FY2017-28 Altman, Rogers, & Company for Auditing Services for the Kodiak Island Borough And The Kodiak Island Borough School District For Fiscal Years 2017-2021.SUBMITTAL DEADLINE:
TIME: 3:00 p.m.
DATE: March 28, 2017_
DELIVER PROPOSALS TO:
Kodiak Island Borough
Managers Office
710 Mill Bay Road
Kodiak AK 99515
COVER SHEET
THIS IS NOT AN ORDER
ISSUE DATE:
909JIM"s
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_March 3, 2017_
EXTERNAL AUDIT SERVICES
THE ATTACHED TERMS & CONDITIONS SHALL BECOME PART OF ANY
CONTRACT RESULTING FROM THIS REQUEST FOR PROPOSAL.
PROPOSALS SHALL BE SUBMITTED IN THE PROPER FORMAT
AND MUST HAVE ORIGINAL SIGNATURES ON THE FORMS PROVIDED.
FOR VENDOR USE ONLY: PLEASE RETURN THIS ORIGINAL. MAKE A COPY FOR YOUR FILES.
DATE OF PROPOSAL: 3/28/17
BUSINESS LICENSE NUMBER: #161807
BUSINESS NAME: Altman, Rogers & Co.
MAILING ADDRESS: 425 G Street, Suite 800, Anchorage, Alaska 99501
PHYSICAL LOCATION: 425 G Street, Suite 800, Anchorage, Alaska 99501
TELEPHONE NUMBER: 907-274-2992
FACSIMILE NUMBER: 907-274-2993
BY: Grant R. Todd /w41" )f 7;w
Print Name Signature
KODIAK ISLAND BOROUGH
Proposal to Provide Auditing Services
For the Fiscal Years Ending June 30, 2017, 2018, 2019, 2020, and 2021
Altman, Rogers & Co.
425 G Street, Suite 500
Anchorage, Alaska 99501
(907)274-2992
Contact Person:
Grant Todd, CPA
Principal
March 28, 2017
KODIAK ISLAND BOROUGH
710 Mill Bay Road
Kodiak, AK 99615
ACKNOWLEDGMENTS
I certify that I am a duly authorized representative of the firm listed below and that information and
materials enclosed with this proposal accurately represent the capabilities of the office listed
below for providing the services indicated. The Borough is hereby authorized to request any
owner identified in this proposal to furnish any pertinent information deemed necessary to verify
information provided or regarding reputation and capabilities of the firm.
AMENDMENTS
The proposer represents to the Borough that it has relied upon no oral representations from the
Borough in the preparation of this proposal. If any amendments are issued to this RFP, the
proposer must acknowledge the receipt of such amendments in the space provided on the line
below or by signing the amendment and submitting it before the submittal deadline, unless the
amendment states otherwise. Proposals, which fail to acknowledge receipt of amendments, shall
be considered non-responsive and will not be evaluated.
Amendment Acknowledgment Number(s)
ORIGINAL SIGNATURE
Acknowledgment sheet must be manually (original signature) signed. A proposal shall be
rejected when the proposal is not signed by hand.
y "
� "" "f7;w Office address for which this
Signature of Representative
Date: March 28, 2017
Name: Grant Todd
Title: Principal
Firm: Altman, Rogers & Co., CPA's
Type of Firm (check one)
Individual
Partnership
X
Corporation in the State of: Alaska
Other (Specify):
submittal is made:
425 G Street, Suite 800
P. 0. Box:
City, State, zip: Anchorage, AK 99501
Telephone: 907-274-2992
AK Business Lic. No. #161807
Transmittal Letter
Insurance Coverage / Profile of the Audit Organization
Scope of Services
Quality Control and Independence
Similar Engagements
Governmental Audit Experience — Audit Approach
Technical Approach
Tentative Audit Timing
Individual Audit Staff Qualifications
Audit Team Technical Qualifications
Benefits of a Long -Term Professional Relationship
Cost Proposal
Cost Proposal Schedule
Rate Schedule for Potential Additional Engagements
References
Attachment A — Insurance Coverage
Attachment B — Sample Management Letter
Attachment C — Peer Review Report
Attachment D —Alaska Business License
Paae
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Altman, Rogers
�7 CERTIFIED
PUBLIC
ACCOUNTANTS
March 28, 2017
Dora Cross, Finance Director
Kodiak Island Borough
710 Mill Bay Road
Kodiak, Alaska 99615
Dear Ms. Cross:
Altman, Rogers & Co. is pleased to submit this proposal for audit services for the fiscal years ending June
30, 2017, 2018, 2019, 2020, and 2021. The principals and managers of the firm are certified public
accountants experienced in auditing boroughs, cities, and school districts in the State of Alaska. Over the
past twenty-five years we have provided accounting and auditing services to more than one hundred ten
governmental entities throughout the State. We feel that this experience is an indication of the quality of
services we can provide to you and your organization.
Our examination of the Kodiak Island Borough will include substantial principal involvement. The principals
are actively involved with engagements, enabling us to make timely decisions on all matters affecting the
examination. We feel that this enables us to provide you with the highest quality services and also gives us
the opportunity to propose a reasonable fee for the services requested. Several of our clients have received
the Certificate of Achievement for Excellence in Financial Reporting from both Association of School
Business Officials (ASBO) and the Government Finance Officers Association (GFOA). In addition, principals
of the firm have served as members of the select review committees for both GFOA and ASBO.
Kodiak Island Borough and Kodiak Island Borough School District will be valuable clients to our firm and will
receive the full attention of our senior resources. The remainder of this proposal provides detailed
information about the team we will assign to this engagement, our approach and our understanding of the
services to be provided and the required time schedule. We wish to again express our appreciation for the
opportunity to present our proposal to serve as independent auditors to the Kodiak Island Borough and
Kodiak Island Borough School District. We would welcome the opportunity to meet with you to discuss our
proposal in detail and answer any questions which may arise. The authorized representative for Altman,
Rogers & Co. is:
ALTMAN, ROGERS & CO.
A"'ter X 7;w
Grant Todd, CPA
Principal
1
425 G Street Suite 800 Anchorage, Alaska 99501 Phone 907-274-2992 Fax 907-274-2993
Offices in Juneau and Soldotna A Professional Corporation
Altman, Rogers & Co. meets all requirements specified in the RFP. Please see Attachment "A" for insurance
coverages. Additional insureds can be added, if required.
Altman, Rogers & Co. is an Alaska -based CPA firm specializing in auditing and accounting services to local
governmental agencies. We are Alaska's largest locally owned public accounting firm. Our main office is in
Anchorage with branch offices in Juneau and Soldotna. Our Firm employs more than 40 people statewide
and the audit team assigned to your engagement will consist of 4-5 members. The individuals assigned to
your engagement have experience in Federal and State Compliance audit requirements. Team members
will serve continuously throughout the engagement to maximize understanding between the team and the
Borough and School District. The team in our office assigned to this engagement will include one principal,
two managers, and a senior accountant along with the necessary number of in -charge and staff accountants.
