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City Council Regular Meeting Minutes <br />July 8, 2025 <br />Page 3 <br />1 <br />2 For the Report on Internal Controls, the Team gained an understanding of internal controls in <br />3 place and their effectiveness in designing the audit procedures. Examples of Internal Controls <br />4 include Approval over disbursements, reviewing monthly bank reconciliations, establishing ideal <br />5 segregation of duties, and reviewing financial information to detect errors. There were no <br />6 internal control findings. <br />7 <br />8 For the Report on Minnesota Legal Compliance, which is required by Minnesota Statute §6.65, <br />9 the OSA audit guide covers seven categories: <br />10 <br />11 Contracting and bidding. <br />12 Deposits and investments. <br />13 Conflicts of interest. <br />14 Public indebtedness. <br />15 Claims and disbursements. <br />16 Tax increment financing. <br />17 Miscellaneous provisions. <br />18 <br />19 There were no compliance findings. <br />20 <br />21 For Communication with Those Charged with Governance, the City implemented one new <br />22 accounting standard relating to compensated absences. Routine estimates included valuation of <br />23 land held for resale and net pension liability and related items. A significant footnote – Note 6 – <br />24 Long-term Debt was noted. Corrected and uncorrected misstatements and no difficulties or <br />25 disagreements were encountered. <br />26 <br />27 Mr. Hering presented the financial results for the General Fund, Capital Fund Balance, Water <br />28 and Sewer Enterprise Fund, and Liquor Fund. <br />29 <br />30 Councilmember Doolan commented in comparing this to last year, our budget increased from <br />31 54% to 56% due to market conditions and the Staff’s work. <br />32 <br />33 Mayor Pro Tem Jenson referred to the water/sewer enterprise fund and asked why operating <br />34 revenue was below the cost line when combining depreciation and operation expenses, and asked <br />35 if this was because people were using less water in lawn irrigation. Mr. Hering stated that water <br />36 usage varies. Mayor Pro Tem Jenson asked if fees should be adjusted. He thanked Mr. Hering for <br />37 his report and the City Staff for their great work. <br />38 <br />39 Mayor Webster thanked Mr. Hering for his diligence in conducting the audit, and she agrees it is <br />40 wonderful to have received a clean opinion due to the leadership of Finance Director Maloney <br />41 and Staff. <br />42 <br />43 Motion by Councilmember Elnagdy, seconded by Councilmember Doolan, to accept the 2024 <br />44 Financial Audit Results as presented. <br />45 <br />46 Motion carried 4-0. <br />9