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HomeMy WebLinkAboutECAT22-004 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 Matthew D. Miller, CPA Frisco: (970) 668-3481 M & A April 8, 2022 Board of Directors Eagle County Air Terminal Corporation c/o Eagle County P.O. Box 850 Eagle, Colorado 81631-0850 Dear Board members: You have requested that we audit the financial statements of the business-type activities and the aggregate remaining fund information of Eagle County Air Terminal Corporation (the “Corporation” and a component unit of Eagle County, Colorado) as of and for the year ended December 31, 2021, and the related notes to the financial statements, which collectively comprise the Corporation’s basic financial statements. In addition, we will audit the Corporation’s compliance over major federal award programs for the year ended December 31, 2021. Our audits will be conducted with the objectives of our expressing an opinion on each opinion unit and an opinion on compliance regarding the Corporation’s major federal award programs. The objectives of our audit of the financial statements 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 (“U.S. GAAS”) and Government Auditing Standards issued by the Comptroller General of the United States of America 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. The objectives of our compliance audit are to obtain sufficient appropriate audit evidence to form an opinion and report at the level specified in the governmental audit requirement about whether the Corporation complied in all material respects with the applicable compliance requirements and identify audit and reporting requirements specified in the governmental audit requirement that are supplementary to U.S. GAAS, Government Auditing Standards, and the Passenger Facility Charge Audit Guide for Public Agencies (the “PFC Audit Guide”), issued by the Federal Aviation Administration, if any, and perform procedures to address those requirements. Accounting principles generally accepted in the United States of America, (“U.S. GAAP”), as promulgated by the Governmental Accounting Standards Board (“GASB”) require that supplementary information, such as management’s discussion and analysis, supplement the Corporation’s basic financial statements. Such information, although not a part of the basic financial statements, is required by GASB, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. It is our understanding that the Corporation will not present an MD&A to accompany its 2021 financial statements, and our report will reference this omission. DocuSign Envelope ID: A13C8A96-3FD6-48D6-A540-DFE9AD9BC79E April 8, 2022 To the Board of Directors Eagle County Air Terminal Corporation Page 2 We have also been engaged to report on supplementary information other than required supplementary information that accompanies the Corporation’s financial statements, including the schedule required by the PFC Audit Guide. 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. GAAS and will provide an opinion on it in relation to the financial statements as a whole:  Budgetary comparison schedule for all funds  Schedule of Passenger Facility Charges (“PFC”) Collected and Expended Auditor’s Responsibilities We will conduct our audits in accordance U.S. GAAS, the standards applicable to financial audits contained in Government Auditing Standards, and the PFC Audit Guide. As part of an audit of financial statements in accordance with U.S. GAAS and Government Auditing Standards, 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.  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 Corporation’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 Corporation’s ability to continue as a going concern for a reasonable period of time. Because of the inherent limitations of an audit, together with the inherent limitations of internal control, an unavoidable risk that some material misstatements or noncompliance may not be detected exists, even though the audit is properly planned and performed in accordance with U.S. GAAS, Government Auditing Standards, and the PFC Audit Guide. Please note that the determination of abuse is subjective and Government Auditing Standards does not require auditors to detect abuse 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 Corporation’s basic financial statements. Our report will be addressed to the Corporation’s 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 opinions, add an emphasis- of-matter or other-matter paragraph(s) to our auditor’s report, or if necessary, withdraw from the engagement. If our opinions on the basic financial statements are other than unmodified, 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 opinions, we may decline to express opinions or to issue a report as a result of this engagement. DocuSign Envelope ID: A13C8A96-3FD6-48D6-A540-DFE9AD9BC79E April 8, 2022 To the Board of Directors Eagle County Air Terminal Corporation Page 3 Audit of the Financial Statements (continued) In accordance with the requirements of Government Auditing Standards and the PFC Audit Guide, we will also issue a written report describing the scope of our testing over internal control over financial reporting and over compliance with laws, regulations, and provisions of grants and contracts, including the results of that testing. However, providing an opinion on internal control and compliance over financial reporting will not be an objective of the audit and, therefore, no such opinion will be expressed. Management Responsibilities Our audit will be conducted on the basis that management acknowledge and understand that they have responsibility: 1. For the preparation and fair presentation of the financial statements in accordance with U.S. GAAP; 2. 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 fraud or error; 3. For identifying, in its accounts, all PFCs and other federal awards received and expended during the year and the federal programs under which they were received; 4. For maintaining records that adequately identify the source and application of funds for federally funded activities (including PFCs); 5. For designing, implementing, and maintaining effective internal control over federal awards (including PFCs) that provides reasonable assurance that the Corporation is managing federal awards in compliance with federal statutes, regulations, the PFC Audit Guide, and the terms and conditions of the federal awards; 6. For identifying and ensuring that the Corporation complies with federal laws, statutes, regulations, rules, provisions of contracts or grant agreements, and the terms and conditions of federal award programs (including PFCs), and implementing systems designed to achieve compliance with applicable federal statutes, regulations, and the terms and conditions of federal award programs; 7. For disclosing accurately, currently, and completely the financial results of each federal award (including PFCs) in accordance with the requirements of the award; 8. For identifying and providing report copies of previous audits, attestation engagements, or other studies that directly relate to the objectives of the audit, including whether related recommendations have been implemented; 9. For taking prompt action when instances of noncompliance are identified; 10. For addressing the findings and recommendations of auditors, for establishing