HomeMy WebLinkAbout19-20 SAS Audit Letter
October 19, 2020
To the Mayor and City Council Members
City of McHenry
McHenry, Illinois
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 McHenry (City) for the
year ended April 30, 2020. Professional standards require that we provide you with information about
our responsibilities under generally accepted auditing standards (and, if applicable, Government
Auditing Standards), 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 June 29, 2020. Professional
standards also require that we communicate to you the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices
Management has the responsibility to select and use appropriate accounting policies. A summary of
the significant accounting policies adopted by the City are included in Note 1 to the financial
statements. There have been no initial accounting policy selections and no changes in significant
accounting policies or their application during fiscal year 2020. No matters have come to our attention
that would require us, under professional standards, to inform you about (1) the methods used to
account for significant unusual transactions and (2) the effect of significant accounting policies in
controversial or emerging areas for which there is a lack of authoritative guidance or consensus.
Significant Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by management and
are based on management’s current judgement. Those judgements are normally based on
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 markedly from
management’s current judgement. We evaluated the key factors and assumptions used to develop
the estimates and determined that they are reasonable in relation to the financial statements taken
as a whole. The most sensitive estimates affecting the financial statements are:
- Management’s estimate of depreciation expense is based on estimated useful lives of the capital
assets held by the City.
- Management’s estimates regarding pension and OPEB liabilities were based on various actuarial
assumptions regarding projected salaries, market trends, and expected mortality.
- Management’s estimates regarding allowances on receivables were based on historical collection
rates.
Financial Statement Disclosures
Certain financial statement disclosures involve significant judgement and are particularly sensitive
because of their significance to financial statement users. The most sensitive disclosures affecting
the City’s financial statements relate to: depreciation, pension and OPEB liabilities, and fair value
estimates.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing
our audit.
Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards require us to accumulate all known and
likely misstatements identified during the audit, other than those that we believe are trivial, and
communicate them to the appropriate level of management. Further, professional standards require
us to also communicate the effect of uncorrected misstatements related to prior periods on the
relevant classes of transactions, account balances or disclosures, and the financial statements as a
whole. Management has corrected all identified misstatements.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or
audit matter, which could be significant to the City’s financial statements or the auditor’s report. No
such disagreements arose during the course of the audit.
Management Representations
We have requested certain written representations from management, which are included in the
attached letter.
Management Consultations with Other 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 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. Management informed us that, and to our knowledge, there were no consultations with other
accountants regarding auditing and accounting matters.
Other Significant Matters, Findings or Issues
In the normal course of our professional association with the City, we generally discuss a variety of
matters, including the application of accounting principles and auditing standards, operating
conditions affecting the City, and operating plans and strategies that may affect the risks of material
misstatement. However, none of the matters discussed resulted in a condition to our retention as the
City’s auditors.
Other Matters
We applied certain limited procedures to the required information, which is required supplemental
information (RSI) that supplement the basic financial statements (as listed on the table of contents in
the audit report). 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 supplemental information which accompany the financial statements
but are not RSI. With respect to the supplemental 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 supplemental information to the underlying accounting records used to prepare the
financial statements or to the financial statements themselves.
Restriction on Use
This information is intended solely for the information and use of the City Council and management
of the City of McHenry and is not intended to be, and should not be, used by anyone other than these
specified parties.
Very truly yours,
EDER, CASELLA & CO.
