Okaloosa County BOCC — August 19, 2014 — Warren Averett - Terms of Engagement July 1 2014 — reading text

aggregate, to the financial statements taken as a whole. The Client is responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud affecting the government involving (1) management, (2) employees who have significant roles in internal control, and (3) others where the fraud or illegal acts could have a material effect on the financial statements. The Client's responsibilities include informing us of the Client’s knowledge of any allegations of fraud or suspected fraud affecting the government received in communications from employees, former employees, grantors, regulators, or others. In addition, the Client is responsible for identifying and ensuring that the entity complies with applicable laws, regulations, contracts, agreements, and grants. Additionally, as required by OMB Circular A-133 and Chapter 10.550 (as applicable), it is management's responsibility to follow up and take corrective action on reported audit findings and to prepare a summary schedule of prior audit findings and a corrective action plan. The summary schedule of prior audit findings should be available for our review at the start of fieldwork. The Client is responsible for the preparation of the schedule of expenditures of federal and/or state awards (as applicable) and the schedule of passenger facility charges in accordance with the requirements applicable to that program and in conformity with OMB Circular A-133 and Chapter 10.550. The Client agrees to include our report on schedule of expenditure of federal and/or state awards (as applicable) in any document that contains, and indicates that we have reported on the schedule of expenditures of federal and/or and state awards (as applicable). The Client also agrees to include the audited financial statement with any presentation of the schedule of expenditure of federal and/or state awards (as applicable) that includes our report thereon or make the audited financial statement readily available to intended users of the schedule of expenditures of federal and/or state awards (as applicable) no later than the date the schedule of expenditures of federal and/or state awards (as applicable) is issued with our report thereon. Your responsibilities include acknowledging to us in the written representation letter that (1) you are responsible for presentation of the schedule of expenditures of federal and/or state awards (as applicable) in accordance with OMB Circular A-133 and Chapter 10.550 (as applicable); (2) that you believe that the schedule of expenditures of federal and/or state awards (as applicable), including its form and content, is fairly presented in accordance with OMB Circular A-133 and Chapter 10.550 (as applicable); (3) that the methods of measurement or presentation have not changed from those used in the prior period (or, if they have changed, the reason for the changes); (4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the schedule of expenditures of federal and/or state awards (as applicable). The Client is also responsible for the preparation of the other supplementary information, which we have been engaged to report on, in conformity with U.S. generally accepted accounting principles. You agree to include our report on the supplementary information in any document that contains and indicates that we have reported on the supplementary information. The Client also agrees to include the audited financial statement with any presentation of supplemental information that includes our report thereon or make the audited financial statement readily available to users of the of the supplementary information no later than the date the supplementary information is issued with our report thereon. Your responsibilities include acknowledging to us in the written representation letter that (1) you are responsible for presentation of the supplementary information in accordance with GAAP; (2) that you believe that the supplementary information, including its form and content, is fairly presented in accordance with GAAP; (3) that the methods of measurement or presentation have not changed from those used in the prior period (or, if they have changed, the reason for the changes); (4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the supplementary information. Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying for us previous financial audits, attestation engagements, performance audits, or other studies related to the objectives discussed in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits, attestation engagements, performance audits, or studies. The Client is also responsible for providing management’s views on our current findings, conclusions, and recommendations, as well as the Client's planned corrective actions for the report, and for the timing and format for providing that information. Terms of Engagement is a standard firm document signed by the firm and all clients of the firm that ensures both the firm and the client have a clear understanding of the services to be provided and the terms and objectives of the engagement. {Okaloosa County, Florida GOVT Engagement -133 July 1, 2014 Page 4 of 7 | audited financial statement readily available to users of the supplementary information no later than the date the supplementary information is issued with our report thereon. 5. AUDIT PROCEDURES — GENERAL: An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the entity or to acts by management or employees acting on behalf of the entity. Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse. Because an audit is designed to provide reasonable, but not absolute assurance and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements or noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements or major programs. However, we will inform you of any material errors and any fraudulent financial reporting or misappropriation of assets that come to our attention. We will also inform you of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential, and of any material abuse that comes to our attention. We will include such matters in the reports required for a Single Audit. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, funding sources, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will require certain written representations from you about the financial statements and related matters. 6. AUDIT PROCEDURES — INTERNAL CONTROL: Our audit will include obtaining an understanding of the entity and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements. Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards. As required by OMB Circular A-133 and Chapter 10.550 (as applicable), we will perform tests of controls over compliance to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements applicable to each major federal award program. However, our tests will be less in scope than would be necessary to render an opinion on those controls and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to OMB Circular A-133 and Chapter 10.550 (as applicable). An audit is not designed to provide assurance on internal control or to identify significant deficiencies. However, during the audit, we will communicate to management and those charged with governance internal control related matters that are required to be communicated under AICPA professional standards, Government Auditing Standards, and OMB Circular A-133 and Chapter 10.550 (as applicable). 7. 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 Client's compliance with applicable laws and regulations and the provisions of contracts and agreements, including grant agreements. However, the objective of those procedures 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. OMB Circular A-133 and Chapter 10.550 (as applicable) requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with applicable laws Terms of Engagement is a standard firm document signed by the firm and ail clients of the firm that ensures both the firm and the client have a clear understanding of the services to be provided and the terms and objectives of the engagement. [Okaloosa County, Florida GOVT Engagement -133 July 1, 2014 Page 5 of 7 | and regulations and the provisions of contracts and grant agreements applicable to major programs. Our procedures will consist of tests of transactions and other applicable procedures described in the OMB Circular A-133 Compliance Supplement and Chapter 10.550 (as applicable) and related addenda for the types of compliance requirements that could have a direct and material effect on each of the Client’s major programs. The purpose of these procedures will be to express an opinion on the Client’s compliance with requirements applicable to each of its major programs in our report on compliance issued pursuant to OMB Circular A-133 and Chapter 10.550 (as applicable). 8.