HomeMy WebLinkAbout20130449.tiffMcGee, Hearne & Paiz, LLP
Certified Public Accountants and Consultants
January 10, 2013
Weld County, Colorado
P.O. Box 758
Greeley, Colorado 80632
Attention: Monica Mika, Director of Finance and Administration
The Objective and Scope of the Audit of the Financial Statements
You have requested that we audit the financial statements of Weld County, Colorado (the "County"),
which comprise governmental activities, business -type activities, aggregate discretely presented
component units, each major fund and aggregate remaining fund information as of and for the year -ended
December 31, 2012 which collectively comprise the basic financial statements. You acknowledge that we
are the group auditor of the County's basic financial statements as of and for the year ended December
31, 2012. We will not audit the financial statements of Weld County Housing Authority. Those financial
statements will be audited by component auditors. You have also requested that we report on whether the
required supplementary information and supplementary information included with the financial
statements is fairly stated, in all material respects, in relation to the financial statements as a whole. We
are pleased to confirm our acceptance and our understanding of this audit engagement by means of this
letter.
Our audit will be conducted with the objective of our expressing an opinion on the financial statements.
We will also perform the audit of the County as of December 31, 2012, so as to satisfy the audit
requirements imposed by the Single Audit Act and the U. S. Office of Management and Budget (OMB)
Circular No. A-133.
The Responsibilities of the Auditor
We will conduct our audit in accordance with auditing standards generally accepted in the United States
of America (GAAS); "Government Auditing Standards" issued by the Comptroller General of the United
States; the provisions of the Single Audit Act, OMB Circular A-133, and OMB's Compliance
Supplement. Those standards circulars, supplements, or guides require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free from material
misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's judgment,
including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. 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.
Because of the inherent limitations of an audit, together with the inherent limitations of internal control,
an unavoidable risk that some material misstatements may not be detected exists, even though the audit is
properly planned and performed in accordance with GAAS. Also, an audit is not designed to detect errors
or fraud that are immaterial to the financial statements. The determination of abuse is subjective;
therefore, Government Auditing Standards do not expect us to provide reasonable assurance of detecting
abuse.
314 West 18th Street
P.O. Box 1088 (Zip 82001-1088)
Cheyenne, Wyoming 82001-4401
(307) 634-2151
Fax: (307) 634-4939
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Weld County, Colorado
January 10, 2013
Page 2
In making our risk assessments, we consider internal control relevant to the County's preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity's internal
control. However, we will communicate to you in writing concerning any significant deficiencies or
material weaknesses in internal control relevant to the audit of the financial statements that we have
identified during the audit.
We will also communicate to the Board of County Commissioners (a) any fraud involving senior
management and fraud (whether caused by senior management or other employees) that causes a material
misstatement of the financial statements that becomes known to us during the audit, and (b) any instances
of noncompliance with laws and regulations that we become aware of during the audit (unless they are
clearly inconsequential).
The funds that you have told us are maintained by the County and that are to be included as part of our
audit are listed here.
Governmental Funds:
General Fund
Public Works Fund
Social Services Fund
Human Services Fund
Contingent Fund
Capital Expenditures Fund
Conservation Trust Fund
Public Health Fund
Solid Waste Fund
Law Enforcement Authority Funds
Proprietary Funds:
Paramedic Enterprise Fund
Motor Vehicle Fund (Internal Service)
Health Insurance Fund (Internal Service)
Insurance Fund (Internal Service)
Phone Services Fund (Internal Service)
Fiduciary Funds:
Retirement Plan
Other Post Employment Benefits
Agency Funds
The component units whose financial statements you have told us are to be included as part of the
County's, basic financial statements are listed here.
Weld County Housing Authority
E-911 Emergency Telephone Service Authority Board
The federal financial assistance programs and awards that you have told us that the County participates in
and that are to be included as part of the single audit are listed in Attachment A — Federal Financial
Assistance Programs.
