HomeMy Public PortalAbout2021.12.16 City of McCall Audit Engagement LetterCOEUR D'ALENE MERIDIAN BOISE HARRISCPAS.COMTWIN FALLS BUHL
December 3, 2021
To the Mayor and City Council
City of McCall
McCall, ID 83638
We are pleased to confirm our understanding of the services we are to provide the City of McCall
for the year ended September 30, 2021. We will 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, including the related notes to the
financial statements, which collectively comprise the basic financial statements of the City of McCall,
as of and for the year ended September 30, 2021. Accounting standards generally accepted in the
United States provide for certain required supplementary information (RSI), such as management’s
discussion and analysis (MD&A), to supplement the City of McCall’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 the financial
reporting for placing the basic financial statements in an appropriate operational, economic, or
historical content. As part of our engagement, we will apply certain limited procedures to the City of
McCall’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:
1.Management’s Discussion and Analysis
2.Statements of Revenues, Expenditures and Changes in Fund Balance - Budget and
Actual for all Major Funds
3.Schedule of Employer’s Share of Net Pension Liability and Employer Contributions
We have also been engaged to report on supplementary information other than RSI that
accompanies the City of McCall’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 will provide an opinion on it in relation to
the financial statements as a whole, in a separate written report accompanying our auditor’s report
on the financial statements:
1.Schedule of Expenditures of Federal Awards
2.Statement of Revenue, Expenditures and Changes in Net Assets – Budget to Actual
Proprietary Funds
DocuSign Envelope ID: 8900397E-3BD8-47AA-BC28-12E1BD5F23A5
City of McCall
December 3, 2021
Page 2
Audit Objectives
The objective of our audit is the expression of opinions as to 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 second
paragraph when considered in relation to the financial statements as a whole. The objective also
includes reporting on:
Internal control over financial reporting and compliance with provisions of laws, regulations,
contracts, and award agreements, noncompliance with which could have a material effect on
the financial statements in accordance with Government Auditing Standards.
Internal control over compliance related to major programs and an opinion (or disclaimer of
opinion) on compliance with federal statutes, regulations, and the terms and conditions of
federal awards tat could have a direct and material effect on each major program in
accordance with the Single Audit Act Amendments of 1996 and Title 2 U.S. Code of Federal
Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (Uniform Guidance).
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
Uniform Guidance 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 the Uniform Guidance. 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; and
the provisions of the Uniform Guidance, and will include tests of accounting records, a
determination of major program(s) in accordance with the Uniform Guidance, and other procedures
we consider necessary to enable us to express such opinions. We will issue written reports upon
completion of our single audit. Our reports will be addressed to the Mayor and City Council of the
City of McCall, Idaho. We cannot provide assurance that unmodified opinions will be expressed.
Circumstances may arise in which it is necessary for us to modify our opinion or add emphasis-of-
matter or other-matter paragraphs. If our opinion on the financial statements or the Single Audit
compliance opinions are other than unmodified, we will discuss the reasons with you in advance. If,
for any reason, we are unable to complete the audit or are unable to form or have not formed
opinions, we may decline to express opinions or to issue reports, or may withdraw from this
engagement.
DocuSign Envelope ID: 8900397E-3BD8-47AA-BC28-12E1BD5F23A5
City of McCall
December 3, 2021
Page 3
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 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 government or to acts by management or employees acting on behalf of the government.
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 examination of all transactions, an unavoidable
risk exists that some material misstatements or noncompliance 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 or on major programs. 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. We will include
such matters in the reports required for a single audit. Our responsibility as auditors is limited to the
period covered by our audit and does not extend to any 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 tests of the physical existence of inventories, and 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 require certain written representations from you about your
responsibilities for the financial statements; schedule of expenditures of federal awards; federal
award programs; compliance with laws, regulations,contracts, and grant agreements; and other
responsibilities required by generally accepted auditing standards.
DocuSign Envelope ID: 8900397E-3BD8-47AA-BC28-12E1BD5F23A5
City of McCall
December 3, 2021
Page 4
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
performed 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 the Uniform Guidance, 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
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 pursuant to the Uniform Guidance.
An audit is not designed to provide assurance on internal control or to identify significant
deficiencies or material weaknesses. Accordingly, we will express no such opinion. 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,
Government Auditing Standards, and the Uniform Guidance.
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 of McCall’s compliance with provisions of applicable
laws, regulations, contracts, and agreements, including grant agreements. However, the objective of
those procedures 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.
