24-Proposal from McClanahan & Holmes LLP to perform an independent outside audit

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dll 'S3WlOH (INV NVHVNtl1D:)W City of Paris August 4, 2009 Page 4 Audit Procedures - General (Continued) Because an audit is designed to provide reasonable, but not absolute assurance and because we will not perfoim a detailed examination of all transactions, there is a risk that material misstatements or noncompliance 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 or inajor programs. However, we will inform you of any material en-ors and any fraudulent fmancial reporting or misappropriation of assets that come to our attention. We will also infoim you of any violations of laws or goveinmental regulations that come to our attention, unless clearly inconsequentiaL We will include such matters in the reports required for a Single Audit. Our responsibility as auditors is linuted to the period covered by 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 coiTespondence with selected individuals, creditors, and financial institutions. We will request written representations fi-om your attorneys as part of the engagement, and they may bill you for responding to this inquiiy. At the conclusion of our audit, we will also request certain written representations from you about the financial statements and related matters. Audit Procedures - Internal Conh-ols If engaged, our audit wi11 include obtaining an understanding of the City and its environment, including internal conn-ol, sufficient to assess the risks of material rrusstatement of the financial statements and to design the nature, tirrung and extent of further audit procedures. Tests of controls may be performed to the test of effectiveness of certain controls that we consider relevant to preventing and detecti.ng eirors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements. Oiu- tests, if performed, will be less in scope than would be necessaty to render an opinion on internal conn-ol and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Govenunent Auditing Standards. As required by OMB Circular A-133, we will perform tests of conh-ols to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements applicable to each major federal award program. However, our tests will be less in scope than would be necessary to render an opinion on those conh•ols and; accordingly, no opinion will be expressed in our report on internal control issued pursuant to OMB Circular A-133. An audit is not designed to provide assurance on internal conn-ol or to identify significant deficiencies. However, during the audit, we will communicate to management and those charged with governance internal control related matters that are required to be communicated under professional standards, Govenunent Auditing Standards, and OMB Circular A-133. Audit Procedures - Com lip ance If engaged, our audit will be conducted in accordance with the standards referred to in the section titled Audit Objectives. As part of obtaining reasonable assurance about whether the financial statements are free of material rrusstatement, we will perform tests of the City's compliance with applicable laws and regulations and the provisions of contracts and ;.M V V V203