07-14-1986 Council Packet - Laserfiche WebLink

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PANNELL KERR FORSTER Certified Public Accountants 410 Park National Bank Bldg 5353 Wayzata Boulevard Minneapolis. MN 55416 Telephone (612) 545-0421 To the City Council and Residents City of Orono Orono, 'Minnesota We have examined the General Purpose Financial Staternent5 of the City of Orono, Minnesota, for the year ended December 31, 1985, and have issued our report thereon, dated May 28, 1986. As a part of our examination, we made a study and evaluation of the City's system of internal accounting control to the extent we considered necessary to evaluate the system as required by generally accepted auditing standards and the standards for financial and compliance audits con- tained in the U.S. General Accounting Office's Standards for Audit of Gcvernmental Organizations, Programs, Activities, and Functions. For the pur- pose of this report, we have classified the significant internal accounting controls in the following categories: Cash receipts Cash disbursements Payroll Our study included all of the control categories listed above. The purpose our study and evaluation was to determine the nature, timing, and extent of per- forming the auditing procedures necessary for expressing an opinion on the entity's financial statements. Our study and evaluation was mor limited than would ne necessary to express an opinion on the system of internal accounting control taken as a whole or on any of the ca Legories of controls identified above. The City is responsible for establishing and traintaining a system of internal accounting control. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of a system are to provide management wiL' reasonable, but not absolute, assurance th,._ assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. because of inherent limitations in any system of internal accounting control, errors or irregularities may nevertheless occur and not be detected. Also, pro- jection of any evaluation of the system to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the degree of compliance with the procedures may deteriorate. - 61 -