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HomeMy WebLinkAbout8 Audit of District Finance Records Agenda Item # �i TRUCKEE DONNER Public Utility District Memorandum To: Board of Directors From: Peter L. Holzmeister Date:February 15, 2002 Subject: Audit of District financial records I have been asked to place on the agenda a discussion of preparation of the audit of our financial records for the year 2001. We had entered into a three-year contract with Arthur Anderson, and we are now in year three of that contract. We began working on the audit weeks ago, prior to any public controversy regarding Arthur Anderson's involvement with ENRON. So Arthur Anderson staff is already performing audit work for us. The auditors work directly for the Board, and you should have confidence in the auditors who serve you. It is entirely your decision whether we continue to utilize the services of Arthur Anderson. a a TDPUD STAFF REPORT TO: Board of Directors FROM: Peter Holzmeister, General Manager SUBJECT Audit of the District's financial records DATE., October 1, 1999 AGENDA # Attached is a letter from Arthur Anderson, LLP proposing to perform the District's audit for the next three years. Following is a table showing the fees for the last three years along with what is proposed for the next three. 1996 THROUGH 1998 1996 $30,000 5% increase 1997 $32,000 5% increase 1998 $33,500 5% increase PROPOSED 1999, 2000, 2001 1999 $37,000 10% increase 2000 $38,500 4% increase 2001 $40,000 4% increase The 10% increase for the 1999 audit is due to their having to pay higher wages to keep and attract qualified employees. We have been very satisfied with the service provided to us by the Arthur Anderson firm over the years and we think it would be a great deal of work and expense to change firms at this point. RECOMMENDATION: I recommend that the Board accept the proposal dated September 22, 1999 from Arthur Anderson, LLP for audit services for the years of 1999, 2000 and 2001. 10/Q1/99 FRI 09:57 FAX 916 442 0170 002 ARTHUR ANDERSEN Arrhiu Andesen t.L^ September 22,1999 Suite 300 Board of Directors of One Capitol Mall Truckee Donner Public Utility District Sacraments)CA 95314-3229 c/o Mr.Peter L.Holzmeister 916 44211501 P.O. Box 309 Truckee,California 95734 Dear Members of the Board: This will serve as our proposal covering the audits you wish us to provide of the balance sheets of Truckee Donner Public Utility District and the related statements of operations, and cash flows for the years ending December 31,1999,2000 and 2001. �� Audit Responsibilities and Limitations The objective of our audit is to provide you with our auditors' report expressing an opinion on the financial statements referred to above. We will conduct our audits in accordance with generally accepted auditing standards. Accordingly,we will examine,on a test basis, evidence supporting the amounts and disclosures in the financial statements,assess the accounting principles used and significant estimates made by management and evaluate the overall financial statement presentation. Generally accepted auditing standards require that we obtain reasonable,rather than absolute, assurance that the financial statements are free of material misstatement,whether caused by error or fraud. Accordingly,a material misstatement may remain undetected. Also,an audit is not designed to detect error or fraud that is immaterial to the financial statements. However, we will bring to your attention immaterial misstatements and any fraudulent or illegal acts of which we become aware during our audit Pursuant to professional standards,in the unusual event that we are unable to complete the audits or are unable to form or have not formed an opinion,we may decline to express an opinion or decline to issue a report as a result of the engagement. While an audit includes obtaining an understanding of internal control sufficient to plan the audit and to determine the nature,timing and extent of audit procedures to be performed,it is not designed to provide assurance on internal control or to identify significant deficiencies in internal.control.However,we are responsible for ensuring that senior management and the Board of Directors are aware of any such deficiencies that come to our attention. 