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2012 Special Purpose ReportOTA S - 6, a" 11 yc"'a, CITY OF NEW HOPE HENNEPIN COUNTY, MINNESOTA Table of Contents Page Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 1 -2 Independent Auditor's Report on Minnesota Legal Compliance 3 Schedule of Findings 4 MMKR CERTIFIED) PUBLIC; ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the City Council and Management City of New Hope, Minnesota PRINCIPALS Thomas M. Montague, (TA Thomas A. Karnowski, CPA Paul A. Radosevieh, CPA William J. Lauer, CPA James H. Eichren, CPA Aaron J. Nielsen, CPA Victoria L. Holinka CPA We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of New Hope, Minnesota (the City) as of and for the year ended December 31, 2012, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated May 16, 2013. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. (continued) Malloy, Montague, Karnowski, Raclosevich, & Co., P.A. 5153 Wayzata Boulevard • Suite 410 • Minneapolis. MN 55416 • Telephone: 952 - 545 -0424 • Tcle {ax: 952.545.0569 • www.mmkr.com Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. In addition, we noted certain other matters that we have reported to management of the City in a separate letter dated May 16, 2013. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Minneapolis, Minnesota May 16, 2013 -2- MMKR CERTIFIE[ PUBLIC ACCOIJN'I'ANTS INDEPENDENT AUDITOR'S REPORT ON MINNESOTA LEGAL COMPLIANCE To the City Council and Management City of New Hope, Minnesota PRINCIPALS Thomas M. Montague, (TA Thomas A. Karnowski, CPA Paul A. Radosevieh, CPA William J. Lauer, CPA James H. Eichren, CPA Aaron J. Nielsen, CPA Victoria L. Holinka CPA We have audited, in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of New Hope, Minnesota (the City) as of and for the year ended December 31, 2012, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated May 16, 2013. The Minnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the Office of the State Auditor pursuant to Minnesota Statute § 6.65, contains seven categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing. Our audit considered all of the listed categories. In connection with our audit, nothing came to our attention that caused us to believe that the City failed to comply with the provisions of the Minnesota Legal Compliance Audit Guide for Political Subdivisions, except as described in the Schedule of Findings as item 2012 -1. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the City's noncompliance with the above referenced provisions. The City's response to the legal compliance finding identified in our audit has been included in the Schedule of Findings. The City's response was not subject to the auditing procedures applied in our audit of the financial statements and, accordingly, we express no opinion on it. The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and not to provide an opinion on compliance. Accordingly, this report is not suitable for any other purpose. r Minneapolis, Minnesota May 16, 2013 511 Malloy, Montague, Karnowski, Radosevich, & Co., P.A. 5153 Wayxa t. Bo u1c ... d • Suite 410 • Min —ap.hi . MN 55416 • Telephone: 952 - 545 -0424 • Te3e {ax: 952.545.0569 • --.kr —m CITY OF NEW HOPE Schedule of Findings Year Ended December 31, 2012 A. FINDINGS — FINANCIAL STATEMENT AUDIT None. B. FINDINGS — MINNESOTA LEGAL COMPLIANCE AUDIT 2012 -1 PAYMENT OF INVOICES Criteria — Minnesota Statue § 471.425 requires prompt payment of local government bills within a standard payment period of 35 days from the receipt of goods and services, or the invoice for goods or services, for cities with governing bodies that meet at least once a month. Condition — One invoice selected for testing was not paid within the required 35 -day time period. Context — One out of twenty -five disbursements tested was not in compliance. This is a current year finding. Cause — This was an oversight by city personnel. Effect — The City of New Hope, Minnesota (the City) did not pay this invoice in a timely manner. Recommendation — We recommend that the City review its procedures for paying invoices to ensure that all invoices are paid within the statutory time limit. Management's Response -- There is no disagreement with the audit finding. The City will review its procedures for paying invoices to ensure future compliance with this statute. --4-