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

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

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

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REQUIRED AUDITOR COMMUNICATIONS TO THE

LEGISLATIVE AUDIT COMMITTEE

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

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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

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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

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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