FY2019 BAA Audit Letter1u XYT
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&ASSOCIATES, L.L.C.
CPAs I Consultants
December 12, 2019
To Blair Airport Authority, Blair Nebraska
Attn: Rodney A. Storm
City Administrator
218 South 16th Street
Blair, NE 68008
We are pleased to confirm our understanding of the services we are to provide Blair Airport Authority
(the Authority) for the year ended September 30, 2019. We will audit the financial statements of the
governmental activities, each major fund, and the related notes to the financial statements which
collectively comprise the basic financial statements, of the Authority as of and for the year ended
September 30, 2019.
Accounting standards generally accepted in the United States of America provide for certain required
supplementary information (RSI), such as management's discussion and analysis (MD&A), to supplement
the Authority's basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. As part of our engagement, we will apply certain limited procedures to
the Authority's RSI in accordance with auditing standards generally accepted in the United States of
America. These limited procedures will consist of inquiries of management regarding the methods of
preparing the information and comparing the information for consistency with management's responses
to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the
basic financial statements. We will not express an opinion or provide any assurance on the information
because the limited procedures do not provide us with sufficient evidence to express an opinion or provide
any assurance. The following RSI is required by generally accepted accounting principles and will be
subjected to certain limited procedures, but will not be audited:
1) Management's discussion and analysis.
2) Budgetary comparison schedules.
We have also been engaged to report on supplementary information other than RSI that accompanies
Authority's financial statements.
Westroads Pointe 1 1015 N. 98th St., Suite 200 1 Omaha, NE 68114 1 T 402-390-2480
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We will subject the following supplementary information to the auditing procedures applied in our audit
of the financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the financial
statements or to the financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America, and we will provide an opinion on
it in relation to the financial statements as a whole, in a report combined with our auditor's report on the
financial statements:
1) Fund balances for the last five years
Audit Objectives
The objective of our audit is the expression of opinions as to whether your financial statements are fairly
presented, in all material respects, in conformity with U.S. generally accepted accounting principles and
to report on the fairness of the supplementary information referred to in the second paragraph when
considered in relation to the financial statements as a whole. Our audit will be conducted in accordance
with auditing standards generally accepted in the United States of America and the standards for financial
audits contained in Government Auditing Standards, issued by the Comptroller General of the United
States, and will include tests of the accounting records of the Authority and other procedures we consider
necessary to enable us to express such opinions. We will issue a written report upon completion of our
audit of the Authority's financial statements. Our report will be addressed to Board of Directors and
Management of the Authority. We cannot provide assurance that unmodified opinions will be expressed.
Circumstances may arise in which it is necessary for us to modify our opinions or add emphasis -of -matter
or other -matter paragraphs. If our opinions on the financial statements are other than unmodified, we will
discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are
unable to form or have not formed opinions, we may decline to express opinions or issue reports, or may
withdraw from this engagement.
We will also provide a report (that does not include an opinion) on internal control related to the financial
statements and compliance with the provisions of laws, regulations, contracts, and grant agreements,
noncompliance with which could have a material effect on the financial statements as required by
Government Auditing Standards. The report on internal control and on compliance and other matters will
include a paragraph that states (1) that the purpose of the report is solely to describe the scope of testing
of internal control and compliance, and the results of that testing, and not to provide an opinion on the
effectiveness of the entity's internal control on compliance, and (2) that the report is an integral part of an
audit performed in accordance with Government Auditing Standards in considering the entity's internal
control and compliance. The paragraph will also state that the report is not suitable for any other purpose.
If during our audit we become aware that the Authority is subject to an audit requirement that is not
encompassed in the terms of this engagement, we will communicate to management and those charged
with governance that an audit in accordance with U.S. generally accepted auditing standards and the
standards for financial audits contained in Government Auditing Standards may not satisfy the relevant
legal, regulatory, or contractual requirements.
Audit Procedures—General
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; therefore, our audit will involve judgment about the number of transactions to be
examined and the areas to be tested.
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. We will plan and perform the audit to obtain reasonable rather than absolute
assurance about whether the financial statements are free of material misstatement, whether from (1) errors,
(2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental
regulations that are attributable to the government or to acts by management or employees acting on behalf
of the government. Because the determination of abuse is subjective, GovernmentAuditing Standards do
not expect auditors to provide reasonable assurance of detecting abuse.
Because of the inherent limitations of an audit, combined with the inherent limitations of internal control,
and because we will not perform a detailed examination of all transactions, there is a risk that material
misstatements may exist and not be detected by us, even though the audit is properly planned and
performed in accordance with U.S. generally accepted auditing standards and Government Auditing
Standards. In addition, an audit is not designed to detect immaterial misstatements or violations of laws
or governmental regulations that do not have a direct and material effect on the financial statements.
