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GM-14-06-25-050 �' GERSBACH �� NIEMEIER PC. CERTIFIED PUBUG ACCOUNTANTS May 21,2014 - To th¢Board of Directors of Bushy Creek Regional Utility Authority, Inc. Round Rock, Texas 78664 Te Board of Directors, We are: pleased to confirm our understanding of the services we are to provide Bushy Creek Regional Utility Authority, lnc. (the BCRUA)for the year ended September 30,2014. We wilt audit the financial statemenss of the governmental and the business-type activities which collectively comprise the basic financial statements of BCRUA as of and for the year ended September 30, 2014. Accounting standards generally accepted in the United Stales of America provide for certain required supplementary information (RSl), such as management's d isoussion and analysis (MDMA), to supplement BCRUA's basic Fnancial statements. Such information, although nota par[ of the basic financial statements, is required by the Governmental Accounting Standards Board whoconsiders it to'be an essential part of financial reporting For placing the basic Fnancial statements in an appropriate operational, economic, or historical context. As part o£our engagement, we will apply certain limited procedures to BCRUA's RSl in accordance with auditing standards generally accepted in the United States o£ America. 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 responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We will no[express an opinion or provide any assurance on the information because the limited procedures do not provide us with sutFicient 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 Discussionand Analysis. _ 2) Budgetary Comparison Schedules Audit Objectives The objective of our audit is the expression of-opinions as [o whether your Fnancial statements are fairly presented, in all mat¢rial respects, in-conformity with U.S. generally accepted accounting principles and to report on the fatness of the supplementary informavon referred to in the second paragraph when considered in relation to the financial statements as a whole. Our audit will be conducted in.accordance with auditing standards generally accepted in the United States of America and[he standards far financial audita contained in Government Aaditiny, Stnndords, issued by the Comptroller General of the United States, and will include tests o£ the accounting records of BCRUA and other procedures we consider necessary to enable us to express such opinions. We will issue a written repots upon completion of our audit of BCRUA's financial statements. Our report will be addressed to the Hoard of Directors of BCRUA. We cannot provide assurance that unmodified opinions will be expressed. Circumstances may arise in which it is necessary far us to modify our opinions or add emphasis-of- matter or,other-matter paragraphs. If our opinions on the financial statements are other than unmodified, we will discuss the reasons with you in advance. I£, 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 issue reports, or may withdraw from. this engagement. 3520 Sw H.K.DODGPN tOOv � .v5 J650d �25d.JJ3.99pJ �Fq%25LT/3.1510 Brushy Creek Regional Utility Authority, Inc. Pages Two We will also provide a report (that does not include an opinion) on internal control re]ated to the financial statements and compliance with the provisions of laws, regulations, contracts, and grant agreemen$ noncompliance with which could have a material etfeM on the financial statements as required by Government Auditing Standards. Tho report on internal control and on compliance and other matters will include a paragraph that states (1) that the purpose of the report.is solely to describe the scope of testingo£ internal control and compliance, and the results of that testing, and not-to provide an opinion on the effectiveness of the entity's internal control on compliance,and(2)[hat the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's in[emal control end compliance. The paragraphwili - also state [hat the report is not suitable for any other purpose. If during our audit we become aware that BCRUA is subject to an audit requirement the[ is not encompassed in the terms of this engagement we will communicate to management and those charged wish governance that an audit in accordance with U.S. generally accepted auditing standards and the standards for financial audits contained in Gaverrsment Auditing Standards may not - satisfy the relevant legal, regulatory,or contractual requirements. MaaagemenY Responsibilities Management is responsible £or [he 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. These nonaudit services do not constitute an audit under Government Auditing Slandards and such services will not be conducted in accordance with Government Aaditing Standards. You agree to assume all management responsibilities relating[o the Fnancial statements and related notes and any other nonaudit services we provide. You will be required to acknowledge in the management representation IeKer our assistance with preparation of the financial statements and related notes and that you have reviewed and approved the financial statements and related notes prior to their issuance and have accepted responsibility for[hem. Further, you agree [o oversee the nonaudit services by designating an individual, preferably from senior management, who possesses suitable skill, knowledge,. or.experience; evaluate the adequacy and results mf those services; and accept responsibility for them. . Management is responsible For establishing and maintaining