HomeMy Public PortalAbout2019.12.11 EideBailly Engagement LetterDecember 11, 2019
City of McCall
216 East Park Street
McCall, Idaho 83638
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EideBaill~
CPAs & BUSINESS ADVISORS
You have requested that we audit 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 City of McCall as of September 30 , 2019 , and for the year then ended , and the related notes
to the financial statements , which collectively comprise City of McCall's basic financial statements . In addition ,
we will audit the entity's compliance over major federal award programs for the period ended September 30,
2019 . We are pleased to confirm our acceptance and our understanding of this audit engagement by means of
this letter. Our audits will be conducted with the objectives of our express i ng an opinion on each opinion unit
and an opinion on compliance regarding the entity's major federal award programs .
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis , schedules of revenues , expenditures , and changes in fund balance-budget and actual-
general fund , street/public works fund , airport fund , recreation fund , library, and local option tax, schedule of
employer's share of net pension liability-PERSI , and schedule of employer contributions 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 operat i onal , economic, or
historical context. As part of our engagement, we will apply certain limited procedures to the required
supplementary information (RSI) in accordance with auditing standards generally accepted in the United States
of America. These l i mited procedures will consist primarily of inquiries of management regarding their methods
of measurement and presentation and comparing the information for consistency with management's
responses to our inquiries. We will not express an opinion or provide any form of assurance on the RSI. The RSI
is required by accounting principles generally accepted in the United States of America and will be subjected to
certain limited procedures but will not be audited.
Schedule of Expenditures of Federal Awards
We will subject the schedule of expenditures offederal awards to the auditing procedures applied in our audit
of the basic financial statements and certain additional procedures , including comparing and reconciling the
schedule to the underlying accounting and other records used to prepare the financial statements or to the
financial statements themselves , and additional procedures in accordance with auditing standards generally
accepted in the United States of America . We intend to provide an opinion on whether the schedule of
expenditures of federal awards is presented fairly in all material respects in relation to the financial statements
as a whole.
Wha t insp ires you, inspires us . I eidebailly.com
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Data Collection Form
Prior to the completion of our engagement, we will complete the sections of the Data Collection Form that are
our responsibility. The form will summarize our audit findings, amounts and conclusions. It is management's
responsibility to submit a reporting package including financial statements, schedule of expenditure of federal
awards, summary schedule of prior audit findings and corrective action plan along with the Data Collection Form
to the federal audit clearinghouse. The financial reporting package must be text searchable, unencrypted, and
unlocked. Otherwise, the reporting package will not be accepted by the federal audit clearinghouse. We will
assist you in the electronic submission and certification. You may request from us copies of our report for you to
include with the reporting package submitted to pass-through entities.
The Data Collection Form is required to be submitted within the earlier of 30 days after receipt of our auditors'
reports or nine months after the end of the audit period, unless specifically waived by a federal cognizant or
oversight agency for audits. Data Collection Forms submitted untimely are one of the factors in assessing
programs at a higher risk.
Audit of the Financial Statements
We will conduct our audit in accordance with auditing standards generally accepted in the United States of
America (U.S. GAAS), the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States of America; the audit requirements of Title 2 U.S. Code of
Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that
we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are
free from material misstatement. An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error, fraudulent financial reporting, misappropriation of assets, or violations of laws,
governmental regulations, grant agreements, or contractual agreements.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements . If appropriate, our procedures will therefore include tests of documentary evidence that
support the transactions recorded in the accounts, tests of the physical existence of inventories, and direct
confirmation of cash, investments, and certain other assets and liabilities by correspondence with creditors and
financial institutions. As part of our audit process, we will request written representations from your attorneys,
and they may bill you for responding. At the conclusion of our audit, we will also request certain written
representations from you about the financial statements and related matters.
Because of the inherent limitations of an audit, together with the inherent limitations of internal control, an
unavoidable risk that some material misstatements or noncompliance (whether caused by errors, fraudulent
financial reporting, misappropriation of assets, detected abuse, or violations of laws or governmental
regulations) may not be detected exists, even though the audit is properly planned and performed in accordance
with U.S. GAAS and Government Auditing Standards of the Comptroller General of the United States of America.
Please note that the determination of abuse is subjective, and Government Auditing Standards does not require
auditors to detect abuse.
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In making our risk assessments, we consider internal control relevant to the entity's preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal
control. However, we will communicate to you in writing concerning any significant deficiencies or material
weaknesses in internal control relevant to the aud it of the financial statements that we have identified during
the audit. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any
other periods .
