10.01 - Appoint Consultants for 2008

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October 3, 2007 City of Pequot Lakes Page 5 Audit procedures-compliance As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of The City of Pequot Lakes' compliance with the provisions of applicable laws,regulations,contracts,agreements, and grants.However,the objective of our audit will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards. As part of our audit, we will also perform the appropriate procedures and reporting as required by the Minnesota Legal Compliance Audit Guide for Local Government. Administration We understand that your employees will prepare all cash or other confinnations we request and will locate any documents selected by us for testing. We will provide copies of our reports to the City; however, management is responsible for distribution of the reports and the financial statements. Unless restricted by law or regulation, or containing privileged and confidential information,copies of our reports are to be made available for public inspection. The audit documentation for this engagement is the property of LarsonAllen LLP (LarsonAllen) and constitutes confidential information. However, pursuant to authority given by law or regulation, we may be requested to make certain audit documentation available to the Minnesota Office of the State Auditor or its designee, a federal agency providing direct or indirect funding, or the U.S. Government Accountability Office for purposes of a quality review of the audit, to resolve audit findings, or to carry out oversight responsibilities. We will notify you of any such request. If requested, access to such audit documentation will be provided under the supervision of LarsonAllen personnel. Furthermore, upon request, we may provide copies of selected audit documentation to the aforementioned parties. These parties may intend, or decide, to distribute the copies or information contained therein to others, including other governmental agencies. The audit documentation for this engagement will be retained for a minimum of seven years after the report release date or for any additional period requested by the Minnesota Office of the State Auditor. If we are aware that a federal awarding agency or auditee is contesting an audit finding, we will contact the party(ies) contesting the audit finding for guidance prior to destroying the audit documentation. Government Auditing Standards require that we provide you with a copy of our most recent external peer review report and any letter of comment, and any subsequent peer review reports and letters of comment received during the period of the contract. Our 2004 peer review report accompanies this letter. Use of financial statements If you and your management intend to reproduce and publish the financial statements and our report thereon, they must be reproduced in their entirety. Inclusion of the audited financial statements in a document you prepare,such as an annual report, should be done only with our prior approval of the document.