HomeMy WebLinkAboutTamarac - RSM Report to the Commission (003)200 E. Las Olas Blvd, Ste 2500
Ft. Lauderdale, FL 33301-4216
O 954 462 6300
F 954 462 4607
www.rsmus.com
January 17, 2023
Honorable Mayor and Members of the City Commission
7525 NW 88th Avenue
Tamarac, Florida 33321
Attention: Honorable Mayor and Members of the City Commission
This letter is intended to communicate certain matters related to the planned scope and timing of our
audit of the City of Tamarac, Florida’s (the City) financial statements and compliance as of and for the
year ending September 30, 2022.
Communication
Effective two-way communication between our firm and those charged with governance is important to
understanding matters related to the audit and developing a constructive working relationship.
Your insights may assist us in understanding the City and its environment, identifying appropriate sources
of audit evidence and providing information about specific transactions or events. We will discuss with
you your oversight of the effectiveness of internal control and any areas where you request additional
procedures to be undertaken. We expect that you will timely communicate to us any matters you consider
relevant to the audit. Such matters might include strategic decisions that may significantly affect the
nature, timing and extent of audit procedures, your suspicion or detection of fraud, or any concerns you
may have about the integrity or competence of senior management.
We will timely communicate to you any fraud involving senior management and other known or likely
fraud, noncompliance with provisions of laws, statutes, regulations, rules, provisions of contracts or grant
agreements or abuse that is likely to have a material effect on the financial statements. We will also
communicate illegal acts, instances of noncompliance or fraud that come to our attention (unless they are
clearly inconsequential), and disagreements with management and other serious difficulties encountered
in performing the audit. We also will communicate to you and to management any significant deficiencies
or material weaknesses in internal control that become known to us during the course of the audit.
Additionally, we will communicate significant unusual transactions, matters that are difficult or contentious
for which the auditor consulted outside the engagement team, and circumstances that affect the form and
content of the auditor’s report. Other matters arising from the audit that are, in our professional judgment,
significant and relevant to you in your oversight of the financial reporting process will be communicated to
you in writing.
Independence
Our independence policies and procedures are designed to provide reasonable assurance that our firm
and its personnel comply with applicable professional independence standards. Our policies address
financial interests, business and family relationships, and non-audit services that may be thought to bear
on independence. For example, our partners or professional employees are restricted in their ability to
own a direct financial interest or a material indirect financial interest in a client or any affiliate of a client.
Also, if an immediate family member or close relative of a partner or professional employee is employed
by a client in a key position, the incident must be reported and resolved in accordance with firm policy. In
addition, our policies prohibit us from providing certain non-attest services and require audit clients to
accept certain responsibilities in connection with the provision of permitted non-attest services.
City of Tamarac
January 18, 2023
Page 2
The Audit Planning Process
Our audit approach places a strong emphasis on obtaining an understanding of how your entity functions.
This enables us to identify key audit components and tailor our procedures to the unique aspects of your
operations. The development of a specific audit plan will begin by meeting with you and with management
to obtain an understanding of business objectives, strategies, risks and performance.
As part of obtaining an understanding of your organization and its environment, we will obtain an
understanding of your system of internal control. We will use this understanding to identify risks of
material misstatement and noncompliance, which will provide us with a basis for designing and
implementing responses to the assessed risks of material misstatement and noncompliance. We will also
obtain an understanding of the users of the financial statements in order to establish an overall materiality
level for audit purposes. We will conduct formal discussions among engagement team members to
consider how and where your financial statements might be susceptible to material misstatement due to
fraud or error or to instances of noncompliance.
The Concept of Materiality in Planning and Executing the Audit
We apply the concept of materiality in both planning and performing the audit, evaluating the effect of
identified misstatements or noncompliance on the audit and the effect of uncorrected misstatements, if
any, on the financial statements, forming the opinion in our report on the financial statements, and
determining or reporting in accordance with Government Auditing Standards and other compliance
reporting requirements.
Our determination of materiality is a matter of professional judgment and is affected by our perception of
the financial and compliance informational needs of users of the financial statements. We establish
performance materiality at an amount less than materiality for the financial statements as a whole to allow
for the risk of misstatements that may not be detected by the audit. We use performance materiality for
purposes of assessing the risks of material misstatement and determining the nature, timing and extent of
further audit procedures. Our assessment of materiality throughout the audit will be based on both
quantitative and qualitative considerations. Because of the interaction of quantitative and qualitative
considerations, misstatements of a relatively small amount could have a material effect on the current
financial statements as well as financial statements of future periods. We will accumulate misstatements
identified during the audit, other than those that are clearly trivial. At the end of the audit, we will inform
you of all individual uncorrected misstatements aggregated by us in connection with our evaluation of our
audit test results.
