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Ottertail reviews 2010 audit

CPA Brian Koehn reviewed some of the highlights of Ottertail's 2010 audit at the city council's April 21 meeting.

The council voted to approve the audit report, which is due to the state by June 30.

"This year your total net assets went up two and half percent," Koehn reported. "Overall, the balance sheet from 2009 to 2010 is fairly comparable."

The city's water fund experienced a $6,000 increase in sales, but also an increase in repair and maintenance costs. The Summer Rec and Tax Increment Financing district budgets were the two that exceeded the funds. Koehn expressed his opinion that this is not a problem that the council should be worried about.

Koehn found three material deficiencies he thought were significant and went over these in detail with the council.

"With an entity this size, every one of them is completely expected," he said of the three deficiencies.

The first deficiency he noted was a lack of a segregation of duties. However, with a staff of two or three in a small city, it is impossible to have adequate separation of duties, he said. The second deficiency is related to the year-end closing process, where the city utilizes cash basis as opposed to accrual basis software.

Third, there was a deficiency with the city's financial statement preparation. Each year Ottertail asks its auditor to prepare the financial statements as opposed to preparing them themselves, which allows for the potential for an error to happen.

Koehn thanked the city council for the opportunity to serve as the auditor for Ottertail. He said he was impressed this year with some of the advancements he's seen the city take.

After a year of discussion, the city council also voted at the meeting to approve the Lodging Tax Ordinance. The ordinance was altered slightly since the council's last review, with the only significant change being an expansion of the purpose statement. The three percent lodging tax, which will be used to help promote Ottertail as a tourist destination, will start being collected May 1.

The official name of the lodging tax board has yet to be finalized. The city will hold the funds collected through the tax until the nonprofit process for the lodging board is complete and finalized.

Also discussed at the meeting were the E-911 Ordinance (which pertains to the city's blue emergency address signs) and the Sidewalk Construction, Inspection and Maintenance Policy. Both the E-911 Ordinance and the sidewalk policy were approved with a few minor changes, as per city attorney Terry Karkela's suggestions.

In other business, the council acknowledged a donation from the town of Amor in the amount of $4,500 for Ottertail Clean-up Days. The council also noted that the annual Ottertail Business Expo would be held May 21 at Thumper Pond.