R2005-48 ACCEPTING THE PROPROSAL AND AUTHORIZING AN ENGAGEMENT CONTRACT

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Honorable Mayor and City Council City of Decatur, Illinois Page 2 April 20, 2005 We will obtain an understanding of the design of the relevant policies and procedures and whether they have been placed in operation, and we will assess control risk. Tests of controls may be performed to test the effectiveness of certain policies and procedures that we consider relevant to preventing and detecting errors and fraud that are material to the basic financial statements and to preventing and detecting misstatements resulting from iltegal acts and other noncompliance matters that have a direct and material effect on the basic financial statements. Our tests, if performed, will be less in scope than would be necessary to render an opinion on the internal control policies and procedures and, accordingly, no such opinion will be expressed. We will perForm tests of controls, as required by OMB Circular A-133, to evaluate the effectiveness of the design and operation of internal control policies and procedures that we consider relevant to preventing or detecting material noncompliance with the compliance requirements that are applicable to each major federal financial assistance program. Our tests will be less in scope than would be necessary to render an opinion on the internal control policies and procedures and, accordingly, no such opinion will be expressed. I We will perform certain procedures to test compliance with certain provisions of laws, � regulations, contracts, and grants and the requirements applicable to the federal award programs as required by OMB Circular A-133. Our procedures will be limited to the applicable procedures described in the OMB's Circular A-133 Compliance Supplement. The audit will include tests of compliance with the requirements identified in the OMB Circular A-133 Compliance Supplement that we consider necessary to enable us to express our opinion on the compliance requirements applicable to each major program. Our reports on internal control and compliance will each include a statement that the report is intended for the information and use of the audit committee (or equivalent), management and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Accounting services. We also will provide you with the following nonaudit services: We will assist you with: • Preparing trial balances • Drafting financial statements and footnotes • Proposing adjusting journal entries • Prepare the State of Illinois Annual Financial Report • Prepare the Data Collection Form In connection with the services we provide, we will not perForm management functions, make management decisions, or act in a capacity equivalent to that of a member of management or an employee. You are responsible for management decisions and functions, and for designating a competent employee to oversee these services. You are responsible for evaluating the adequacy and results of the services performed and accepting responsibility for the results. Yoi s are also responsible for establishing and maintaining internal controls, including monitoring ongoing activities.