HomeMy WebLinkAbout18-19 SAS Audit Letter
October 21, 2019
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 City of McHenry (City) for the year
ended April 30, 2019. 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 July 8, 2019. 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 is responsible for the selection and use of appropriate accounting policies. The
significant accounting policies used by City of McHenry are described in Note 1 to the financial
statements. During fiscal year 2019, the City implemented GASB Statement No. 75, Accounting and
Financial Reporting for Postemployment Benefits Other Than Pensions and GASB Statement No. 85,
Omnibus 2017 and GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of
a Construction Period. The application of existing policies was not changed during fiscal year 2019.
We noted no transactions entered into by the City during the year for which there is a lack of
authoritative guidance or consensus. All significant transactions have been recognized in the
financial statements in the proper period.
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. We evaluated the key factors and assumptions
used to develop the estimates in determining that they are reasonable in relation to the financial
statements taken as a whole. The most sensitive estimates affecting the financial statements were:
- Management’s estimate of depreciation expense is based on estimated useful lives of the
capital assets held by the District.
- 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.
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.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during
the audit, other than those that are clearly trivial, and communicate them to the appropriate level of
management. The attached adjustments, detected as a result of audit procedures, were corrected
by management.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditor’s report. We are pleased to report that no such disagreements arose during
the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter, a copy of which is attached.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation
involves application of an accounting principle to the City’s financial statements or a determination of
the type of 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.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the City’s auditors. However,
these discussions occurred in the normal course of our professional relationship and our responses
were not a condition to our retention.
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 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 McHenryEngagement: City of McHenryPeriod Ending: 4/30/2019Workpaper: General Fund AJEs ReportAccount DescriptionAdjusting Journal Entries JE # IPBC - Accrue 3rd and 4th quarter Dispatch Revenue Share Payment ot PTFPDper CarolynX23-5110 Contractual Services210 Accounts PayableTotalAdjusting Journal Entries JE #2PBC- Transfer from general fund parks to the recreation center fund for theparks payroll expensesX41-9902 Transfer-Recreation Center Fund1990 Cash in PoolTotalAdjusting Journal Entries JE #3PBC - Clean up interfund balance accounts. Wrong account used for transferfor Lisafeld's L150 insurance payments1990 Cash in Pool1552 Due From Water Sewer FundTotalAdjusting Journal Entries JE #4Reclass Radicom prior year prepaid to expenseX22-51 10 Contractual Services130 Prepaid ExpensesTotalAdjusting Journal Entries JE # 5PBC- Incorrect amount was entered for police pension property tax receipts for10/19/18X22-4430 Employer Contributions - PPFR3051.22 Property Tax Coil-Police PensionTotalAdjusting Journal Entries JE #6Reclass reimbursement from McHenry County ETSBR3180 GrantsR3882.22 Reimb - MiscTotalI have reviewed and agree with the adjustments above:CliatureDateDebit Credit37,202.00___________________ 37,202.0037,202.00 37,202.0081,954.00__________________ 81,954.0081,954.00 81,954.0018,153.00_________________ 18,153.0018,153.00 18,153.0020,683.00__________________ 20,683.0020,683.00 20,683.00200.00__________________ 200.00200.00 200.00192,227.00_________________ 192,227.00192,227.00 192,227.00
Client:Engagement:Period Ending:Trial Balance:Workpaper:AccountCity of McHenry - City of McHenryCity of McHenry4/30/2019200- Tourism Fund200- Tourism FundAJE's ReportDescription WIP RefAdjusting Journal Entries JE # IRemove duplicate Visit McHenry County Payment fromAccounts Payable.210 Accounts Payable5110 Contractual ServicesTotalI have reviewed and agree with the adjustment(s) above:Client Sign9/j/igDate8/13/20194:57 PMDebit Credit12,000.00_________________ 12,000.0012,000.00 12,000.001 of 1
