LILTS BERGER & ASSOCIATES 4-1

Certified Public Accountants CW

11/23/2018
Ocean City, Florida 33140

October 30, 2018

Mr. Donald Phillips, President

36 Clearwater Lake Road (name of the company Oceanview marine company)
Ocean City, Florida 33140

Dear Mr. Phillips:

You have requested that we audit the financial statements of Oceanview Marine
Company, which comprise the balance sheet for December 31, 2018, and the
related statements of income, changes in stockholders’ equity, and cash flows for the
year then ended, and the related notes to the financial statements. We are pleased to
confirm our acceptance and understanding of this audit engagement by means of this
letter. Our audit will be conducted with the objective of our expressing an opinion on
the financial statements.
Objective
The objectives of our audit are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with International Standards on Auditing (New
Zealand) (ISAs (NZ)) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial statements.
We will perform our audit in accordance with auditing standards generally accepted
in the United States of America (GAAS). An audit involves performing procedures
to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including
the assessment of the risk of material misstatement of the financial statements. An
 audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of significant accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements.

Because of the inherent limitations of and audit, together with the inherent
limitations of internal control, an unavoidable risk that some material
misstatements may not be detected exists, even though the audit is properly planned
and performed in accordance with GAAS. (GAAP)

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In making our risk assessments, we consider internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances but not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control. However, we will
communicate to you in writing concerning and significant deficiencies or material
weaknesses in internal control relevant to the audit of the financial statements that we have
identified during the audit.

Our audit will be conducted on the basis that the management of Oceanview
Marine Company acknowledges and understands that it has responsibility for
a. the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United
States of America;
b. the design, implementation and maintenance of internal control relevant to
the fair presentation of the financial statements that are free from material
misstatement, whether due to fraud or error.
c. to provide us with access to all information of which management is aware
that is relevant to the preparation of the financial statements such as
records, documentation, and other matters; additional information that we
may request from management for the purpose of the audit; and unrestricted
access to persons within the entity from whom we determine it necessary to
obtain audit evidence.
As part of our audit process, we will request from management written confirmation
concerning representations made to use in connection with the audit.
 We will issue a written report upon completion of our audit of Oceanview Marine
Company’s financial statements. Our report will be addressed to the board of
directors of Oceanview Marine Company. We cannot provide assurance than an
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opinion will be expressed. Circumstances may arise in which it is necessary for us to
11/23/2018
modify our opinion, add an emphasis-of-matter or other-matter paragraph, or withdraw
from the engagement.

The timing of our services is scheduled for performance and completion as follows:

Begin interim fieldwork December 1, 2018

Completion of fieldwork March 15, 2019
Delivery of management letter March 22, 2019
Delivery of audit report March 29, 2019
Delivery of tax returns March 29, 2019

Our fees will be based on our standard hourly rates. Invoices will be submitted periodically
as the work progresses and are payable upon presentation. Should we find any conditions
that could significantly affect our initial estimated total fees of $32,000, we will notify
you immediately.

Please sign and return the attached copy of this letter to indicate your
acknowledgement of, and agreement with, the arrangements for our audit of the
financial statements including our respective responsibilities.

Yours very truly,

Charles Ward
Charles Ward, CPA
Partner

Per: Donald
Phillips
Donald Phillips, President
Oceanview Marine Company
 November 10,
2018

One of the requirements of the audit engagement letter as per NZ IAS 220 Para 1 is to
provide the client with any of the ethical requirements and independence issues in the
context of the acceptance of an audit engagement and insofar as they are within the
control of the auditor are dealt with ISA(NZ) 220.

As per NZ 6.1 there is a limitation to the accept a new client which is not mentioned in
the engagement letter.
As per NZ 6.1 If management or those charged with governance impose a limitation on
the scope of the auditor’s work in the terms of a proposed audit engagement such that
the auditor believes the limitation will result in the auditor disclaiming an opinion on the
financial statements, the auditor shall not accept such a limited engagement as an audit
engagement unless required by law or regulation to do so.

Discussion Questions:

Q1. Concerns: Long term credits and low interest rates. Concern of going bankrupt if
someone defaults. No Credit check when accepting checks of up to $2,500.
Trade ins the company policy is not to record a gain or loss on disposal of similar (like
kind) property. This could also lead to fraud transactions and can result in legal
consequences.

There is a high stake of Southeastern enterprises of 30%. There are also 2 board
members in the board of trustees. There is a huge amount of dividend that is being paid
to the board members. The other company may act in their favor when making
decisions. Also in company where the relationships with the customers is casual then
having two board members of other company does not seem right.