Service Solicited - 2014 - Quest CPA's P.C. - Quest Independent Audit 11501 Highway 95
Payette,Idaho 83661
Quest CPAs. P.C. wwcpas.com
Audits info@qcpas.com
Taxes P: 208-642-1417
Special Services Quality Expertise Service Timeliness F: 208-642-1582
June 25, 2014
City of Eagle
P.O. Box 1520
Eagle, ID 83616
RE: FY2014, FY2015, & FY2016 Independent Audits
We are pleased to confirm our understanding of the services we are to provide the City of Eagle
(the City) for the years ended September 30, 2014, 2015, and 2016. We will audit the financial
statements of the governmental activities, the business-type activities, 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 as of and for the years
ended September 30, 2014, 2015, and 2016. Accounting standards generally accepted in the
United States of America provide for certain required supplementary information (RSI) 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, and 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. As in prior years, the Management's Discussion & Analysis (MD&A) will be
excluded. If supplementary information other than RSI accompanies the basic financial
statements, we will subject it 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 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.
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
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accounting principles and to report on the fairness of the supplementary information referred to
above when considered in relation to the financial statements as a whole. Our audit will be
conducted in accordance with auditing standards generally accepted in the United States of
America and the standards for financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, and will include tests of the accounting
records of the City and other procedures we consider necessary to enable us to express such
opinions. We will issue a written report upon completion of our audit of the City's financial
statements. Our report will be addressed to the governing board of the City. We cannot provide
assurance that unmodified opinions will be expressed. Circumstances may arise in which it is
necessary for us to modify our opinions or add emphasis-of-matter or other-matter paragraphs. If
our opinions on the financial statements 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 issue reports, or may
withdraw from this engagement.
We will also provide a report (that does not include an opinion) 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
as required by Government Auditing Standards. The report on internal control and on compliance
and other matters will include a paragraph that states (1)that 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 on compliance,
and (2) that 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 paragraph
will also state that the report is not suitable for any other purpose. If during our audit we become
aware that the City is subject to an audit requirement that is not encompassed in the terms of this
engagement, we will communicate to management and those charged with governance that an
audit in accordance with U.S. generally accepted auditing standards and the standards for
financial audits contained in Government Auditing Standards may not satisfy the relevant legal,
regulatory, or contractual requirements.
Management Responsibilities
Management is responsible for the financial statements and all accompanying information as
well as all representations contained therein. As part of the audit, we will assist with preparation
of your financial statements and related notes. 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. You agree to assume all management responsibilities
relating to the financial statements and 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 and related notes and that you have reviewed and
approved the financial statements 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, who possesses suitable skill, knowledge, or
experience; evaluate the adequacy and results of those services; and accept responsibility for
them.
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Management is responsible for establishing and maintaining effective internal controls, including
evaluating and monitoring ongoing activities,to help ensure that appropriate goals and objectives
are met; following laws and regulations; and 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,
for the preparation and fair presentation of the financial statements 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 include adjusting the financial statements to correct material misstatements
and confirming to us in the written 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 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 entity complies with applicable laws, regulations, contracts, agreements, and grants and for
taking timely and appropriate steps to remedy fraud and noncompliance with provisions of laws,
regulations, and contracts or grant agreements, or abuse that we report.
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 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.
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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.
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 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 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; compliance
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with laws, regulations, contracts, and grant agreements; and other responsibilities required by
generally accepted auditing standards.
Audit Procedures—Internal Controls
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 internal control and, accordingly, no
opinion will be expressed in our report on internal control issued pursuant to Government
Auditing Standards.
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.
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.
The audit documentation for this engagement is the property of Quest CPAs, P.C. 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 Legislative Services Office 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
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the supervision of Quest CPAs, P.C. 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 Legislative Services Office. 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.
We expect to begin our audit on approximately September 1st and to issue our reports no later
than December 31st. Kurt R. Folke or Daniel T. Coleman will be the engagement partner and
will be responsible for supervising the engagement and signing the reports or authorizing another
individual to sign them.
Our fees for these services will be at our standard hourly rates plus out-of-pocket costs (such as
report reproduction, word processing, postage,travel, copies, telephone, etc.) except that we
agree that our gross fees, including expenses, will not exceed:
FY2014 FY2015* FY2016*
Financial Audit $10,700 $11,000 $11,300
*Future years are not binding on future City Councils.
Our invoices for these fees will be rendered each month as work progresses and are payable upon
presentation. The above fees are 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.
We appreciate the opportunity to be of service to you 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 one
copy and return it to us.
Very truly yours,
Oaagt CPAs, P.C.
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RESPONSE:
This letter correctly sets forth the understanding of the City.
Management signature:
Title:
Date: 1
Governance signature*: "N‘. ..�st./ '-
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*If the governing body has delegated this responsibility to management, the governance
signature is not required.
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