2022 Special Purpose Audit Report
CITY OF GOLDEN VALLEY
HENNEPIN COUNTY, MINNESOTA
Special Purpose Audit Reports
Year Ended
December 31, 2022
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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 and Responses 4–5
CITY OF GOLDEN VALLEY
Table of Contents
HENNEPIN COUNTY, MINNESOTA
Year Ended December 31, 2022
Special Purpose Audit Reports
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-1-
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 Golden Valley, Minnesota
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 Golden Valley, Minnesota (the City) as of and for the year ended December 31, 2022, and the
related notes to the financial statements, which collectively comprise the City’s basic financial statements,
and have issued our report thereon dated August 3, 2023.
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) as a basis for designing 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 a 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 and, therefore, material weaknesses or significant deficiencies may
exist that were not identified. We identified certain deficiencies in internal control, described in the
accompanying Schedule of Findings and Responses as findings 2022-001 and 2022-002 that we consider
to be material weaknesses.
(continued)
C E R T I F I E D
A C C O U N T A N T S
P UBLIC
PRINCIPALS
Thomas A. Karnowski, CPA
Paul A. Radosevich, CPA
William J. Lauer, CPA
James H. Eichten, CPA
Aaron J. Nielsen, CPA
Victoria L. Holinka, CPA/CMA
Jaclyn M. Huegel, CPA
Kalen T. Karnowski, CPA
Malloy, Montague, Karnowski, Radosevich & Co., P.A.
5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com
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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
financial statements. 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.
CITY’S RESPONSES TO FINDINGS
Government Auditing Standards requires the auditor to perform limited procedures on the City’s
responses to the findings identified in our audit and described in the accompanying Schedule of Findings
and Responses. The City’s responses were not subjected to the other auditing procedures applied in the
audit of the financial statements and, accordingly, we express no opinion on the responses.
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 report is not suitable for any other purpose.
Minneapolis, Minnesota
August 3, 2023
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INDEPENDENT AUDITOR’S REPORT
ON MINNESOTA LEGAL COMPLIANCE
To the City Council and Management
City of Golden Valley, Minnesota
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 Golden Valley, Minnesota (the City) as of and for the year ended December 31, 2022, and the
related notes to the financial statements, which collectively comprise the City’s basic financial statements,
and have issued our report thereon dated August 3, 2023.
MINNESOTA LEGAL COMPLIANCE
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 contracting – bid laws, depositories of public funds and public
investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous
provisions, and tax increment financing sections of the Minnesota Legal Compliance Audit Guide for
Cities, promulgated by the State Auditor pursuant to Minnesota Statutes § 6.65, insofar as they relate to
accounting matters. 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, insofar as they
relate to accounting matters.
PURPOSE OF THIS REPORT
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.
Minneapolis, Minnesota
August 3, 2023
C E R T I F I E D
A C C O U N T A N T S
P UBLIC
PRINCIPALS
Thomas A. Karnowski, CPA
Paul A. Radosevich, CPA
William J. Lauer, CPA
James H. Eichten, CPA
Aaron J. Nielsen, CPA
Victoria L. Holinka, CPA/CMA
Jaclyn M. Huegel, CPA
Kalen T. Karnowski, CPA
Malloy, Montague, Karnowski, Radosevich & Co., P.A.
5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com
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CITY OF GOLDEN VALLEY
Schedule of Findings and Responses
Year Ended December 31, 2022
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MATERIAL WEAKNESSES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
2022-001 SEGREGATION OF DUTIES
Criteria – Internal control over financial reporting.
Condition – The City of Golden Valley, Minnesota (the City) has limited segregation of
duties in a number of areas, including controls over cash disbursements, investments, and
payroll.
Questioned Costs – Not applicable.
Context – This condition applies to multiple areas as noted above.
Repeat Finding – This is a current year and prior year finding.
Cause – The limited segregation of duties is primarily caused by the limited size of the City’s
finance department staff.
Effect – One important element of internal accounting controls is an adequate segregation of
duties, such that no one individual has responsibility to execute a transaction, have physical
access to the related assets, and have responsibility or authority to record the transaction. A
lack of segregation of duties subjects the City to a higher risk that errors or fraud could occur
and not be detected in a timely manner in the normal course of business.
Recommendation – We recommend that the City continue to review its accounting
procedures and internal controls and make improvements on an ongoing basis within the
limits of the staff available.
Management Response – There is no disagreement with the audit finding. The City reviews
and makes improvements to its internal control structure on an ongoing basis and attempts to
maximize the segregation of duties in all areas within the limits of the staff available.
However, the City does not consider it cost-beneficial at this time to increase the size of its
staff in order to further segregate accounting functions.
CITY OF GOLDEN VALLEY
Schedule of Findings and Responses (continued)
Year Ended December 31, 2022
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MATERIAL WEAKNESSES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
(CONTINUED)
2022-002 TIMELINESS OF CASH RECONCILIATIONS
Criteria – Internal controls over financial reporting are intended to allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect
and correct, misstatements on a timely basis. To be effective, control procedures such as
periodic and year-end account and subledger reconciliations must be performed regularly,
accurately, and in a timely manner.
Condition – During our audit, we noted that the monthly cash reconciliation process was not
being performed in a timely manner during the fiscal year, and the year-end reconciliation
was not fully completed until well after year-end. In previous audits of the City, we have
generally found the internal controls in this area to be well designed, implemented, and
functioning properly. Although the internal controls were still considered to be well designed,
the effectiveness of some control procedures were diminished during the year under audit,
due to a lack of timeliness and accuracy.
Questioned Costs – Not applicable.
Context – Monthly cash reconciliations were not completed on a timely basis throughout the
year, and the year-end cash reconciliation was not fully completed until June 2023.
Repeat Finding – This is a current and prior year finding.
Cause – This condition was primarily caused by the turnover of finance department
personnel.
Effect – This condition subjects the City to a higher risk that errors or fraud could occur and
not be detected in a timely manner in the normal course of business, and potentially
diminishes the effectiveness of other internal controls, such as periodic budget-to-actual
comparisons that are dependent on the accurate recording of financial transactions.
Recommendation – We recommend that the City ensure that its finance department is
adequately staffed and trained in order to ensure the timely completion of this critical internal
control procedure in the future.
Management Response – There is no disagreement with the audit finding. City management
will continue to review its internal control procedures and finance department duties to ensure
monthly cash reconciliations are accurately completed in a timely manner going forward.
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