HomeMy WebLinkAboutC11-400 McMahonMCMAHAN AND ASSOCIATES, L.L.C.
Certified Public Accountants and Consultants
WEB SITE: W .MCMAHANCPA.COM
CHAPEL SQUARE, BLDG C MAIN OFFICE: (970) 845-8800
245 CHAPEL PLACE, SUITE 300 FACSIMILE: (970) 845-8 1 08
P.O. BOX 5850, AVON, CO 8 1 620 E-MAIL: MCMAHAN@MCMAHANCPA.COM
December 5, 2011
Board of County Commissioners
Eagle County
P.O. Box 850
Eagle, Colorado 81631-0850
c/o John Lewis, Finance Director
Dear Commissioners:
We are pleased to confirm our understanding of the services we are to provide to Eagle County, Colorado
(the "County") for the year ending December 31, 2011. We will audit the financial statements of the
governmental activities, the business -type activities, the aggregate discretely presented component units,
each major fund, proprietary funds, and the aggregate remaining fund information, which collectively
comprise the basic financial statements of the County as of and for the year ended December 31, 2011.
U.S. generally accepted accounting standards provide for certain required supplementary information
("RSI"), such as management's discussion and analysis ("MD&A"), to supplement the County's basic
financial statements. Such information, although not a part of the basic financial statements, is required
by the Governmental Accounting Standards Board who considered it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or historical
context. As part of our engagement, we will apply certain limited procedures to the County's RSI in
accordance with U.S. generally accepted auditing standards. These limited procedures will consist of
inquiries of management regarding the methods of preparing the information and comparing the
information for consistency with management's response to our inquiries, the basic financial statements,
and other knowledge we obtained during our audit of the basic financial statements. We will not express
and opinion or provide any assurance on the information because the limited procedures do not provide
us with sufficient evidence to express an opinion or provide any assurance. 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
The following RSI is required by U.S. generally accepted accounting principles and will be subjected to
the auditing procedures applied in our audit of the basic financial statements and we will provide an
opinion on it in relation to the County's basic financial statements:
1) Budgetary comparison schedules for the General Fund and major special revenue funds
We have also been engaged to report on supplementary information other than RSI that accompanies the
County's financial statements. We will subject the following supplementary information 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 will provide an opinion on
it in relation to the financial statements as a whole:
1) Combining Balance Sheet — Non -major Governmental Funds
Member., American Institute of Coriif ed 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 1
Board of County Commissioners
Eagle County, Colorado
December 5, 2011
Page 2 of 7
2) Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -major
governmental funds
3) Budgetary comparison schedules — Non -major governmental funds
4) Budgetary comparison schedules— Proprietary funds
5) Combining schedule of net assets — Internal service funds
6) Combining schedule of revenues, expenses and changes in fund net assets — Internal service
funds
7) Combining schedule of cash flows – Internal service funds
S) Budgetary comparison schedules– Internal service funds
9) Combining schedule of cash flows – Internal service funds
10) Combining Statement of Changes Fiduciary Assets and Liabilities – Agency funds
11) Budgetary comparison schedules – E 911 Discretely Presented Component Unit
12) Schedule of Cash Flows – E 911 Discretely Presented Component Unit
13) Local Highway Finance Report
14) Schedule of Social Services Fund expenditures and Federal and State authorizations
15) Schedule of expenditures of Federal awards
16) Schedule of Passenger Facility Charges Collected and Expended
The following additional information accompanying the 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
not provide an opinion or any assurance:
1) Introductory section of the County's Comprehensive Annual Financial Report ("CAFR")
2) Statistical section of the County's CAM
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 U.S. generally accepted accounting principles
and to report on the fairness of the supplementary information referred to in the third and fourth
paragraphs when considered in relation to the financial statements taken 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 individuals charged with governance,
others within the entity, 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.
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 opinions and
to render the required reports. If our opinions on the financial statements or the Single Audit compliance
opinions 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.
Board of County Commissioners
Eagle County, Colorado
December 5, 2011
Page 3 of 7
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 for inclusion in the County's CAFR. 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 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 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; for the fair presentation in the financial statements of
the respective financial position of the governmental activities, the business -type activities, the aggregate
discretely presented component units, each major fund, and the aggregate remaining fund information of
the County and the respective changes in financial position and, where applicable, 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 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 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 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 County
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.
Board of County Commissioners
Eagle County, Colorado
December5, 2011
Page 4 or
Management Responsibilities (continued)
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
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 other 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 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 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 County or to acts by management or employees
acting on behalf of the County. 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 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 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. 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, 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, 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 also require certain written representations from you about the financial statements and
related matters.
Board of County Commissioners
Eagle County, Colorado
December 5, 2011
Page 5 of 7
Audit Procedures—Internal Controls
Our audit will include obtaining an understanding of the County 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 management 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 County'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.
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 test of
transactions and other applicable procedures described in the OMB CircularA-133 Compliance
Supplement for the types of compliance requirements that could have a direct and material effect on each
of the County's major programs. The purpose of these procedures will be to express an opinion on the
County'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, or other confirmations,
reconciliations, or work papers we request and will locate any documents selected by us for testing.
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 County; 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.
$oard of County Commissioners
Eagle County, Colorado
December 5, 2011
Page 6 of 7
Audit Administration, Fees, and Other (continued)
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. 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 County'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 County. 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.
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 and assistance with drafting the County's CAFR, will not exceed 162,50 . 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.
$oard'of County Commissioners
Eagle County, Colorado
December5, 2011
Page 7 of 7
We appreciate the opportunity to be of service to Eagle County 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 Eagle County, Colorado with respect to the services to
be performed by McMahan and Associates, L.L.C.
Eagle County
B Y:
Signature:
Title:
Date:
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KARREN I HENDRIX I STAGG I ALLEN
COMPANY
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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
Ray H. Allen, CPA
Rebecca hl Allred
Robert L Archuleta. CPA
Stephen R. Capson, CPA
Scott J. Hanni, CPA
Danny L Hendrix, CPA
R. Joe tAerkley, CPA
Tim C Rees, CPA
Jeffrey 14 Ririe, CPA
C. John Roma, CPA
R. Ted Stagg, CPA
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.aiepa.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) orfail. McMahan and Associates,
L.L.C. has received a peer review rating of pass.
Kamen, Hendrix, Stagg, Allen &Com
CERTIFIED PUBLIC ACCOUNTANTS
111 East Broadway • Suite 250 • Salt Lake City, Utah 84111 • Phone 801.521.7620 • Fax 801.521.7641 • !,ebsite www.khsa.biz
