01-20-16 LPRDA/TIRZ - Laserfiche WebLink

Browse Search

Board of Directors La Porte Redevelopment Authority Material Weaknesses (Continued) SUB J�C� TofiT CygNG J, January 2016 Page 2 As is common within the system of internal control of most small organizations, the accounting function of the Authority does not include preparation of the financial statements complete with footnotes in accordance with accounting principles generally accepted in the United States of America. Accordingly, the Authority has not established internal controls over the preparation of its financial statements. This condition is considered to be a material weakness of the Authority's system of internal control over financial reporting. During the course of performing an audit, the auditor prepared journal entries to present the financial statements on the government -wide basis of accounting. Management's reliance upon the auditor to detect and make these necessary adjustments is considered to be a material weakness in internal control. Auditing standards do not make exceptions for reporting deficiencies that are adequately mitigated with nonaudit services rendered by the auditor or deficiencies for which the remedy would be cost prohibitive. We agree with the objective to inform an organization of all the conditions in its internal control that interfere with its ability to record financial data reliably and issue financial statements free of material misstatement. Communication of the material weaknesses above helps to emphasize that the responsibility for financial reporting rests entirely with the organization and not the auditor. Management's Response The Authority's Board of Directors is appointed from the general population and do not necessarily have governmental accounting expertise. The Board engages consultants who possess industry knowledge and expertise to provide financial services, as well as legal services. Based on the auditor's unmodified opinion and after reading the financial statements, the Board believes the financial statements are materially correct. The Board does not think that the addition of an employee or consultant to oversee the annual financial reporting process is necessary nor would it be cost effective. Conclusion Management's written response to the material weaknesses identified in our audit has not been subjected to the auditing procedures applied in the audit of the financial statements, and accordingly, we express no opinion on it. This communication is intended solely for the information and use of the Board of Directors and is not intended to be and should not be used by anyone other than these specified parties. Sincerely, DRAFT SUBJECT TO CHANGE McCall Gibson Swedlund Barfoot PLLC Certified Public Accountants Houston, Texas