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Board of County Commissioners Cabarrus County, North Carolina October 13, 2009 Page two Significant Accounting Policies Management has the responsibility for selection and use of appropriate accounting policies. in accordance with the terms of our engagement lek#er, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by Cabarrus County, North Carolina are described in Note 1 to the basic financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the 2008-2009 fiscal year. We noted no transactions entered into by Cabarrus County, North Carolina during the year that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is a lack of authoritative guidance or consensus. Accounting Estimates Accounting estimates are an Integral part of the basic 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 basic financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most significant estimates affecting the financial statements were the allowance for doubtful accounts and landfill post-closure care costs. Management's estimate of the allowance for doubtful accounts is based on historical revenues, historical loss levels, and an analysis of the collectability of individual accounts. We evaluated the key factors and assumptions used to develop the allowance in determining that it is reasonable in relation to the proprietary fund type financial statements taken as a whole. Management's estimate of the landfill post-closure costs is a particularly sensitive accounting estimate. Due to the changing federal regulations over ciosure and post-ciosure, the actual liability may differ from the current estimate. Significant Audit Adjustments For purposes of this letter, professional standards define a significant audit adjustment as a proposed correction of the basic financial statements that, in our judgment, may not have been detected except through our auditing procedures. An audit adjustment mayor may not indicate matters that could have a significant effect on the County's financial reporting process (that is, cause future financial statements to be materially misstated). There were no audit adjustments as a result of our audit. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the basic financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves appiication of an accounting principle to the governmental unit's basic financial statements or a determination of the G-8 Attachment number 2 Page 261