R2005-48 ACCEPTING THE PROPROSAL AND AUTHORIZING AN ENGAGEMENT CONTRACT

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Honorable Mayor and City Council City of Decatur, Iliinois Page 3 April 20, 2005 We are not responsible for the preparation of any report to any governmental agency, or any other form, return, or report, or for providing advice not specifically recited in this letter. This letter constitutes the entire agreement regarding services to be provided to you and supersedes all prior agreements, understandings, negotiations, and discussions between us, whether oral or written. This agreement may be supplemented by other written agreements. The purpose and objective of our audit is to lead to the expression of an unqualified opinion with respect to the financial statements. You understand that circumstances may exist or may arise that would preclude submitting such an opinion. We will inform you if we discover circumstances that will have an effect on our opinion on the financial statements or on compliance with the requirements applicable to major programs in accordance with OMB Circular A-133. If our opinion on the financial statements or on compliance with the requirements applicable to major programs in accordance with OMB Circular A-133 will be other than unqualified, the reasons will be fully disclosed. If, for any reason, we are unable to complete the audit or are unable to form an opinion, we may decline to issue a report and terminate our engagement. We will inform you of any matters involving the internal control and its operation, of which we become aware, 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 deficiencies 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 financial statements. We will also inform you of any nonreportable conditions or other matters involving the internal control, if any, as required by OMB Circular A-133, of which we become aware. Our audit is designed to provide reasonable, but not absolute, assurance of detecting misstatements, whether caused by error or fraud, that, in our judgment, could have a material effect on the financial statements as a whole. It is not designed to detect error or fraud that is immaterial to the financial statements. Our audit will be based upon tests and samples, since detailed auditing of all transactions is not practicable. The concept of selective testing of data is generally accepted as a valid and sufficient basis for an auditor to express an opinion on financial statements. Selective testing involves judgment both as to the number of transactions we examine and the areas to be tested. Because we will not perform a detailed examination of all transactions, there is an inherent risk that we will not detect material errors, fraud, or other illegal acts, if they exist. There is also an inherent risk that violations of compliance requirements and other responsibilities imposed by state and federal statutes and regulations or assumed by contracts, if they exist, will not be detected. Management is responsible for establishing and maintaining a sound system of internal control and for identifying and ensuring that the entity complies with the laws and regulations applicable to its activities. Management is also responsible for: designing and implementing programs and controls to prevent and detect fraud; informing us about all known or suspected fraud affecting the City involving (a) management, (b) employees who have significant roles in internal control, and (c) others where the fraud could have a material effect on the financial statements; and informing us of their knowledge of any allegations of fraud