Our reports on internal control will include any significant deficiencies and material weaknesses in
controls of which we become aware as a result of obtaining an understanding of internal control and
performing tests of internal control consistent with requirements of the standards and circulars identified
above. Our reports on compliance matters will address material errors, fraud, abuse, violations of
compliance obligations, and other responsibilities imposed by state and federal statutes and regulations or
assumed by contracts, and any state or federal grant, entitlement, or loan program questioned costs of
which we become aware, consistent with requirements of the standards and circulars identified above.
Weld County, Colorado
January 10, 2013
Page 3
The Responsibilities of Management and Identification of the Applicable Financial Reporting
Framework
Our audit will be conducted on the basis that management and those charged with governance,
acknowledge and understand that they have responsibility:
a. For the preparation and fair presentation of the financial statements in accordance with accounting
principles generally accepted in the United States of America;
b. For the design, implementation, and maintenance of internal control relevant to the preparation and
fair presentation of financial statements that are free from material misstatement, whether due to fraud
or error;
c. For establishing and maintaining effective internal control over financial reporting and for informing
us of all significant deficiencies and material weaknesses in the design or operation of such controls
of which it has knowledge;
d. For identifying and ensuring that the entity complies with the laws and regulations applicable to its
activities, and for informing us about all known material violations of such laws or regulations. In
addition, management is 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 entity
involving management, employees who have significant roles in internal control, and others where
the fraud could have a material effect on the financial statements. Management is also responsible for
informing us of its knowledge of any allegations of fraud or suspected fraud affecting the entity
received in communications from employees, former employees, analysts, regulators, or others;
e. For (a) making us aware of significant vendor relationships where the vendor is responsible for
program compliance, (b) following up and taking corrective action on audit findings, including the
preparation of a summary schedule of prior audit findings, and a corrective action plan, and (c) report
distribution including submitting the reporting package(s);and
f. To provide us with:
(1) Access to all information of which management is aware that is relevant to the preparation and
fair presentation of the financial statements such as records, documentation, and other matters;
(2) Additional information that we may request from management for the purpose of the audit;
(3) Unrestricted access to persons within the entity from whom we determine it necessary to obtain
audit evidence;
(4) When applicable, a summary schedule of prior audit findings for inclusion in the single audit
reporting package; and
(5) If applicable, responses to any findings reported on the schedule of findings and questioned costs.
As part of our audit process, we will request from management written confirmation concerning
representations made to us in connection with the audit including among other items:
a. That management has fulfilled its responsibilities as set out in the terms of this letter: and
b. That it believes 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.
Weld County, Colorado
January 10, 2013
Page 4
Management is responsible for identifying and ensuring that the County complies with the laws and
regulations applicable to its activities, and for informing us about all known material violations of such
laws or regulations. In addition, management is responsible for the design and implementation of
programs and controls to prevent and detect fraud or abuse, and for informing us about all known or
suspected fraud or abuse affecting the entity involving management, employees who have significant
roles in internal control, and others where the fraud or abuse could have a material effect on the financial
statements or compliance. Management is also responsible for informing us of its knowledge of any
allegations of fraud or abuse or suspected fraud or abuse affecting the entity received in communications
from employees, former employees, analysts, regulators, short sellers, or others.
Management is responsible for the preparation of the required supplementary information and
supplementary information presented in relation to the financial statements as a whole in accordance with
accounting principles generally accepted in the United States of America. Management agrees to include
the auditor's report on the required supplementary information and supplementary information in any
document that contains the supplementary information and that indicates that the auditor has reported on
such required supplementary information and supplementary information. Management also agrees to
present the supplementary information with the audited financial statements or, if the supplementary
information will not be presented with audited financial statements, to make the audited financial
statements readily available to the intended users of the supplementary information no later than the date
of issuance of the supplementary information and the auditor's report thereon.
The Board of County Commissioners is responsible for informing us of its views about the risks of fraud
or abuse within the entity, and its knowledge of any fraud or abuse or suspected fraud or abuse affecting
the entity.
The County agrees that it will not associate us with any public or private securities offering without first
obtaining our consent. Therefore, the County agrees to contact us before it includes our reports or
otherwise makes reference to us, in any public or private securities offering.