Certified Public Accountants
Client:City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Workpaper:GASB 34 AJE Report
Account Description Debit Credit
Adjusting Journal Entries JE # 1
7610 LOAN PRINCIPAL PAYMENT 141.00
2309 LOAN PAYABLE 141.00
Total 141.00 141.00
Adjusting Journal Entries JE # 2
214 Police Pension Deferred Outflows - Actuarial Report 1,930,900.00
216 Police Pension Deferred Inflows 631,104.00
9600 Change in Net Pension Obligation 3,470,061.00
1441 NET PENSION OBLIGATION 3,954,361.00
9600a Police Pension Contributions 2,077,704.00
Total 6,032,065.00 6,032,065.00
Adjusting Journal Entries JE # 3
1202 Deferred Outflows - OPEB 358,230.00
2202 Deferred Inflows - OPEB 50,352.00
9605 OPEB Expense 188,997.00
210 Net OPEB Obligation 443,884.00
9604 OPEB - Employer Contributions 153,695.00
Total 597,579.00 597,579.00
Adjusting Journal Entries JE # 4
211 IMRF Pension Liability 2,240,966.00
213 IMRF Deferred Outflows - Contributions after Measurement Date 40,450.00
9602 IMRF Pension Expense 790,587.00
212 IMRF Deferred Outflows - Actuarial Evaluation 892,584.00
233 IMRF Deferred Inflows of Resources 1,544,040.00
9603 IMRF Contributions 635,379.00
Total 3,072,003.00 3,072,003.00
I have reviewed and agree with the adjustments above:
Client Signature
Date
Adjust Balance of Loan Payable to Match Amortization Schedule
Adjust Police Pension Liabilities to Match Actuarial Valuation
Adjust OPEB Accounts to Match Actuarial Valuation
Adjust IMRF Accounts to Match Actuarial Valuation
Client:City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Workpaper:General Fund AJEs Report
Account Description Debit Credit
Adjusting Journal Entries JE # 1
R3140 State Pull Tab/Games Tax 169,341.00
R3350 Video Gambling Licenses 169,341.00
Total 169,341.00 169,341.00
Adjusting Journal Entries JE # 2
210 Accounts Payable 1,160.00
X01-5230 Legal Service 1,160.00
Total 1,160.00 1,160.00
Adjusting Journal Entries JE # 3
210 Accounts Payable 1,522.00
X01-5230 Legal Service 1,522.00
Total 1,522.00 1,522.00
Adjusting Journal Entries JE # 4
X01-5230 Legal Service 85,658.00
210 Accounts Payable 85,658.00
Total 85,658.00 85,658.00
Adjusting Journal Entries JE # 5
X04-9908 Transfer to Revolving Loan Fund 155,000.00
X04-6940 Administrative Expense 155,000.00
Total 155,000.00 155,000.00
Adjusting Journal Entries JE # 6
Q250 Fund Balance 8,343.00
R3920.22 Proceeds - Fixed Asset Sale 8,343.00
Total 8,343.00 8,343.00
I have reviewed and agree with the adjustments above:
Client Signature
Date
Per Client - Reclass Video Gaming Receipts to Correct Account
Per Client - Adjustment for Zukowski Invoice regarding Ricky Rockets/Thortons
Per Client - Adjustment for Zukowski Invoice regarding Denver Farms
Record Additional Accounts Payable Amounts Found During Testing
Reclass Business Resiliency Loan Transfer
Fund Balance Adjustment
9/22/2020
9:03 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:200 - Tourism Fund
Workpaper:200 - Tourism Fund AJE's Report
Account Description W/P Ref Debit Credit
Adjusting Journal Entries JE # 1
7600 Loan Interest 141.00
7610 Loan Principle Payment 141.00
Total 141.00 141.00
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
Reclass Loan Principle Payment Amount to Match Amortization Schedule
1 of 1
9/22/2020
9:06 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:205 - Pageant Fund
Workpaper:205 - Pageant Fund AJEs Report
Account Description W/P Ref Debit Credit
Adjusting Journal Entries JE # 1
213 Deferred Revenue 2,850.00
3890 Misc. Income 2,850.00
Total 2,850.00 2,850.00
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
Due to Covid19, there is no Pageant this year, remove Deferred Revenue
1 of 1
Client:City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Workpaper:Band Fund Adjusting Entries Report
Account Description W/P Ref Debit Credit
None for FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
9/22/2020
9:11 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:215 - McHenry Character Counts
Workpaper:215 - McHenry Character Counts AJEs Report
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
1 of 1
Client:City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Workpaper:Civil Defense Fund Adjusting Entries Report
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
Client:City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Workpaper:Audit Expense Adjusting Entries Report
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
9/22/2020
