LEGISLATIVE DEPARTMENT, STATE OF COLORADO FINANCIAL AUDIT REPORT YEAR ENDED JUNE 30, 2005 AND 2004_part5 pptx

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS This is trial version www.adultpdf.com GHP Horwath, P.C. 1670 Broadway, Suite 3000 Denver, Colorado 80202 303.831.5000 303.831.5032 Fax www.GHPHorwath.com A GHP Financial Group company GHP Horwath, P.C. is a member firm of Horwath International Association. Each member firm is a separate and independent legal entity. REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Members of the Legislative Audit Committee: We have audited the financial statements of the Legislative Department, State of Colorado (the “Department”) as of June 30, 2005 and 2004, and for the years then ended, and have issued our report thereon dated September 9, 2005. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audits, we considered the Department’s internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level, the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Department’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, and contracts, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of the members of the Legislative Audit Committee of the State of Colorado and management of the Department and is not intended to be and should not be used by anyone other than these specified parties. However, this report is a matter of public record and its distribution is not limited. September 9, 2005 40 This is trial version www.adultpdf.com REQUIRED AUDITOR COMMUNICATIONS TO THE LEGISLATIVE AUDIT COMMITTEE This is trial version www.adultpdf.com GHP Horwath, P.C. 1670 Broadway, Suite 3000 Denver, Colorado 80202 303.831.5000 303.831.5032 Fax www.GHPHorwath.com A GHP Financial Group company GHP Horwath, P.C. is a member firm of Horwath International Association. Each member firm is a separate and independent legal entity. September 9, 2005 Members of the Legislative Audit Committee: We have audited the financial statements of the Legislative Department, State of Colorado (the “Department”) as of June 30, 2005 and June 30, 2004, and for the years then ended, and have issued our report thereon dated September 9, 2005. Professional standards require that we provide you with the following information related to our audits. Our Responsibility under Auditing Standards Generally Accepted in the United States of America and Government Auditing Standards Our responsibility, as described by professional standards, is to plan and perform our audits to obtain reasonable, but not absolute, assurance that the financial statements are free of material misstatement and are fairly presented in accordance with accounting principles generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Because of the concept of reasonable assurance and because we did not perform a detailed examination of all transactions, there is a risk that material errors, fraud, or other illegal acts may exist and not be detected by us. As part of our audits, we considered the internal control of the Department. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning internal control. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the Department’s compliance with certain provisions of laws, regulations, and contracts. However, the objective of our tests was not to provide an opinion on compliance with such provisions. Significant Accounting Policies Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by the Department are described in Note 2 to the financial statements. We noted no transactions entered into by the Department during the years that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is a lack of authoritative guidance or consensus. 41 This is trial version www.adultpdf.com 42 Management Judgments and 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. Management’s use of estimates is disclosed in the notes to the financial statements. Audit Adjustments For purposes of this letter, professional standards define an audit adjustment as a proposed correction to the financial statements that, in our judgment, may not have been detected except through audit procedures. An audit adjustment may or may not indicate matters that could have a significant effect on the Department’s financial reporting process (that is, cause future financial statements to be materially misstated). There were no audit adjustments or waived audit adjustments identified in connection with the June 30, 2005 and 2004 audits. Other Information in Documents Containing Audited Financial Statements The audited financial statements have been presented along with required and non-required supplementary information. The required supplementary information consists of management’s discussion and analysis. Pursuant to professional standards, the auditors’ responsibility for other information in documents containing the Department’s audited financial statements does not extend beyond the financial information identified in the audit report, and the auditor is not required to perform procedures to corroborate such other information. However, in accordance with such standards, we are required to read the information in such documents and consider whether such information, or the manner of its presentation, is materially inconsistent with its presentation in the financial statements. Our responsibility also includes calling to management’s attention any information, which we believe is a material misstatement of fact. No such inconsistencies or misstatements come to our attention. The non-required supplemental information, which includes certain combining and other schedules, is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements, and in our opinion, is fairly stated in all material respects, in relation to the basic financial statements taken as a whole. 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 auditing matter that could be significant to the financial statements or the auditors’ report. We are pleased to report that no such disagreements arose during the course of our audit. This is trial version www.adultpdf.com 43 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 Department’s financial statements or a determination of the type of auditors’ opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Issues Discussed Prior to Retention of Independent Auditors 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 Department's auditors. However, these discussions occurred in the normal course of our professional relationship, and our responses were not a condition to our retention. Difficulties Encountered in Performing the Audit We encountered no difficulties in dealing with management in performing and completing our audits. Independence In our professional judgment, we are independent of the Department and its related entities within the meaning of the AICPA’s Professional Code of Conduct and under Government Auditing Standards. In addition, we are not aware of any relationships between GHP Horwath, P.C. and its related entities and the Legislative Department, State of Colorado, and its related entities that in our professional judgment may reasonably be thought to bear on independence. This information is intended solely for the information and use of the Legislative Audit Committee, Department’s management, and others within the Department and is not intended to be, and should not be used by anyone other than these specified parties. However, this report is a matter of public record and its distribution is not limited. Sincerely, GHP HORWATH, P.C. Scott D. Magnuson, CPA Director This is trial version www.adultpdf.com 44 Report Control Number 1662 LEGISLATIVE DEPARTMENT, STATE OF COLORADO DISTRIBUTION PAGE YEARS ENDED JUNE 30, 2005 AND 2004 The electronic version of this report is available on the Web site of the Office of the State Auditor www.state.co.us/auditor A bound report may be obtained by calling the Office of the State Auditor 303-869-2800 Please refer to the Report Control Number below when requesting this report. This is trial version www.adultpdf.com . the financial statements of the Legislative Department, State of Colorado (the “Department”) as of June 30, 2005 and June 30, 2004, and for the years then ended, and have issued our report thereon. GOVERNMENT AUDITING STANDARDS Members of the Legislative Audit Committee: We have audited the financial statements of the Legislative Department, State of Colorado (the “Department”) as of June. version www.adultpdf.com 44 Report Control Number 1662 LEGISLATIVE DEPARTMENT, STATE OF COLORADO DISTRIBUTION PAGE YEARS ENDED JUNE 30, 2005 AND 2004 The electronic version of this report is