1969 - Comp. Annual Financial Report
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ERNST & ERNST
FIR 5 T N AT ION A L BAN K B LOG.
MINNEAPOLIS. MINN. 55402
June 26, 1970
To the Village Council
Village of Shorewood
P. O. Box 307
Excelsior, Minnesota 55331
Gentlemen:
During the course of our examination of the financial statements of the various
funds of the Village of Shorewood for the 1969 calendar year, we reviewed the
internal controls and various procedures and offer the following comments for
your consideration.
LIQUOR F'QND
At the present time an up-to-date record of the liquor fund cash balance is not
maintained. We recommend that the Village Clerk maintain a memorandum record
which reflects the cash balance at the beginnll;,lg of the month, the deposits
made from liquor store and other receipts, checks written (by batch total) and
new cash balance. This memorandum record would be in addition to the journals
and ledger maintained by the public accountant. Information as regards deposits
will be furnished by requiring that the manager of the liquor store deliver the
Daily Cash Sales Reports and related deposit slips to the Village Clerk as soon
as possible after the deposit is made. We believe that a record of this type
is essential in order to allow for effective budgeting for cash disbursements,
timely transfers of cash between funds, and optimum investment of surplus cash.
At the present time the bank account is reconciled only at the end of every
fourth month by the public accountant. We recommend that the Village Clerk
reconcile the bank statement balance to the memorandum cash record balance
(described above) at the end of each month. Such a procedure will serve both
as a verification of the memorandum cash record balance and will bring to light
any bank errors.
We observed that liquor store receipts were often allowed to accumulate for
three or more days to amounts in excess of $7,000 and as much as $8,500 while
the public employees blanket bond will only provide for a recovery of $5,000
in the case of employee dishonesty and the insurance coverage for theft inside
the premises of the store is also limited to $5,000. We recommend that the
daily receipts not be allowed to accumulate to an amount in excess of $5,000.
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ERNST 5. ERNST
Village of Shorewood
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6/26/70
GENERAL
Budgeting
In order to provide meaningful information to the Village Council as regards the
relationship of actual expenditures to budgeted expenditures, a cOmparison of
these amounts should be formally presented to the Council twice a year as a
minimum.
Should you have any questions regarding the above comments or any other matters
in which we can be of assistance, we would be glad to discuss them with you.
Very truly yours,
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--00000--
AUDITED FINANCIAL STATEMENTS
AND OTHER FINANCIAL INFORMATION
VILLAGE OF SHOREWOOD,MINNESOTA -LIQUOR FUND
December 31, 1969
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--00000--
CONTENT S
AUDITED FINANCIAL .STATEMENTS:
ACCQUNTAN'TS' REPORT.........................,...........................................
STATEMENT OF FINANCIAL POSITION....... ....................
STATEMENT OF EARNINGS AND RETAINED EARNINGS...............
OTHER FINANCIAL INFORMATION:
EXAMINATION .CO}.1}r1ENTS. .. .. .. .. .'.. .. .. .. .. .. .. .. .. .' .. .' .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
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ERNST 5c ERNST
FIR S T N A T ION A L BAN K B L D G.
MINNEAPOLIS, MINN. 55402
ACCOUNTANTS' REPORT
The Village Council
Village of Shorewood, Minnesota
We have examined the statement of financial position of the Village of Shorew:ood -
Liquor Fund as of December 31, 1969 and the related statement of earnings and
retained earnings for the year then ended. Our examination was made in accordance
with generally accepted auditing standards, and accordingly included such tests of
the accountingxecords and such other auditing procedures as we considered neces-
saryin the circumstances.
In our opinion, the accompanying statements of financial position and earnings
and retained earnings present fairly the financial position of the Village of
Shorewood - Liquor Fund at December 31, 1969 and the results of its operations
and changes in fund balance for the year then ended, in conformity with generally
accepted accounting principles applied on a basis consistent with that of the
preceding year.
