2008-025 Finance - McGladrey & Pullen

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Orange County, North Carolina April 23, 2007 • Page 3 received in communications from employees, regulators, or others, (7) making all financial records and related information available to us, (8) for adjusting the financial statements to correct material misstatements, (9) 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 (if any), and (10) report distribution including submitting the reporting package. At the conclusion of our audit, we will request certain written representations from management about the financial statements and matters related thereto. We will also require that management affirm to us 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. The Board is responsible for informing us of its views about the risks of fraud within the entity, and its knowledge of any fraud or suspected fraud affecting the entity. We will also determine that certain matters related to the conduct of the audit are communicated to the Board, including (1) fraud involving senior management and fraud (whether caused by senior management or other employees) that causes a material misstatement of the financial statements, (2) illegal acts that come to our attention (unless they are clearly inconsequential), (3) disagreements with management and other serious difficulties encountered in performing the audit, and (4) various matters related to the entity's accounting policies and financial statements. You have informed us that you intend to prepare a comprehensive annual financial report ("CAFRA) and submit it for evaluation by the Govemment Finance Officers Association's Certificate of Achievement for Excellence in Financial Reporting. Our participation in the preparation of the CAFR is to consist of having the financial statement report reviewed by a person who is also a reviewer for the GFOA Certificate Program and have him involved in the resolution of any accounting or reporting questions that arise during the engagement. • The working papers for this engagement are the property of McGladrey & Pullen, 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. Govemment Accountability Office shall have access to the audit working papers upon their request; and that we shall maintain the working papers for a period of at least five 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 workpapers will be provided under the supervision of McGladrey & Pullen, LLP audit personnel and at a location designated by our Firm. We will provide basic accounting assistance limited to preparing draft financial statements that are based on management's chart of accounts and trial balance and any adjusting, correcting and closing entries that have been approved by management, and preparing draft notes to the financial statements based on information determined and approved by management. We will assist in drafting the County's financial statements and the separate financial statements for the SportsPlex Enterprise Fund, propose adjustments to the trial balance and preparation of schedules of properly tax receivables for the Towns of Chapel Hill, Carrboro and Hillsborough, all of which are reviewed and approved by management. The draft and the adjustments are the responsibility of management. The two overarching principles of the independence standards of the GovemmenfAuditing Standards issued by the Comptroller General of the United States provide that management is responsible for the substantive outcomes of the work, and therefore, has a responsibility and is able to make any informed judgment on the results of the services described above. Accordingly, the County agrees to the following: 7. Mr. Ken T. Chavious, Finance Director, will be accountable and responsible for overseeing the draft of the . County's financial statements and the draft separate financial statements for the SportsPlex Enterprise Fund, propose adjustments to the trial balance and preparation of schedules of property tax receivables for the Towns of Chapel Hill, Carrboro and Hillsborough.