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HomeMy WebLinkAboutRAP22-01 McMahan and AssociatesMcMahan and Associates, l.l.c. Certified Public Accountants and Consultants Web Site: www.mcmahancpa.com Chapel Square, Bldg C Main Office: (970) 845-8800 245 Chapel Place, Suite 300 Facsimile: (970) 845-8108 P.O. Box 5850, Avon, CO 81620 E-mail: mcmahan@mcmahancpa.com Member: American Institute of Certified Public Accountants Paul J. Backes, CPA, CGMA Avon: (970) 845-8800 Michael N. Jenkins, CA, CPA, CGMA Aspen: (970) 544-3996 Daniel R. Cudahy, CPA, CGMA Frisco: (970) 668-3481 M & A December 16, 2021 Board of Directors Riverview Apartments Preservation LP c/o Eagle County P.O. Box 850 Eagle, Colorado 81631-0850 Attention: Jill Klosterman, Finance Director Dear Board members: You have requested that we audit the financial statements of Riverview Apartments Preservation LP (the “Partnership”), which comprise the balance sheet as of December 31, 2021, and the related statements of income, changes in partners’ capital, and cash flows for the year then ended, and the related notes to the financial statements. We are pleased to confirm our acceptance and our understanding of this audit engagement by means of this letter. The objectives of our audit are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in the United States of America (“GAAS”) will always detect a material misstatement when it exists. Misstatements, including omissions, can arise from fraud or error and are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. Auditor Responsibilities Financial Statements and Supplementary Information We will conduct our audit in accordance with GAAS, Government Auditing Standards issued by the Comptroller General of the United States of America, and the Consolidated Audit Guide for Audits of HUD Programs, HUD Handbook 2000.04 issued by the U.S. Department of Housing and Urban Development (“HUD”) Inspector General (the “HUD Audit Guide”). As part of an audit in accordance with GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. DocuSign Envelope ID: CDEA5976-F57E-4888-9BD1-1FB0D2C7D110 December 16, 2021 Board of Directors Riverview Apartments Preservation LP Page 2 Auditor Responsibilities (continued) Financial Statements and Supplementary Information (continued)  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. However, we will communicate to you in writing concerning any significant deficiencies or material weaknesses in internal control relevant to the audit of the financial statements that we have identified during the audit.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.  Conclude, based on the audit evidence obtained, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Partnership’s ability to continue as a going concern for a reasonable period of time. The HUD Audit Guide requires our audit to include tests of transactions related to HUD programs for compliance with applicable laws, regulations, and the provisions of contracts, or grant agreements, noncompliance with which could have a material effect on the HUD programs. Because of the inherent limitations of an audit, together with the inherent limitations of internal control, an unavoidable risk that some material misstatements may not be detected exists, even though the audit is properly planned and performed in accordance with GAAS, Government Auditing Standards, and the HUD Audit Guide. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any other periods. We will issue a written report upon completion of our audit of the Partnership’s financial statements. Our report will be addressed to the Board of Directors of the Partnership. We cannot provide assurance that an unmodified opinion will be expressed. Circumstances may arise in which it is necessary for us to modify our opinion, add an emphasis-of-matter or other-matter paragraph(s), or withdraw from the engagement. Also, in accordance with the requirements of Government Auditing Standards, we will issue a written report describing the scope of our testing over internal control over financial reporting and on compliance with laws, regulations, and provisions of grants and contracts, including the results of that testing. However, providing an opinion on internal control over financial reporting will not be an objective of the audit and, therefore, no such opinion will be expressed. The report on internal control over financial reporting will include a statement in the report that the purpose of the report on internal control over financial reporting is solely to describe the scope of our testing of internal control over financial reporting and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control over financial reporting. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control over financial reporting. Accordingly, this report is not suitable for any other purpose. DocuSign Envelope ID: CDEA5976-F57E-4888-9BD1-1FB0D2C7D110 December 16, 2021 Board of Directors Riverview Apartments Preservation LP Page 3 Auditor Responsibilities (continued) Financial Statements and Supplementary Information (continued) Supplementary information consisting of the financial and compliance data templates required by HUD will accompany the Partnership’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 the supplementary information to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and additional procedures in accordance with GAAS. We also intend to provide an opinion on the following supplementary information in relation to the financial statements as a whole:  Balance Sheet – HUD Basis  Statement of Profit and Loss – HUD Basis  Statement of Changes in Partners’ Capital – HUD Basis  Schedule of Reserve for Replacement and Computation of Surplus Cash, Distributions, and Residual Receipts  Statement of Changes in Fixed Asset Accounts Compliance with HUD Program(s) Our audit of the Partnership’s compliance with its HUD program(s) will be conducted in accordance with the requirements of the HUD Audit Guide and will include tests of the Partnership’s compliance with applicable HUD laws, regulations, and provisions of grants and contracts. Our procedures will include tests of compliance, and other procedures we consider necessary to enable us to express such an opinion on the Partnership’s compliance with the compliance requirements that could have a direct and material effect on each of the Partnership’s major HUD programs. If our opinion on compliance is other than unmodified, we will fully discuss the reasons with you in advance. In accordance with the requirements of the HUD Audit Guide, we will issue a written report describing the scope of our testing over internal control over compliance, including the results