2006-12-31 Management Letter - Laserfiche WebLink

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City of Centerville May 3, 2007 Page Twenty-One GASB Statement No. 47 - Accountingfor Termination Benefits In general, Statement No. 47 is effective for fmandal statements for periods beginning after June 15,2005. However, for termination benefits that affect defmed benefit post employment benefits other than pensions, governments should implement Statement No. 47 simultaneously with Statement No. 45, Accounting and Financial Reporting by Employers for Post employment Benefits Other Than Pensions. The statement provides accounting and reporting guidance for state and local governments that offer benefits such as early retirement incentives or severance to employees that are involuntarily terminated. The statement requires that similar forms of termination benefits be accounted for in the same manner and is intended to enhance both the consistency of reporting for termination benefits and the comparability of fmancial statements. New Auditing Standards Related to Risk Assessment (SAS 104 -111) There are significant changes in the auditing profession that undoubtedly will impact how we perform your annual fmancial statement audit. Four years ago, in the wake of the Enron scandal and other business failures, Congress enacted the Sarbanes-Oxley Act. This legislation had a profound effect on both company management and the audit profession; however, the law was applicable only to publicly traded companies and so most of our firm's clients were unaffected. Earlier this year, the standards-setting body that governs auditors of non-public entities passed a sweeping set of new standards that rewrite many of the fundamental principles of a fmancial statement audit. Though less in scope than the rules for public companies, these new standards parallel many of the key themes of Sarbanes-Oxley, including new requirements that. . Auditors gain a more thorough understanding of their clients' internal control . Auditors obtain more detailed information about their clients' operations, their business objectives and strategies, and the risks to achieving these objectives, . Client management clearly accepts responsibility for preparing all financial information and the financial statements. The main objective of the new auditing standards is to strengthen and maintain the integrity ofthe independent financial statement audit. We support this objective. We also believe that the new standards will benefit all stakeholders in the financial reporting process-those who prepare financial information, those of us who provide assurance on the reliability of that information, and those who use the information to make decisions about your government. Because these standards demand a higher level of performance, there will be changes to the way we perform audits. The new standards require us to perform more extensive procedures than we have in tile past. In many cases these new procedures will result in higher audit fees. The good news is that the new rules do not go into effect until next year, that is, the 2007 audit. Between now and then, our firm will be investing significant resources to re-design our audit process and train our engagement teams so they are able to perform their audits as effectively and efficiently as possible. Over the coming months, as we develop our new audit approach, we will have more details about how that approach will affect our audit clients. Going forward, your engagement partner will be working with you directly to communicate these changes and pave the way for a smooth implementation of the new, higher standards. 952.835.9090 . Fax 952.835.3261 www.aemcpas.com