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3 <br />The objective of our audit is the expression of an opinion about whether your basic financial statements are fairly <br />presented, in all material respects, inconformity with accounting principles generally accepted in the United States of <br />America. The objective also includes reporting on the County's: <br />Internal control related to the basic financial statements and compliance with laws, regulations, and the <br />provisions of contracts or grant agreements, noncompliance with which could have a material effect on the <br />basic financial statements in accordance with Government Auditing Standards. <br />Internal control related to major programs and an opinion on whether Orange County complied with laws, <br />regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on <br />each major program in accordance with the Single Audit Act Amendments of 1996, OMB Circular A-133, <br />"Audits of States, Local Governments, and Non-Profit Organizations", and the State Single Audit <br />Implementation Act. <br />The reports on internal control and compliance will each include a statement that the report is intended solely for the <br />information of the audit committee, management, specific legislative or regulator} bodies, federal and state awarding <br />agencies, and if applicable, pass-through entities and is not intended to be and should not be used by anyone other <br />than these specified parties. <br />We will begin our audit on a future agreed-upon date that we both mutually agree t;o and will issue our report no later <br />than October 31, 2003. <br />You agree that Orange County will prepare the Management's Discussion and ,~~nalysis for their respective basic <br />financial statements. <br />I will lead the engagement and will be responsible for assuring the overall quality, value, and timeliness of our <br />services to you. <br />YOUR EXPECTATIONS <br />As part of our planning process, we have discussed with you your expectations of {:henry, Bekaert & Holland, L.L.P., <br />your concerns about your local government, your views on risks facing you, any relationship issues with Cherry, <br />Bekaert & Holland, L.L.P., and specific engagement arrangements and timing. Our services plan, which includes our <br />audit plan, is designed to provide a foundation for an effective, efficient, and qualify-focused approach to accomplish <br />the engagement objectives and meet, and/or exceed, your expectations. Our service plan will be reviewed with you <br />periodically and will serve as a benchmark against which you will be able to measure our performance. <br />LIMITATIONS OF THE AUDITING PROCESS <br />Our audit will include procedures designed to obtain reasonable, rather than absolute, assurance of detecting <br />misstatements due to errors or fraud that are material to the basic financial statements. As you are aware, however, <br />there are inherent limitations in the auditing process. For example, audits are based on the concept of selective testing <br />of the data being examined and are, therefore,.subject to the limitation that material misstatements due to errors or <br />fraud, if they exist, may not be detected. Also, an audit is not designed to detect error or fraud that is immaterial to the <br />basic general-purpose financial statements. <br />