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Saltmarsh, Cleaveland & Gund
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
January 7, 2016
Elizabeth Roy, City Clerk
City of Crestview
198 North Wilson Street
Crestview, Florida 32536
We are pleased to confirm our understanding of the services we are to provide the City of Crestview, Florida.
We will examine the City of Crestview, Florida's compliance with Section 218.415, Florida Statutes, for the
year ended September 30, 2015. Our examination will be conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants. Accordingly, it will include tests of your
records and other procedures we consider necessary to enable us to express an opinion as to whether you have
complied with Section 218.415, Florida Statutes. If, for any reason, we are unable to complete the examination,
we will not issue a report as a result of this engagement.
Our engagement will not include a detailed inspection of every transaction and cannot be relied on to disclose
all material errors, fraud, or other violations of laws or regulations, that may exist. However, we will inform
you of any material errors or fraud that comes to our attention. We will also inform you of any other violations
of laws or regulations that come to our attention, unless clearly inconsequential.
You are responsible for complying with Section 218.415, Florida Statutes; and for selecting the criteria and
determining that such criteria are appropriate for your purposes. You are responsible for assuming all
management responsibilities and for overseeing the examination we provide by designating an individual, Sara
Bowers, City Manager, who possesses suitable skill, knowledge, and/or experience. You are responsible for
evaluating the adequacy and results of the services perfoinied and accepting responsibility for the results of
such services.
I am the engagement shareholder and am responsible for supervising the engagement and signing the report or
authorizing another individual to sign it.
Our fees for this service are included in the fee stated in the September 30, 2015 audit engagement letter dated
January 7, 2016.
Since 19-14
www.saltmarshcpa com • (800) 477-7458
Pensacola • Fort Walton Beach • Tampa • Orlando
City of Crestview, Florida Page 2 of 2
Parties to this engagement agree that any dispute that may arise regarding the meaning, performance, or
enforcement of this engagement will, prior to resorting to litigation, be submitted to mediation upon the written
request of any party to the engagement. All mediations initiated as a result of this engagement shall be
administered by a Florida Bar Certified trial mediator selected by the parties. The results of this mediation shall
be binding only upon agreement of each party to be bound. Costs of any mediation proceeding shall be shared
equally by both parties.
We appreciate the opportunity to be of service to the City of Crestview, Florida and believe this letter accurately
summarizes the significant terms of our engagement. If you have any questions, please let us know. If you
agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to
us.
Very truly yours,
For the Finn
RESPONSE: This letter correctly sets forth the understanding of the City of Crestview, Florida.
Title
Saltmarsi
Saltmarsh, Cleaveland & Gund
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
January 7, 2016
Elizabeth Roy, City Clerk
City of Crestview
198 North Wilson Street
Crestview, Florida 32536
We are pleased to confirm our understanding of the services we are to provide the City of Crestview, Florida (the City) for
the year ended September 30, 2015.
We will audit the financial statements of the governmental activities, the business -type activities, each major fund, and the
aggregate remaining funds including the related notes to the financial statements, which collectively comprise the basic
financial statements of the City as of and for the year ended September 30, 2015. Accounting standards generally
accepted in the United States of America provide for certain required supplementary information ("RSI"), such as
management's discussion and analysis ("MD&A"), to supplement the City's 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 operational, economic, or historical context. As part of our engagement, we will apply certain limited
procedures to the City's RSI in accordance with auditing standards generally accepted in the United States of America.
These limited procedures will consist of inquiries of management regarding the methods of preparing the information and
comparing the information for consistency with management's responses to our inquiries, the basic financial statements,
and other knowledge we obtained during our audit of the basic financial statements. We will not express an opinion or
provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to
express an opinion or provide any assurance. The following RSI is required by generally accepted accounting principles
and will be subjected to certain limited procedures, but will not be audited:
• Management's Discussion and Analysis
• Other Postemployment Benefits (OPEB)
• Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget to Actual — General Fund
• Schedules of Changes in Net Pension Liabilities and Related Ratios
• Schedules of Contributions
• Schedules of Investment Returns
We have also been engaged to report on supplementary information other than RSI that accompanies the City's financial
statements. We will subject the following supplementary information to the auditing procedures applied in our audit of
the financial statements and certain additional procedures, including comparing and reconciling such information directly
to the underlying accounting and other records used to prepare the financial statements or to the financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States
of America, and we will provide an opinion on it in relation to the financial statements as a whole in a report combined
with our auditor's report on the financial statements.