Client: City of McHenry - City of McHenryEngagement: City of McHenryTrial Balance: 280 - Developer Donations FundWorkpaper: 280- Developer Donations Adjusting Journal Entries ReportAccountDescriptionAdjusting Journal Entries JE # IReclass receivable from State for Intercepted Payments to be refunded - Bike PathTotal1180 Due From Other Govt Units199 Cash in PoolI have reviewed and agree with the adjustment(s) above:Client SignatureDateDebit8/13/20195:00 PMCredit2,702.002,702.002,702.00 2,702.001 of 1
Client:Engagement:Period Ending:Trial Balance:Workpaper:AccountCity of McHenry - City of McHenryCity of McHenry4/30/2019440- Capital Improvements Fund440- Capita! Improvements AJESDescriptionW/P RefAdjusting Journal Entries JE # IReclass receivable from State to Water Sewer for Intercepted Payments to berefunded237 Due to Water Sewer Fund3886 Reimb-Misc-State118 Due From Other Govt Units5110 Contractual ServicesTotalAdjusting Journal Entries JE # 2Reclass intercepted funds from State for Bike Path199 Cash in Pool3886 Reimb-Misc-State118 Due From Other Gov't Units5110 Contractual ServicesTotalI have reviewed and agree with the ljustments above:DateDebit8/13/20195:03 PMCredit97,714.0097,714.0097,714.00_________________ 97,714.00195,428.00 195,428.002,702.002,702.002,702.00__________________ 2,702.005,404.00 5,404.001 of 1
Client: City of McHenry - City of McHenryEngagement: City of McHenryPeriod Ending: 4/30/2019Trial Balance: 510- Water/Sewer FundWorkpaper: 510 - Water Sewer Adjusting Journal Entries ReportAccount DescriptionAdjusting Journal Entries JE # 1PBC - Record other half of interfund transaction - Record September IPBC InsurancePayment - Heafth, Dental, Life InsuranceX31-4330 US Life InsuranceX32-4330 US Life InsuranceX35-4330 US Life Insurance235 Due to General FundTotalAdjusting Journal Entries JE #2PBC - Record other half of interfund transaction. Local 150 insurance premiums changedeffective 5/1/19 - correct amount charged to departmentsX31-4310 Insurance Premiums-HeallhNisionX32-4310 Insurance Premiums-HealthNisionX35-4310 Insurance Premiums - Heath235 Due to General FundTotalAdjusting Journal Entries JE #3PBC - Clean up interfund balance accounts. Wrong account used for transfer.1551 Due from General Fund1995 Claim on 995TotalAdjusting Journal Entries JE #4Reclass receivable from State for Intercepted Funds for IEPA loan118 Due From Other Govt Units1550 Due From Other FundsTotalAdjusting Journal Entries JE #5Accrue interest on WWTP EPA loanX32-7600 Loan Interest232 Accrued Interest PayableTotalAdjusting Journal Entries JE #6Record construction period interest on the WVVTP IEPA loan via GASB Stmt 89X32-7600 Loan Interest2308 W\NTP Loan PayableTotalAdjusting Journal Entries JE #7Adjust IMRF liability for actuarial valuation226 lMRF Deferred Outflows - Actuarial Evaluation2448 IMRF Deferred Inflows of ResourcesX31-4420 IMRFX32-4420 IMRFX35-4420 Employer Contribution - IMRF225 IMRF Net Pension Liability227 lMRF Deferred Outflows - Contributions after MeasurementTotalWIP Ref Debit19.0030.0027.0076.00796.00943.001233.002,972.0014,988.0014,988.0097,714.0097,714.00230,053.00230,053.008/13/20195:04 PMCredit76.0076.002,972.002,972.0014,988.0014,988.0097,714.0097,714.00230,053.00230,053.00531,550.00_________________ 531,550.00531,550.00 531,550.00929,974.00165,165.003,430.004,888.004,322.001,103,547.00_________________ 7,232.001,110,779.00 1,110,779.001 of 2
Client: City of McHeniy - City of McHenryEngagement: City of McHenryPeriod Ending: 4/30/2019Trial Balance: 510 - Water/Sewer FundWorkpaper: 510 - Water Sewer Adjusting Journal Entries ReportAccountAdjusting Journal Entries JE # 8Record Net OPEB LiabilityDescription228 Deferred Outflows - OPEB241 Net OPEB Liability250 Fund BalanceX99-9200 OPEB Expense229 Deferred Infows - OPEB241 Net OPEB LiabilityX99-9300 OPEB ContributionsTotalAdjusting Journal Entries JE # 9Adjust current portion for IEPA loanTotal249 Less Current Portion - Long Term Debt247 Current PortionI have reviewed and agree with the adjustment(s) above:DateWIP Ref Debit33,846.0020,552.00280,325.009,078.00343,801.001,395,506.001,395,506.008/13/20195:04 PMCredit55,480.00280,325.007,996.00343,801.001,395,506.001,395,506.002 of 2
8/13/20195:05 PMClient: City of McHenry - City of McHenryEngagement: City of McHenryPeriod Ending: 4/30/2019Trial Balance: 550- Capital Development FundWorkpa per: 550 - Capital Development AJE's ReportAccount Description Debit CreditAdjusting Journal Entries JE # IPBC - Clean up interfund balance accounts. Wrong account used for transfer.Total1995 Claim on 9951551 Due from General FundI have reviewed and agree with the adjustment(s) above:Client SignatureDate14,988.00______________ 14,988.0014,988.00 14,988.00I of 1
