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HomeMy Public PortalAboutLTC 011-2023 - RSM US LLPBAL HARBOUR - V I L LAG E - OFFICE OF THE VILLAGE MANAGER LETTER TO COUNCIL NO. 011-2023 To: Mayor Jeffrey Freimark and Members of the Village Council From: Jorge M. Gonzalez, Village Manager Date: January 20, 2023 Subject: RSM US LLP -Auditors The purpose of this Letter to Council (LTC) is to transmit the attached correspondence received from RSM US LLP, Bal Harbour Village auditors. If you have any questions or need any additional information, please feel free to contactme. JMG/MH N RSM RSM US LLP January9, 2023 200 E. Las Olas Blvd, Ste 2500 Ft. Lauderdale, FL 33301-4216 O 954 462 6300 F 954 462 4607 Honorable Mayor and Members of the Village Council www.rsmus.com c/o Dwight S. Danie, Village Clerk 655 961h Street Bal Harbour, Florida 33154 Attention: Honorable Mayor and Members of the Village Council This letter is intended to communicate certain matters related to the planned scope and timing of our audit of Bal Harbour Village, Florida's (the Village) financial statements and compliance as of and for the year ending September 30, 2022. Communication Effective two-way communication between our firm and those charge with governance is important to understanding matters related to the audit and developing a constructive working relationship. Your insights may assist us in understanding the Village and its environment, identifying appropriate sources of audit evidence and providing information about specific transactions or events. We will discuss with you your oversight of the effectiveness of internal control and any areas where you request additional procedures to be undertaken. We expect that you will timely communicate to us any matters you consider relevant to the audit. Such matters might include strategic decisions that may significantly affect the nature, timing and extent of audit procedures, your suspicion or detection of fraud, or any concerns you may have about the integrity or competence of senior management. We will timely communicate to you any fraud involving senior management and other known or likely fraud, noncompliance with provisions of laws, statutes, regulations, rules, provisions of contracts or grant agreements or abuse that is likely to have a material effect on the financial statements. We will also communicate illegal acts, instances of noncompliance or fraud that come to our attention (unless they are clearly inconsequential), and disagreements with management and other serious difficulties encountered in performing the audit. We also will communicate to you and to management any significant deficiencies or material weaknesses in internal control that become known to us during the course of the audit. Additionally, we will communicate significant unusual transactions, matters that are difficult or contentious for which the auditor consulted outside the engagement team, and circumstances that affect the form and content of the auditor's report. Independenct Our independence policies and procedures are designed to provide reasonable assurance that our firm and its personnel comply with applicable professional independence standards. Our policies address financial interests, business and family relationships, and non -audit services that may be thought to bear on independence. For example, without our permission, no partners or professional employee of RSM US LLP is permitted to have any direct financial interest or a material indirect financial interest in a client or any affiliate of a client. Also, if an immediate family member or close relative of a partner or professional employee is employed by a client in a key position, the incident must be reported and resolved in THE POWER OF BEING UNDERSTOOD AUDI1 I TAX I CONSULT INC) Bal Harbour Village, Florida January 9, 2023 Page 2 accordance with firm policy. In addition, our policies restrict certain non -audit services that may be provided by RSM US LLP and require audit clients to accept certain responsibilities in connection with the provision of permitted non -attest services. The Audit Plan. ig Pro%;ess Our audit approach places a strong emphasis on obtaining an understanding of how your entity functions. This enables us to identify key audit components and tailor our procedures to the unique aspects of your operations. The development of a specific audit plan will begin by meeting with you and with management to obtain an understanding of business objectives, strategies, risks and performance. As part of obtaining an understanding of your Village and its environment, we will obtain an understanding of your system of internal control. We will use this understanding to identify risks of material misstatement and noncompliance, which will provide us with a basis for designing and implementing responses to the assessed risks of material misstatement and noncompliance. We will also obtain an understanding of the users of the financial statements in order to establish an overall materiality level for audit purposes. We will conduct formal discussions among engagement team members to consider how and where your financial statements might be susceptible to material misstatement due to fraud or error or to instances of noncompliance. The Concept of Materiality in Planning and Executing the Audit We apply the concept of materiality in both planning and performing the audit, evaluating the effect of identified misstatements or noncompliance on the audit and the effect of uncorrected misstatements, if any, on the financial statements, forming the opinion in our report on the financial statements, and determining or reporting in accordance with Government Auditing Standards and other compliance reporting requirements. Our determination of materiality is a matter of professional judgment and is affected by our perception of the financial and compliance informational needs of users of the financial statements. We establish