HomeMy Public PortalAbout050_011_Baird Memorandum aird
o m pa n J CPAs, LL C, John P.Gillion,Jr.. CPA,PFS,CFS,CVA,CF;
1 Rep E. Whiddon,CP ,CVA
CERTIFIED PUBLIC ACCOUNTANTS&FINANCIAL ADVISORS Brenda F.Carroll,CPA,CFE,CIA,CICA,FCPA,CZEUPFS
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Mayor and City Council
City of Tybee Island, Georgia
P. O. Box 2749
Tybee Island, Georgia 31328
I have been asked to present a time line for completing the audit of the financial statements for City of
Tybee Island, Georgia to instill confidence in our firm.
We performed the audit of the financial statements for the year ended June 30, 2012, on a time line
consistent with the requests of the Finance Department of the City of Tybee Island.
We discussed the timing of the audit of the financial statements with Mary Hogan and determined that the
best time to perform field work was during the week of August 13, 2012. We arrived at the scheduled time
and were presented with audited financial statements for the year ended June 30, 2011, that did not include
changes in fund balance as well as other adjustments made by the prior auditor. At arrival, we were
presented with a trial balance that was not balanced and a capital asset schedule that did not agree to the
audited financial statements.
We completed fieldwork by the end of August, 2012, based on information that was supplied by your
Finance Department and City Administrator. At the end of August, we required an adjustment to record
your property tax accrual and had questions regarding the reporting of the River's End RV Park. We felt
that the RV Park should be reported as an enterprise fund. It is reported as an enterprise fund in the June 30,
2012 financial statements. During fieldwork, we met with the audit committee and expressed our concerns
regarding the accuracy of the accounting records.
Subsequent to primary fieldwork, and after we had completed input of substantially all of the data for the
financial statements, we were informed by Angela Hudson, that she had employed a consultant to determine
the adjustment to properly classify and report the RV Park as an enterprise fund. She also informed us that
prior period adjustments would be required for the SPLOST funds. Since these entries were not provided
during primary fieldwork, and were not a part of the period that we were engaged to audit, additional testing
was required during April,2013 after our meeting with the consultant.
We provided periodic updates to management and the audit committee, keeping them informed about the
status of the engagement.
We provided a rough draft of the financial statements prior to May 31, 2013 so that management could
prepare its MD&A. We informed management that this was a draft and the "DRAFT" watermark was
inserted on each page. Drafts of the financial statements should not be distributed.
Generally Accepted Audit Standards require that we receive a "Management Representation Letter" to
document certain management assertions and for the dating of our opinion letters. Your "Management
Representation Letter" is dated July, 24, 2013.
4210 Columbia Road,Building 10,Augusta,Georgia 30907/Telephone(706)855-9500/Telefax(706)855-2900(www.bairdcpas.com)
"Management's Discussion and Analysis" is to be prepared by management and is not to be prepared by the
auditor. We did not receive the MD&A until July 22, 2013..
Our firm meets all the qualifications that you require for an audit and has served as the independent auditor
for entities far larger than the City of Tybee Island. Our staff is large enough to meet the fieldwork and
preparation requirements to perform the audit. We have a full time audit staff that is committed to meeting
client deadlines and working with the client to make improvements in internal control and operating
efficiency.
We met with Tom Groover, Dick Smith, Angela Hudson and Diane Schleicher to discuss the upcoming
audit of the financial statements for the year ended June 30, 2013. During this meeting we were asked to
present a time line for completing the audit. Prior to the meeting, we were informed by Angela Hudson that
she was almost finished with the closing entries for the audit and that she has employed the same consultant
to assist with preparing for the audit and a draft of the financial statements. Mr. Groover, asked that we
submit a time line for the audit. I prepared a rough draft and submitted it to Angela Hudson for approval
and modification if necessary. Her reply made undue demands on the audit, such as not providing
information prior to being onsite. Generally Accepted Auditing Procedures require that the audit be planned
and significant audit areas be identified. We are also required to perform preliminary analytical reviews to
determine the appropriate levels of testing. If we cannot receive a draft of the financial statements or a
balanced trial balance prior to beginning fieldwork, how do we know what to audit? We must also have the
full cooperation of your management and staff,to prevent the delay in issuing our reports.
We set a October 14, 2013 as the start date of fieldwork. Last year it took one week of fieldwork to
complete work needed for us to issue our opinions, with the exception of the accrual for property taxes and
the reclassification of the River's End RV Park. We had almost completed a draft of the financial statements
when we were asked by your management to wait until your consultant completed his work. The financial
statements had to be completely redone after this work by the consultant.
Tentative Time Line
Start of field work October 14,2013
Complete of fieldwork October 25,2013
Complete review of work papers November 1, 2013
Draft of the financial statements November 19,2013
Receive MD&A from management November 29, 2013
Receive Management Representation Letter November 29, 2013
Issue our report and financial statements December 16, 2013
Generally Accepted Auditing Standards do not allow us to issue our reports without having received the
"Management Representation Letter"and the "Attorney Letter" as well as any outstanding confirmations.
The problems with the late issuance of the financial statements were not caused by the audit firm but were
caused by internal problems of the City of Tybee Island.
Our
assuredbymor this engagement and the in excess of$120000 with your audit fee being $14,100. We
charges
e that we would be compensated for our additional
work. We don't expected to be reimbursed for our full time charges, but do expect to be compensated for
the additional time required for us to get adequate documentation to support the amount and disclosures
made in the financial statements.
4210 Columbia Road,Building 10,Augusta,Georgia 30907/Telephone(706)855-9500/Telefax(706)855-2900(www.bairdcpas.com)
The future engagement can be performed for our quoted fees, if management and staff provides the
necessary assistance to the auditor, management provides a balanced trial balance for each fund in a timely
manner.
We are committed to meeting your reporting deadlines and want to continue as the independent auditor for
the City of Tybee Island but you must have confidence in our ability to meet your objectives.
BAIRD& COMPANY, CPAS, LLC
Certified Public Accountants
August 22, 2013
4210 Columbia Road,Building 10,Augusta,Georgia 30907/Telephone(706)855-9500/Telefax(706)855-2900(wtiwv.bairdcpas.com)