HomeMy WebLinkAboutProfessional Service Agreement with Balukoff Lindstrom & Co PA for Finance Audit
BALUKOFF LINDSTROM & Co., P.A.
Ceni/ied Public Accountants
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877 West Main Street, Suite 80S
Boise, Idaho B3702
(208) 344-71 SO
fAX: (208) 344.7435
www.blco.com
September 11, 2003
Mayor Robert Come
City of Meridian
33 East Idaho
Meridian, ill 83642
Dear Mayor Corrie:
We are pleased to confirm our understanding of the services we are to provide City of Meridian
for the year ended September 30, 2003. We will audit the financial statements of City of Meridian
as of and for the year ended September 30, 2003. We understand that the financial statements
will be presented in accordance with the financial reporting model described in GASB Statement
No. 34. Also, the document we submit to you will include additional information that will be
subjected to the auditing procedures applied in our audit of the financial statements:
.
Management's Discussion and Analysis
Audit Objectives
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 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 City
of Meridian and other procedures we consider necessary to enable us to express such 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 ofthis engagement.
We will also provide reports (that do not include opinions) on internal control related to financial
statements and compliance with laws, regulations, and the provisions of grant agreements,
noncompliance with which could have a material effect on the financial statements as required by
Government Auditing Standards.
City of Meridian
September II, 2003
Page 2
Management Responsibilities
Management is responsible for establishing and maintaining internal control and for compliance
with laws, regulations, contracts, and agreements. 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 ftom 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.
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 ofthat 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. That
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 statement 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. You are responsible for the design and implementation of
programs and controls to prevent and detect ftaud, and for informing us about all known or
suspected ftaud affecting the government involving (a) management, (b) employees who have
significant roles in internal control, and (c) others where the ftaud could have a material effect on
the financial statements. You are also responsible for informing us of your knowledge of any
allegations offtaud or suspected ftaud affecting the government received in communications ftom
employees, former employees, regulators, or others. In addition, you are responsible for
identifying and ensuring that the entity complies with applicable laws and regulations.
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 ftee of
material misstatement, whether ftom errors, ftaudulent financial reporting, misappropriation of
assets, or violations of laws or governmental regulations that are attributable to the entity or to
City of Meridian
September 11, 2003
Page 3
acts by management or employees acting on behalf of the entity. 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 oflaws 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 that come to our
attention, and we will inform you of any ftaudulent financial reporting or misappropriation of
assets that comes 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.
We have advised you of the limitations of our audit regarding the detection of ftaud and the
possible effect on the financial statements (including misappropriation of cash or other assets). In
addition, we have advised you of the limitations of our audit regarding the detection of
inappropriate travel and meal expenses, and inappropriate reimbursements that are immaterial to
the financial statements. We have offered to perform other agreed-upon procedures specifically
designed to detect such items for an additional fee. Although you understand the limitations of
our audit, you do not wish to engage us to perform any such additional procedures at this time.
Our procedures will include tests of documentary evidence supporting the transactions recorded
in the accounts, and may include direct confirmation of receivables and certain other assets and
liabilities by correspondence with selected individuals, creditors, and financial institutions. We will
request written representations ftom 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 ftom you about the financial statements and related matters.
IdentifYing and ensuring that City of Meridian complies with laws, regulations, contracts, and
agreements is the responsibility of management. As part of obtaining reasonable assurance about
whether the financial statements are ftee of material misstatement, we will perform tests of City of
Meridian's compliance with applicable laws and regulations and the provisions of contracts and
agreements. However, the objective of our audit will not be to provide an opinion on overall
compliance and we will not express such an opinion.
Audit Procedures-Internal Controls
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 City of Meridian's financial statements.
City of Meridian
September 11, 2003
Page 4
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 ftaud that are material to the financial statements and to preventing and detecting
misstatements resulting ftom illegal acts and other noncompliance matters that have a direct and
material effect on the financial statements. (Tests of controls 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 internal control and, accordingly, no opinion will be expressed.
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.
Audit Administration, Fees, and Other
We understand that your employees will prepare all cash or other confirmations we request and
will locate any invoices selected by us for testing.
The workpapers for this engagement are the property of Balukoff, Lindstrom & Co., P.A. and
constitute confidential information. However, we may be requested to make certain workpapers
available to the cognizant audit agency pursuant to authority given to it by law or regulation. If
requested, access to such workpapers will be provided under the supervision of Balukoff,
Lindstrom & Co., P.A. personnel. Furthermore, upon request, we may provide photocopies of
selected workpapers to a cognizant audit agency. The cognizant audit agency may intend, or
decide, to distribute the photocopies or information contained therein to others, including other
governmental agencies.