DocuSign Envelope ID: 8900397E-3BD8-47AA-BC28-12E1BD5F23A5
City of McCall
December 3, 2021
Page 5
The Uniform Guidance requires that we also plan and perform the audit to obtain reasonable
assurance about whether the auditee has complied with federal statutes, regulations, and the terms
and conditions of federal awards applicable to major programs. Our procedures will consist of tests
of transactions and other applicable procedures described in the OMB Compliance Supplement for the
types of compliance requirements that could have a direct and material effect on each of City of
McCall’s major programs. For federal programs that are included in the 2021 Compliance
Supplement, our compliance and internal control procedures will relate to the compliance
requirements that the 2021 Compliance Supplement identifies as being subject to audit. The purpose
of these procedures will be to express an opinion on City of McCall’s compliance with requirements
applicable to each of its major programs in our report on compliance issued pursuant to the
Uniform Guidance.
Other Services
We will also assist in preparing the financial statements, schedule of expenditures of federal awards,
and related notes of City of McCall in conformity with U.S. generally accepted accounting principles
and the Uniform Guidance 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. We will perform the services in accordance with
applicable professional standards. The other services are limited to the financial statements,schedule
of expenditures of federal awards, and related notes services previously defined. We, in our sole
professional judgment, reserve the right to refuse to perform any procedure or take any action that
could be construed as assuming management responsibilities.
Management Responsibilities
Management is responsible for (1) designing, implementing, establishing, and maintaining effective
internal controls relevant to the preparation and fair presentation of financial statements that are
free from material misstatement, whether due to fraud or error, including internal controls over
federal wards, 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 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; for the preparation and fair presentation of the
financial statements, schedule of expenditures of federal awards, and all accompanying information
in conformity with U.S. generally accepted accounting principles; and for compliance with applicable
laws and regulations (including federal statutes) and the provisions of contracts and grant
agreements (including award agreements). Your responsibilities also include identifying significant
contractor relationships in which the contractor has responsibility for program compliance and for
the accuracy and completeness of that information.
DocuSign Envelope ID: 8900397E-3BD8-47AA-BC28-12E1BD5F23A5
City of McCall
December 3, 2021
Page 6
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) access to personnel, accounts,
books,records, supporting documentation, and other information as needed to perform an audit
under the Uniform Guidance, (3) additional information that we may request for the purpose of the
audit, and (4) unrestricted access to persons within the government from whom we determine it
necessary to obtain audit evidence.
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 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 government
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
government received in communications from employees, former employees, grantors, regulators,
or others. In addition, you are responsible for identifying and ensuring that the government
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 the Uniform Guidance, it is management’s responsibility to evaluate and
monitor noncompliance with federal statutes, regulations, and the terms and conditions of federal
awards;take prompt action when instances of noncompliance are identified including
noncompliance identified in audit findings; promptly follow up and take corrective action on
reported audit findings; and prepare a summary schedule of prior audit findings and a separate
corrective action plan.
You are responsible for identifying all federal awards received and understanding and complying
with the compliance requirements and for the preparation of the schedule of expenditures of federal
awards (including notes and noncash assistance received) in conformity with the Uniform Guidance.
You agree to include our report on the schedule of expenditures of federal awards in any document
that contains and indicates that we have reported on the schedule of expenditures of federal awards.
You also agree to include the audited financial statements with any presentation of the schedule of
expenditures of federal awards 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 schedule of expenditures of federal awards in accordance with the Uniform Guidance; (2) you
believe the schedule of expenditures of federal awards, including its form and content, is fairly
presented in accordance with the Uniform Guidance; (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.
DocuSign Envelope ID: 8900397E-3BD8-47AA-BC28-12E1BD5F23A5
City of McCall
December 3, 2021
Page 7
You are also responsible for the preparation of the other supplementary information, which we have
been engaged to report on, 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 OR make the audited financial statements readily available to users of the
supplementary information no later than the date the supplementary information is issued with 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 and providing report
copies of 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 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, 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 related notes and that
you have reviewed and approved the financial statements, schedule of expenditures of federal
awards, 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, accounts receivable, and other
confirmations we request and will locate any documents selected by us for testing.
DocuSign Envelope ID: 8900397E-3BD8-47AA-BC28-12E1BD5F23A5
City of McCall
December 3, 2021
Page 8
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
electronically submit the reporting package (including financial statements, schedule of expenditures
of federal awards, summary schedule of prior audit findings,auditors’ 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. The Data Collection Form and the reporting
package must be submitted within the earlier of 30 calendar days after receipt of the auditors’
reports or nine months after the end of the audit period.
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.
The audit documentation for this engagement is the property of Harris CPAs and constitutes
confidential information. However, subject to the applicable laws and regulations, audit
documentation and appropriate individuals will be made available upon request and in a timely
manner to the granting 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
Harris CPAs 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.
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 the granting agency. If we are aware
that a federal awarding agency, pass-through entity, 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.
We expect to begin our audit in January 2022 and to issue our reports in March 2022. Josh Tyree is
the engagement partner and is responsible for supervising the engagement and signing the reports or
authorizing another individual to sign them.
