Rehmann Robson

5800 Gratiot Rd.

Suite 201
Saginaw, MI 48638
Ph: 989.799.9580
Fx: 989.799.0227
rehmann.com

INDEPENDENT AUDITORS’ COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE

October 10, 2018

Board of Trustees
St. Clair County Community College
Port Huron, Michigan

We have audited the financial statements of the business-type activities of the St. Clair County
Community College “College”) as of and for the year ended June 30, 2018, and have issued our report
thereon dated October 10, 2018. We did not audit the financial statements of the SC4 Foundation.
Those financial statements were audited by other auditors whose report thereon has been furnished to
us, and our opinion on the financial statements and this report, insofar as they relate the SC4
Foundation, are based solely on the report of other auditors. Professional standards require that we
advise you of the following matters relating to our audit.

Our Responsibility in Relation to the Financial Statement Audit

As communicated in our engagement letter dated May 23, 2018, our responsibility, as described by
professional standards, is to form and express opinions about whether the financial statements that
have been prepared by management with your oversight are fairly presented, in all material respects,
in conformity with accounting principles generally accepted in the United States of America. Our audit
of the financial statements does not relieve you or management of your respective responsibilities.

Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain
reasonable, rather than absolute, assurance about whether the financial statements are free of
material misstatement. An audit of financial statements includes consideration of internal control over
financial reporting as a basis for designing 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
over financial reporting. Accordingly, as part of our audit, we considered the internal control of the
College solely for the purpose of determining our audit procedures and not to provide any assurance
concerning such internal control.

We are also responsible for communicating significant matters related to the audit that are, in our
professional judgment, relevant to your responsibilities in overseeing the financial reporting process.
However, we are not required to design procedures for the purpose of identifying other matters to
communicate to you.

We noted a certain other matter which is included in Attachment A to this letter.

Planned Scope and Timing of the Audit

We performed the audit according to the planned scope and timing previously communicated to you in
our engagement letter and in our meeting about planning matters on August 24, 2018.

Rehmann is an independent member of Nexia International.

CPAs & Consultants Wealth Advisors Corporate Investigators

Board of Trustees
St. Clair County Community College
October 10, 2018
Page 2

Compliance with All Ethics Requirements Regarding Independence

The engagement team, others in our firm, as appropriate, and our firm has complied with all relevant
ethical requirements regarding independence.

Qualitative Aspects of the College’s Significant Accounting Practices

Significant Accounting Policies

Management has the responsibility to select and use appropriate accounting policies. A summary of the
significant accounting policies adopted by the College is included in Note 1 to the financial statements.
As described in Note 4 to the financial statements, the College changed accounting policies related to
its accounting for its proportionate share of the net OPEB liability of the Michigan Public School
Employees Retirement System (MPSERS) by adopting Statement of Governmental Accounting Standards
(GASB Statement) No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions. The cumulative effect of the accounting change as of the beginning of the year is reported in
the fiscal 2018 Statement of Revenues, Expenses and Changes in Net Position. We noted no
transactions entered into by the College during the year for which there is a lack of authoritative
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.

No matters have come to our attention that would require us, under professional standards, to inform
you about (1) the methods used to account for significant unusual transactions and (2) the effect of
significant accounting policies in controversial or emerging areas for which there is a lack of
authoritative guidance or consensus.

Significant Accounting Estimates

Accounting estimates are an integral part of the financial statements prepared by management and are
based on management’s current judgments. Those judgments are normally based on 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 markedly from management’s
current judgments.

The most sensitive accounting estimates affecting the financial statements were:

 Management’s estimate of the useful lives of depreciable capital assets is based on the
length of time it is believed that those assets will provide some economic benefit in the
future.

 Management’s estimate of the accrued compensated absences is based on current hourly

rates and policies regarding payment of sick and vacation banks.

 Management’s estimate of the allowance for uncollectible receivable balances is based on

past experience and future expectation for collection of various account balances.

