Legislative Audit Committee Representatives Bill Beck _part3 potx

Independent AudItor’s reportThe Legislative Audit Committee of the Montana State Legislature: Our audit was conducted for the purpose of forming an opinion on the financial statements th

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Independent AudItor’s report

The Legislative Audit Committee

of the Montana State Legislature:

Our audit was conducted for the purpose of forming an opinion on the financial statements that

collectively comprise the Montana Water Pollution Control and Drinking Water State Revolving Fund Programs’ financial statements The Montana Water Pollution Control and Drinking Water Schedule of Revolving and Non-Revolving SRF Programs Balance Sheet, Special Revenue and Debt Service Funds, Regulatory Basis, as of June 30, 2007, and the related Schedule of Revolving and Non-Revolving SRF Program Revenues, Expenditures, and Changes in Fund Balances, Special Revenue and Debt Service

Funds, Regulatory Basis for the year then ended are presented for the purposes of additional analysis

and are not a required part of the financial statements Such information has been subjected to the auditing procedures applied in the audit of the programs’ financial statements and, in our opinion, is fairly stated in all material respects in relation to the programs’ financial statements taken as a whole

Respectfully submitted,

/s/ James Gillett

James Gillett, CPA Deputy Legislative Auditor February 21, 2008

LEGISLATIVE AUDIT DIVISION Scott A Seacat, Legislative Auditor

Tori Hunthausen,

Chief Deputy Legislative Auditor

Room 160 • State Capitol Building • PO Box 201705 • Helena, MT • 59620-1705 Phone (406) 444-3122 • FAX (406) 444-9784 • E-Mail lad@mt.gov

Deputy Legislative Auditors:

James Gillett Angie Grove

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Independent AudItor’s report on ComplIAnCe And other mAtters

And on InternAl Control over FInAnCIAl reportIng

BAsed on An AudIt oF FInAnCIAl stAtements

perFormed In ACCordAnCe WIth Government AuditinG StAndArdS

The Legislative Audit Committee

of the Montana State Legislature:

We have audited the financial statements of the Montana Water Pollution Control and Drinking Water State Revolving Fund Programs as of and for the fiscal year ended June 30, 2007, and have issued our report thereon dated February 21, 2008 We conducted our audit 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.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Montana Water Pollution Control and Drinking Water State Revolving Fund Programs’ financial statements are free of material misstatement,

we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, 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.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered the Montana Water Pollution Control and Drinking Water State Revolving Fund Programs’ internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the programs’ internal control over financial reporting Accordingly, we do not express an opinion on the effectiveness of the programs’ internal control over financial reporting

LEGISLATIVE AUDIT DIVISION Scott A Seacat, Legislative Auditor

Tori Hunthausen,

Chief Deputy Legislative Auditor

Deputy Legislative Auditors:

James Gillett Angie Grove

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A control deficiency exists when the design or operation of a control does not allow management

or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there

is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected by the entity’s internal control We consider the deficiencies described below to be significant deficiencies in internal control over financial reporting The Montana Water Pollution Control State Revolving Fund Program did not accurately record fund balance related to loans receivable on the accounting records in accordance with generally accepted accounting principles, as required by state law and accounting policy, due to ineffective controls to prevent or detect material errors on the accounting records in a timely manner

The Montana Water Pollution Control and Drinking Water State Revolving Fund Programs did not accurately compile and classify its financial status and results of operations, including related disclosures, in accordance with generally accepted accounting principles and state accounting policy, due to ineffective controls to prevent or detect material errors in the financial statements in

a timely manner

A material weakness is a significant deficiency, or combination of significant deficiencies, that results

in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity’s internal control

Our consideration of the internal control over financial reporting was for the limited purpose described

in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses However, of the significant deficiencies described above, we consider items 1 and 2 above to be material weaknesses

This report is intended solely for the information and use of the Legislative Audit Committee, the departments’ management, the Montana State Legislature, and the federal Environmental Protection Agency 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

Respectfully submitted,

/s/ James Gillett

James Gillett, CPA Deputy Legislative Auditor February 21, 2008

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