Client: City of McHeniy - City of McHenryEngagement: City of McHenryPeriod Ending: 4/30/2019Trial Balance: 600 - Employee Insurance FundWorkpaper: 600- Employee Insurance Fund AJE's ReportAccountDescriptionAdjusting Journal Entries JE # IPBC - Clean up interfund balance accounts. Wrong account used for transferfor Lisafeld's L150 insurance payments1552 Due From Water Sewer199 Cash in PoolTotalAdjusting Journal Entries JE # 2PBC - Correct transfers for insurance paymentsTotal4310 Insurance Premiums-Health5245 Health HRA Reimbursement3831 Employees Contributions3975 General Fund Transfer3978 Water/Sewer Fund Transfer4310 Insurance Premiums-HealthI have reviewed and agree with the adjustment(s) above:Client SignatureDateDebit18,153.0018,153.002,679.001,125.008/13/20195:06 PMCredit18,153.0018,153.0057.002,391.001,356.003,804.00 3,804.001 of 1
Client: City of McHeniy - City of McHenryEngagement: City of McHenryPeriod Ending: 4/30/2019Trial Balance: 620-Information Technology FundWorkpaper 620-Information Technology Fund AJE ReportAccount DescriptionAdjusting Jaarnal Entries JE #1Adjust lMRF liability to actuarial valuation231 IMRF Deferred Outflows - Actuarial Report240 IMRF Deferred Inflows 01 Resources4420 IMRF ExpnoSe230 lMRF Net Pension Liabilly232 IMRF Deferred Outftows - Cuniributinos mule after Meauremeot DaleTotalAdjusting Journal Entries JE 62Record OPEB Liability241 Net OPEB Liability242 Deterred Outflows - OPEB250 Food Batance9930 OPEB Expense241 Net OPEB Liability243 Deterred Inflows - OPEB9940 OPEB CootribulioosTotalWIP RefDebit9/13/20195:07 PMCredit77,531 no11,232.00616.05n9,207.0O___________________ 372.0089,079,00 89,579,001,699.002,7n1.0023,031.00746.0023,031 nO4,558.00___________________ 658.0020,247.60 28,247.00
Client:Engagement:Period Ending:Trial Balance:Workpaper:AccountCity of McHenry - City of McHenryCity of McHenry4/30/2019760- Police Pension Fund760- Police Pension AJE's ReportDescriptionAdjusting Journal Entries JE # IRecord non-duty disability pension payable at year endTotal4940 Non-duty Disability Payments215 Pensions and Benefits Due and UnpaidI have reviewed and agree with the adjustment(s) above:ClSig 44JL'9Date8/13/20195:09 PMDebit Credit28782.00_______________ 28,782.0028,782.00 28,782.00I of 1
Client; City of McHenry- City of McHenryEngagement: City of McHenryPeriod Ending: 4/30/2019Triat Balance: 400- Recreation Center FundWorkpaper: 400- Recreation Center Adjusting Journal Entries ReportAccountDescriptionAdjusting Journal Entries JE #1PBC - transfer from general fund parks to the recreation center fund for the parkspayroll expenses1990 Cash in Pool3975 Transfer General FundTotalAdjusting Journal Entries JE #2Record rec center receivables per CarolynTotal128 Accounts Receivable - Unbilled3645 Annual MembershipI have reviewed and agree with the adjustment(s) above:re//DateWIP Ref Debit81,954.0081,954.0039,924.0039,924.009/24/20199:25 AMCredit81,954.0081,954.0039,924.0039,924.00I of 1
City of McHenry333 S. Green StreetMcHenry, IL 60050Eder, Casella & Co.5400 West Elm StreetSuite 203McHenry, Illinois 60050This representation letter is provided in connection with your audit of the financial statements of Cityof 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 ofApril 30, 2019, and the respective changes in financial position and, where applicable, cash flows forthe year then ended, and the related notes to the financial statements, for the purpose of expressingopinions as to whether the financial statements are presented fairly, in all material respects, inaccordance 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. Itemsare considered material, regardless of size, if they involve an omission or misstatement of accountinginformation that, in light of surrounding circumstances, makes it probable that the judgment of areasonable person relying on the information would be changed or influenced by the omission ormisstatement. An omission or misstatement that is monetarily small in amount could be consideredmaterial as a result of qualitative factors.We confirm, to the best of our knowledge and belief, the following representations made to you duringyour audit.Financial Statements1. We have fulfilled our responsibilities, as set out in the terms of the audit engagement letterdated July 8, 2019, including our responsibility for the preparation and fair presentation of thefinancial statements in accordance with U.S. GAAP and for preparation of the supplementaryinformation in accordance with the applicable criteria.2. The financial statements referred to above are fairly presented in conformity with U.S. GAAPand include all properly classified funds and other financial information of the primarygovernment and all component units required by generally accepted accounting principles tobe included in the financial reporting entity.3. We acknowledge our responsibility for the design, implementation, and maintenance of internalcontrol relevant to the preparation and fair presentation of financial statements that are freefrom material misstatement, whether due to fraud or error.4. We acknowledge our responsibility for the design, implementation, and maintenance of internalcontrol to prevent and detect fraud.5. Significant assumptions we used in making accounting estimates, including those measuredat fair value, are reasonable.6. Related party relationships and transactions, including revenues, expenditures/expenses,loans, transfers, leasing arrangements, and guarantees, and amounts receivable from or
