10.06 - Appoint Consultants for 2007

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LarsonAllenM CPAs, Consultants & Advisors www.larsonallen.com November 10, 2006 Honorable Mayor and Council Members City of Pequot Lakes City Clerk Office 4638 CORD 11 Pequot Lakes,MN 56472 We are pleased to confirm our understanding of the services we are to provide the City of Pequot Lakes ("you" or "your") for the year ended December 31, 2006. Scope We will audit the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information, which collectively comprise the entity's basic financial statements, of the City of Pequot Lakes as of and for the year ended December 31, 2006. The following supplementary information accompanying the basic financial statements is required by U.S. generally accepted accounting principles and will be subjected to certain limited procedures,but will not be audited: 1. Management's discussion and analysis. 2. Budgetary comparison schedules. Also, the following additional information accompanying the basic financial statements will be subjected to the auditing procedures applied in our audit of the financial statements upon which we will provide an opinion in relation to the basic financial statements. 1. Combining and individual fund statements. Audit objective The objective of our audit is the expression of opinions as to whether your basic financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles and to report on the fairness of the additional information referred to in the first paragraph when considered in relation to the basic financial statements taken as a whole. Our audit will be conducted in accordance with U.S. generally accepted auditing standards and the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and will include tests of the accounting records of the City of Pequot Lakes and other procedures we consider necessary to enable us to express such opinions. If our opinions on the financial statements are other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed opinions,we may decline to express opinions or to issue a report as a result of this engagement. PO Box 648, Brainerd, MN 56401-0648, 218/828-0100, Fax 218/828-9503 14275 Golf Course Drive, Suite 300, Baxter, MN 56425 Larson,Allen,Weishair&Co.,LLP I An Independent Member of Baker Tilly International