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HomeMy WebLinkAboutC09-082 McMahan and Associates_LCMCMAHAN AND ASSOCIATES, L.L.C. .~ -~` Certified Public Accountants and Consultants WEB SITE: NNVW.MCMAHANCPA COM -, y~~ SUITE 222/AVON CENTER TELEPHONE' (970) 845-8800 / I OO WEST BEAVER CREEK BLVD FACSIMILE: (970) $45-0$5 I -,~~ P.O. BOX 5$50 AVON, CO $ 1620 E-MAIL: MCMAHAN(?G MCMAHANCPA COM January 5, 2009 Lake Creek Affordable Housing Corporation Board of Directors c/o Eagle County P.O. Box 850 Eagle, Colorado 81631 Dear Board Members We are pleased to confirm our understanding of the services we are to provide for Lake Creek Affordable Housing Corporation (the "Corporation") for the year ended December 31, 2008. We will audit the statement of financial position of the Corporation as of December 31, 2008, and the related statements of activities and cash flows for the year then ended. We will also subject the supplementary Schedule of Budget and Actual Comparison - 2008 to the auditing procedures applied in our audit of the Corporation's basic financial statements and will provide an opinion on it in relation to the basic financial statements. As separate reports, we will also report on the Corporation's Schedule of Debt Service Coverage Ration Calculation as of and for the year ended December 31, 2008, in conformity with the Trust Indenture securing the Corporation's Series 1998A indebtedness, and on our knowledge of any violations of the covenants in the Trust Indentures for the Series 1998A and 19986 indebtedness during the Corporation's financial statement audit. Audit Objectives The objective of our audit is the expression of an opinion about whether the Corporation's financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. Our audit will be conducted in accordance with U.S. generally accepted auditing standards and will include tests of your accounting records and other procedures we consider necessary to enable us to express such an opinion. If our opinion is other than unqualified, we will 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. Management Responsibilities Management is responsible for establishing and maintaining internal controls, including monitoring ongoing activities; for the selection and application of accounting principles; and for the fair presentation in the financial statements of financial position, changes in net assets, and cash flows 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. Performing services throughout Colorado D. Jerry McMahan, C.P.A. Daniel R. Cudahy, C.P.A. Paul J. Backes, C.P.A. Michael N. Jenkins, C.A., C.P.A. Members: American Institute o~ Certified Public Accountants/Colorado Society o~ Certi{ied Public Accountants Lake Creek Affordable Housing Corporation Board of Directors January 5, 2009 Page 2 ©f 4 Management Responsibilities (continued) As part of the audit, we will prepare a draft of your financial statements and related notes. You are responsible for making any decisions that involve management functions relating to the financial statements and related notes and for accepting full responsibility for such decisions. You will be required to acknowledge in the management representation letter that you have reviewed and approved the financial statements and related notes prior to their issuance and have accepted responsibility for them. Further, you are required to designate an individual with suitable skill, knowledge, or experience to oversee any non-audit services we provide and for evaluating the adequacy and results of those services and accepting responsibility for them. Management is responsible for making all financial records and related information available to us, Management's responsibilities include adjusting the financial statements to correct material misstatements and for confirming to us in the management 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 fraud, and for informing us about all known or suspected fraud or illegal acts affecting the Corporation 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 Corporation received in communications from employees, former employees, Trustees, regulators, or others. In addition, you are responsible for identifying and ensuring that the Corporation complies with applicable laws, regulations, contracts, agreements, and grants. With regard to the electronic dissemination of audited financial statements, including financial statements published electronically on your website, you understand that electronic sites are a means to distribute information and, therefore, we are not required to read the information contained in these sites or to consider the consistency of other information in the electronic site with the original document. Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying for us 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. 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) misappropriations of assets, or (4) violations of laws or governmental regulations that are attributable to the Corporation or to acts by management or employees on behalf of the Corporation. Lake Creek Affordable Housing Corporation Board of Directors January 5, 2009 Page 4 of 4 We appreciate the opportunity to be of service to Lake Creek Affordable Housing Corporation 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, McMAHAN and ASSOCIATES, L.L.C. This letter correctly sets forth the understanding of Lake Creek Affordable Housing Corporation with respect to the services to be performed by McMahan and Associates, L.L.C. Lake Creek Affordable Housing Corporation BY: Signature: ` - - Lam„( f~ . _ Title: L.-~'~q: ~..~Mp~-~'"D Date: ~ •3 • ~ -` Lake Creek Affordable Housing Corporation Board of Directors January 5, 2009 Page 3 of 4 Audit Procedures -General (continued) Because an audit is designed to provide reasonable, but not absolute, assurance and because we will not perforrr1 a detailed examination of all transactions, there is a risk that material misstatements or non- compli~nce 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 on 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 any 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 direct confirmation of cash, receivables, loan balances, and certain other assets and liabilities by correspondence with selected individuals, funding sources, 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 require certain written representations from you about the financial statements and related matters Audit Procedures -Internal Controls Our audit will include obtaining an understanding of the Corporation 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 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. 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 AICPA professional standards. Audit Administration, Fees, and Other We understand that employees of the Corporation's Managing Agent will prepare all cash, accounts receivable, and other confirmations, reconciliations and work papers we request and will locate any documents selected by us for testing. Michael Jenkins is the engagement partner and is responsible for supervising the engagement and signing the report. Our fees for these services will be based on the actual time spent at our standard hourly rates, and other out-of-pocket costs such as report production, typing, postage, etc. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. We estimate that our fees with respect to the 2008 audit will range from $10,500 to $12,750, which includes travel and other out-of-pocket costs such as report production, word processing, postage, etc. The fee estimate 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. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation.