Audit - 2010
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SALINE COUNTY-CITY BUILDING AUTHORITY
December 31, 2010
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Thomas G. Arnett, CPA, P.A.
717 Roach Street
Salina, Kansas 67401
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SALINE COUNTY -CITY BUILDING AUTHORITY
December 31, 2010
TABLE OF CONTENTS
Summary of Cash Receipts, Expenditures
and Unencumbered Cash
General Fund Statement of Cash Receipts
and Expenditures ~ Actual and Budget
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Notes to Financial Statements
3 - 7
Independent Auditor's Report
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SALINE COUNTY -CITY BUILDING AUTHORITY
Salina, Kansas
SUMMARY OF CASH RECEIPTS, EXPENDITURES,
AND UNENCUMBERED CASH
For the year ended December 31, 2010
Beginning Ending Add Outstanding
Unencumbered Cash Unencumbered Encumbrance and Ending Cash
Funds Cash Balance Receipts Expenditures Cash Balance Accounts Payable Balance
General Fund $ 1,212,901 $ 783,531 $ 818,298 $ 1,178,134 $ 73,792 $ 1,251,926
Composition of Ending Cash Balances:
Checking account
Checking Account -Flex spending
$ 1,250,884
1,042
1,251,926
Cash on hand
Total
$ 1,251,926
The accompanying notes are an intetral part of these fmancial statements.
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SALINE COUNTY-CITY BUILDING AUTHORlTY
Salina, Kansas
GENERAL FUND
STATEMENT OF CASH RECEIPTS AND
EXPENDITURES,- ACTUAL AND BUDGET
For the year ended December 31, 2010
Actual
Budget
Over (Under)
Budget
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Cash Receipts
City of Salina - Maintenance 900 900
City of Salina - Regular 290,329 290,329
"
Miscellaneous receipts 5,021 600 4,421
; Salina Public Library 9,000 9,000
Saline County 473,694 473,694
,Interest income 1,823 2,500 (677)
Vending commissions 2,764 3,000 (236)
Total Cash Receipts 783,531 $ 780,023 $ 3,508
Expenditures and Transfers
Audit fees 5,000 6,500 (1,500)
Beautification 3,890 5,000 (1,110)
Capital projects 116,967 279,500 (162,533)
Clerical services 1,500 1,500
'Consultant fees 2,322 5,000 (2,678)
'Education 1,634 3,000 (1,366)
,Equipment 2,699 8,000 (5,301)
Group insurance 78,075 88,000 (9,925)
Insurance - Work comp., Auto & Building 33,940 52,000 (18,060)
:Janitor supplies 25,835 33,000 (7,165)
'KPERS - Retirement 19;484 17,000 2,484
:Maintenance agreement 50,988 58,120 (7,132)
Miscellaneous expenditures 3,720 5,000 (1,280)
Repairs & maintenance 19,816 50,000 (30,184)
Salaries 284,685 280,000 4,685
;,social Security 21,257 22,000 (743)
Unemployment insurance 252 280 (28)
Utilities 146,234 190,000 (43,766)
Tptal Expenditures and Transfers 818,298 $1,103,900 $ (285,602)
Receipts Over (Under) Expenditures (34,767)
Unencumbered Cash, Beginning 1,212,901
Unencumbered Cash, Ending $ 1,178,134
The accompanying notes are an integral part of these financial statements.
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
NOT,ES TO FINANCIAL STATEMENTS
December 31; 2010
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Note 1 Summary of Significant Accounting Policies
The Saline County-City Building Authority (Authority) was formed March 22, 1965,
under the Interlocal Cooperation Act of Kansas (KSA 12-2907) by Saline County
(County), the City of Salina (City), and the Board of Education D.S.D. #305 (School
District). The Authority was created to provide for the acquisition of land and the
construction, equipping, operating, and maintenance of a building and parking area to
house the county offices and courts, the city offices and courts, and the school district
offices. On January 16, 1996, the Interlocal Agreement was restated to relieve the School
District from any ongoing responsibility or expense relating to the Authority. The School
District retained its beneficial ownership interest in the Building Authority.
The accounting policies of the Authority conform to the statutory basis of accounting, as
regulated by the State of Kansas, which demonstrates compliance with the cash basis and
budget laws of Kansas. The following is a summary of the more significant policies.
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A. Reporting Entity
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The governing board of the Authority is composed of seven members, six of whom are
appointed from the governing boards of the participating municipalities, and one of who
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is selected at large by the six appointed members. The makeup of the appointed members
is three from Saline County, two from the City of Salina, and one from the District Court.
The accompanying financial statements include all funds which are controlled by or are
dependent on the Authority.
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The Authority is considered to be a joint venture because it is a separate legal entity that
is jointly controlled by the County and City. The County and the City both have an
ongoing financial re~ponsibility for the Authority. The Authority's Interlocal
Cooperation Agreement grants a beneficial interest to the County, City, and the School
District in proportion to the respective share of the original acquisition costs of the
building.
B. Fund Accounting
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A fund is defined as an independent fiscal and accounting entity with a self-balancing set
of accounts recording cash, receipts, expenditures and unencumbered cash balance. The
funds segregate specific activities or certain objectives in accordance with special
regulations, restrictions, or limitations.
The following types of funds were utilized in recording the financial activities of the
Authority:
General Fund""': to account for all unrestricted resources except those required to
be accounted for in another fund.
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SALINE COUNTY -CITY BUILDING AUTHORITY
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2010
C. Basis of Accounting
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The statutory basis of accounting, as used in the preparation of these statutory financial
statements, is designed to demonstrate compliance with the cash basis and budget laws of
the State of Kansas. Cash receipts are recognized when the cash balance of a fund is
increased. Expenditures include disbursements, accounts payable, and encumbrances,
with disbursements being adjusted for prior year's accounts payable and encumbrances.
Encumbrances are commitments related to unperformed (executory) contracts for goods
and services, and are evidenced by a purchase order or written contract. For an interfund
transaction, a cash receipt is recorded in the fund receiving cash from another fund, and
an expenditure is charged in the fund from which the transfer was made.
The Authority has approved a resolution that is in compliance with KSA 7 5-1120a( c),
waiving the requirement for application of generally accepted accounting principles and
allowing the Commission to use the statutory basis of accounting.
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D. Departure from Accounting Principles Generally Accepted In the United States
of America
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The basis of accounting described above results in a financial statement presentation
which shows cash receipts, expenditures, cash, unencumbered cash balances, and
expenditures compared:to budget. Balance sheets that would have shown noncash assets
such as receivables, inventories, and prepaid expense; liabilities such as deferred revenue,
outstanding debt, and interest payable; and reservations of the fund balance are not
presented. Under generally accepted accounting principles, encumbrances are only
recognized as a reservation of fund balance; encumbrances outstanding at year-end do not
constitute expenditures or liabilities. Consequently, the expenditures as reported do not
present the cost of goods and services received during the fiscal year in accordance with
generally accepted accounting principles. Capital assets that account for the land,
buildings, and equipment owned by the municipality are not presented in the financial
statements.
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E. Budgetary Inform~tion
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The Authority does not have tax levying powers and is not required to publish a budget.
A budget is adopted annually by the Board of Directors to determine the amount of
appropriations to request from Saline County.
F. Cash and Investments
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Cash includes amounts; in time deposits and certificates of deposit. Kansas Statute 12-
1675 authorizes the Authority to invest in time deposits, certificates of deposit, U.S.
Obligations, and certain other investments.
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SALINE COUNTY-CITY BUILDING AUTHORITY
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2010
G. Risk Management
Commercial Insurance T The Authority carries commercial insurance to limit its exposure
to the various risks of loss related to torts; theft of, damage to and destruction of assets;
errors and omissions; injuries to employees; and natural disasters. Settled claims have
not exceeded commercial insurance coverage in any of the past three years.
H. Compensated Absences
The Authority is liable for payments to employees for sick pay and vacation pay earned
according to Authority personnel policies. This liability is recorded as an encumbrance
and is included as an expenditure in the accompanying financial statements.
I. Estimates
The preparation of financial statements requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and the
accompanying notes. Actual results may differ from those estimates.
Note 2 Deposits - Cash Balances
As of December 31, 2010, the Authority had cash in financial banking institutions of
$1,252,074. Outstanding checks were $148 and the cash balance per books was
$1,251,926. These deposits were secured by $250,000 FDIC insurance and pledged
securities having a market value of $1, 162,527.
The Authority does nothave any activity in investment-type assets.
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Interest rate risk - KSA 9-1401 establishes the depositories which may be used by
Kansas governments. The statue requires banks eligible to hold the government's funds
have a main or branch bank in the county in which the government is located, or in an
adjoining county if such institution has been designated as an official depository, and the
banks provide an acceptable rate of return on funds. In addition, KSA 9-1402 requires
the banks to pledge securities for deposits in excess of FDIC coverage. The Authority
has no other policies that would further limit interest rate risk.
Credit risk - KSA 12-1675 limits the government's investment of idle funds to time
deposits, open accounts, and certificates of deposit with allowable financial institutions;
U.S. government securities; temporary notes; no-fund warrants; repurchase agreements;
and the Kansas Municipal Investment Pool. The Authority has no investment policy that
would further limit its investment choices. The Authority's practice is to place idle funds
in certificates of deposit.