However, we will inform the appropriate level of management of any material errors, any fraudulent
financial reporting, or misappropriation of assets that come to our attention. We will also inform the
appropriate level of management of any violations of laws or governmental regulations that come to our
attention, unless clearly inconsequential, and of any material abuse that comes to our attention. Our
responsibility as auditors is limited to the period covered by our audit and does not extend to later periods
for which we are not engaged as auditors.
Our procedures will include tests of documentary evidence supporting the transactions recorded in the
accounts and may include direct confirmation of receivables and certain other assets and liabilities by
correspondence with selected individuals, funding sources, creditors, and financial institutions. We will
request written representations from your attorneys as part of the engagement, and they may bill you for
responding to this inquiry. At the conclusion of our audit, we will require certain written representations
from you about your responsibilities for the financial statements; compliance with laws, regulations,
contracts, and grant agreements; and other responsibilities required by generally accepted auditing
standards.
Audit Procedures—Internal Control
Our audit will include obtaining an understanding of the government and its environment, including
internal control, sufficient to assess the risks of material misstatement of the financial statements and to
design the nature, timing, and extent of further audit procedures. 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 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 financial
statements. Our tests, if performed, will be less in scope than would be necessary to render an opinion on
internal control and, accordingly, no opinion will be expressed in our report on internal control issued
pursuant to Government Auditing Standards.
An audit is not designed to provide assurance on internal control or to identify significant deficiencies or
material weaknesses. However, during the audit, we will communicate to management and those charged
with governance internal control related matters that are required to be communicated under AICPA
professional standards and Government Auditing Standards.
Audit Procedures—Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of material
misstatement, we will perform tests of the Authority's compliance with the provisions of applicable laws,
regulations, contracts, agreements, and grants. However, the objective of our audit will not be to provide
an opinion on overall compliance and we will not express such an opinion in our report on compliance
issued pursuant to GovernmentAuditing Standards.
Other Services
We will also assist in preparing the financial statements and related notes of the Authority in conformity
with U.S. generally accepted accounting principles based on information provided by you. These non -
audit services do not constitute an audit under GovernmentAuditing Standards and such services will not
be conducted in accordance with Government Auditing Standards.
Management Responsibilities
Management is responsible for establishing and maintaining effective internal controls, including
evaluating and monitoring ongoing activities, to help ensure that appropriate goals and objectives are met;
following laws and regulations; and ensuring that management and financial information is reliable and
properly reported. Management is also responsible for implementing systems designed to achieve
compliance with applicable laws, regulations, contracts, and grant agreements. You are also responsible
for the selection and application of accounting principles, for the preparation and fair presentation of the
financial statements and all accompanying information in conformity with U.S. generally accepted
accounting principles, and for compliance with applicable laws and regulations and the provisions of
contracts and grant agreements.
Management is also responsible for making all financial records and related information available to us
and for the accuracy and completeness of that information. You are also responsible for providing us with
(1) access to all information of which you are aware that is relevant to the preparation and fair presentation
of the financial statements, (2) additional information that we may request for the purpose of the audit,
and (3) unrestricted access to persons within the government from whom we determine it necessary to
obtain audit evidence.
Your responsibilities include adjusting the financial statements to correct material misstatements and for
confirming to us in the written representation letter that 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.
You are 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 government involving (1)
management, (2) employees who have significant roles in internal control, and (3) others where the fraud
could have a material effect on the financial statements. Your responsibilities include informing us of your
knowledge of any allegations of fraud or suspected fraud affecting the government received in
communications from employees, former employees, grantors, regulators, or others. In addition, you are
responsible for identifying and ensuring that the government complies with applicable laws, regulations,
contracts, agreements, and grants and for taking timely and appropriate steps to remedy fraud and
noncompliance with provisions of laws, regulations, contracts or grant agreements, or abuse that we report.
You are responsible for the preparation of the supplementary information, which we have been engaged
to report on, in conformity with U.S. generally accepted accounting principles. You agree to include our
report on the supplementary information in any document that contains and indicates that we have reported
on the supplementary information. You also agree to include the audited financial statements with any
presentation of the supplementary information that includes our report thereon. Your responsibilities
include acknowledging to us in the written representation letter that (1) you are responsible for
presentation of the supplementary information in accordance with GAAP; (2) you believe the
supplementary information, including its form and content, is fairly presented in accordance with GAAP;
(3) the methods of measurement or presentation have not changed from those used in the prior period (or,
if they have changed, the reasons for such changes); and (4) you have disclosed to us any significant
assumptions or interpretations underlying the measurement or presentation of the supplementary
information.
Management is responsible for establishing and maintaining a process for tracking the status of audit
findings and recommendations. Management is also responsible for identifying and providing report
copies of previous financial audits, attestation engagements, performance audits or other studies related
to the objectives discussed in the Audit Objectives section of this letter. This responsibility includes
relaying to us corrective actions taken to address significant findings and recommendations resulting from
those audits, attestation engagements, performance audits, or other studies. You are also responsible for
providing management's views on our current findings, conclusions, and recommendations, as well as
your planned corrective actions, for the report, and for the timing and format for providing that information.