10:23 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:260 - Annexation Fund
Workpaper:260 - Annexation Fund AJE's Report
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
1 of 1
9/22/2020
10:27 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:270 - Motor Fuel Tax Fund
Workpaper:270 - Motor Fuel Tax Adjusting Journal Entries Report
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
1 of 1
9/22/2020
10:33 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Trial Balance:280 - Developer Donations Fund
Workpaper:280 - Developer Donations Adjusting Journal Entries Report
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
1 of 1
9/22/2020
10:21 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:290 - TIF Fund
Workpaper:290 - TIF AJE's Report
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
1 of 1
9/22/2020
10:36 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Trial Balance:300 - Debt Service Fund
Workpaper:300 - Debt Service Fund Adjusting Journal Entries Report
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
1 of 1
9/22/2020
10:19 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:400 - Recreation Center Fund
Workpaper:400 - Recreation Center Adjusting Journal Entries Report
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
1 of 1
Client:City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Workpaper:Special Service Area #1A - Shamrock Adjusting Entries Report
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
Client:City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Workpaper:Lakewood SSA #4
Account Description W/P Ref Debit Credit
Adjusting Journal Entries JE # 1
227 Deferred Property Taxes 724.00
115 Property Tax Receivable 724.00
Total 724.00 724.00
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
Adjust Property Tax Receivable and Deferral
9/22/2020
11:12 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:426 - Huntersville SSA #6
Workpaper:426 - Huntersville SSA Adjusting Journal Entries Report
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustments above:
Client Signature
Date
1 of 1
9/22/2020
10:50 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:440 - Capital Improvements Fund
Workpaper:440 - Capital Improvements AJES
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustments above:
Client Signature
Date
1 of 1
9/22/2020
10:03 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:450 - Capital Equipment Fund
Workpaper:450 - Capital Equipment Fund AJEs Report
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustments above:
Client Signature
Date
1 of 1
9/22/2020
10:48 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:510 - Water/Sewer Fund
Workpaper:510 - Water Sewer Adjusting Journal Entries Report
Account Description W/P Ref Debit Credit
Adjusting Journal Entries JE # 1
1551 Due from General Fund 7,975.00
R31-3630 Hookup/Connection Fees 2,750.00
R31-3640 Water Meter Sales 2,475.00
R32-3630 Hookup/Connection Fees 2,750.00
Total 7,975.00 7,975.00
Adjusting Journal Entries JE # 2
X31-4330 US Life Insurance 18.00
X32-4330 US Life Insurance 30.00
X35-4330 US Life Insurance 27.00
235 Due to General Fund 75.00
Total 75.00 75.00
Adjusting Journal Entries JE # 3
R31-3610 Sales 5,091.00
R31-3615 Base Charge - Capital 290.00
R32-3610 Sales 6,695.00
R32-3615 Base Charge - Capital 671.00
R32-3660 Debt Service 1,036.00
R32-3665 Debt Service Fee - Sewer Cons Loan 5,640.00
128 Accounts Receivable-W/S (Unbilled) 19,423.00
Total 19,423.00 19,423.00
Adjusting Journal Entries JE # 4
1308 Systems & Equipment 452,750.00
X31-9510 Depreciation Expense 4,125.00
X32-9510 Depreciation Expense 402.00
1388 Accumulated Depreciation - Systems & Equipment 4,527.00
R31-3821 Donated Public Improvements 412,500.00
R32-3821 Donated Public Improvements 40,250.00
Total 457,277.00 457,277.00
Adjusting Journal Entries JE # 5
1308 Systems & Equipment 5,595.00
X32-9510 Depreciation Expense 560.00
1388 Accumulated Depreciation - Systems & Equipment 560.00
X35-6110 Materials & Supplies 5,595.00
Total 6,155.00 6,155.00
Adjusting Journal Entries JE # 6
X31-5510 Utilities 5,422.00
X32-5510 Utilities 2,196.00
X32-5510 Utilities 6,164.00
X32-5510 Utilities 13,907.00
X32-6110 Materials and Supplies 6,472.00
210.1 Accounts Payable 995 34,161.00
Total 34,161.00 34,161.00
Interfund Transfer Adjustment
Life Insurance Interfund Transfer
The calculation used was 47/60 when it should have been 47/62 days for March 15-
May15. This entry is provided by the client.