performance materiality at an amount less than materiality for the financial statements as a whole to allow for the risk of misstatements that may not be detected by the audit. We use performance materiality for purposes of assessing the risks of material misstatement and determining the nature, timing and extent of further audit procedures. Our assessment of materiality throughout the audit will be based on both quantitative and qualitative considerations. Because of the interaction of quantitative and qualitative considerations, misstatements of a relatively small amount could have a material effect on the current financial statements as well as financial statements of future periods. We will accumulate misstatements identified during the audit, other than those that are clearly trivial. At the end of the audit, we will inform you of all individual uncorrected misstatements aggregated by us in connection with our evaluation of our audit test results. Significant Risks of Material Misstatement Our audit of the financial statements includes the performance of risk assessment procedures in order to identify risks of material misstatement, whether due to fraud or error. As part of these risk assessment procedures, we determine whether any risks identified are a significant risk. A significant risk is an identified risk of material misstatement that, in our professional judgement, requires special audit consideration. As part of our initial risk assessment procedures, we identified the following risks as significant risk. Additional significant risks may be identified as we perform additional audit procedures. Bal Harbour Village, Florida January 9, 2023 Page 3 Controls Management override of Obtain an understanding of controls and test controls journal entries. Revenue Revenues are improperly Perform substantive test of details and recognition recognized in the financial analytical procedures. statements Pension and Pension and OPEB liabilities Review & determine that management's OPEB liabilities are not properly valued methodology is properly & consistently applied • Assess the reputation & competency of the Village's actuary, in order to place reliance on their work • Test the underlying data supporting the estimates Implementation Improper application and Assess the applicability of the GASB of GASB 87, implementation of the GASB statement to the Village's transactions Leases statement • Test for proper recognition and disclosure of applicable transactions Our Approach to Internal Control and Compliance Relevant to the Audit Our audit of the financial statements, including compliance, will include obtaining an understanding of internal control sufficient to plan the audit and determine the nature, timing and extent of audit procedures to be performed. An audit is not designed to provide assurance on internal control or identify significant deficiencies or material weaknesses. Our review and understanding of the entity's internal control is not undertaken for the purpose of expressing an opinion on the effectiveness of internal control. We will issue reports on internal control related to the financial statements and major programs. These reports describe the scope of testing of internal control and the results of our tests of internal control. Our reports on internal control will include any significant deficiencies and material weaknesses in the system of which we become aware as a result of obtaining an understanding of internal control and performing tests of internal control consistent with the requirements of Government Auditing Standards issued by the Comptroller General of the United States, the Single Audit Act, and Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards at 2 CFR 200 (when applicable). We will issue reports on compliance with laws, statutes, regulations, and the terms and conditions of federal awards. We will report on any noncompliance that could have a material effect on the financial statements and any noncompliance that could have a direct and material effect on each major program. Our reports on compliance will address material errors, fraud, violations of compliance requirements, and other responsibilities imposed by state and federal statutes and regulations and assumed contracts; and Bal Harbour Village, Florida January 9, 2023 Page 4 any state or federal grant, entitlement or loan program questioned costs of which we become aware, consistent with the requirements of the standards identified above. Timing of the Audi, Preliminary audit work took place in September 2022. We have scheduled final fieldwork for the period from January 2023 through February 2023. Management's adherence to its closing schedule and timely completion of information used by us in performance of the audit is essential to timely completion of the audit. Closing We will be pleased to respond to any questions you have about the foregoing. We appreciate the opportunity to be of service to the Village. This communication is intended solely for the information and use of the Mayor, Council Members, and management, and is not intended to be, and should not be, used by anyone other than these specified parties. Sincerely, �?-s,y vs .c,cR Copies sent to: Chief Financial Officer, Village Manager, Village Clerk, Mayor and Councilmen Dwight S. Danie, Village Clerk Bal Harbour Village 655 961h Street Bal Harbour, FL 33154 Jorge M. Gonzalez, Village Manager Bal Harbour Village 655 96th Street Bal Harbour, FL 33154 Claudia Dixon, Chief Financial Officer Bal Harbour Village 655 961h Street Bal Harbour, FL 33154 Seth Salver, Vice Mayor Bal Harbour Village 655 96th Street Bal Harbour, FL 33154 Jeffrey Freimark, Mayor Bal Harbour Village 655 96th Street Bal Harbour, FL 33154 David Albaum, Councilman Bal Harbour Village 655 961h Street Bal Harbour, FL 33154 Buzzy Sklar, Councilman Bal Harbour Village 655 96th Street Bal Harbour, FL 33154 David Wolf, Councilman Bal Harbour Village 655 961h Street Bal Harbour, FL 33154