With regard to using the auditor's report, you understand that you must obtain our prior written consent
to reproduce or use our report in bond offering official statements or other documents. With regard to the
electronic dissemination of audited financial statements, including financial statements published
electronically on your website, you understand that electronic sites are a means to distribute information
and, therefore, we are not required to read the information contained in these sites or to consider the
consistency of other information in the electronic site with the original document.
You agree to assume all management responsibilities relating to the financial statements and related notes
and any other non -audit services we .provide. You will be required to acknowledge in the management
representation letter our assistance with preparation of the financial statements and related notes and that
you have reviewed and approved the financial statements and related notes prior to their issuance and have
accepted responsibility for them. Further, you agree to oversee the non -audit services by designating an
individual, preferably from senior management, with suitable skill, knowledge, or experience; evaluate
the adequacy and results of those services; and accept responsibility for them.
Engagement Administration, Fees, and Other
The audit documentation for this engagement is the property of Hayes & Associates, L.L.C. and
constitutes confidential information. However, pursuant to authority given by law or regulation, we may
be requested to make certain audit documentation available to oversight agencies, a federal agency
providing direct or indirect funding, or the U.S. Government Accountability Office for purposes of a
quality review of the audit, to resolve audit findings, or to carry out oversight responsibilities. We will
notify you of any such request. If requested, access to such audit documentation will be provided under
the supervision of Hayes & Associates, L.L.C. personnel. Furthermore, upon request, we may provide
copies of selected audit documentation to the aforementioned parties.
These parties may intend, or decide, to distribute the copies or information contained therein to others,
including other governmental agencies. The audit documentation for this engagement will be retained for
a minimum of seven years after the report release or for any additional period requested by the oversight
agencies, a federal agency providing direct or indirect funding, or the U.S. Government Accountability
Office. If we are aware that a federal awarding agency, pass-through entity, or auditee is contesting an
audit finding, we will contact the parties contesting the audit finding for guidance prior to destroying the
audit documentation.
Bryan Broekemier is the engagement partner and is responsible for supervising the engagement and
signing the report or authorizing another individual to sign it. Our base fee for our services will be $8,750
for the financial audit. We will perform our audit in accordance with the timelines below.
Planning: Week of December 2, 2019
Fieldwork: Weeks of December 9, 2019, and December 16, 2019
Draft: On or before December 27, 2019
Final: On or before January 17, 2020
We will schedule appropriate and adequate staffing to adhere to these timelines based on the assumption
that the schedules, workpapers, reconciliations, and other documentation requested in the attached
Information Request List will be prepared by you and be available for our review no later than dates
outline in the Information Request List.
Our fees assume that information, schedules, and reports requested will be available in a timely manner
and that they will be auditable, e.g., are supported with the appropriate documentation and agree to the
financial statements. The fee estimate is based on anticipated cooperation from your personnel and the
assumption that unexpected circumstances will not be encountered during the engagement. Additionally,
you may request that we perform additional services not addressed in this engagement letter.
If additional work is required to meet schedule deadlines, in the event that the information is unavailable
from you, in the event that they are not auditable, or we are requested to perform additional services, we
will communicate with you regarding the scope of the additional services and the estimated fees. We will
not undertake any additional services without obtaining approval through a written change order for such
additional work. See an example copy of our Change Order Form in Appendix B. We ask that you
confirm acknowledgement of this arrangement by reviewing, signing, and returning the Change Order
Acknowledgement in Appendix A.
Fees include out-of-pocket costs, such as telephone, faxes, postage and report binding (10 bound reports,
one unbound report, and one electronic pdf file are included in the audit fee, additional reports are billed
at $25 per report). Travel costs have been factored into the fee and there will not be a separate charge.
It is the firm's policy to bill at the end of the month for work in progress, with a final bill at the delivery
of the final audit report. All bills are due on receipt. Finance charges will accrue for all bills that are
unpaid more than 30 days after receipt. In accordance with our firm policies, work may be suspended if
your account becomes 75 days or more overdue and may not be resumed until your account is paid in full.
If we elect to terminate our services for nonpayment, our engagement will be deemed to have been
completed upon written notification of termination, even if we have not completed our report(s). You will
be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket costs through
the date of termination.
You have requested that we provide you with a copy of our most recent external peer review report and
any subsequent reports received during the contract period. Accordingly, our most recent peer review
report is available on the AICPA Peer review web program public file which can be accessed at:
https:llpeerreview.aiepa.org/publicfile.
We appreciate the opportunity to be of service to you and believe this letter accurately summarizes the
significant terms of our engagement. If you have any questions, please let us know. If you agree with the
terms of our engagement as described in this letter, please sign the enclosed copy and return it to us.
Very truly yours,
HAYES & ASSOCIATES, LLC
RESPONSE:
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