Minneapolis, Minnesota
May 7, 1970
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STATEMENT OF FINANCIAL POSITION
VILLAGE .OFSHOREWOOD -LIQUOR FUND
December 31
1969 1968
ASSETS
CURRENT ASSETS
Cash
Savings certificates
Inventory - at the lower of cost (first-in,
first-out method) or market
Prepaid expenses
$21,675.51
73,500.00
$ ~1,657.19
33,500.00
TOTAL CURRENT ASSETS
FIXTURES AND EQUIPMENT -on the basis of cost
Furniture, fixtures and equipment
Leasehold improvements
Allowances for depreciation (deduction)
35,398.95
3,110.70
$133, 685.16
30,885.19
1,981.01
$ 98,023.39
$ 17,294.23
3,427.99
( 8,592.0&) (
$ 12,130.14 $
$17,294.23
3,427.99
6,684.25)
14,037.97
$145,815.30 $112,061.36
LIABILITIES AND FUND BALANCE
CURRENT LIABILITIES
Accounts payable
Salaries, payroll taxes and
contribution
State sales tax
$ 7,712.16 $ 6,544.61
pension
988.21 2,321.55
1,098.62 1,188.60
TOTAL CURRENT LIABILITIES $ 9,798.99 $ 10,054.76
FUND BALANCE
Retained earnings
136,016.31 102,006.60
$145,815.30 $112,061.36
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STATEMENT OF EARNINGS AND RETAINED EARNINGS
VILLAGE OF SHOREWOOD - LIQUOR FUND
Net sales:
Liquor and wine
Beer
Miscellaneous
Cost of products sold:
Inventory at beginning of year
Purchases, less discounts
Less inventory at end of year
GROSS 'MARGIN
Operating expenses:
Salaries
Payroll taxes and employee benefits
Rent
Light and power
Telephone
Insurance
Depreciation
Accounting and auditing
Bad debts
Supplies,
Office expense
Repairs
Other
Other income (deduction):
Intere'st income
Interest expense
NET EARNINGS
Retained earnings at beginning of year
Transfers:
To General Fund
From Gene~a1 Fund
RETAINED EARNINGS AT END OF YEAR
( ) Indicates deduction.
Year Ended December 31
1969 1968
$268,160.88 $237,997.00
87,806.90 72,459.07
16,460.46 13,204.45
$372,428.24 $323,660.52
$ 30,885.19 $ 28,314.18
288,617.12 249,663.46
$319,502.31 $277 ,.977 . 64
35,398.95 30,885.19
$284,103.36 $247,092.45
$ 88,324.88 $ 76,568.07
$ 23,035.46 $ 21,365.,90
3,067.59 2,475.75
6,209.00 5,892.00
1,815.46 1,815.64
313.01 336.69
3,565.00 3,348.90
1,907.83 1,932.07
2,760.00 2,441.00
40.51
769.70 573.57
277.67 275.99
186.80 71.00
453.08 389.47
$ 44,360.60 $ 40,958.49
$ 43,964.28 $ 35,609.58
$ 2,645.43 $ 1,400.00
( 109.25)
$ 2,645.43 $ 1,490.75
$ 46,609.71 $ 36,900. 3.3
102,006.60 84,106.27
$148,616.31 $121,006.60
( 12,600.00) ( 24,000.00)
5,000.00
$136,016.31 $102,006.60
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OTHER FINANCIAL INFORMATION
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ERNST 5c ERNST
FIR S T N AT ION A L BAN K B L D G.
MINNEAPOLIS, MINN. 55402
EXAMINATION COMMENTS
Village of Shorewood, Minnesota
The audited financial statements of the Village of Shorewood -LiquorFund and
our report thereon are presented in the preceding section of this report. The
following comments relate to the details of the scope of our examination and
our review of accounting procedures and internal controls.
SCOPE OF EXAMINATION
The examination comments in the other financial informationinc1uded with the
audited statement of receipts and disbursements of the various funds of the
Village of Shorewoodof the same date cover the scope of our procedures in the
area of cash, cash transactions and certain other areas.
We obs.erved the taking of the physical inventory and recorded test counts which
were subsequently traced to the inventory listings. Prices were supported on a
test basis by reference to vendors' invoices. Clerical accuracy was verified on
a test basis. We also tested the accounts payable cutoff. We tested the retail
inventory control system and observed that it is functioning properly.
We reviewed the property accounts and additions were supported on a test basis.
The provision for depreciation for the year was reviewed and tested.
Accounts payable were supported by direct correspondence with vendors on a test
basis and by sighting documentary evidence.
Amounts due to the Public Employees Retirement Association and for FICA taxes
were analyzed and adjusted to the required amounts.
Sales were reconciled to cash receipts, and other accounts were tested and
supported as deemed necessary.
We reviewed the internal controls and accounting procedures used at the village
hall, at the liquor store and by the public accountant who assists the Village
Clerk.
Minneapolis, Minnesota
May 7, 1970
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