GM-15-07-08-058 BROCKWAY
GERSBACH
FRANKLIN &
NIEMEIER,P.C.
CERTIFIED PUBLIC ACCOUNTANTS
July 2, 2015
To the Board of Directors of
Brushy Creek Regional Utility Authority,Inc.
Round Rock, Texas 78664
We are pleased to confirm our understanding of the services we are to provide Brushy Creek Regional.Utility
Authority,Inc. (the BCRUA)for the year ended September 30,2015. We will audit the financial statements of the
governmental activities,.the business-type activities, each major fund, and the aggregate remaining fund
information, including the related notes to the financial statements, which collectively comprise the basic
financial statements of Brushy Creek Regional Utility Authority, Inc. as of and for the year ended September 30,
2015. Accounting standards generally accepted in the United States of America provide for certain required
supplementary information(RSI), such as management's discussion and analysis(MD&A),to supplement Brushy
Creek Regional Utility Authority, Inc.'s basic financial statements. Such information, although not a part of the
basic financial statements, is required by the Governmental Accounting Standards Board 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. As part of our engagement, we will apply certain limited procedures to Brushy
Creek Regional Utility Authority, Inc.'s RSI in accordance with auditing standards generally accepted in the
United States of 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 not express an opinion or 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 principles and will be subjected to certain limited
procedures, but will not be audited:
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 financial statements are fairly
presented, in all material respects, in conformity with U.S. generally accepted accounting principles and to report
on the fairness of the supplementary information 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 the standards for financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States, and will include tests of the
accounting records of BCRUA and other procedures we consider necessary to enable us to express such opinions.
We will issue a written report upon completion of our audit of BCRUA's financial statements. Our report will be
addressed to Board of Directors of Brushy Creek Regional Utility Authority, Inc. We cannot provide assurance
that unmodified opinions will be expressed. Circumstances may arise in which it is necessary for 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. 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 issue
reports, or may withdraw from this engagement.
01M-C S o7_0X - —�
3520 SW H.K.DODGEN LOOP■ TEMPLE,TEXAS 76504■ 254.773.9907■ FAx 254.773.1570
•
Brushy Creek Regional Utility Authority, Inc.
Page Two
We will also provide a report (that does not include an opinion) on internal control related to the financial
statements and compliance with the provisions of laws, regulations, contracts, and 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 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 testing of 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)that the report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the entity's internal control and compliance. The paragraph will'
also state that the report is not suitable for any other purpose. If during our audit we become aware that BCRUA
is subject to an audit requirement that is not encompassed in the terns 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.
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 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) misappropriation of assets, or(4)violations of laws or governmental
regulations that are attributable to the government or to acts by management or employees acting on behalf of the
government. Because the determination of abuse is subjective, Government Auditing Standards do not expect
auditors to provide reasonable assurance of detecting abuse.
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
U.S. generally accepted auditing standards and Government Auditing Standards. 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, any 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, 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 not extend to later
periods for which we are not engaged as auditors.
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 your responsibilities for the financial statements; compliance with laws,
regulations, contracts, and grant agreements; and other responsibilities required by generally accepted auditing
standards.
Brushy Creek Regional Utility Authority,Inc.
Page Three
Audit Procedures—Internal Control
Our audit will include obtaining an understanding of the government 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 or material
weaknesses. 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—Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of material 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.
Other Services
We will also assist in preparing the financial statements and related notes of BCRUA in conformity with U.S.
generally accepted accounting principles based on information provided by you. These nonaudit services do not
constitute an audit under Government Auditing Standards and such services will not be conducted in accordance
with Government Auditing Standards.
Management Responsibilities
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; and ensuring that management and financial information is reliable and properly reported.
Management is also responsible for implementing systems designed to achieve compliance with applicable laws,
regulations, contracts, and grant agreements. You are also responsible for the selection and application of
accounting principles, for the preparation and fair presentation of the financial statements and all accompanying
information in conformity with U.S. generally accepted accounting principles, 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 that we may request for the purpose of the audit, and(3) unrestricted access
to persons within the government from whom we determine it necessary to obtain audit evidence.
Brushy Creek Regional Utility Authority,Inc.
Page Four
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 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 government 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 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 grants and for taking
timely and appropriate steps 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, which we have been engaged to report
on, in conformity with U.S. generally accepted accounting principles. You agree to include our report on the
supplementary information in any document that contains and indicates that we have reported on the
supplementary information. You also agree to include the audited financial statements with any presentation of
the supplementary information that includes our report thereon.Your responsibilities include acknowledging to us
in the written representation letter that(1) 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 of measurement or presentation have not changed
from those used in the prior period (or, if they 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 for establishing and maintaining a process for tracking the status of audit findings and
recommendations. Management is also responsible for identifying and providing report copies of 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 audits, attestation 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.
You agree to assume all management responsibilities relating to the financial statements and related notes and any
other nonaudit services we provide. You will be required to acknowledge in the management representation letter
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
them. Further, you agree to oversee the nonaudit services by designating an individual, preferably from senior
management, with suitable skill, knowledge, or experience; evaluate the adequacy and results of those services;
and accept responsibility for them.
Brushy Creek Regional Utility Authority,Inc.
Page Five
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.
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 financial 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, subject to applicable laws and regulations, audit
documentation and appropriate individuals will be made available upon request and in a timely manner to the
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 & 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 or for any additional period requested by the BCRUA. 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 on approximately November 2015 and to issue our reports no later than January
2016. 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 and the support we have received in the past,the fees should not
exceed $ 25,000 including out-of-pocket expense. See attached Appendix A for fee estimates for the year ending
September 30,2015.
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,
' �
r
Brockway, Gersbach,Frankl &Niemeier,P.C.
RESPONSE:
This letter correctly sets forth the understanding of Brushy Creek Regional Utility Authority,Inc.
Name
Title Date
Brushy Creek Regional Utility Authority, Inc.
Appendix A
Schedule of professional 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 $ 24,000
2014 $ 24,500
2015 $ 25,000