ORDER NO. 29913
AUDIT ENGAGEMENT FOR KERR COUNTY FOR FY ENDING
SEPTEMBER 30, 2006
Came to be heard this the 11th day of September, 2006, with a motion made
by Commissioner Nicholson, seconded by Commissioner Williams. The
Court unanimously approved by vote of 4-0-0 to:
Approve engagement of Pressler Thompson & Co. for the annual audit for
Kerr County for the FY ending September 30, 2006, and authorize County
Judge to sign same.
~~1°II'3
1, ~ `~ COMMISSIONERS' COURT AGENDA REQUEST
PLEASE FURNISH ONE ORIGINAL AND TEN COPIES OF THIS
MADE BY: Pat Tinley OFFICE: County Judge
MEETING DATE: September 11, 2006 TIME PREFERRED:
SUBJECT: Consider, discuss and take appropriate action on Audit Engagement
($28,750) for Kerr County for FY ending September 30, 2006.
EXECUTIVE SESSION REQUESTED: (PLEASE STATE REASON)
NAME OF PERSON ADDRESSING THE COURT: County Judge
ESTIMATED LENGTH OF PRESENTATION:
IF PERSONNEL MATTER -NAME OF EMPLOYEE:
Time for submitting this request for Court to assure that the matter is posted in
accordance with Title 5, Chapter 551 and 552, Government Code, is as follows:
Meeting scheduled for Mondays:
THIS REQUEST RECEIVED BY:
THIS REQUEST RECEIVED ON:
5:00 P.M. previous Tuesday.

All Agenda Requests will be screened by the County Judge's Office to determine if adequate
information has been prepared for the Court's formal consideration and action at time of Court
Meetings. Your cooperation will be appreciated and contribute towards your request being
addressed at the earliest opportunity. See Agenda Request Rules Adopted by Commissioners'
Court.
William F Thompson, D.PA.
Ernst H. Druebert, Jr, C.P.A.
Jerry N. Oliver, C.P.A.
Douglas H. Sundberg, C.P.A.
Timothy R. Porter, C.P.A.
August 14, 2006
PRESSLER, THOMPSON AND COMPANY
A PROFESSIONAL CORPORATION
CERTIFIED PUBLIC ACCOUNTANTS
ONE SCHREINER CENTER
819 WATER STREET, SUPI'E 320
KERRVILLE, TEXAS 78028
The Honorable Judge and Members of the
Commissioners Court
Kerr County
Kerrville, Texas
P.O. 8oz 290590
Telephone (830) 257-7241
Faz (830) 896-4041
Email: info®ptcocpa.com
Website: www.ptcocpa.com
We are pleased to confirm our understanding of the services we are to provide Kerr
County for the year ended September 30, 2006. We will audit the financial statements of
the governmental activities, the business-type activities, each major fund, and the
aggregate remaining fund information, which collectively comprise the entity's basic
financial statements, of Kerr County as of and for the year ended September 30, 2006.
The following supplementary information accompanying the basic financial statements is
required by generally accepted accounting principles and will be subjected to certain
limited procedures, but will not be audited:
Management's Discussion and Analysis.
2. Budgetary Comparison Schedules
Also, the following additional information accompanying the basic financial statements
will be subjected to the auditing procedures applied in our audit of the financial
statements upon which we will provide an opinion in relation to the basic financial
statements:
Schedule of expenditures of federal awards.
Audit Objectives
The objective of our audit is the expression of opinions as to whether your basic financial
statements are fairly presented, in all material respects, in conformity with U.S. generally
accepted accounting principles and to report on the fairness of the additional information
referred to in the first paragraph when considered in relation to the basic financial
statements taken as a whole. The objective also includes reporting on-
Internal control related to the financial statements and compliance with
the provisions of applicable laws, regulations, contracts, agreements, and
grants, noncompliance with which could have a material effect on the
financial statements in accordance with Government Auditing Standards.
Internal control related to major programs and an opinion (or disclaimer of
opinion) on compliance with laws, regulations, and the provisions of
contracts or grant agreements that could have a direct and material effect
on each major program in accordance with the Single Audit Act
Amendments of 1996 and OMB Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations.
The reports on internal control and compliance will each include a statement that the
report is intended for the information and use of the audit committee, management,
specific legislative or regulatory bodies, federal awarding agencies, and if applicable,
pass-through entities and is not intended to be and should not be used by anyone other
than these specified parties.
