2006 S Finance - Audit Contract for the June 30, 2006 Fiscal Year

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LIMITATIONS OF THE AUDITING PROCESS Our audit will include procedures designed to obtain reasonable assurance of detecting misstatements due to errors or fraud that are material to the financial statements. Absolute assurance is not attainable because of the nature of audit evidence and the characteristics of fraud. For example, audits performed in accordance with GARS are based on the concept of selective testing of the data being examined and are, therefore, subject to the limitation that material misstatements due to errors or fraud, if they exist, may not be detected. Also,. an audit is not designed to detect matters that are immaterial to the financial statements. In addition, an audit conducted in accordance with GARS does not include procedures specifically designed to detect iAegal acts having an indirect effect (e.g., violations of fraud and abuse statutes that result in fines or penalties being imposed on the County) on the financial statements. As required by the Single Audit Act Amendments of 1996, OMB Circular A-133, and the State Single Audit Implementation Act, our audit will include tests of transactions related to major federal and State award programs for compliance with applicable laws and regulations and the provisions of contracts and grant agreements. Because an audit is designed to provide reasonable, but not absolute assurance and because we will not perform a detailed examination of all transactions, there is a risk that material errors, fraud, other illegal acts, or noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect immaterial errors, fraud, or other illegal acts or illegal acts that do not have a direct effect on the basic financial statements or to major programs. It should be recognized that our audit generally provides no assurance that illegal acts will be detected, and only reasonable assurance that illegal acts having a direct and material effect on the determination of financial statement amounts will be detected. However, we will inform you with respect to material errors and fraud, or illegal acts that come to our attention during the course of our audit. We will include such matters in the reports as required for a Single Audit. If, for any reason, we are unable to complete the audit, or are unable to form or have not formed an opinion on the basic financial statements, we may decline to express an opinion or decline to issue a report as a result of the engagement. In this case, our firm will inform in writing the parties to the contract. RESPONSIBILITIES AS TO INTERNAL CONTROLS As a part of our audit, we will consider the County's intemal control structure, as required by auditing standards generally accepted in the United States of America and GovemmentAuditing Standards, sufficient to plan the audit and to determine the nature, timing, and extent of auditing procedures necessary for expressing our opinion concerning the basic financial statements. You recognize that the basic financial statements and the establishment and maintenance of an effective intemal control over financial reporting are the responsibility of management. You also recognize that management is responsible for identifying and ensuring that the County complies with the laws and regulations applicable to its activities. Appropriate supervisory review procedures are necessary to provide reasonable assurance that adopted policies and prescribed procedures are adhered to and to identify errors, fraud, or illegal acts. An audit is not designed to provide assurance on internal control. As part of our consideration of the County's internal control structure, however, we will inform you of reportable conditions and other matters that come to our attention that represent significant deficiencies in the design or operation of the internal control structure, if any, as required by OMB Circular A-133 and the State Single Audit Implementation Act. As required by OMB Circular A-133 and the State Single Audit Implementation Act, we will perform tests of controls to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements, applicable to each major federal and State award program.