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<br /> <br />115 <br /> <br />Peat Marwick <br /> <br />Certified Public Accountants <br /> <br />Peat Marwick Main & Co. <br />1300 One Capitol Square <br />300 West 15th Street <br />Austin, TX 78701 <br /> <br />Telephone 512 478 7476 <br />Telex 9102404235 <br /> <br />Telecopier 512 320 5390 <br /> <br />January 28, 1988 <br /> <br />Honorable Mayor and City Council <br />City of San Marcos <br />San Marcos, Texas <br /> <br />The purpose of this letter is to outline certain factors which have <br />resul ted in increased effort on our part and delays with respect to the <br />completion of our audit of the City of San Marcos, Texas (the City). We <br />feel that the following items, arising from those conditions over which we <br />had very little or no control, are responsible. <br /> <br />EXTENSION OF AUDIT EFFORT <br /> <br />. <br /> <br />The most significant factor which has resulted in increased hours is <br />the acquisition of the San Marcos Electric Utility (SMEU) from LCRA. <br />First, the actual acquisition required verification of beginning <br />balances as well as customary testwork on year-end balances. <br />Secondly, certain entries related to the purchase and subsequent <br />activity of SMEll were recorded by both LCRA and the City. A detailed <br />analysis of each set of records was required in order to eliminate <br />duplicate recordings prior to consolidation. <br /> <br />. <br /> <br />The original input of general ledger balances into Peat Marwick' s <br />computerized audit report program had many misclassifications, <br />omissions, and other problems. These errors required increased time <br />on our part to correct. <br /> <br />. <br /> <br />In addition to the above, several accounting and auditing matters <br />related to various funds and balance sheet accounts resulted in <br />excessive amounts of additional time. <br /> <br /> <br />Member Firm of <br />Klynveld Peat Marwick Goerdeler <br />