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HomeMy WebLinkAboutSOB19-001 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 13, 2018 Board of Directors Seniors on Broadway LP c/ o Eagle County P.O. Box 850 Eagle, Colorado 81631-0850 Attention: Jill Klosterman, Finance Director Dear Board members We are pleased to confirm our understanding of the services we are to provide for Seniors on Broadway LP (the “Corporation”) for the year ending December 31, 2018. We will audit the financial statements of the Corporation, which comprise the balance sheet as of December 31, 2018, and the related statements of operations, changes in partners’ capital, and cash flows for the year then ended, and the related notes to the financial statements. We will also prepare the Corporation’s federal and state income tax returns (Form 1065 and Colorado Form 106) for the year ended December 31, 2018. Audit Objective The objective of our audit is the expression of an opinion about whether the Corporation’s financial statements are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America. Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America and will include tests of your accounting records and other procedures we consider necessary to enable us to express such an opinion. 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 or add an emphasis-of-matter or other-matter paragraph. If our opinion is 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 an opinion, we may decline to express an opinion or to issue a report as a result of this engagement. Audit Procedures 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 cash, receivables, loan balances, and certain other assets and liabilities by correspondence with selected customers, vendors, creditors, funding sources, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will require certain written representations from you about the financial statements and related matters. DocuSign Envelope ID: B27B5A8B-FED9-48AA-9E98-826EC83B32D7 Board of Directors Seniors on Broadway LP December 13, 2018 Page 2 of 4 Audit Procedures (continued) 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriations of assets, or (4) violations of laws or governmental regulations that are attributable to the Corporation or to acts by management or employees on behalf of the Corporation. Because of the inherent limitations of an audit, combined with the inherent limitations of internal control, and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us, even though the audit is properly planned and performed in accordance with auditing standards generally accepted in the United States of America. 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. However, we will inform the appropriate level of management of any material errors, fraudulent financial reporting, or misappropriation of assets that come to our attention. We will also inform the appropriate level of management of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors. Our 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. An audit is not designed to provide assurance on internal control or to identify deficiencies in internal control. 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 professional standards. Management Responsibilities Management is responsible for the basic financial statements and all accompanying information as well as all representations contained therein. As part of the audit, we will provide tax services and assist with preparation of the Corporation’s financial statements and related notes. You will be required to acknowledge in the representation letter our tax services and assistance with preparation of the financial statements and related notes and that you have evaluated the adequacy of our services and have reviewed and approved the results of the services, the financial statements and related notes prior to their issuance and have accepted responsibility for them. Further, you are required to designate an individual, preferably from senior management, 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. We will advise you with respect to tax positions taken in the preparation of the tax returns, but the responsibility for the tax returns remains with you. You are responsible for establishing and maintaining internal controls, including monitoring ongoing activities; for the selection and application of accounting principles; and for the fair presentation of the financial statements in conformity with accounting principles generally accepted in the United States of America. You are also responsible for making all financial records and related information available to us and for the accuracy and completeness of that information. You are also responsible for providing us with (1) access to all information of which you are aware that is relevant to the preparation and fair presentation of the financial statements, (2) additional information that we may request for the purpose of the audit, and (3) unrestricted access to persons within the Corporation from whom we determine it necessary to obtain audit evidence. DocuSign Envelope ID: B27B5A8B-FED9-48AA-9E98-826EC83B32D7 Board of Directors Seniors on Broadway LP December 13, 2018 Page 3 of 4 Management Responsibilities (continued) 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. 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 affecting the Corporation involving (1) management, (2) employees who have significant roles in internal control, and (3) others where the fraud 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, regulators, or others. In addition, you are responsible for identifying and ensuring the Corporation complies with applicable laws and regulations. Certain communications involving tax advice are privileged and not subject to disclosure to the IRS. By disclosing the contents of those communications to anyone, or by turning over information about those communications to the government, you, your employees, or agents may be waiving this privilege. To protect this right to privileged communication, please consult with us or your attorney prior to disclosing any information about our tax advice. Should you decide that it is appropriate for us to disclose any potentially privileged communication, you agree to provide us with written, advance authority to make that disclosure. 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 Administration, Fees, and Other We understand that employees of the Corporation’s Managing Agent will prepare all cash, accounts receivable, and other confirmations, reconciliations and work papers we request and will locate any documents selected by us for testing. Michael Jenkins is the engagement partner and is responsible for supervising the engagement and signing the report. Additional firm personnel will be assigned to the engagement as considered necessary. We will schedule our audit fieldwork at a mutually convenient time. Our fees for these services will be based on the actual time spent at our standard hourly rates, and other out-of-pocket costs such as report production, typing, postage, etc. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. However, we estimate that our gross fee for the 2018 audit will not exceed $6,740 and that our fee for preparation of the Corporation’s 2018 tax returns will not exceed $1,135. The fee estimates are 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. DocuSign Envelope ID: B27B5A8B-FED9-48AA-9E98-826EC83B32D7 Board of Directors Seniors on Broadway LP December 13, 2018 Page 4 of 4 We appreciate the opportunity to be of service to Seniors on Broadway LP 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 Seniors on Broadway LP with respect to the services to be performed by McMahan and Associates, L.L.C. SENIORS ON BROADWAY LP BY: Signature: _________________________________ Title: _________________________________ Date: _________________________________ DocuSign Envelope ID: B27B5A8B-FED9-48AA-9E98-826EC83B32D7 1/3/2019 Secretary Kimberly Bell Williams