We evaluated the key factors and assumptions used to develop these estimates and determined that
they are reasonable in relation to the basic financial statements taken as a whole. In addition, the
Board of Trustees
St. Clair County Community College
October 10, 2018
Page 3

financial statements include a net pension liability, a net other postemployment benefit liability, other
pension and other postemployment benefit-related amounts, which are dependent on estimates made
by the plan. These estimates are based on historical trends and industry standards, but are not within
the control of management.

Significant Difficulties Encountered During the Audit

We encountered no significant difficulties in dealing with management relating to the performance of

the audit.

Uncorrected and Corrected Misstatements

For purposes of this communication, professional standards require us to accumulate all known and
likely misstatements identified during the audit, other than those that we believe are trivial, and
communicate them to the appropriate level of management. Further, professional standards require us
to also communicate the effect of uncorrected misstatements related to prior periods on the relevant
classes of transactions, account balances or disclosures, and the financial statements as a whole and
each applicable opinion unit. In addition, professional standards require us to communicate to you all
material, corrected misstatements that were brought to the attention of management as a result of
our audit procedures. We did not identify any misstatements during 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, which could be significant to the College’s financial statements or the auditors’
report. No such disagreements arose during the course of the audit.

Representations Requested from Management

We have requested certain written representations from management, which are included in
Attachment C to this letter.

Management’s Consultations with Other Accountants

In some cases, management may decide to consult with other accountants about auditing and
accounting matters. Management informed us that, and to our knowledge, there were no consultations
with other accountants regarding auditing and accounting matters.

Other Significant Matters, Findings, or Issues

In the normal course of our professional association with the College, we generally discuss a variety of
matters, including the application of accounting principles and auditing standards, operating and
regulatory conditions affecting the entity, and operational plans and strategies that may affect the
risks of material misstatement. None of the matters discussed resulted in a condition to our retention
as the College’s auditors.
Board of Trustees
St. Clair County Community College
October 10, 2018
Page 4

Other Information in Documents Containing Audited Financial Statements

Our responsibility for the supplementary information accompanying the financial statements, as
described by professional standards, is to evaluate the presentation of the supplementary information
in relation to the financial statements as a whole and to report on whether the supplementary
information is fairly stated, in all material respects, in relation to the financial statements as a whole.
We made certain inquiries of management and evaluated the form, content, and methods of preparing
the information to determine that the information complies with accounting principles generally
accepted in the United States of America, the method of preparing it has not changed from the prior
period, and the information is appropriate and complete in relation to our audit of the financial
statements. We compared and reconciled the supplementary information to the underlying accounting
records used to prepare the financial statements or to the financial statements themselves.

Upcoming Changes in Accounting Standards

Generally accepted accounting principles (GAAP) are continually changing in order to promote the
usability and enhance the applicability of information included in external financial reporting. While it
would not be practical to include an in-depth discussion of every upcoming change in professional
standards, Attachment B to this letter contains a brief overview of recent pronouncements of the
Governmental Accounting Standards Board (GASB) and their related effective dates. Management is
responsible for reviewing these standards, determining their applicability, and implementing them in
future accounting periods.

This information is intended solely for the use of the governing body and management of the St. Clair
County Community College and is not intended to be and should not be used by anyone other than
these specified parties.

Very truly yours,

ST. CLAIR COUNTY COMMUNITY COLLEGE

Attachment A - Comments and Recommendations

For the June 30, 2018 Audit

During our audit, we became aware of certain other matters that are opportunities for strengthening
internal control and/or improving operating efficiency. This memorandum summarizes our comments and
recommendations regarding those matters. Our consideration of the College's internal control over financial
reporting is described in our report, dated October 10, 2018, issued in accordance with Government
Auditing Standards. This memorandum does not affect that report or our report dated October 10, 2018,
on the financial statements of the St. Clair County Community College.

