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December 9, 2015 City of Gem Lake Page Auditor responsibilities, procedures, and limitations We will conduct our audit in accordance with U.S. GAASand the standards for financial audits contained. in Government Auditing Standards. Those standards require that we plan and. perform the audit to. obtain..reasonable assurance about whether the basic financial statements as. a whole are free from. material misstatement,whether due to fraud or .error. An audit involves performing procedures to obtain sufficient. appropriate audit evidenceabout the amounts and disclosures in the basin financial statements.: The procedures selected depend .on the auditors' judgment, including the assessment of th.e risks of material misstatement of the financial.statements, whether due to fraud.or error. An audit also .includes evaluating the. appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the basic financial statements, There is an unavoidable risk, because. of the inherent limitations of an audit, together wit h.the inherent limitations of internal .control, that some material misstatements may not be detected, even though the audit is properly planned .and performed. in accordance with U.S. GARS: and .Government Auditing Standards. Because. we will not perform. a detailed examination of all transactions, material misstatements, 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, may not be detected. Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors toprovide reasonable assurance of detecting abuse. 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. However,. we will Inform the appropriate level of management of any material errors, fraudulent financial reporting, or misappropriation of assets that .come to our attention. We will also infonri the appropriate level of management of any violations of laws or governmental regulations that come to our attention, unless clearly 1nconsequential,..and of any material abuse that comes to.our attention.. In making our. risk assessments, we consider internal control relevant to the .entity's preparation and fair presentation of the basic financial statements in order to design. audit procedures. that are appropriate in the circumstances; but not for the purpose of expressing an opinion on the effectiveness of the entity's: internal control, Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to. preventing and detecting fraud or errors that a. re material to the. financial statements .and .to preventing and detecting misstatements resulting from noncornpllance with provisions of laws, regulations, contracts,. and grant agreements that have a. 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. An audit. is .not designed toprovide assurance on internal control or to identify.deficiencies, significant. deficiencies, or material weaknesses in internal control. However; we will communicate to you in writing significant deficiencies or material Weaknesses in. internal control relevant to the audit of the basic financial statements that we identify during the .audit that are required to: be communicated under AICPA professional standards :and Government. Auditing Standards.