Our audit will be conducted in accordance with U.S. generally accepted auditing
standards; the standards for financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; the Single Audit Act
Amendments of 1996; and the provisions of OMB Circular A-133, and will include tests
of accounting records, a determination of major program(s) in accordance with Circular
A-133, and other procedures we consider necessary to enable us to express such
opinions and to render the required reports. If our opinions on the financial statements
or the Single Audit compliance opinions are other than unqualified, we will fully discuss
the reasons with you in advance. If, for any reason, we are unable to complete the audit
or are unable to form or have not formed opinions, we may decline to express opinions
or to issue a report as a result of this engagement.
Management Responsibilities
Management is responsible for establishing and maintaining effective internal control
and for compliance with the provisions of applicable laws, regulations, contracts,
agreements, and grants. In fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of the
controls. The objectives of internal control are to provide management with reasonable,
but not absolute, assurance that assets are safeguarded against loss from unauthorized
use or disposition, that transactions are executed in accordance with management's
authorizations and recorded properly to permit the preparation of financial statements in
accordance with generally accepted accounting principles, and that federal award
programs are managed in compliance with applicable laws and regulations and the
provisions of contracts and grant agreements.
Management is responsible for making all financial records and related information
available to us, including any significant vendor relationships in which the vendor has the
responsibility for program compliance. We understand that you will provide us with such
information required for our audit and that you are responsible for the accuracy and
completeness of that information. Management's responsibilities include adjusting the
financial statements to correct material misstatements and for confirming to us in the
representation letter that the effects of any uncorrected misstatements aggregated by us
during the current engagement and pertaining to the latest period presented are
immaterial, both individually and in the aggregate, to the financial statements taken as a
whole.
You are responsible for establishing and maintaining internal controls, including
monitoring ongoing activities; for the selection and application of accounting principles;
and for the fair presentation in the financial statements of the respective financial
position of the governmental activities, the business-type activities, the aggregate
discretely presented component units, each major fund, and the aggregate remaining
fund information of the Kerr County and the respective changes in financial position and,
where applicable, cash flows in conformity with U.S. generally accepted accounting
principles.
You are responsible for the design and implementation of programs and controls to
prevent and detect fraud, and for informing us about all known or suspected fraud, or
illegal acts affecting the government involving (1) management, (2) employees who have
significant roles in internal control, and (3) others where the fraud or illegal acts could
have a material effect on the financial statements. Your responsibilities include informing
us of your knowledge of any allegations of fraud or suspected fraud or illegal acts
affecting the government received in communications from employees, former
employees, grantors, regulators, or others. In addition, you are responsible for identifying
and ensuring that the entity complies with applicable laws and regulations and for taking
timely and appropriate steps to remedy any fraud, illegal acts, violations of contracts or
grant agreements, or abuse that we may report. Additionally, as required by OMB
Circular A-133, it is management's responsibility to follow up and take corrective action
on reported audit findings and to prepare a summary schedule of prior audit findings and
a corrective action plan.
As part of the audit, we will prepare a draft of your financial statements, schedule of
expenditures of federal awards, and related notes. In accordance with Government
Auditing Standards, you will be required to review and approve those financial
statements prior to their issuance and have a responsibility to be in a position in fact and
appearance to make an informed judgment on those financial statements. Further, you
are required to designate a qualified management-level individual to be responsible and
accountable for overseeing our services.
Audit Procedures-General
An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements; therefore, our audit will involve judgment about
the number of transactions to be examined and the areas to be tested. We will plan and
perform the audit to obtain reasonable rather than absolute assurance about whether the
financial statements are free of material misstatement, whether from (1) errors, (2)
fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or
governmental regulations that are attributable to the entity or to acts by management or
employees acting on behalf of the entity. Because the determination of abuse is
subjective, Government Auditing Standards do not expect auditors to provide reasonable
assurance of detecting abuse. As required by the Single Audit Act Amendments of 1996
and OMB Circular A-133, our audit will include tests of transactions related to major
federal award programs for compliance with applicable laws and regulations and the
provisions of contracts and agreements.
Because an audit is designed to provide reasonable, but not absolute assurance and
because we will not perform 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 major programs. However, we will inform you of any material
errors and any fraudulent financial reporting or misappropriation of assets that come to
our attention. We will also inform you of any violations of laws or governmental
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
limited 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
correspondence with selected individuals, creditors, and financial institutions. We will
request written representations from your attorneys as part of the engagement, and they
may bill you for responding to this inquiry. At the conclusion of our audit, we will also
require certain written representations from you about the financial statements and
related matters.