Other Matter

Availability of Public Information

Phishing attacks by hackers are continuing to occur at an alarming rate. Hackers will often use information
available to the public on websites to aid in their attacks. By placing employees' e-mail addresses on the
College's website, it allows the hackers to use these legitimate e-mail addresses to launch spear-phishing
attacks. The College should limit employees' information, including email addresses, published on their
website as much as possible, so that it cannot be easily obtained and used by hackers to carry out an
attack.



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ST. CLAIR COUNTY COMMUNITY COLLEGE
Attachment B – Upcoming Changes in Accounting Standards
For the June 30, 2018 Audit

The following pronouncements of the Governmental Accounting Standards Board (GASB) have been
released recently and may be applicable to the College in the near future. We encourage management to
review the following information and determine which standard(s) may be applicable to the College. For
the complete text of these and other GASB standards, visit www.gasb.org and click on the “Standards &
Guidance” tab. If you have questions regarding the applicability, timing, or implementation approach for
any of these standards, please contact your audit team.

GASB 83  Certain Asset Retirement Obligations

Effective 06/15/2019 (your FY 2019)

This standard addresses accounting and financial reporting for certain asset retirement obligations--legally
enforceable liabilities associated with the retirement of a tangible capital asset. We do not expect this
standard to have any significant effect on the College.

GASB 84  Fiduciary Activities

Effective 12/15/2019 (your FY 2020)

This standard establishes new criteria for determining how to report fiduciary activities in governmental
financial statements. The focus is on whether the government is controlling the assets, and who the
beneficiaries are. Under this revised standard, certain activities previously reported in agency funds may
be reclassified in future periods. Due to the number of specific factors to consider, we will continue to
assess the degree to which this standard may impact the College.

GASB 87  Leases
Effective 12/15/2020 (your FY 2021)

This standard establishes a single model for reporting all leases (including those previously classified as
operating and capital). Lessees will now report offsetting intangible lease assets and lease liabilities equal
to the present value of future lease payments. Lessors will report offsetting lease receivables and deferred
inflows of resources.

GASB 88  Certain Disclosures Related to Debt

Effective 06/15/2019 (your FY 2019)

This standard provides guidance on note disclosures related to debt, including direct borrowings and direct
placements. It also clarifies which liabilities governments should include when disclosing information
related to debt. We do not expect this standard to have any significant effect on the College.

GASB 89  Accounting for Interest Cost Incurred before the End of a Construction Period
Effective 12/15/2020 (your FY 2021)

This standard eliminates the requirement for governments to capitalize interest during the construction
period for business-type activities. As this simplifies the accounting for interest, early implementation is
encouraged. We do not expect this standard to have any significant effect on the College.

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ST. CLAIR COUNTY COMMUNITY COLLEGE
Attachment B – Upcoming Changes in Accounting Standards
For the June 30, 2018 Audit

GASB 90  Majority Equity Interests

Effective 12/15/2019 (your FY 2020)

This standard addresses situations in which a government acquires a majority of the equity interest in a
legally separate organization, and whether such holdings should be reported as an investment or a
component unit. We do not expect this standard to have any significant effect on the College.



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 Attachment C
St. Clair County Community College
323 Erie St., P.O. Box 5015, Port Huron, Michigan 48061-5015
(810) 984-3881 • Fax (810) 984-4730 • sc4.edll
October 10, 2018

Rehmann Robson
P.O. Box 2025
Saginaw, Michigan 48638

This representation letter is provided in connection with your audits of the financial statements of the
business-type activities and its discretely presented component unit of St. Clair County Community
College (the "College"), which comprise the statements of net position as of June 30, 2018 and 2017,
and the related statements of revenue, expenses and changes in net position and statements of cash
flows for the years then ended, and the related notes to the financial statements, for the purpose of
expressing an opinion on whether the basic financial statements are presented fairly, in all material
respects, in accordance with accounting principles generally accepted in the United States of America
(U.S. GAAP).We understand that your opinions insofar as they relate to the information included for SC4
Foundation are based solely on the reports of the other auditors.

