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Service Solicited - 2023 - Quest CPAs PLLC - Quest CPAs PLLC FY23-25 Independent Audits Quest CPAs PLLC March 8,2023 City of Eagle P.O. Box 1520 Eagle, ID 83616 RE: FY23-25 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 30,2023,2024,and 2025. Audit Scope and Objectives 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 as of and for the years ended September 30,2023,2024,and 2025.Accounting standards generally accepted in the United States of America (GAAP) 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 (GARS). 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.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. Provisions described in this engagement letter relating to a Single Audit, the Uniform Guidance,or the schedule of expenditures of federal awards only apply when the City is subject to a Single Audit. The objectives of our audit are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,whether due to fraud or error,and issue an auditor's report that includes our opinions about whether your financial statements are fairly presented, in all material respects, in conformity with GAAP,and report on the fairness of any supplementary information referred to above when considered in relation to the financial statements as a whole. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. Misstatements, including omissions, can arise from fraud or error and are considered material if there is a substantial likelihood that, individually or in 1 11501 Highway 95,Payette,Idaho 836611 www.gcpas.com I info@gcpas.com 1208-642-1417 the aggregate,they would influence the judgment of a reasonable user made based on the financial statements.The objectives also include 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 statues, regulations, and the terms and conditions of federal awards that 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). Auditor's Responsibilities for the Audit of the Financial Statements and Single Audit We will conduct our audit in accordance with GAAS; 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 the 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.As part of an audit in accordance with GAAS and Government Auditing Standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We will evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management. We will also evaluate the overall presentation of the financial statements, including the disclosures, and determine whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 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 entity or to acts by management or employees acting on behalf of the entity. Because the determination of waste and abuse is subjective, Government Auditing Standards do not expect auditors to perform specific procedures to detect waste or abuse in financial audits nor do they expect auditors to provide reasonable assurance of detecting waste or 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 material misstatements or noncompliance may exist and not be detected by us, even though the audit is properly planned and performed in accordance with GAAS 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 major programs. However, we will inform 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. 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. We will also conclude,based on the audit evidence obtained,whether there are conditions or events,considered in the aggregate,that raise substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time. 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 2 institutions.We may also request written representations from your attorneys as part of the engagement.Our audit of the financial statements does not relieve you of your responsibilities. Audit Procedures—Internal Control We will obtain an understanding of the entity and its environment, including internal control relevant to the audit, sufficient to identify and assess the risks of material misstatement of the financial statements,whether due to error or fraud,and to design and perform audit procedures responsive to those risks and obtain evidence that is sufficient and appropriate to provide a basis for our opinions.The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentation,or the override of internal control.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'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. The Uniform Guidance requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with applicable 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 the City's major programs. For federal programs that are included in the Compliance Supplement, our compliance and internal control procedures will relate to the compliance requirements that the Compliance Supplement identifies as being subject to audit.The purpose of these procedures will be to express an opinion on the City'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 with preparing the financial statements,schedule of expenditures of federal awards,and related notes of the City in conformity with U.S.generally accepted accounting principles and the Uniform Guidance based on the 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 3 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. You agree to assume all management responsibilities for the financial statements, schedule of expenditures of federal awards,and related notes,and any other nonaudit services we provide.You will be required to acknowledge in the management representation letter our assistance with the 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. Responsibilities of Management for the Financial Statements and Single Audit Our audit will be conducted on the basis that you acknowledge and understand your responsibility 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 awards,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), rules, 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. You are also responsible for making drafts of financial statements, schedule of expenditures of federal awards, all financial records,and related information available to us and for the accuracy and completeness of that information (including information from outside of the general and subsidiary ledgers).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, such as records, documentation, identification of all related parties and all related-party relationships and transactions, and other matters; (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.At the conclusion of our audit,we will require certain written representations from you about the financial statements;schedule of expenditures of federal awards; federal award programs; compliance with laws, regulations, contracts, and grant agreements; and related matters. 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 of each opinion unit 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 entity 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 4 suspected fraud, affecting the entity 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. Management is also responsible for taking timely and appropriate steps to remedy fraud and noncompliance with provisions of laws,regulations,contracts,and grant agreements,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 and make them ready for our review. 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,and COVID-19-related concepts,such as lost revenues,if applicable)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 stated fairly 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. 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. 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 Scope and 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. Reporting We will issue written reports upon completion of our audit of the City's financial statements and our Single Audit. Our reports will be addressed to the governing board of the City. Circumstances may arise in which our report may differ from its expected form and content based on the results of our audit. Depending on the nature of these circumstances, it may be necessary for us to modify our opinions, add a separate section, or add an emphasis-of- matter or other-matter paragraph to our auditor's report, or if necessary, withdraw from this engagement. If our opinions are other than unmodified, we will discuss the reasons with you in advance. If, for any reason, we are 5 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 we may withdraw from this engagement. The Government Auditing Standards report on internal control over financial reporting and on compliance and other matters will state 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 state 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 Uniform Guidance. Both reports will state that the report is not suitable for any other purpose. Engagement Administration,Price,and Other We understand that your employees will prepare all cash, accounts receivable, or other confirmations we request and will locate any documents selected by us for testing. At the conclusion of the engagement,we will complete the appropriate sections of the Data Collection Form (when applicable) 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, 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 reporting package must be submitted within the earlier of 30 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 Quest CPAs PLLC 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 the supervision of Quest CPAs PLLC 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, 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 September for planning purposes and to issue our reports no later than January 31st. Kurt Folke, Dan Coleman, or Tim Hoyt will be the engagement partner and will be responsible for supervising the engagement and signing the reports or authorizing another individual to sign them. 6 We agree that our prices for these services plus any out-of-pocket costs will not exceed: Service Description FY23 FY24* FY2S* Financial Audit Financial audit required by Idaho Code. $17,350 $18,200 $19,100 Additional Additional services- only if needed-see Appendix A. Services *Future years are not binding on future City Councils.Our invoices will be rendered each month as work progresses and are payable on presentation.The above prices 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 price 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, Owst OPAs PIM RESPONSE: This letter correctly sets forth the understanding of the City. Management signature: Title: Date: Governance signature*: Title: Date: *If the governing body has delegated this responsibility to management, the governance signature is not required. 7 APPENDIX A—ADDITIONAL SERVICES The following additional services are available if needed. Service Description FY23 FY24 FY25 Additional compliance audit needed if the entity Single Audit $4,000 $4,100 $4,200 spends over$750K in federal funds. MD&A document For MD&A (management's discussion and (only if entity analysis document),providing assistance with $1,000 $1,100 $1,200 includes this proper document format/required elements and document) performing required procedures. Bond,loan,material long-term(->1 year)lease issuances,refinances,or refundines and related accounting,financial reporting,and auditing(AFRA).Price is only charged during the initial year of the bond,loan,and long-term lease issuance, refinance,or refunding. For new bond,loan,and long-term lease AFRA for new bond, issuances,providing assistance with proper loan,&long-term accounting(i.e. appropriate journal entries, $950 $1,000 $1,050 using correct funds),financial reporting(i.e. lease issuances note disclosures,amortization tables,and changes in LT liabilities tables),and auditing. For bond,loan,and long-term lease refinances AFRA for bond,loan or re undin s,providing assistance with proper accounting(i.e.appropriate journal entries), &lease refinances $950 $1,000 $1,050 or refundinAs financial reporting(i.e.note disclosures, amortization tables,and changes in LT liabilities tables),and auditing. A-1