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Home My WebLink About061518 CAFR Required Auditor Disclosure LetterRequired Auditor Disclosure Letter June 15, 2018 To the Honorable Mayor and City Council Members of the City of West University Place, Texas: We have audited the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of West University Place, Texas (the "City ") as of and for the year ended December 31, 2017, and have issued our report thereon dated June 15, 2018. Professional standards require that we provide the City Council (the "governing body ") with information about our responsibilities under generally accepted auditing standards, as well as certain information related to the planned scope and timing of our audit. I. Our Responsibility under U.S. Generally Accented Auditing Standards As stated in our engagement letter dated June 28, 2016, our responsibility, as described by professional standards, is to express opinions about whether the financial statements prepared by management with the governing body's oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. Our audit of the financial statements does not relieve the governing body or management of its responsibilities. H. Planned Scope and Timing of the Audit We performed the audit according to the planned scope and timing previously communicated to management in our engagement letter dated June 28, 2016. Ill. Significant Audit Findines 1. Qualitative Aspects of Accounting Practices A. Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in the notes to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Houston &IlywB Ame O All OffiCSH Governmental 3210 Bin& Rd., 8m. 300 P.O. Box 826 100 Congmss Avc., Bm.2000 w ..mwauditms.mm HoustonjX 77055 BcBviUc,TX 77418 Awdn,TX78701 info @txaudim..com Audit Quality Center 713.263.1123 713263.1123 512.381.0222 713.263.1550 6. City of West University Place, Texas Required Auditor Disclosure Letter Page 2 of 3 B. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's 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 significantly from those expected. The most sensitive estimates affecting the financial statements were: Management's estimate of the useful lives of capital assets is based on industry standards relating to capital assets. We evaluated the key factors and assumptions used to develop the useful lives of capital assets in determining that they are reasonable in relation to the financial statements taken as a whole. Estimates are used in the calculation of the pension liability and the required annual contribution. The Texas Municipal Retirement System (TMRS) hires a licensed actuary to make key assumptions and to perform calculations, as well as an independent auditor to review those assumptions and calculations. We evaluated the reasonableness of the employee data provided by the City to TMRS. Estimates are used in the calculation of the health care liability for other post employment benefits. The City hires a licensed actuary to perform the calculation. We evaluated the key factors and assumptions used to develop the liability in relation to the financial statements taken as a whole. C. The disclosures in the financial statements are neutral, consistent, and clear. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosure affecting the financial statements was: The disclosure of long -term debt in the financial statements is significant to financial statement users because it discloses the City's long -term financial obligations. 2. Difficulties Encountered in Perforating the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. 3. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. The attached schedule summarizes both material and immaterial misstatements detected as a result of our audit procedures. 4. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors' report. We are pleased to report that no such disagreements arose during the course of our audit. 5. Management Representations We have requested certain representations from management that are included in the management representation letter dated June 15, 2018. City of West University Place, Texas Required Auditor Disclosure Letter Page 3 of 3 6. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's financial statements or a determination of the type of auditors' opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. 7. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. IV. Other Matters We applied certain limited procedures to the Required Supplementary Information (RSI), as identified on the table of contents, which supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on supplementary information, as identified on the table of contents, which accompanies the financial statements but is not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We were not engaged to report on the introductory and statistical information, which accompanies the financial statements but is not RSI. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. V. Restrictions on Use This information is intended solely for the use of the Mayor, City Council, and management and is not intended to be, and should not be, used by anyone other than these specified parties. LJd ELT ?l ARRIS ECHACEK, ULP Belt Hams Pechacek, LLLP Certified Public Accountants Houston, Texas 6/14/2018 7:24 PM Client City of West University Place, Texas Engagement 4.1 - West University Place 12/31/17 Period Ending: 12/3112017 Trial Balance: 2.2.01- TB Workpaper. 2.5.06 - Adjusting Journal Entries Report Account Description W/P Ref Debit Credit Adjusting Journal Entries JE #I C.01 To adjust property tax deferred revenue based on property tax analysis. 100 -0000 -22309 DEFERRED REVENUE - TAXES 39,552.24 101 -0000 -22309 DEFERRED REVENUE -TAXES 54,745.90 100 - 0000 -41101 CURRENT YEAR PROPERTY TAXES 39,552.24 101 - 0000-41101 CURRENT YEAR PROPERTY TAXES 54,745.90 Total 94,298.14 94,298.14 Adjusting Journal Entries JE # 2 J.01 For reporting purposes; to adjust beginning retained earnings to match prior year report. 990 -0000 303 0 00 Unrestrict (retained earnings) 508.64 990 -0000 424 0 00 Other 508.64 Total 508.64 508.64 Adjusting Journal Entries JE # 3 C.09 To reclass FEMA reimbursement amounts to unearned revenue. 101 - 0000 43102 FEMA REIMBURSEMENT 263,176.57 401 - 0000 43102 FEMA REIMBURSEMENT 57,327.59 402. 0000 43102 FEMA REIMBURSEMENT 19,311.24 502. 0000 43102 FEMA REIMBURSEMENT 32,124.67 101 -0000 -22350 Deferred /Unearned Revenue 263,176.57 401 - 0000 -22350 Deferred /Unearned Revenue 57,327.59 402 -0000 -22350 Deferred /Unearned Revenue 19,311.24 502 -0000 -22350 Deferred / Uneamed Revenue 32,124.67 Total 371,940.07 371,940.07 Adjusting Journal Enures JE # 4 F.07a To adjust deferred out0owsfinflows, pension expense, and net pension liability based on TMRS reporting package and GASS 6B WP 401 - 2040 -71555 PENSION EXPENSE 16,583.61 401. 5050.71555 PENSION EXPENSE 97,173.46 402- 5070 -71555 PENSION EXPENSE 29,012.96 402 - 5076.71555 PENSION EXPENSE 10,245.12 502- 8010.71555 PENSION EXPENSE 44,233.52 401 -0000 -18001 DEFERRED OUTFLOWS - PENSION 99,499.34 401 - 0000.21000 DEFERRED INFLOWS - PENSION 11,183.99 401 - 0000.23801 NET PENSION OBLIGATION 3,073.74 402 -0000 -18001 DEFERRED OUTFLOWS - PENSION 34,637.74 402 - 0000 -21000 DEFERRED INFLOWS - PENSION 3,624.27 402 - 0000.23801 NET PENSION OBLIGATION 995.07 502 - 0000.18001 DEFERRED OUTFLOWS - PENSION 37,941.59 502- 0000 -21000 DEFERRED INFLOWS - PENSIONS 4,935.49 502.0000.23801 NET PENSION OBLIGATION 1,356.44 Total 197,248.67 197,248.67 Adjusting Journal Entries JE # 5 A.05a To adjust Investment balance to market value (Note: *BHP created placeholder account that was used for adjustment purposes). 101.0000.49005 Gain /Lass on Investment 60,685.34 801 -0000 -29101 GENERAL FUND 60,685.34 101. 0000.10101 CONCENTRATION CASH 60,685.34 801 -0000 -10303 INVESTMENTS 60,685.34 Total 121,370.68 121,370.68 1 of