Certain representations in this letter are described as being limited to matters that are material. Items
are considered material, regardless of size, if they involve an omission or misstatement of accounting
information that, in the light of surrounding circumstances, makes it probable that the judgment of a
reasonable person relying on the information would be changed or influenced by the omission or
misstatement.

We confirm that, having made such inquiries as we considered necessary for the purpose of appropriately
informing ourselves as of October 10, 2018:

Financial Statements

1. We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated
May 23, 2018, for the preparation and fair presentation of the financial statements of the various
opinion units referrefl to above in accordance with U.S. GAAP.We have reviewed, approved, and
taken responsibility for the financial statements and related notes.
2. We acknowledge our responsibility for the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
3. We acknowledge our responsibility for the design, implementation, and maintenance of internal
control to prevent and detect fraud.
4. Significant assumptions used by us in making accounting estimates, including those measured at fair
value, are reasonable.
5. Related party relationships and transactions have been appropriately accounted for and disclosed in
accordance with the requirements of U.S. GAAP. For the purposes of this letter, related parties
mean members of the governing body;, board members; administrative officials; immediate families
of administrative officials, board members, and members of the governing body; and any companies
affiliated with or owned by such individuals.
6. All events subsequent to the date of the financial statements and for which U.S. GAAPrequires
adjustment or disclosure have been adjusted or disclosed.
7. The effects of all known actual or possible litigation and claims have been accounted for and
disclosed in accordance with U.S. GAAP.

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Rehmann Robson
Page 2 of 5

8. All component units,: as well as joint ventures with an equity interest, are included and other joint
ventures and related'organizations are properly disclosed.
9. All components of net position classifications have been properly reported.
10. All revenues within the statement of activities have been properly classified.
11. All expenses have been properly classified in or allocated to functions and programs in the statement
of activities, and allocations, if any, have been made on a reasonable basis.
12. Deposit and investme,nt risks have been properly and fully disclosed.
13. Capital assets, including infrastructure assets, are properly capitalized, reported, and if applicable,
depreciated.
14. All required supplementary information is measured and presented within the prescribed guidelines.
15. We believe that the actuarial assumptions and methods used to measure pension and other
postemployment benefit liabilities and costs for financial accounting purposes are appropriate in the
circumstances.
16. We are responsible for the fair presentation of the College's proportionate share of the net pension
and other postemployment benefit liabilities of the Michigan Public School Employees Retirement
System (MPSERS)and.related amounts. We provided MPSERSwith complete and accurate information
regarding the College's participation in the plan, and have reviewed the information provided by
MPSERSfor inclusion in the College's financial statements.

Information Provided

17. We have provided yol.lwith:

a. Access to all inf6rmation, of which we are aware that is relevant to the preparation and fair
presentation oft.he financial statements of the various opinion units referred to above, such as
records, documentation, meeting minutes, and other matters;
b. Additional information that you have requested from us for the purpose of the audit; and
c. Unrestricted access to persons within the entity from whom you determined it necessary to
obtain audit evid'ence.
18. All transactions hav~ been recorded in the accounting records and are reflected in the financial
statements.
19. We have disclosed to you the results of our assessment of the risk that the financial statements may
be materially missta~ed as a result of fraud.
20. We have no knowledge of any fraud or suspected fraud that affects the College and involves:
a. Management;
b. Employees who have significant roles in internal control; or
c. Others where the fraud could have a material effect on the financial statements.
21. We have no knowledge of any allegations of fraud, or suspected fraud, affecting the College's
financial statements communicated by employees, former employees, vendors, regulators, or others.
22. We are not aware qf any pending or threatened litigation and claims whose effects should be
considered when preparing the financial statements.
23. We have disclosed t9' you the identity of the College's related parties and all the related party
relationships and transactions of which we are aware.
24. There have been no: communications from regulatory agencies concerning noncompliance with or
deficiencies in accou~ting, internal control, or financial reporting practices.
25. The College has no p\ans or intentions that may materially affect the carrying value or classification
of assets and liabilities.
26. We have disclosed to you all guarantees, whether written or oral, under which the College is
contingently liable.

