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City Council Regular Meeting Minutes May 23, 2006 Page 13 Motion carried unanimously 3 F. Resolution 06 -055; Approving the Audit for the City of St Anthony for the year end 4 December 31, 2005. 5 6 Dave Mall from HLB Tautges Redpath. Ltd. presented their findings of the City of St. Anthony 7 audit. Peggy Moller from HLB was also in the audience. 9 Mr. Mall reported they are responsible for auditing City records that include: the annual 10 financial report, the State Legal Compliance Report, Report on Internal Controls, and all funds 11 the City maintains. He presented a brief summary to the Council and the audience. 12 13 The Annual Financial Report is an audit report on the fair presentation of the financial 14 statements. The financial statements are the responsibility of management. The results of the 15 City audit found "clean opinion" on the 2005 financial statements. 16 17 The State Legal Compliance Report is required by Minnesota Statutes. The Office of the State 18 Auditors established a task force several years ago to develop an audit guide for legal 19 compliance. The City audit was comprised of seven categories: Contracting and Bidding, 20 deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, 21 other miscellaneous provisions, tax increment financing. The audit resulted in two findings. 22 These findings were payroll declaration and granting acceptance by resolution. 23 24 The Report on Internal Control is based on inquiries and observations. It identifies a reportable 25 condition which is defined as "significant deficiencies in the design or operation of the internal 26 control over financial reporting that would adversely affect the City's ability to record, process, 27 summarize, and report financial data." Six reportable conditions were noted by the auditors. 28 These were: segregation of duties, timely reconciliation of accounts, netting of revenues and 29 expenditures, grant monitoring, capital assets depreciation calculation errors, and unreconciled 30 capital asset system/under identified land values. 31 32 The Management Letter All Funds Summary form was displayed. This form provides a summary 33 of all the funds the City maintains including the funds, revenues and expenditures of the City. A 34 schedule of investments in 2005 totaled $16,400,000. These are diversified funds. 35 36 City investment income for 2005 totaled $402,000. Most of the investment income was 37 allocation to the water filtration and purification fund. 38 39 Outstanding bonds and loans payable for 2005 are $27,570,000. A little over $11,000,000 are 40 general obligation improvement bonds. Payment is mostly from taxes and assessments. 41 42 Summary of the General Fund shows an increase of $13,754 during 2005. The budget of 43 $4,126,000 means actual results were very close to what was budgeted. The allocation of the 44 fund balance at the end of 2005 was $1,187.719 included $39,000 for prepaid items, self 45 insurance, unemployment reserves, and a major portion for working capital. A policy exists for 46 working capital which states 30 percent is maintained in the general fund of the budgeted 47 expenditures from the previous year. The City was very close to its reserve balance.