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City of Little Canada <br />Contract for Auditing Services <br />Page 2 <br />We will also issue a report (that does not include opinions) on internal control related to the <br />financial statements and compliance with laws, regulations, and the provisions or grant <br />agreements, noncompliance with which could have a material effect on the financial <br />statements as required by Government Auditing Standards. This report will include a <br />statement that the report is intended for the information and use of the audit committee, <br />management and specific legislative or regulatory bodies and is not intended to be and should <br />not be used by anyone other than these specified parties. <br />Management Responsibilities <br />Management is responsible for establishing and maintaining internal control and for <br />compliance with laws, regulations, contracts and agreements. In fulfilling this responsibility, <br />estimates and judgments by management are required to assess the expected benefits and <br />related costs of the controls. The objectives of internal control are to provide management <br />with reasonable, but not absolute, assurance that assets are safeguarded against loss from <br />unauthorized use or disposition, that transactions are executed in accordance with <br />management's authorizations and recorded properly to permit the preparation of basic <br />financial statements in accordance with U.S. generally accepted accounting principles. <br />Management is responsible for making all financial records and related information available <br />to us. We understand that you will provide us with such information required for our audit <br />and that you are responsible for the accuracy and completeness of that information. We will <br />advise you about appropriate accounting principles and their application and will assist in the <br />preparation of your financial statements, but the responsibility for the financial statements <br />remains with you. That responsibility includes the establishment and maintenance of <br />adequate records and effective internal control over financial reporting, the selection and <br />application of accounting principles, and the safeguarding of assets. Management is <br />responsible for adjusting the basic financial statements to correct material misstatements and <br />for confirming to us in the representation letter that the effects of any uncorrected <br />misstatements aggregated by us during the current engagement and pertaining to the latest <br />period presented are immaterial, both individually and in the aggregate, to the basic financial <br />statements taken as a whole. <br />You are responsible for the design and implementation of programs and controls to prevent <br />and detect fraud, and for informing us about all known or suspected fraud affecting the <br />government involving (a) management, (b) employees who have significant roles in internal <br />control, and (c) others where the fraud could have a material effect on the financial <br />statements. You are also responsible for informing us of your knowledge of any allegations <br />of fraud or suspected fraud affecting the government received in communications from <br />employees, former employees, regulators, or others. In addition, you are responsible for <br />identifying and ensuring that the entity complies with applicable laws and regulations. <br />538937.1 <br />