Per Client - Add Contributed Public Improvements to White Oaks Retirement Home
Record Push Camera Fixed Asset Addition
Adjust Accounts Payable for Items found during Unrecorded Liabilities Testing
1 of 2
9/22/2020
10:48 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:510 - Water/Sewer Fund
Workpaper:510 - Water Sewer Adjusting Journal Entries Report
Account Description W/P Ref Debit Credit
Adjusting Journal Entries JE # 7
X35-6210 Bulk Office Supplies 223.00
X32-6210 Bulk Office Supplies 223.00
Total 223.00 223.00
Adjusting Journal Entries JE # 8
228 Deferred Outflows - OPEB 18,018.00
229 Deferred Infows - OPEB 2,585.00
X99-9200 OPEB Expense 9,522.00
241 Net OPEB Liability 22,382.00
X99-9300 OPEB Contributions 7,743.00
Total 30,125.00 30,125.00
Adjusting Journal Entries JE # 9
225 IMRF Net Pension Liability 677,130.00
227 IMRF Deferred Outflows - Contributions after 12,032.00
X31-4420 IMRF 12,611.00
X32-4420 IMRF 18,249.00
X35-4420 Employer Contribution - IMRF 16,059.00
226 IMRF Deferred Outflows - Actuarial Evaluation 272,438.00
2448 IMRF Deferred Inflows of Resources 463,643.00
Total 736,081.00 736,081.00
Adjusting Journal Entries JE # 10
247 Current Portion 7,013.00
249 Less Current Portion - Long Term Debt 7,013.00
Total 7,013.00 7,013.00
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
Adjust IMRF Accounts to Match Actuarial Valuation
Reclass Negative Expense Account
Adjust OPEB Accounts to Match Actuarial Valuation
Adjust Current Portion of Long-Term Debt
2 of 2
9/22/2020
9:27 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:550 - Capital Development Fund
Workpaper:550 - Capital Development AJE's Report
Account Description W/P Ref Debit Credit
Adjusting Journal Entries JE # 1
1551 Due from General Fund 45,276.00
R31-3630 Water Hookup Fees 25,985.00
R32-3630 Sewer Hookup Fees 19,291.00
Total 45,276.00 45,276.00
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
Interfund Transfer Adjustment
1 of 1
Client:City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Workpaper:Utility Improvements Fund AJEs
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
9/22/2020
11:23 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:590 - Marina Operations Fund
Workpaper:590 - Marina Fund Adjusting Entries Report
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
1 of 1
9/22/2020
9:52 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:600 - Employee Insurance Fund
Workpaper:600 - Employee Insurance Fund AJE's Report
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
1 of 1
9/22/2020
9:48 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:610 - Risk Management Fund
Workpaper:610 - Risk Management Fund AJE's Report
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
1 of 1
9/22/2020
9:46 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:620 - Information Technology Fund
Workpaper:620 - Information Technology Fund AJE Report
Account Description W/P Ref Debit Credit
4010 Salaries - Regular 443.55
217 Compensated Absences 443.55
Total 443.55 443.55
Adjusting Journal Entries JE # 2
242 Deferred Outflows - OPEB 1,109.00
243 Deferred Inflows - OPEB 588.00
9930 OPEB Expense 715.00
241 Net OPEB Liability 1,832.00
9940 OPEB Contributions 580.00
Total 2,412.00 2,412.00
Adjusting Journal Entries JE # 3
230 IMRF Net Pension Liability 55,705.00
232 IMRF Deferred Outflows - Contributions made after Meaurement Date 507.00
4420 IMRF Expense 3,916.00
231 IMRF Deferred Outflows - Actuarial Report 29,334.00
240 IMRF Deferred Inflows of Resources 30,794.00
Total 60,128.00 60,128.00
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
Adjust OPEB Accounts to Match Actuarial Valuation
Adjust IMRF Accounts to Match Actuarial Valuation
Adjusting Journal Entries JE # 1
There was a miscalculation becuase Aaron Greve's hourly rate was not originally
updated from his pay increase in January - Provided by Client
1 of 1
Client:City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Workpaper:Employee Flex Fund Adjusting Entries Report
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
Client:City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Workpaper:Developmental Escrow Fund AJEs
Account Description W/P Ref Debit Credit
None in FY'20
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
9/22/2020
9:29 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:740 - Retained Personnel Escrow Fund
Workpaper:740 - Retained Personnel Escrow AJEs Report
Account Description W/P Ref Debit Credit
Adjusting Journal Entries JE # 1
120 Accounts Receivable - Other 1,160.00
5230 Legal Service 1,160.00
210 Accounts Payable 1,160.00
3735 Legal Fees-Developers 1,160.00
Total 2,320.00 2,320.00
Adjusting Journal Entries JE # 2
120 Accounts Receivable - Other 1,522.00
5230 Legal Service 1,522.00
210 Accounts Payable 1,522.00
3735 Legal Fees-Developers 1,522.00
Total 3,044.00 3,044.00
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
Per Client - Adjustment for Zukowski Invoice regarding Ricky Rockets/Thortons
Per Client - Adjustment for Zukowski invoice regarding Denver Farms
1 of 1
