05.02 - 2012 Audit - Laserfiche WebLink

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Honorable Mayor and City Council Members City of Pequot Lakes Page 2 Accountina estimates (Continued) Management's estimate of the useful lives of depreciable assets is based on guidance issued by the Minnesota Office of the State Auditor and historical practice. We evaluated the key factors and assumptions used to develop the depreciation in determining that it is reasonable in relation to the financial statements taken as a whole. Management's estimate of accrued compensated absences is based on earned vacation, sick leave, and comp time. The current portion of the estimate is based on City policy and historical trends. • Management's estimate of other postemployment benefits payable is based upon an actuarial calculation. Financial statement disclosures Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. There were no particularly sensitive financial statement disclosures. The financial statement disclosures are neutral, consistent, and clear. Difficulties encountered in performing the audit We encountered no significant difficulties in dealing with management in perForming and completing our audit. Uncorrected misstatements Professional standards require us to accumulate all misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management did not identify and we did not notify them of any uncorrected financial statement misstatements. Professional standards require us to accumulate all misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. Corrected misstatements The following material misstatements detected as a result of audit procedures were corrected by management: • To adjust for receipts of payment on loan receivable. • To adjust account payable for items not properly accrued. • To record additional receivable not booked by the client. • To adjust bond proceeds to account for client netting of issuance costs. Disagreements with management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors' report. No such disagreements arose during our audit. Management representations We have requested certain representations from management that are included in the management representation letter dated April 2, 2013.