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HomeMy WebLinkAboutAgr 2007-03-12 ((Nicholson & Olson) 729 Sunrise January 26, 2007 ;, 'E" L.".:..,., \~ 61;T<' V Ek. e JAil = .. 2;07 , FI f\Jf, , TOWN v Town Hall - Tiburon Ms. Heidi Bigall, D.A.S. 1505 Tiburon Blouevard Tiburon, California 94920 RE: 2007 Audit Engagement Letter We are pleased to confirm our understanding of the services we are to provide to the Town of Tiburon for the year ending June 30, 2007. We will audit the financial statements of the Town of Tiburon as of and for the year ended June 30, 2007. Also, the financial statement report should include the following additional information that will be subjected to the auditing procedures applied in our audit of the basic financial statements: 1. GASB-required supplementary information 2. Separate audit report on the Tiburon Redevelopment Agency Audit Objective The objective of our audit is the expression of an opinion 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 additional information referred to in the first paragraph when considered in relation to the financial statements taken as a whole. 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; and will include tests of the accounting records of the Town of Tiburon and other procedures we consider necessary to enable us to express an opinion. If our opinion on the financial statements is 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 an opinion, we may decline to express an opinion or to issue a report as a result of this engagement. Town of Tiburon January 26, 2007 Management Responsibilities Management is responsible for establishing and maintaining internal control and for compliance with the provisions of contracts, agreements, and grants. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of the controls. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorizations and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles, and that federal award programs are managed in compliance with applicable laws and regulations and the provisions of contracts and grant agreements. Management is responsible for making all financial records and related information available to us. We understand that you will provide us with such information required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application. This responsibility includes the establishment and maintenance of adequate records and effective internal control over financial reporting, the selection and application of accounting principles, and the safeguarding of assets. Management is responsible for adjusting the financial statements to correct material misstatements and for 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 presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. . 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 judgement about the number of transactions to be examined and the areas to be tested. Also, we will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement. 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 governmental 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 attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors. - 2- Town of Tiburon January 26, 2007 Audit Procedures - General (continued) 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, creditors, and financial institutions. We may request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will also request certain written representations from you about the financial statements and related matters. Audit Procedures - Internal Control In planning and performing our audit, we will consider the internal control sufficient to plan the audit in order to determine the nature, timing, and extent of our auditing procedures for the purpose of expressing our opinions on the Town ofTiburon's financial statements, and not to provide assurance on the internal controls. We will obtain an understanding of the design of the relevant controls and whether they have been placed in operation, and we will assess control risk. 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 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. Tests of controls relative to the financial. statements are required only if control risk is assessed below the maximum level. Our tests, if performed, will be less in scope than would be necessary to render an opinion on the 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 reportable conditions. However, we will inform the governing body or audit committee of any matters involving internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. We will also inform you of any non-reportable conditions or other matters involving internal control, if any. - 3 - Town of Tiburon January 26, 2007 Audit Administration, Fees, Audit Report and Other We understand that your employees will type all cash or other confirmations we request and will locate any invoices and cancelled checks selected by us for testing. Additionally your employees will photocopy any other documents we request for our files. Any "accounting procedures" that you ask us to perform, that are outside the scope of the audit, will be billed to the Town at our standard governmental billing rates. ' The workpapers for this engagement are the property of Nicholson & Olson, CPAs and constitute confidential information. However, we may be requested to make certain workpapers available to a Cognizant or Grantor Agency pursuant to authority given to it by law or regulation. If requested, access to such workpapers will be provided under the supervision of Nicholson & Olson's personnel. Furthermore, upon request, we may provide photocopies of selected workpapers to the Cognizant or Grantor Agency. The workpapers for this engagement will be retained for a minimum of five years after the date the auditor's report is issued. 