Client:City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Workpaper:Revolving Loan Fund Adjusting Entries Report
Account Description W/P Ref Debit Credit
Adjusting Journal Entries JE # 1
126 Accrued Interest Receivable 1,188.00
2121 Notes Payable 9,873.00
121 Loan Receivable 9,873.00
3210 Checking Interest 1,188.00
Total 11,061.00 11,061.00
Adjusting Journal Entries JE # 2
3840 Loan Payback Proceeds 155,000.00
6000 Transfer - General Fund 155,000.00
Total 155,000.00 155,000.00
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
Adjust Loan Receivable/Notes Payable Amounts
Reclass Business Resiliency Loan Transfer
9/22/2020
9:31 AM
Client:City of McHenry - City of McHenry
Engagement:City of McHenry
Period Ending:4/30/2020
Trial Balance:760 - Police Pension Fund
Workpaper:760 - Police Pension AJE's Report
Account Description W/P Ref Debit Credit
Adjusting Journal Entries JE # 1
1104 American Funds 109.00
3882 Reimbursement - Miscellaneous 109.00
Total 109.00 109.00
I have reviewed and agree with the adjustment(s) above:
Client Signature
Date
Adjust Cash to Match Investment Statement
1 of 1
Eder, Casella & Co.
5400 West Elm Street
Suite 203
McHenry, Illinois 60050
City of McHenry
333 S. Green Street
McHenry, IL 60050
This representation letter is provided in connection with your audit of the financial statements of City
of McHenry (City), which comprise the respective financial position of the governmental activities,
the business-type activities, each major fund, and the aggregate remaining fund information as of
April 30, 2020 and the respective changes in financial position and, where applicable, cash flows for
the year then ended, and the related notes to the financial statements, for the purpose of expressing
opinions on whether the basic financial statements present fairly, in all material respects, in
accordance with accounting principles generally accepted in the United States of America (U.S.
GAAP).
Certain representations in this letter are described as being limited to matters that are material. Items
are considered material, regardless of size, if they involve an omission or misstatement of accounting
information that, in the light of surrounding circumstances, makes it probable that the judgment of a
reasonable person relying on the information would be changed or influenced by the omission or
misstatement. An omission or misstatement that is monetarily small in amount could be considered
material as a result of qualitative factors.
We confirm that, to the best of our knowledge and belief, the following representations made to you
during your audit.
Financial Statements
1. We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter
dated June 29, 2020, for the preparation and fair presentation of the financial statements of the
various opinion units referred to above in accordance with U.S. GAAP and for preparation of
the supplementary information in accordance with the applicable criteria.
2. We acknowledge our responsibility for the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error.
3. We acknowledge our responsibility for the design, implementation, and maintenance of internal
control to prevent and detect fraud.
4. We acknowledge our responsibility for compliance with the laws, regulations, and provisions of
contracts and grant agreements.
5. We have reviewed, approved, and taken responsibility for the financial statements and related
notes.
6. Significant assumptions used by us in making accounting estimates, including those measured
at fair value, are reasonable.
7. Related party relationships and transactions have been appropriately accounted for and
disclosed in accordance with the requirements of U.S. GAAP.
8. All events subsequent to the date of the financial statements and for which U.S. GAAP requires
adjustment or disclosure have been adjusted or disclosed.
9. We are in agreement with the adjusting journal entries you have proposed, if any, and they will
be posted.
10. The effects of all known actual or possible litigation, claims, and assessments have been
accounted for and disclosed in accordance with U.S. GAAP.
11. All component units, as well as joint ventures with an equity interest, are included and other
joint ventures and related organizations are properly disclosed.
12. All funds and activities are properly classified.
13. All funds that meet the quantitative criteria in GASB Statement No. 34, Basic Financial
Statements-and Management's Discussion and Analysis-for State and Local Governments,
GASB Statement No. 37, Basic Financial Statements-and Management's Discussion and
Analysis-for State and Local Governments: Omnibus as amended, and GASB Statement No.
65, Items Previously Reported as Assets and Liabilities, for presentation as major are identified
and presented as such and all other funds that are presented as major are considered
important to financial statement users.
14. All components of net position, nonspendable fund balance, and restricted, committed,
assigned, and unassigned fund balance are properly classified and, if applicable, approved.