Our association with an official statement is a matter for which separate arrangements will be necessary.
The County agrees to provide us with printer's proofs or masters of such offering documents for our
review and approval before printing and with a copy of the final reproduced material for our approval
before it is distributed. In the event our auditor/client relationship has been terminated when the County
seeks such consent, we will be under no obligation to grant such consent or approval.
Because McGee, Hearne & Paiz, LLP will rely on the County and its management and Board of County
Commissioners to discharge the foregoing responsibilities, the County holds harmless and releases
McGee, Hearne & Paiz, LLP, its partners, and employees from all claims, liabilities, losses, and costs
arising in circumstances where there has been a knowing misrepresentation by a member of the County's
management which has caused, in any respect, McGee, Hearne & Paiz, LLP's breach of contract or
negligence. This provision shall survive the termination of this arrangement for services.
The County's Records and Assistance
If circumstances arise relating to the condition of the County's records, the availability of appropriate
audit evidence, or indications of a significant risk of material misstatement of the financial statements
because of error, fraudulent financial reporting, or misappropriation of assets, which in our professional
judgment, prevent us from completing the audit or forming an opinion, we retain the unilateral right to
take any course of action permitted by professional standards, including declining to express an opinion,
issue a report, or withdraw from the engagement.
Weld County, Colorado
January 10, 2013
Page 5
During the course of our engagement, we may accumulate records containing data that should be reflected
in the County's books and records. The County will determine that all such data, if necessary, will be so
reflected. Accordingly, the County will not expect us to maintain copies of such records in our
possession.
The assistance to be supplied by County personnel, including the preparation of schedules and analyses of
accounts, has been discussed and coordinated with Barbara Connolly, Controller. The timely and accurate
completion of this work is an essential condition to our completion of the audit and issuance of our audit
report.
In accordance with Government Auditing Standards, a copy of our most recent peer review report is
enclosed, for your information.
Fees, Costs, and Access to Workpapers
Our fees for the audit and accounting services described above are based upon the value of the services
performed and the time required by the individuals assigned to the engagement, plus direct expenses. Our
fee for the services described in this letter will not exceed $75,000. Our fee estimate and completion of
our work is based upon the following criteria:
a. Anticipated cooperation from County personnel
b. Timely responses to our inquiries
c. Timely completion and delivery of client assistance requests
d. Timely communication of all significant accounting and financial reporting matters
e. The assumption that unexpected circumstances will not be encountered during the engagement
If any of the aforementioned criteria are not met, then fees may increase. All other provisions of this
letter will survive any fee adjustment. Interim billings will be submitted as work progresses and as
expenses are incurred. Billings are due upon submission.
Our professional standards require that we perform certain additional procedures, on current and previous
years' engagements, whenever a partner or professional employee leaves the firm and is subsequently
employed by or associated with a client in a key position. Accordingly, the County agrees it will
compensate McGee, Hearne & Paiz, LLP for any additional costs incurred as a result of the County's
employment of a partner or professional employee of McGee, Hearne & Paiz, LLP.
In the event we are requested or authorized by the County or are required by government regulation,
subpoena, or other legal process to produce our documents or our personnel as witnesses with respect to
our engagement for the County, the County will, so long as we are not a party to the proceeding in which
the information is sought, reimburse us for our professional time and expenses, as well as the fees and
expenses of our counsel, incurred in responding to such requests.
The documentation for this engagement is the property of McGee, Hearne & Paiz, LLP. However, you
acknowledge and grant your assent that representatives of the cognizant or oversight agency or their
designee, other government audit staffs, and the U.S. Government Accountability Office shall have access
to the audit documentation upon their request and that we shall maintain the audit documentation for a
period of at least three years after the date of the report, or for a longer period if we are requested to do so
by the cognizant or oversight agency. Access to requested documentation will be provided under the
supervision of McGee, Hearne & Paiz, LLP audit personnel and at a location designated by our Firm.