The engagement will be staffed from our Anchorage office.
Our firm has qualified Certified Public Accountants who have extensive experience in working with cities
and boroughs. Our firm personnel have experience and expertise in governmental accounting and
Federal and State Single Audit requirements. We understand the reporting and auditing requirements
of the Borough and School District which enables us to work in closer harmony with your staff. In
addition, one of the principals has been a member of the select review committee for the Certificate in
Reporting Excellence for the Governmental Finance Officers Association and two are former members
of the Certificate in Excellence Reporting committee for the Association of School Business Officials.
The principals have provided accounting and auditing services to many of the cities, boroughs and
governmental entities in Alaska. This has helped us develop an understanding of the economic and
budgeting problems they encounter. We currently provide auditing and accounting services to over 75
governmental entities iii the State of Alaska. We feel that this understanding will allow us io provide you
with more than the normal auditing services.
Several of our clients receive the GFOA Certificate of Excellence in Financial Reporting and the ASBO
Certificate of Excellence, and we will assist the Borough and School District in acquiring and retaining
this prestigious award, which can result in long-term savings to the Borough and recognition to both the
Borough and School District.
The principals of the firm each work closely with the clients. We feel that this continuity of accounting
staff and experience will provide the client with the most desirable service and has been important in our
overall growth.
The firm is licensed as a Certified Public Accounting firm as outlined in Alaska Statutes. The firm meets
the standards as required in "Government Auditing Standards" (Yellow Book), and has never issued a
substandard audit report according to records maintained by the State Division of Occupational
Licensing.
The scope of the services to be provided is as follows:
Perform the annual financial statement audits for the fiscal years ending June 30, 2017, 2018, 2019,
2020 and 2021, in accordance with auditing procedures generally accepted in the United States of
America and standards as developed by the American Institute of Certified Public Accountants and
perform compliance audits as required by the federal government and the State of Alaska. Our audit
will be a single audit made in accordance with the standards for financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States, and the
provisions of Title 2 US Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and
the State of Alaska Audit Guide and Compliance Supplement for State Single Audits, and will include
tests of the accounting records of the Borough and School District and other procedures we consider
necessary to enable us to express an opinion on whether the financial statements are fairly presented in
conformity with accounting principles generally accepted in the United States of America, and to report
on the Borough and School District's compliance with laws and regulations and its internal accounting
controls as required for a single audit.
Review the internal controls and accounting cycles of the Borough and School District as we deem
necessary and prepare a letter to the governing board noting internal control significant deficiencies and
material weaknesses and our recommendations for improvement. The letter to the governing board will
address those areas essential for sound financial control and those upon which we feel you can
improve.
Be available to you throughout the year to assist with accounting, budgeting, and financial matters, if
requested, at any time, and up to 60 hours annually.
Present the financial statements and letter to management to the Borough and School District
We will assist you in the preparation and printing of all reports, financial statements, schedules and
notes. The CAFR will also be prepared according to the requirements of Government Finance Officers
Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting.
We will audit the financial statements of the governmental activities, the business -type activities, the
discretely presented component unit, each major fund, and the aggregate remaining fund information, which
collectively comprise the basic financial statements of Kodiak Island Borough, as of and for the years ending
June 30, 2017, 2018, 2019, 2020 and 2021. In addition, we will audit the financial statements of the
governmental activities, each major fund and the remaining fund information of Kodiak Island Borough
School District. Also, the documents we submit to you will include the following additional information that will
be subjected to the auditing procedures applied in our audits of the financial statements:
1. Management's discussion and analysis
2. Schedule of expenditures of federal awards
3. Schedule of state financial assistance.
4. Schedule of PERS and TRS Contributions and Proportionate Share of the Net Pension Liability
5. Other additional information.
Audit Obiectives
The objective of our audit is the expression of an opinion as to whether your 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 financial statements taken as a whole. The objective also includes reporting on:
Internal control related to the financial statements and compliance with laws, regulations, and the
provisions of contracts or grant agreements, 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 Uniform Guidance.
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 and state 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 include tests of accounting records, a determination of major program(s) in accordance with
the Uniform Guidance and other procedures we consider necessary to enable us to express such an
opinion and to report on the Schedules of State and Federal Financial Assistance and on the auditees'
compliance with laws and regulations and its internal controls as required for a single audit. If our
opinions on the financial statements or the compliance opinions is 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 decline to issue a
report as a result of this engagement.
Altman, Rogers & Co. adheres to strict professional standards as outlined by the AICPA and the Alaska State
Board of Accountancy. This includes approved continuing education for all staff, quality control and review of
the firm's auditing practice, and continuing support of professional organizations. We are members of the
private company practice section for the Division of CPA Firms as established and controlled by the AICPA,
and our audits, workpapers, reports and all other areas concerning quality control will be reviewed and
examined by the AICPA every three years. Our firm underwent its latest review during April 2016 for year
ended December 31. 2015, and we received a clean opinion as to the overall quality of our standards and
performance. A substantial number of governmental engagements were included in that review. A copy of
our most recent external quality control review is included as Attachment "C".
The firm is licensed as a Certified Public Accounting firm as outlined in Alaska Statutes. The firm meets all of
the independence standards as required by "Government Auditing Standards", and has never issued a
substandard audit report.
Assigned key professional staff are properly licensed as certified Public Accountants as set forth by the
Accountancy Act (A.S.08.04.200). No disciplinary action has ever been taken against the Firm by any
professional organization.
Staff assignments are arranged to provide continuity of service by key personnel. This, in turn, improves the
Firm's knowledge and understanding of the client's business and increases the staffs ability to provide
informed and timely service.
Our firm performs over 75 governmental audits which represents approximately 69% of our overall audit
practice and 52% of our total firm hours.
Our internal quality control and review procedures include the following:
On-site principal involvement from beginning of audit fieldwork through workpaper review.
Planning and agreement of audit approach with client and audit team.
Two levels of principal review on all financial statements.
Required governmental accounting continuing education for all staff.
Assignment of proper staff to all engagements.
Metlakatla Indian Community Estimated Hours: 800
Audit of the financial statements for the past eight years. Additionally audited two discretely presented
component units and one blended component unit. The Community has governmental activities of
approximately $22 million per year and business -type activities of approximately $6 million per year.
Activities include government services, health clinic, public works, public safety, economic
development and a seafood processing plant.
Contact: Myranell Bergtold, Finance Director
Phone: 907-886-4441
2. Lake and Peninsula Borough Estimated Hours: 250
Lake and Peninsula School District Estimated Hours: 300
(NOTE: These are separate engagements.)
