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 U.S. CELLULAR COLISEUM
(AN ENTERPRISE FUND OF THE
CITY OF BLOOMINGTON, ILLINOIS)

AUDITOR'S COMMUNICATION TO
CITY COUNCIL

For the Year Ended

April30, 2013
U.S. CELLULAR COLISEuM
(AN ENTERPRISE FUND OF THE
CITY OF BLOOMINGTON, ILLINOIS)
AUDITOR'S COMMUNICATION TO THE CITY COUNCIL
TABLE OF CONTENTS

Page(s)

COVER LETTER ..... ....... .. .. .. ....... .... .. .. .. .. ... ... .. .. .. ... ... .............. ... . .. .. .. ... ..... .... ... ... ... ....... .. 1

REQUIRED COMMUNICATION WITH THOSE CHARGED WITH

GOVERNANCE............................................................................................................. 2-6
• Adjusting J oumal Entries
• Passed Adjustments

MANAGEMENT LETTER.............................................................................................. 7-10

FIRM OVERVIEW
 Accounting // Advisory // Technology // Managed Services

September 9, 2013

The Honorable Mayor

and Members of the City Council
City of Bloomington, Illinois
109 E. Olive Street
PO Box 3157
Bloomington, IL 61701

As part of our audit process we are required to have certain communications with those charged
with governance at the beginning of our audit process and at the conclusion of the audit. Those
communications include information related to the planned scope and timing of our audit, as well
as other information required by auditing standards. Our communication at the beginning of our
audit process was sent to you on April1, 2013.

In addition, auditing standards require the communication of internal control related matters to
those charged with governance. Our management letter, as well as a listing of future
pronouncements that may affect the U.S. Cellular Coliseum (An Enterprise Fund of the City of
Bloomington, Illinois), is enclosed within this document.

This information is intended solely for the use of the City Council and management of the U.S.
Cellular Coliseum, an enterprise fund of the City of Bloomington, Illinois and is not intended to
be and should not be used by anyone other than these specified parties.

Sincerely,

Sikich LLP
By: Chad Lucas, CPA
Partner

1
 Accounting // Advisory // Technology // Managed Servicr:~s

September 9, 2013

To the Honorable Mayor and

Members of the City Council
City of Bloomington, Illinois
109 E. Olive Street
Bloomington, IL 61701

We have audited the financial statements of the U.S. Cellular Coliseum (An Enterprise Fund of
the City of Bloomington, Illinois) for the year ended April 30, 2013. Professional standards
require that we provide you with information about our responsibilities under generally accepted
auditing standards and Government Auditing Standards, as well as certain information related to
the planned scope and timing of our audit. We have communicated such information in our letter
to you dated April 1, 2013. Professional standards also require that we communicate to you the
following information related to our audit.

Significant Audit Findings

Qualitative Aspects ofAccounting Practices

Management is responsible for the selection and use of appropriate accounting policies. The
significant accounting policies used by the U.S. Cellular Coliseum (An Enterprise Fund of the
City of Bloomington, Illinois) are described in Note 1 to the financial statements. No new
accounting policies were adopted and the application of existing policies was not changed during
the year except for the implementation of Statement of Governmental Accounting Standards
(GASB Statement) No. 62, Codification ofAccounting and Financial Reporting Guidance
Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, GASB Statement No.
63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and
Net Position and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities.
We noted no transactions entered into by the Coliseum during the year for which there is a lack
of authoritative guidance or consensus.

Accounting estimates are an integral part of the financial statements prepared by management
and are based on management's knowledge and experience about past and current events and
assumptions about future events. Certain accounting estimates are particularly sensitive because
of their significance to the financial statements and because of the possibility that future events
affecting them may differ significantly from those expected. We noted no particularly sensitive
estimates made by management during our audit of the financial statements.

2
We reviewed all material accounting estimates made by management and found them to be
reasonable and supported by sound judgment.

Difficulties Encountered in Performing the Audit

We encountered no significant difficulties in dealing with management in performing and
completing our audit.

