01-26-2005 Council Agenda - Laserfiche WebLink

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City of Little Canada Contract for Auditing Services Page 4 We will obtain an understanding of the design of the relevant controls and whether they have been placed in operation, and we will assess control risk. 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 basic 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 basic financial statements. (Tests of controls are required only if control risk is assessed below the maximum level.) Our tests, if performed, will be less in scope than would be necessary to render an opinion on the internal control and, accordingly, no opinion will be expressed. An audit is not designed to provide assurance on internal control or to identify reportable conditions. However, we will inform the governing body or audit committee of any matters involving internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the basic financial statements. We will also inform you of any nonreportable conditions or other matters involving internal control, if any, as required by Government Auditing Standards. Nonaudit Services As part of the audit, we will provide the following nonaudit services: • Prepare draft financial statement (AFR) document using the City's trial balance and other information provided by the City. • Processing of the financial statement document. In accordance with Government Auditing Standards, you will be required to review and approve those financial statements and any journal entries prior to their issuance and have a responsibility to be in a position in fact and appearance to make an informed judgment on those services. Further you are required to designate a qualified management -level individual to be responsible and accountable for overseeing their services, or any other nonaudit services that may be requested. 538937.1