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19 STUART J. B®NNIWELL Certified Public Accountant 7101 York Avenue South Office: (952)921-3325 Suite 346 Fax:(952)921-3331 " Minneapolis,Minnesota 55435 a mail: sbonniwell @unique-soflware.com April 28, 2004 Honorable Mayor and Members of the City Council City of St. Anthony,Minnesota Financial activities of the City were significant in 2003. Significant financial activities/events started with severe state revenue reductions and this impact on the City's operating budget(prepared based on previous state funding levels),closing of liquor operations, issuance of six types of bonds, com- mencement of renovation of public works facilities and plans for construction of a fire station and continuing redevelopment efforts of certain properties. Also,included is the implementation of the new reporting standards required by Governmental Accounting Standards Board Statement No. 34 (GASB 34). This Statement changed drastically the method of presenting the financial statements and activities of the City. The emphasis of GASB 34 is reporting the City as a whole with an added focus on major funds of the City. It involves the conversion of traditional underlying financial operating statements into a single statement of net assets depending on type of activity—governmental or business type activities. The conversion process involves the reporting of capital assets(less accumulated depreciation),recognition of long-term debt(bonds payable) and other reconciling items. The statement of activities summarizes expenditures/expenses by function or program of major activities of the City and how they are financed. Statements of proprietary funds remain unchanged as these statements were previously prepared on the accrual method of accounting. As previously noted, GASB 34 focuses on reporting of the City as a whole. However,the importance of individual funds and their activities remain the critical factor since GASB 34 reporting basis starts with the underlying financial statements. Traditional accounting standards are still utilized in accounting for activities of the City. Individual fund financial statements are contained within the new reporting format, although if the fund is determined to be a major fund it is listed separately rather than with its fund type. My report, dated April 28, 2004, expresses an unqualified report on the basic financial statements of the City as prepared in accordance with the provisions of GASB 34. The following comments or observations are for your information and consideration based on the audit of the financial statements of the City of St. Anthony,Minnesota for the year ended December 31,2003.