Audit Procedures-Internal Controls
In planning and performing our audit, we will consider the internal control sufficient to
plan the audit in order to determine the nature, timing, and extent of our auditing
procedures for the purpose of expressing our opinions on Kerr County's financial
statements and on its compliance with requirements applicable to major programs.
We will obtain an understanding of the design of the relevant controls and whether they
have been placed in operation, and we will assess control risk. Tests of controls may be
performed to test the effectiveness of certain controls that we consider relevant to
preventing and detecting errors 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.
Tests of controls relative to the financial statements are required only if control risk is
assessed below the maximum level. Our tests, if performed, will be less in scope than
would be necessary to render an opinion on internal control and, accordingly, no opinion
will be expressed in our report on internal control issued pursuant to Government
Auditing Standards.
As required by OMB Circular A-133, we will perform tests of controls over compliance 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 controls 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 control or to identify reportable
conditions. However, we will inform the governing body or audit committee of any
matters involving internal control and its operation 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 internal control, if any, as required by Government Auditing Standards and
OMB Circular A-133.
Audit Procedures-Compliance
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 misstatement, we will perform tests of Kerr
County's compliance with applicable laws and regulations and the provisions of
contracts and agreements, including grant agreements. However, the objective of those
procedures will not be to provide an opinion on overall compliance and we will not
express such an opinion in our report on compliance issued pursuant to Government
Auditing Standards.
OMB Circular A-133 requires that we also plan and perform the audit to obtain
reasonable assurance about whether the auditee has complied with applicable laws and
regulations and the provisions of contracts and grant agreements applicable to major
programs. Our procedures will consist of the applicable procedures described in the
OMB Circular A-133 Compliance Supplement for the types of compliance requirements
that could have a direct and material effect on each of Kerr County's major programs.
The purpose of those procedures will be to express an opinion on Kerr County's
compliance with requirements applicable to each of its major programs in our report on
compliance issued pursuant to OMB Circular A-133.
Audit Administration, Fees, and Other
We understand that your employees will prepare all cash, accounts receivable, or other
confirmations we request and will locate any documents selected by us for testing.
At the conclusion of the engagement, we will complete the appropriate sections of and
sign the Data Collection Form that summarizes our audit findings. We will provide the
required number of copies of our reports to Kerr County; however, it is management's
responsibility to submit the reporting package (including financial statements, schedule
of expenditures of federal awards, summary schedule of prior audit findings, auditors'
reports, and a corrective action plan) along with the Data Collection Form to the
designated federal clearinghouse and, if appropriate, to pass-through entities. The Data
Collection Form and the reporting package must be submitted within the earlier of 30
days after receipt of the auditors' reports or nine months after the end of the audit period,
unless a longer period is agreed to in advance by the cognizant or oversight agency for
audits. At the conclusion of the engagement, we will provide information to management
as to where the reporting packages should be submitted and the number to submit.
The audit documentation for this engagement is the property of Pressler, Thompson and
Company and constitutes confidential information. However, pursuant to authority given
by law or regulation, we may be requested to make certain audit documentation
available to grant agencies or its designee, a federal agency providing direct or indirect
funding, or the U.S. Government Accountability Office for purposes of a quality review of
the audit, to resolve audit findings, or to carry out oversight responsibilities. We will notify
you of any such request. If requested, access to such audit documentation will be
provided under the supervision of Pressler, Thompson and Company personnel.
Furthermore, upon request, we may provide copies of selected audit documentation to
the aforementioned parties. These parties may intend, or decide, to distribute the copies
or information contained therein to others, including other governmental agencies.
The audit documentation for this engagement will be retained for a minimum of five
years after the report release or for any additional period requested by the granting
agencies. If we are aware that a federal awarding agency, pass-through entity, or
auditee is contesting an audit finding, we will contact the party(ies) contesting the audit
finding for guidance prior to destroying the audit documentation.
Our fee for these services will be at our standard hourly rates plus out-of-pocket costs
(such as report reproduction, word processing, postage, travel, copies, telephone, etc.)
except that we agree that our gross fee, including expenses, will not exceed $28,750.