Corrected and Uncorrected Misstatements

Professional standards require us to accumulate all known and likely misstatements. identified
during the audit, other than those that are trivial, and communicate them to the appropriate level
of management. We have included a list of audit adjustments, which were all corrected by
management. In addition, none of the misstatements detected as a result of audit procedures and
corrected by management were material, either individually or in the aggregate, to the financial
statements taken as a whole.

In addition, the attached schedule summarizes uncorrected misstatements of the financial

statements. Management has determined that their effects are immaterial, both individually and
in the aggregate, to the financial statements taken as a whole.

Disagreements with Management

For purposes of this letter, professional standards define a disagreement with management as a
financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction,
that could be significant to the financial statements or the auditor's report. We are pleased to
report that no such disagreements arose during the course of our audit.

Management Representations
We have requested certain representations from management that are included in the
management representation letter dated September 9, 2013.

Management Consultations with Other Independent Accountants

In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a
consultation involves application of an accounting principle to the Coliseum's financial
statements or a determination of the type of auditor's opinion that may be expressed on those
statements, our professional standards require the consulting accountant to check with us to
determine that the consultant has all the relevant facts. To our knowledge, there were no such
consultations with other accountants.

Other Audit Findings or Issues

We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the Coliseum's auditors.
However, these discussions occurred in the normal course of our professional relationship and
our responses were not a condition to our retention.

3
This information is intended solely for the use of the City Council and management of U.S.
Cellular Coliseum and is not intended to be and should not be used by anyone other than these
specified parties.

Very truly yours,

Sikich LLP
Springfield, Illinois

4
US Cellular Coliseum -Consolidated
Year End: April 30, 2013
Adjusting Journal Entries
Date: 5/1/2012 To 4/30/2013

Number Date Name Account No Reference Debit Credit

4/30/2013 Retained Earnings 390000 QB R. 1 557.00

4/30/2013 Security 621000 QB R.1 400.00
4/30/2013 Production Expense 642000 QB R.1 127.00
4/30/2013 Miscellaneous 715000 QB R. 1 30.00

To record effects of PY AJE 2 not

recorded by client to record expense and related payable

2 4/30/2013 Accounts Receivable: 1241 00 Basketball Receiv 120000 QB G. 5. 1 19,058.61

2 4/30/2013 Hockey Receivable 123000 QB G. 5. 1 1,064.60
2 4/30/2013 Membership Fees 153000 QB G. 5. 1 253.36
2 4/30/2013 Accounts payable:203000 B/N Football 200000 QB G. 5. 1 1,200.70
2 4/30/2013 Box Office Sales 221000 QB G. 5. 1 4,038.00
2 4/30/2013 Box Office Sales 221000 QB G. 5. 1 5,617.00
2 4/30/2013 Sponsorships 243000 QB G.5. 1 2,000.00
2 4/30/2013 Sponsorships 243000 QB G. 5. 1 400.00
2 4/30/2013 Box Office Convenience Fees 401000 QB G. 5. 4,038.00
2 4/30/2013 Suites 403000 QB G. 5. 1 400.00
2 4/30/2013 Hockey Reimbursement 412500 QB G. 5. 1 1,064.60
2 4/30/2013 Event Income 423000 QB G. 5. 1 24,675.61
2 4/30/2013 Drive Basketball 614000 QB G. 5. 1 2,000.00
2 4/30/2013 ClAM 632000 QB G. 5. 1 1,200.70
2 4/30/2013 Dues and Subscriptions 750000 QB G. 5. 1 253.36

PBC CLIENT NEED NOT POST

3 4/30/2013 Basketball Receivable 124100QB G. 5. 1 26,883.00

3 4/30/2013 Box Office Sales 221000 QB G. 5. 1 26,883.00

CLIENT NEED NOT POST AS CLIENT

ALREADY POSTED- to
record basketball receivable

5
PAS SED ADJUSTMENTS
U.S. Cellular Coliseum Coliseum- Enterprise
(CLIENT) (FUND OR FUND TYPE)

For the Year Ended 4/30/2013

All entries posted as Debit (Credit)