payable to related parties have been appropriately accounted for and disclosed in accordancewith U.S. GMP.7. Adjustments or disclosures have been made for all events, including instances ofnoncompliance, subsequent to the date of the financial statements that would requireadjustment to or disclosure in the financial statements.We are in agreement with the adjusting journal entries you have proposed, if any, and they willbe posted.The effects of all known actual or possible litigation, claims, and assessments have beenaccounted for and disclosed in accordance with U.S. GAAP.10. Guarantees, whether written or oral, under which the City is contingently liable, if any, havebeen properly recorded or disclosed.Information Provided11We have provided you with:a. Access to all information, of which we are aware, that is relevant to the preparation and fairpresentation of the financial statements, such as records, documentation, and othermatters.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 toobtain audit evidence.d. Minutes of the meetings of the Board of Trustees or summaries of actions of recentmeetings as listed below:5/7/20185/21/20186/4/20186/18/20187/10/20187/23/20187/31/2018 — Special Meeting8/6/20188/20/20188/23/2018 — Special Meeting9/4/2018— Special Meeting9/10/20189/24/201810/1/201810/15/201811/12/201811/26/201812/3/201812/17/20181/21/20192/4/20192/28/20193/4/20193/18/20194/1 /20 194/15/20194/29/20195/6/20195/20/20196/3/2019 (Agenda Only)6/17/20197/15/2019 (Agenda Only)8/5/2019 (Agenda Only)12. All material transactions have been recorded in the accounting records and are reflected in thefinancial statements.
13. We have disclosed to you the results of our assessment of the risk that the financial statementsmay be materially misstated as a result of fraud.14. 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, orc. Others where the fraud could have a material effect on the financial statements.15. We have no knowledge of any allegations of fraud or suspected fraud affecting the City'sfinancial statements communicated by employees, former employees, regulators, or others.16. We have no knowledge of instances of noncompliance or suspected noncompliance withprovisions of laws, regulations, contracts, or grant agreements, or abuse, whose effects shouldbe considered when preparing financial statements.17. We have disclosed to you all known actual or possible litigation, claims, and assessmentswhose effects should be considered when preparing the financial statements.18. We have disclosed to you the identity of the City's related parties and all the related partyrelationships and transactions of which we are aware.Government - specific19. There have been no communications from regulatory agencies concerning noncompliancewith, or deficiencies in, financial reporting practices.20. We have identified to you any previous audits, attestation engagements, and other studiesrelated to the audit objectives and whether related recommendations have been implemented.21. The City has no plans or intentions that may materially affect the carrying value or classificationof assets, deferred outflows of resources, liabilities, deferred inflows of resources, and fundbalance or net position.22. We are responsible for compliance with the laws, regulations, and provisions of contracts andgrant agreements applicable to us, including tax or debt limits and debt contracts, and legaland contractual provisions for reporting specific activities in separate funds.23. We have identified and disclosed to you all instances that have occurred or are likely to haveoccurred, of fraud and noncompliance with provisions of laws and regulations that we believehave a material effect on the financial statements or other financial data significant to the auditobjectives, and any other instances that warrant the attention of those charged withgovernance.24. We have identified and disclosed to you all instances, which have occurred or are likely to haveoccurred, of noncompliance with provisions of contracts and grant agreements that we believehave a material effect on the determination of financial statement amounts or other financialdata significant to the audit objectives.25. We have identified and disclosed to you all instances that have occurred or are likely to haveoccurred, of abuse that could be quantitatively or qualitatively material to the financialstatements or other financial data significant to the audit objectives.
