08 - Auditor Communication Letter Audit 12-13 Costa Mesa Sanitary District
…an Independent Special District
Protecting our community’s health and the environment by providing solid waste and sewer collection services.
www.cmsdca.gov
Memorandum
To: Board of Directors
Via : Scott Carroll, General Manager
From : Stacey Cuevas, Finance Manager
Date: August 29, 2013
Subject: Auditor Communication Letter Audit FY 2012 -13
Summary
On July 22, 2010 the Board approved a Professional Services Agreement for Independent
Audit services to Diehl Evans & Company, LLP for the total amount of $26,930 for the
three fiscal years ending June 30, 2010, 2011 and 2012. On January 24, 2013, the Board
approved extending this agreement one year to perform the audit of fiscal year 2012 -13.
In preparation of the start of the June 30, 2013 audit, the auditors have issued an Auditor
Communication Letter disclosing their responsibilities under U.S. Generally Accepted
Auditing Standards and Government Auditing Standards. The audit will begin on
approximately October 14, 2013 and the report will be issued on approximately November
28, 2013.
Staff Recommendation
That the Board of Directors receive and file this report.
Analysis
The District has contracted for annual audit services with the firm Diehl, Evans &
Company, LLP since its separation from the City. Diehl Evans & Company, LLP merged
on September 30, 2011 with another audit firm to form a combined firm now practicing as
White Nelson Diehl Evans LLP. The first agreement covered the fiscal years ended June
30, 2005 through June 30, 2009. The current agreement covers the fiscal years ending
ITEM NO. 08
Board of Directors
August 29 , 2013
Page 2 of 2
June 30, 2010 through June 30, 2013, including the one -year extension. We are currently
in the fourth year of the agreement.
Strategic Element & Goal
This item supports achieving Strategic Element No. 7.0, Finances and Strategic Goal No.
7.4, Develop a Comprehensive Annual Financial Report.
Legal Review
Not applicable.
Financial Review
The audit fee for the fisca l year ending June 30, 2013 is $9,340, which is within the
budgeted amount for fiscal year 2013 -14.
Public Notice Process
Copies of this report are on file and will be included with the entire agenda packet for the
August 29, 2013 Board of Directors regu lar meeting at District Headquarters and on
District website.
Alternative Actions
1. Refer the matter back to staff for additional information.
Attachments A: Auditor Communication Letter
2875 Michelle Drive, Suite 300, Irvine , CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offices located in Orange and San Diego Counties
August 15, 2013
M s. Stacey Cuevas
Finance Manager
Costa Mesa Sanitary District
628 West 19 th Street
Costa Mesa, CA 92627
Dear M s. Cuevas:
Enclosed is the “Communication with Those Charged with Governance” during the planning phase of
the audit. Ple ase forward the letter to the Board of Directors.
If you have an y questions, please feel free to call me.
Very trul y yours,
Nitin P. Patel, CPA
2875 Michelle Drive, Suite 300, Irvine , CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offices located in Orange and San Diego Counties
-1 -
To the Board of Directors
Costa Mesa Sanitary District
Costa Mesa, California
We are en gaged to audit the financial statements of Costa Mesa Sanitary District (the District) for the
ye ar end ed June 30,20 1 3 . P rofessional standards require that we provide you with the following
information related to our audit.
Our Responsibilit ies under U.S. Generall y Accepted Auditing Standards and Government Auditing
Standards
As stated in our engagement letter dated June 14, 2013,o ur responsibility , as described by professional
standards, is to express an opinion about whether the financial statements prepared by m anagement
with your oversight are fairl y presented, in all material respects, in conformity w ith U.S. generally
accepted accounting principles. O ur audit of the financial statements does not relieve you or
management of your responsibilities.
Our responsibility is to plan and perform the audit to obtain reasonable, but not absolute, assurance that
the financial statements are free of material misstatement .
As part of our audit, we will consider the internal control of the District . Such cons iderations are solely
for the purpose of determining our audit procedures and not to provide any assurance concerning such
internal control.
As part of obtaining reasonable assurance about whether the financial statements are free of material
misstatement, we will also perform tests of the District’s compliance with certain provisions of laws,
regulations, contracts, and grants. H owever, the objective or our tests is not to provide an opinion on
compliance with such provisions.
We are responsible for com municating significant matters related to the audit that are, in our
professional judgment, relevant to your responsibilities in overseeing the financial reporting process.
However, we are not required to design procedures specificall y to identify such mat ters .
Planned Scope and Timing of the Audit
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; therefore, our audit will involve judgment about the number of transactions to be
exami ned and the areas to be tested.
-2 -
Planned Scope and Timing of the Audit (Continued)
Our audit will include obtaining an understanding of the District and its environment, including
internal control, sufficient to assess the risks of material misstatement of the financial statements and to
design the nature, timing and extent of further audit procedures. M aterial misstatements may r esult
from (1)errors, (2)fraudulent financial reporting, (3)misappropriation of assets, or (4)violations of
laws or govern mental regulations that are attributable to the District or to acts by m anagement or
employ ees acting on behalf of the District . We will generall y communicate our significant findings at
the conclusion of the audit. H owever, some matters could be communi cated sooner, particularly i f
significant difficulties are encountered during the audit where assistance is needed to overcome the
difficulties or if the difficulties may l ead to a modified opinion. We will also communicate any
internal control related ma tters that are required to be communicated under professional standards . If a
member of the Board is aware of matters that have a material bearing on the financial statements taken
as a whole (such as those described above in items 1 -4), please contact Ni tin Patel at (714)978 -1300
or by email at npatel@wndecpa.com by October 14, 2013.
W e expect to begin our audit on October 14, 2013 and issue our report on approximatel y
December 15,2013.
This information is int ended solely f or the use of the Board of Directors and management of the
District and is not intended to be and should not be used b y an yone other than these specified parties.
Irvine, California
August 15, 2013