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                            INDEPENDENT AUDITORS' REPORT


To the Honorable Mayor and Members of the
  City Commission of the City of Muskegon, Michigan

We have audited the accompanying 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 City of Muskegon,
Michigan as of and for the year ended December 31, 2002, which collectively comprise
the City's basic financial statements as listed in the table of contents. These financial
statements are the responsibility of the management of City of Muskegon, Michigan.
Our responsibility is to express an opinion 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 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, the business-
type activities, the aggregate discretely presented component units, each major fund,
and the aggregate remaining fund information of the City of Muskegon, Michigan as of
December 31, 2002, and the respective changes in financial position and cash flows,
where applicable, thereof for the year then ended in conformity with accounting
principles generally accepted in the United States of America.

As discussed in note A to the financial statements, the City of Muskegon, Michigan
adopted the provisions of Governmental Accounting Standards Board (GASB)
Statement 34, Basic Financial Statements ­ and Management's Discussion and
Analysis ­ for State and Local Governments, as amended by GASB 37, Basic Financial
Statements ­ and Management's Discussion and Analysis ­ for State and Local
Governments Omnibus and GASB 38, Certain Financial Statement Notes Disclosures,
as of January 1, 2002.

The management's discussion and analysis and the required supplementary information
on pages 19 through 29 and 75 through 80 are not a required part of the basic financial
statements but are supplementary information required by generally accepted
accounting principles. We have applied certain limited procedures, which consisted
primarily of inquiries of management regarding the methods of measurement and



presentation of the supplementary information.  However, we did not audit the
information and express no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements
that collectively comprise the City of Muskegon, Michigan's basic financial statements.
The accompanying introductory section, supplemental financial information, and
statistical section are presented for purposes of additional analysis and are not a
required part of the of the basic financial statements.  The supplemental financial
information has been subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements as a whole.  The introductory section and
statistical tables have not been subjected to the auditing procedures applied in the audit
of the basic financial statements and, accordingly, we express no opinion on them. 

In accordance with Government Auditing Standards, we have also issued a report dated
March 11, 2003 on our consideration of the City of Muskegon, Michigan's internal
control over financial reporting and our tests of its compliance with certain laws,
regulations, contracts and grants.  That report is an integral part of an audit performed
in accordance with Government Auditing Standards and should be read in conjunction
with this report considering the results of our audit.



March 11, 2003