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MAY-23-2003 15:13 763 569 5799 763 569 5799 P.03/19 KE RN. D EWE NTE It- VI ERE March 6, 2003 I~Ionorab Ie Mayor and City Council City of Hastings Hastings, Minnesota The accompanying memorandum includes financial trend infonnation for your City and suggestions for improvement of accounting procedures and internal accounting control measures that came to our attention as a result of our audit of the general purpose [mancial statements of the City of Hastings, Minnesota., for the year ended December 31, 2002. The matters discussed herein were considered by us during our a~dit and they do not nl0dify the opinion expressed in our independent auditors' report dated March 6, 2003, on such statements. In planning and performing our audit of the general purpose financial statements of the City of Hastings, Minnesota., for the year ended December 31, 2002) we considered its internal control over fll1aneial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on the internal control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgment, could adversely affect the City's ability to record, process, summarize and report fmandal data consistent with the assertions of management in the general purpose financial statements. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the noma] course of performing their assigned functions. Our consideration of the jntemal control over financial reporting would not necessarily disclose all matters in the intemal control that might be reportable c.onditions and, accordingly~ would not necessarily disclose all reportable conditions that are also considered to be material weaknesses- However, we do not believe the reportable condition described in this letter is a materia) weakness.