HomeMy WebLinkAbout5A - 1994 Audit Report
AGENDA #:
PREPARED BY:
SUBJECT:
DATE:
INTRODUCTION:
BACKGROUND:
DISCUSSION:
5 (A)
RALPH TESCHNER FINANCE DIRECTOR
CONSIDER APPROVAL OF 1994 AUDIT REPORT
JUNE 5, 1995
Attached for your review is the 1994 Financial Report as prepared by the
George M. Hansen Company. A summary of the City's financial
condition and fund highlights are presented under the beginning section
entitled "Comments" on pages I-V under the Introductory Section. As
noted within the General Fund, revenues exceeded expenditures by
$53,240.00 in 1994. Because the Council appropriated a $300,000 transfer
to the Equipment Acquisition Fund in June of last year, the City of Prior
Lake's overall fund balance actually decreased to $1,485,015.00.
On January 3, 1994 the City Council approved the engagement of the
George M. Hansen Company to complete the 1994 annual audit. The cost
for their professional services was approved at an amount of $9,785.00.
This is the final year that the George M. Hansen Company will be
conducting the audit and preparing the CAFR (comprehensive annual
financial report). At the beginning of this year, the Council directed Staff
to solicit the services of a new accounting firm. In accordance with this
directive, Staff has mailed RFP's (request for proposals) to prospective
companies with a submission deadline of June 16, 1995.
Final budget figures came in quite favorably which allowed for the City to
complete two very important projects relating to the renovation of the
former council chambers to engineering office space and the acquisition of
a new computer network system. Revenues of $4,709,158 compared to
budget of $4,775,180, representing 98.60/0 of projection. Expenditures
(excluding equipment fund transfer) resulted in an amount of $4,655,918
or 97.5% of budget.
The City Council approved Resolution 94-27 on June 6, 1994 which
authorized a working capital designation equivalent to 30% of the current
year's Operating Budget, based upon the availability of sufficient funds
and any remaining portion to be allocated as unreserved fund balance.
Each year, the Council is to review these excess amounts for the purpose
of allocating the excess reserves to other City funds on an as needed basis.
Because of the large equipment fund transfer and the relatively small
surplus of $53,000, the working capital designation will be equivalent to
the entire fund balance because 30% of budget represents a slightly greater
sum than that available. Therefore, no excess reserve will be generated in
1994.
16200 Eagle Creek Ave., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
i
r~
Also noted within the financial report is a legal compliance audit which
was performed to ensure compliance with Minnesota Statutes in the areas
of: contracting and bidding, deposits and investments, conflicts of interest,
public indebtedness and claims and disbursements. Within this
management notation is the statement that the amount, exceeding FSLIC
insurance of $100,000, of investment c.d.' s with Metropolitan Federal
Savings (presently FBS Bank) and our cash checking with Prior Lake
State Bank are classified as uninsured and uncollateralized at December
31,1994.
This technically places such an investment in a Category 3 risk assignment
only because the Metropolitan Federal Board of Directors refused to pass
a resolution on an ongoing basis that specifically approves the collateral
assignment that was pledged to the City. So, while in fact we did indeed
have the certificate of deposits secured by government securities, as
required by Minnesota Statute, GASB considers such an investment
"uncollateralized" because of the lack of an official board endorsement.
Both Prior Lake State Bank and FBS Bank of Prior Lake are currently
processing such board resolutions for this year.
ALTERNATIVES:
The following alternatives are available to the City Council:
1. Accept 1994 Audit Report as submitted.
2. Delay action according to specific Council reason.
RECOMMENDATION: Staff would recommend approval of the financial report for the fiscal year
ended December 31, 1994 as submitted.
A City Financial Reporting Form, which is basically a condensed excerpt
of the official document, is required to be submitted to the Office of the
State Auditor by June 30, 1994 along with this report.
REVIEWED BY:
Please feel free to contact Staff prior to the meeting regarding content
interpretation. Richard Ellsworth will make a brief presentation, basically
acknowledging the George M. Hansen Company's thanks and
appreciation to the City Council for their long standing relationship that
has existed during the riod of 1980-94.
~
oti~.r - prove s art of the agenda is in order.
ACTION REQUIRED:
- --"/
Auoml,WRT
"r
GMHCo
GEORGE M, HANSEN COMPANY, P.A.
.~ ProfessIOnal CurporatlOn or Cl'rtl.iied PublIC Accountants
, ~33 UTlc.:. ~vENUE SOUTH SUITE 175
MINNEAI=CUS, MINI'\JESCTA 55416
612.'546-2566
FAX 612/544-7557
AUDrroRS' REFORI' ON I.1:XiAL a:MPLIANCE
City Council
City of Prior I..ake, Minnesota
We have audited the general ~ finarx:ial statements of the City of Prior lake,
Mi.nnesota as of am for the year en:ied December 31, 1994, am have issued our report
thereon dated M:1y 12, 1995. !be financial statements are the responsibility of
city's management. our responsibility is to express an opinion on the finarx::ia1
statements based on our atrlit. em- audit was made in aa:ordance with generally
accepted audi tin;; starrlards a.rrl the provisions of the Minnesota I.eaal Ccmp1iance
Audit Guide for Local Government pranulgated by the legal CoIrpliance Task Force
p.rrsuant to Minnesota Statutes Sec. 6.65. Accordi.rx;;ly, the audit included such
tests of the accountin;; records am such other audi tirq procedures as we considered
~ in the circumstances.
'!he Mi.nnesota I.eaal Camo1iance Au::li t Guide for Lcx:al GoverrIITent covers five main
categories of c::x:rrpliance to be tested: contra~ am bidd.irg, deposits am
investments, conflicts of interest, p..1blic in:iebtedness, am claims arrl
dis1:ursements. CUr study in:lu:ied all of the listed categories. with the
follor.vin;; exception, the results of our tests in:licate that for the items tested,
the City of Prior Lake a:xnplied with the material tenns am conditions of
awlicable legal provisions. As set forth in Note 2 to the finarx::ial statements,
$6,128,153 of the City's deposits were classified as uninsured am uncollateralized
at Cecember 31, 1994. Although securities had been pledged by t..'1e depositories as
security for the City's deposits in accordarx:e with security agreements, the
depositories had not furnished the City with Board. resolutions approvinq the
security agreements. For the items not tested, based on our audit arrl the
procedures referred to above, nothi.n:J came to our attention to in:licate that the
City had oot c::c:rcplied with such legal provisions.
'!his report is inten:ied solely for the use of the City of Prior lake, Mi.nnesota and
shoold oot be used for ~ other~. '!his restriction is not interrled to
limit the distribution of this report, which is a matter of public record.
7;J~
fr?
H~
COd'
/'J I A.
May 12, 1995
73