Audit of the financial statements for over twenty years (including the Lake and Peninsula School
District). The School District applied for and received the GFOA and ASBO Certificates of Excellence
in Financial Reporting for more than 12 consecutive years.
Contact: Susan Edwards, Borough Finance Officer
Phone: 907-246-3421
3. Bering Strait School District Estimated Hours: 440
Audit of the School District for over fifteen years. Scope of work included capital projects, state and
federal compliance audits and several additional engagements including audit of capital assets. The
School District has continuously applied for and received awards for Excellence in Reporting from both
GFOA and ASBO International.
Contact:
Phone:
Mark Vink, Business Manager
907-624-4256
4. City of Nome Estimated Hours: 500
Audit of the financial statements for over ten years. The City has governmental activities of
approximately $20 million per year and business -type activities of approximately $7 million per year
including water, sewer, garbage and harbor activities.
Contact:
Phone:
Julie Liew, Finance Director
907-443-6620
GOVERNMENTAL
AUDIT
AUDIT EXPERIENCE
APPROACH
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 errors, fraudulent
financial reporting, misappropriation of assets, or 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. As required by
the State of Alaska Single Audit Guide, the Single Audit Act Amendments of 1996 and Uniform Guidance, our
audit will be based on tailor-made audit programs and will include test of transactions related to major federal
and state awards programs for compliance with applicable laws and regulations and the provisions of contracts
and grant 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. 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 matters that might arise during 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.
Our audit engagement is not expected to include statistical sampling. Sample sizes for audit test work have
been developed and approved by our peer review team over the past twenty years. These sample sizes are
based on typical populations of cash disbursement, payroll and cash receipts for an entity with revenues
comparable to the Kodiak Island Borough. Based on a 95% confidence level and no errors, sample sizes are
typically 40-60 items. Reliance on the internal control over these systems is planned with additional audit work to
be performed on material transactions and selected balance sheet accounts for major funds. It is not expected
that there will be a need for computer and/or other specialists outside of the engagement team. In addition to
these samples additional samples are also selected for all major funds and all major programs for compliance
purposes.
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Our specific audit approach will include the following procedures designed specifically for the audit of the Kodiak
Island Borough and School District
We will gain an understanding of the general operations and situations of the Kodiak Island Borough and
School District to aid in the assessing of preliminary audit risk.
This will be accomplished by:
- Reviewing the prior year financial statements. Identifying all revenue sources and operations.
- Talking to various accounting personnel and key employees.
- Reviewing the Assembly and Board minutes and abstract information that is relevant to the audit. (i.e.
expenditure authorizations, contracts, new leases, legal matters, related party transactions)
- Reviewing Borough ordinances for relevant changes in laws and procedures.
- Determination of major programs for compliance.
- Apply preliminary analytical procedures on account balances to identify any unusual balances or
relationships.
Determine preliminary material account balance and transaction amounts.
We will gain an understanding of and document the Borough's and District's policies and procedures
relating to internal controls of the accounting function. This will aid us in our risk assessment and the
determination to perform test work on the various systems.
If the systems are deemed to have adequate internal control structures we will test transactions for reliance
on the various systems so that we can reduce our substantive audit procedures.
This will be accomplished by:
- Looking at 40-60 cash receipts, cash disbursements, payroll transactions, property tax assessments,
utility billings, and other major transaction cycles.
- Test transactions for correct recording as to classification, amount, period; trace to the general ledger
and deposit and proper authorization. In addition, several disbursements, billings and assessments will
be recalculated.
- If a Single audit is required and any selected transactions are from major programs those transactions
will be tested for compliance with laws and regulations.
- If no errors are detected the risk will be assessed at minimum and substantive tests will be reduced (i.e.
perform analytical procedures instead of tests of detail on expenditure balances in the general fund).
If errors are detected risk will be assessed between moderate and maximum and the substantive tests
will be increased to obtain reasonable assurance to the accuracy of the account balances.
- Review all material checks written during the fiscal year.
Audit procedures performed over balance sheet accounts will be based on the results of our assessment of
material misstatement.
N
We will apply final analytical procedures to identify any unusual balances and relationships not already
tested or reviewed.
We will performance substantive tests on all material revenue and expenditure accounts, as determined
necessary.
This will include:
- Applying analytical procedures to general fund expenditures and revenues identifying all unusual
fluctuations.
- Comparing tax revenues to current budget and prior revenues.
- Use the established tax rates to compute the tax levy and compare to the recorded amount.
- Compare expenditures to prior year actual and current year budget.
- In addition, for all material expenditure accounts we will review a significant number of
transactions to reasonable assure us of materially correct balances.
We will apply final analytical procedures to identify any unusual balances and relationships not already
tested or reviewed.
We will review financial statement disclosures and format to ascertain compliance with GFOA Certificate
of Excellence requirements.
Tvcical Assistance from Client's Staff
The major amount of time required of your staff will be in obtaining and refiling source documents. The ability of
your staff to locate required documents will help in the smooth operation of the audit. Certain balance sheet
accounts will need detail schedules such as receivables, inventories, prepaids, payables, encumbrances, etc.,
which are usually already prepared. In addition, trial balances, by fund, will need to be provided at the start of the
audit fieldwork.
It is our understanding that preparation and reconciliation of any schedules, reconciliation of any accounts, or
assistance with preparation of journal entries, will be treated as accounting assistance, and will not be part of the
regular audit engagement. To the extent possible we will utilize the services of your accounting staff. This would
include systems documentation in addition to account analysis and reconciliations
Engagement Monitoring
Weekly, we formally evaluate the status of each of our engagements. Each member of the attestation team
maintains a to-do list and reports on the status of their projects to the partner and manager group. This allows us to
stay abreast of issues as they arise. In addition to this, as detailed further below, we have a very high level of partner
and manager involvement in your engagement. A partner is on your engagement during fieldwork at virtually all
times, and if not, a manager is there. This allows issues to be addressed as they arise and not sit unaddressed until
too late to be resolved in an orderly and efficient way.
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Audit Technical Approach
We are a paperless audit firm. This means that all facets of the audit, work programs, client prepared material,
continuing (permanent) files, and original client documentation are either created in electronic medium or scanned
and saved in electronic medium.
Each of our audit staff has the newest -generation laptops and portable scanners. We make a significant investment
in technology that is at the top of our industry. We have found that the benefit has been significant, with more
efficient processes and less impact on our clients.
KIB and KIBSD depend heavily on information processing. Because of the significance of electronic data processing
to daily operations, management needs assurance that data processing controls are adequate and operating
effectively.
Various factors relating to your IT environment have an impact on our audit approach and on our ability to apply
specific audit software to create efficiencies in the audit process.
We utilize numerous audit related software including CSA Engagement Management, PPC (all FASB, AICPA,
GASB pronouncements and other publications that are available), industry -specific audit planning and work
program tools, and the powerful analytical tools available in Excel, to minimize the manual effort involved in routine
procedures required in our audits performed in accordance with generally accepted auditing standards.
Information and Accounting Systems Management
Our audit approach is designed to evaluate both manual and computer systems. We review the controls over a
transaction as it flows through the entire processing cycle so that we audit "through the system" rather than "around
the system." While in some cases, it is more efficient to audit results of computer based controls after the fact, we
frequently perform tests of processing in the systems. The electronic data processing (EDP) methodology defines
specific computer control objectives and the control techniques established to meet them. Our review of your
system will include the following typical EDP functions:
• Organization and management of the EDP function
• Management's attitude toward the use of EDP and security
• The EDP expertise of the staff and their understanding of EDP activities, applications, and internal
controls
• Application systems development
• The overall internal control characteristics of new EDP applications or ones that have been substantially
modified
• The quality of internal controls over EDP systems
• Application systems maintenance
• Computer operations
• Systems software support
• Centralized data control and entry
• Back-up and off-site storage of data and programs.
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Communication is Critical
Our audits of KIB and KIBSD require close communication with you. Accordingly, in addition to informal discussions
throughout the engagement, we conduct entrance conferences to discuss the planning phase of our audit and exit
conferences to discuss the results of our audit. We set a series of "milepost' dates for each of our engagements
that serve as benchmarks of our progress against the audit plan. The mileposts are set with you, many of which are
integrated into the audit dates reflected in the RFP and our proposal, and our status with these mileposts are
discussed with you as needed as the audit progresses.
Our audit approach includes year-round consulting with the management of KIB and KIBSD on new
pronouncements issued by the Governmental Accounting Standards Board and other industry developments.
As part of our audit we perform a review and evaluation of the system of internal accounting controls at each entity.
If conditions are discovered during this review or anytime during the audit, which indicates that material errors,
defalcations, or other irregularities may exist, or if any other circumstances are encountered that require extended
services, we will promptly advise the appropriate management as stated previously. No extended services will be
performed without prior approval.
For less significant control areas or areas for strengthening internal controls, we discuss this with appropriate
members of your team as they come up. For those that advance to the management letter stage, we hold a meeting
towards the conclusion of fieldwork to discuss these matters in order for you to give us additional facts or otherwise
address the matters. If we make the decision to include items in our formal letters to the School Board or Assembly,
we provide you with a draft of the letter with ample time for us to discuss the items further.
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Audit Planning and Interim Audit Work
Audit engagement planning will involve the Borough Finance Director, School District Business Manager, and
Altman, Rogers' staff. The primary objective will be to establish interim and final audit work timing, workpaper, and
account analysis preparation responsibilities, and agreement on any accounting assistance to be provided to the
Borough and District.
Interim audit work will be completed in June or July, or a time mutually agreed to. This will consist of computer and
accounting systems review, revenue and expense account analysis, payroll, cash disbursements and cash receipts
testwork, inventory observations, and State and federal compliance audit steps.
Final Audit Work
Final audit work will commence in August or September or at another time agreeable to all parties providing
significant time to complete the audit and shall be completed no later than September 30 following the end of each
fiscal year. During this time, the following items will be completed:
Completion of the detail analysis of balance sheet, revenue and expense accounts for the all funds.
A review of all client prepared schedules.
Detail review of all audit workpapers.
Exit Conference - last day of fieldwork.
Preparation and Review of Financial Statements
Preparation (if prepared by us) and review of the Borough's financial statements including GFOA Certificate of
Excellence review will take place following the completion of field work. This will be done in our office. Drafts of the
Borough's financial stbtements and recommendations to management will be provided'by November 1't and final
reports will be printed upon your approval and delivered priority mail no later than November 151h of each year,
unless adjusted by mutual agreement.
Preparation (if prepared by us) and review of the District's financial statements including GFOA Certificate of
Excellence review (if requested) will take place following the completion of field work. This will be done in our office.
Drafts of the School District's financial statements and recommendations to management will be provided by
September W, and final reports will be printed upon your approval and delivered priority mail no later than October
151 of each year, unless adjusted by mutual agreement.
Presentation to Borough Assembly and School Board
Financial statements will be presented as soon as possible after the printing following the issuance of the reports.
12
Enaaaement Team
The engagement team will be composed of individuals experienced in auditing, accounting, and Federal and State
compliance audits. Team members will serve continuously throughout the engagement to maximize the
understanding between the team and the Kodiak Island Borough/School District staff. . If team members need to
be replaced, we understand that the auditees have the right to accept or reject replacements. The primary
engagement team assigned to the engagements will be comprised or CPAs. The members of the engagement
team who will participate in the audits are presented below.
Grant Todd, CPA (Principal) — Mr. Todd is a licensed CPA by the
State of Alaska (Certificate #2621). Mr. Todd is an audit Principal in
our Anchorage office responsible for review of financial reports and
audit fieldwork. He joined Altman, Rogers & Co, in July 2004. He has
many years' experience working with non-profit and governmental
organizations, including financial statement audits as well as
compliance audits in accordance with federal and state requirements.
He has also assisted several municipal governments with meeting the
requirements to obtain the Certificate of Achievement for Excellence in
Financial Reporting. He is a member of the American Institute of
Certified Public Accountants, the Alaska Society of Certified Public
Accountants, the Governmental Finance Officers Association, and
Association of Local Government Auditors. Mr. Todd graduated from
Montana State University — Bozeman in 2004 with a Bachelor's
Degree in Business Administration, concentration in Accounting.
Within the last two years, Mr. Todd has been involved in the following governmental audits:
Enti . Audit Type
Bethel, City of
Municipality
Dillingham, City of
Municipality
Egegik, City of
Municipality
Galena, City of
Municipality
King Cove, City of
Municipality
Kodiak Island Borough
Municipality
Lake and Peninsula Borough
Municipality
Nome, City of
Municipality
Nuiqsut, City of
Municipality
Ouzinkie, City of
Municipality
Metlakatla Indian Community
Native Tribal Organization
Bering Strait School District
School District
Bristol Bay Borough School District
School District
Ketchikan Gateway Borough School District
School District
Kodiak Island Borough School District
School District
Lake & Peninsula School District
School District
Valdez City Schools
School District
13
Katie Stachow, CPA (Manager) — Mrs. Stachow is a licensed CPA by
the State of Alaska (Certificate #2762) and is a member of the American
Institute of Certified Public Accountants (AICPA) as well as the Alaska
Society of CPAs. Mrs. Stachow joined Altman, Rogers & Co. in June
2009. Mrs. Stachow has a BA degree in professional accountancy and
public administration. She graduated from the Carroll College in May
2009. She is responsible for financial statement report writing and audit
field work.
