HomeMy WebLinkAboutMcDirmit, Davis, & Company, LLC Audit - 2007 08 28
MCDIRMIT III DAVIS
CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS
August 28, 2007
City of Winter Springs, Florida
1126 East State Road 434
Winter Springs, FL 32708-2799
We are pleased to confirm our understanding of the services we are to provide the City of
Winter Springs for the years ended September 30, 2007, 2008, and 2009. We will audit the
financial statements of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information, which collectively comprise the entity's
basic financial statements, of the City of Winter Springs as of and for the years ended
September 30, 2007, 2008, and 2009. Accounting standards generally accepted in the United
States provide for certain required supplementary information (RSI), such as management's
discussion and analysis (MD&A), to accompany the City of Winter Springs' basic financial
statements. As part of our engagement, we will apply certain limited procedures to City of
Winter Springs' RSI. These limited procedures will consist principally of inquiries of
management regarding the methods of measurement and presentation, which management is
responsible for affirming to us in its representation letter. Unless we encounter problems with
the presentation of the RSI or with procedures relating to it, we will disclaim an opinion on it.
The following RSI is required by generally accepted accounting principles and will be subjected
to certain limited procedures, but will not be audited:
1. Management's Discussion and Analysis.
Supplementary information other than RSI, such as combining and individual fund financial
statements, also accompanies the City of Winter Springs' basic financial statements. We will
subject the following supplementary information to the auditing procedures applied in our audit
of the basic financial statements and will provide an opinion on it in relation to the basic financial
statements:
1. Combining nonmajor fund financial statements,
2. Individual nonmajor fund schedules, and
3. Schedules of the governmental capital asset schedule by function and activity.
The following additional information accompanying the basic financial statements will not be
subjected to the auditing procedures applied in our audit of the financial statements, and for
which our auditor's report will disclaim an opinion.
1. Introductory section, and
2. Statistical section.
MCDIRMIT DAVIS & COMPANY, LLC
605 E. ROBINSON STREET, SUITE 635 . ORLANDO, FLORIDA 32801
TELEPHONE 407-843-5406. FAX 407-649-9339. EMAIL: INFO@MCDIRMITDAYIS.COM
MEMBERS: PRIVATE COMPANIES PRACTICE SECTION. AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS. FLORIDA INSTITUTE OF CERTIHED PUBLIC ACCOUNTANTS
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City of Winter Springs
Engagement Letter
Page 2
Audit Objectives
The objective of our audit is the expression of opinions as to whether your basic financial
statements are fairly presented, in all material respects, in conformity with United States
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 U.S. generally
accepted auditing standards 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 of Winter Springs and other procedures we consider
necessary to enable us to express such opinions. If our opinions on the financial statements
are 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 opinions,
we may decline to express opinions or to issue a report as a result of 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 applicable laws, regulations,
contracts, agreements, and grants, noncompliance with which could have a material effect on
the financial statements as required by Government Auditing Standards. The report on internal
control and compliance will include a statement that the report is intended solely for the
information and use of the audit committee, management, and specific legislative or regulatory
bodies and is not intended to be and should not be used by anyone other that these specified
parties. If during our audit we become aware that the City of Winter Springs 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 establishing and maintaining effective internal controls, including
monitoring ongoing activities; for the selection and application of accounting principles; and for
the fair presentation in the financial statements of the respective financial position of the
governmental activities; the business-type activities, each major fund, and the aggregate
remaining fund information of the City of Winter Springs and the respective changes in financial
position and cash flows, where applicable, in conformity with U.S. generally accepted
accounting principles. Management is responsible for the basic financial statements and all
accompanying information as well as all representations contained therein.
You are responsible for management decisions and functions. Further, you are required to
designate a qualified management-level individual to be responsible and accountable for
overseeing our services.
Management is responsible for making all financial records and related information available to
us and for the accuracy and completeness of that information. Management's responsibilities
include 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.
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City of Winter Springs
Engagement Letter
Page 3
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 or illegal acts 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, contract, agreements, and
grants for taking timely and appropriate steps to remedy any fraud, illegal acts, violations of
contracts or grant agreements, or abuse that we may report.
Management is responsible for establishment and maintenance of a process for tracking the
status of audit findings and recommendations. Management is also responsible for identifying
for us any previous audits or other engagements or 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
or other engagements 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, and the timing and format related thereto.
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. 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 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 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. 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 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, 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 require certain written representations from
you about the financial statements and related matters.