and maintaining a process to track the status of such findings and recommendations and taking corrective action on reported audit findings from prior periods and preparing a summary schedule of prior audit findings; 11. For following up and taking corrective action on current year audit findings and preparing a corrective action plan for such findings; 12. For making the auditor aware of any significant contractor relationships where the contractor is responsible for program compliance; 13. To provide us with: a. Access to all information of which management is aware that is relevant to the preparation and fair presentation of the financial statements including the disclosures, and relevant to federal award programs (including PFCs), such as records, documentation, and other matters; b. Additional information that we may request from management for the purpose of the audit; c. Unrestricted access to persons within the Corporation from whom we determine it necessary to obtain audit evidence; and d. A final version of the annual report (including all the documents that, together, comprise the annual report) in a timely manner prior to the date of the auditor’s report. DocuSign Envelope ID: A13C8A96-3FD6-48D6-A540-DFE9AD9BC79E April 8, 2022 To the Board of Directors Eagle County Air Terminal Corporation Page 4 Management Responsibilities (continued) 14. 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 period(s) under audit are immaterial, both individually and in the aggregate, to the financial statements as a whole; 15. For acceptance of non-attest services, including identifying the proper party to oversee non-attest work; 16. For maintaining adequate records, selecting and applying accounting principles, and safeguarding assets; 17. For informing us of any known or suspected fraud affecting the Corporation involving management, employees with significant role in internal control and others where fraud could have a material effect on compliance; 18. For the accuracy and completeness of all information provided; 19. For taking reasonable measures to safeguard protected personally identifiable and other sensitive information; and 20. For confirming your understanding of your responsibilities as defined in this letter to us in your management representation letter. As part of our audit process, we will request from management written confirmation concerning representations made to us in connection with the audit. We understand that your employees will prepare all confirmations we request and will locate any documents or invoices selected by us 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. Non-attest 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 Corporation’s management.  We may assist with preparation of the financial statements but the ultimate authority for review and preparation rests with you; We will not assume management responsibilities on behalf of the Corporation. However, we will provide advice and recommendations to assist management in performing its responsibilities. 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. DocuSign Envelope ID: A13C8A96-3FD6-48D6-A540-DFE9AD9BC79E April 8, 2022 To the Board of Directors Eagle County Air Terminal Corporation Page 5 Non-attest Services (continued) Our responsibilities and limitations of the non-attest services are as follows:  We will perform the services in accordance with applicable professional standards, including GASB Standards and the PFC Audit Guide.  The non-attest services are limited to the drafting of financial statements 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 may advise the Corporation with regard to options regarding the presentation of financial statements, however the Corporation must make all decisions with regard to those matters. Engagement Administration Michael Jenkins is the engagement partner and is responsible for supervising the engagement and signing the report. Additional firm personnel will be assigned to the engagement as considered 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. However, we estimate that our gross fee for the 2021 audit engagement will not exceed $11,800. 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 Corporation’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. 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. 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. DocuSign Envelope ID: A13C8A96-3FD6-48D6-A540-DFE9AD9BC79E April 8, 2022 To the Board of Directors Eagle County Air Terminal Corporation Page 6 Engagement Administration (continued) The audit documentation for this engagement is the property of McMahan and Associates, L.L.C. 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 United States Government Accountability Office, or peer reviewers for purposes of a quality review of the audit, to resolve audit findings, or to carry out oversight responsibilities. If requested, access to such audit documentation will be provided under the supervision of McMahan and Associates, L.L.C. 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. We agree to retain our audit documentation or work papers for a period of at least five years from the date of 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. During the course of the audit, we may observe opportunities for economy in, or improved controls over, your operations. We will bring such matters to the attention of the appropriate level of management, either orally or in writing. At the conclusion of our audit engagement, we will communicate to the Board of Directors the following significant findings from the audit:  Our view about the qualitative aspects of the Corporation’s significant accounting practices;  Significant difficulties, if any, encountered during the audit;  Uncorrected misstatements, other than those we believe are trivial, if any;  Disagreements with management, if any;  Other findings or issues, if any, arising from the audit that are, in our professional judgment, significant and relevant to those charged with governance regarding their oversight of the financial reporting process;  Material, corrected misstatements that were brought to the attention of management as a result of our audit procedures;  Representations we requested from management;  Management’s consultations with other accountants, if any; and  Significant issues, if any, arising from the audit that were discussed, or the subject of correspondence, with management. 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. We appreciate the opportunity to be of service to Eagle County Air Terminal Corporation and look forward to working with you and your staff on this engagement. Please sign where indicated below to indicate your acknowledgment of, and agreement with, the arrangements for this engagement, including our respective responsibilities. Very truly yours, McMAHAN and ASSOCIATES, L.L.C. DocuSign Envelope ID: A13C8A96-3FD6-48D6-A540-DFE9AD9BC79E April 8, 2022 To the Board of Directors Eagle County Air Terminal Corporation Page 7 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: _________________________________ Title: _________________________________ Date: _________________________________ DocuSign Envelope ID: A13C8A96-3FD6-48D6-A540-DFE9AD9BC79E 4/12/2022 County Manager 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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