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City of Paris <br />August 7, 2001 <br />Page 2 <br /> <br />Audit Objectives (Continued) <br /> Internal control related to the financial statements and compliance with <br /> taws, regulations, and the provisions of contracts or grant agreements, <br /> noncompliance with which could have a material effect on the financial <br /> statements in accordance with Government Auditing Standards. <br /> Internal control related to major programs and an opinion (or disclaimer <br /> of opinion) on compliance with laws, regulations, and the provisions of <br /> contracts or grant agreements that could have a direct and material effect <br /> on each major program in accordance with the Single Audit Act Araendments <br /> of 1996 and OMB Circular A-133, Audits of States, Local Governments, and <br /> Non-Profit Organizations. <br /> <br /> The reports on internal control and compliance will each include a statement that <br /> the report is intended for the information and use of management, specific <br /> legislative or regulatory bodies, federal awarding agencies, and if applicable, <br /> pass-through entities and is not intended to be and should not be used by anyone <br /> other than these specified parties. <br /> <br />IX enqaged, our audit will be conducted in accordance with auditing standards <br />generally accepted in the United States of A~erica; the standards foe financial <br />audits contained in Government Auditing Standards, issued by the Comptroller <br />General of the United States; the Single Audit Act 7kmendments of 1996; and the <br />provisions of Circular A-133 and will include tests of accounting records, a <br />determination of major program(s) in accordance with Circular A-133, and other <br />procedures we consider necessary to enable us to express such an opinion and to <br />render the required reports. If our opinion on the general purpose financial <br />statements or the Single Audit compliance opinion is other than unqualified, we <br />will fully discuss the reasons with you in advance. If, for any reason, we are <br />unable to complete the audit or are unable to form or have not formed an opinion, <br />we may decline to express an opinion or to issue a report as a result of the <br />engagement. <br /> <br />Manaqement Responsibilities <br /> <br />Management is responsible for establishing and maintaining internal control and <br />for compliance with the provisions of contracts, agreements, and grants. In <br />fulfilling this responsibility, estimates and judgments by management are <br />required to assess the expected benefits and related costs of the controls. The <br />objectives of internal control are to provide management with reasonable, but not <br />absolute, assurance that assets are safeguarded against loss from unauthorized <br />use or disposition, that transactions are executed in accordance with manage- <br />ment's authorizations and recorded properly to permit the preparation of general <br />purpose financial statements in accordance with generally accepted accounting <br />principles, and that federal award programs are managed in compliance with <br />applicable laws and regulations and the provisions of contracts and grant <br />agreements. <br /> <br />Management is responsible for making all financial records and related <br />information available to us. We understand that you will provide us with such <br />information =equired for our audit and that you are responsible for the accuracy <br />and completeness of that information. We will advise you about appropriate <br />accounting principles and their application and will assist in the preparation of <br />your financial statements, including the schedule of expenditures of federal <br /> <br />McCLANAHAN AND HOLMES, PLLC <br /> <br /> <br />