HomeMy Public PortalAboutCarr, Riggs & IngramA\ CRICARINGRAMR
RIGGS &
CPAs and Advisors
December 17, 2012
City of Crestview
Attn: Patti Beebe
198 N. Wilson Street
Crestview, FL 32536
Carr, Riggs & Ingram, LLC
Certified Public Accountants
500 Grand Boulevard
Suite 210
Miramar Beach, Florida 32550
(850) 837-3141
(850) 654-4619 (fax)
CRlcpa.com
We are pleased to confirm our understanding of the services we are to provide the City of Crestview,
Florida for the year ended September 30, 2012. We will audit the financial statements of the
governmental activities, business -type activities, each major fund, and the aggregate remaining fund
information, which collectively comprise the basic financial statements of the City of Crestview, Florida as
of and for the year ended September 30, 2012. 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 of Crestview's basic financial statements. Such
information, although not 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 of Crestview'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. Schedule of Funding Progress
3. Schedule of Contributions from Employer and Other Contributing Entities
We have also been engaged to report on supplementary information other than RSI that accompanies the
City of Crestview'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:
1. Schedule of Expenditures of Federal Awards and State Projects
2. Nonmajor Fund Combining Statements
3. Schedules of Revenues, Expenditures and Changes in Fund Balance for Non -major
Funds
Audit Objectives
The objective of our audit is the expression of opinions as to whether your basic financial statements are
fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles
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and to report on the fairness of the supplementary information referred to in the second paragraph when
considered in relation to the basic financial statements taken as a whole. The objective also includes
reporting on:
• Internal control related to the financial statements and compliance with laws, regulations, and the
provisions of contracts or grant agreements, noncompliance with which could have a material
effect on the financial statements in accordance with Govemment 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 Govemments, and Non -
Profit Organizations.
The reports on internal control and compliance will each include a statement that the report is intended
solely for the information and use of management, the body of individuals charged with governance,
others within the entity specific legislative or regulatory bodies, federal awarding agencies, and if
applicable, pass -through entities and is not intended to be and should not be used by anyone other than
these specified parties.
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 OMB Circular A-133, and will include tests of the accounting records, a determination of major
programs in accordance with OMB Circular A-133, and other procedures we consider necessary to
enable us to express such opinions and to render the required reports. If our opinions on the financial
statements or the Single Audit compliance opinions are other than unqualified, we will fully 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 a report as a result of
this engagement.
Management Responsibilities
Management is responsible for the basic financial statements and all accompanying information as well
as all representations contained therein. Management is also responsible for identifying government
award programs and understanding and complying with the compliance requirements, and for preparation
of the schedule of expenditures of federal awards in accordance with the requirements of OMB Circular
A-133. As part of the audit, we will prepare a draft of your financial statements, schedule of expenditures
of federal awards, and related notes. You are responsible for making all management decisions and
performing all management functions relating to the financial statements, schedule of expenditures of
federal awards, and related notes and for accepting full responsibility for such decisions. You will be
required to acknowledge in the management representation letter 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 are required to designate an individual
with suitable skill, knowledge, or experience to oversee any nonaudit services we provide and for
evaluating the adequacy and results of those services and accepting responsibility for them.
Management is responsible for establishing and maintaining effective intemal controls, including internal
controls over compliance, and for evaluating and monitoring ongoing activities, to help ensure that
appropriate goals and objectives are met and that there is reasonable assurance that government
programs are administered in compliance with compliance requirements. You are also responsible for
the selection and application of accounting principles; for the fair presentation in the financial statements
of the respective financial position of the governmental activities, business -type activities, each major
fund, and the aggregate remaining fund information of the City of Crestview and the respective changes
in financial position and, when applicable, cash flows in conformity with U.S. generally accepted
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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 ensuring that management and financial information is reliable and properly recorded. Your
responsibilities also include identifying significant vendor relationships in which the vendor has the
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 representation letter that the effects of any uncorrected misstatements aggregated
by us during the current engagement and pertaining to the latest period 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 or illegal acts affecting the govemment
involving (1) management, (2) employees who have significant roles in intemal control, and (3) others
where fraud or illegal acts 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 entity complies with
applicable laws, regulations, contracts, agreements, and grants. 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. You are responsible for the
preparation of the 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
present the supplementary information with the audited financial statements.