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 may not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, 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. The audit 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. Financial Audit Our fee for these audit services will be at our governmental standard hourly rates plus out- of-pocket costs (such as postage, travel, copies, printing, etc) except that we agree that our gross fee, including expenses, will not exceed $25,000 for the June 30, 2007 financial audit ($23,000 Town audit and SCO report; and $2,000 RDA audit and SCO report). Our governmental standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. Included in this fee is reviewing the Town prepared "Management's Discussion & Analysis" (MD&A) for correct information. - 4- Town of Tiburon January 26, 2007 Audit Administration, Fees, Audit Report and Other (continued) Financial Statement Report Preparation of the financial statement report in accordance with the GASB 34 reporting model will be the responsibility of the auditor. Preparation of the MD&A and other required supplementary information will be the responsibility of the Town. We will also provide ten printed and bound financial statement reports and one "photo-ready" master copy. Government Auditing Standards - 1994 Revision requires that we provide you with a copy of our most recent quality control review report. Our 2003 peer review report accompanies this letter (APPENDIX A). We appreciate the opportunity to be of service to the Town of Tiburon 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 below and return this copy to us. A copy is enclosed for your files. Sincerely, ~at{tIt,4, ~ Ralph A. Marcello, CPA Director of Audits RAM:cds RESPONSE: This letter correctly sets forth the understanding of the Town of Tiburon for financial audit services. BY~ TitleTo M wn ::ana.ger -.s. (~_f>-:r Date F:docs/englTiburon 07.doc - 5 - LI Vocker Kristofferson and Co. 1700 S. EI Camino Real, Suite 406 San Mateo, CA 94402 .' (650) 574-5000 · FAX (650) 574-2334 ANDCQ . Certified Public Accountants September 29, 2003 To the Members Nicholson & Olson We have reviewed the system of quality control for the accounting and auditing practice of Nicholson & Olson (the firm), in effect for the year ended May 31, 2003. A system 'of quality control encompasses the fiml's organizational structure and the policies adopted and procedures established to provide it with reasonable assurance of complying with . professional standards. The elements of quality control are described in the Statements on Quality Control Standards issued by the American Institute of Certified Public Accountants (the AICP A). The design of the system, and compliance with it, are the responsibilities of the firm. In addition, the firm has agreed to comply with the nlembership requirements of the SEC Practice Section of the AICP A Division for CPA Firms (the Section). Our responsibility is to express an opinion on the design of the system, and the firm's compliance with that system and the Section's membership requirements based on our review. Our review was conducted in conformity with standards established by the Peer Review Comnlittee of the Section and included procedures to plan and perform the review that are summarized in the attached description of the peer review process. Our review would not necessarily disclose all weaknesses in the system of quality control or all instances of lack of compliance with it or with the membership requirements of the Section since it was based on selective tests. Because ther~ are inherent limitations in the effectiveness of any system of quality control, departures from the system may occur and not be detected. Also, projection of any evaluation of a systern of quality control to future periods is subject to the risk that the system of quality control may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the system of quality control for the accounting and auditing practice of Nicholson & Olson, in effect for the year ended May 31, 2003, hag been designed to meet the requirements of the quality control standards for an accounting and auditing practice established by the AICP A, and was complied with during the year then ended to provide the' firm with reasonable assurance of complying with professional' standards. Also, in our opinion, the finn has complied with membership requirements of the Section in all material respects. As is custOlnary in a peer review, we have issued a letter under this date that sets forth conlments relating to certain policies and procedures or compliance with them. The matters described in the letter were not considered to be of sufficient significance to affect the opinion expressed in this report. V ~~lCv\ l~-t<<{{~-- (v1"-P( Cc9 r VOCKER KRISTOFFERSON AND CO. ~EC ACTICE CTION ~ nm ~ December 3, 2003 Charles Nicholson, CPA Nicholson & Olson 729 Sunrise Ave Ste 303 Roseville, CA 95661-4504 Dear Mr. Nicholson: It is my pI easure to not i fy you that on November 19, 2003 the SECPS Peer Review Committee accepted the report on the most recent peer review of your firm, the related letter of comments, and your firm's response thereto. Those documents will now be placed in the public files of the SEC Practice Section. The exit conference on your next review-must occur by December 31, 2006. As you know, the reviewer's oplnlort was unmodified. The Committee asked me to convey its congratulations to the firm. Sincerely, ~ Richard L. Miller, CPA Chair SECPS Peer Review Committee cc: Marianne H Kristofferson, CPA Firm Number: Review Number: 10098130 200115 American Institute of Certified Public Accountants Harborside Financial Center, 201 Plaza Three, Jersey City, NJ 07311-3881 (201) 938-3030 · (888) 817-3277 (public files) · fax (201) 521-5436 · www.aicpa.org ISO 9001 Certified , I 1M tiD. Never Underestimate The Value.@