Mrs. Stachow volunteers locally with organizations supporting individuals
with intellectual disabilities and serves on the finance council for a local
non-profit corporation. In addition to community service, Mrs. Stachow
specializes in consulting clients on efficient and effective internal control
policies and procedures. She also has worked with numerous clients in
consulting on charts of accounts and transitions in accounting software.
Mrs. Stachow has a certification by the AICPA as an Advanced Single Audit Certificate for Federal Single Audits
under OMB A-133 and the Uniform Guidance and is proficient in the requirements of the State of Alaska Single
Audit.
Within the last two years, Mrs. Stachow has been involved in the following governmental audits:
Enti Audit Type
Bethel, City of
Municipality
Akutan, City of
Municipality
King Cove, City of
Municipality
Ouzinkie, City of
Municipality
Metlakada Indian Community
Tribal Government
Bristol Bay Borough School District
School District
Dillingham City School District
School District
Kodiak Island Borough School District
School District
Lake and Peninsula School District
School District
Nenana City School District
School District
Yukon Flats School District
School District
North Slope Borough School District
School District
Interior Regional Housing Authority
Housing Authority
Northwest Inupiat Housing Authority
Housing Authority
14
Gavin Schultze (Supervisor) — Mr. Schultze joined Altman, Rogers &
Co. in August 2012. Mr. Schultze has a BA degree in finance/accounting
and a Masters of Professional Accountancy (MPAC). He graduated from
the Montana State University in May 2012. Mr. Schultze is responsible for
leading audit fieldwork and ensuring all AICPA auditing standards are
being adequately met during the fieldwork process. Mr. Schultz provides
accounting consultation on many different governmental engagements
and provides best practice consulting on implementation of GASB
standard, specifically GASB 68 and other pension standards.
Within the last two years, Mr. Schultz has been involved in the following governmental audits:
9D& Audit Type
Akutan, City of
Municipality
Galena, City of
Municipality
King Cove, City of
Municipality
Kodiak Island Borough
Municipality
Lake and Peninsula Borough
Municipality
Nome, City of
Municipality
Bering Strait School District
School District
Chugach School District
School District
Dillingham City School District
School District
Lower Kuskokwim School Distript
School District
Southwest Region Schools
School District
15
Maxim V. Mamontov (Supervisor) — Mr. Mamontov returned to Altman,
Rogers & Co. in August of 2015 after residing for several years outside the
U.S. Mr. Mamontov has a BA degree in accounting and Finance. He
graduated from the University of Alaska Anchorage in May of 2003. Mr.
Mamontov is responsible for accounting assistance, financial statement
report writing and audit field work.
Within the last two years, Mr. Mamontov has been involved in the following governmental audits:
Entity Audit Type
Akutan, City of
Municipality
Aleknagik, City of
Municipality
Dillingham, City of
Municipality
Galena, City of
Municipality
Pelican, City of
Municipality
Kodiak Island Borough
Municipality
Lake and Peninsula Borough
Municipality
Bristol Bay Borough School District
School District
Chugach School District
School District
Kodiak Island Borough School District
School District
Lake and Peninsula Borough School District
School District
Southwest Region School District
School District
16
All accountants participate in firm -wide continuing education classes based upon their level of experience and
complete a total of 40 hours of Continuing Professional Education annually, as required by GAO standards for
participation in governmental and nonprofit audits. Our accountants complete a minimum of 24 hours of Continuing
Professional Education every two years related strictly to governmental and nonprofit accounting issues.
Grant Todd completed the following accounting seminars and courses in the past two years:
2016 New OMB Guidance for Federal Awards 2016-2017
2016 Single Audits under OMB's Uniform Guidance
2016 Applying the Uniform Guidance Audit Requirements
2016 Sampling in a Single Audit
2016 Implementing the GAO Green Book
2016 Common Deficiencies with SLG Reports
2016 Internal Control in a Single Audit, Part 2 (Continued From Session 26)
2016 Advanced Single Audit Issues
2016 GASB's Reexamination of the Financial Reporting Model
2016 Implementation of the UG: Cost Principles and Administrative Requirements
2016 Preparing and Reporting on the SEFA
2015 2015 OMB Compliance Supplement and Single Audit Update (Auditing Governmental)
2015 Ethics and Professional Conduct for Alaska CPAs
2015 Single Audits: The Uniform Guidance and Related Implementation Challenges
2015 UGG Cost Principles and Administrative Requirements
2015 GASB Update
2015 Testing of Internal Control and Compliance in a Single Audit - Part 1
2015 Sampling in a Single Audit Environment
2015 Advanced Single Audit
2015 Governmental Accounting and Auditing Update
2015 2015 OMB Compliance Supplement and Single Audit Update
Katie Stachow completed the following accounting seminars and courses in the past two years:
2016 Applying the Uniform Guidance for Federal Awards in Your Single Audits
2016 New OMB Guidance for Federal Awards 2016-2017
2016 Single Audits under OMB's Uniform Guidance
2016 Not -for -Profit Accounting and Auditing Update: AICPA Activities
2016 Not -for -Profit Accounting and Auditing Update: Federal Government Activities
2016 Applying the Uniform Guidance for Federal Awards in Your Single Audits - Exam
2015 ABPAOC 2015 Managers and Supervisors EBP Audit Planning
2015 Auditing Nonprofit Organizations and Governmental Entities
2015 Auditing - Governmental
2015 Governmental and Nonprofit Update
2015 Auditing Nonprofit Organizations and Governmental Entities - Advanced Topics
2015 Governmental Accounting and Auditing Update
2015 Yellowbook Auditing NFPs and Government Agencies -Advanced
17
Gavin Schultze has completed the following accounting seminars and courses during the last two years:
2016 Applying the Uniform Guidance for Federal Awards in Your Single Audits
2016 New OMB Guidance for Federal Awards 2016-2017
2016 Single Audits under OMB's Uniform Guidance
2016 Companion to PPC's Guide to Preparing Governmental Financial Statements — Course 3 -
Preparing Governmental Financial Statements and Fund Accounting
2016 Companion to PPC's Guide to Audits of Local Governments - Course 2 - Concluding the Audit
2016 Companion to PPC's Guide to HUD Audits — Course 1 - Program Features, Contracts, and
Forms for HUD Multifamily Housing and Concluding a HUD Audit
2015 Compliance Issues
2015 Governmental Accounting and Auditing Update
2015 Accounting and Auditing of NPO's - New Guide
2015 Companion to PPC's Guide to Audits of Nonprofit Organizations (NPOTG152)
2015 Companion to PPC's Guide to Audits of Nonprofit Organizations (NPOTG153)
2015 Annual Governmental GAAP Update
Maxim Mamontov has completed the following accounting seminars and courses during the past two years:
2016 New OMB Guidance for Federal Awards 2016-2017
2016 Single Audits under OMB's Uniform Guidance
2016 Companion to PPC's Guide to Nonprofit GAAP - Course 2 - Intangibles, Leases, and Property
2016 Companion to PPC's Guide to Preparing Governmental Financial Statements - Course 3 -
Preparing Governmental Financial Statements and Fund Accounting
2015 Accounting and Auditing of NPO's New Guide
2015 Introduction to 990 Preparation
Seniors. In -charge and Staff Accountants - Classes attended by personnel on these levels within the past two years
include:
Pacific Northwest Intergovernmental Audit Forum
AGFOA GovernmentalAccounting Update
GFOA GASB 54 Implementation
Implementing SFAS Nos. 116 and 117 in Financial Statements of Nonprofit Organizations
Audit Requirements for Nonprofit Organizations related to OMB Uniform Guidance
Governmental Accounting and Auditing Updates
Yellow Book - Government Auditing Standards
Staff Training -Beginning In -Charge
Advanced Governmental Auditing and Reporting
Intermediate Governmental Auditing and Reporting
18
We view the relationship between Altman, Rogers and Co. and our clients as a long-lasting one and believe that we
provide excellent professional services with reasonable fees. There are many compelling reasons which make
rotation of auditors unattractive as described in the following paragraphs:
Decreased Risk
The AICPA Commission on Auditors' Responsibilities (Cohen Commission, 1978), the National Commission on
Fraudulent Financial Reporting (Treadway Commission, 1987) and the Securities Exchange Commission (2003
report to Congress) have inferred that the frequency of substandard audits increases as auditor tenue decreases. In
fact, a substantial body of academic literature has accumulated that testifies to the direct relationship between the
length of auditor tenure and the increased discovery of material financial statement errors. It is also noteworthy that
private -sector regulators view changes in auditors with great caution. The SEC for example, requires immediate
notification when a publicly held company changes auditors, suggesting that such action is a possible "red flag" to
the investment community.