Weld County, Colorado
January 10, 2013
Page 6
You have informed us that you intend to prepare a comprehensive annual financial report (CAFR) and
submit it for evaluation by the Government Finance Officers Association's Certificate of Achievement for
Excellence in Financial Reporting.
Claim Resolution
The County and McGee, Hearne & Paiz, LLP agree that no claim arising out of services rendered
pursuant to this agreement shall be filed more than two years after the date of the audit report issued by
McGee, Hearne & Paiz, LLP or the date of this arrangement letter if no report has been issued. The
County waives any claim for punitive damages. McGee, Hearne & Paiz, LLP's liability for all claims,
damages and costs of the County arising from this engagement is limited to the amount of fees paid by the
County to McGee, Hearne & Paiz, LLP for the services rendered under this arrangement letter.
Reporting
We will issue a written report upon completion of our audit of the County's financial statements. Our
report will be addressed to the Board of County Commissioners of the County. We cannot provide
assurance that an unmodified opinion will be expressed. Circumstances may arise in which it is necessary
for us to modify our opinion, add an emphasis -of -matter or other -matter paragraphs, or withdraw from the
engagement.
In addition to our report on the County's financial statements, we will also issue the following types of
reports:
• A report on the fairness of the presentation of the County's schedule of expenditures of federal
awards for the year ending December 31, 2012.
• Reports on internal control related to the financial statements, and major programs. These reports
will describe the scope of testing of internal control and the results of our tests of internal controls.
• Reports on compliance with laws, regulations, and the provisions of contracts or grant agreements.
We will report on any noncompliance which could have a material effect on the financial
statements and any noncompliance which could have a material effect, as defined by OMB Circular
A-133, on each major program.
• A schedule of findings and questioned costs.
This letter constitutes the complete and exclusive statement of agreement between McGee, Hearne &
Paiz, LLP and the County, superseding all proposals, oral or written, and all other communications, with
respect to the terms of the engagement between the parties.
Weld County, Colorado
January 10, 2013
Page 7
Please sign and return the attached copy of this letter to indicate your acknowledgment of, and agreement
with, the arrangements for our audit of the financial statements including our respective responsibilities.
McGEE, HEARNE & PAIZ, LLP
Robert W. Dahill, Partner
Confirmed on behalf of the County:
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CERTIFIED PUBLIC ACCOUN TANTS
AND CONSULTANTS
SYSTEM REVIEW REPORT
October 7, 2010
To the Partners of
McGee, Hearne & Paiz, LLP
and the Peer Review Committee of the Nevada Society
of Certifed Public Accountants
We have reviewed the system of quality control for the accounting and auditing practice
of McGee, Hearne & Paiz, LLP (the firm) in effect for the year ended June 30, 2010. Our
peer review was conducted in accordance with the Standards for Performing and
Reporting on Peer Reviews established by the Peer Review Board of the American
Institute of Certified Public Accountants. The firm is responsible for designing a system of
quality control and complying with it to provide the firm with reasonable assurance of
performing and reporting in conformity with applicable professional standards in all
material respects. Our responsibility is to express an opinion on the design of the system
of quality control and the firm's compliance therewith based on our review. The nature,
objectives, scope, limitations of and the procedures performed in a System Review
are described in the standards at www. aicpa.orq/prsummary.
As required by the standards, engagements selected for review included engagements
performed under the Government Auditing Standards and audits of employee benefit
plans.
In our opinion, the system of quality control for the accounting and auditing practice of
McGee, Hearne & Paiz, LLP in effect for the year ended June 30, 2010, has been suitably
designed and complied with to provide the firm with reasonable assurance of performing
and reporting in conformity with applicable professional standards in all material respects.
Firms can receive a rating of pass, pass with deficiency(ies) or fail. McGee, Hearne &
Paiz, LLP has received a peer review rating of pass.
Brady Marti & Associates P.C.
BRADY, MARTZ & ASSOCIATES, PC
401 Demers Avenue 5uhe 300 RO Box 14296
Gi and Folks, ND 58208-42% (701) 773-4683 Fax O01 1795-7 498
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