GM-11-10-19-022___11_--GERSBACH
BROCKWAY
II FRANKLIN &
__NIEMEIER,P.e.
CERllFIED PUBLIC ACCOUN1AN1SSeptember 16,20II
BrushyCreek Regional Utility Authority, Inc.
221 E Main St
Round Rock,Texas 78664
We are pleased to confirm our understanding of the-services we are to provide Brushy Creek Regional Utility
Authority, Inc.(theBCRUA)forthe yearendedSeptember30,2011. Wewillauditthe financial statements of the
business-type activities which comprise the basic financial statements of BCRUA as of and for the year ended
September 30,2011. Accountingstandards generally acceptedin theUnitedStates of Americaprovideforcertain
required supplementary information (RSI), such as management's discussion and analysis (MD&A), to
supplement BCRUA's basic financial statements. Such infonnation, although not a part of the basic financial
statements,is requiredby the Governmental Accounting StandardsBoardwhoconsidersit 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 BCRUA's RSI in
accordance with auditingstandardsgenerallyacceptedin the UnitedStates of America.Theselimited procedures
will consist of inquiries of management regarding the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial statements, and
other knowledge we obtainedduringouraudit of the basic financial statements.Wewillnot expressanopinionor
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 principlesandwillbe subjected tocertainlimited procedures, but willnotbeaudited:
1) Management's Discussion and Analysis
2) Budgetary Comparison Schedules
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 conformitywithU.S.generallyacceptedaccountingprinciplesand to report
on the fairness of the supplement information referred to in the firstparagraphwhen consideredin relationto the
basic financial statements taken as a whole. Our audit will be conducted in accordance with auditing standards
generallyacceptedin theUnitedStates of Americaandthe standardsfor financial auditscontainedin Government
Auditing Standards, issued by the Comptroller General of the United States, and will include tests of the
accounting records of BCRUAandotherproceduresweconsidernecessary to enableus to expresssuch opinions.
Ifouropinionsonthe financial statementsareother than unqualified, we will fully discuss the reasons with you in
advance. If, foranyreason,we areunabletocompletetheauditor are unableto formor havenot formed opinions,
wemaydeclineto expressopinionsor to issuea reportas a result of this engagement.
POSJ OFFICE BOX 4083 • TEMPLE, TEXAS 76505-4083 • 254.773.9907. FAX 25.4.773.1570
Brushy Creek Regional Utility Authority, Inc.
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We will also provide a report (that does not include an opinion) 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 as required by Government
Auditing Standards. The report on internal control and compliance will 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, and specific legislative or regulatory bodies and is not intended to be and should not be
used by anyone other than these specified parties. If during our audit we become aware that BCRUA is subject to
an audit requirement that is not encompassed in the terms of this engagement, we will communicate to
management and those charged with governance that an audit in accordance with U.S. generally accepted auditing
standards and the standards for financial audits contained in Government Auditing Standards may not satisfy the
relevant legal, regulatory, or contractual requirements.
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 assist with preparation of your financial statements
and related notes. You are responsible for making all management decisions and performing all management
functions relating to the financial statements 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 and that you have reviewed and approved the financial statements 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 nonaudit 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 monitoring
ongoing activities, to help ensure that appropriate goals and objectives are met; for the selection and application
of accounting principles; and for the fair presentation in the financial statements of the respective financial
position of the business-type activities of the BCRUA and the respective changes in financial position and cash
flows, where applicable, in conformity with U.S. generally accepted accounting principles.
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
include adjusting the financial statements to correct material misstatements and for 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 fmancial statements taken as a whole.
"
Brushy Creek Regional Utility Authority, Inc.
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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 affectingthe government involving (l) management, (2)
employees whohave significant rolesin internal control, and(3) otherswherethe fraudor illegalactscouldhave
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
thatthe entity complies with applicable laws, regulations,'contracts,agreements,and grantsfortaking timely and
appropriate steps to remedy any fraud, illegal acts, violations of contracts or grant agreements. or abuse that we
may report. 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
anydocumentthatcontainsandindicatesthatwehavereportedonthe supplementary information. Youalsoagree
to [present the supplementary information withthe audited financial statements.
Management is responsible for establishing and maintaining a processfortrackingthe statusof 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 auditaattestation 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, for the report. and for the timing and format for
providing that information.
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 involvejudgment aboutthe number of transactions to be examinedandthe
areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about
whether the fmancial statements are free of material misstatement, whether from (l) errors, (2) fraudulent
financial reporting. (3) misappropriation of assets. or (4) violations of laws or governmental regulations that are
attributable to the entity or to acts by management or employees acting on behalf of the entity. Because the
determination of abuseis subjective. Government Auditing Standards do notexpectauditorsto provide reasonable
assurance of detecting abuse.
