform local policies and official controls for surface water, wetland, and groundwater management; (5) prevent erosion of soil into surface water systems; (6) promote groundwater recharge; (7) protect and enhance fish and wildlife habitat and water recreational facilities, and secure other benefits associated with the proper management of surface ground water, and be in accordance with the Act. The Organization is governed by a Board of Commissioners which consists of seven members, one from each of the following. participating governmental units: City of North Oaks City of White Bear Lake St. Paul Regional Water Services City of Lino Lakes White Bear Township City of Vadnais Heights City of Gem Lake All property of the Organization is owned by the members entities in proportion to the total contribution of each participating governmental unit as required by the previous annual budget. The accounting policies of the Organization conform to generally accepted accounting principles as applicable to governmental units. L 11 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2003 Component units are legally separate entities for which the Organization (primary government) is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading. The criteria used to determine if the primary government is financially accountable for a component unit include whether or not the primary government appoints the voting majority of the potential component unit's governing body, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit. Based on these criteria, there are no organizations considered to be component units of the Organization. B. FUND ACCOUNTING The accounting system of the Organization is organized and operated on the basis of funds and account groups. A fund is defined as a fiscal and accounting entity with a self -balancing set of accounts recording cash and other fmancial resources, together with all related liabilities and residual equities or balances, and changes therein, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. The following types of funds and account groups are employed by the Organization: GOVERNMENTAL FUNDS General Fund is the general operating fund of the Organization. It is used to account for financial resources to be used for general administrative expenses and for the construction and maintenance of projects of common benefit to the Organization. ACCOUNT GROUPS The governmental fund types are designed to account for the financial flow of a particular fund; therefore, they generally include only current assets and current liabilities on their balance sheets. The Organization maintains one account group to account for noncurrent assets as follows: General Fixed Assets — This account group contains the fixed assets used in the governmental fund type operations. They are assets of the Organization as a whole and not of individual funds. 12 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2003 C. BASIS OF ACCOUNTING The modified accrual basis of accounting is followed by the Organization for its governmental funds. Under this method of accounting, revenues are recognized when they become susceptible to accrual; that is, when they become both measurable and available to finance expenditures of the fiscal period. Also, under this method, expenditures are recognized in the accounting period when the liability is incurred, except for disbursements for inventory -type items and prepaid expenses which are considered expenditures at the time of purchase. Major revenue sources susceptible to accrual include intergovernmental revenues, charges for services and investment income. No interest has been accrued on investments since the amount is deemed by management to be immaterial. Miscellaneous revenue sources not susceptible to accrual are recorded as revenue when received because they are not measurable until collected. D. BUDGETS AND BUDGETARY ACCOUNTING The Board of Commissioners adopts a budget for the general government operations of the Organization on an annual basis. During the budget year, supplemental appropriations and deletions are or may be authorized by the Board. The amounts shown in the financial statements as "Budgeted" represent the original budgeted amounts plus all revisions made during the year and/or for the year. The modified accrual basis of accounting is used by the Organization for budgeting data. All appropriations end with the fiscal year for which they were made. The Organization monitors budget performance and all amounts over budget have been approved by the Board through the disbursement approval process. The Organization prepares a revenue and expenditure budget for its General Fund. Encumbrance accounting, under which purchase orders, contracts, and other commitments of monies are recorded in order to reserve that portion of the applicable appropriation, is not employed by the Organization. E. INVENTORIES The original cost of materials and supplies has been recorded as expenditures at the time of purchase. The Organization does not maintain significant amounts of inventories of materials and supplies. 