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CM-2003-006UPPER BRUSHY CREEK WATER CONTROL AND IMPROVEMENT DISTRICT 309 East Main Street Round Rock, Texas 76527 General Manager Directors Mike Erdmann January 2, 2003 Maxwell Locke & Ritter LLP 500 Congress Avenue, Suite 300 Austin, Texas 78701 Butch Bradley Darin Butler Jim Clarno Charles Roth Will Wilson, Sr. We are providing this letter in connection with your audit of the general purpose financial statements of Brushy Creek Water Control and Improvement District No. IA of Williamson and Milam Counties (the "District") as of September 30, 2002 and for the year then ended for the purpose of expressing an opinion as to whether the general purpose financial statements present fairly, in all material respects, the financial position of the District and the results of its operations in conformity with generally accepted accounting principles. We confirm that we are responsible for the fair presentation in the general purpose financial statements of financial position and results of operations in conformity with generally accepted accounting principles in the United States of America. We are also responsible for adopting sound accounting policies, establishing and maintaining internal control, and preventing and detecting fraud. We confirm, to the best of our knowledge and belief, as of January 2, 2003, the following representations made to you during your audit. 1. The financial statements referred to above are fairly presented in conformity with generally accepted accounting principles and include all properly classified funds and account groups of the primary government and all component units required by generally accepted accounting principles to be included in the financial reporting entity. 2. We have made available to you all— a. Financial records and related data b. Minutes of the meetings of the Board of Directors, and committees of directors, or summaries of actions of recent meetings for which minutes have not yet been prepared 3. There have been no communications from regulatory agencies concerning noncompliance with, or deficiencies in, financial reporting practices. 4. There are no material transactions that have not been properly recorded in the accounting records underlying the financial statements. CxyL-Q 003- 0G6 Maxwell Locke & Ritter LLP January 2, 2003 Page 2 5. There has been no— a. Fraud involving management or employees who have significant roles in internal control. b. Fraud involving others that could have a material effect on the financial statements. 6. The District has no plans or intentions that may materially affect the carrying value or classification of assets, liabilities, or fund equity. 7. The following, if any, have been properly recorded or disclosed in the financial statements: a. Related party transactions, including revenues, expenditures/expenses, loans, transfers, leasing arrangements, and guarantees, and amounts receivable from or payable to related parties. b. Guarantees, whether written or oral, under which the District is contingently liable. c. All accounting estimates that could be material to the financial statements, including the key factors and significant assumptions underlying those estimates, and we believe the estimates are reasonable in the circumstances. 8. We are responsible for the District's compliance with laws and regulations applicable to it; and we have identified, and disclosed to you, all laws and regulations that have a direct and material effect on the determination of financial statements amounts. 9. There are no— a. Violations or possible violations of budget ordinances, laws and regulations (including those pertaining to adopting and amending budgets), terms of contractual agreements, tax or debt limits, and any related debt covenants whose effects should be considered for disclosure in the financial statements or as a basis for recording a loss contingency. b. Unasserted claims or assessments that our lawyer has advised us are probable of assertion and must be disclosed in accordance with Financial Accounting Standards Board (FASB) Statement No. 5, Accounting for Contingencies. c. Other liabilities or gain or loss contingencies that are required to be accrued or disclosed by FASB Statement No. 5. d. Reservations or designations of fund equity that were not properly authorized and approved. 10. The District has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets nor has any asset been pledged as collateral. 11. The District has complied with all aspects of contractual agreements that would have a material effect on the general purpose financial statements in the event of noncompliance. 12. We believe that the effects of the uncorrected financial statement misstatements summarized in the attached schedule are immaterial, both individually and in aggregate, to the financial statements taken as a whole. Maxwell Locke & Ritter LLP January 2, 2003 Page 3 13. To the best of our knowledge and belief, no events have occurred subsequent to the balance sheet date and through the date of this letter that would require adjustment to or disclosure in the aforementioned financial statements. Signed: R. use resident, Brushy Creek WCID No. lA Signed: Mike Erdmann General Manager, Brushy WCID No. 1 A Signed.W�'!! Charlie Cros Attorney, Sheets & rossfield, P.C.