• Schedules of Expenditures of Federal Awards and State Financial Assistance
• Combining and Individual Nonmajor Fund Financial Statements
Since 1944
www saltmarshcpa.com • (800) 477-7458
Pensacola • Fort Walton Beach • Tampa • Orlando
City of Crestview, Florida Page 2 of 7
Audit Objectives
The objective of our audit is the expression of an opinion about whether your financial statements are fairly presented, in
all material respects, in conformity with U.S. generally accepted accounting principles and to report on the fairness of the
supplementary information referred to in the third paragraph when considered in relation to the financial statements as a
whole. The objective also includes reporting on:
Internal control related to the financial statements and compliance with the provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a material effect on the financial
statements in accordance with Government Auditing Standards,
Internal control related to major programs and an opinion (or disclaimer of opinion) on compliance with laws,
regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on
each major program in accordance with the Single Audit Act Amendments of 1996 and OMB Circular A-133,
Audits of States, Local Governments, and Non -Profit Organizations, and Chapter 10.550, Rules of the Auditor
General.
The Government Auditing Standards report on internal control over financial reporting and on compliance and other
matters will include a paragraph that states that (1) the purpose of the report is solely to describe the scope of testing of
internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
entity's internal control or on compliance, and (2) the report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the entity's internal control and compliance. The OMB Circular A-133
report on internal control over compliance will include a paragraph that states that the purpose of the report on internal
control over compliance is solely to describe the scope of testing of internal control over compliance and the results of
that testing based on the requirements of OMB Circular A-133. Both reports will state that the report is not suitable for
any other purpose.
Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America; the
standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the
United States; the Single Audit Act Amendments of 1996; the provisions of OMB Circular A-133; and Sections 218.39
and 215.97, Florida Statutes; Rules of the Auditor General of the State of Florida for Local Governmental Entity Audits as
set forth in Florida Administrative Code Chapter10.550, and will include tests of accounting records, a determination of
major program(s) in accordance with OMB Circular A-133 and Chapter 10.550 of the Rules of the Auditor General, and
other procedures we consider necessary to enable us to express such an opinion. We will issue written reports upon
completion of our Single Audit. Our reports will be addressed to the Honorable Mayor and Member of the City Council
of the City of Crestview. We cannot provide assurance that an unmodified opinion will be expressed. Circumstances may
arise in which it is necessary for us to modify our opinion or add an emphasis -of -matter or other -matter paragraph. If our
opinion on the financial statements or the Single Audit compliance opinions are other than unmodified, we will discuss
the reasons with management in advance. If, for any reason, we are unable to complete the audit or are unable to form or
have not formed an opinion, we may decline to express an opinion or issue a report, or we may withdraw from this
engagement.
Audit Procedures -General
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements;
therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. 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. We
will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements
are free of material misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of
assets, or (4) violations of laws or governmental regulations that are attributable to the entity or to acts by management or
employees acting on behalf of the entity. Because the determination of abuse is subjective, Government Auditing
Standards do not expect auditors to provide reasonable assurance of detecting abuse. Because of the inherent limitations
of an audit, combined with the inherent limitations of internal control, and because we will not perform a detailed
City of Crestview, Florida Page 3 of 7
examination of all transactions, there is a risk that material misstatements may exist and not be detected by us, even
though the audit is properly planned and performed in accordance with U.S. generally accepted auditing standards and
Government Auditing Standards. In addition, an audit is not designed to detect immaterial misstatements or violations of
laws or governmental regulations that do not have a direct and material effect on the financial statements. However, we
will inform the appropriate level of management of any material errors, any fraudulent financial reporting, or
misappropriation of assets that come to our attention. We will also inform the appropriate level of management of any
violations of laws or governmental regulations that come to our attention, unless clearly inconsequential, and of any
material abuse that comes to our attention. Our responsibility as auditors is limited to the period covered by our audit and
does not extend to later periods for which we are not engaged as auditors.
Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may
include direct confirmation of receivables and certain other assets and liabilities by correspondence with selected
individuals, funding sources, creditors, and financial institutions. We will request written representations from your
attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit,
we will also require certain written representations from you about your responsibilities for the financial statements;
compliance with laws, regulations, contracts, and grant agreements; and other responsibilities required by generally
accepted auditing standards.
Audit Procedures -Internal Control
Our audit will include obtaining an understanding of the government and its environment, including internal control,
sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and
extent of further audit procedures. Tests of controls may be pertained to test the effectiveness of certain controls that we
consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to
preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and
material effect on the financial statements. Our tests, if performed, will be less in scope than would be necessary to render
an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued
pursuant to Government Auditing Standards.
As required by OMB Circular A-133 and Chapter 10.550 of the Rules of the Auditor General, we will perform tests of
controls over compliance to evaluate the effectiveness of the design and operation of controls that we consider relevant to
preventing or detecting material noncompliance with compliance requirements applicable to each major federal and State
award program. However, our tests will be less in scope than would be necessary to render an opinion on those controls
and, accordingly, no opinion will be expressed in our report on internal control issued to pursuant to OMB Circular A-133
or Chapter 10.550 of the Rules of the Auditor General.
An audit is not designed to provide assurance on internal control or to identify significant deficiencies or material
weaknesses. However, during the audit, we will communicate to management and those charged with governance internal
control related matters that are required to be communicated under AICPA professional standards and Government
Auditing Standards.
Audit Procedures -Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we
will perform tests of the City's compliance with the provisions of applicable laws, regulations, contracts, agreements, and
grants. However, the objective of our audit will not be to provide an opinion on overall compliance and we will not
express such an opinion in our report on compliance issued pursuant to Government Auditing Standards.
OMB Circular A-133 and Chapter 10.550, Rules of the Auditor General, requires that we also plan and perform the audit
to obtain reasonable assurance about whether the auditee has complied with applicable laws and regulation and the
provisions of contracts and grant agreements applicable to major programs. Our procedures will consist of tests of
transactions and other applicable procedures described in the OMB Circular A-133 Compliance Supplement and the
Executive Office of the Governor's State Projects Compliance Supplement and related addenda for the types of
compliance requirements that could have a direct and material effect on each of the City's major programs and projects.
The purpose of these procedures will be to express an opinion on the City's compliance with requirements applicable to
City of Crestview, Florida Page 4 of 7
each of its major programs and projects in our report on compliance issued pursuant to OMB Circular A-133 and Chapter
10.550, Rules of the Auditor General.
Other Services
We will also assist in preparing the financial statements, schedule of expenditures of federal awards and state projects (if
applicable), and related notes of the City in conformity with U.S. generally accepted accounting principles and OMB
Circular A-133 and Chapter 10.550 Rules of the Auditor General based on information provided by you. These nonaudit
services do not constitute an audit under Government Auditing Standards and such services will not be conducted in
accordance with Government Auditing Standards.
Management Responsibilities
Management is responsible for (1) establishing and maintaining effective internal controls, including internal controls
over compliance, and for evaluating and monitoring ongoing activities to help ensure that appropriate goals and objectives
are met; (2) following laws and regulations; (3) ensuring that there is reasonable assurance that government programs are
administered in compliance with compliance requirements; and (4) ensuring that management is reliable and financial
information is reliable and properly reported.
Management is also responsible for implementing systems designed to achieve compliance with applicable laws,
regulations, contracts, and grant agreements. You are also responsible for the selection and application of accounting
principles; and for the preparation and fair presentation of the financial statements, schedule of expenditures of federal
awards and state projects, and all accompanying information in conformity with U.S. generally accepted accounting
principles; and for compliance with applicable laws and regulations and the provisions of contracts and grant agreements.
