HomeMy WebLinkAboutGallina LLP - Butte County Single Audit Report 06-30-15 GALLINA UP
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OF SUPFFZiASORg
January 6,2016 MAR l i%
Board of Supervisors and Grand Jury � �
County of Butte
Oroville,California
We have audited the financial statements of the governmental activities, the business-type activities,
each major fund,and the aggregate fund information of the County of Butte as of and for the year ended
June 30,2015, which collectively comprise the County's basic financial statements and have issued our
report thereon dated January 6,2016.Professional standards require that we advise you of the following
matters relating to our audit.
Our Responsibilities Under U.S. Generally Accepted Auditing Standards and OMB Circular A-
133
As communicated in our engagement letter dated April 28, 2015, our responsibility, as described by
professional standards,is to form and express opinions about whether the financial statements that have
been prepared by management with your oversight are presented fairly, in all material respects, in
conformity with accounting principles generally accepted in the United States of America. Our audit of
the financial statements does not relieve you or management of your respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain
reasonable, rather than absolute, assurance about whether the financial statements are free of material
misstatement. An audit of financial statements includes consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances,but not for
the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial
reporting. Accordingly, as part of our audit, we considered the internal control of the County of Butte
solely for the purpose of determining our audit procedures and not to provide any assurance concerning
such internal control.
We also considered internal control over compliance with requirements that could have a direct and
material effect on a major federal program in order to determine our auditing procedures for the purpose
of expressing our opinion on compliance and to test and report on internal control over compliance in
accordance with OMB Circular A-133.
As part of obtaining reasonable assurance about whether the County's financial statements are free of
material misstatement,we performed tests of its compliance with certain provisions of laws,regulations,
contracts and grants, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts.However,providing an opinion on compliance with those
provisions was not an objective of our audit. Also, in accordance with OMB Circular A-133, we
examined, on a test basis, evidence about the County's compliance with the types of compliance
requirements described in the U.S. Office of Management and budget (OMB) Circular A-133
Compliance Supplement applicable to each of its major federal programs for the purpose of expressing
an opinion on the County's compliance with those requirements. While our audit provides a reasonable
basis for our opinion, it does not provide a legal determination on the County's compliance with those
requirements.
We are also responsible for communicating significant matters related to the audit that are, in our
professional judgment, relevant to your responsibilities in overseeing the financial reporting process.
However, we are not required to design procedures for the purpose of identifying other matters to
communicate to you.
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Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously communicated to you.
Compliance with All Ethics Requirements Regarding Independence
The engagement team, others in our firm, and as appropriate, our firm, and our network firms have
complied with all relevant ethical requirements regarding independence.
Qualitative Aspects of the Entity's Significant Accounting Practices
Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies.A summary of the
significant accounting policies adopted by the County of Butte is included in Note 1 to the financial
statements.
As described in the Note 1 to the financial statements, the County adopted new accounting guidance,
GASB Statement No. 68,Accounting and Financial Reporting for Pensions—an amendment of GASB
Statement No. 27,and GASB Statement No.71,Pension Transition for Contributions Made Subsequent
to the Measurement Date—an amendment of GASB Statement No. 68,during the fiscal year 2015.
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No matters have come to our attention that would require us,under professional standards,to inform you
about (1) the methods used to account for significant unusual transactions and (2) the effect of
significant accounting policies in controversial or emerging areas for which there is a lack of
authoritative guidance or consensus.
Significant Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's current judgments. Those judgments are normally based on knowledge and
experience about past and current events and assumptions about future events. Certain accounting
estimates are particularly sensitive because of their significance to the financial statements and because
of the possibility that future events affecting them may differ markedly from management's current
judgments. €
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The most sensitive accounting estimates affecting the financial statements are:
• Management's estimate of the claims liabilities is based on actuarial valuation reports
obtained from experts.
• Management's estimate of the other post-employment benefits (OPEB) liability is based
on actuarial valuation reports obtained from experts.
Management's estimate of the net pension liability and related deferred inflows/outflows is
based on actuarial valuation reports obtained from CalPBRS.
• Management's estimate of the liability for the landfill closure/postclosure care costs is
based on yearly estimates prepared by the County's Public Works department and
reviewed by the California Department of Resources Recycling and Recovery agency.
We evaluated the key factors and assumptions used to develop the estimates described above and
determined that they are reasonable in relation to the basic financial statements taken as a whole and in
relation to the applicable opinion units.
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Significant Difficulties Encountered during the Audit
During the year,the County implemented a new reporting system,Engagement,to compile its financial
statements.While the initial setup of the system,including mapping and linking all of the accounts from
the reporting system,caused some delays in completing the audit and issuing the final report,the County
was still able to issue the final CAFR report during the first week of January.
Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards require us to accumulate all known and
likely misstatements identified during the audit, other than those that we believe are trivial, and
communicate them to the appropriate level of management.Further,professional standards require us to
also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes
of transactions, account balances or disclosures, and the financial statements as a whole and each
applicable opinion unit. No material misstatements were noted as a result of our audit.
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Disagreements with Management
For purposes of this letter,professional standards define a disagreement with management as a matter,
whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing
matter, which could be significant to the County of Butte's financial statements or the auditor's report.
No such disagreements arose during the course of the audit.
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Representations Requested from Management
We have requested certain written representations from management, which are included in the
management representation letters dated January 6,2016.
Management's Consultations with Other Accountants
In some cases,management may decide to consult with other accountants about auditing and accounting
matters. Management informed us that, and to our knowledge, there were no consultations with other
accountants regarding auditing and accounting matters. k
Other Significant Matters,Findings,or Issues
In the normal course of our professional association with the County of Butte, we generally discuss a
variety of matters,including the application of accounting principles and auditing standards,operating and i
regulatory conditions affecting the entity, and operational plans and strategies that may affect the risks of
material misstatement.None of the matters discussed resulted in a condition to our retention as the County
of Butte's auditors.
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This report is intended solely for the information and use of the Board of Supervisors, and management of
the County of Butte and is not intended to be and should not be used by anyone other than these specified
parties.
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January 6,2016
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