of that testing. However, providing an opinion on internal control over compliance will not be an objective of the audit and, therefore, no such opinion will be expressed. The report on internal control over compliance will include a statement in the report that the purpose of the report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the HUD Audit Guide. Accordingly, this report is not suitable for any other purpose. If we become aware of fraud or noncompliance with laws and regulations that has occurred or is likely to occur, we will bring such acts to the attention of the appropriate level of management, even if the matter is considered inconsequential. In addition, we are required to telephonically contact the HUD Single Audit Coordinator to discuss the conditions noted. Based on that discussion, we will be requested to prepare a written report on all known or likely fraud or noncompliance with laws and regulations. Acceptance of the engagement letter by you grants us the permission to make the telephone contact with the HUD Single Audit Coordinator and discuss the conditions noted. We will perform an agreed-upon procedures engagement to ensure that the financial and compliance data is electronically submitted to HUD. The terms of that engagement are addressed in a separate engagement letter. DocuSign Envelope ID: CDEA5976-F57E-4888-9BD1-1FB0D2C7D110 December 16, 2021 Board of Directors Riverview Apartments Preservation LP Page 4 Management’s Responsibilities Our audit will be conducted on the basis that management acknowledge and understand that they have responsibility: a. For the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”); b. For the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to error, fraudulent financial reporting, misappropriation of assets, or violations of laws, governmental regulations, grant agreements, and contractual agreements; c. To provide us with: i. Access to all information of which management is aware that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, and other matters; ii. Additional information that we may request from management for the purpose of the audit; iii. Unrestricted access to persons within the entity from whom we determine it necessary to obtain audit evidence; d. For including the auditor’s report in any document containing financial statements that indicates that such financial statements have been audited by us; e. For identifying and ensuring that the entity complies with the laws and regulations applicable to its activities; f. For 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 current year under audit are immaterial, both individually and in the aggregate, to the financial statements as a whole; g. For acceptance of non-attest services, including identifying the proper party to oversee non-attest work; h. For maintaining adequate records, selecting and applying accounting principles, and safeguarding assets; i. For informing us of any known or suspected fraud affecting the entity involving management, employees with significant role in internal control and others where fraud could have a material effect on the financials; and j. For the accuracy and completeness of all information provided. With regard to the supplementary information referred to above, you acknowledge and understand your responsibility: (a) for the preparation of the supplementary information in accordance with GAAP, and in accordance with HUD requirements; (b) to provide us with the appropriate written representations regarding supplementary information; (c) to include our report on the supplementary information in any document that contains the supplementary information and that indicates that we have reported on such supplementary information; and (d) to present the supplementary information with the audited financial statements, or if the supplementary information will not be presented with the audited financial statements, to make the audited financial statements readily available to the intended users of the supplementary information no later than the date of issuance by you of the supplementary information and our report thereon. In addition, it is management’s responsibility to follow up and take corrective action on reported audit findings from prior periods and to prepare a summary schedule of prior audit findings, and follow up on current year audit findings and prepare a corrective action plan for such findings. Management is also responsible for submitting the reporting package to the appropriate parties. You agree that you will confirm your understanding of your responsibilities as defined in this letter to us in your management representation letter. You are also responsible for the electronic submission of required annual financial information to HUD’s Financial Assessment Subsystem on a timely basis, in accordance with your obligations to HUD. DocuSign Envelope ID: CDEA5976-F57E-4888-9BD1-1FB0D2C7D110 December 16, 2021 Board of Directors Riverview Apartments Preservation LP Page 5 Management’s Responsibilities (continued) As part of our audit process, we will request from management, written confirmation concerning representations made to us in connection with the audit. Nonattest Services At the end of the year, we agree to perform the following:  Propose adjusting or correcting journal entries to be reviewed and approved by the Partnership’s management.  Prepare federal and state income tax returns (Form 1065 and Colorado Form 106) for the Partnership’s year ended December 31, 2021.  We will assist with the preparation of the Partnership’s financial statements, supplementary financial information, and related notes, but the ultimate authority for review and preparation rests with you. We will not assume management responsibilities on behalf of the Partnership. However, we will provide advice and recommendations to assist management of the Partnership in performing its responsibilities. The Partnership’s management is responsible for (a) making all management decisions and performing all management functions; (b) assigning a competent individual to oversee the services; (c) evaluating the adequacy of the services performed; (d) evaluating and accepting responsibility for the results of the services performed; and (e) establishing and maintaining internal controls, including monitoring ongoing activities. Our responsibilities and limitations of the non-attest services are as follows:  We will perform the services in accordance with applicable professional standards, including FASB standards and the Statements on Standards for Tax Services issued by the AICPA.  