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Rehmann Robson
Page 3 of 5

27. We have identified and disclosed to you the laws, regulations, and provisions of contracts and grant
agreements that could have a direct and material effect on financial statement amounts.
28. There are no:
a. Violations or possible violations of laws or regulations, or provisions of contracts or grant
agreements whose effects should be considered for disclosure in the financial statements or as
a basis for recording a loss contingency, including applicable budget laws and regulations.
b. Unasserted claims or assessments that our lawyer has advised are probable of assertion and must
be disclosed in accordance with GASB-62,Codification of Accounting and Financial Reporting
Guidance Contained in Pre-November 30, 1989 FASBand A/CPA Pronouncements.
c. Other liabilities or gain or loss contingencies that are required to be accrued or disclosed by
GASB-62.
29. The College has satisfactory title to all owned assets, and there are no liens or encumbrances on
such assets nor has any asset or future revenue been pledged as collateral, except as disclosed to
you.
30. We have complied with all aspects of grant agreements and other contractual agreements that would
have a material effect on the financial statements in the event of noncompliance.
31. We have disclosed to you all significant estimates and material concentrations known to management
that are required to be disclosed in accordance with GASB-62.Significant estimates are estimates at
the statement of net position date that could change materially within the next year. Concentrations
refer to volumes of business, revenues, available sources of supply, or markets or geographic areas
for which events could occur that would significantly disrupt normal finances within the next year.

Supplementary Information in Relation to the Financial Statements as a Whole

32. With respect to the S:upplementaryinformation accompanying the financial statements:

a. We acknowledgei our responsibility for the presentation of the supplementary information in
accordance with ~ccounting principles generally accepted in the United States of America.
b. We believe the sypplementary information, including its form and content, is fairly presented in
accordance with accounting principles generally accepted in the United States of America.
c. The methods of 'measurement or presentation have not changed from those used in the prior
period.
d. We believe the ' significant assumptions or interpretations underlying the measurement or
presentation of : the supplementary information, and the basis for our assumptions and
interpretations, ctre reasonable and appropriate in the circumstances.

Required Supplementali' Information

l
33. With respect to the rbquired supplementary information accompanying the financial statements:
a. We acknowledgEi our responsibility for the presentation of the required supplementary
information in a~cordance with accounting principles generally accepted in the United States of
America.
b. We believe the r~quired supplementary information, including its form and content, is measured
and fairly presented in accordance with accounting principles generally accepted in the United
States of America.
c. The methods of measurement or presentation have not changed from those used in the prior
period.
d. We believe the• significant assumptions or interpretations underlying the measurement or
presentation of the required supplementary information, and the basis for our assumptions and
interpretations, are reasonable and appropriate in the circumstances.

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Rehmann Robson
Page 4 of 5

Uniform Guidance (2 CFR 200)