Our fee for these services will be at our hourly rates plus out-of-pocket costs. Our hourly rates
vary according to the degree of responsibility involved and the experience level of the personnel
assigned to your audit. Our invoices for these fees will be rendered each month as work
progresses and are payable on presentation. We estimate the fee for the audit will be $26,200.
Additional procedures performed to assist with closing and reconciliation of account balances will
be billed at our standard hourly rates. The above fee is based on anticipated cooperation ftom
your personnel and the assumption that unexpected circumstances will not be encountered during
City of Meridian
September 11, 2003
Page 5
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.
Government Auditing Standards require that we provide you with a copy of our most recent
quality control review report. Our 2000 peer review report accompanies this letter.
We appreciate the opportunity to be of service to City of Meridian 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,
~
Kevin R. Andersen
RESPONSE:
Title:
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Date:
HANSEN, BARNETT & MAXWELL
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So!<'"",Çi¡y.U1Jl>S4111.26!13
s.p_ber S, 2000
To the Shareholders
B.lukof!; L;D.dstrom &: Co., P A.
We have "",lowed !he system of quality conti',;! for the acoounting and auditing praciìcè j)fB1Iù~~f!;
Lindstrom &: Co., PAitite rU'ln)iuflèot rOt the yoar el1d«!Ju~ 30,2000, A system "f quality control
onoompasses the firm's organízotionàl ,trUolure 000 the pob.... adopted and ,,~ ambUshed to
þrovída It w.th toSSo""ble "suraI'" of complyillg with prof...""",1 stæ>dórds.. The element, of quaiìty
oontrol ore described in the Su<œmentson Quality Conb'\>l. S~issuedby 11", American Institute of
CertffiedPubli. Acoowrtants (tha *.AlCPA"),The design of tho s~, and.compiia>'" with it, ..... the
"",ponsìbilities of !he f1mLID.odditioll; tI\e firm has "i'""d ro coOlply withlhe membership reqWr<m!ent' ì>f
the SEe Pnwtice Se~iOn ofJhcAICPA Division for CPA FinnS (the SeCtion). CuI'resp<mslbìJity is to
express ,nopinion aD the deoignofjJ¡e ~!, and the finn's oomplian...with thai system and lb. SectiOn's
m.mh~hip requfremalrtS based "n our ceviëw.
Our ",view ....asoondnotod i"aœo,dancewi!JI otandords eotabb,hed by tile Peer R,¡\'iow ColUl!1itœo ,fthe
Section.ln..pettòn:nfngour rev;ew,'.... obtained'" undetscan<!íngofthe system of'luality conuol for the
f1rm's """,,un!inS a"d$ld!tingpraoticc.Jn adtIition,.weromdoomplþIJ:OO.wrth the film's quality œntrol
policies andp"""ed.rooand..ïth tile niembe,~biprequ¡remonts oft!æ Scotian I:Ptbe --twe cònsidered
.apl""J'-', Th.,e ~ts covered lb. "¡>plicali... of fu. ftm's polio,es and proocdures on selected
engag_Is.. B..- out review wos \>!....J OIl ..loctive -, it would n« ¡'e.......Uy dí&ol""" all
weo!a¡eo.... in the sysœm Qf qnoliJ:y control or all instanoes of ¡ecl< <Af complÌ4l1e. WÍth;! or with the
membership requirements Qftbe SectiOll.
.Because!~ are iliherent ltmitaliaDS iD. the efœct;.e.... afo~y sY"lem of qualfo/ control"!epartu",,, from
the systotll~. OOOIIJand na! be detected. Also. pl'(ljecl;on ì>f a¡¡y <>valuation of a syotcm.. of qua1iJ:Y coot,ol
to r.tore periods is subjeolt<) the nsklfutttbe sY"l.em ofqualíty control may beoom.ÙIOd.e«uaœ bee..... of
chw /JOIl in.conditio"", orlbat the degree' of -¡iliánce Wi!h the polioies or pmcodnres ~ 4\eriorsto,
In our opinion, the sY"temaf quality control fOrthe ao_uti.good auditing p<actii'O ofBaIul«>ff.~~om
&. C<>., PA in effect for tbeycar ended June 3O, 2000, lias beende~ìgned Iomeettbe"'qwremenlsoflhe
quality control Stan<lards fur an accouOlì¡)g .",d auditíng prnci"" esJablishad by Ibe AIèi'A, and Wjl$
complíed wiII1 c!:utin$tbeyearthen ended", ¡>rO"idethefu:m witb"",""uobleassuranceafcomplying ...tib
þrof...ionalSlamlards AJsó, in,, ' opinion, the !inn hascomplied wim the member:obiÌ'requ~ents ofth.
'Seotion in all materia! respects.
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