Audit Agr. 06/30/2006
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June 30, 2006
\VOODBUR.'\J l~RBAN RE:'-iEWAl .--\GE~CY
270 MONTGOJ\1ER Y S1
WOODBURN. OR 97071
We are pleased to confirm our understanding of the services we are to provide WOODBlJRN lJRBAl"\T
RE0JEWAL A.GENCY for the year ended June 30, 2006. We will audit the financial statements of the
governmental actIvities and the major fund which collectively comprises the entity's basic financial statements,
of WOODBlJR.."\; URBA..'\J RENE\\-.-\L AGE~CY as of and for the year ended June 30, 2006. The
ylanagement's Discussion and Analysis accompanying the basic financial statements is required by generally
accepted accounting principles and \\'dl be subjected to certain limited procedures. but will not be audited.
Audit Objective
The objective of our audit is the expression of opinions as to whether your basic tinancial statements are fairly
presented, in all material respects, in conformity with U.S. generally accepted accounting principles and to
report on the fairness of the additional information referred to in the first paragraph when considered in relation
to the basic financial statements taken as a whole. Our audit will be conducted in accordance with U.S.
generally accepted auditing standards and will include tests of the accounting records and other procedures we
consider necessary to enable us to express such opinions. If our opinions on the financial statements are other
than unqualified. we will fully discuss the reasons with you in advance. If, for any reason, we are unable to
complete the audit or are unable to form or have not formed opinions, we may decline to express opinions or to
issue a report as .1 result of this engagement.
www.bcsllc.com
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SALEM: 480 CHURCH STREET S.E. . SALEM, OR 97301 . PHONE: (503) 585-7751 . FAX: (503) 370-3781
STAYTON: 408 NORTH THIRD AVENUE . STAYTON, OR 97383 . PHONE: (503) 769-2186 . FAX: (503) 769-4312
ALBANY: 1205 9TII AVENUE S.L . ALBANY, OR 97322 . PHONE: (541) 928-6500 . FAX: (541) 928-6501
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June 30, 2006
~anagement Responsibilities
Management is responsible for establishing and maintammg effective internal controls. In fulfilling this
responsibility, estimates and judgments by management are required to assess the expected benetits and related
costs of the controls. The objectives of internal control are to provide management with reasonable, but not
absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that
transactions are executed in accordance with management's authorizations and recorded properly to permit the
preparation of financial statements in accordance with generally accepted accounting principles. You are also
responsible for all management decisions and functions; for designating an individual with suitable skill,
knowledge, or experience to oversee our financial statement preparation services and any other nonattest
services we provide; and for evaluating the adequacy and results of those services and accepting responsibility
for them.
.'vlanagement is responsible for making all tinancial records and related information available to us. We
understand that you will provide us with such information required for our audit and that you are responsible for
the accuracy and completeness of that information. Management is responsible for adjusting the financial
statements to correct material misstatements and for 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 establishing and maintaining internal controls, including monitoring ongoing activities;
for the selection and application of accounting principles; and for the fair presentation in the financial
statements of the respective financial position of the governmental activities and the major fund information of
the WOODBUR.N URBAN RENEWAL AGENCY and the respective changes in tlnancial position in
conformity with U.S. generally accepted accounting principles.
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 (l)
management, t2) employees who have significant roles in internal control, and (3) others where 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 or illegal acts affecting the government
received in communications from employees, former employees, regulators, or others. In addition, you are
responsible for identifying and ensuring that the entity complies with applicable laws and regulations and for
taking timely and appropriate steps to remedy any fraud, illegal acts, or violations of contracts or grant
agreements that we may report.
With regard to using the auditor's report, you understand that you must obtain our prior written consent to
reproduce or use our report in bond offering official statements or other documents.
With regard to the electronic dissemination of audited financial statements, including tlnancial statements
published electronically on your web site, you understand that electronic sites are a means to distribute
information and, therefore. we are not required to read the information contained in these sites or to consider the
consistency of other information in the electronic site with the original document.
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June 30, 2006
Audit Procedures General
.--\11 audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements; therefore, our audit \vill involve Judgment about the number of transactions to be examined and the
areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about
whether the financial statements are free of material misstatement, whether from (1) errors, (2) fraudulent
financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are
attributable to the entity or to acts by management or employees acting on behalf of the entity.
Because an audit is designed to provide reasonable, but not absolute, assurance and because we will not perform
a detailed examination of all transactions. there is a risk that material misstatements may exist and not be
detected by us. In addition, an audit is not designed to detect immaterial misstatements, or violations of laws or
governmental regulations that do not have a direct and material effect on the financial statements. However, we
will inform you of any material errors and any fraudulent tinancial reporting or misappropriation of assets that
come to our attention. We will also inform you of any violations of laws or governmental regulations that come
!o our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered
'JY our audit and does not extend to any later periods for which we are not engaged as auditors.
Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts,
and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain
other assets and liabilities by correspondence with selected individuals. creditors. and financial institutions. We
will request written representations from your attorneys as part of the engagement, and they may bill you for
responding to this inquiry. At the conclusion of our audit we will also require certain written representations
from you about the financial statements and related matters.
Audit Procedures Internal Control
In planning and performing our audits, we will consider the internal control sufficient to plan the audit in order
to determine the nature, timing, and extent of our auditing procedures for the purpose of expressing our
opinions on the Agency's financial statements.
.--\11 audit is not designed to provide assurance on internal control or to identify reportable conditions. However,
we will inform the governing body or audit committee of any matters involving internal control and its
operation that we consider to be reportable conditions under standards established by the American Institute of
Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to
significant detIciencies in the design or operation of the internal control that, in our judgment, could adversely
affect the entity's ability to record, process. summarize. and report financial data consistent with the assertions
of management in the tinancial statements.
Audit Procedures Compliance
Identifying and ensuring that WOODBURc"J URBAN RENEWAL AGENCY complies with laws, regulations,
contracts, and agreements is the responsibility of management. As part of obtaining reasonable assurance about
whether the financial statements are tree of material misstatement, we will perform tests of the Agency's
compliance with applicable laws and regulations and the provisions of contracts and agreements. However, the
objective of our audit will not be to provide an opinion on overall compliance and we will not express such an
opmlOn.
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June 30, 2006
Audit Administration, Fees, and Other
You may request that we perform additional services not addressed in this engagement letter. If this occurs, we
will communicate with you regarding the scope of the additional services and the estimated fees. We also may
issue a separate engagement letter covering the additional services. In the absence of any other written
communication from us documenting such additional services, our services will continue to be governed by the
terms of this engagement letter.
\Ve understand that your employees will prepare all cash or other confirmations we request and will locate any
documents selected by us for testing.
Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. In
accordance with our firm policies, work may be suspended if your account becomes 60 days or more overdue
and may not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment,
our engagement will be deemed to have been completed upon written notification of termination, even if we
have not completed our report. You will be obligated to compensate us for all time expended and to reimburse
us for all out of pocket costs through the date of termination. We anticipate cooperation from your personnel
and assume that unexpected circumstances will not be encountered during the audit. Such unexpected
circumstances might include, for example, a greater than expected risk of material misstatement due to fraud. If
significant additional time is necessary. we will discuss it with you and arrive at a new fee estimate before we
incur the additional costs.
We appreciate the opportunity to be of service to WOODBURN lJRBAN RENEWAL AGENCY and believe
this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let
us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy
and return it to us.
Very truly yours.
~()Ut e~ & S~, ile
RESPONSE:
By:
. set.? forth the understanding of WOODBURN lJRBAN RENE\V AL AGENCY.
Title:
Date:
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