08-15-11 Fiscal Affairs Committee Meeting

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Mayor and Members of City Council City* of La Porte, Texas Page 3 Management Responsibilities Management is responsible for the basic financial statements and all accompanying information as well as all representations contained therein. Management is also responsible for identi firing government award programs and understanding and complying with the compliance requirements, and for preparation of the schedule of expenditures of federal awards in accordance with the requirements of OMB Circular A -133. As part of the audit, we will assist with preparation of your financial statements, schedule of expenditures of federal awards, and related notes. You are responsible for making all management decisions and performing all management functions relating to the financial statements, schedule of expenditures of federal awards, and related notes and for accepting full responsibility* for such decisions. You will be required to acknowledge in the management representation letter our assistance with preparation of the financial statements and the schedule of expenditures of federal awards and that you have reviewed and approved the financial statements, schedule of expenditures of federal awards, and related notes prior to their issuance and have accepted responsibility* for them. Further, you are required to designate an individual with suitable skill, knowledge, or experience to oversee any* nonaudit services we provide and for evaluating the adequacy* and results of those services and accepting responsibility* for them. Management is responsible for establishing and maintaining effective internal controls, including internal controls over compliance, and for evaluating and monitoring ongoing activities, to help ensure that appropriate goals and objectives are met and that there is reasonable assurance that government programs are administered in compliance with compliance requirements. You are also responsible for the selection and application of accounting principles; for the fair presentation in the financial statements of the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of La Porte, Texas and the respective changes in financial position and, where applicable, cash flows in conformity* with U.S. generally* accepted accounting principles; and for compliance with applicable laws and regulations and the provisions of contracts and grant agreements. Management is also responsible for making all financial records and related information available to us and for ensuring that management and financial information is reliable and properly* recorded. Your responsibilities also include identi firing significant vendor relationships in which the vendor has responsibility* for program compliance and for the accuracy* and completeness of that information. Your responsibilities include adjusting the financial statements to correct material misstatements and confirming to us in the representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually* and in the aggregate, to the financial statements taken as a whole. You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud or illegal acts affecting the government involving (1) management, (2) employees who have significant roles in internal control, and (3) others N-, - here the fraud 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. In addition, you are responsible for identi firing and ensuring that the entity* complies with applicable laws, regulations, contracts, agreements, and grants. Additionally*, as required by OMB Circular A -133, it is management's responsibility* to follow up and take corrective action on reported audit findings and to prepare a summaiv schedule of prior audit findings and a corrective action plan. You are responsible for the preparation of the supplementaiv information in conformity* with U.S. generally* accepted accounting principles. You agree to include our report on the supplementaiv information in any document that contains and indicates that we have reported on the supplementaiv information. You also agree to present the supplementaiv information with the audited financial statements.