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 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.
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. 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 an audit is designed to provide reasonable, but not absolute assurance and because we will not
perform a detailed examination of all transactions, there is a risk that material misstatements or
noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect
immaterial misstatements or violations of laws or govemmental regulations that do not have a direct and
material effect on the financial statements or major programs. However, we will inform you of any
material errors and any fraudulent financial reporting or misappropriation of assets that come to our
attention. We will also inform you of any violations of laws or governmental regulations that come to our
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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 the financial statements and related
matters.
Audit Procedures — Internal Control
Our audit will include obtaining an understanding of the entity 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 intemal control and, accordingly, no opinion will be expressed in our report on intemal control issued
pursuant to Govemment Auditing Standards.
As required by OMB Circular A-133, we will perform test 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 intemal control issued pursuant to OMB
Circular A-133.
An audit is not designed to provide assurance on intemal control or to identify significant deficiencies.
However, during the audit, we will communicate to management and those charged with govemance
intemal control related matters that are required to be communicated under AICPA professional
standards, Govemment Auditing Standards, and OMB Circular A-133.
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 Crestview's compliance with applicable laws and
regulations and the provisions of 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 Govemment Auditing Standards.
OMB Circular A-133 requires that we also plan and perform the audit to obtain reasonable assurance
about whether the auditee has complied with applicable laws and regulations 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 related addenda for the types of compliance requirements that could have a direct and
material effect on each of the City of Crestview's major programs. The purpose of these procedures will
be to express an opinion on the City of Crestview's compliance with requirements applicable to each of its
major programs in our report on compliance issued pursuant to OMB Circular A-133.
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Audit Administration, Fees, and Other
We understand that your employees will prepare all cash, accounts receivable, or other confirmations we
request and will locate any invoices selected by us for testing.
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, summary schedule
of prior audit findings, auditor's reports, and a corrective action plan) along with the Data Collection Form
to the designated 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 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 audits.
The audit documentation for this engagement is the property of Carr Riggs & Ingram, LLC and constitutes
confidential information. However, pursuant to authority given by law or regulation, we may be requested
to make certain audit documentation available to an oversight agency, or its designee, a federal agency
providing direct or indirect funding, or the U.S. Govemment 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 Carr Riggs & Ingram, LLC 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 govemmental agencies.
The audit documentation for this engagement will be retained for a minimum of five years after the report
release or for any additional period requested by a grantor agency, oversight agency for audit, or pass -
through entity. If we are aware that a federal awarding agency, pass -through entity, or auditee is
contesting an audit finding, we will contact the parties contesting the audit finding for guidance prior to
destroying the audit documentation.
We expect to begin our audit on approximately December 17, 2012 and to issue our reports no later than
March 31, 2013. Alan Jowers is the engagement partner and is responsible for supervising the
engagement and signing the reports. Our fee for these services will be at our standard hourly rate plus
out-of-pocket costs (such as report reproduction, word processing, postage, travel, copies, telephone,
etc.) except that we agree that our gross fee, including expenses, will not exceed $35,000. Our standard
hourly rates vary according to the degree of responsibility involved and the experience level of the
personnel assigned to your audit. 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
costs through the date of termination. 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 the additional costs.
Govemment 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 the contract. Our most recent peer review letter was submitted to you as
part of our bid package.
We appreciate the opportunity to be of service to the City of Crestview and believe this letter accurately
summarizes the significant terms of our engagement. If you have any questions, please let us know. If
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you agree with the terms of our engagement as described in this letter, please sign and retum a copy to
us.
Very truly yours,
ellAti R , L.L.C..
Carr Riggs & Ingram, LLC
RESPONSE:
This letter correctly sets forth the understanding of the City of Crestview.
By: `4..1.e1 Th /r/.-
Title: d iY-ry dice/4'
Date: