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January 7, :3009 City of Ce n Lake Page 3 You are responsible for the desifnand implementation of programs and controls to prevent and detect :fraud, and lbr informing us about all known or suspected fraud affecting: the .government involving (}) management, (2) employees who have significan roles in internal control, and (3) others where the !laud or illegal acts could have a material effect on the financial statements- Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting ;the government received in. communications from .employees: former employees, grantors, regulators, or others ]rn: addition, you are. responsible for identifying and ensuring that the entity complies withapplicablelaws; regulations, contracts, agreements, and grants: and for taking timelyand appropriate steps toremedy any fraud, illegal acts, violations of contracts or grant agreements, or abuse :that we may report.. Management is responsible for establishment and maintenance of a process for tracking the status of audit findingsand. recommendations. Management is, also responsible :for identifying for us previous -:audits or other engagements or studies related to the objectives discussed in the "Audit objectives.' section of thisletter..rlr"is responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits or other engagements or studies. You arealso responsible for providing management's views on our current findings. conclusions, and recommendations, as well as your planned corrective actions. and the .timing .and format related thereto. Audit procedures - general An audit includes examining, on a less basis. evidence: supporting the amounts and disclosures inthe financial statements; therefore,our audit will involve judgment about the numberof transactions to be examined and theareas 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 (l) 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 mana$ement or employees acting on behalf of Ehe entity. 13ecause the: determination of abuse is subjective, Government Auditing Siwidnrrrr do not expect auditors to providereasonable assurance ol detecting abuse Because an audit is designed .toprovide reasonable. butnot absolute assurance and because we will not. perform a detailed examination of all transactions, .there is a risk that material misstatements may exist and not be detected by us. In addition. an audit is notdesigned to detect immaterial misstatements or violations of: laiirs or governmental regulations that do not have:a direct and material effect on the financial statements. However, we +fill niforrn you of any material .errors and any fraudulent financial reporting or misappropriation. of :assets that conic to our attention. We will also inform you of any violations of laws or governmental regulations that eol77C to .our attention, unless Clearly incansetluentitri, OM' responsibility as auditors is limited to the period covered by our` audit and doos not extend to layer periods for which we are not engaged as auditors Our procedures will include tests of documentary evidence supporting the transactions recordedin 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, 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. Al the conclusion of our audit, we will also require certain written representations from you about the financial statements and related matters