The non-attest services are limited to the potential adjusting entries proposal, tax services, and financial statement preparation as previously outlined. Our firm, in its sole professional judgment, reserves the right to refuse to do any procedure or take any action that could be construed as making management decisions or assuming management responsibilities, including determining account coding and approving journal entries. Our firm will advise the Partnership with regard to tax positions taken in the preparation of the tax return, but the Partnership must make all decisions with regard to those matters. Reporting We will issue a written report upon completion of our audit of the Partnership’s financial statements. Our report will be addressed to the Board of Directors. Circumstances may arise in which our report may differ from its expected form and content based on the results of our audit. Depending on the nature of these circumstances, it may be necessary for us to modify our opinion, add an emphasis-of-matter or other-matter paragraph(s) to our auditor’s report, or if necessary, withdraw from the engagement. We also will issue a written report on:  Independent Auditor’s Report on Compliance for Each Major HUD Program and Report on Internal Control over Compliance Required by Consolidated Audit Guide for Audits of HUD Programs.  Independent Auditor’s Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Governmental Auditing Standards. DocuSign Envelope ID: CDEA5976-F57E-4888-9BD1-1FB0D2C7D110 December 16, 2021 Board of Directors Riverview Apartments Preservation LP Page 6 Engagement Administration We understand that your employees will prepare all confirmations we request and will locate any documents or support for any other transactions we select for testing. If you intend to publish or otherwise reproduce the financial statements and make reference to our firm, you agree to provide us with printers’ proofs or masters for our review and approval before printing. You also agree to provide us with a copy of the final reproduced material for our approval before it is distributed. During the course of the engagement, we may communicate with you or your personnel via fax or e-mail, and you should be aware that communication in those mediums contains a risk of misdirected or intercepted communications. Regarding the electronic dissemination of audited financial statements, including financial statements published electronically on your Internet 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. Professional standards prohibit us from being the sole host and/or the sole storage for your financial and non-financial data. As such, it is your responsibility to maintain your original data and records and we cannot be responsible to maintain such original information. By signing this engagement letter, you affirm that you have all the data and records required to make your books and records complete. Michael Jenkins is the engagement partner for the audit services specified in this letter. His responsibilities include supervising McMahan and Associates, L.L.C. services performed as part of this engagement and signing or authorizing another qualified firm representative to sign the audit report. 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 degree of responsibility involved and experience level of the personnel assigned to your audit. However, we estimate that our gross fee for the 2021 audit engagement will not exceed $11,600 and that our fee for the preparation of the Partnership’s 2021 tax returns will not exceed $1,365. This fee estimate is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit, including significant changes in the size and nature of the Partnership’s operations or the state of its accounting records and controls. If significant additional time is necessary, we will keep you informed of any problems we encounter and our fees will be adjusted accordingly. The audit documentation for this engagement is the property of McMahan and Associates, L.L.C. and constitutes confidential information. However, we are required to provide the HUD Secretary or his/her designee, the HUD Inspector General, and the U.S. Government Accountability Office (“GAO”) or their representatives access to audit documentation or any other documents needed to review the audit (hardcopy or electronic). Access to audit documentation by HUD and GAO representatives includes making necessary photocopies of any or all of the hardcopy audit documentation or any other documents and/or electronic copies of any electronic audit documentation or any other electronic documents. We may also be requested to make certain audit documentation available to peer reviewers. If requested, access to such audit documentation will be provided under the supervision of McMahan and Associates, L.L.C. personnel. We agree to retain our audit documentation or workpapers for a period of at least six years from the date or our report. You agree to inform us of facts that may affect the financial statements of which you may become aware during the period from the date of the auditor’s report to the date the financial statements are issued. In accordance with the requirements of Government Auditing Standards, we have attached a copy of our latest external peer review report of our firm for your consideration and files. DocuSign Envelope ID: CDEA5976-F57E-4888-9BD1-1FB0D2C7D110 December 16, 2021 Board of Directors Riverview Apartments Preservation LP Page 7 Please sign where indicated below to indicate your acknowledgment of, and agreement with, the arrangements for our audit of the financial statements including our respective responsibilities. The signed letter should be returned to us promptly. We appreciate the opportunity to be of service to Riverview Apartments Preservation LP and look forward to working with you and your staff. Very truly yours, McMAHAN and ASSOCIATES, L.L.C. This letter correctly sets forth the understanding of Riverview Apartments Preservation LP with respect to the services to be performed by McMahan and Associates, L.L.C. RIVERVIEW APARTMENTS PRESERVATION LP BY: Signature: _________________________________ Title: _________________________________ Date: _________________________________ DocuSign Envelope ID: CDEA5976-F57E-4888-9BD1-1FB0D2C7D110 Executive Director 12/27/2021 Member American Institute of Certified Public Accountants 900 Werner Ct., Suite 200 • Casper, WY 82601 Tel: (307) 234-7800 • Fax: (307) 234-9847, (307) 234-5414 Larry D. Graham, CPA Richard P. Reimann, CPA Stephen A. Willadson, CPA Stephanie L. Means, CPA Clif Hodder, CPA Rick Mason, CPA - Of Counsel Joni Kumor, CPA John A. Smith, CPA Scott Buckingham, CPA Andrew J. Beyeler, CPA Jack E. Lenhart, CPA - Of Counsel Larry G. 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