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P,~asey Fire l~lief ~ssociation October 17, 1994 Page 2 An audit inclrudes e~xamining, on a tut bmis, evidence supporting the amounts and disclosures in the financial statemtnts;~ therefore, our audit will involve judgment about the number of transactiom to be examined and the a~eas to be testec[. Also, we will plan and perform the audit to obtain reasonable assurance about wh ~gther the financial statements are free of material missmmmmt. However, because of the concept of re~Sonable assurance and because we will not perform a detailed examination of all transactions, thexe ~b a risk that material error/, irregularities, or illegal acts, including fraud or defalcations, may ¢~ist and not be detected by us. We will advise you, however, of any matters of that nature that come to _Our attention. Our responsibility as auditors is limited to the period covered by our audit and does not ~xtend to matters that might arise during any later periods for which we are not engaged as auditors. We understand that You will provide us with the basic infra'mation required for our audit and that you are responsible /-or !the accuracy and completeness of that information. We will advise you about appropriate accotm '~ti~ principles and their application and will assist in the preparation of your financial statement.s, but the ~sponsibility for the fmo_n¢ial statements remains with you. This responsibility includes the mainten~ncel~- of adequate recor&u and related internal control structure policies, the selection and application of aicounting principles, and the safeguarding of a.~sets. The assistance to be.supplied by your personnel, including the preparation of schedules and :m,~lyses of accounm, typing all ~:ash or other confirmations we request, and locating any invoices selected by us for testing, will be dis~ssed and coordinated with you. Oar audit i.q not specifically designed and cannot be relied on to disclose reportable conditions, that is, signif~am deficiencies in the design or operatkm of the internal control structure. However, during the audit, if we becometaware of such reportable conditions or ways tMt we believe management practices can be improved, wi~ will communicate them to you in a separate letter. We will also prepar~ the Association's Anma',d Federal Return of Organizations Exempt From Income Tax (Form 990) and[ the State of Minnesota Annual Financ/al Report. Our fees for thee s~'vices will be based on the acm'al time spent at our standard hourly rates, plus travel and other out-of-pocket costs such as report production, typing, postage, etc. Our standard hourly rates vary according to th~ degree of responsibility involved and the experience level of the personnel assigned to your audit. OurI invoices for these fees will be rendered each month as work progresses and are payable upon presedtation. Our fe~ for tht indicated services will not exceed $1,200 unless unex'i>e~ted circumstances are ex, countered -- at which point we would discuss additional services and fees with you before proceeding. - If you intend to publish or otherwise reproduce the financial ,statements and make reference to our Firm name, you agree to; provide us with printers' proofs or masters for our review and approval before printing. Yo~ also :agree to provide us with a copy of the final reproduced material for oar approval beXbre it is distributed. . .