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Village of Mayfield May 23, 2011 Page 4 When transaction processing is complex and the volume of transactions is relatively high, obtaining and reviewing a service organization auditor's Report on Controls Placed in Operation and Tests of Operating Effectiveness may be the most effective method of meeting your responsibility to monitor a service organization, and may also be the only efficient means by which we can obtain sufficient evidence regarding their internal controls. Statement on Auditing Standards No. 70 (SAS 70) discusses the aforementioned report. (In some circumstances, we can accept asuitably-designed agreed-upon procedures report (AUP) in lieu of a SAS 70 report.) Our staff can discuss SAS 70 and possible monitoring controls you might use with you. You are>responsibie for informing our staff bf theservice organizatrons-your Service organizations of which we are aware are: • Regional Income Tax Agency (RITA), which processes income tax collections for the Village. • Cuyahoga County, which processes tax collections for the Village. • Life Force Management Inc., which processes ambulance billing for the Village. Please confirm to us that, to the best of your knowledge, the above listing is complete. Of the service organizations above, those for which we believe the complexity of processing and volume of transactions warrant a SAS 70 (or AUP) report are: • Regional Income Tax Agency (RITA), which processes income tax collections for the Village. • Life Force Management Inc., which processes ambulance billing for the Village. Without an acceptable SAS 70 or AUP report for the above-listed organizations, generally accepted auditing standards may require us to qualify our opinion on your Village's financial statements due to an insufficiency of audit evidence regarding service organization transactions included in your Village's financial statements. You are responsible for communicating the need for a SAS 70 or AUP report to these service organizations. Please note that Statement on Standards for Attestation Engagements (SSAE) No. 16, Reporting on Controls at a Service Organization, supersedes Statement on Auditing Standards No. 70 for service organization reports with a period ending on or after June 15, 2011. Representations from Management Your Responsibilities At the conclusion of the engagement, the Village's management will provide to us a representation letter that, among other things, will confirm, to the best of their knowledge and belief: • Management's responsibility for preparing the financial statements in conformity with the Village's accounting basis; • The availability of original financial records and related data, the completeness and availability of all minutes of the legislative or other bodies and committee meetings; • Management's responsibility for the entity's compliance with laws and regulations; • The identification and disclosure to the auditor of all laws, regulations, and provisions of contracts and grant agreements directly and materially affecting the determination of financial statement amounts and; • The absence of fraud involving management or employees with significant roles in internal control.