(Retained
Known or Workpaper Earnings/Fund (Profit)
Description Likely Reference Assets (Liabilities) Balance) Loss

Current Effect of Prior Period Passed AJE's that

have carried forward to Current Period $ $ $ $
Club Seat Revenue appears to be understated as
April 2013 revenue does not appear to have been
recorded K S.2 2,213 (2,213)
Deferred sponsorship revenue appears to be
understated K S.6 (4,496) 4,496
Difference between revenue recognized per
Pantagraph trade agreement and amount used on
current trade agreement L S.ll (2,276) 2,276
Difference between Suites Deferred Revenue per TB
and recalculated Suites Deferred Revenue L S.4 (4,718) 4,718
Utility charges crossing both FY13 and FY14. No
payable was incldued in FY13 for FY13 portion
of utilities. L K.3 (6,014) 6,014

Totals
$ $(15,291) $ $ 15,291

6
 Accounting // Advisory // Technology // Managed Services

September 9, 2013

To the City Council and Management

of the U.S. Cellular Coliseum (An Enterprise
Fund of the City of Bloomington)

In planning and performing our audit of the financial statements of the U.S. Cellular Coliseum
(An Enterprise Fund of the City of Bloomington) as of and for the year ended April30, 2013, in
accordance with auditing standards generally accepted in the United States of America, we
considered the Coliseum's internal control over financial reporting (internal control) as a basis
for designing our auditing procedures that are appropriate in the circumstances for the purpose of
expressing our opinions on the financial statements, but not for the purpose of expressing an
opinion on the effectiveness of the Coliseum's internal control. Accordingly, we do not express
an opinion on the effectiveness of the Coliseum's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a
deficiency or combination of deficiencies in internal control, such that there is a reasonable
possibility that a material misstatement of the entity's financial statements will not be prevented,
or detected and corrected on a timely basis.

Our consideration of internal control was for the limited purpose described in the first paragraph
and was not designed to identify all deficiencies in internal control that might be significant
deficiencies or material weaknesses and therefore, there can be no assurance that all such
deficiencies have been identified. We did not identify any deficiencies in internal control that we
consider to be material weaknesses. However, we identified certain matters that are
opportunities for strengthening internal controls and operating efficiency, of which management
should be aware. In addition we reviewed the status of the management letter for the year ended
April 30, 2012.

The Coliseum's written responses to the matters discussed in the attached memorandum have not
been subjected to the audit procedures in the audit of the financial statements and, accordingly,
we express no opinion on it.

This communication is intended solely for the information and use of management, the City
Council, and others within the organization, and is not intended to be and should not be used by
anyone other than these specified parties.

Sikich LLP
Springfield, Illinois

7
 U.S. Cellular Coliseum
(An Enterprise Fund of the City of Bloomington)
Management Letter Memorandum
September 9, 2013

RECOMMENDATIONS FOR IMPROVING INTERNAL CONTROLS AND

OPERATING EFFICIENCY

Re-evaluation of the Management and Development Agreement

As communicated in the prior year, we noted various areas of the Management and Development
Agreement which contained ambiguous language, subject to interpretation. Accordingly, we
recommend the City and Central Illinois Arena Management (ClAM) re-evaluate the
management agreement to address any areas containing ambiguous language, which may be
subject to loose interpretation to more clearly state the original intent of both parties upon
execution of the agreement.

During the audit, we noted the Coliseum's practice for recording certain management
transactions are not clearly defined or differ from the provisions in the management agreement.
Several examples of such differences or omissions include:

• A portion ($0.50/ticket) of the ticket facility fee collected will be remitted to the City's
Parking Fund. No provision in the agreement was found.
• Commission percentages stated in the Pre-Opening Sales and Management Agreement
(Exhibit B) is 5o/o of gross receipts realized, whereas the commission percentage found in
Section 7 of the agreement is 10% of sale proceeds. We have noted the Coliseum has
calculated commissions using either 5o/o or 1Oo/o. The presence of two percentages for the
same calculation makes it difficult to determine the rationale for using one percentage
over another and determining compliance with the management agreement.

Based on discussions with both ClAM and City personnel the practice being utilized is based on
verbal agreements made between the former City Manager and ClAM. As a result, the ability to
determine adherence to the agreement is difficult to achieve. We recommend the City and
ClAM clearly state all applicable provisions of the agreement in writing to ensure complete and
accurate adherence is achieved in practice.

Auditee Response:

City Parking Fund. On March 27, 2007, during a meeting with the Management of the City of
Bloomington and ClAM it was agreed that .50 per ticket sold of the ticket facility fee would be
remitted to the City of Bloomington to help with expenses of the Coliseum Parking Deck. Notes
of the meeting were kept, however, no formal document was generated to make this official
policy.

8
Management Commission. Although the Management Agreement clearly states a 10%
commission, in order to be more fiscally responsible, ClAM has chosen (as per the Pre-Opening
Sales and Management Agreement) to take 5% commission on certain sponsors, renewed clubs
and suites. ClAM has handled the commission structure this way since 2006 and the
commission structure shall remain in effect for future years.

Whistleblower Policy

The Coliseum encourages employees to report any suspicions of fraud or misconduct, but it does
not provide an effective, practical mechanism for doing so. We believe that as a result,
employees would be hesitant to report knowledge or suspicions that could prevent or detect fraud
or other misconduct that could be detrimental to the Coliseum. Studies show that most frauds
are known to someone in the defrauded organization and are revealed after a tip is received from
someone with knowledge about the fraud. However, an employee may not report suspicions or
knowledge of fraud if he or she does not know to whom to report, especially if the perpetrator is
someone high up in the organization or someone to whom the employee reports. We recommend
the Coliseum consider establishing a whistleblower policy to allow confidential, anonymous
submission by employees regarding concerns without the fear of retaliation.

Auditee Response:

Central Illinois Arena Management will establish a policy with regard to confidential,
anonymous submission by employees for any suspicions or concerns. This policy will be
included in the Full Time and Part Time Employee Handbooks.

Segregation of Duties

During our audit, we noted a lack of segregation of duties over payroll processing. While
obtaining an understanding of the payroll process, we noted the individual responsible for
processing payroll has the ability to modify pay rates prior to processing payroll in both ABI and
Quickbooks. The Coliseum lacks adequate compensating controls over this process and the
possibility exists for modified pay rates to go undetected. We recommend the Coliseum review
its compensating controls over the payroll function to mitigate the ability for modified pay rates
to go undetected.

Auditee Response:

Each month, one payroll cycle is selected by the Assistant General Manager- Finance for
comparison between ABI (time processing) and Quickbooks (payroll processing). Individual
employees time and pay is compared to actual pay. Also reviewed is pay rates for employees
paid during the selected payroll cycle. The Assistant General Manager also reviews unfamiliar
employees to her in ABI for verification of employee (pictures, address, social security, etc.).
An additional step will be added to the monthly review. The Assistant General Manager will also
run a WIP Audit Report from ABI. All transactions that are modified during that pay period are
reported on the Audit Report. This report will be reviewed for changes in pay rates, changes in
time and will be investigated accordingly.

9
We also noted a lack of segregation of duties over collection of parking receipts. While
obtaining an understanding of parking revenue, we noted instances could occur where the person
collecting cash in the parking garage is the same individual giving out parking ticket stubs. The
ability exists for the individual to collect cash without giving out a ticket and could pocket the
cash undetected. We recommend having two employees working in the parking deck in order to
have one employee giving out the parking tickets and one to collect the cash.

Auditee Response:

The type and size of an event determines the number of staffing that sell parking spaces.
Typically for a tenant sporting event there is one attendee as it does not warrant having two.
However, it is uncommon to have only one attendant for all other events. For an event utilizing
two attendees, one does hand out parking tickets and one collects cash. In addition to two
attendants, the Assistant General Manager - Finance, and the Event Service Manager throughout
the event make checks on the staff on the deck, as well as cash drops to ensure a large amount of
cash does not remain with the parking attendant.

10
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