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SALINE COUNTY -CITY BUILDING AUTHORITY
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2010
Custodial credit risk - The custodial credit risk for deposits is the risk that, in the event of
the failure of a depository financial institution, a government will not be able to recover
deposits or will not be able to recover collateral securities that are in the possession of an
outside party. Kansas Statutes 9-1402 and 9-1405 require that governments obtain
security for all deposits: The Authority manages its custodial credit risk by requiring the
financial institutions to grant a security interest in securities held by third-party custodial
banks.
Concentration of credit risk - State statutes place no limit on the amount the government
may invest in anyone issuer as long as the investments are adequately secured under
KSA 9-1402 and 9-1405. The Authority has placed all of its resources with one financial
institution.
Note 3 Defined Benefit Pension Plan
Plan Description - The Saline County-City Building Authority participates in the
Kansas Public Employees Retirement System (KPERS), a cost-sharing multiple-
employer defined benefIt pension plan as provided by KSA 74-4901, et seq. KPERS
provides retirement benefits, life insurance, disability income benefits, and death benefits.
Kansas law establishes and amends benefit provisions. KPERS issues a publicly
available financial report that includes financial statements and required supplementary
information. That report may be obtained by writing to KPERS (611 S. Kansas, Suite
100, Topeka, KS 66603) or by calling 1-888-275-5737.
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Funding Policy - KSA 74-4919 establishes the KPERS member-employee contribution
rate at 4% (new employees after June 1, 2009 6%) of covered salary. The employer
collects and remits member-employee contributions according to the provisions of
Section 414(h) of the Internal Revenue Code. State law provides that the employer
contribution rate be determined annually based on the results of an annual actuarial
valuation. KPERS is funded on an actuarial reserve basis. State law sets a limitation on
annual increases in the contribution rates for KPERS employers. The employer rate
established for calendar year 2010 was 6.54%. The Authority's employer contributions
to KPERS for the years ending December 31, 2010, 2009 and 2008 were $19,484,
$14,282, and $11,048 respectively, equal to the required contribution for each year.
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SALINE COUNTY-CITY BUILDING AUTHORITY
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2010
Note 4 Capital Assets
The presentation of the financial statements in accordance with the statutory basis of
accounting does not include the capital assets of the Authority. The Authority maintains
records on these capital assets. Depreciation expense is not calculated. The balances and
activity are reported at. cost except for the initial value of the building $2,371,947 and
initial land $200,228 which are reported at appraised values at date of acquisition.
Balance Balance
01/01/10 Additions Deletions 12/3 1/1 0
Building, Land & Improvements
Building & improvements $3,452,754 $3,452,754
Land 220,228 88,697 308,925
Land improvements 216,238 - 216,238
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3,889,220 88,697 - 3,977,917
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Equipment
Floor machines 20,338 20,338
Ladders 1,465 1,465
Lawn equipment 55,752 55,752
Office equipment 17,941 17,941
Security system 21,351 21,351
Shop tools 8,939 8,939
Telephone system 252,418 252,418
Vacuums 4,429 4,429
Vehicles 36,548 - 36,548
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419.181 - 419.181
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Total $4.308.40 I $88.697 $ - $4 397.098
Note 5 Subsequent Events
There are no subsequent events that were identified in procedures performed through
March 15,2011, which also is the date these financial statements were available to be
issued.
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Thomas G. Arnett, CPA, P.A.
CERTIFIED PUBLIC ACCOUNTANT
717 ROACH STREET
SALINA, KANSAS 67401
PHONE: (785) 827-7244
FAX: (785) 827-0048
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Saline County-City Building Authority
Salina, Kansas 67401
I have audited the accompanying statutory basis financial statements of Saline County-
City Building Authority, Salina, Kansas, a compon~nt unit of Saline County, as of and for the
year ended December 31, 2010 as listed in the table;' of contents. These financial statements are
the responsibility of the Authority's management. My responsibility is to express an opinion on
these financial statements based on my audit.
I conducted my audit in accordance with auditing standards generally accepted in the
United States of America and the Kansas MunicipalAudit Guide. Those standards require that I
plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit inclJ.1des examining, on a test basis, evidence
supporting the amounts and disclosures in the fiml.llcial statements. An audit also includes
assessing the accounting principles used and signifid'ant estimates made by management, as well
I as evaluating the overall financial statement presentation. I believe that my audit provides a
. reasonable basis for my opiniort.