We will issue a written report upon completion of our audit of City of McCall 's basic financial statements . Our
report will be addressed to the governing body of Cit y of McCall. We cannot provide assurance that any
unmodified opinions will be expressed . Circumstances may arise in which it is necessary for us to modify our
opinions , add an emphasis-of-matter or other-matter paragraph(s), or withdraw from the engagement.
In accordance with the requirements of Government Auditing Standards, we will also issue a written report
describing the scope of our testing over internal control over financial reporting and over compliance with laws,
regulations, and provisions of grants and contracts , i ncluding the results of that testing . However, providing an
opinion on internal control and compliance over financial reporting will not be an objective of the audit and ,
therefore, no such op i nion will be expressed .
Audit of Major Program Compliance
Our audit of City of McCall's major federal award program(s) compliance will be conducted in accordance with
the requirements of the Single Audit Act, as amended ; and the Uniform Guidance and will include tests of
accounting records , a determination of major programs in accordance with the Uniform Guidance, and other
procedures we consider necessary to enable us to express such an opinion on major federal award program
compliance and to render the required reports. We cannot provide assurance that an unmodified opinion on
compliance will be expressed . Circumstances may arise i n which it is necessary for us to modify our opinion or
withdraw from the engagement .
The Uniform Guidance requires that we also plan and perform the audit to obtain reasonable assurance about
whether the entity has complied with applicable laws and regulations and the provisions of contracts and grant
agreements applicable to major federal award programs . Our procedures will consist of determining major
federal programs and performing the applicable procedures described in the U.S. Office of Management and
Budget OMB Complian ce Supplement for the types of compliance requirements that could have a direct and
material effect on each of the entity's major programs . The purpose of those procedures will be to express an
opinion on the entity's compliance with requirements applicable to each of its major programs in our report on
compliance issued pursuant to the Uniform Guidance.
Also , as required by the Uniform Guidance , we will perform tests of controls to evaluate the effectiveness of the
design and operation of controls that we consider relevant to preventing or detecti ng material noncompliance
with compliance requirements applicable to each of the entity's major federal award programs . However, our
tests will be less in scope than would be necessary to render an opinion on these controls and, accordingly, no
opinion will be expressed in our report.
We will issue a report on compliance that will include an op i nion or disclaimer of opinion regard i ng the entity's
major federal award programs , and a report on internal controls over compliance that will report any significant
deficiencies and material weaknesses identified; however, such report will not express an opin ion on internal
control.
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Management Responsibilities
Our audit will be conducted on the basis that management and, when appropriate, those charged with
governance, acknowledge and understand that they have responsibility:
1. For the preparation and fair presentation of the basic financial statements in accordance with
accounting principles generally accepted in the United States of America;
2. For the design, implementation , and maintenance of internal control relevant to the preparation and
fair presentation of basic financial statements that are free from material misstatement, whether due to
fraud or error;
3. For identifying, in its accounts, all federal awards received and expended during the period and the
federal programs under which they were received , including federal awards and funding increments
received prior to December 26, 2014 (if any), and those received in accordance with the Uniform
Guidance (generally received after December 26 , 2014);
4. For maintaining records that adequately identify the source and application of funds for federally
funded activities;
5. For preparing the schedule of expenditures of federal awards (including notes and non cash assistance
received) in accordance with the Uniform Guidance;
6. For the design, implementation, and maintenance of internal control over federal awards;
7. For establishing and maintaining effective internal control over federal awards that provides reasonable
assurance that the nonfederal entity is managing federal awards in compliance with federal statutes,
regulations, and the terms and conditions of the federal awards;
8. For identifying and ensuring that the entity complies with federal statutes, regulations, and the terms
and conditions of federal award programs and implementing systems designed to achieve compliance
with applicable federal statutes, regulations, and the terms and conditions of federal award programs;
9. For disclosing accurately, currently, and completely, the financial results of each federal award in
accordance with the requirements of the award;
10 . For identifying and providing report copies of previous audits, attestation engagements, or other studies
that directly relate to the objectives of the audit, including whether related recommendations have
been implemented;
11. For taking prompt action when instances of noncompliance are identified;
12 . For addressing the findings and recommendations of auditors, for establishing and maintaining a
process to track the status of such findings and recommendations and taking corrective action on
reported audit findings from prior periods and preparing a summary schedule of prior audit findings;
13. For following up and taking corrective action on current year audit findings and preparing a corrective
action plan for such findings;
14. For submitting the reporting package and data collection form to the appropriate parties;
15 . For making the auditor aware of any significant contractor relationships where the contractor is
responsible for program compliance;
16. To provide us with:
a. Access to all information of which management is aware that is relevant to the preparation and
fair presentation of the financial statements, and relevant to federal award programs, such as
records , documentation, and other matters;
b. Additional information that we may request from management for the purpose of the audit; and
c. Unrestricted access to persons within the entity from whom we determine it necessary to
obtain audit evidence.
