2003 Auditor's Report on Legal Compliance �
� Tautges Redpath, Ltd.
Certified Public Accountants and Consultants
Independent Auditor's Report on Compliance With
Minnesota Le�al Compliance Guide for Local Government
To the Honorable Mayor and
Members of the City Council
City of Fridley, Minnesota
We have audited the basic financial statements of the City of Fridley, Minnesota, as of and
for the year ended December 31, 2003 and have issued our report thereon dated
May 21, 2004.
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America and the provisions of the Minnesota Legal Compliance Audit Guide
for Local Government promulgated by the State Auditor pursuant to Minnesota Statutes
Section 6.65. Accordingly, the audit 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: contracting and bidding; deposits and investments;
conflicts of interest; public indebtedness; and claims and disbursements. Our study included
all of the listed categories.
The results of our tests indicate that for the iterns tested, the City of Fridley, Minnesota
complied with the material terms and conditions of applicable legal provisions, except as
described in this report.
This report is intended solely for the information and use of the City of Fridley, Minnesota's
City Council and management and is not intended to be, and should not be, used by anyone
other than these specified parties.
May 21, 2004
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HLB TAUTGES REDPATH, LTD.
Certified Public Accountants
White Bear Lake Office:4810 White Bear Parkway,White Bear Lake, Minnesota 55110 USA Telephone� 651 426 7000 Fax� 651 426 5004
Hastings Office:1303 South Frontage Aoad, Suite 13, Hastings, MN 55033, USA Telephone:651 480 4990 Fax: 651 426 5004
HLB Tautges Redpath,Ltd.is a member of�International. A world-wide organization of accounting firms and business advisers.
' Auditor's Comments on State Compliance
Page 2
FINDING: Deposits of the Fridlev HRA were not adequately collateralized on
July 11, 2003.
CONDITION: Minnesota statutes require that all deposits be collateralized 110% of
the deposit balance. The Fridley HRA collateral was not sufficient to
meet the 110%test of the deposit balance on the date reviewed. On
July 11, 2003 110% of the HRA deposits amounted to $2,238,261 and
collateral provided was $2,089,810.
CRITERIA: Minnesota Statute 118A.03 subd. 3 reads as follows:
118A.03 When and what collateral required.
Subd. 3. Amount. The total amount of the collateral computed
at its market value shall be at least ten percent more than the amount
on deposit plus accrued interest at the close of the business day, except
that where the collateral is irrevocable standby letters of credit issued
by Federal Home Loan Banks, the amount of collateral shall be at least
equal to the amount on deposit plus accrued interest at the close of the
business day. The financial institution may furnish both a surety bond
and collateral aggregating the required amount.
RECOMMENDATION:
We recommend that the City monitor their cash and collateral balances
throughout the year to make sure their deposits are adequately
collateralized. '
CITY RESPONSE:
This condition occurred only once during the year. It occurred in the
HRA checking account and was due to the wiring of the tax settlement
from the County. This situation was corrected and should not occur in
the future.