Because an auditis designed to provide reasonable. but not absolute assurance andbecausewe willnot perform a
detailed examination of all transactions. there is a risk that material misstatements 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. However, we
will inform you of any material errors and any fraudulent financial reporting or misappropriation of assets that
cometo our attention. We willalso informyou of any violations of lawsor governmental regulations thatcome
to our attention, unlessclearly inconsequential. Our responsibility as auditorsis limitedto the period covered by
ourauditanddoesnotextendtolater periods forwhichwearenot engaged as auditors.
Brushy Creek Regional Utility Authority, Inc.
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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 require certain written
representations from you about the financial statements and related matters.
Audit Procedures-Internal Controls
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.
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 and Government Auditing
Standards.
Audit Procedures-CompUance
As part of obtaining reasonable assurance about whether the financial statements are free ofmaterial misstatement,
we will perform tests of BCRUA's compliance with the provisions of applicable laws, regulations, contracts,
agreements, and grants. However, the objective of our audit 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.
Engagement Administration, Fees, and Other
We may from time to time, and depending on the circumstances. use third-party service providers in serving your
account. We may share confidential information about you with these service providers, but remain committed to
maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies,
procedures, and safeguards to protect the confidentiality of your personal information. In addition, we will secure
confidentiality agreements with all service providers to maintain the confidentiality of your information and we
will take reasonable precautions to determine that they have appropriate procedures in place to prevent the
unauthorized release of your confidential information to others. In the event that we are unable to secure an
appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your
confidential information with the third-party service provider. Furthermore, we will remain responsible for the
work provided by any such third-party service providers.
Bl11Shy Creek Regional Utility Authority, Inc.
Page Five
We understand that your employees will prepare all cash or other confirmations we request and will locate any
documents selected by us for testing.
We will provide copies of our reports to BCRUA; however, management is responsible for distribution of the
reports and the fmancial statements. Unless restricted by law or regulation, or containing privileged and
confidential information, copies of our reports are to be made available for public inspection.
The audit documentation for this engagement is the property of Brockway, Gersbach, Franklin & Niemeier, P.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 a state or 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 Brockway, Gersbach, Franklin &
Niemeier, P.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.
The audit documentation for this engagement will be retained for a minimum of five years after the report release
date. If we are aware that a federal awarding agency or auditee is contesting an audit finding, we will contact the
party(ies) contesting the audit finding for guidance prior to destroying the audit documentation.
We expect to begin our audit the first of November 2011 and to issue our reports no later than December 2011.
Steve Niemeier is the engagement partner and is responsible for supervising the engagement and signing the
reports or authorizing another individual to sign them.
Our fee for these services will be at our standard hourly rates plus out-of-pocket costs (such as report reproduction,
typing, 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. 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 30 days or more overdue and may not be resumed
until your account is paid in full. If we elect to terminate our services for nonpayment, 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. Based on our preliminary estimates, the fees should not exceed $ 23,500 plus out-of-pocket expense.
The above fee 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 discuss
it with you and arrive at a new fee estimate before we incur the additional costs.
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 2009 peer review accompanies this letter.'
Brushy Creek Regional Utility Authority, Inc.
Page Six
We appreciate the opportunity to be of service to BCRUA and believe this letter accurately summarizes the
significant terms of our engagement.If youhaveany questions,please let us know. Ifyouagreewiththe terms of
our engagement as described inthis letter, pleasesignthe enclosed copyandreturnit to us.
Sincerely,
~i{ '~?~
I
B~kvvay,(}ersbach,F in & Niemeier, P.C.
RESPONSE:
Thisletter correctly setsforththe understanding of Brushy Creek Regional Utility Authority, Inc..
C.L-.~
Name ~£rl-~J l1tv~t-
Title
I o-/?'-I (
Date
Carneiro, Chumney&'Co., L.C.
Robert M. McAdams. CPA Allen E. Robertson. Jr.• CPACERTIFIED PUBLIC ACCOUNTANTS
Paul Roth-Roffy. CPA Edward H. Guerra. CPA
Julia C. Norton. CPA Michael J. Schaub. CPA
System Review Report
September 22, 2009
To the Shareholders of Brockway Gersbach Franklin &Niemeier PC
and the Peer Review Committee of the Texas Society of CPAs
We have reviewed the system of quality control for the accounting and auditing practice of
Brockway Gersbach Franklin & Niemeier PC (the firm) in effect for the year ended April 30,
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.aicoa.ora/prsummarv.
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 Brockway
Gersbach Franklin & Niemeier PC, in effect for the year ended April 30, 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. Brockway Gersbach Franklin &
Niemeier PC has received a peer review rating of pass.
"Helping Clients Succeed for more than 75 Years"
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(210) 342-8000· Fax (210) 342-0866
E-mail: carnelro@carnelro.com • www.carnelro.com
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