HomeMy WebLinkAboutCHERRY BEKARET HOLLAND
Augusta Richmond GA
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FILE NUMBER: } ~ 12-<6
NUMBER OF PAGES: (p
CHERRY
BEKAERT&.
HOLLAN
January 22, 1998
CEllTll'lED PUULlC
ACCOIJNTM'l'S I':.
CONSllLTANTS
Augusta-Richmond County Commission
Augusta-Richmond County, Georgia
We are pleased to confirm our understanding of the services we are to provide for Augusta-Richmond County for
the year ended December 31, 1997.
Summary of Slervices
We will audit the general purpose financial statements of Augusta-Richmond County as of and for the year e
December 31, 1997. Our audit will be a single audit conducted according to generally accepted auditing stand ds;
the standarcl:; for financial audits contained in Government Auditing Standards, issued by the Comptroller Gen ral
of the Unitecl States; the Single Audit Act of1984; and the provisions ofOMB Circular A-133, "Audits ofSta
Local Governments and Not-for-Profit Organizations," and will include tests of the accounting records of August
Richmond County and other procedures we consider necessary to enable us to express an unqualified opinion that
the financi~d statements are fairly presented, in all material respects, in confonnity with generally accepted
accounting principles. We will also report on the Schedule of Federal Financial Assistance, on Augusta-Richmond
County's compliance with laws and regulations, and on its internal controls as required for a single audit. If 0
opinion is other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we ar
unable to complete the audit, we will not issue a report as a result of this engagement.
Financial audit
Our procedw'es will include tests of documentary evidence supporting the transactions recorded in the accoun
and may include tests assets and liabilities by correspondence with selected individuals, creditors, and financi
institutions. We will request written representations from your attorneys as part of the engagement, and they ma
bill you for responding to this inquiry. At the conclusion of our audit, we will also request certain writte
representations from you about the financial statements and related matters.
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. Also, we will plan and perfonll the audit to obtain reasonable assurance about whether
financial stakments are free of material misstatement. As required by the Single Audit Act of 1984 and the Singl
Audit Act Amendments of1996, our audit will include tests of transactions related to federal assistance programs
for complianl:e with applicable laws and regulations. However, because of the concept of reasonable assurance
and because we will not perform a detailed exanunation of all transactions, there is a risk that material errors,
irregularities, or illegal acts, including fraud or defalcations, may exist and not be detected by us. We will inforn1
you, however, of any matters ofthat nature that come to our attention, and we will include such matters in the
reports requiflxi for a single audit. Our responsibility as auditors is linuted 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.
Cherry, Bekaert & Holland, L.L.P.
1029 Greene Street (3090 I) . P.O. Box 2247 . Augusta, GA 30903 . (706) 724-3557 . Fax (706) 724-1667
Offices Throughout The Southeast. Represented Internationally Through Summit International Associates, Inc.
Augusta-Richmond County Commission
January 22, 1998
Any additional services that you may request, and that we agree to provide, will be the subject of separate
written agreements.
This engagement will be led by Kendall O. Fields, Engagement Partner, who will be responsible for assuring the
overall quality, value, and timeliness of our services to you. Paul L. Chancey will serve as the in-charge auditor
during the field work.
Management Responsibility
The management of Augusta-Richmond County ("Management") is responsible for establishing and maintaining an
internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to
assess the expe<:ted benefits and related costs of internal control structure policies and procedures. The objectives of
an internal control structure 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 general purpose financial statements
in accordance with generally accepted accounting principles, and that federal financial assistance programs are
managed in compliance with applicable laws and regulations.
During 1997, Management, including its commissioners and audit committee, was responsible for maintaining
internal control and directing the internal audit function. As part of your responsibility, management monitored
internal control through ongoing activities, separate evaluations, or a combination of both, to assess the quality of
its performance. Management was responsible for:
. Designating the Administrator and Audit Committee to be responsible for the internal audit function.
. Determining the scope, risk and frequency of all internal audit activities, including those performed by Cheny,
Bekaert & Holland, L.L.P.
. Evaluating the findings and results arising from the internal audit activities, including those performed by Cheny,
Bekaert & Holland, L.L.P.
. Evaluating the adequacy of the audit procedures performed and the findings resulting from the performance of
those procedures by, among other things, obtaining reports from Cheny, Bekaert & Holland, L.L.P.
The Board of Commissioners and Administrator established guidelines to follow in canying out these responsibilities
and monitoring how well the respective responsibilities were met.
Cherry, Bekaert & Holland, L.L.P. was responsible for performing specific procedures in accordance with the terms
of the Board and Administrator and reporting thereon. The reports were provided to the Administrator to evaluate the
adequacy of the audit procedures perfonned and the findings resulting from the performance of those procedures. The
reports included recommendations for improvements in systems, processes, and procedures. Cheny, Bekaert &
Holland, L.L.P. assisted the Administrator in perfornung preliminary audit risk assessments, preparing audit plans,
and recommending audit priorities. Cheny, Bekaert & Holland, L.L.P. did not undertake any other responsibilities
that are required, as described above, to be performed by the individual responsible for the internal audit function, or
to enable us to express an opinion on Augusta-Richmond County's internal control.
