HomeMy WebLinkAboutECAT11-015 McMahan and Associates MCMAHAN AND ASSOCIATES, L.L.C.
Certified Public Accountants and Consultants
WEB SITE: WWW. MCMAHAN CPA. COM
CHAPEL SQUARE, BLDG C MAIN OFFICE: (970) 845
245 CHAPEL PLACE, SUITE 300 FACSIMILE: (970) 845 108
P.O. Box 5850, AVON, CO 81 620 E MCMAHAN @MCMAHANCPA. COM
December 5, 2011
Board of Directors
Eagle County Air Terminal Corporation
c/o Eagle County
P.O. Box 850
Eagle, Colorado 81631 -0850
Attention: John Lewis, Finance Director
Dear Board members:
We are pleased to confirm our understanding of the services we are to provide for Eagle County Air
Terminal Corporation ( "Corporation "), a component unit of Eagle County, Colorado, for the year ending
December 31, 2011.
We will audit the statement of financial position of the Corporation as of December 31, 2011, and the
related statements of activities and cash flows for the year then ended. Also, if applicable, the following
supplementary information accompanying the financial statements will be subjected to the auditing
procedures applied in our audit of the financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other records used
to prepare the financial statements or to the financial statements themselves, and other additional
procedures in accordance with U.S. generally accepted auditing standards, and our auditor's report will
provide an opinion on it in relation to the financial statements as a whole:
1) Schedule of Expenditures of Federal Awards
Audit Objectives
The objective of our audit is the expression of an opinion about 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 supplementary information referred to in the second paragraph when
considered in relation to the financial statements as a whole. The objective also includes reporting on:
• Internal control related to the financial statements and compliance with laws, regulations, and the
provisions of contracts or grant agreements, noncompliance with which could have a material effect
on the financial statements in accordance with Government Auditing Standards.
• Internal control related to major programs and an opinion (or disclaimer of opinion) on compliance
with laws, regulations, and the provisions of contracts or grant agreements that could have a direct
and material effect on each major program in accordance with the Single Audit Act Amendments of
1996 and OMB Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations.
The reports on internal control and compliance will each include a statement that the report is intended
solely for the information and use of management, the body or individual charged with governance, others
within the organization, specific legislative or regulatory bodies, federal awarding agencies, and, if
applicable, pass- through entities and is not intended to be and should not be used by anyone other than
these specified parties.
Member: American Institute of Certified Public Accountants
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.
AVON ASPEN FRISCO
(970) 845 -8800 (970) 544 -3996 (970) 668 -348 I
•
Board of Directors
Eagle County Air Terminal Corporation
December 5, 2011
Page 2 of 6
Audit Objectives (continued)
Our audit will be conducted in accordance with U.S. 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 accounting records, a determination of major program(s) in accordance with OMB
Circular A -133, and other procedures we consider necessary to enable us to express such an opinion and
to render the required reports. If our opinion on the financial statements or the Single Audit compliance
opinion is other than unqualified, we will discuss the reasons with management 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 the basic financial statements and all accompanying information as well
as all representations contained therein. Management is also responsible for identifying government
award programs and understanding and complying with the compliance requirements, and for preparation
of the schedule of expenditures of federal awards in accordance with the requirements of OMB Circular
A -133. As part of the audit, we will assist with preparation of your financial statements, schedule of
expenditures of federal awards, and related notes. You are responsible for making all management
decisions and performing all management functions relating to the financial statements, schedule of
expenditures of federal awards, and related notes and for accepting full responsibility for such decisions.
You will be required to acknowledge in the management representation letter our assistance with
preparation of the financial statements, schedule of expenditures of federal awards, and related notes
and that you have reviewed and approved the financial statements, schedule of expenditures of federal
awards, 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 any non -attest
services we provide; and for evaluating the adequacy and results of those services and accepting
responsibility for them.
Management is responsible for establishing and maintaining effective internal controls, including internal
controls over compliance, and for evaluating and monitoring ongoing activities; to help ensure that
appropriate goals and objectives are met and that there is reasonable assurance that government
programs are administered in compliance with compliance requirements. You are also responsible 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; and for compliance with applicable laws and regulations and the provisions of
contracts and grant agreements.
