Agenda Packets - 2025/05/11 - Laserfiche WebLink

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AUDIT SUMMARY The following is a summary of our audit work, key conclusions, and other information that we consider important or that is required to be communicated to the City Council,administration,or those charged with governance of the City. OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA AND GOVERNMENTAUDITING STANDARDS We have audited the financial statements of the governmental activities,the business-type activities, each major fund, and the aggregate remaining fund information of the City as of and for the year ended December 31, 2025. Professional standards require that we provide you with information about our responsibilities under auditing standards generally accepted in the United States of America and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information to you verbally and in our audit engagement letter. Professional standards also require that we communicate the following information related to our audit. PLANNED SCOPE AND TIMING OF THE AUDIT We performed the audit according to the planned scope and timing previously discussed and coordinated in order to obtain sufficient audit evidence and complete an effective audit. AUDIT OPINIONS AND FINDINGS Based on our audit of the City's financial statements for the year ended December 31,2025: • We have issued unmodified opinions on the City's basic financial statements. • We reported one matter involving the City's internal control over financial reporting that we consider to be a material weakness. Due to the limited size of the City's office staff, the City has limited segregation of duties in certain areas. • The results of our testing disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. • We reported one finding based on our testing of the City's compliance with Minnesota laws and regulations. We noted that 1 of 40 disbursements tested were not paid within the 35-day period as required by Minnesota Statutes § 471.425, Subd.2. OTHER OBSERVATIONS AND RECOMMENDATIONS Internal Controls Over Vendors A relatively common method of attempting to defraud local governments involves inducing them to pay claims from fictitious vendors for goods or services that were never provided. Strong safeguards over adding new vendors or making changes to existing vendors within the government's accounts payable system is an important control to mitigate this risk. Some considerations in this area include: • Limiting the number of employees with access to add or alter vendor records within the accounts payable system, • Requiring vendor additions or changes to be reviewed and approved by supervisory personnel, preferably one not directly involved in processing accounts payable, • Verifying the legitimacy of vendors by obtaining a W-9 or other means, • Verifying any changes to vendor address or banking information prior to processing payments,and • Periodically reviewing the vendor listing to remove inactive vendors from the system. -1-