Internal Control Structure
In planning and p,mornling our audit, we will consider the internal control structure in order to determine our auditing
procedures for the purpose of expressing our opinions on Augusta-Richmond County's general purpose financial
statements, on it; compliance with requirements applicable to major federal financial assistance programs, and to
report on the internal control structure in accordance with OMB Circular A-l33. Our audit is not designed to provide
assurance on internal control, including any Year 2000 issues relating to computerized operations.
Page 2 of 6 pages
Augusta-Richmond County Commission
January 22, 1998
We will obtain an understanding of the design of the relevant policies and procedures 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 policies :md procedures that we consider relevant to preventing and detecting errors and irregularities that are
material to the general purpose 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 general purpose financial
statements. Our tests, ifperformed, will be less in scope than would be necessary to render an opinion on the internal
control structure policies and procedures and, accordingly, no opinion will be expressed.
We will perfonn tests of controls, as required by OMB Circular A-133, to evaluate the effectiveness of the design and
operation of internal control policies and procedures that we consider relevant to preventing or detecting material
noncompliance with specific requirements, general requirements, and requirements governing claims for advances and
reimbursements and amounts claimed or used for matching that are applicable to each of Augusta-Richmond County's
major federal financial assistance programs. Our tests will be less in scope than would be necessary to render an
opinion on the internal control structure policies and procedures and, accordingly, no opinion will be expressed.
We will infoffil you of any matters involving internal control structure 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 structure 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 general purpose
financial statements. We will also inform you of any nonreportable conditions or other matters involving the internal
control structum, if any, as required by OMB Circular A-l33.
Compliance R€:sponsibility
Compliance with laws, regulations, contracts, and grant agreements applicable to Augusta-Richmond County is
the responsibility of Augusta-Richmond County's management. As part of obtaining reasonable assurance about
whether the general purpose financial statements are free of material misstatement, we will perform tests of
Augusta-Richmond County's compliance with certain provisions of laws, regulations, contracts, and grants.
However, the o'bjective of our audit will not be to provide an opinion on overall compliance with such provisions,
and we will not l~xpress such an opinion.
Our audit will be conducted in accordance with the standards referred to in the second paragraph of this letter. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether material
noncompliance with the requirements governing types of services allowed or unallowed; eligibility; matching, level
of effort, or earmarking; reporting; special tests and provisions; c1aiins for advances and reimbursements; and
amounts claimed or used for matching that are applicable to major programs occurred. The purpose of our audit will
be to express an opinion on Augusta-Richmond County's compliance with the specific requirements applicable
to major programs listed in the previous sentence.
We will perform certain procedures to test Augusta-Richmond County's compliance with the general requirements
applicable to its federal financial assistance programs as required by OMB Circular A-l33. Our procedures will
be limited to the applicable procedures described in OMB's Compliance Supplement for Single Audits of State and
Local Governments. Our procedures will be substantially less in scope than an audit, the objective of which is
the expression of an opinion on the general requirements, and we will not express such an opinion.
Terms and Conditions Supporting Fee
As a result of our planning process, the County and Cherry, Bekaert & Holland, L.L.P. have agreed to a fee,
subject to the following conditions.
Page 3 of 6 pages
Augusta-Richmond County Commission
January 22, 1998
To facilitate meeting our mutual objectives, the County will provide in a timely manner audit schedules and
supporting infOlmation, including timely connnunication of all significant accounting and financial reporting matters,
as well as working space and clerical assistance as mutually agreed upon and as is normal and reasonable in the
circumstances. When and if for any reason the County is unable to provide such schedules, information and
assistance, Cherry, Bekaert & Holland, L.L.P. and the County will mutually revise the fee to reflect additional
services, if any:. required of us to achieve these objectives.
In providing our services, we will consult with the County with respect to matters of accounting, financial
reporting or other significant business issues. Accordingly, time necessary to effect a reasonable amount of such
consultation is rl~flected in our fee. However, should a matter require research, consultation or audit work beyond that
amount, Cherry, Bekaert & Holland, L.L.P. and the County will agree to an appropriate revision in services and fee.
Except for any changes in fees which may result from the circumstances described above, our fees will be limited to
those set forth below.
We will prepare a schedule of required documents and a timetable for completion by County personnel. We
understand that you will provide us with the 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 and will assist in the preparation of your financial statements, but the responsibility for the
financial statements remains with you. This responsibility includes the maintenance of adequate records and
related internal control structure policies and procedures, the selection and application of accounting principles,
and the safegu2ifding of assets.
We understand that your employees will type confirmations and other items we request and will locate invoices
selected by us for testing.
We anticipate delivering the report to you by June 30, provided we receive your trial balances by March 15, and
receive maximum cooperation from your personnel.
