ORDER NO. 30483
2007 AUDIT ENGAGEMENT LETTER FROM PRESSLER, TI-IOMPSON AND
COMPANY
Came to be heard this the 27th day of August, 2007, with a motion made by
Commissioner Williams, seconded by Commissioners Baldwin. The Court
unanimously approved by vote of 3-1-0 to:
Approve the 2007 Audit Engagement Letter from Pressler, 1,hoinpson and
Company, as amended..
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COMMISSIONERS' COURT AGENDA REQUEST
PLEASE FURNISH ONE ORIGINAL AND TEN (10) COPIES OF THIS
REQUEST AND DOCUMENTS TO BE REVIEWED BY THE COURT
MADE BY: Jeannie Hargis
MEETING DATE: August 27, 2007
SUBJECT: Consider, discuss and take appropriate action to approve 2007 Audit
Engagement Letter from Pressler, Thompson and Company and authorize County Judge
to sign the same.
EXECUTIVE SESSION REQUESTED: (PLEASE STATE REASON)
NAME OF PERSON ADDRESSING THE COURT: Jeannie Hargis
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 RQUEST RECEIVED ON:
OFFICE: County Auditor
TIME PREFERRED:
5:00 PM previous Tuesday
@ .M.
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.

PRESSLER, THOMPSON AND COMPANY
A PROFESSIONAL CORPORATION
William F. Thompson, C.P.A.	CERTIFIED PUBLIC ACCOUNTANTS	P.O. Box 290590
Ernst H. Druebert, Jr., C.P.A.	ONE SCHREINER CENTER	Telephone (830) 257-7241
Jerry N. Oliver, C.P.A.
Douglas H. Sundberg, C.P.A.	819 WATER STREET, SUITE 320	Fax (830) 896-4041
Email: infoC~?ptcocpa.com
Timothy R. Porter, C.P.A.	KERRVILLE, TEXAS 78028	Website: www.ptcocpa.com
August 14, 2007
The Honorable Judge and Members of the
Commissioners Court
Kerr County
Kerrville, Texas
We are pleased to confirm our understanding of the services we are to provide Kerr County for the year
ended September 30, 2007. 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 basic financial statements of Kerr County as of and for the year ended
September 30, 2007. Accounting standards generally accepted in the United States provide for certain
required supplementary information (RSI), such as management's discussion and analysis (MD&A), to
accompany Kerr County's basic financial statements. As part of our engagement, we will apply certain
limited procedures to Kerr County's RSI. These limited procedures will consist principally of inquiries of
management regarding the methods of measurement and presentation, which management is
responsible for affirming to us in its representation letter. Unless we encounter problems with the
presentation of the RSI or with procedures relating to it, we will disclaim an opinion on it. The following
RSI is required by generally accepted accounting principles and will be subjected to certain limited
procedures, but will not be audited:
1) Management's Discussion and Analysis.
2) Budgetary Comparison Schedules
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. Our audit will be
conducted in accordance with U.S. generally accepted auditing standards and the standards for
financial audits contained in Government Auditing Standards, issued by the Comptroller General of the
United States, and will include tests of the accounting records of Kerr County and other procedures we
consider necessary to enable us to express such opinions. If our opinions on the financial statements
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.
We will also provide a report (that does not include an opinion) 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 as required by Government Auditing Standards. The report on internal control and
compliance will include a statement that the report is intended solely for the information and use of the
audit committee, management, and specific legislative or regulatory bodies and is not intended to be
and should not be used by anyone other than these specified parties. If during our audit we become
aware that Kerr County is subject to an audit requirement that is not encompassed in the terms of this
engagement, we will communicate to management and those charged with governance that an audit in
accordance with U.S. generally accepted auditing standards and the standards for financial audits
contained in Government Auditing Standards may not satisfy the relevant legal, regulatory, or
contractual requirements.
Management Responsibilities
Management is 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, each major fund, and the aggregate remaining fund information of the Kerr
County and the respective changes in financial position and cash flows, where applicable, in conformity
with U.S. generally accepted accounting principles. Management is responsible for the basic financial
s#atements and all accompanying information as well as all representations contained therein.
You are responsible for management decisions and functions. As part of the audit, we will prepare a
draft of your financial statements 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.
Management is responsible for making all financial records and related information available to us and
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 the design and implementation of programs and controls to prevent and detect
fraud, and for informing us about all known or suspected fraud 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 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, regulations, contracts, agreements, and grants for taking timely and appropriate steps
to remedy any fraud, illegal acts, violations of contracts or grant agreements, or abuse that we may
report.
Management is responsible for establishment and maintenance of a process for tracking the status of
audit findings and recommendations. Management is also responsible for identifying for us previous
audits or other engagements or studies related to the objectives discussed in the Audit Objectives
section of this letter. This responsibility includes relaying to us corrective actions taken to address
significant findings and recommendations resulting from those audits or other engagements or studies.
You are also responsible for providing management's views on our current findings, conclusions, and
recommendations, as well as your planned corrective actions, and the timing and format related thereto.
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 transacfiions 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.
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 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. However, we will inform you of any material errors and any
fraudulent financial reporting or misappropriation of assets that come to our attention. Our
responsibility as auditors is limited to the period covered by our audit and does not extend to 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
Our audit will include obtaining an understanding of internal control sufficient to plan the audit and to
determine the nature, timing and extent of audit procedures to be performed. 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. 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 Sfandards.
