Laserfiche WebLink
October 3,2007 <br /> City of Pcquot Lakes <br /> �. Page 4 <br /> Audit procedures-general <br /> An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial <br /> statements; therefore, our audit will involve judgment about the number of transactions to be examined and <br /> the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance <br /> about whether the financial statements are free of material misstatement, whether from (1) errors, <br /> (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental <br /> regulations that are attributable to the entity or to acts by management or employees acting on behalf of the <br /> entity. Because the determination of abuse is subjective, Government Auditing Standards do not expect <br /> auditors to provide reasonable assurance of detecting abuse. <br /> Because an audit is designed to provide reasonable, but not absolute assurance and because we will not <br /> perform a detailed examination of all transactions, there is a risk that material misstatements may exist and <br /> not be detected by us. In addition, an audit is not designed to detect immaterial misstatements or violations of <br /> laws or governmental regulations that do not have a direct and material effect on the financial statements. <br /> However, we will inform you of any material errors and any fraudulent financial reporting or <br /> misappropriation of assets that come to our attention. We will also inform you of any violations of laws or <br /> governmental regulations that come to our attention, unless clearly inconsequential. Our responsibility as <br /> auditors is limited to the period covered by our audit and does not extend to later periods for which we are not <br /> engaged as auditors. <br /> Our procedures will include tests of documentary evidence supporting the transactions recorded in the <br /> accounts, and may include tests of the physical existence of inventories, and direct confirmation of <br /> receivables and certain other assets and liabilities by correspondence with selected individuals, creditors, and <br /> financial institutions. We will request written representations from your attorneys as part of the engagement, <br /> and they may bill you for responding to this inquiry. At the conclusion of our audit, we will also require <br /> certain written representations from you about the financial statements and related matters. <br /> Audit procedures-internal control <br /> Our audit will include obtaining an understanding of the entity and its environment,including internal control, <br /> sufficient to assess the risks of material misstatement of the financial statements and to design the nature, <br /> timing, and extent of further audit procedures. Tests of controls may be performed to test the effectiveness of <br /> certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the <br /> financial statements and to preventing and detecting misstatements resulting from illegal acts and other <br /> noncompliance matters that have a direct and material effect on the financial statements. Our tests, if <br /> performed, 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 Government <br /> Auditing Standards. <br /> An audit is not designed to provide assurance on internal control or to identify significant deficiencies. <br /> However, during the audit, we will communicate to management and those charged with governance internal <br /> control related matters that are required to be communicated under professional standards and Government <br /> Auditing Standards. <br />