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Village of Mayfield May 23, 2011 Page 3 Compliance with Laws and Regulations Our Responsibilities As part of reasonably assuring whether the financial statements are free of material misstatement, we will test the Village's compliance with certain provisions of laws, regulations, contracts, and grants if noncompliance might reasonably directly and materially affect the financial statements. However, our objective is not to opine on overall compliance with these provisions. Your Responsibilities: Management and those charged with governance are responsible for: 1. Being knowledgeable of, and complying with, laws, regulations, contracts, and grants applicable to the Village. 2. Identifying for us other financial audits, attestation engagements, performance audits, internal audits, reports from regulators or other studies related to the Village (if any), and the corrective actions taken to address these audits' significant findings and recommendations. 3. Tracking the status of prior audit findings. 4. Taking timely and appropriate steps to remedy fraud, illegal acts, violations of provisions of laws, regulations, contracts or grant agreements, or abuse we may report. 5. Providing your views and planned corrective action on audit findings we may report. Internal Control Our Responsibilities: As a part of our audit, we will obtain an understanding of your Village and its environment, including its internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. An audit is not designed to provide assurance on internal control or to identify significant deficiencies. While our audit is not designed to identify significant deficiencies, as required by Government Auditing Standards, we will prepare a written report to those charged with governance describing any significant deficiencies or material weaknesses we may detect. Your Responsibilities: Maintaining internal control over financial reporting and over compliance is management's responsibility. Appropriate supervisory reviews are necessary to reasonably assure that adopted policies and prescribed procedures are followed. Your Responsibility for Service Organizations: Service organizations are entities to which you have outsourced accounting functions. Service organizations process transactions reflected in your Village's financial statements, and therefore fall within the scope of our audit. While service organizations are responsible for establishing and maintaining their internal control, you are responsible for being aware of the service organizations your Village uses, and for establishing controls to monitor the service organization's performance. Because the complexity of service organization transaction processing can vary considerably, your monitoring activities can vary accordingly.