Management is also responsible for making all financial records and related information available to us,
and for ensuring that management and financial information is reliable and properly recorded. Your
responsibilities also include identifying any significant vendor relationships in which the vendor has
responsibility for program compliance and for the accuracy and completeness of that information. Your
responsibilities include adjusting the financial statements to correct material misstatements and
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.
Board of Directors
Eagle County Air Terminal Corporation
December 5, 2011
Page 3 of 6
Management Responsibilities (continued)
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, grantors,
regulators, or others. In addition, you are responsible for identifying and ensuring that the Corporation
complies with applicable laws, regulations, contracts, agreements, and grants. Additionally, as required
by OMB Circular A -133, it is management's responsibility to follow up and take corrective action on
reported audit findings and to prepare a summary schedule of prior audit findings and a corrective action
plan. The summary schedule of prior audit findings should be available for our review during fieldwork.
You are responsible for the preparation of the supplementary information in conformity with U.S. generally
accepted accounting principles. You agree to include our report on the supplementary information in any
document that contains and indicates that we have reported on the supplementary information. You also
agree to present the supplementary information with the audited financial statements.
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 financial
audits, attestation engagements, performance audits, or other 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, attestation
engagements, performance audits, 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 for the report, and for the timing and format for providing that information.
With regard to using the auditor's report, you understand that you must obtain our prior written consent to
reproduce or use our report in bond offering official statements or other documents.
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.
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 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 Corporation or to acts by management or employees acting on
behalf of the Corporation. Because the determination of abuse is subjective, Government Auditing
Standards do not expect auditors to provide reasonable assurance of detecting abuse.
• Board of Directors
Eagle County Air Terminal Corporation
December 5, 2011
Page 4 of 6
Audit Procedures — General (continued)
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 or
noncompliance 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, and of any material abuse that comes to our attention. 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 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, tests of the physical existence of inventories, and direct confirmation of receivables and certain
assets and liabilities by correspondence with selected individuals, funding sources, creditors, and
financial institutions. We will also 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 Control
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 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.
As required by OMB Circular A -133, we will perform tests of controls over compliance to evaluate the
effectiveness of the design and operation of controls that we consider relevant to preventing or detecting
material noncompliance with compliance requirements applicable to each major federal award program.
However, our tests will be less in scope than would be necessary to render an opinion on those controls
and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to OMB
Circular A -133.
An audit is not designed to provide assurance on internal control or to identify significant deficiencies.
However, during the audit, we will communicate to you and those charged with governance internal
control related matters that are required to be communicated under AICPA professional standards,
Government Auditing Standards, and OMB Circular A -133.
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 Corporation's compliance with applicable laws and regulations
and the provisions of contracts and agreements, including grant agreements. However, the objective of
those procedures 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.
• *Board of Directors
Eagle County Air Terminal Corporation
December 5, 2011
Page 5 of 6
Audit Procedures — Compliance (continued)
OMB Circular A -133 requires that we also plan and perform the audit to obtain reasonable assurance
about whether the auditee has complied with applicable laws and regulations and the provisions of
contracts and grant agreements applicable to major programs. Our procedures will consist of tests of
transactions and other applicable procedures described in the "OMB Circular A -133 Compliance
Supplement" and related addenda for the types of compliance requirements that could have a direct and
material effect on each of the Corporation's major programs. The purpose of these procedures will be to
express an opinion on the Corporation's compliance with requirements applicable to each of its major
programs in our report on compliance issued pursuant to OMB Circular A -133.
Audit Administration, Fees, and Other
We understand that your employees 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.
If applicable, at the conclusion of the engagement, we will complete the appropriate sections of the Data
Collection Form that summarizes our audit findings. We will provide copies of our reports to the
Corporation; however, it is management's responsibility to submit the reporting package (including
financial statements, schedule of expenditures of federal awards, summary schedule of prior audit
findings, auditors' reports, and a corrective action plan) along with the Data Collection Form to the
designated federal clearinghouse and, if appropriate, to pass- through entities. We will coordinate with
you the electronic submission and certification, if applicable.
If applicable, the Data Collection Form and the reporting package must be submitted within the earlier of
30 days after receipt of the auditor's reports or nine months after the end of the audit period, unless a
longer period is agreed to in advance by the cognizant or oversight agency for audits. If applicable, at the
conclusion of the engagement, we will provide information to management as to where the reporting
packages should be submitted and the number to submit.