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17 . For adjusting the basic financial statements to correct material misstatements and confirming to us in
the management representation letter that the effects of any uncorrected misstatements aggregated by
us during the current engagement and pertaining to the current period under audit are immaterial, both
individually and in the aggregate, to the basic financial statements as a whole;
18 . For acceptance of nonattest services, including identifying the proper party to oversee nonattest work;
19 . For maintaining adequate records, selecting and applying accounting principles , and safeguarding
assets ;
20 . For informing us of any known or suspected fraud affecting the entity involving management,
employees with significant role in internal control and others where fraud could have a material effect
on compliance ;
21. For the accuracy and completeness of all information provided;
22. For taking reasonable measures to safeguard protected personally identifiable and other sensitive
information ; and
23. For confirming your understanding of your responsibilities as defined in this letter to us in your
management representation letter.
With respect to any non attest services we perform , we agree to perform the following:
• Prepare or assist with preparing financial statements in conformity with U.S . generally accepted
accounting principles based on information provided by you.
• Completion of the auditee's portion of the Data Collection Form
City of McCall's management is responsible for (a) making all management decisions and performing all
management functions ; (b) assigning a competent individual to oversee the services ; (c) evaluating the adequacy
of the services performed; (d) evaluating and accepting responsibility for the results of the services performed;
and (e) establishing and maintaining internal controls, including monitoring ongoing activities .
With regard to the schedule of expenditures of federal awards referred to above , you acknowledge and
understand your responsibility (a) for the preparation of the schedule of expenditures of federal awards in
accordance with the Uniform Guidance, (b) to provide us with the appropriate written representations regarding
the schedule of expenditures of federal awards , (c) to include our report on the schedule of expenditures of
federal awards in any document that contains the schedule of expenditures of federal awards and that indicates
that we have reported on such schedule, and (d) to present the schedule of expenditures offederal awards with
the audited financial statements, or ifthe schedule will not be presented with the audited financial statements,
to make the audited financial statements readily available to the intended users of the schedule of expenditures
of federal awards no later than the date of issuance by you of the schedule and our report thereon.
With regard to the supplementary information referred to above , you acknowledge and understand your
responsibility (a) for the preparation of the supplementary information in accordance with the applicable
criteria , (b) to provide us with the appropriate written representations regarding supplementary information, (c)
to include our report on the supplementary information in any document that contains the supplementary
information and that indicates that we have reported on such supplementary information, and (d) to present
the supplementary information with the audited financial statements , or if the supplementary information will
not be presented withthe audited financial statements, to make the audited financial statements readily
available to the intended users of the supplementary information no later than the date of issuance by you of
the supplementary information and our report thereon .
As part of our audit process , we will request from management and, when appropriate, those charged with
governance, written confirmation concerning representations made to us in connection with the audit .
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We understand that your employees will prepare all confirmations we request and will locate any documents or
i nvoices selected by us for testing.
If you intend to publish or otherwise reproduce the financial statements and make reference to our firm, you
agree to provide us with printers' proofs or masters for our review and approval before printing. You also agree
to provide us with a copy of the final reproduced material for our approval before it is distributed.
Fees and Timing
Bobby Lawrence is the engagement partner for the audit services specified in this letter. Responsibilities include
supervising services performed as part of this engagement and signing or authorizing another qual ified firm
representat ive to sign the audit report. We expect to begin our audit on approximately January 6, 2020 .
Our fees are based on the amount of time required at various levels of responsibility, plus actual out-of-pocket
expenses . Invoices are payable upon presentation. We estimate that our fee for the audit will not exceed
$52,000 for the audit and $6,000 for the single audit of one major program . Each additional major program will
be $4,000. We will notify you immediately of any circumstances we encounter that could significantly affect this
initial fee estimate. Whenever possible , we will attempt to use City of McCall's personnel to assist in the
preparation of schedules and analyses of accounts. This effort could substantially reduce our time requirements
and facilitate the timely conclusion of the audit. Further, we will be available during the year to consult with you
on financial management and accounting matters of a routine nature.
In addition , we will be compensated for any time and expenses , including time and expenses of legal counsel,
we may incur in conducting or responding to discovery requests or participating as a witness or otherwise in any
legal , regulatory, or other proceedings as a result of our Firm 's performance of these services . You and your
attorney will receive, if lawful, a copy of every subpoena we are asked to respond to on your behalf and will
have the ability to control the extent of the discovery process to control the costs you may incur.
Should our relationship te r minate before our audit procedures are completed and a report issued , you will be
billed for services to the date of termination. All bills are payable upon receipt. A service charge of 1% per
month, which is an annual rate of 12 %, will be added to all accounts unpaid 30 days after billing date. If
collection action is necessary, expenses and reasonable attorney's fees will be added to the amount due.
