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FINDING AND RECOMMENDATION <br />1. Finding <br />CITY OF RAMSEY, MINNESOTA <br />2. Cause of Finding <br />Schedule of Findings and Recommendations (continued) <br />Year Ended December 31, 1993 <br />Minnesota Statutes § 118.005 requires that if a municipality desires to deposit amounts exceeding <br />federal insurance coverage, then the excess deposits must be covered by collateral that has a <br />market value of at least 110% of such excess (140%, if collateral consists of notes secured by <br />first mortgages). At one of our test dates, July 13, 1993, the City was undercollateralized. <br />The City did not have adequate collateral for deposits that exceeded federal insurance coverage <br />at July 13, 1993 due to a timing difference between release and replacement of collateral by the <br />local banking institution. <br />3. Ouestioned Costs <br />Not applicable. <br />4. Current Year vs. Prior Year <br />This is a current year finding. <br />5. Recommendation <br />Management of the City should establish procedures to ensure that deposits exceeding federal <br />insurance coverage are properly collateralized. <br />MANAGEMENT'S RESPONSE <br />We concur with the auditor's recommendations. The institution now has all collateral run through the <br />Federal Reserve which will not release collateral until adequate replacements are secured. <br />