As described more fully in Note 1, the Authority has prepared these financial statements
using accounting practices prescribed or permitted by the State of Kansas, which practices differ
from accounting principles generally accepted in the United States of America. The effect on the
financial statements of the variances between these regulatory accounting practices and
accounting principles generally accepted in the United States of America, although not readily
determinable, are presumed to be material.
In my opinion, because of the effects of the matter discussed in the preceding paragraph,
the financial statements referred to above do not present fairly, in conformity with accounting
principles generally accepted in the United States' of America, the financial position of the
Authority as of December 31, 2010, the changes in its financial position, or where applicable, its
cash flows for the year then ended.
In my opinion, the financial statements referred to above present fairly, in all material
respects the cash and unencumbered cash balances of the Saline County-City Building Authority,
as of December 31, 2010, and the cash receipts, expenditures, and budgetary results for the year
then ended, on the basis of accounting described in Note 1.
,cYJAI ~A-~
Thomas G. Arnett, CPA, P.A.
March 15,2011
MEMBER OF
DIVISION FOR CPA FIRM PRIVATE COMPANIES PRACTICE SECTION
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
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Thomas G. Arnett, CPA, P .A.
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CERTIFIED PUBLIC ACCOUNTANT
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717 ROACH STREET
SALINA, ~NSAS 67401
PHONE: (785) 827-7244
FAX: (785) 827-0048
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M~rch 15,2011
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To the Board of Directors
S~line County-City Building Authority
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I have audited the financial statements of Saline Comity-City Building Authority for the year ended
December 31, 2010, and have issued my report thereon dated March 15, 2011. Professional standards
require that I provide you with the following information related to my audit.
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My Responsibility under U.S. Generally Accepted Auditing Standards
As stated in my engagement letter dated January 21,2011, my responsibility, as described by professional
standards, is to express an opinion about whether the financial statements prepared by management with
your oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted
accounting principles. My audit of the financial statements does not relieve you or management of your
responsibilities. .
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Planned Scope and Timing of the Audit
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I performed the audit according to the planned scope and timing previously communicated to you in my
engagement letter January 21,201 L
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Significant Audit Findings
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Qualitative Aspects of Accounting Practices
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M!lnagement is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by Saline County-City Building Authority are. described in Note 1 to the
financial statements. No new accounting policies were adopted and the application of existing policies
was not changed during 2010. I no~ed no transaction.s entered into by the organization during the year for
which there is a lack of authoritatiye guidance or consensus. There are no significant transactions that
have been recognized in the financial. statements in a different period than when the transaction occurred.;
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Accounting estimates are an integral part of the financial statements prepared by management and are
bised on management's knowledge and experience abo* past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
firtancial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimate affecting the financial statements was:
Calculation of accrued leave and sick pay
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MEMBER OF
DIVISION FOR CPA FIRM PRIVATE COMPANIES PRACTICE SECTION
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
KANSAS SOCIElY OF CERTIFIED PUBLIC ACCOUNTANTS
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The disclosures in the financial statements are neutral, consistent, and clear. Certain financial statement
disclosures are particularly sensitive because of their significance to financial statement users. The most
sensitive disclosure affecting the financial statements was:
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Note 4. Capital Assets
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Difficulties Encountered in Performing the Audit
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I ~ncountered no significant difficulties in dealing with management in performing and completing my
m,ldit.
Corrected and Uncorrected Misstatements
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Professional standards require me to accumulate all known and likely misstatements identified during the
audit, other than those that are trivial, and communicate them to the appropriate level of management.
Management has corrected all such misstatements. The following misstatements were detected as a result
of audit procedures.
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1. Accrue leave and sick pay, thereby increasing salaries expenditure to $2,074.
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2. Adjust fLEX account $1,131.
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Disagreements with Management
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For purposes of this letter, professional standards define a disagreement with management as a financial
accounting, reporting, or auditing matter, whether or, not resolved to my satisfaction, that could be
significant to the financial statements or the auditor's report. I am pleased to report that no such
disagreements arose during the course of my audit.
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Management Representation
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I have requested certain representations from management that are included In the management
representation letter dated March 15, 2011.
Management Consultations with Other Independent Accountants
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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
application of an accounting prin~iple to the organization's financial statements or determination of the
type of auditor's opinion that may be expressed on those statements, my professional standards require
the consulting accountant to check, with me to determine that the consultant has all of the relevant facts.
To my knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
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I: generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the organization's auditors. However, these
discussions occurred in the normal course of our professional relationship and my responses were not a
condition to my retention.
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This information is intended solely for the use of the Board of Directors and management of Saline
CQunty-City Building Authority arid is not intended to be and should not be used by anyone other than
these specified parties.
Very truly yours,
c!./;f-, ~ If,
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Thomas G. Arnett, CPA, P.A.