FY2019 City of Blair Audit LetterL,
HAY"Es
&ASSOCIATES, L.L.C.
CPAs I Consultants
December 16, 2019
City of 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 City of Blair, Nebraska
(the City) for the year ended September 30, 2019. We will audit the financial statements of the
governmental activities, the business -type activities, each major fund, and the aggregate remaining fund
information, which collectively comprise the basic financial statements, of the City 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 City'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 City'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.
Westroads Pointe 1 1015 N. 98th St., Suite 200 1 Omaha, NE 68114 1 T 402-390-2480
134 West Broadway I Council Bluffs, IA 51503 1 T 712-322-5503
We have also been engaged to report on supplementary information other than RSI that accompanies
City's financial statements. 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 will provide an opinion on it in relation to the financial statements as a whole:
1) Schedule of expenditures of federal awards and related notes
2) Combining balance sheet — general fund
3) Combining statement of revenues, expenditures, and changes in fund balance — general fund
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 City 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 City's financial statements. Our report will be addressed to City Council and
Management of the City. 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 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 City 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, Government Auditing 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 or noncompliance 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 or major programs. 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. We will include such matters in the reports required for a single audit.
Our responsibility as auditors is limited to the period covered by our audit and does not extend to any
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; schedule of expenditures of federal
awards; federal award programs; 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 GovernmentAuditing 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 City's compliance with provisions of applicable laws,
regulations, contracts, and agreements, including grant agreements. However, the objective of those
procedures 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 Government Auditing Standards.
Other Services
We will also assist in preparing the financial statements and related notes of the City 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 Government Auditing Standards and such services will not be
conducted in accordance with Government Auditing Standards. We will perform the services in
accordance with applicable professional standards. The other services are limited to the financial
statement services previously defined. We, in our sole professional judgment, reserve the right to refuse
to perform any procedure or take any action that could be construed as assuming management
responsibilities.
Management Responsibilities
Management is responsible for (1) establishing and maintaining effective internal controls, including
internal controls over federal awards, and for evaluating and monitoring ongoing activities, to help
ensure that appropriate goals and objectives are met; (2) following laws and regulations; (3) ensuring
that there is reasonable assurance that government programs are administered in compliance with
compliance requirements; and (4) 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, schedule of expenditures of federal awards, and all accompanying information in
conformity with U.S. generally accepted accounting principles; and for compliance with applicable laws
and regulations (including federal statutes) and the provisions of contracts and grant agreements
(including award 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 also include identifying significant contractor relationships in which the contractor
has responsibility for program compliance and for the accuracy and completeness of that information.
Your responsibilities include adjusting the financial statements to correct material misstatements and
confirming to us in the management 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 OR make the
audited financial statements readily available to users of the supplementary information no later than the
date the supplementary information is issued with 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.
You agree to assume all management responsibilities relating to the financial statements, schedule of
expenditures of federal awards, 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, schedule of expenditures of federal awards, and related notes and that you have
reviewed and approved the financial statements, schedule of expenditures of federal awards, 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
$29,450 for the financial audit. If it is later determined a single audit is required, we will discuss this
with you prior to the commencement of any additional work being performed. At the time of this letter,
it is not anticipated that a single audit will be required. We will perform our audit in accordance with the
timelines below.
Planning: Week of December 9, 2019
Fieldwork: Weeks of December 16, 2019, and December 30, 2019
Draft: On or before February 7, 2020
Final: On or before February 21, 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.
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:/peerreview.aicpa.orglpublicfile.
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:
This letter correctly sets forth t e bnderstanding of ;be City.
Management signature:
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Date: 0 —%
Governance signature: -
Title:
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