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City Council Regular Meeting Minutes May 23, 2006 Page 14 1 2 Mayor Faust stated the City receives their cash from the County on June 15 and December 15. 3 The numbers shown may look like quite a bit, but the City must make it through to the next 4 payment cycle. Mr. Mall informed the Council that the State auditor recommends a minimum 30 5 percent. Once a city achieves 50 percent anything over is termed as "in excess" of what is 6 needed. Mayor Faust stated the City is at the minimum of what the State auditor recommends 7 and perhaps should set a goal of 3 5 percent to off -set any unforeseen expenditures. 8 9 Mr. Mall next presented the water and Sewer Enterprise Fund for sewer operations over the past 10 two years. He noted no change to sewer rates in 2005. Again, operating revenue exceeded 11 operational expenditures. The biggest portion of operating expenses is the payment to the 12 Metropolitan Council Environmental Services for processing of sewage 13 14 The analysis of the 2005 activity of liquor operations generated a net income of $269,000 or 5.1 15 percent of sales. Operating expenses increased over a two year period partly due to the opening 16 of two new stores. A comparison of state averages of municipal -owned liquor operations 17 indicates the City is performing favorably. 18 19 The HRA fund balance shows a total fund balance of $3,421,000 at the end of 2005. .20 21 Councilmember Stille asked Mr. Mall if the recommendations within the body of the letter were 22 considered major or minor issues. Specific levels relate to internal controls. Different levels are 23 used by the auditors. 24 25 Mr. Mall stated that none of the items reached the level of a material weakness. The six items 26 were identified in the internal control report were deemed a reportable condition. The others in 27 the report are considered `other matters' and are not as significant or severe. During the audit, 28 informal discussions included procedures to prevent fraud. 29 30 Mayor Faust asked about accounting for uncollected taxes and how it is reported. Mr. Mall 31 answered that they look at that when the audit is conducted. The City cannot recognize 32 uncollected taxes as revenue. when the auditor looks at the government wide financial statement 33 of net assets, the City is given consideration for doubtful accounts. This is measured and deemed 34 not material. Most cities chose to not record an allowance for uncollectible moneys. 35 36 Councilmember Stille commented that the 30 percent cash available was discussed at a budget 37 meeting. The City's balance sheet indicates the City is in good condition. He looks forward to a 38 good relationship going forward with the new accounting Firm. He recognized and thanked 39 Finance Director Roger Larson for his recommendation to change auditors. 40 41 Motion by Councilmember Horst, seconded by Councilmember Thuesen, to approve Resolution 42 06-055; Approving the Audit for the City of St. Anthony for the year ended December 31, 2005. 43 44 Motion carried unanimously. 45 46 VI. GENERAL POLICY BUSINESS OF THE COUNCIL. i[