13 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2003 F. "MEMORANDUM ONLY" PRESENTATIONS Total columns on the General Purpose Financial Statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. G. USE OF ESTIMATES The preparation of financial statements in accordance with generally accepted accounting principles (GAAP) requires management to make estimates that affect amounts reported in the financial statements during the reporting period. Actual results could differ from such estimates. H. COMPENSATED ABSENCES Vested or accumulated vacation leave and other benefit amounts that are expected to be liquidated with expendable available financial resources are reported as an expenditure and a fund liability of the governmental fund that will pay it. No expenditure is reported for these amounts. At December 31, 2003, the amount of accumulated vacation leave was immaterial to the financial statements and is not reported. I. FIXED ASSETS General fixed assets are recorded as expenditures of the Governmental Funds at the time of purchase. Such assets are capitalized at historical cost or estimated historical cost in the General Fixed Asset Account Group. Public Domain ("infrastructure") general fixed assets consisting of roads, bridges, curbs, gutters, streets, sidewalks, and drainage systems are excluded from general fixed assets as these assets are immovable and of value only to the Organization. No depreciation has been provided on general fixed assets. Note 2 DEPOSITS AND INVESTMENTS A. DEPOSITS In accordance with Minnesota Statutes, the Organization maintains deposits at those depository institutions authorized by the Board of Commissioners. Minnesota Statutes require that all Organization deposits be protected by insurance, surety bond or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or bonds (140% in the case of mortgage notes pledged). 14 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2003 Authorized collateral includes the legal investments described below, as well as certain first mortgage notes, and certain other state or local government obligations. Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the Organization treasurer or in a financial institution other than that furnishing the collateral. In accordance with the provisions of GASB No. 31, the Organization reports investments at fair value in the financial statements. Also in accordance with the provisions of GASB No. 31, the Organization has reported all investment income, including changes in fair value of investments, as revenue to the operating statements. At year end the carrying amount of the Organization's deposits was $305,236 and the bank balance was $305,236. Minnesota Statutes require that all of the Organization's deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or bonds (140% in the case of mortgage notes pledged). At December 31, 2003, the Organization's deposits were entirely insured by the FDIC or collateral. B. INVESTMENTS Minnesota Statutes authorize the Organization to invest in the following: a) Direct obligations or obligations guaranteed by the United States or its agencies, its instrumentalities or organizations created by an act of Congress, excluding mortgage -backed securities defined as high risk. b) Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are in securities described in (a) above. c) General obligations of the State of Minnesota or any of its municipalities. d) Bankers acceptance of United States banks eligible for purchase by the Federal Reserve System. e) Commercial paper issued by United States corporations or their Canadian subsidiaries, of the highest quality, and maturing in 270 days or less. f) Repurchase or reverse repurchase agreements with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000; a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; certain Minnesota securities broker -dealers; or, a bank qualified as a depository. The Organization did not invest in any of the above listed investments during 2003. 15 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2003 Note 3 CHANGES IN GENERAL FIXED ASSETS A statement of changes in general fixed assets is as follows: Equipment Balance Balance Beginning End of Year Additions Deletions of Year $5,915 $825 ($1,000) $5,740 Note 4 RELATED PARTY TRANSACTIONS REVENUE The Organization assesses each member entity on a yearly basis to provide funds to operate the Organization's business. Revenue from assessments to members in 2003 is as follows: 2003 Revenue City of North Oaks $13,790 City of White Bear Lake 10,560 St. Paul Regional Water Services 1,589 City of Lino Lakes 1,423 White Bear Township 5,354 City of Vadnais Heights 12,853 City of Gem Lake 1,331 Total $46,900 Note 5 DEFINED BENEFIT PENSION PLANS - STATEWIDE A. PLAN DESCRIPTION All full-time and certain part-time employees of the Organisation are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the Public Employees Retirement Fund (PERF) which is cost -sharing, multiple -employer retirement plan. This plan is established and administered in accordance with Minnesota Statute, Chapters 353 and 356. 16 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2003 PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The defined retirement benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for PERF. That report may be obtained by writing to PERA, 60 Empire Drive #200, St. Paul, Minnesota, 55103-2088 or by calling (651)296-7460 or 1-800-652-9026. B. FUNDING POLICY Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The Organisation makes annual contributions to the pension plans equal to the amount required by state statutes. PERF Basic Plan members and Coordinated Plan members are required to contribute 9.10% and 5.10%, respectively, of their annual covered salary. The Organization is required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan PERF members and 5.53% for Coordinated Plan PERF members. The Organization's contributions for the years ending December 30, 2003, 2002 and 2001 were $2,433, $2,056 and $1,814, respectively. Note 6 EXCESS OF EXPENDITURES OVER APPROPRIATIONS IN INDIVIDUAL FUNDS For the year ended December 31, 2003, there were excess expenditures over appropriations in the General Fund as follows: Over Budget Actual Budget General fund $66,640 $78,431 $11,791 17 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2003 Note 7 RISK MANAGEMENT The Organization is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Property and casualty and worker's compensation liabilities are insured. The Organisation retains risk for the deductible portions of the insurance. The amounts of these deductibles are considered immaterial to the general purposed financial statements. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. Note 8 PRIOR YEAR RECLASSIFICATION Certain reclassifications have been made to the 2002 fmancial statements to conform to the 2003 fmancial statement presentation. The amount of these restatements is immaterial to the financial statements taken as a whole. 18 OTHER REPORTS 19 11, - This page intentionally left blank - 1 11 I I i, 1 I 1 1 20 HLB Tautges Redpath, Ltd. Certified Public Accountants and Consultants Independent Auditor's Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards To the Board of Commissioners Vadnais Lake Area Water Management Organization White Bear Lake, Minnesota We have audited the general purpose fmancial statements of the Vadnais Lake Area Water Management Organization as of and for the year ended December 31, 2003, and have issued our report thereon dated March 6, 2004. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the Vadnais Lake Area Water Management Organization's general purpose financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of general purpose fmancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Vadnais Lake Area Water Management Organization's internal control over fmancial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on the internal control over fmancial reporting. However, we noted certain matters involving the internal control over fmancial 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 Vadnais Lake Area Water Management Organization's ability to record, process, summarize, and report fmancial data consistent with the assertions of management in the general purpose financial statements. Reportable conditions are as follows: White Bear Lake Office: 4810 White Bear Parkway, White Bear Lake, Minnesota 55110, USA Telephone: 651 426 7000 Fax: 651 426 5004 Hastings Office:1303 South Frontage Road, Suite 13, Hastings, MN 55033, USA Telephone: 651 480 4990 Fax: 651 426 5004 HLB Tautges Bedpath, Ltd. is a member of MA ru International. A world-wide organization of accounting firms and business advisers. 21 - This page intentionally left blank - 22 Independent Auditor's Report on Compliance and on Internal Control Page 2 Segregation of Duties Our audit disclosed that substantially all accounting procedures are performed by a single employee. Ideal conditions call for segregation of duties to establish a system of internal testing of procedures performed. It is a common practice in organizations of this size to have a substantial portion of certain accounting processes performed by a single employee. The Organization has established certain other safeguards to compensate for this situation, such as Board approval of all disbursements, Board review of interim financial data compared to budget, two signatures required on all checks, etc. Any modification of internal controls in these areas must be viewed from a cost/benefit perspective. 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 general purpose fmancial 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 fmancial 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 believe that none of the reportable conditions described above is a material weakness. This report is intended solely for the information and use of the Vadnais Lake Area Water Management Organization and is not intended to be and should not be used by anyone other than those specified parties. March 6, 2004 Wcifs as.,e HLB TAUTGES REDPATH, LTD. Certified Public Accountants - This page intentionally left blank - a 1 1 Q rt 1 q T 1 1 24 HLB Tautges Redpath, Ltd. Certified Public Accountants and Consultants Independent Auditor's Report on Compliance With Minnesota Legal Compliance Audit Guide For Local Government To the Board of Commissioners Vadnais Lake Area Water Management Organization White Bear Lake, Minnesota We have audited the general purpose financial statements of the Vadnais Lake Area Water Management Organization, as of and for the year ended December 31, 2003 and have issued our report thereon dated March 6, 2004. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the provisions of the Minnesota Legal Compliance Audit Guide for Local Government promulgated by the State Auditor pursuant to Minnesota Statutes Section 6.65. Accordingly, the audit included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. The Minnesota Legal Compliance Audit Guide for Local Government covers five main categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, and, claims and disbursements. Our study included all of the listed categories. The results of our tests indicate that for the items tested, the Vadnais Lake Area Water Management Organization complied with the material terms and conditions of applicable legal provisions. This report is intended solely for the information and use of the Vadnais Lake Area Water Management Organization and management and is not intended to be and should not be used by anyone other than these specified parties. March 6, 2004 ita,K HLB TAUTGES REDPATH, LTD. Certified Public Accountants White Bear Lake Office: 4810 White Bear Parkway, White Bear Lake, Minnesota 55110, USA Telephone: 651 426 7000 Fax: 651 426 5004 Hastings Office: 1303 South Frontage Road, Suite 13, Hastings, MN 55033, USA Telephone: 651 480 4990 Fax: 651 426 5004 HLB Tautges Redpath, Ltd. is a member of IIIn International. A world-wide organizationsfgccounting firms and business advisers. i - This page intentionally left blank - 1 1 i 1 1 i i 26 I