effective internal controls, including evaluating and monitoring ongoing activities, to help ensure that appropriate goals and objectives are met; following laws and regulations; end ensuring [ha[management is reliable andfinancial information is reliable and properly reported_ Management is also responsible for implementing systems designed-to achieve compliance with applicable laws, regulations, contracts, and Krant agreements. You are also responsible For the selection and application of accounting principles, for the preparation and fair presentation of[he Fnancial statements in conformity with U.S. generally accepted accounting princip los, 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 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 [hat we may request for the purpose of the audit; and(3) unrestricted access to persons within the government From whom we determine it necessary[o obtain audit evidence. - Your responsibilities include adjusting the financial statements to correct material misstatements and For confirming to us in the written representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to[he latest period presented are immaterial, both individually and in the aggregate,to the Fnancial statements taken as a whole_ Brushy Creek Regional Utility Authority, Inc. Pag¢ Three - You are responsible £or 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 government involving (1) management, (2) employees who hav¢ 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 o£ your knowledge of any ail¢gations 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 government complies with applicable laws, regulations, contracts, agreements, and granzsand for taking timely and appropriate st¢ps to remedy fraud and noncompliance with provisions of laws, regulations, contracts or grant.agreements,or abuse that we 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 infortna[ion in any document that contains and indicates that we have reported on the supplementary information. Vou also agree to include [he.audited £tnancial statements with any presentation of the supplementary information that includes our report thereon. Vour responsibilities include acknowledging to us in the written representation letter Shat (Ij you are responsible for presentation of the supplementary information in accordance with GAAP; (2)you believe the supplementary information, including its form and content, is fairly presented in accordance with GAAP; (3) the methods o£measurement or presentation have not changed from chase used in the prior period (or, if th¢y have changed, the reasons for such changes); and- (4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the supplementary information. Management is responsible£or establishing and maintaining a process for tracking the status of audit Endings and recommendations: Management is also responsible £or identifying for us previous financial audits, attestation engagements, performance audits or o[h¢r studies related to the-objectives discussed in the Audit .Objectives section of this letter. This responsibility includes relaying [o us corrective actions taken to address significant findings and recommendations resulting from those audits, attestation engagements, performance audits, or other studies. Vou are also responsible for providing management's views on our current Endings, conclusions, and recommendations, as well as your planned corrective actions, for the report, and for the timing and format for providing that in£ornation. Audit Procedures--General An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in [he 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 mad¢ 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 <I) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or(4j violations of laws or governmental regulations that are attributable to the govemment or to acts by management or employees acting on behalf of the govemment. Because- [he determination of abuse is subjective, G'overxment Avdtting Stc+ndords do not expect auditors to provide reasonable assurance of detecting abuse. Brushy Creek Regional Utility Authority, Inc. ' ' Page Four Because of the inherent limitations of an audiS combined with the inherent limitations of intemal control, and ' because we will not perform a detailed examinatien of all transactions, there is a risk that material misstatements may axis[end not be detected 6y us,even though She audit is properly planned and performed in accordance with U.S. generally accepted auditing standards and Government Auditing Stundru�ds. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations [hat do not have a direct and material effect on the Fnancial statements. However, we will inform the appropriate level of management of any material errors, any fraudulent financial reporting, or misappropriation of assets that come [o our attention. We will also inform the appropriate level of management of any.violations bf laws or governmental regulations that come to our attention, unless clearly inconsequential, and of any material abuse that comes to our attention. Our responsibility as auditors is limited to the period covered by our audit and does no[extend [o later periods For which we are not engaged as auditors. ' Our procedures will include tests of documentary evidence supporting the transactions recorded in She accounts, ' and may include tests o£the physical existence of inventories, and direct con£rination of receivables and certain other assets and Iiabil ities by coriespondence with selected