Significant Risks of Material Misstatement
Our audit of the financial statements includes the performance of risk assessment procedures in order to
identify risks of material misstatement, whether due to fraud or error. As part of these risk assessment
procedures, we determine whether any risks identified are a significant risk. A significant risk is an
identified risk of material misstatement for which the assessment of inherent risk is close to the upper end
of the spectrum of inherent risk due to the degree to which inherent risk factors affect the combination of
the likelihood of a misstatement occurring and the magnitude of the potential misstatement should that
misstatement occur, or that is to be treated as a significant risk in accordance with generally accepted
auditing standards in the United States of America. As part of our initial risk assessment procedures, we
identified the following risks as significant risks. Additional significant risks may be identified as we
perform additional audit procedures.
City of Tamarac
January 18, 2023
Page 3
Risk Name Risk Description Planned Response
Management
Override of
Controls
Management could manipulate
controls over financial reporting
Obtain an understanding and perform test of
controls over significant transaction cycles,
as deemed appropriate
Test journal entries for propriety and proper
authorization
Revenue
Recognition
Revenues are improperly
recognized in the financial
statements
Understand the City’s revenue recognition
policy and assess its compliance with GAAP
Perform substantive test of details
CARES Act and
Related Funding
City does not comply with
the applicable terms and
conditions for CARES Act
and other related funding
received
This could result in
improper revenue
recognition for the year
ending
Test compliance with applicable terms and
conditions of the CARES Act and other
related funding received
Perform test of details on revenue
Pension and
OPEB Liabilities
Estimated liabilities are not
properly valued at year end
Review and determine that management’s
methodology is properly and consistently
applied
Assess the reputation and competency of
the City’s actuary, to place reliance on their
work
Test the underlying data supporting the
estimate
Implementation of
GASB 87, Leases
Improper application and
implementation of the GASB
statement
Assess the applicability of the GASB
statement to the City’s transactions
Test for proper recognition and disclosure of
applicable transactions
Our Approach to Internal Control and Compliance Relevant to the Audit
Our audit of the financial statements, including compliance, will include obtaining an understanding of
internal control sufficient to plan the audit and determine the nature, timing and extent of audit procedures
to be performed. An audit is not designed to provide assurance on internal control or identify significant
deficiencies or material weaknesses. Our review and understanding of the entity’s internal control is not
undertaken for the purpose of expressing an opinion on the effectiveness of internal control.
City of Tamarac
January 18, 2023
Page 4
We will issue reports on internal control related to the financial statements and major programs. These
reports describe the scope of testing of internal control and the results of our tests of internal control. Our
reports on internal control will include any significant deficiencies and material weaknesses in the system
of which we become aware as a result of obtaining an understanding of internal control and performing
tests of internal control consistent with the requirements of Government Auditing Standards issued by the
Comptroller General of the United States, the Single Audit Act, and Uniform Administrative Requirements,
Cost Principles, and Audit Requirements for Federal Awards at 2 CFR 200 (Uniform Guidance).
We will issue reports on compliance with laws, statutes, regulations, and the terms and conditions of
federal awards. We will report on any noncompliance that could have a material effect on the financial
statements and any noncompliance that could have a direct and material effect on each major program.
Our reports on compliance will address material errors, fraud, violations of compliance requirements, and
other responsibilities imposed by state and federal statutes and regulations and assumed contracts; and
any state or federal grant, entitlement or loan program questioned costs of which we become aware,
consistent with the requirements of the standards identified above.
Timing of the Audit
Preliminary audit work took place in August 2022. We have scheduled final field work for the period from
January through February 2023. Management’s adherence to its closing schedule and timely completion
of information used by us in performance of the audit is essential to timely completion of the audit.
Closing
We will be pleased to respond to any questions you have about the foregoing. We appreciate the
opportunity to continue to be of service to the City.
This communication is intended solely for the information and use of the Honorable Mayor and Members
of the City Commission and is not intended to be, and should not be, used by anyone other than these
specified parties.
Copies sent to: Mayor, City Clerk, City Manager, Director of Financial Services and each Commissioner
City of Tamarac
January 18, 2023
Page 5
Mayor Michelle Gomez
City of Tamarac
7525 NW 88th Avenue
Tamarac, Florida 33321
Commissioner Morey Wright, Jr.
City of Tamarac
7525 NW 88th Avenue
Tamarac, Florida 33321
Commissioner Elvin Villalobos
City of Tamarac
7525 NW 88th Avenue
Tamarac, Florida 33321
Vice Mayor Marlon Bolton
City of Tamarac
7525 NW 88th Avenue
Tamarac, Florida 33321
Commissioner Kicia Daniel
City of Tamarac
7525 NW 88th Avenue
Tamarac, Florida 33321
Kimberly Dillon, City Clerk
City of Tamarac
City Hall, Room 101
7525 NW 88th Avenue
Tamarac, Florida 33321
Kathleen Gunn, City Manager
City of Tamarac
7525 NW 88th Avenue
Tamarac, Florida 33321
Christine Cajuste, Finance Director
City of Tamarac
City Hall, Room 100
7525 NW 88th Avenue
Tamarac, Florida 33321