Management is also responsible for making all financial records and related information available to us and for the
accuracy and completeness of that information. You are also responsible for providing us with (1) access to all
information of which you are aware that is relevant to the preparation and fair presentation of the financial statements, (2)
additional information that we may request for the purpose of the audit, and (3) unrestricted access to persons within the
government from whom we determine it necessary to obtain audit evidence.
Your responsibilities also include identifying significant vendor relationships in which the vendor has responsibility for
program compliance and for the accuracy and completeness of that information. Your responsibilities include adjusting
the 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
latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole.
You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for
informing us about all known or suspected fraud affecting the Organization involving (1) management, (2) employees
who have significant roles in internal control, and (3) others where the fraud could have a material effect on the financial
statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud
affecting the Organization received in communications from employees, former employees, grantors, regulators, or others.
In addition, you are responsible for identifying and ensuring that the Organization complies with applicable laws,
regulations, contracts, agreements, and grants. Management is also responsible for taking timely and appropriate steps to
remedy fraud and noncompliance with provisions of laws, regulations, contracts, and grant agreements, or abuse that we
report. Additionally, as required by OMB Circular A-133, it is management's responsibility to follow up and take
corrective action on reported audit findings and to prepare a summary schedule of prior audit findings and a corrective
action plan. The summary schedule of prior audit findings should be available for our review on the first day of field
work.
You are responsible for identifying all federal and State awards received and understanding and complying with the
compliance requirements and for the preparation of the schedule of expenditures of federal awards and state projects
(including notes and noncash assistance received) in conformity with OMB Circular A-133 and Chapter 10.550 of the
Rules of the Auditor General. You agree to include our report on the schedule of expenditures of federal awards and state
City of Crestview, Florida Page 5 of 7
projects in any document that contains and indicates that we reported on the schedule of expenditures of federal awards
and state projects. You also agree to include the audited financial statements with any presentation of the schedule of
expenditures of federal awards and state projects that includes our report thereon. Your responsibilities include
acknowledging to us in the representation letter that (1) you are responsible for presentation of the schedule of
expenditures of federal awards and state projects in accordance with OMB Circular A-133 and Chapter 10.550 of the
Rules of the Auditor General; (2) you believe the schedule of expenditures of federal awards and state projects, including
its form and content, is fairly presented in accordance with OMB Circular A-133 and Chapter 10.550 of the Rules of the
Auditor General; (3) the methods of measurement or presentation have not changed from those used in the prior period
(or, if they have changed, the reasons for such changes); and (4) you have disclosed to us any significant assumptions or
interpretations underlying the measurement or presentation of the schedule of expenditures of federal awards and state
projects.
You are responsible for the preparation of the other supplementary information in conformity with U.S. generally
accepted accounting principles. You agree to include our report on the supplementary information in any document that
contains and indicates that we have reported on the supplementary information. You also agree to include the audited
financial statements with any presentation of the supplementary information that includes our report thereon. Your
responsibilities include acknowledging to us in the written representation letter that (1) you are responsible for
presentation of the supplementary information in accordance with GAAP; (2) you believe the supplementary information,
including its form and content, is fairly presented in accordance with GAAP; (3) the methods of measurement or
presentation have not changed from those used in the prior period (or, if they have changed, the reasons for such changes);
and (4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or
presentation of the supplementary information.
Management is responsible for establishing and maintaining a process for tracking the status of audit findings and
recommendations. Management is also responsible for identifying for us previous financial audits, attestation
engagements, performance audits or other studies related to the objectives discussed in the Audit Objectives section of
this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and
recommendations resulting from those audits, attestation engagements, performance audits, or other studies. You are also
responsible for providing management's views on our current findings, conclusions, and recommendations, as well as
your planned corrective actions, for the report, and for the timing and format for providing that information.