The audit documentation for this engagement is the property of McMahan and Associates, LLC and
constitutes confidential information. However, pursuant to authority given by law or regulation, we may be
requested to make certain audit documentation available to the Corporation's 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 a 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 McMahan and Associates, LLC personnel.
Furthermore, upon request, we may provide copies of selected audit documentation to the
aforementioned parties. These parties may intend, or decide, to distribute the copies or information
contained therein to others, including other governmental agencies.
The audit documentation for this engagement will be retained for a minimum of five years after the report
release or for any additional period requested by the Corporation. If we are aware that a federal awarding
agency, pass- through entity, or auditee is contesting an audit finding, we will contact the party or parties
contesting the audit finding for guidance prior to destroying the audit documentation.
Michael Jenkins is the engagement partner and is responsible for supervising the engagement and
signing the report. Other staff will be assigned to the engagement as we consider necessary. We will
begin our audit and issue our reports on a mutually agreed -upon date.
Board of Directors
Eagle County Air Terminal Corporation
December 5, 2011
Page 6 of 6
Audit Administration, Fees, and Other
Our fee for these services will be based on our standard hourly rates, plus out -of- pocket costs (such as
report reproduction, word processing, postage, travel, copies, telephone, 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 gross fee for the 2011 audit engagement, including the Single Audit
opinions, will not exceed $8,950. 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 keep you informed of any problems we encounter and our
fees will be adjusted accordingly.
Our invoices for these fees will be rendered each month as work progresses and are payable on
presentation. In accordance with our firm policies, work may be suspended if your account becomes
overdue and may not be resumed until your account is paid in full. If we elect to terminate our services
for nonpayment, our engagement will be deemed to have been completed upon written notification of
termination, even if we have not completed our report. You will be obligated to compensate us for all time
expended and to reimburse us for all out -of- pocket costs through the date of termination.
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 unqualified 2009 peer review report accompanies this
letter.
We appreciate the opportunity to be of service to Eagle County Air Terminal 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.
i `Gi4 ivt eta G, t
This letter correctly sets forth the understanding of Eagle County Air Terminal Corporation with respect to
the services to be performed by McMahan and Associates, L.L.C.
Eagle County Air Terminal Corporation
BY:
Signature: i, ,,,_-,4111110
Title:
Date: /c 12 ��
•
Ray H. Allen, CPA
12:10E1
» Rebecca Mi..Allred
Robert L. Archuleta, CPA
Stephen R. Canson, CPA
Scott J. Hanni, CPA
KARREN HENDRIX ( STAGG I ALLEN Danny L.. Hendrix, CPA
COMPANY 8. Joe tvierkley, CPA
tt , Tim C. Rees, CPA
Jeffrey N. Ririe, CPA
G. John Runia, CPA
R. Ted Stagg, CPA
System Review Report
December 2, 2009
To the Partners of
McMahan and Associates, L.L.C.
and the Peer Review Committee of the Colorado Society of CPA's
We have reviewed the system of quality control for the accounting and auditing practice of McMahan and
Associates, L.L.C. (the firm) in effect for the year ended October 31, 2009. Our peer review was conducted in
accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board
of the American Institute of Certified Public Accountants. The firm is responsible for designing a system of quality
control and complying with it to provide the firm with reasonable assurance of performing and reporting in
conformity with applicable 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 therewith based on our review. The nature,
objectives, scope, limitations of, and the procedures performed in a System Review are described in the standards at
www.aicpa.org/prsummary.
As required by the standards, engagements selected for review included engagements performed under the
Government Auditing Standards and audits of employee benefit plans.
In our opinion, the system of quality control for the accounting and auditing practice of McMahan and Associates,
L.L.C. in effect for the year ended October 31, 2009, has been suitably designed and complied with to provide the
firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in
all material respects. Firms can receive a rating of pass, pass with deficiency(ies) or fail. McMahan and Associates,
L.L.C. has received a peer review rating of pass.
Karren, Hen Stagg, Allen ‘Co
CERTIFIED PUBLIC ACCOUNTANTS
111 East Broadway • Suite 250 • Salt Lake City, Utah 84111 • Phone 801.521.7620 • Fax 801.521.7641 • .Vebsite www.khsa.biz
