HomeMy Public PortalAbout2014-2015 Audit Management LetterMOAB CITY
MANAGEMENT LETTER - COMMUNICATION
WITH THOSE CHARGED WITH GOVERNANCE
YEAR ENDED JUNE 30, 2015
Table of Contents
Communication with Those Charged with Governance 1
Schedule of Findings — State Compliance current year 3
Schedule of Findings — Internal Control current year 4
Status of Findings — State Compliance prior year 5
Status of Findings — Internal Control prior year 6
Jm1 Larson
November 13, 2015
To the Honorable Mayor and
Members of the City Council
City of Moab, Utah
We have audited the financial statements of the governmental activities, the business -type activities, each major
fund, and the aggregate remaining fund information of Moab City for the year ended June 30, 2015. Professional
standards require that we provide you with information about our responsibilities under generally accepted
auditing standards (and, if applicable, Government Auditing Standards and OMB Circular A-133), as well as
certain information related to the planned scope and timing of our audit. We have communicated such information
in our letter to you dated August 30, 2015. Professional standards also require that we communicate to you the
following information related to our audit.
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by Moab City are described in Note 1 to the financial statements. No new accounting
policies were adopted and the application of existing policies was not changed during 2015. We noted no
transactions entered into by the governmental unit during the year for which there is a lack of authoritative
guidance or consensus. All significant transactions have been recognized in the financial statements in the proper
period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on
management's knowledge and experience about past and current events and assumptions about future events.
Certain accounting estimates are particularly sensitive because of their significance to the financial statements
and because of the possibility that future events affecting them may differ significantly from those expected.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit,
other than those that are clearly trivial, and communicate them to the appropriate level of management.
Management has corrected all such misstatements.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing
matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the
auditor's report. We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated November 13, 2015.
Larson & Company
765 North Main, Spanish Fork, Utah 84660
Main: (801) 798-3545 Fax: (801) 798-3678
www.larsco.com
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Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters,
similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting
principle to the governmental unit's financial statements or a determination of the type of auditor's opinion that
may be expressed on those statements, our professional standards require the consulting accountant to check
with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such
consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the governmental unit's auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a condition
to our retention.
Other Matters
We applied certain limited procedures to the Management's Discussion and Analysis, the Schedule of Revenues,
Expenditures, and Changes in Fund Balances — Budget and Actual — General Fund, and the schedules relating to
pensions, which are (is) required supplementary information (RSI) that supplements the basic financial
statements. Our procedures consisted of inquiries of management regarding the methods of preparing the
information and comparing the information for consistency with management's responses to our inquiries, the
basic financial statements, and other knowledge we obtained during our audit of the basic financial statements.
We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
Restriction on Use
This information is intended solely for the use of Moab City, management of Moab City, and other various Federal
and State funding and auditing agencies and is not intended to be, and should not be, used by anyone other than
these specified parties.
Very truly yours,
Larson & Company, PC
Spanish Fork, Utah
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SCHEDULE OF FINDINGS — CURRENT YEAR
State Compliance Finding(s)
No findings related to state compliance were noted in current year.
Internal Control Findinq(s)
IC-2015.1 Separation of Duties — Significant Deficiency
Finding:
Complete separation of duties is a key effective internal control because it can aid in reducing the
risk of mistakes and inappropriate actions, and can help fight fraud through discouraging collusion.
It can also help with the detection of misstatements in the financial reporting. We noted during our
audit that the City lacks complete separation of duties which results in a weakness in internal
controls.
Recommendation:
We recommend that to the extent possible, the City continue to separate duties to serve as a
check and balance to maintain the best control system possible with available resources. We also
recommend that the Mayor and Council provide oversight on the financial operations of the City
by continuing to review and approve expenditures and other transactions.
Client Response:
The nature of small cities and its limited staff size is such that it is difficult to achieve adequate
separation of duties. The City will continue to work towards compensating controls to mitigate
overlapping duties. The Mayor and all Council members will, along with the Recorder, review all
financial matters and disbursements and promptly investigate anything unusual.
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SCHEDULE OF FINDINGS — PRIOR YEAR
State Compliance Finding(s)
No findings related to state compliance were noted in the prior year.
Internal Control Findinq(s)
IC-2014.1 Separation of Duties - Significant Deficiency
Finding:
Complete separation of duties is a key effective internal control because it can aid in
reducing the risk of mistakes and inappropriate actions, and can help fight fraud through
discouraging collusion. We noted during our audit that the City lacks complete
separation of duties which results in weakness in internal controls.
Recommendation:
We recommend that, to the extent possible, the City segregate duties to serve as a check
and balance to maintain the best control system possible. Due to the limited number of
staff at the City we also recommend that the Council provide oversight on the financial
operations of the City.
Status:
See current period findings.
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