15. Our policy regarding whether to first apply restricted or unrestricted resources when an
expense is incurred for purposes for which both restricted and unrestricted net position are
available is appropriately disclosed and net position is properly recognized under the policy.
16. Our policy regarding whether to first apply restricted, committed, assigned, or unassigned
resources when an expense is incurred for purposes for which more than one resource of fund
balance is available is appropriately disclosed and fund balance is properly recognized under
the policy.
17. All revenues within the Statement of Activities have been properly classified as program
revenue, general revenues, contributions to term or permanent endowments, or contributions
to permanent fund principal.
18. All expenses have been properly classified in or allocated to functions and programs in the
statement of activities, and allocations, if any, have been made on a reasonable basis.
19. All interfund and intra-entity transactions and balances have been properly classified and
reported.
20. Deposit and investment risk have been properly and fully disclosed.
21. Capital assets, including infrastructure assets, are properly capitalized, report, and if applicable,
depreciated.
22. We acknowledge our responsibility for the required supplementary information (RSI). All RSI
is measured and presented within the prescribed guidelines and the methods of measurement
and presentation have not changed from those used in the prior year. We have disclosed to
you any significant assumptions and interpretations underlying the measurement and
presentation of the RSI.
23. With regard to investments and other instruments reported at fair value:
a. The underlying assumptions are reasonable and they appropriately reflect management's
intent and ability to carry out its stated coursed of action.
b. The measurement methods and related assumptions used in determining fair value are
appropriate in the circumstances and have been consistently applied.
c. The disclosures related to fair values are complete, adequate, and in accordance with U.S.
GAAP.
d. There are no subsequent events that require adjustments to the fair value measurements
and disclosures included in the financial statements.
24. With respect to preparation offinancial statements, preparation of comptroller's annual financial
report, and IDOi report services, we have performed the following:
a. Made all management decisions and performed all management functions;
b. Assigned a competent individual to oversee the services;
c. Evaluated the adequacy of the services performed;
d. Evaluated and accepted responsibility for the result of the service performed; and
e. Established and maintained internal controls, including monitoring ongoing activities.
25. Adjustments or disclosures have been made for all events, including instances of
noncompliance, subsequent to the date of the financial statements that would require
adjustment to or disclosure in the financial statements
Information Provided
26. We have provided you with:
a. Access to all information, of which we are aware, that is relevant to the preparation and fair
presentation of the financial statements of the various opinion units referred to above, such
as records, documentation, and other matters.
b. Additional information that you have requested from us for the purpose of the audit.
c. Unrestricted access to persons within the City from whom you determined it necessary to
obtain audit evidence.
d. Minutes of the meetings of the Board of Trustees or summaries of actions of recent
meetings as listed below:
i. May 6, 2019
ii. May 20, 2019
iii. June 3, 2019
iv. June 17, 2019
v. June 24, 2019
vi. July 15, 2019
vii. July 18, 2019 -Special Meeting
viii. August 5, 2019
ix. August 19, 2019
x. September 3, 2019
xi. September 16, 2019
xii. September 30, 2019 -Special Meeting
xiii. October 7, 2019
xiv. October 21, 2019
XV. October 28, 2019
xvi. November 4, 2019
xvii. November 18, 2019
xviii. December 16, 2019
xix. January 6, 2020
xx. January 20, 2020
xxi. February 3, 2020
xxii. February 18, 2020
xxiii. March 2, 2020
xxiv. March 16, 2020
XXV. March 16, 2020 -Emergency Meeting
xxvi. March 25, 2020 -Emergency Meeting
xxvii. April 6, 2020
xxviii. April 20, 2020
xxix. May 4, 2020
XXX. May 18, 2020
xxxi. June 1, 2020
27. All transactions have been recorded in the accounting records and are reflected in the financial
statements.
28. We have disclosed to you the results of our assessment of the risk that the financial statements
may be materially misstated as a result of fraud.
29. We have no knowledge of any fraud or suspected fraud that affects the City and involves:
a. Management,
b. Employees who have significant roles in internal control, or
c. Others where the fraud could have a material effect on the financial statements.
30. We have no knowledge of any allegations of fraud or suspected fraud affecting the City's
financial statements communicated by employees, former employees, vendors, regulators, or
others.
31. We have disclosed to you all known actual or possible litigation, claims, and assessments
whose effects should be considered when preparing the financial statements.
