HomeMy WebLinkAbout14-3 Truckee Draft SAS Letter
Communications with Those Charged
with Governance and Internal Control
Related Matters for
Truckee Donner
Public Utility District
December 31, 2015
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COMMUNICATIONS WITH THOSE CHARGED WITH GOVERNANCE
AND INTERNAL CONTROL RELATED MATTERS
To the Board of Directors
Truckee Donner Public Utility District
We have audited the consolidated and primary government only financial statements of Truckee
Donner Public Utility District (the District) as of and for the year ended December 31, 2015, and
have issued our report thereon dated June 1, 2016. Professional standards require that we
provide you with the following information related to our audit.
OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE
UNITED STATES OF AMERICA
As stated in our engagement letter dated October 14, 2015, our responsibility, as described by
professional standards, is to form and express an opinion about whether the consolidated
financial statements prepared by management with your oversight are fairly presented, in all
material respects, in conformity with U.S. generally accepted accounting principles. Our audit of
the consolidated financial statements does not relieve you or management of your
responsibilities.
Our responsibility is to plan and perform the audit in accordance with generally accepted
auditing standards and to design the audit to obtain reasonable, rather than absolute, assurance
about whether the consolidated financial statements are free of material misstatement. An audit
of consolidated financial statements includes consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the District’s internal
control over financial reporting. Accordingly, we considered the District’s internal control solely
for the purposes of determining our audit procedures and not to provide assurance concerning
such internal control.
We are also responsible for communicating significant matters related to the financial statement
audit that, in our professional judgment, are relevant to your responsibilities in overseeing the
financial reporting process. However, we are not required to design procedures for the purpose
of identifying other matters to communicate to you.
PLANNED SCOPE AND TIMING OF THE AUDIT
We performed the audit according to the planned scope and timing previously communicated to
you in the engagement letter.
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SIGNIFICANT AUDIT FINDINGS
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The
significant accounting policies used by the District are described in the notes to the consolidated
financial statements. The District adopted the following new accounting pronouncement in the
current year:
Effective July 1, 2014, the District adopted GASB Statement No. 68, Accounting and Financial
Reporting for Pensions as well as GASB Statement No. 71, Pension Transition for Contributions
Made Subsequent to the Measurement Date – an Amendment of GASB Statement No. 68. GASB 68
provides guidance for accounting for net pension liabilities, including definition of balances to
be included in deferred inflows and deferred outflows of resources. Previous standards defined
pension liabilities in terms of the Annually Required Contribution. Statement No. 68 defines the
net pension liability as the portion of the actuarial present value of projected benefit payments
that is attributed to past periods of employee service, net of the pension plan’s fiduciary net
position. Statement No. 68 includes recognition of deferred inflows and outflows of resources
associated with the difference between projected and actual earnings on pension plan
investments. These differences are to be recognized in pension expense using a systematic and
rational method over a closed five‐year period. The implementation of Statement No. 68
resulted in an adjustment to the net pension liability and the recording of deferred inflows and
outflows for the two years presented.
No other new accounting policies were adopted and there were no changes in the application of
existing policies during 2015. We noted no transactions entered into by the District during the
year for which there is a lack of authoritative guidance or consensus. There are no significant
transactions that have been recognized in the financial statements in a different period than
when the transaction occurred.
Significant Accounting Estimates
Accounting estimates are an integral part of the consolidated financial statements prepared by
management and are based on management’s knowledge and experience about past and current
events and assumptions about future events. Certain accounting estimates are particularly
sensitive because of their significance to the financial statements and because of the possibility
that future events affecting them may differ significantly from those expected. The most
sensitive estimates affecting the consolidated financial statements were:
Unbilled Revenue – Unbilled revenue is a measure of revenue earned through the end of
the reporting period that has yet to be billed. This generally represents accounts with
billing cycles that start in the reporting year and end in the subsequent year. We have
evaluated the key factors and assumptions used to develop unbilled revenue in
determining that it is reasonable in relation to the consolidated financial statements
taken as a whole.
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Allowance for Doubtful Accounts – The allowance for doubtful accounts represents an
estimate of the amount of accounts receivable that will not be collected. We have
evaluated the key factors and assumptions used to develop the allowance in
determining that it is reasonable in relation to the consolidated financial statements
taken as a whole.
Recovery Periods for the Cost of Plant – This represents the depreciation of plant
assets. Management’s estimate of the recovery periods for the cost of plant is based on
regulatory‐prescribed depreciation recovery periods. We have evaluated the key factors
and assumptions used to develop the recovery periods in determining that they are
reasonable in relation to the consolidated financial statements taken as a whole.
Other Post‐Employment Benefit Obligations – This represents the amount of annual
expenses recognized for post‐employment benefits. The amount is actuarially
determined with management input. We have evaluated the key factors and
assumptions used to develop the annual expenses in determining that it is reasonable in
relation to the consolidated financial statements taken as a whole.
Pension Liability and Related Pension Expense – This represents the amount of annual
expense recognized for pensions and the related pension asset or liability. The amount
is actuarially determined, with CalPERS management input. We have evaluated the key
factors and assumptions used to develop the annual expense in determining that it is
reasonable in relation to the financial statements taken as a whole.
Financial Statement Disclosures
The disclosures in the consolidated financial statements are consistent, clear and
understandable. Certain financial statement disclosures may be particularly sensitive because of
their significance to financial statement users.
We did not note any disclosures in the consolidated financial statements which we consider
sensitive to potential users.
Significant Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and
completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified
during the audit, other than those that are trivial, and communicate them to the appropriate
level of management. No material misstatements, either individually or in the aggregate, were
detected as a result of our audit procedures.
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Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction,
that could be significant to the consolidated financial statements or the auditor’s report. We are
pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the
management representation letter dated June 1, 2016.
Management Consultation with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a “second opinion” on certain situations. If a
consultation involves application of an accounting principle to the District’s consolidated
financial statements or a determination of the type of auditor’s opinion that may be expressed
on those statements, our professional standards require the consulting accountant to check with
us to determine that the consultant has all the relevant facts. To our knowledge, there were no
such consultations with other accountants.
Other Significant Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the District’s auditors.
However, these discussions occurred in the normal course of our professional relationship and
our responses were not a condition to our retention.
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This information is intended solely for the use of Board of Directors and management of Truckee
Donner Public Utility District and is not intended to be and should not be used by anyone other
than these specified parties.
Portland, Oregon
June 1, 2016