No "Learning Curve"
The reason for the correlation between audit quality and auditor tenure seems to be the "learning curve." Simply
put, a new auditor must expend time, energy, and money to effectively learn about the client and its business,
particularly a client of the size and the complexity of the Borough and School District. The academic literature
supports this conclusion. A number of studies have pointed to the "learning curve" effect
Securing the Best Firm
It is not in the interest of any organization to risk the loss of the best firm in its industry for the sake of arbitrary
rotation. The only way to ensure that the very best firm in auditing is selected - or, more relevantly, kept — is to
guarantee that no firm is arbitrarily excluded from the procurement process simply because of a long-standing and
incumbent record of prior service.
Cost Savings
The investment of management's time and expense in the procurement process, as well as the subsequent
"learning curve," most often exceeds any actual cost benefits that might accrue from engaging a new auditor. In
fact, the lowest cost comes from retaining an auditor, not replacing it with ne who charges a lower initial fee. It costs
an agency considerable expense when Its personnel have to spend time explaining organizational structures,
systems, and data to new auditors.
Stability in an Environment of Change
The rotation of audit firms often adds unnecessarily to the many significant changes that are already required for an
organization to remain healthy and competitive. Borough and School District management continues to face
significant challenges in the future. Stability of audit firms will help you to manage that.
19
KODIAK ISLAND BOROUGH
710 Mill Bay Road
Kodiak, AK 99615
EXTERNAL AUDIT SERVICES FOR THE KODIAK ISLAND BOROUGH AND
THE KODIAK ISLAND BOROUGH SCHOOL DISTRICT
<•191n ��y�aat.� T• •lratc�:
Airfare 1,800
Per Diem 4,800
Typing, postage, etc. 800
Total Cost, KIBSD $q
all
# Person
Cost per
Total Person
Days
Person Days
Days Cost
Partner
7.0
1,440
10,080
Manager
10.0
1,280
12,800
Supervisor
5.0
1,160
5,800
Senior
10.0
1,000
10,000
In -Charge
10.0
880
8,800
Staff
20.0
760
15.200
Sub -Total
62.0
62,680
Airfare
3,600
Per Diem
10,500
Typing, postage, etc.'
3.175
Total Cost, KIB
$ 7�
'based on actual costs incurred during
the FY16 audit.
KODIAK ISLAND BOROUGH SCHOOL DISTRICT
# Person
Cost per
Total Person
Days
Person Days
Days Cost
Partner
3.0
$ 1,440
$ 4,320
Manager
9.0
1,280
11,520
Senior
9.0
1,200
9,000
Staff
10.0
760
7 600
Sub -Total
31.0
32,440
Airfare 1,800
Per Diem 4,800
Typing, postage, etc. 800
Total Cost, KIBSD $q
all
KODIAK ISLAND BOROUGH
710 Mill Bay Road
Kodiak, AK 99615
EXTERNAL AUDIT SERVICES FOR THE KODIAK ISLAND BOROUGH AND
THE KODIAK ISLAND BOROUGH SCHOOL DISTRICT
2017 2018 2019 2020
Borough
Comprehensive Annual $ 65955
Financial Report
Federal Single Audit
4500
State Single Audit
5 500
Consultation
4,000
Total
$ 7�
CAFR preparation -
5 000
perhourrate
$ 160
School District
3 000
Comprehensive Annual Financial
Report,
Statements of Compliance (Alaska Statutes
and Department of Education and Early
Development, Reimbursable Expenditures
for School Construction, and
Tuition Rate Report
$ 27840
Federal Single Audit
4 500
State Single Audit
4 500
Consultation
3 000
Total
$ 3
CAFR preparation -
per hour rate (if requested)
$ 160
GRAND TOTAL
$119795
2021
68 500 70 000 72 000 73 500
4 500 5 000 5 000 5 500
5500 6 000 6 000 6500
4.0004 000 4,500 4500
✓} E._5_= 87 500 99
29 000
29250
30500
30,750
4500
5 000
55�
5.500
4 500
5 000
5 000
5 500
3 000
3 000
3 000
3 000
441-=
160
123.500
165
127 250
4a !
165
131 1
44
170
1.
21
Scone Changes
The quoted audit fee is based on anticipated cooperation from your personnel and the assumption that
unexpected circumstances will not be encountered and that significant deficient and/or material weaknesses
will not be discovered during the audit. The quoted audit fee is based on there being three major federal
programs and four state programs for each entity. Significant deficiencies and/or material weaknesses or
significant noncompliance issues with federal and state financial assistance resulting in findings in the
financial statements and compliance reports are considered to be changes in the scope of the required audit
work. The development and documentation required in the workpapers and the report for each finding are
charged as additional services, and the fees for these services are dependent on the scope of the additional
work but are typically $500-$1,000 per finding. Significant changes to either the State of Alaska Audit Guide
and Compliance Supplement or Uniform Guidance Compliance Supplement that results in either: (1) the
changes in the calculation of the number of programs selected as major programs, or (2) requires significant
additional audit steps; may result in additional audit hours required. 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.