10/01/99 FRI 09:57 FAX 916 442 0170 Z 003 ARTHUR )XNDERSEN Board of Directors Page 2 September 22,1999 An audit of financial statements is not designed to detect whether any systems are Year 2000 compliant. Further,we have no responsibility with regard to the Districts's efforts to make its systems, or any other systems (such as those of the District's vendors,service providers or any other third parties),Year 2000 compliant or provide assurance on whether the District has addressed or will be able to address all of the affected systems on a timely basis.This is the responsibility of management. However,we will make inquiries of management regarding the Year 2000 issue,consider management's assessment of the potential impact of the Year 2000 issue on the current year's financial statements and our audit,and discuss or otherwise be satisfied that senior management and the Board of Directors are apprised of any observations we have relative to its Year 2000 remediation plan. The working papers prepared in conjunction with our work are the property of our Firm, constitute confidential and proprietary information and will be retained by us in accordance r with our policies and procedures. Management's Responsibilities and Representations The District's management is responsible for the financial statements and for adjusting those statements to correct material misstatements. Management is also responsible for (1) maintaining effective internal control over financial reporting, (2)identifying and ensuring the District complies with the laws and regulations applicable to its activities and(3) making available to us all financial records and related information and personnel with information of relevance to our audits. As required by generally accepted auditing standards,we will make specific inquiries of management and others about the representations embodied in the financial statements and the effectiveness of internal.control. Those standards also require that we obtain from certain members of management a representation letter which covers the financial statements and which affirms that the effects of any uncorrected misstatements are,both individually and in the aggregate,immaterial to the financial statements taken as a whole. The results of our audit tests,the responses to our inquiries and the written representations constitute the evidential matter we intend to rely upon in forming an opinion on the financial statements. Because of the importance of management's representations to an effective audit,Truckee Donner Public Utility District agrees to release Arthur Andersen LLP and its personnel from any liability and costs relating to the services under this letter attributable to any misrepresentations by management. 10/01/99 FRI 09:58 FAX 916 442 0170 Z004 ARTHUR ANDERSEN Board of Directors Page 3 September 22,1999 if you intend to publish or otherwise reproduce the financial statements together with our report(or otherwise make reference to our Firm)in a document that contains other information, you agree to provide us with a draft of the document to read and comment on before it is printed and distributed. Furthermore,you agree that the terms of this engagement do not encompass an undertaking by us(1) to consent,by means of a separate letter or otherwise,to the inclusion of our auditors report on the financial statements referred to above in a filing with a Federal or state regulatory agency or otherwise reissue our report for purposes of a securities offering or other financing transaction,or(2)to acknowledge reliance on our report by others. Other Services Any additional services that you may request,and that we agree to provide,will be the subject of separate written arrangements. 4a Fees and Other Arrangements We estimate that our fees for the audits referred to above will be: 1999 $37,000 2000 $38,500 2001 $40,000 This fee proposal is based upon business as usual today (electric and water operations) and does not include work related to future business ventures in the internet and/or telecommunications areas. This estimate awumes we will receive appropriate assistance from your staff in the preparation of schedules and other matters. We will bill you as the work progresses. Except to the extent finally determined to have resulted from Arthur Andersen LLP's (Andersen) gross negligence or wilful misconduct (1) Andersen's maximum liability to Truckee Donner Public Utility District for any reason,including Andersen's negligence,relating to the services under this letter shall be limited to the fees paid to Andersen for the services or work product giving rise to liability and (2) Truckee Donner Public Utility District will indemnify and hold harmless Andersen and its personnel from any claims,liabilities,costs and expenses arising for any reason,including Andersens negligence,relating to the services under y this letter. 10/.01/99 FRI 09:58 FAX 916 442 0170 RJ005 ARTHUR ANDERSEN Board of Directors Page 4 September 22,1999 Acknowledgment Please confirm your agreement with the foregoing by signing a copy of this letter and returning it in the enclosed self-addressed envelope. We are pleased to have this opportunity to be of service to you and assure you that this engagement will be given our dose attention. Very truly yours, ARTH�UR ANDERSEN LLP � �� By // /// Teri R.Guthrie AGREED AND ACKNOWLEDGED: Truckee Donner Public Utility District By Date Title y� PLH, Mary The Board accepted the proposal dated September 22, 1999 MO99-120 from Arthur Andersen, LLP for audit services for the years of 1999, 2000 and 2001.