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City of Casselberry June 13,2005 Page 2 on the financial statements or the Single Audit compIíance opinion is other than unqualified, they will fully discuss the reasons with management of the City in advance. If, for any reason, they are unable to complete the audit or are unable to express an opinion, they may decline to express an opinion or may not issue a report as a result of this engagement. The management of the City is responsible for establishing and maintaining internal control. In fulfilling this responsibility, estimates and judgements 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 authorization and recorded properly to permit the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that federal award programs are managed in compliance with applicable laws and regulations and the provisions of contracts and grant agreements. In planning and performing their audits, the Auditor 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 their opinions on the City's financial statements and on its compliance with requirements applicable to major federal programs and state projects. The Auditor will obtain an understanding of the design of the relevant controls and whether they have been placed in operation, and 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 are required only if control risk is assessed below the maximum level.) These tests, if performed, will be less in scope than would be necessary to render an opinion on the internal control and, accordingly, no opinion will be expressed. An audit is not designed to provide assurance on internal control or to identify reportable conditions. However, the Auditor will inform the governing body or audit committee of any matters involving internal control and its operation that they consider to be reportable conditions under standards estabIíshed by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to the Auditor's attention relating to significant deficiencies in the design or operation of the internal control that, in their judgement, 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. The Auditor will also inform the governing body or audit committee of any nonreportable conditions or other matters involving internal control, if any, as required by OMB Circular A-133 and the Rules of the Auditor General.