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Decembeir 9,:2015 City of Gem Lake Page 4 As part of obtaining reason able,assufance.about whether the financial statements are free of material misstatement, we will -perform testsofthe entity'.s compliance with the provisions of laws, regulations, contracts, and -gran t-.agreements that have a material effect on the financial statements. However, the objective of out audit Will not be to provide an opinion off -overpll compliance and we will not express such an opinion in our report on compliance issued:pt6suant1o:GoverdmentAuditing Standards. We will include *in: our report on internal control over*financial reporting and compliance relevant information about any fraud; noncompliance with provisions of laws, regulations, contracts, or grant agreenients;.or abuse that may have occurred that are required to be.communicated under Governnieht Auditing Standards. Our resporisibiltt 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. Management responsibilities Our audit Will be, conducted 'on the basis that you (management and, when appropriate, those charged with governance) acknowledge and understand that you have certain responsibilities that are fundamental to the conduct of art audit. You are. responsible for the preparation and fair presentation of the: financial statements and RSI in accordance with U.S. GAAP. Management's responsibilities Include the selection and application of accounting prindples;-recording and reflecting all transact(ons in -the financial statements; determining. the reasonableness of significant accounting estimates Included in the financial.statements; adjusting the- financial statements to correct material misstatements; and confirming to us iri-the management representation letter that. the effects of any uncorrected rnjsstatements aggregated by us during the c0rent.engagement and pettaining-to the latest period presented.are immaterial, both lndividuallyand. in the aggregate,.to the finandlal statements taken as. a whole. You -are responsible for the design, impie mentaition, and maintenance of effective internal control,. ]ii Iudjng evaluatln& and monitoring ongoing activities, to help ensurethat appropriate goals: and objectives are.metrelevant-to tFle preparation and *fa ir presentation of financial statements that are free. from material misstatement, whether due to fraud or error. You are responsible for the. design; Implementation, and maintenance of internal'controls to prevent and detect..fraud; assessiing.the risk that the financial statements may be materially misstated as a. result of fraud; and for informing-.ut about -all known or suspected fraud affecting the entity involving (1) management, (2) employees Who liave.significant roles in internal control, and (31 others where the fraud 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 entity received In communications from employees, fornter erployees,"grantors,. regulators, or others. In addition, you are responsible for implementing systems designed to achieve compliance with applicable laws.*and. regulations; identif Ihg-and:ensuring that the entity complies with applicable laws, regulations, contracts, and grant agreements; and informing us.of all instances of Identified or suspected noncompliance whose effects on the.f nancial statements:should be considered. You are responsible for taking timely and appropriate steps to. remedy. any fraudh noncompliance with provisions of laws, regulations, contracts; or grant agreements; or.abuse that we may report.