The city of North Little Rock recently received an audit of the North Little Rock Electric Department for 2013.
In a report issued to the city council, city administration, and NLRED, the accounting firm EGP PLLC Certified Public Accountants & Consultants of North Little Rock graded the department on how it kept its books last year.
"Professional standards require us to provide you with information about our responsibilities under generally accepted auditing standards, as well as certain information related to the planned scope and timing of our audit," said EGP in its letter about the audit to the city.
EGP pointed out that NLRED’s management is responsible for the selection and use of appropriate accounting policies.
"No new accounting policies were adopted and the application of existing policies was not changed during 2013," according to the letter. "We noted no transactions entered into by the government unit during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period."
EGP noted that accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events.
"Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected," stated EGP.
The most sensitive estimate affecting the department’s financial statement was NLRED’s management’s estimate of depreciation expense which is based on the cost of the assets less any salvage value over the estimated useful lives ranging from three to 50 years.
"We evaluated key factors and assumptions used to develop these accounting estimates, described above, in determining that they were reasonable in relation to the financial statements taken as a whole," EGP stated.
EGP reported that it found no significant difficulties in dealing with management in performing and completing the audit.
EGP said NLRED’s management may not agree with all of its findings.
"In some cases, management may decide to consult with other accountants about auditing and account matters, similar to obtaining a ‘second opinion’ on certain situations," according to EGP. "If a consultation involves application of an accounting principle to the government unit’s financial statements or a determination of the type of auditor’s 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 fact. To our knowledge, there were no such consultants with our accountants."