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DocuSign Envelope ID: FD83399B-C72A-42C4-A531-71667A72DBC7 <br /> Orange County - 2019 Engagement Letter <br /> May 31, 2019 <br /> Page 7 <br /> Our procedures will include tests of documentary evidence supporting the transactions recorded <br /> in the accounts, and may include direct confirmation of receivables and certain other assets and <br /> liabilities by correspondence with selected individuals, funding sources, creditors, and financial <br /> institutions. We will request written representations from your attorneys as part of the <br /> engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, <br /> we will require certain written representations from you about your responsibilities for the <br /> financial statements; schedule of expenditures of federal awards; federal award programs; <br /> compliance with laws, regulations, contracts, and grant agreements; and other responsibilities <br /> required by generally accepted auditing standards. <br /> We plan to obtain and place reliance on the report of other auditors for the Orange County ABC <br /> Board, a discretely presented component unit of the County, assuming that our communications <br /> with the other auditors and review of their audit report and the financial statements of the Orange <br /> County ABC Board provide sufficient and appropriate audit evidence on which to base our overall <br /> opinion on the aggregate discretely presented component units. <br /> Audit Procedures—Internal Control <br /> Our audit will include obtaining an understanding of the government and its environment, <br /> including internal control, sufficient to assess the risks of material misstatement of the financial <br /> statements and to design the nature, timing, and extent of further audit procedures. Tests of <br /> controls may be performed to test the effectiveness of certain controls that we consider relevant to <br /> preventing and detecting errors and fraud that are material to the financial statements and to <br /> preventing and detecting misstatements resulting from illegal acts and other noncompliance <br /> matters that have a direct and material effect on the financial statements. Our tests, if performed, <br /> will be less in scope than would be necessary to render an opinion on internal control and, <br /> accordingly, no opinion will be expressed in our report on internal control issued pursuant to <br /> Government Auditing Standards. <br /> As required by the Uniform Guidance and the State Single Audit Implementation Act, we will <br /> perform tests of controls over compliance to evaluate the effectiveness of the design and operation <br /> of controls that we consider relevant to preventing or detecting material noncompliance with <br /> compliance requirements applicable to each major federal award program. However,our tests will <br /> be less in scope than would be necessary to render an opinion on those controls and, accordingly, <br /> no opinion will be expressed in our report on internal control issued pursuant to the Uniform <br /> Guidance and the State Single Audit Implementation Act. <br /> An audit is not designed to provide assurance on internal control or to identify significant <br /> deficiencies or material weaknesses. However, during the audit, we will communicate to <br /> management and those charged with governance internal control related matters that are required <br /> to be communicated under AICPA professional standards, Government Auditing Standards, and <br /> the Uniform Guidance. <br /> Audit Procedures—Compliance <br /> As part of obtaining reasonable assurance about whether the financial statements are free of <br /> material misstatement,we will perform tests of Orange County,North Carolina's compliance with <br /> provisions of applicable laws, regulations, contracts and agreements, including grant agreements. <br /> However,the objective of those procedures will not be to provide an opinion on overall compliance <br />