Agenda - Council - 06/12/2018 - Laserfiche WebLink

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CITY OF RAMSEY Schedule of Findings and Questioned Costs (continued) Year Ended December 31, 2017 B. FINANCIAL STATEMENT FINDINGS 2017-001 Prior Period Adjustment Criteria — Management is responsible for establishing and maintaining effective internal controls over the financial reporting process. These controls include the responsibility for the preparation of the City of Ramsey, Minnesota's (the City) annual financial statements in accordance with accounting principles generally accepted in the United States of America. Condition — During our audit, we noted a material prior period adjustment, as detailed in the notes to basic financial statements, that was necessary to reflect an interfund loan that should have been reported in the prior year. Auditing standards consider the necessity of recording a material prior period adjustment to be indicative of a material weakness in the related internal controls. Questioned Costs — None. Our testing did not indicate any instances of noncompliance. Context — An internal loan of $500,000 between major governmental funds was not reported. The loan was established to repay the Public Improvement Revolving Fund for tax increment expenditures that were incurred prior to tax increments being received. This has no effect on net position in the government -wide financial statements. Repeat Finding — This is a current year and prior year finding. Cause — This was an oversight by city staff. Effect — The City's basic financial statements, as of and for the year ended December 31, 2016, contained a material misstatement. Recommendation — We recommend that the City review its accounting procedures and internal controls for recording of internal loans to assure transactions such as these are properly reported in the future. View of Responsible Official and Planned Corrective Actions — There is no disagreement with the audit finding. The error was discovered by city staff during their preparation for the current year audit. The nature and details of the misstatement have been reviewed with the individuals responsible, and appropriate guidance has been given to assure such transactions are reported correctly in the future. The City has separately issued a Corrective Action Plan related to this finding. -9-