32. We have disclosed to you the identity of the City's related parties and all the related party
relationships and transactions of which we are aware.
33. We have disclosed to you all communications from regulatory agencies concerning
noncompliance with or deficiencies in accounting, internal control, or financial reporting
practices, if any.
34. The City has no plans or intentions that may materially affect the carrying value or classification
of assets, deferred outflows of resources, liabilities, deferred inflows of resources, and fund
balance or net position.
35. We have disclosed to you all guarantees, whether written or oral, under which the City is
contingently liable.
36. We have disclosed to you all significant estimates and material concentrations known to
management that are required to be disclosed in accordance with GASB Statement No. 62,
Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30,
1989 FASB and AICPA Pronouncements. Significant estimates are estimates at the balance
sheet date that could change materially within the next year. Concentrations refer to volumes
of business, revenues, available sources of supply, or markets or geographic areas for which
events could occur that would significantly disrupt normal finances within the next year.
37. We have identified and disclosed to you the laws, regulations, and provisions of contracts and
grant agreements that could have a direct and material effect on financial statement amounts,
including legal and contractual provisions for reporting specific activities in separate funds.
38. There are no:
a. Violations or possible violations of budget ordinances, laws and regulations (including
those pertaining to adopting, approving, and amending budgets), provisions of contracts or
grant agreements, tax or debt limits, or any related debt covenants whose effects should
be considered for disclosure in the financial statements or as a basis for recording a loss
contingency, or for reporting on noncompliance.
b. Unasserted claims or assessments that our lawyer has advised are probable of assertion
and must be disclosed in accordance with GASB 62.
c. other liabilities or gain or loss contingencies that are required to be accrued or disclosed
by GASB62.
d. Continuing disclosure consent decree agreements or filings with the Securities and
Exchange Commission and we have filed updates on a timely basis in accordance with the
agreements (Rule 240, 15c2-12).
39. The City has satisfactory title to all owned assets, and there are not liens or encumbrances on
such assets nor has any asset or future revenue been pledged as collateral, except as
disclosed to you.
40. We have complied with all aspects of grant agreements and other contractual. agreements that
would have a material effect on the financial statements in the event of noncompliance.
41. We have no knowledge of instances of noncompliance or suspected noncompliance with
provisions of laws, regulations, contracts, or grant agreements, or abuse, whose effects should
be considered when preparing financial statements.
42. We have identified and disclosed to you all instances that have occurred or are likely to have
occurred, of fraud and noncompliance with provisions of laws and regulations that we believe
have a material effect on the financial statements or other financial data significant to the audit
objectives, and any other instances that warrant the attention of those charged with
governance.
43. We have identified and disclosed to you all instances that have occurred or are likely to have
occurred, of abuse that could be quantitatively or qualitatively material to the financial
statements or other financial data significant to the audit objectives.
44. Investments, derivative instruments, and land and other real estate held by endowments are
properly valued.
45. Provisions for uncollectible receivables have been properly identified and recorded.
46. We are not aware of any current or anticipated losses in excess of our insurance coverage
for which we would be financially liable.
47. The City meets the GASS-established requirements for accounting for eligible infrastructure
assets using the modified approach.
48. With respect to the supplemental financial information we acknowledge our responsibility for
presenting the supplemental financial information in accordance with accounting principles
generally accepted in the United States of America, and we believe the supplemental financial
information, including its form and content, is fairly presented in accordance with accounting
principles generally accepted in the United States of America. The methods of measurement
and presentation of the supplemental financial information have not changed from those used
in the prior period, and we have disclosed to you any significant assumptions or interpretations
underlying the measurement and presentation of the supplemental information.
49. We agree with the findings of specialists in evaluating the City's accrued pension liability and
OPES Liability and have adequately considered the qualifications of the specialists in
determining the amounts and disclosures used in the financial statements and underlying
accounting records. We did not give or cause any instructions to be given to specialists with
respect to the values or amounts derived in an attempt to bias their work, and we are not
otherwise aware of any matters that have had an impact on the independence or objectivity of
the specialists.
50. We believe that the actuarial assumptions and methods used to measure pension and OPES
liabilities and costs for financial accounting purposes are appropriate in the circumstances.
Signed: -~=~~'-174=~~~==-----
Title: (/n a.,11dR.-bi redo r -~-~------~------
Date: ~Io~/ /~q /J-.<-u~2.o __ _