December , 2013
Mr. Michael J. Moody, Director
Office of Financial Management
Romney Building, 7th Floor
111 S. Capitol Ave.
Lansing, Michigan 48933
Dear Mr. Moody:
In connection with your preparation of the State of Michigan Comprehensive Annual
Financial Report (SOMCAFR), for the fiscal year ended September 30, 2013, we confirm to
the best of our knowledge and belief the following representations concerning the
department:
1.
We are responsible for properly recording financial transactions resulting from
the operations of the department and for otherwise communicating to you
appropriate information necessary for preparation of the SOMCAFR in
accordance with generally accepted accounting principles (GAAP).
2.
We have made available to you and the Auditor General all financial records
and related data and other pertinent nonfinancial information.
3.
We have reconciled all assets, liabilities, authorizations, allotments,
encumbrances, expenditures, and revenues of this department with the State's
central accounting records as of September 30, 2013, as reflected on Period 13
fiscal year-end 2013 MAIN (RMDS) reports, effective through December 13, 2013
(year-end report #8).
4.
We have notified you of all accounts receivable for which collection is not
expected within 12 months of the balance sheet date.
5.
We have identified all uncollectible receivables and have recorded allowances
for doubtful accounts.
6.
There are no material unrecorded transactions or improperly recorded transactions
related to the operations of the department in the State's central accounting
records. As described in the State of Michigan Financial Management Guide Part
II, Chapter 1, Section 200, Section 300 and Section 400, agencies should consider
materiality as it relates to their own operations, but as a maximum, materiality
should not exceed $1 million. In addition, our financial transactions have been
prepared and approved by appropriately authorized financial management system
users consistent with the framework for security management previously
submitted to OFM. In addition, users' security privileges have been monitored in a
comprehensive and timely manner to ensure compliance with the framework. All
transactions are properly accounted for except for the following (list material
departures from GAAP or from prescribed State accounting policies; if none, write
"none" as your response).
Mr. Michael J. Moody
December , 2013
Page 2
7. We are responsible for the department’s design and implementation of programs and
controls to prevent and detect fraud.
a.
Other than the instances already reported to the Office of the Auditor General,
we have no knowledge of fraud or suspected fraud affecting the department
involving:
(1) Management or employees who have significant roles in internal accounting
control.
(2) Other employees where the fraud could have a material effect on the
SOMCAFR.
b.
8.
Other than the instances already reported to the Office of the Auditor General,
we have no knowledge of any allegations of fraud or suspected fraud affecting
the department received in communications from employees, former employees,
analysts, regulators, short sellers, or others.
There are no known violations or possible violations of laws or regulations whose
effects should be considered for disclosure in the SOMCAFR, or as a basis for
recording a loss contingency that have not been communicated to you in our previous
letter of analyzed contingencies.
9. We have notified you of all communications from federal agencies or other grantors of
funds concerning noncompliance with program requirements or deficiencies in
financial reporting practices that could result in disallowance of claims for
reimbursement and, as a result, have a material effect on the SOMCAFR.
10. There are no unasserted claims or assessments that we are aware of that are
probable of assertion and must be disclosed in accordance with Governmental
Accounting Standards Board (GASB) Codification Section C50.162. There are no
other material liabilities or gain or loss contingencies that are required to be accrued
or disclosed in the SOMCAFR.
11. The department has satisfactory title to all owned assets within its jurisdiction.
There are no liens or encumbrances on such assets nor has any asset been pledged
except as disclosed in the SOMCAFR.
We have no plans or intentions that would materially affect the carrying value or
classification of assets and liabilities. When material, provisions have been made to
reduce excess or obsolete inventories to their estimated net realizable value.
12. We are responsible for the department's compliance with laws and regulations, and
we have identified and disclosed to you all laws and regulations that could have a
direct and material effect on the SOMCAFR in the event of noncompliance, as follows:
Mr. Michael J. Moody
December , 2013
Page 3
a. All aspects of contractual agreements that could have a direct and material
effect in the event of noncompliance.
b. All aspects of State and federal laws, rules, and regulations that could have a
material effect on the SOMCAFR in the event of noncompliance, including but not
limited to:
(1)
431, P.A. 1984 as amended ("the management and budget act").
(2)
Boilerplate provisions pertaining to the department contained in the
appropriation acts.
(3)
Policies and procedures prescribed by OFM.
c. All applicable laws and regulations related to adopting, approving, and
amending budgets have been followed.
We have complied with all aspects of such laws and regulations that could have a
direct and material effect on the SOMCAFR in the event of noncompliance.
13.
14.
The following have been properly recorded or reported to you for possible disclosure
in the SOMCAFR:
a.
Arrangements with affiliated organizations or nonprofit organizations that
raise and hold economic resources for the direct benefit of the State.
b.
Related party transactions and related accounts receivable or payable,
including but not limited to sales, revenues, purchases, loans, transfers,
leasing arrangements, and guarantees.
c.
Arrangements with financial institutions involving compensating balances or
other arrangements involving restrictions on cash balances and line-of-credit
or similar arrangements.
d.
Agreements to repurchase assets previously sold.
e.
All funds held in a trust capacity.
We are responsible for establishing and maintaining effective internal control
within the department. There are no material weaknesses in the system of
internal accounting control, including those for which we believe the cost of
corrective action may exceed the benefits, except as follows (list material
weaknesses; if none, write "none" as your response).
If applicable, we have requested SSAE 16 audit reports and obtained assurances
that third party service organizations have effective internal control processes.
Mr. Michael J. Moody
December , 2013
Page 4
15.
We have disclosed to OFM all changes subsequent to September 30, 2013, through
the date of this letter, which would significantly affect the system of internal
accounting control, including any corrective action taken with regard to material
weaknesses.
16.
No events have occurred subsequent to September 30, 2013, through the date of
this letter, that would require adjustment to, or disclosure in, the SOMCAFR except
as disclosed to you.
17.
Except as disclosed to you, we intend to use all work project, restricted revenue,
capital outlay, and encumbrance carry-overs recorded at year-end for the purpose
carried over and we have no plans to lapse those funds or use them for other
purposes.
Sincerely,
Chief Financial Officer
Department of