26. There are no violations or possible violations of budget ordinances, laws and regulations(including those pertaining to adopting, approving, and amending budgets), provisions ofcontracts and grant agreements, tax or debt limits, and any related debt covenants whoseeffects should be considered for disclosure in the financial statements, or as a basis forrecording a loss contingency, or for reporting on noncompliance.27. The City has satisfactory title to all owned assets, and there are no liens or encumbrances onsuch assets nor has any asset been pledged as collateral.28. The City has complied with all aspects of contractual agreements that would have a materialeffect on the financial statements in the event of noncompliance.29. The financial statements include all component units as well as joint ventures with an equityinterest, and properly disclose all other joint ventures and other related organizations.30. The financial statements properly classify all funds and activities in accordance with GASBStatement No. 34.31. All funds that meet the quantitative criteria in GASBS Nos. 34 and 37 for presentation as majorare identified and presented as such and all other funds that are presented as major areparticularly important to financial statement users.32. Components of net position (net investment in capital assets; restricted; and unrestricted) andclassifications of fund balance (nonspendable, restricted, committed, assigned, andunassigned) are properly classified and, if applicable, approved.33. Investments, derivative instruments, and land and other real estate held by endowments areproperly valued.34. Provisions for uncollectible receivables have been properly identified and recorded.35. Expenses have been appropriately classified in or allocated to functions and programs in theStatement of Activities, and allocations have been made on a reasonable basis.36. Revenues are appropriately classified in the Statement of Activities within program revenues,general revenues, contributions to term or permanent endowments, or contributions topermanent fund principal.37. Interfund, internal, and intra-entity activity and balances have been appropriately classified andreported.38. Deposits and investment securities and derivative instruments are properly classified as to riskand are properly disclosed.39. Capital assets, including infrastructure and intangible assets, are properly capitalized, reported,and, if applicable, depreciated.40. We are not aware of any current or anticipated losses in excess of our insurance coveragefor which we would be financially liable.41. The City meets the GASB-established requirements for accounting for eligible infrastructureassets using the modified approach.
42. We have appropriately disclosed the City's policy regarding whether to first apply restricted orunrestricted resources when an expense is incurred for purposes for which both restricted andunrestricted net position is available and have determined that net position is properlyrecognized under the policy.43. We are following our established accounting policy regarding which resources (that is,restricted, committed, assigned, or unassigned) are considered to be spent first forexpenditures for which more than one resource classification is available. That policydetermines the fund balance classifications for financial reporting purposes.44. We acknowledge our responsibility for the required supplementary information (RSI). The RSIis measured and presented within prescribed guidelines and the methods of measurement andpresentation have not changed from those used in the prior period. We have disclosed to youany significant assumptions and interpretations underlying the measurement and presentationof the RSI.45. With respect to the supplemental financial information we acknowledge our responsibility forpresenting the supplemental financial information in accordance with accounting principlesgenerally accepted in the United States of America, and we believe the supplemental financialinformation, including its form and content, is fairly presented in accordance with accountingprinciples generally accepted in the United States of America. The methods of measurementand presentation of the supplemental financial information have not changed from those usedin the prior period, and we have disclosed to you any significant assumptions or interpretationsunderlying the measurement and presentation of the supplemental information.46. We agree with the findings of specialists in evaluating the City's accrued pension liability andOPEB liability and have adequately considered the qualifications of the specialists indetermining the amounts and disclosures used in the financial statements and underlyingaccounting records. We did not give or cause any instructions to be given to specialists withrespect to the values or amounts derived in an attempt to bias their work, and we are nototherwise aware of any matters that have had an impact on the independence or objectivity ofthe specialists.47. We believe that the actuarial assumptions and methods used to measure pension liabilitiesand costs for financial accounting purposes are appropriate in the circumstances.48. In regards to the preparation of the financial statements, comptroller report and IDOl reportservices performed by you, we have:a. Assumed all management responsibilities.b. Designated an individual who has suitable skill, knowledge, or experience to oversee theservices.c. Evaluated the adequacy and results of the services performed.d. Accepted responsibility for the results of the services.