Example of Management Letter

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METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY
Management Letter June 30, 2004

KPMG LLP 1900 Nashville City Center 511 Union Street Nashville, TN 37219-1735

October 31, 2004

The Honorable Mayor and Members of Council The Metropolitan Government of Nashville and Davidson County Nashville, Tennessee Ladies and Gentlemen: We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Metropolitan Government of Nashville and Davidson County, Tennessee (the Government) as of and for the year ended June 30, 2004, which collectively comprise the Government’s basic
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KPMG also suggests that potential adjustments are recorded within three months of when the inventory verification process began. Management Response We concur. During fiscal year 2005, we will outline a comprehensive plan which will detail when each department will have their physical inventory listings initially distributed, when each department must have these listings completed and returned, and a targeted date in which all adjustments will be finalized and entered into the fixed asset system.

GENERAL GOVERNMENT METRO INVESTMENT POOL INCOME ALLOCATION

Observation During fiscal 2004, the Government made separate allocations of three investment earnings components: interest income, realized market gains/losses and unrealized market gains/losses to participants in the Metro Investment Pool on a monthly basis. In some months, the overall net investment earnings allocation was positive; in other months, the overall investment earnings allocation was negative. Prior to FY03 the allocation was made as a net of all three investment earning components and the pool kept a net asset value of $1.00. Market values did not fluctuate as a result. The portfolio was bifurcated in FY03 with one portfolio having a longer duration than the other two and all three portfolios were marked to market monthly. During FY03 there were no overall net negative investment earnings allocations. In FY04 the portfolios experienced negative investment
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