HomeMy WebLinkAboutAudit Managment Letter ' III IIII II
TRUCKEE DONNER
Memorandum
To: Board of Directors
From: Peter Holzmeister
Date: September 2, 2005
Subject:
Audit management letter: Attached is the audit letter for 2005 for which
KPMG has audited our financial reports.
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KPN1G LLPTelephone 503 221 6500
Suite 3800 Fax 503 S20 6565
1300 South West Fifth Avenue 'nternet www,us.kpmg,com
Penland, OR 97201
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August 26,2005
Ms.Mary Chapman
Truckee Donner Public Utility
11570 Donner Pass Road
Truckee, California 96161
Dear Mary:
Enclosed please Find 7 bound and 1 unbound copy of the Truckee Donner Public Utility District
Management Letter for the Year Ended December 31, 2004 dated April 8, 2005.
If you have questions or require additional copies, please call me.
Sincerely,
Holly Greii�iatn
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Enclosures
KiMG LL tlrrc 5.
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KPMG LLP Telephone 503 221 6500
1300 Soout
Suite South
Fax 5038206565
h West Fifth Avenue Internet www.uskprog.cam
Portland, OR 97201
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April R, 2005
Board of Directors
Truckee Donner Public Utility District
Truckee, California
Ladies and Gentlemen_
We have audited the financial statements of Truckee Donner Public Utility District (the District), for the
planning and
year ended December 31, 2004, and have issued our report thereon dated April 8, 2005. In performing our audit of the financial statements of the District, we considd internal control in order to
determine our auditing procedures for the purpose of expressin ereg our opinion on the financial statements_
An audit does not include examining the effectiveness of internal control and does not provide assurance
on internal control. We have not considered internal control since the date of our report.
During our audit, we noted certain matters involving internal control and other operational matters and
have presented below recommendations for your consideration. These recommendations, which have been
discussed with the appropriate members of management, are intended to improve internal control and
result in operating efficiencies and are summarized as follows:
FINANCIAL ACCOUNTING AND REPORTING POSITION
Observatio"ecommendation
The District required significant assistance from KPMG in relation to the accounting for certain
transactions related to fixed assets, the conversion to PERS, as well as continued implementation of the
reporting requirements of GASB No. 34. With the increasing complexity of accounting and reporting
rulemaking as well as the complex accounting transactions the District is involved in, we recommend the
hiring of an accounting professional with significant technical accounting expertise. This position should
require a strong accounting and financial reporting background, preferably with governmental accounting
experience.
BILLING PROCESS FOR SERVICES
Observation/Recommendation
A significant amount of time is being spent by the accounting staff in accumulating the billing and related
expenses for services provided to customers. Currently, the District tracks and bills customers for actual
costs incurred. We recommend standardizing the pricing for services,based upon average historical costs
incurred or engineer's estimates, to reduce the amount of time invested in this process and the resultant
manual journal entries required to account for these transactions.
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The Board of Directors
Truckee Donner Public Utility District
April 8, 2005
Page 2
OVERHEAD APPLICATION PROCESS
Observation[Recommendation
The District currently charges fixed asset work orders for actual overhead amounts incurred. This process,
as currently designed, requires a significant amount of time and effort on behalf of the accounting
during the annual budget process based upon historical overhead
department to account for all actual overhead costs. We recommend estimating a standard overhead rate
costs and applying that rate based upon an
appropriate cost driver like labor hours incurred on each work order. For most allocated costs, the time
saved may outweigh the impact of the reduced precision and allow accounting staff to refocus their time
and energy on more beneficial pursuits.
Our audit procedures are designed primarily to enable us to form an opinion on the financial statements,
and therefore may not bring to light all weaknesses in policies or procedures that may exist. We aim,
however, to use our knowledge of the District's organization gained during our work to make comments
and suggestions that we hope will be useful to you.
We would be pleased to discuss these comments and recommendations with you at any time.
This report is intended solely for the information and use of the board of directors, management, and others
within the organization and is not intended to be and should not be used by anyone other than these
specified parties.
Very truly yours,