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City of Winter Springs
Engagement Letter
Page 4
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 basic 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. 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 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 of Winter Springs' 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.
Audit 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 of Winter Springs; 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 McDirmit Davis & Company and
constitutes confidential information. However, pursuant to authority given by law or regulation,
we may be requested to make certain audit documentation available to cognizant or oversight
agency or its designee, a federal agency providing direct or indirect funding, or the U.S.
Government Accountability Office for purposes of an 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
McDirmit Davis & Company personnel. Furthermore, upon request, we may provide copies of
selected audit documentation to the aforementioned parties.
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City of Winter Springs
Engagement Letter
Page 5
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 the cognizant or oversight
agency. 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 in December and to issue our reports no later than February 15,
as long as we have received the CAFR and reviewed it.
Our fees for these services will be as follows:
Fiscal Year Ending
September 30:
Audit Fee
Additional Fees for
Sinale Audit (If Reauired)
2007
2008
2009
$26,600
27,400
28,200
$4,400
4,700
5,000
If the City of Winter Springs exercises the option of three one-year renewals of the audit
contract, we will submit separate engagement letters for the years ending September 30, 2010,
2011, and 2012.
Government Auditing Standards require that we provide you with a copy of our most recent
external peer review report and any letter of comment, and any subsequent peer review reports
and letters of comment received during the period of the contract. Our current peer review
accompanies this letter.
We appreciate the opportunity to be of service to the City of Winter Springs 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 the enclosed copy and return it to us.
Very truly yours,
K~1:6f
RESPONSE:
This letter correctly sets forth the understanding of the City of Winter Springs.
By:
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Title:
Date:
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Davidson, Jl\mieson & Cristini, P.L.
Certified Public Accountants
1956 Bayshore Boulevard
Dunedin, Florida 34698-2503
(727)734-5437 or 736-0771
F AJ{ (727) 733-3487
Member
American Institute of
Certified Public Accountants
Florida Institute of
Certified Public Accountants
Members of the Firm
John N. Davidson, CPA., CV A
Harry B. Jamieson, CPA.
Richard A. Cristini, CPA., CPPT, CGFM
October 19,2005
*Regulated by the
State of Florida
To the Stockholders
McDirmit, Davis & Company, LLC
We have reviewed the system of quality control for the accounting and auditing practice of McDirmit, Davis
& Company, LLC (the firm) in effect for the year ended June 30, 2005. A system of quality control
encompasses the firm's organizational structure, the policies adopted and procedures established to provide
it with reasonable assurance of conforming with professional standards. The elements of quality control are
described in the Statements on Quality Control Standards issued by the American Institute ofCP As (AICP A).
The firm is responsible for designing a system of quality control and complying with it to provide the firm
reasonable assurance of conforming with professional standards in all material respects. Our responsibility
is to express an opinion on the design of the system of quality control, and the firm's compliance with the
system of quality control based on our review.
Our review was conducted in accordance with standards established by the Peer Review Board of the
AICPA. In performing our review, we read required representations from the firm, interviewed firm
personnel and obtained an understanding of the nature of the firm's accounting and auditing practice, and
the design of the finn's system of quality control sufficient to assess the risks implicit in its practice. Based
on our assessments, we selected engagements and administrative files to test for conformity with professional
standards and compliance with the firm's system of quality control. The engagements selected represented
a reasonable cross-section of the firm's accounting and auditing practice with emphasis on higher-risk
engagements. The engagements selected included among others, audits of Employee Benefit Plans and
engagements performed under Government Auditing Standards. Prior to concluding the review, we
reassessed the adequacy of the scope of the peer review procedures and met with firm management to discuss
the results of our review. We believe that the procedures we performed provide a reasonable basis for our
oplmon.
In performing our review, we obtained an understanding of the system of quality control for the firm's
accounting and auditing practice. In addition, we tested compliance with the firm's quality control policies
and procedures to the extent we considered appropriate. These tests covered the application of the firm's
policies and procedures on selected engagements. Our review was based on selected tests therefore it would
not necessarily detect all weaknesses in the system of quality control or all instances of noncompliance with
it. There are inherent limitations in the effectiveness of any system of quality control and therefore
noncompliance with the system of quality control may occur and not be detected. Projection of any
evaluation of a system of quality control to further periods is subject to the risk that the system of quality
control may become inadequate because of changes in conditions, or because 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 ofMcDirmit, Davis &
Company, LLC in effect for the year ended June 30, 2005, has 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 conforming with
professional standards.
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