Other Matters
During the course of the engagement , we may communicate with you or your personnel via fax or e-mail, and
you should be aware that communication in those mediums contains a risk of misd i rected or intercepted
communications .
We may use third party service providers and/or affiliated entities (including Eide Bailly Shared Services Private
Limited) (collectively, "service providers") in order to facilitate delivering our services to you . Our use of service
providers may require access to client information by the service provider. We will take reasonable precautions
to determine that they have the appropriate procedures in place to prevent the unauthorized release of
confidential information to others . We will remain responsible for the confidentiality of client information
accessed by such service provider and any work performed by such service provider.
The audit documentation for this engagement is the property of Eide Bailly LLP and constitutes confidential
information . However, we may be requested to make certain audit documentation available to the Regulator
pursuant to authority given to it by law or regulation , or to peer reviewers. If requested, access to such audit
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documentation will be provided under the supervision of Eide Ba i lly LLP 's personnel. Furthermore, upon
request , we may provide copies of selected audit documentation to the Regulator. The Regulator may intend , or
decide , to distribute the copies of information contained therein to others, including other governmental
agencies. We agree to retain our audit documentation or work papers for a period of at least eight years from
the date of our report.
Further, we will be available during the year to consult with you on financial management and accounting matters of a
routine nature .
During the course of the audit, we may observe opportunities for economy in, or improved controls over, your
operations . We will bring such matters to the attention of the appropriate level of management, either orally or
in writing.
Regarding the electronic dissemination of audited financial statements , including financial statements published
electronically on your Internet website, you understand that electronic sites are a means to distribute
information and , therefore, we are not required to read the information conta i ned in these sites or to consider
the consistency of other information in the electronic site with the original document.
You agree to inform us of facts that may affect the financial statements of which you may become aware during the
period from the date of the auditor's report to the date the financial statements are issued.
At the conclusion of our audit engagement, we will communicate to Members of the City Council the following
significant findings from the audit:
• Our view about the qualitative aspects ofthe entity's significant accounting practices;
• Significant difficulties, if any, encountered during the aud it ;
• Uncorrected misstatements , other than those we believe are trivial, if any;
• Disagreements with management, if any;
• Other findings or issues , if any , arising from the audit that are , in our professional judgment, significant
and relevant to those charged with governance regarding their oversight of the financial reporting
process;
• Material, corrected misstatements that were brought to the attention of management as a result of our
audit procedures ;
• Representations we requested from management;
• Management's consultations with other accountants, if any; and
• Significant issues , if any , arising from the audit that were discussed , or the subject of correspondence ,
with management.
Government Auditing Standards require that we provide, upon request, a copy of our most recent external peer
review report and any subsequent review reports to the party contracting for the audit . Accordingly, we will
provide a copy of our most recent peer review report at your request.
DISPUTE RESOLUTION
The following procedures shall be used to resolve any disagreement, controversy or claim that may arise out of
any aspect of our services or relationship with you , including this engagement, for any reason ("Dispute ").
Specifically, we agree to first med i ate.
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Mediation
All Disputes between us shall first be submitted to non-binding mediation by written notice ("Mediation
Notice ") to the other party. In mediation, we will work with you to resolve any differences voluntarily with the
aid of an impartial mediator. The mediator will be selected by mutual agreement, but if we cannot agree on a
mediator, one shall be designated by the American Arbitration Association ("AAA ").
The mediation will be conducted as specified by the mediator and agreed upon by the parties . The parties agree
to discuss the ir differences in good faith and to attempt, with the assistance of the mediator, to reach an
amicable resolution of the Dispute. Mediation will be conducted with the parties in person in Boise, Idaho .
Each party will bear its own costs in the mediation . The fees and expenses of the mediator will be shared
equally by the parties.
Either party may commence suit on a Dispute after the mediator declares an impasse .
ASSIGNMENTS PROHIBITED
You agree that you will not and may not assign , sell , barter or transfer any legal rights, causes of actions , claims
or Disputes you may have against Eide Bailly LLP , its partners , affiliates , officers and employees, to any other
person or party, or to any trustee, receiver or other third party.
Please sign and return the attached copy of this letter to indicate your acknowledgment of, and agreement with ,
the arrangements for our audit of the financial statements compliance over major federal award programs
including our respective responsibilities .
We appreciate the opportunity to be your certified public accountants and look forward to working with you
and your staff.
Res pectfu I ly,
4o~ce , Partner
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RESPONSE:
This letter correctly sets forth our understanding.
Acknowledged and agreed on behalf of City of McCall by :
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