Responsibility for Year 2000 Issues
Because many computerized systems use only two digits to record the year in date fields (for example, the year
1998 is recorded as 98), such systems may not be able to process dates accurately in the year 2000 and after. The
effects of this problem will vary from system to system and may adversely affect an entity's operations as well as its
ability to prepare financial statements. An audit of financial statements conducted in accordance with generally
accepted auditing standards is not designed to detect whether a company's systems are year 2000 compliant.
Further, we have no responsibility with regard to the County's efforts to make its systems, or any other systems, such
as those of the County's vendors, service providers, or any other third parties, year 2000 compliant or provide
assurance on whether the County has addressed or will be able to address all of the affected systems on a timely basis.
These are responsibilities of the County's management. However, for the benefit of management, we may choose
to connnunicate matters that come to our attention relating to the Year 2000 Issue.
'Representation from Management
Management is responsible for the fair presentation of the financial statements in conformity with generally accepted
accounting principles, for making all financial records and related information available to us, and for identifying and
ensuring that the .entity complies with the laws and regulations applicable to its activities. At the conclusion of
the engagement, the County's management will provide to us a representation letter that, among other things,
addresses these matters and confirms certain representations made during the audit, including, to the best of their
knowledge and belief, the absence of fraud involving management or those employees who have significant roles
in the entity's internal control, or others where it could have a material effect on the financial statements. These
representations include management's acceptance and understanding of their responsibilities with respect to the
internal control slructure and internal audit function as described in this engagement letter.
Page 4 of 6 pages
Augusta-Richmond County Commission
January 22, 1998
Communications
At the conclusion of the engagement, we will provide management, in a mutually agreeable format, our
recommendations designed to help the County make improvements in its internal control structure and operations, and
other matters that may come to our attention (see "Responsibilities as to Internal Controls" above).
As part of this engagement we will ensure that certain additional matters are communicated to the appropriate
members of management, the finance and the audit committees of the Board. Such matters include (1) the
initial selection of and changes in significant accounting policies and their application; (2) the process used by
management in fonnulating particularly sensitive accounting estimates and the basis for our conclusion regarding the
reasonableness of those estimates; (3) audit adjustments that could, in our judgement, either individually or in the
aggregate be significant to the financial statements or our report; (5) our views about matters that were the subject of
management's consultation with other accountants about auditing and accounting matters; (6) major issues that
were discussed with management in connection with the retention of our services, including, among other matters,
any discussion:; regarding the application of accounting principles and auditing standards; (7) serious difficulties
that we encountered in dealing with management related to the performance of the audit; and (8) total fees for
management advisory services during the year under audit, including a description of the types of such services
re~~ .
Access to Worl.ang Papers
The working papers for the engagement are the property of Cherry, Bekaert & Holland, L.L.P. and constitute
confidential information. Except as discussed below, any requests for access to our working papers will be discussed
with you prior to making them available to requesting parties.
Our Firm, as well as all other major accounting firnls, participates in a "peer review" program, covering our audit
and accounting practices. This program requires that once every three years we subject our quality assurance
practices to an examination by another accounting firm. As part of the process, the other firm will review a sample
of our work. It is possible that the work we perfornl for you may be selected by the other firm for their review. If
it is, they are bound by professional standards to keep all infonnation confidential. If you object to having the work
we do for you reviewed by our peer reviewer, please notify us in writing.
Subpoenas
In the event we are requested or authorized by you or required by government regulation, subpoena, or other legal
process to produce our working papers or our personnel as witnesses with respect to our engagement for you, you will,
so long as we are not a party to the proceeding in which the information is sought, reimburse us for our
professional time and expense, as well as the fees and expenses of our counsel, incurred in responding to such a
request.
Fee
Our fees for these services will be based on actual time spent based on our standard billing procedures, plus out-of-
pocket costs such as report production, typing, postage, etc. Our hourly rates vary according to the degree of
responsibility involved and the experience level of the personnel assigned to your audit. However, we agree that
our fee for the services described will be $118,000. Our invoices for these fees will be rendered each month as
work progresses and are payable on presentation.
Services performed in connection with non-audit items will be billed separately based on standard billing procedures.
Government Auditing Standards requires that we provide you with a copy of our most recent quality review report.
Our peer review report accompanies this letter.
Page 5 of 6 pages
Augusta-Richmond County Commission
January 22,1998
We appreciate the opportunity to be of service to Augusta-Richmond County and believe this letter accurately
summarizes the' significant tenus of our engagement. If you have questions, please let us know. If you agree with
the tenus of our engagement as described in this letter, please sign the enclosed copy and return it to us.
Sincerely,
CHERRY.BEKAERT & HOLLAND,L.L.P.
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RESPONSE:
This letter correctly sets forth the understanding of Augusta-Richmond County, Georgia, with regards to the audit of
its general purpose financial statements for the year ended December 31, 1997.
Augusta-Richmond County, Crtorgia
Accepted by:
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