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18b. 1987 Audit n Jib CITY OF CHANHASSEN 690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317 (612) 937-1900 1 MEMORANDUM 1 TO: Mayor and City Council FROM: Don Ashworth, City Manager 1 DATE: June 16 , 1988 SUBJ: Council Review of 1987 Audit Report Copies of the City' s Annual Financial Statement and Management Report were distributed to the City Council Monday evening. Given the amount of materials the Council had that evening, do not feel embarassed to ask for another copy if yours was misplaced in the avalanche of packet enclosures . Should time 1 permit on June 27th, I would like to poll Council members as to a potential special meeting date to discuss the 1987 Audit Report as well as to discuss goals which are hoped to be achieved as part of the 1989 budgetary process . Mistakenly deleted from the enclosures forwarded Monday night was the legal compliance audit as required under Minnesota Statute. 1 Attached please find a copy of such. 11.1()5(-) Q.1 ‘13 1 VOTO, TAUTGES, REDPATH & CO., LTD. CERTIFIED PUBLIC ACCOUNTANTS Irizsi Birch Lake Professional Building •1310 E. Hwy. 96•White Bear Lake, MN 55110• Phone 426-3263 ROBERT J.VOTO,CPA ROBERT G.TAUTGES,CPA JAMES S.REDPATH,CPA To the Honorable Mayor and ' Members of the City Council City of Chanhassen, Minnesota We have examined the combined financial statements of the City of Chanhassen as Hof and for the year ended December 31 , 1987, and have issued our report thereon dated April 23, 1988. Our examination was made in accordance with generally accepted auditing standards and the provisions of the Minnesota Legal Compliance Audit Guide for Local Government promulgated by the Legal Compliance Task Force pursuant to Minnesota Statutes Section 6.65. Accordingly, the examination included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. ' The Minnesota Legal Compliance Audit Guide for Local Government covers five main categories of compliance to be tested: 1 ) contracting and bidding; 2) deposits ; and investments; 3) conflicts of interest; 4) public indebtedness; and, 5) claims and disbursements. Our study included all of the above listed cate- gories. The results of our tests indicate that for the items tested, the City of Chanhassen complied with the material terms and conditions of applicable legal provisions except as described in this letter. Further, for items not tested, based on our examination and the procedures referred to above, nothing came to our attention to indicate that the City of Chanhassen had not complied with such regulations. I I 1 I I / I MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS•PRIVATE COMPANIES PRACTICE SECTION MINNESOTA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS GOVERNMENT FINANCE OFFICERS ASSOCIATION•MINNESOTA ASSOCIATION OF SCHOOL BUSINESS OFFICIALS City of Chanhassen, Minnesota Legal Compliance Audit, Page 2 1 FINDING: Lack of endorsement on claims CONDITION: The City does not employ a claim system. This is not uncommon for ' Minnesota cities. There is a statutory requirement which outlines the disbursing process and refers to approvals based on a claim system. The City does have alternate approval mechanisms which provide reaso- nable assurances that authorized amounts are disbursed. The lack of ' claim procedures as referred to in Minnesota statutes may be considered non-compliance with statutes. CRITERIA: MS 412.271 reads in part as follows: 412.271 DISBURSEMENTS. i Subd. 3. Endorsement on claims. The clerk shall endorse on each claim required to be audited by the council the word "disallowed" if ' such be the fact, or, "allowed in the sum of $ ," if approved in whole or in part, specifying in the latter case the items rejected. Each order shall be so drawn that when signed by the treasurer in an ' appropriate space, it becomes a check on the city depository. Such order-check may have printed on its reverse side, above the space for endorsement thereof by the payee, the following statement: "The undersigned payee, in endorsing this order-check, declares that the same is received in payment of a just and correct claim against the city of , and that no part of such claim has heretofore been paid." When endorsed by the payee named in the order-check, such statement shall operate and shall be deemed sufficient as the required declaration of the claim. Any order presented to the treasurer and not paid for want of funds shall be so marked and paid ' in the order of its presentation with interest from the date of pre- sentation at the rate of five percent or such lower rate as is fixed by the council prior to its issuance. RECOMMENDATION: Our office has requested clarification of this issue from the Office of the State Auditor regarding the applicability of the MS 412.271 . ' Pending the result of this request, we will advise the City of required corrective actions (if any) . There is pending legislation to amend the applicable statute. 1 City of Chanhassen, Minnesota Legal Compliance Audit, Page 3 1 FINDING: Notice of proposed assessment roll was not published at least two weeks prior to the meeting. CONDITION: The Chanhassen City Council met on Monday, August 24, 1987 to adopt an assessment roll. The notice of this meeting was published on the 13th and 20th days of August, 1987. This notice should have been published prior to the 10th of August, 1987 to be in compliance with state statu- tes. ' CRITERIA: MS 429.061 reads in part as follows: 429.061 ASSESSMENT PROCEDURE. Subd. 1 . The clerk shall thereupon, under the council's direc- tion, publish notice that the council will meet to consider the pro- posed assessment. Such notice shall be published in the newspaper at least once and shall be mailed to the owner of each parcel described in the assessment roll. For the purpose of giving mailed notice under this subdivision, owners shall be those shown to be such on the records of the county auditor or, in any county where tax statements are mailed by the county treasurer, on the records of the county treasurer; but other appropriate records may be used for this pur- pose. Such publication and mailing shall be no less than two weeks prior to such meeting of the council. RECOMMENDATION: We recommend the City review this statutory section and apply proce- dures to assure compliance. . ... , City of Chanhassen, Minnesota Legal Compliance Audit, Page 4 Further, for items not tested, based on our examination and the procedures referred to above, nothing came to our attention to indicate that the City of Chanhassen, Minnesota had not complied with such legal provisions. ' This report is intended solely for the use of City of Chanhassen and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report which is a matter of public record. Respectfully submitted, VOTO, TAUTGES, REDPATH & CO. , LTD. Certified Public Accountants April 23, 1988 t 1 1 ' . .