2008-025 Finance & McGladrey & Pullen 2008 Audit Contract

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~ McGladrey& Pullen Certified Public Accountants March 24, 2008 The Honorable Manager and Members of the County Commissioners Orange County, North Carolina P.O. Box 8181 Hillsborough, North Carolina 27278 Attention: Mr. Gary Humphreys, Financial Services Director McGladrey fi Pullen, LLP 230 North EM St, Ste.1100. Greensboro, NC 27401.2436 P.0. Box 2470, Greensboro, NC 21402.2470 0 336273.4461 F 336.274.2519 www.mcgladreycom This letter is to explain our understanding of the arrangements for the services we are to perform for Orange County, North Carolina (the "County') for the year ending June 30, 2008. We ask that you either confirm or amend this understanding. Audit Services We will perform an audit of the County's governmental activities and major fund as of for the year ended June 3Q 2008 which collectively comprise the basic financial statements. We understand that these financial statements will be prepared in accordance with accounting principles generally accepted in the United States of America. The objective of an audit of financial statements is to express an opinion on those statements. • We will also pertomt the audit of the County as of June 30, 2008 so as to satisfy the audit requirements imposed by the Single Audit Act and the U.S. Office of Management and Budget ("OMB's Circular A-133. Vlfe will conduct the audit in accordance with auditing standards generally accepted in the United States of America and Govemment AudrGng StandaMs issued by the Comptroller General of the United States; the provisions of the Single Audit Act, OMB Circular A-133 and OMB's Compliance Supplemenfi and the State Single Audit Implementation Act. Those standards, circulars, supplements or guides require that we plan and perform the audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement whether caused by error or fraud. Accordingly, a material misstatement may remain undetected. Also, an audit is not designed to detect errors oi'fraud that are immaterial to the financial statements. The determination of abuse is subjective; therefore, Govemment Auditing Standards do not expect us to provide reasonable assurance of detecting abuse. An audit of financial statemerrts also includes obtaining an understanding of intemal control sufficient to plan the audit and to determine the nature, timing, and extent of audit procedures to be performed. An audit is not designed to .provide assurance on intemal control or to identify significant deficiencies or material weaknesses. However, we will communicate to you and to management any significant deficiencies or material weaknesses that become known to us during the course of the audit. We will also communicate tp the board of county commissioners (a) any fraud involving senior management and fraud (whether caused by senior management or other employees) that causes a material misstatement of the financial statements, (b) any fraud, illegal acts, violations of provisions of contracts orgrant agreements and abuse that come to our attention (unless they are clearly inconsequential), (c) any disagreements with management and other serious difficulties encountered in performing the audit, and (d) various matters related to the entity's accounting policies and financial statements. • McGladrey & Pullen, LLP is a member firm of RSM International - an affiliation of separate and independent legal entities.