2. Financial Section - Independent Auditor's ReportDenning, Downey & Associates,
CERTIFIED PUBLIC ACCOUNTANTS
P.O. Box 1957, Kalispell, MT 59903-1957
(406) 756-6879 o FAX (406) 257-7879 <E-Mail dda@ddaudit.com
Kim M. Downey, CPA, CGFM, CFF, CITP Robert K Denning, CPA, CGFM,
CFF, CITP
Mayor and City Council
City of Kalispell
Flathead County
Kalispell, Montana
We have audited the accompanying financial statements of the governmental activities, business -
type activities, each major fund, the aggregate discretely presented component units and the
remaining fund information of the City of Kalispell, Flathead County, Montana, as of and for the
year ended June 30, 2011, which collectively comprise the City of Kalispell's basic financial
statements as listed in the table of contents. These financial statements are the responsibility of
City of Kalispell management. Our responsibility is to express opinions on these financial
statements based on our audit.
We conducted our audit 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. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, business -type activities, each
major fund, the aggregate discretely presented component units and the remaining fund
information of the City of Kalispell, Flathead County, Montana, as of June 30, 2011, and the
respective changes in financial position, and cash flows thereof for the year then ended in
conformity with accounting principles generally accepted in the United States of America.
As described in Note 1, the City has implemented the Post Retirement Benefits other than
Pensions, as required by the provisions of GASB Statement No. 45 as of June 30, 2011.
As described in Note 1, the City has implemented the Fund balance Reporting and Governmental
Fund Type Definitions as required by the provisions of GASB Statement No. 54, as of June 30,
2011.
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In accordance with Government Auditing Standards, we have also issued our report dated
December 22, 2011, on our consideration of the City of Kalispell's internal control over financial
reporting and our tests of its compliance with certain provisions of laws, regulations, contracts,
and grant agreements and other matters. The purpose of that report is to describe the scope of
our testing of internal control over financial reporting and compliance and the results of that
testing and not to provide an opinion on the internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards and should be considered in assessing the results of our audit.
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis, budgetary comparison information, and schedule of
funding for other post employment benefits other than pensions on pages 14 through 27, 90
through 115, and 70 be presented to supplement the basic financial statements. Such
information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board, who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or
historical context. This required supplemental information has been subjected to the auditing
procedures applied in the audit of the financial statements and additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the financial statements or to the financial statements themselves, and
other additional procedures in accordance with auditing standards generally accepted in the
United States of America. In our opinion, the information is fairly stated in all material respects
in relation to the financial statements taken as a whole.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Kalispell's basic financial statements. The introductory
section, combining and individual nonmajor fund financial statements, and statistical section are
presented for purposes of additional analysis and are not a required part of the basic financial
statements. The accompanying schedule of expenditures of federal awards is presented for
purposes of additional analysis as required by U.S. Office of Management and Budget Circular
A-133, Audits of States, Local Governments, and Non -Profit Organizations, and is also not a
required part of the basic financial statements of City of Kalispell, Flathead County, Montana.
The introductory section, combining, individual nonmajor fund financial statements, the
statistical section and the schedule of expenditures of federal awards are the responsibility of
management and were derived from and relate directly to the underlying accounting and other
records used to prepare the financial statements. The schedule of expenditures of federal
awards, has been subjected to the auditing procedures applied in the audit of the financial
statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the financial
statements or to the financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America. In our
opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in
relation to the financial statements as a whole. The introductory section, combining and
individual nonmajor fund financial statements, and statistical section have not been subjected to
the auditing procedures applied in the audit of the basic financial statements and, accordingly, we
do not express an opinion or provide any assurance on it.
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December 22, 2011
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