individuals, funding sources, creditors,and Fnancial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding [o this inquiry. At the conclusion of our audit, we will require certain written representations from you about your responsibilities for the Financial statements; compliance with laws, regulations, contracts, and grant agreements; and other responsibilities required by generally accepted auditing standards. Audi[Proced urea—interval Control Our audit will include obtaining an understanding of the government and its environmenS including intemal control, suf£cieni to assess the risks of material misstatement of the Fnancial statements and to design the nature, timing, and extent of further audit procedures. Tests of controls may be performed [o [est the eRecNveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material [o the Fnancial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the Fnancial statements. Our tests, if perFormed, will be less in scope than would be necessary[o render an opinion on intemal control and,accordingly, no opinion will be expressed in our report on izrternal control issued pursuant to CJavernment AuditinKStmzdards. An audit is not designed to provide assurance on internal control or to identify signi£cant deFciencies or material weaknesses. However,-during the audit, we will communicate to management and those charged with governance intemal control related matters that are required to be communicated under AICPA professional standards and Government Auditing Stundurds. Audit Proced ures�—Compliance As part of obtaining reasonable assurance about whether the Fnancial statements era free of material misstatement, we will perforin 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 Csuvernment AuditinK Stvndurds�. Brushy Creek Regional Utility Authority, Inc. Page Five Engagement Admiaiatratioa,Feea,aad 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 committ¢d to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures, end safeguards m protect the confidentialiTy of your personal information. In addition, we will secure conFdentiality 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 [o secure an appropriate confidentiality agreement, yeu will be asked [o provide your consent prior to the sharing of your- confidentia/ information with th¢ third-party service provider. Furthermore, w¢ will remain responsible for the ' work provided 6y any such third-party service providers. 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 o£our reports to BCRUA; however, management is responsible for distribution of the reports and the financial statements. Unless restricted by law or regulation, or containing privileged and confidential information,copies of our reports are to be made available £or public inspection. The audit dbcumeniation for this engagement is [he property of Brockway, Gersbach, Franklin 4 Niemeieq P.C. and constitutes confidential information. However, subject to applicable laws and regulations, audit documentation and appropriate individuals will be made available upon request and in a timely manner to BCRUA 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 Brockway, Gersbach, Franklin &c Niemei¢q P.C. personn¢l. Fur[hernore, upon request, we may provide copies of selected audit documentation to the aforem¢ntioned parties. These parties may intend, or decide, to distribute [he copies or information contained therein to others, including other governmental agencies. The audit documentation for this engagement will be retained £or a minimum of five years after the report release date or For any additional period requested by the federal agency. I£we are aware that a federal awarding agency or auditee is contesting an audit Ending, we will contact the party(ies) contesting [he audit Finding for guidance prior to destroying[he audit documentation. We expect to begin our audit on approximately November 2014 and to issue our reports no later than January 2015. 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£or these services will be at our standard hourly rates plus out-of-pocket costs(such as report reproduction, typing, postage, [ravel, copies, telephone, etc.) Our standard.hourly rates vary according to the degree o£ 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 [n accordance with our £trm policies, work may be suspended if your account becomes 30 days ar more overdue and may no[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 reimburs¢ us for all out-o£-pocket costs through the date o£ termination. Based on our preliminary estimates and the support we have received in the pass the fees should not exceed $24,500 including out-of-pocket expense. See attached Appendix A£or fee estimates for the year ending September 30,2014 and September 30,2075. Brushy Creek Regional Utility Authority, Inc. Page Six We appreciate the opportunity to be of service to Brushy Creek Regional Utility Authority, Inc. 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. Sincerely, Brockway,sbach, Frankli efk Niemeier, P.C. RESPONSE: This letter correctly ets forth the understanding of Brushy Creek Regional Utility Authority, Inc. Name Title J Date - Brushy Creek Regional Utility Authority, Inc. Appendix A Schedule o£professicnal fees and expenses listed below serves to document the total all inclusive maximum price based on the continued level of assistance provided by the staff of the City of Cedar Park,Texas. _ The total all inclusive maximum prices for the 2013,2014 and 2015 engagements are as Follows: 2013 S 24.000 2014 $ 24.500 2015 -$ 25_000