Our standard hourly rates vary according to the degree of responsibility involved and the
experience level of the personnel assigned to your audit. Our invoices for these fees will
be rendered upon completion of the engagement. The above fee is based on
anticipated cooperation from your personnel and the assumption that unexpected
circumstances will not be encountered during the audit. If significant additional time is
necessary, we will discuss it with you and arrive at a new fee estimate before we incur
the additional costs.
Government Auditing Standards require that we provide you with a copy of our most
recent external peer review report and any letter of comment, and any subsequent peer
review reports and letters of comment received during the period of the contract. Our
2005 peer review report accompanies this letter.
We appreciate the opportunity to be of service to Kerr County and believe this letter
accurately summarizes the significant terms of our engagement. If you have any
questions, please let us know. If you agree with the terms of our engagement as
described in this letter, please sign the enclosed copy and return it to us.
Very truly yours,
~~~~~ ~ '~
Pressler, Thompson and Company
RESPONSE:
This letter correctly sets forth the understanding of Kerr County.
c
~_ i ~ , __
Title: xerr County Judge
Date: September 11, 2006
Carneiro,Chumney8.Co., L.c
Robert M. McAdams, CPA J. Lowell Goode, CPA
Robert L. Lewis, CPA CERTIFIED PUBLIC ACCOUNTANTS JUlla C. Norton, CPA
`Franklin W. Burk, CPA Sandra J. Leppert, CPA
Paul Roth-Roffy, CPA Allen E. Robertson, Jc, CPA
December 5, 2005
To the Shareholders
Pressler, Thompson and Company
We have reviewed the system of quality control for the accounting and auditing practice of
Pressler, Thompson and Company (the firm) in effect for the year ended July 31, 2005. A
system of quality control encompasses the firm's organizational structure, the polices adopted
and procedures established to provide it with reasonable assurance of conforming with
professional standards. The elements of quality control are described in the Statements on
Quality Control Standards issued by the American Institute of CPAs (AICPA). The firm is
responsible for designing a system of quality control and complying with it to provide the firm
reasonable assurance of conforming with professional standards in all material respects. Our
responsibility is to express an opinion on the design of the system of quality control and the
firm's compliance with its system of quality control based on our review.
Our review was conducted in accordance with standards established by the Peer Review
Board of the AICPA. During our review, we read required representations from the firm.
interviewed firm personnel and obtained an understanding of the nature of the firm's
accounting and auditing practice, and the design of the firm's system of quality control
sufficient to assess the risks implicit in its practice. Based on our assessments, we selected
engagements and administrative files to test for conformity with professional standards and
compliance with the firm's system of quality control. The engagements selected represented a
reasonable cross-section of the firm's accounting and auditing practice with emphasis on
higher-risk engagements. The engagements selected included among others, audits of
Employee Benefit Plans and engagements performed under Government Auditing
Standards. Prior to concluding the review, we reassessed the adequacy of the scope of the
peer review procedures and met with firm management to discuss the results of our review.
We believe that the procedures we performed provide a reasonable basis for our opinion.
In performing our review, we obtained an understanding of the system of quality control for
the firm's accounting and auditing practice. In addition, we tested compliance with the firm's
quality control policies and procedures to the extent we considered appropriate. These tests
covered the application of the firm s policies and procedures on selected engagements. Our
review was based on selected tests therefore it would not necessarily detect all weaknesses
in the system of quality control or all instances of noncompliance with it. There are inherent
limitations in the effectiveness of any system of quality control and therefore noncompliance
with the system of quality control may occur and not be detected. Projection of any
evaluation of a system of quality control to future periods is subject to the risk that the system
of quality control may become inadequate because of changes in conditions, or because the
degree of compliance with the policies or procedures may deteriorate.
"Helping Clients Succeed for more than 75 Years"
40 N.E. Loop 410, Suite 200 • San Antonio, Texas 78216-5876
(210) 342-8000 • Fax (210) 342-0866
E-mall: camelro®carnelro.tom • www.carnelro.com
An Independent Member of the BDO Seidman Alliance
To the Shareholders - 2 - December 5, 2005
Pressler, Thompson and Company
In our opinion, the system of quality control for the accounting and auditing practice of
Pressler, Thompson and Company in effect for the year ended July 31, 2005, has been
designed to meet the requirements of the quality control standards for an accounting and
auditing practice established by the AICPA and was complied with during the year then ended
to provide the firm with reasonable assurance of conforming with professional standards.
As is customary in a system review, we have issued a letter under this date that sets forth
comments that were not considered to be of sufficient significance to affect the opinion
expressed in this report.