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member: <br />Artmna Soddy :4 Ccnificd <br />Public Acceoni« s <br />To the Shareholders <br />IILB Tautges, Redpath, Ltd, <br />Appendix A <br />Member. <br />Private Companies PteclIOE <br />Sealan, iRv sIan of Firms, <br />Mnrican Instltutc of <br />Certified PubiIC pOW emmyts <br />\ti e have reviewed the system of quality control for the accounting and audit practice cf <br />HLB Tautges, Redpath, Ltd. (the firm) in effect for the year ended September 30, 2004. <br />A system of quality control encompasses the firm's organizational structure, the policies <br />adopted and procedures established to provide it with reasonable assurance of <br />conforming with professional standards. The elements of quality control are described in <br />the Statements on Quality Control Standards issued by the American Institute of CPAs <br />(AICPA). The firm is responsible• for 'designing a system of quality control and <br />complying with it to provide the film reasonable assurance of conforming wiii <br />professional standards in all material respects. Our responsibility is to express an opinion <br />on the design of the system of quality control and the firms compliance with its system <br />of quality control based on our review, <br />Our review was conducted in accordance with standards established by the Peer Review <br />Board of the AICPA. During our review, we read required representations from the firm, <br />interviewed firm personnel and obtained an understanding of the nature of the firm's <br />accounting and auditing practice, and the design of the firm's system of quality control <br />sufficient to assess the risks implicit in its practice. Based on our assessments, we <br />selected engagements and administrative files to test for conformity with professional <br />standards and compliance with tlae firm's system of quality control. The engagemeat3 <br />selected represented a reasonable cross- section of the firm's accounting and auditing <br />practice with emphasis on higher -risk engagements. The engagements selected included <br />among others, audits of Employee Benefit Plans and engagements performed under <br />Government Auditing Standards. Prior to concluding the review, we reassessed the <br />adequacy of the scope of the peer review procedures and met with firm management to <br />discuss the results of our review, We believe that the procedures we perforated provide a <br />reasonable basis for our opinion. <br />In performing our review, we obtained an understanding of the system of quality control <br />for the firm's accounting and auditing practice. In addition, we tested compliance with <br />the frfs quality control policies and procedures to the extent we considered appropriate, <br />These tests covered the application of the fine's policies and procedures on selected <br />engagements. Our review was based on selected tests therefore it would not necessarily <br />detect all weaknesses in the system of quality control or all instances of noncompliance <br />with it. There are inherent limitations in the effectiveness of any system of quality <br />control and therefore noncompliance with the system of quality control may occur and <br />not be detected. Projection of any evaluation of a system of quality control w future <br />Certified Public Accountants <br />4455 East Camelback Road <br />Suite E290 <br />Phoenix, Arizona 05018 <br />Telephone (6021 66:.6040 <br />Fa (602! 667 -6039 <br />