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City of Paris <br />August 3, 2010 <br />Page 4 <br />Audit Procedures - General (Continued) <br />Because an audit is designed to provide reasonable, but not absolute assurance and because we will not perform a detailed <br />examination of all transactions, there is a risk that material misstatements or noncompliance may exist and not be detected <br />by us. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental <br />regulations that do not have a direct and material effect on the fmancial statements or major programs. However, we will <br />inform you of any material errors and any fraudulent financial reporting or misappropriation of assets that come to our <br />attention. We will also inform you of any violations of laws or governmental regulations that come to our attention, unless <br />clearly inconsequential. We will include such matters in the reports required for a Single Audit. Our responsibility as <br />auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not <br />engaged as auditors. <br />Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts and may <br />include tests of the physical existence of inventories and direct confirmation of receivables and certain other assets and <br />liabilities by correspondence with selected individuals, creditors, and financial institutions. We will request written <br />representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At <br />the conclusion of our audit, we will also request certain written representations from you about the financial statements <br />and related matters. <br />Audit Procedures - Internal Controls <br />If engaged, our audit will include obtaining an understanding of the City and its environment, including internal control, <br />sufficient to assess the risks of material misstatement of the fmancial statements and to design the nature, timing and <br />extent of further audit procedures. Tests of controls may be performed to the test of effectiveness of certain controls that <br />we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to <br />preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and <br />material effect on the fmancial statements. Our tests, if performed, will be less in scope than would be necessary to render <br />an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued <br />pursuant to Government AuditinQ Standards. <br />As required by OMB Circular A-133, we will perform tests of controls to evaluate the effectiveness of the design and <br />operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance <br />requirements applicable to each major federal award program. However, our tests will be less in scope than would be <br />necessary to render an opinion on those controls and, accordingly, no opinion will be expressed in our report on internal <br />control issued pursuant to OMB Circular A-133. <br />An audit is not designed to provide assurance on internal control or to identify significant deficiencies. However, during <br />the audit, we will communicate to management and those charged with governance internal control related matters that are <br />required to be communicated under professional standards, Government Auditine Standards, and OMB Circular A-133. <br />Audit Procedures - Compliance <br />If engaged, our audit will be conducted in accordance with the standards referred to in the section titled Audit Objectives. <br />As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will <br />perform tests of the City's compliance with applicable laws and regulations and the provisions of contracts and <br />62 <br />