34. With respect to federal awards, we represent the following to you:

a. We are responsible for understanding and complying with and have complied with the
requirements of the Uniform Guidance.
b. We are responsible for the preparation and presentation of the schedule of expenditures of
federal awards in accordance with the Uniform Guidance.
c. We believe the schedule of expenditures of federal awards, including its form and content, is
fairly presented in accordance with the Uniform Guidance.
d. The methods of measurement or presentation have not changed from those used in the prior
period.
e. We believe the· significant assumptions or interpretations underlying the measurement or
presentation of the schedule of expenditures of federal awards, and the basis for our assumptions
and interpretations, are reasonable and appropriate in the circumstances.
f. We are responsible for including the auditor's report on the schedule of expenditures of federal
awards in any dpcument that contains the schedule and that indicates that the auditor has
reported on such' information.
g. When the schedule of expenditures of federal awards is not presented with the audited financial
statements, man:agement will make the audited financial statements readily available to the
intended users qf the schedule of expenditures of federal awards no later than the date of
issuance by the entity of the schedule of expenditures of federal awards and the auditor's report
thereon. ·
h. We have, in accordance with the Uniform Guidance, identified in the schedule of expenditures
of federal award( expenditures made during the audit period for all awards provided by federal
agencies in the ~orm of grants, federal cost-reimbursement contracts, loans, loan guarantees,
property (including donated surplus property), cooperative agreements, interest subsidies, food
commodities, diri'!ct appropriations, and other assistance.
i. We are responsible for complying with the requirements of laws, regulations, and the provisions
of contracts and igrant agreements related to each of our federal programs and have identified
and disclosed to you the requirements of laws, regulations, and the provisions of contracts and
grant agreements that are considered to have a direct and material effect on each major federal
program; and wel have complied, in all material respects, with these requirements.
j. We have provided to you our interpretations of any compliance requirements that have varying
interpretations. ,
k. We are responsit:Hefor establishing and maintaining effective internal control over compliance
requirements applicable to federal programs that provide reasonable assurance that we are
managing our federal awards in compliance with laws, regulations, and the provisions of
contracts and grant agreements that could have a material effect on our federal programs. Also,
no changes have lbeen made in the internal control system to the date of this letter that might
significantly affect internal control, including any corrective action taken with regard to
significant deficiencies,
'
including material weaknesses, reported in the schedule of findings and
questioned costs;
l. We have made awailable to you all contracts and grant agreements (including amendments, if
any) and any other correspondence with federal agencies or pass-through entities relating to
federal program~.
m. We have received no requests from a federal agency to audit one or more specific programs as a
major program. i
n. We have identifi~d and disclosed to you all amounts questioned and any known noncompliance
with the requir!lments of federal awards, including the results of other audits or program
reviews. We also!know of no instances of noncompliance occurring subsequent to the end of the
period audited. ·
o. We have charged!costs to federal awards in accordance with applicable cost principles, including
amounts claimedi or used for matching determined in accordance with relevant guidelines in the
Uniform Guidance.

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Rehmann Robson
Page 5 of 5

p. We have made available to you all documentation related to the compliance requirements,
including information related to federal program financial reports and claims for advances and
reimbursements.,
q. Federal program financial reports and claims for advances and reimbursements are supported by
the books and records from which the basic financial statements have been prepared (and are
prepared on a basis consistent with the schedule of expenditures of federal awards).
r. The copies of federal program financial reports provided to you are true copies of the reports
submitted, or elei:tronically transmitted, to the respective federal agency or pass-through entity,
as applicable.
s. We are responsible for and have accurately prepared the summary schedule of prior audit
findings to include all findings required to be included by the Uniform Guidance, and we have
provided you with all information on the status of the follow-up on prior audit findings by federal
awarding agencies and pass-through entities, including all management decisions.
t. We have disclosed to you the findings received and related corrective actions taken for previous
audits, attestation engagements, and internal or external monitoring that directly relate to the
objectives of the compliance audit, including findings received and corrective actions taken from
the end of the period covered by the compliance audit to the date of the auditor's report.
u. We are responsible for and have accurately completed the appropriate sections of the Data
Collection Form as required by the Uniform Guidance, and we are responsible for preparing and
implementing a oorrection action plan for each audit finding.
v. We have disclose/1all contracts or other agreements with service organizations and disclosed to
you all communications from these service organizations relating to noncompliance at the
organizations.
w. We have reviewed, approved, and taken responsibility for the financial statements and related
notes.
x. We have disclosed to you the nature of any subsequent events that provide additional evidence
with respect to: conditions that existed at the end of the reporting period that affect
noncompliance d~ring the reporting period.

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