Form NSAR-B HERZFELD CARIBBEAN BASIN For: Jun 30

      PAGE  1
000 B000000 06/30/2016
000 C000000 0000880406
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000 J000000 A
001 A000000 THE HERZFELD CARIBBEAN BASIN FUND INC.
001 B000000 811-6445
001 C000000 3052711900
002 A000000 119 WASHINGTON AVE SUITE 504
002 B000000 MIAMI BEACH
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011 A000001 THOMAS J. HERZFELD & CO., INC.
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011 C010001 MIAMI BEACH
011 C020001 FL
011 C030001 33139
012 A000001 STATE STREET BANK AND TRUST COMPANY
012 B000001 84-0000
012 C010001 BOSTON
012 C020001 MA
012 C030001 02116
013 A000001 TAIT, WELLER & BAKER LLP
013 B010001 PHILADELPHIA
013 B020001 PA
013 B030001 19103
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      PAGE  2
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      PAGE  6
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SIGNATURE   REANNA J. M. LEE
TITLE       SECRETARY/TREASURER

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Shareholders and Board of Directors

The Herzfeld Caribbean Basin Fund, Inc.

Miami Beach, FL

 

In planning and performing our audit of the financial statements of The Herzfeld Caribbean Basin Fund, Inc. (the "Fund") as of and for the year ended June 30, 2016, in accordance with the standards of the Public Company Accounting Oversight Board (United States), we considered its internal control over financial reporting, including control activities for safeguarding securities, as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements and to comply with the requirements of Form N-SAR, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion.

 

The management of the Fund is responsible for establishing and maintaining effective internal control over financial reporting. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Such internal control includes policies and procedures that provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company's assets that could have a material effect on the financial statements.

 

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the company's ability to initiate, authorize, record, process or report financial data reliably in accordance with accounting principles generally accepted in the United States of America such that there is more than a remote likelihood that a misstatement of the company's annual or interim financial statements that is more than inconsequential will not be prevented or detected. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

 

 

To the Shareholders and Board of Directors

The Herzfeld Caribbean Basin Fund, Inc.

Page Two

 

Our consideration of the Fund's internal control over financial reporting was for the limited purpose described in the first paragraph and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies or material weaknesses under standards established by the Public Company Accounting Oversight Board (United States). However, we noted no deficiencies in the Fund's internal control over financial reporting and its operation, including controls for safeguarding securities, which we consider to be material weaknesses, as defined above, as of June 30, 2016.

 

This report is intended solely for the information and use of management, Shareholders and Board of Directors of the Fund and the Securities and Exchange Commission, and is not intended to be and should not be used by anyone other than these specified parties.

 

	TAIT, WELLER & BAKER LLP

 

Philadelphia, Pennsylvania

August 15, 2016

 

Change in Independent Registered Public Accounting Firm

 

The Audit Committee (the "Committee") of the Board of Directors of the Fund completed a competitive process to select the Fund's independent registered public accounting firm for the fiscal years ending June 30, 2016 and 2017. As a result of this process, on May 11, 2016, the Committee approved and the Board of Directors ratified (i) the engagement of Tait Weller as the Fund's new independent registered public accounting firm to audit its financial statements for the fiscal years ending June 30, 2016 and 2017, and (ii) the dismissal of KPMG LLP ("KPMG"), as the Fund's independent registered public accounting firm. Accordingly, on May 18, 2016, Tait Weller was engaged by the Fund as the independent registered public accounting firm and KPMG was dismissed.

 

The audit reports of KPMG on the Fund's financial statements as of and for the two fiscal years ended June 30, 2014 and 2015 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

 

During the fiscal years ended June 30, 2014 and 2015, and through the subsequent interim period preceding KPMG's dismissal on May 18, 2016: (i) there were no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to their satisfaction would have caused them to make reference in connection with their opinion to the subject matter of the disagreement, or (ii) there were no "reportable events" within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.

 

A letter from KPMG is attached as Exhibit 77 Q1 to this form N-SAR.

 

The selection of Tait Weller does not reflect any disagreements with or dissatisfaction by the Fund or the Board of Directors with the performance of the Fund's prior independent registered public accounting firm, KPMG. During the Fund's fiscal years ended June 30, 2014 and 2015, neither the Fund nor anyone on their behalf, consulted with Tait Weller on items which: (i) concerned the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Fund's financial statements; or (ii) concerned the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of Regulation S-K) or reportable events (as described in paragraph (a)(1)(v) of said Item 304).

 

August 29, 2016

Securities and Exchange Commission
Washington, D.C. 20549

 

Ladies and Gentlemen:

 

We were previously principal accountants for The Herzfeld Caribbean Basin Fund, Inc. (the Fund) and, under the date of August 21, 2015, we reported on the financial statements of the Fund, as of and for the years ended June 30, 2015 and 2014. On May 18, 2016, we were notified of our dismissal. We have read the Fund's statements, which we understand will be filed with the Commission pursuant to Item 77K of Form N-SAR dated August 29, 2016, and we agree with such statements, except that we are not in a position to agree or disagree with the Fund's stated reason for changing principal accountants or the statement that Tait, Weller & Baker LLP ("Tait Weller") was not consulted with by the Fund nor anyone on their behalf, on items which: (i) concerned the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Fund's financial statements; or (ii) concerned the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of Regulation S-K) or reportable events (as described in paragraph (a)(1)(v) of said Item 304).

 

Very truly yours,

 

(signed) /s/ KPMG LLP

 

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