You agree to assume all management responsibilities relating to the financial statements, schedule of expenditures of
federal awards and state projects, related notes, and any other nonaudit services we provide. You will be required to
acknowledge in the management representation letter our assistance with preparation of the financial statements, schedule
of expenditures of federal awards and state projects, and related notes prior to their issuance and have accepted
responsibility for them. Further, you agree to oversee the nonaudit services by designating an individual, preferably from
senior management, with suitable skill, knowledge, or experience; evaluate the adequacy and results of those services; and
accept responsibility for them.
Engagement Administration, Fees, and Other
We understand that your employees will prepare all cash or other confirmations we request and will locate any documents
selected by us for testing.
We will provide copies of our reports to the City; however, management is responsible for distribution of the reports and
the financial statements. Unless restricted by law or regulation, or containing privileged and confidential information,
copies of our reports are to be made available for public inspection.
At the conclusion of the engagement, we will complete the appropriate sections of the Data Collection Form that
summarizes our audit findings. It is management's responsibility to submit the reporting package (including financial
statements, schedule of expenditures of federal awards and state projects, summary schedule of prior audit findings,
auditor's reports, and corrective action plan) along with the Data Collection Form to the federal audit clearinghouse. We
will coordinate with you the electronic submission and certification. If applicable, we will provide copies of our report for
you to include with the reporting package you will submit to pass -through entities. The Data Collection Form and the
'City of Crestview, Florida Page 6 of 7
reporting package must be submitted within the earlier of 30 days after receipt of the auditor's reports or nine months after
the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audit.
The audit documentation for this engagement is the property of Saltmarsh, Cleaveland & Gund and constitutes
confidential information. However, subject to applicable laws and regulations, audit documentation and appropriate
individuals will be made available upon request and in a timely manner to a Cognizant or Grantor Agency or its designee,
a federal agency providing direct or indirect funding, or the U.S. Government Accountability Office for purposes of a
quality review of the audit, to resolve audit findings, or to carry out oversight responsibilities. We will notify you of any
such request. If requested, access to such audit documentation will be provided under the supervision of Saltmarsh,
Cleaveland & Gund personnel. Furthermore, upon request, we may provide copies of selected audit documentation to the
aforementioned parties. These parties may intend, or decide, to distribute the copies or information contained therein to
others, including other governmental agencies. Notwithstanding these provisions, the parties agree that the Florida
Statutes Chapter 119 shall be deemed controlling and govern whether these documents constitute public records and are
subject to disclosure, or are otherwise exempted from disclosure.
The audit documentation for this engagement will be retained for a minimum of five years after the report release date or
for any additional period requested by a Cognizant Agency, Oversight Agency for Audit, or Pass -through Entity, or for
any periods of time required by Florida Statutes Chapter 119 or other applicable law, whichever is longer. If we are aware
that a federal awarding agency or auditee is contesting an audit finding, we will contact the party(ies) contesting the audit
finding for guidance prior to destroying the audit documentation.
Charles E. "Chuck- Landers is the engagement shareholder and is responsible for supervising the engagement and signing
the reports or authorizing another individual to sign them. Our fee for these services will be $38,600 plus $3,000 for each
program subject to the single audit requirements for the year ended September 30, 2015. Our invoices for these fees will
be rendered as work progresses and are payable upon presentation. The above fee is based on anticipated cooperation
from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If
significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur any
additional costs.
Parties to this engagement agree that any dispute that may arise regarding the meaning, performance, or enforcement of
this engagement will, prior to resorting to litigation, be submitted to mediation upon the written request of any party to the
engagement. All mediations initiated as a result of this engagement shall be administered by a Florida Bar Certified trial
mediator selected by the parties. The results of this mediation shall be binding only upon agreement of each party to be
bound. Costs of any mediation proceeding shall be shared equally by both parties.
We appreciate the opportunity to be of service to the City and believe this letter accurately summarizes the significant
terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement
as described in this letter, please sign the enclosed copy and return it to us.
Very truly yours,
For
he Firm
City of Crestview, Florida
Page 7 of 7
RESPONSE:
This letter correctly sets forth the understanding of the City of Crestview, Florida.
By:
Title:
Date:
eizKixai