You may request that we perform additional services not contemplated by this engagement letter. If this
occurs, we will communicate with you the scope of the additional services and the estimated fees. We also
may issue a separate engagement letter covering the additional services. In the absence of any other written
communication from us documenting such additional services, our services will continue to be governed by
the terms of this engagement letter
22
KODIAK ISLAND BOROUGH
710 Mill Bay Road
Kodiak, AK 99615
EXTERNAL AUDIT SERVICES FOR THE KODIAK ISLAND BOROUGH AND
THE KODIAK ISLAND BOROUGH SCHOOL DISTRICT
Staff Cateaory
2017
2018
2019
2020
2021
Partner
200
200
205
205
210
Manager
175
175
180
180
185
Supervisor
155
155
160
160
165
Senior
130
130
135
135
140
In -Charge
110
110
115
115
120
Staff
110
100
105
105
110
23
For additional information concerning our firm, please feel free to contact the following individuals:
Myranell Bergtold, Finance Officer
Metlakatla Indian Community
P.O. Box 8
Metlakatla, Alaska 99926
886-4441
Mark Vink, Business Manager
Bering Strait School District
P.O. Box 225
Unalakleet, Alaska 99684
624-4256
Julie Liew, Finance Director
City of Nome
P.O. Box 281
Nome, AK 99762
443-6620
24
Susan Edwards, Finance Officer
Lake and Peninsula Borough
P.O. Box 495
King Salmon, Alaska 99613
246-3421
Laura Hylton, Business Manager
Lake and Peninsula School District
P.O. Box 498
King Salmon, AK 99613
246-4280 opt. 6 ext. 310
Government Auditing Standards require that we provide you with a copy of our most recent quality control review
report. Our 2015 peer review report accompanies this letter.
We appreciate the opportunity to submit this proposal and are available to discuss any items or questions you may
have regarding it. If this audit proposal for the years ending June 30, 2017, 2018, 2019, 2020 and 2021 is
acceptable to you, please sign where indicated below and return it to our office.
Sincerely,
/1SIrI&iI_\Oi•3i1MI.01 a
Grant Todd, CPA
Principal
ACCEPTED:
Kodiak Island Borough
Title:
Date:
25
Insurance Coverage
ACIORoe CERTIFICATE OF LIABILITY INSURANCE
v ATE(MIGG""."
9/2017
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS
CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES
BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED
REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER.
IMPORTANT: If the certificate holder Is an ADDITIONAL INSURED, the policy(ies) must have ADDITIONAL INSURED provisions or be endorsed.
If SUBROGATION IS WAIVED, subject to the terms and conditions of the polity, certain policies may require an endorsement A statement on
this certificate does not confer rights to the certificate holder in lieu of such endorsement(s).
PRODUCER
Arthur J. Gallagher & Co. Insurance Brokersof CA.PxoxE
18201 Von Karman Ave Suite 200
Irvine CA 92612
N=W' Tina Cobaum
ggg.349-9800 FAX .949-349-9900
EMIUL
AU-R--S-
INSURER(SI AFFORDING COVERAGE HAICO
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INSURMA:West American Insurance Company 44393
BZW57765774
INSURED ALTMROG-01
INSURERB:Ohlo Casualty Insurance ComDany 24074
Altman, Rogers & Co., A Professional Corporation
425 G. St. Ste 800
INSURER C:
MEDEXP(My ors anon) 515,000
Anchorage AK 99501
INSURER O:
INSURER E:
INSURERF:
CI
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD
INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS
CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS,
EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
ILTR
TYPE OFINSURANCE
60
POLICYNUMBER
POLICYEFF
0
POLICY E%P
MMRND
LIMITS
A
X COMMERCIAL GENERAL LIABILITY
CLMMS•MADE ❑X OCCUR
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BZW57765774
1/14/2017
111412018
EACH OCCURRENCE $1,000000
PREMISES Ee rte $1,000,000
MEDEXP(My ors anon) 515,000
PERSONAL&ADV IWURY $1,000,000
GENLAGGREGATE UMIT APPLIES PER:
X POLICY El p2a, F� LOC
GENERALAGGREGATE $2.000.000
PRODUCTS-COMP/OP AGO S2.000,0D0
5
OTHER:
AMONOSILE
LUU!(LIrY
a acdcanl 5
BODILY INJURY (Perperwn) 5
ANYAUTO
AMOSOONLY SCHEDULED
BODILY INJURY (Per eddanl) 5
AMOS ONLY AUTON S ONLYY
Per edtlent 5
S
UMERELLALIAB
OCCUR
EACHOCCURRENCE S
AGGREGATE 5
EXCESS UAB
CWMS.NpgOE
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WORKERS COMPENSATION
AND EMPLOYERS' LUMIMY YIN
ANY PROPRIEtORIPARTNERIEXECUTIVE ❑
OFFICERIMEWER EXCLUDED?
N 1 A
XWS57765774
1/142017
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X DTH•
EL. EACH ACOIDEM $100,000
E.L.OISEASE-EAEMPLOYE $100,000
IMandamry In MU
Ma,tleeru0ewder
E.L.OISEASE•POUCY LIMIT I 5500,000
DIIESCRIPTIONOFOPERATIONSW.
DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES (ACOR01o1, AtldNqul Pvmarlu5ehvdulv,mry ba atMohedUman apau la maulrvtl)
RE: Property located at 44539 Sterling Highway #107, Soldotna, AK
The Certificate Holder is an additional Insured as respects General Liability policy per the attached
endorsement
CERTIFICATE HOLDER CANCELLATION
®1988-2015 ACORD CORPORATION. All rights reserved.
ACORD 25 (2016103) The ACORD name and logo are registered marks of ACORD
SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE
THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN
ACCORDANCE WITH THE POLICY PROVISIONS.
AUTHORIffA REPRESEMATIVE„
i
®1988-2015 ACORD CORPORATION. All rights reserved.
ACORD 25 (2016103) The ACORD name and logo are registered marks of ACORD
Sample Management Letter
KODIAK ISLAND BOROUGH
Sample Letter to the Governing Board
Year Ended June 30, 2017
Month XX, 2017
Members of the Assembly
Kodiak Island Borough
Kodiak, Alaska
We have audited the financial statements of the governmental activities, the business -type activities, the
discretely presented component unit, each major fund and the aggregate remaining fund information of
Kodiak Island Borough for the year ended June 30, 2017, which collectively comprise the Borough's basic
financial statements. Professional standards require that we provide you with information about our
responsibilities under generally accepted auditing standards, Government Auditing Standards, the Uniform
Guidance, and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits, as well
as certain information related to the planned scope and timing of our audit. We have communicated such
information in our letter to you dated Month XX, 2017. Professional standards also require that we
communicate to you the following information related to our audit.