An audit is not designed to provide assurance on internal control 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 and
Government Auditing Standards.
Audit Procedures-Compliance
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 the provisions of applicable laws,
regulations, contracts, agreements, and grants. However, the objective of our audit 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.
Audit Procedures -Expanded Scope
You have requested we expand our scope during the audit in several areas which we have outlined
below. We will perform these expanded procedures and any findings we have will be presented in the
management letter we will issue at thgs.~lclYu~ion of the engagement.
``o
For Justice of the Peace offices s. 3 and 4 w will review receipt procedures they follow and perform
some additional testing procedures raciri`g receipts to bank deposits, to the proper county and state
revenue codes and to verify the monies remitted were credited to the proper case number.
We will visit the Animal Control Department and review the receipt procedures. they follow, including
how often the are remitting their receipts to the county.
At th g~a we will again review their receipts procedures, how they are charging for the facilities
and if discounts are being given, and if so how the discounts are determined.
In the County Clerk's office we will review additional receipt procedures and. reconcile additional
monthly reports to the- County. We will also review the procedures followed in the handling of the jury
funds.
In the District Clerk's office we will also review the procedures followed in the handling of the jury funds.
We will look at who is reconciling the bank statements, who is making bank deposits and who is
preparing and reconciling the monthly reports submitted to the court.
The Human Resources Department is another department we will spend some additional time in. We
will verify some selected salary amounts and perform a recalculation of some payroll checks. We will
review the procedures regarding voiding and reissuing paychecks. We will look at how and when
payroll tax deposits are being made and any existing I R S issues.
In Tax Office we will review some of the credit card and online payments since they are new features
this year. We will also determine if there were any cash drawer: reconciling issues during this past year.
In the Treasurer's Office we will make an expanded review of the activity in this office with more
emphasis placed on the first six (6) months of the fiscal year. Since the JP's jury box is maintained
here, we will review the procedures followed for the maintenance of these funds.
Audit Administration, Fees, and Other
We understand that your employees will prepare all cash or other confirmations we request and will
locate any documents selected by us for testing.
We will provide copies of our reports to Kerr County; however, management is responsible for
distribution of the reports and the financial statements. Unless restricted by law or regulation, or
containing privileged and confidential information, copies of our reports are to be made available for
public inspection.
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 their 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 date or for any additional period requested by the granting agencies. If we are aware that
a federal awarding agency 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
fee, including expenses, for the audit will not exceed $29,500 and for the expanded scope procedures
the fee will be at our standard hourly rates but will not exceed $5,000. Our standard hourly rates vary
according to the degree of responsibility involved and the experience level of the personnel assigned to
your audit. The above fees are 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. Our invoice for these fees will be rendered upon completion of the engagement.
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 and letter of
comments 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,
~~(i~Ji ~'~"
Pressler, Thompson and Compan
RESPONSE:
This letter correctly sets forth the understanding of Kerr County.
By:
Title:
Date:
Carneiro,Chumney8.Co., L.c.
Robert M. McAdams, CPA
Robert L. Lewis, CPA
Franldin W. Burl, CPA
Paul Roth-Roffy, CPA
CERTIFIED PUBLIC ACCOUNTANTS
J. Lowell Goode, CPA
Julia C. Norton, CPA
Sandra J. Leppert, CPA
Allen E. Robertson, Jr., 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.
I 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 firms 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: carnelro~carneiro.com • vvww.carneiro.cAm
An Independent Member of the 810 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.
~ ~ ~ ., ~~.
~ ,
Carneiro,ChumneyB,Co., L.c.
Robert M. McAdams, CPA
Robert L. Lewis, CPA
Franklin W. Burk, CPA
Paul Roth-Roffy, CPA
December 5, 2005
CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders
Pressler, Thompson and Company
J. Lowell Goode, CPA
Julia C. Norton, CPA
Sandra J. Leppert, CPA
Allen E. Robertson, Jr., CPA
Thompson and Company
We have reviewed the accounting and auditing practice of Pressler,
(the firm) for the year ended July 31, 2005, and have issued our report thereon dated
December 5, 2005. That report should be read in conjunction with the comments in this
letter, which were considered in determining our opinion. The matters described below were
not considered to be of sufficient significance to affect the opinion expressed in that report.
Comment-The firm's quality control policies and procedures require consultation in
situations that involve complex subject matter or newly issued technical or professional
pronouncements. During our review, we noted instances where consultation was
warranted, but the firm did not consult. The firm performed engagements in which new
technical or professional pronouncements were applicable but the firm did include
documentation of performance of these procedures. Through discussion with staff
members we were able to assure ourselves the procedures were performed but just not
documented. A similar comment was included in the previous peer review.
Recommendation-The firm should review at a staff training session its policies regarding
consultation as outlined in its quality control document. The firm should encourage its staff
to consult with or use current authoritative sources on complex, unus shareholders should
and professional matters in accordance with firm policy. In addition,
review workpapers to be sure all procedures performed are documented.

"Helping Clients Succeed for more than 75 Years"
40 N.E. Loop 4t0, Suite 200 • San Antonio, Texas 78216-5876
(210) 342-8000 • Fax (210) 342-0866
E-mail: carneiro~carneiro.com • www.carneiro.com
An Independent Member of the BDO Seidman Alliance