We estimate that our fees for these services will be $38,000 for the audit of the basic financial
statements and $7,500 for the single audit which covers the first major program. Any additional
major programs will cost $3,000 each. The fee estimates are based on anticipated cooperation from
your personnel and the assumption that unexpected circumstances will not be encountered during
the audit. Additionally, we understand that your entity will make all of the year end adjustments to
reconcile accounts. If significant additional time is necessary, we will discuss it with you and arrive at
a new fee estimate before we incur the additional costs. Our invoices for these fees will be rendered
each month as work progresses and are payable on presentation. In accordance with our firm
policies, work may be suspended if your account becomes 30 days or more overdue and will not be
resumed until your account is paid in full.If we elect to terminate our services for nonpayment, our
engagement will be deemed to have been completed upon written notification of termination, even
if we have not completed our report. You will be obligated to compensate us for all time expended
and to reimburse us for all out-of-pocket expenditures through the date of termination.
DocuSign Envelope ID: 8900397E-3BD8-47AA-BC28-12E1BD5F23A5
City of McCall
December 3, 2021
Page 9
In the event of a dispute over fees for our engagement, we mutually agree to try in good faith to
resolve the dispute through mediation by selecting a third party to help us reach an agreement. If we
are unable to resolve the fee dispute through mediation, client and accountant agree to submit to a
resolution by arbitration in accordance with the rules of the American Arbitration Association. Such
arbitration shall be binding and final. In agreeing to arbitration, we both acknowledge that in the
event of a dispute over fees, each of us is giving up the right to have the dispute decided in a court
of law before a judge or jury, and instead we are accepting the use of arbitration for resolution.
Government Auditing Standards require that we provide you with a copy of our most recent external
peer review report and any letter of comment, and any subsequent peer review reports and letters of
comment received during the period of contract. Our 2018 peer review report accompanies this
letter.
Anti-Boycott Against Israel Act (Idaho Code 67-2346). Within the meaning of the terms as defined
in Idaho Code 67-2346, Harris CPA’s certifies that it is not currently engaged in, and will not for the
duration of this Agreement engage in, a boycott of goods or services from Israel or territories under
its control.
We appreciate the opportunity to be of service to the City of McCall 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,
Josh Tyree
Certified Public Accountant
RESPONSE:
This letter correctly sets forth the understanding of the City of McCall.
Officer Signature
Title
Governance Signature
Title
DocuSign Envelope ID: 8900397E-3BD8-47AA-BC28-12E1BD5F23A5
Mayor
Robert S Giles
City Clerk
BessieJo Wagner
609 South Washington, Suite 202
Moscow, Idaho 83843
www.presnellgage.com
(208) 882-2211
Fax: (208) 883-3808
Lewiston Office: 1216 Idaho Street, Lewiston, Idaho 83501, (208) 746-8281
Grangeville Office: 111 South Mill Street, Grangeville, Idaho 83530, (208) 983-1254
Orofino Office: 216 Johnson Avenue, P.O. Box 632, Orofino, Idaho 83544, (208) 476-3012
Pullman Office: 1230 SE Bishop Blvd., Pullman, Washington 99163, (509) 332-6541
Report on the Firm’s System of Quality Control
December 28, 2018
To the Members of Harris CPAs and
the Peer Review Committee of the Idaho Society of CPAs
We have reviewed the system of quality control for the accounting and auditing practice of Harris CPAs (the firm) in effect for the year ended
June 30, 2018. Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established
by the Peer Review Board of the American Institute of Certified Public Accountants (Standards).
A summary of the nature, objectives, scope, limitations of, and the procedures performed in a System Review as described in the standards
may be found at www.aicpa.org/prsummary. The summary also includes an explanation of how engagements identified as not performed or
reported in conformity with applicable professional standards, if any, are evaluated by a peer reviewer to determine a peer review rating.
Firm’s Responsibility
The firm is responsible for designing a system of quality control and complying with it to provide the firm with reasonable assurance of
performing and reporting in conformity with applicable professional standards in all material respects. The firm is also responsible for
evaluating actions to promptly remediate engagements deemed as not performed or reported in conformity with professional standards,
when appropriate, and for remediating weaknesses in its system of quality control, if any.
Peer Reviewer’s Responsibility
Our responsibility is to express an opinion on the design of the system of quality control and the firm’s compliance therewith based on our
review.
Required Selections and Considerations
Engagements selected for review included engagements performed under the Government Auditing Standards, including compliance audits
under the Single Audit Act and audits of employee benefit plans.
As a part of our peer review, we considered reviews by regulatory entities as communicated by the firm, if applicable, in determining the
nature and extent of our procedures.
Opinion
In our opinion, the system of quality control for the accounting and auditing practice of Harris CPAs in effect for the year ended June 30, 2018,
has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with
applicable professional standards in all material respects. Firms can receive a rating of pass, pass with deficiency (ies), or fail. Harris CPAs has
received a peer review rating of pass.
Presnell Gage, PLLC
DocuSign Envelope ID: 8900397E-3BD8-47AA-BC28-12E1BD5F23A5