Significant Accounting Policies and Transactions
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by Kodiak Island Borough are described in Note 1 to the financial statements.
As noted in Note 1, the Borough adopted GASB XX in fiscal year 2017. We noted no transactions entered
into by the Borough 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.
Accounting Estimates
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:
All Opinion Units:
Management's estimate of the collectability of accounts receivable is based on historical collections.
We evaluated the key factors and assumptions used to develop the collectability of accounts
receivable in determining that it is reasonable in relation to the financial statements taken as a whole.
Members of the Assembly
Kodiak Island Borough
Government -Wide Opinion Unit and Business -Nae Activities:
Management's estimate of the useful lives and depreciation is based upon the expected life of an asset. We
evaluated the key factors and assumptions used to develop the useful lives and depreciation expense in
determining that it is reasonable in relation to the financial statements as a whole.
Management's estimates of the Borough's proportionate share of the collective net pension liability and
related deferred outflows and inflows of resources are based on information furnished by the State of Alaska
and actuarial reports generated during the audit of the Public Employees' Retirement System. The
amortization of these deferrals is based on guidance provided by the Governmental Accounting Standards
Board. We evaluated the key factors and assumptions used to develop the estimates of the Borough's
proportionate share of the collective net pension liability and deferred outflows and inflows of resources and
related amortization in determining that it is reasonable in relation to the financial statements as a whole.
Government -Wide Opinion, Business -type Activities and Municipal Solid Waste Collection and Disposal
Enterprise Fund Opinion Units:
Management's uses estimates to calculate the liability for the closure and post closure of the landfill. These
estimates are based on engineering surveys. We evaluated the key factors and assumptions used to
develop the estimated liability for the closure and post closure activities of the landfill to determine its
reasonableness in relation to the financial statements taken as a whole.
Financial Statement Disclosures
The financial statement disclosures are neutral, consistent, and clear.
Difficufties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
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. During the course of our
audit we identified the following misstatements.
• To correct debt issuance costs by $X,XXX in the Debt Service Fund.
• To correct accounts payable balances as of Month XX, 2017 in the amount of $XXX,XXX in the General
Fund.
Disagreements with Management
For the 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
auditor's report. We are pleased to report that no such disagreements arose during the course of the audit.
Members of the Assembly
Kodiak Island Borough
Management Representations
We have requested certain representations from management that are included in the management representation
letter dated Month XX, 2017.
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 Borough's financial statements or a determination of the type of auditor's 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.
Internal Control Matters
See the June 30, 2017 Federal and State Single Audit Report for definition and descriptions of deficiencies,
significant deficiencies, material weaknesses and any reported findings.
Accounting Assistance
As part of our engagement we drafted the basic financial statements of the Borough from the Borough's
accounting records; however, management of the Borough was involved in the drafting process and retains
responsibility for the basic financial statements.
Supplementary Information Accompanvino the Financial Statements
We applied certain limited procedures to the Management's Discuss and Analysis, Budgetary Comparison
Schedules, and Schedules of the Borough's Proportionate Share of Net Position Liabilities and Contributions for
the Public Employees' Retirement System, which are required supplementary information (RSI) that
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 the "Additional Supplementary Information", which includes the Budgetary
Comparison Schedule — Debt Service Fund — Education and Health, Nonmajor Governmental Funds: Combining
Balance Sheet and Combining Statement of Revenues, Expenditures, and Changes in Fund Balances, Nonmajor
Special Revenue Funds: Combining Balance Sheet, Combining Statement of Revenues, Expenditures and
Changes in Fund Balances (Deficits), and Schedules of Revenues, Expenditures, and Changes in Fund Balance
(Deficit) — Budget and Actual, Nonmajor Capital Project Funds: Combining Balance Sheet and Combining
Statement of Revenues, Expenditures and Changes in Fund Balances, which accompany the financial statements
but are 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.
Members of the Assembly
Kodiak Island Borough
We were not engaged to report on the Introductory Section, the Supplementary Bond Schedules and the Statistical
Section, which accompany the financial statements but are not RSI. We did not audit or perform other procedures
on this other information and we do not express an opinion or provide any assurance on them.
Maior Issues Discussed with Management Prior to Retention
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 Borough's auditors. However, these discussions occurred in
the normal course of our professional relationship and our responses were not a condition to our retention.
This information is intended solely for the use of the Borough Assembly and management of Kodiak Island Borough
and is not intended to be and should not be used by anyone other than these specified parties.
Sincerely,
Anchorage, Alaska
Peer Review Report
anderson
ZURMUEHLEN
ANDERSON ZURMUEHLEN & CO., P.C.
System Review Report
CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS
MEMBER: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders of
Altman Rodgers & Co.
and the California Society of CPAs Administering Peer Review Committee
We have reviewed the system of quality control for the accounting and auditing practice of Altman
Rogers & Co. (the firm) in effect for the year ended December 31, 2015. Our peer review was
conducted in accordance with the Standards for Performing and Reporting on Peer Reviews
established by the Peer Review Board of the American Institute of Certified Public Accountants. As
a part of our peer review, we considered reviews by regulatory entities, if applicable, in determining
the nature and extent of our procedures. The firm is responsible for designing a system of quality
control and complying with it to provide the firm with reasonable assurance of performing and
reporting in conformity with applicable 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 therewith based on our review. The nature, objectives, scope, limitations of, and the
procedures performed in a System Review are described in the standards at
www.aicpa.org/Drsumma .
As required by the standards, engagements selected for review included audit engagements
performed in accordance with Government Auditing Standards and OMB Circular A-133 and
employee benefit plans.
In our opinion, the system of quality control for the accounting and auditing practice of Altman
Rogers & Co., in effect for the year ended December 31, 2015, has been suitably designed and
complied with to'provide the firm with reasonable assurance of performing and reporting in
conformity with applicable professional standards in all material respects. Firms can receive a
rating of pass, pass with derciency(ies), or /'ail. Altman Rogers & Co., has received a peer review
rating ofpass.
Butte, Montana
May 6, 2016
Alaska Business License
Alaska Business License # 161807
Alaska Department of Commerce, Community, and Economic Development
Division of Corporations, Business and Professional Licensing
P.O. Box 110806, Juneau, Alaska 99811-0806
This is to certify that
ALTMAN, ROGERS, AND COMPANY, APC
425 G ST STE 800 ANCHORAGE AK 99501
owned by
ALTMAN, ROGERS, AND COMPANY, APC
is licensed by the department to conduct business for the period
December 19, 2016 through December 31, 2018
for the following line of business:
54 - Professional, Scientific and Technical Services
This license shall not be taken as permission to do business in the state without
having complied with the other requirements of the laws of the Slate or of the United States.
This license must be posted in a conspicuous place at the business location.
It is not transferable or assignable.
Chris Hladick