HomeMy WebLinkAboutFinancial Audit Year Ending 12/31/1998
Augusta Richmond GA
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August 10, 1998
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, 1998.
Summary of Services
Financial audit
We will audit the general purpose financial statements of Augusta-Richmond County as of and for the
year ended December 31, 1998. The objective of our audit is the expression of an opinion as to whether the
general purpose financial statements are fairly presented, in all material respects, in conformity with generally
accepted accounting principles, The objective also includes reporting on Augusta-Richmond County's
compliance with laws and regulations and the provisions of contracts and grant agreements and its internal
controls as required by the Single Audit Act Amendments of 1996 and OMB Circular A-133, Audits of States.
Local Governments, and Non-Profit Organizations, Our audit will be conducted in accordance with generally
accepted auditing standards; 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 of Augusta-Richmond
County and other procedures we consider necessary to enable us to express such an opinion and to render the
required Single Audit reports, If our opinion on the general purpose financial statements or the Single Audit
compliance opinion 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 express an opinion, we may decline to express
an opinion or may not issue a report as a result of this engagement.
Our procedures will include tests of documentary evidence supporting the transactions recorded in the
accounts, and may include tests of assets and liabi I ities by correspondence with selected individuals, 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 also
request certain written representations from you about the financial statements and related matters.
An audit includes examining, on a test basis, evidence supporting the anlounts and disclosures in the financial
statements; therefore, our audit will involve judgment about the number oftransactions to be examined and
the areas to be tested. Also, we will plan and perform the audit to obtain reasonable assurance rather than
absolute assurance about whether the financial statements are free of material misstatement, \vhether caused
by error or fraud, As required by the Single Audit Act Amendments of 1996 and OMB Circular A-133, our
audit will include tests oftransactions related to federal award programs for compliance with applicable laws
and regulations and the provisions of contracts and grant agreements. However, because of the concept of
reasonable assurance and because we wi II not perform a detailed exam ination of all transactions, there isai"isk
that material errors, irregularities, or illegal acts, including fraud or defalcations, may exist and not be detected
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.
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August 10, 1998
by us. In addition, an audit is not designed to detect errors, fraud, or other illegal acts that are immaterial to the
general purpose financial statements or to major programs. We will inform you, however, of any matters of that
nature that come to our attention, and 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 matters that might
arise during any later periods for which we are not engaged as auditors.
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 0, Fields and Kip Plowman, Partners, who are responsible for assuring
the overall quality, value, and timeliness of our services to you. Paul L. Chancey will continue to 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 expected 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.
Internal Control Structure
In planning and performing 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 its compliance with requirements applicable to major federal financial assistance
programs, and to report on the internal control structure in accordance with OMB Circular A-133, Our audit is
not designed to provide assurance on internal control, including any Year 2000 issues relating to computerized
operations.
We will update our 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 and 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, if performed, 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 perform 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 inform 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 Cel1ified 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 abi lity to record,
process, summarize, and report financial data consistent with the assertions of management in the general purpose
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August 10, 1998
financial statements. We will also inform you of any nonreportable conditions or other matters involving the
internal control structure, if any, as required by OMB Circular A-I33.
Compliance Responsibility
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 objective of our audit will not be to provide an opinion on overall compliance with such provisions,
and we will not express 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; claims 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 OMS Circular A-I33. Our procedures will
be limited to the applicable procedures described in OMS'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, Sekaert & Holland, L.L.P. have agreed to a fee,
subject to the following conditions,
To facilitate meeting our mutual objectives, the County will provide in a timely manner audit schedules and
supporting information, including timely communication 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 iffor 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 reflected in our fee. However, should a matter require research, consultation or audit work beyond
that amount, Cherry, Sekaert & 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 ofadequate records and
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Augusta-Richmond County Commission
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August 10, 1998
related internal control structure policies and procedures, the selection and application of accounting principles,
and the safeguarding 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 ofthis 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 offinancial 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 ofthe 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 communicate 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 orthose 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 oftheir responsibilities
with respect to the internal control structure and internal audit function as described in this engagement letter.
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 (I) the
initial selection of and changes in significant accounting policies and their application; (2) the process used by
management in formulating 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 discussions 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 rendered.
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Augusta-Richmond County Commission
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August 10, 1998
Access to Working Papers
The working papers for the engagement are the property of Cherry, Sekaert & 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 firms, 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 perform for you may be selected by the other firm for their review.
If it is, they are bound by professional standards to keep all information 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.
We appreciate the opportunity to be of service to Augusta-Richmond County and believe this letter accurately
summarizes the significant terms of our engagement. Ifyoll have questions, please let us know. If you agree with
the terms 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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Augusta-Richmond County Commission
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August 10, 1998
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, 1998.
Augusta-Richmond County, Georgia
Date:
Accepted by:
Title:
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To the P::l.rtners
Che:::", Bekaert & Holl<lI1d, L.L.P.
We have reviewed the system of qualiry control for the accounting and auditing prac:ice
of Cherry, Bebert & Holland, L.L.P. (the firm) in effect for the year e:1ded April 30,
1995. Our review was conducted in conformiry with st.:md:lrds for pee:- reviews
promulgated by the pee:- review c9rnmittee of the SEC practice section of the AlCPA
Division for CPA Firms (the section). We tested compE3.."1ce with the firm's quality
control policies and prccedures at- the firm's exec:J.tive office and at selected practice
offices and with the membership requireme:1ts of the sec:ion to the extent we conside:ed
appropriate. Tnese tests included the application of the firm's policies and procedures on
selected accoun.ting and auditing e:1gagemems.
In performing our review, we have give:1 conside:-ation to the general charncte::isncs of a
system of quality concrol as described in qualiry control standards issued by the .AJCPA.
Such a system should be appropriately comprehel1sive and suitably designed in relation to
the fin:n's orga.'1iz"'oonal strucrure, its Dolicies, and tb,e nature of its oractice. V mance in
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individual performance can affect the degree of compliance with a firm's prescribed
quality control policies and procedures. Therefore, adhere:1ce to all policies and
procedures in every C:lSe may Dot be possible. As is customary in a peer review, we are
issuing a letter under this date that sets forth comme:ltS related to certain policies and
procedures or complicu'1.ce with them. None of these matters we:-e conside:-ed to be of
sufficie:lt significance to affect the opinion expressed in this report.
In our opinion, the system of quality control for the accounting a.'1a auditing practice of
Che:T)', Bekaert & Holland., L.L.P. in effect for the year e:lded April 30, 1995, met the
objectives of quality control s--.andarqs es--.ablished by the AICPA, and was being
complied with during the year u.1.en e:lded to provide the fL.""TIl with re:l.Sonable assu..-ance
of conforming with professional stmlcliirds. Also, in our opinion, the finn was in
conformity Vlith the me:nbe:-ship requirementS of the section in all material respectS.
Milwaukee, Wisconsin
Novembe: 9, 1995
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