1998 S Finance - Deloitte and Touche, LLP - Audit contract for the June 30 1998 Fiscal Year

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June 4, 1998 The Board of County Commissioners Page 2 Our audits will be conducted in accordance with generally accepted auditing standards, standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and Office of Management and Budget (OMB ") Circular A -133, Audits of States, Local Governments and Non-pro .flt Organizations. We will plan and perform our audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement, whether caused by error or fraud, and we will perform tests of Orange County's compliance with certain provisions of laws, regulations, contracts, and grants. However, because of the characteristics of fraud, particularly those involving concealment and falsified documentation (including forgery), a properly planned and performed audit may not detect a material misstatement. Therefore, an audit conducted in accordance with generally accepted auditing standards is designed to obtain reasonable, rather than absolute, assurance that the general purpose financial statements are free of material misstatement. An audit is not designed to detect error or fraud that is immaterial to the general purpose financial statements or to detect immaterial instances of noncompliance. As part of our audit, we will consider the County's internal control and assess control risk, as required by generally accepted auditing standards and Government Auditing Standards, for the purpose of establishing a basis for determining the nature, timing, and extent of auditing procedures necessary for expressing an opinion on the general purpose financial statements, and not to provide assurance on the County's internal control or to identify reportable conditions. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose 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 assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our auditing procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, creditors, and financial institutions. We will make audit inquiries and request written responses from your attorneys as part of the engagement, and they may bill you for responding to this inquiry.