The URL can be used to link to this page

Home My Public Portal About2009-2010 Audit final management letter_09_10LARSON & ROSENBERGER LLP CERTIFIED PUBLIC ACCOUNTANTS October 14, 2010 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, 2010. 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 October 14, 2010. 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 2010. 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. 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 trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as 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 October 14, 2010. SALT LAKE CITY OFFICE 9065 SOUTH 1300 EAST SANDY, UTAH 84094 (001) 313-1900 FAx (801) 313-1912 LOS ANGELES OFFICE 801 NORTH BRAND BLVD STE 1180 GLENDALE, CALIFORNIA 91203 (818) 334-8623 FAx (818) 241-7353 SPANISH FORK OFFICE 765 NORTH MAIN SPANISH FORK, UTAH 84660 (801) 798-3545 FAx (801)798-3878 MOAB OFFICE 115 WEST 200 SOUTH I14 MOAB, UTAH 84532 (435) 259-9100 FAX (435)259-1100 MEMBER OF THE INTERNATIONAL ACCOUNTING GROUP ( T I A G) t W W W. L A R S C O. C O M 2 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. 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 & Rosenberger, LLP Certified Public Accountants (Continued) 3 SCHEDULE OF FINDINGS — CURRENT YEAR State Compliance Finding (s) Underfunded State Treasurers Bond Finding: Every public treasurer shall secure a fidelity bond, based on the previous year's budgeted gross revenue, which includes funds collected or handled by the Public Treasurer. It was noted that the City's bond was under the required limit set by the State of Utah Recommendation: It is recommended that the City increase its treasurers bond to the appropriate level based on budgeted revenues. Client Response: The City will contact the bond company and increase the bond to a sufficient amount. General Fund Balance Finding: Utah Code 10-6-116(4) indicates that only the fund balance in excess of 5% of total revenues of the general fund may be utilized for budget purposes. The remaining 5% must be maintained as a minimum fund balance. The maximum fund balance in the general fund may not exceed 18% of the total estimated revenue within the general fund. The City had fund balance in excess of the 18% limit. This was due to an oversight by management. Recommendation: We recommend that the City use the available funds. If the City is accumulating funds for projects, then they should budget and allocate those funds to a capital projects fund to be used at a later date. Client Response: The City underestimated sales tax revenue projections and therefore the fund balance was higher than anticipated. They will monitor this balance more closely in the future. Impact Fee Report Finding: Each municipality shall present an impact fee report which identifies impact fee funds by the year in which they were received, the project from which the funds were collected, the capital projects for which the funds were budgeted, and the projected schedule for expenditure in a format developed by the State Auditor, certified by their financial officer and transmitted annually to the State Auditor. Due to an oversight by management, the City's report was not filed in a timely manner. Recommendation: It is recommended that the City complete and finalize the impact fee report in the correct format laid out by the State Auditor and submit it to the State Auditor's office by the due date each year. Client Response: The City is still trying to locate the report for 2009 to make sure it wasn't filed. As of the date of this report the impact fee report for 2009 had not been located. The City will complete the report and submit/resubmit to the State Auditor's office as required. (Continued) 4 Internal Control Finding (s) Cash Disbursements Finding: It was noted during the cash disbursement testing that 1 of the checks out of 60 could not be located. A former employee had the file containing the check stub and documentation, who was subsequently let go for other reasons. It is believed that the check documentation was lost in his office. Recommendation: The City was able to recreate all documentation, and provided a copy of the cancelled check. However, the city needs to put controls in place to ascertain and retain all necessary documentation and approvals for expenditures. Client Response: The City is still trying to locate the original documentation. The City understands the need to retain all documentation. They will fortify controls already in place to prevent this happening in the future. Separation of Duties Finding: Proper 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 proper segregation 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. Client Response: The city plans to remain vigilant in separating duties where possible, and provide mitigating controls where adequate separation is not possible due to the limited staff size at the City. (Continued) 5 SCHEDULE OF FINDINGS - PRIOR YEAR Internal Control Finding (s) Segregation of Duties Finding: Proper 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 proper segregation 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 year findings. (Continued)