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<br />J'\"~ <br />, <br />~, <br />, <br />l <br /> <br />r <br />j' <br /> <br />As provided in Colorado's State Constitution, the State Auditor is the only <br />authority that can furnish an official opinion of a state agency's financial condition, The <br />Auditor performs this task through the assistance of private accounting firms, It is <br />therefore necessary to coordinate all of the activities surrounding the preparation of the <br />Construction Fund and STTFPBA comprehensive annual financial reports with the State <br />Auditor's Office, This includes preparation of the project scope of work, request for <br />proposals (RFP), and contract for services, <br /> <br />e <br /> <br />Discussion <br /> <br />Due to the State Auditor's required involvement in this process, staff has prepared <br />the attached draft "Audit Engagement Letter" to be forwarded to the Auditor for initial <br />preparation of a project RFP. The Letter was developed utilizing examples from the <br />Colorado Water Resources & Power Development Authority, the State Auditor's Office <br />and the Standards for Professional Practice of Internal Auditing, by and for the Institute <br />of Internal Auditors, <br /> <br />The Letter outlines in various levels of detail the objectives, requirements, scope <br />and performance of the proposed audit Specifically we are asking the auditing firm to <br />evaluate the Construction Fund and STTFPBA accounting procedures, account balances, <br />loan and grant disbursements, loan repayments, account reversal procedures, and fund <br />reporting categories for adherence to standard accounting procedures. Weare also <br />interested in comparing previous Construction Fund financial statements prepared by the <br />Department of Natural Resources Controller to the financial statements prepared by the <br />auditing firm for accuracy and possible further evaluation of various cash sources, <br />applications and reserve account balances, <br /> <br />e <br /> <br />Staff objectives for the completion of this audit is to provide timely, reliable and <br />accurate financial statements of both the Construction Fund and STTFPBA for the <br />Board's use annually at the November board meeting, These financial statements are <br />critical in the determination of available funds for water project loans, grants, and non- <br />reimbursable studies, <br /> <br />Recommendation <br /> <br />Staff recommends that the Board consider a motion to approve the attached draft <br />Audit Engagement Letter and authorize the CWCB Director to negotiate and approve the <br />final scope of work with the State Auditor to be used in the associated Request for <br />Proposals for an independent accounting firm to prepare comprehensive annual financial <br />reports of the cwes Construction Fund and Severance Tax Trust Fund Perpetual Base <br />Account as contracted by the State Auditor's Office. <br /> <br />- <br />