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HomeMy WebLinkAboutAgreement_General_06/18/2009CUM RACHLIN ACCOUNTANTS ADVISORS June 18, 2009 Honorable Mayor, Village Council and Village Manager Village of Tequesta, Florida We are pleased to confirm our understanding of the services we are to provide the Village of Tequesta for the years ended September 30, 2009, 2010 and 2011, with the Village having the option to extend the contract for ensuing years. We will audit the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information, which collectively comprise the basic financial statements, of the Village of "1'e.questa as of and for the years ended September 30, 2009, 2010 and 2011. Accounting standards generally accepted in the United States provide for certain required supplementary information (RSI), such as management's discussion and analysis (MD&A), to accompany the Village of Tequesta's basic financial statements. As part of our engagement, we will apply certain limited procedures to the Village of ~'equesta's RSI. These limited procedures will consist principally of inquiries of management regarding the methods of measurement and presentation, which management is responsible for affirming to us in its representation letter. Unless we encounter problems with the presentation of the RSI or with procedure: relating to it, we will disclaim an opinion on it. The following RSI is required by generally accepted accounting principles and will be subjected to certain limited procedures, but will not be audited: 1) Management's Discussion and Analysis 2) Schedule of Funding Progress 3) Schedule of Employer and Other Entity Contributions 4) Budgetary Comparison Schedules Supplementary information other than RSI also accompanies the Village of Tequesta's basic financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the basic financial statements and will provide an opinion on it in relation to the basic financial statements: 1) Schedule of Expenditures of Federal Awards and State Financial Assistance 2) Combining Fund Financial Statements The following additional information accompanying the basic financial statements will not be subjected to the auditing procedures applied in our audit of the financial statements, and for which our auditor's report will disclaim an opinion. 1) Introductory Section 2) Statistical Section MnRCUM~-ar~ouP M E M B E R MarcumRachlin a division of Marcum LLP ~ marcumrachlin.com One Southeast Third Avenue Tenth Floor ^ Miami, Florida 33131 Phone 305.377.4228 ^ Fax 305.377.8331 FLORIDA ~ NEW YORK a NEW JERSEY ~ CONNECTICUT s GRAND CAYMAN Honorable Mayor, Village Council and Village Manager Village of Tequesta, Florida June 18, 2009 Page 2 Audit Objectives The objective of our audit is the expression of opinions as to whether your basic financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles and to report on the fairness of the additional information referred to in the first paragraph when considered in relation to the basic financial statements taken as a whole. The objective also includes reporting on • Internal control related to the fmancial statements and compliance with laws, regulations, and the provisions of contracts or grant agreements, noncompliance with which could have a material effect on the financial statements in accordance with Government Auditing Standards. • Internal control related to major programs and an opinion (or disclaimer of opinion) on compliance with laws, regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 1996 and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, the Florida Single Audit Act and Chapter 10.550, Rules of the Auditor General of the State of Florida. The reports on internal control and compliance will each include a statement that the report is intended solely for the information and use of management, the body or individuals charged with governance, others within the entity specific legislative or regulatory bodies, federal and state awarding agencies, and if applicable, pass- through entities and is not intended to be and should not be used by anyone other than these specified parties. Our audit will be conducted in accordance with generally accepted auditing standards established by the Auditing Standards Board (United States); the standards for fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; and the provisions of OMB Circular A-133, the Florida Single Audit Act and Chapter 10.550, Rules of the Auditor General of the State of Florida and will include tests of accounting records, a determination of major program(s) in accordance with OMB Circular A-133, and the Florida Single Audit Act, and other procedures we consider necessary to enable us to express such opinions and to render the required reports. If our opinions on the financial statements or the Single Audit compliance opinions are other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed opinions, we may decline to express opinions or to issue a report as a result of this engagement. Management Responsibilities Management is responsible for the basic financial statements and all accompanying information as well as all representations contained therein. As part of the audit, we will assist you with the preparation of a draft of your financial statements, schedule of expenditures of federal awards and state financial assistance, and related notes. You are responsible for making all management decisions and performing all management functions relating to the fmancial statements, schedule of expenditures of federal awards and state fmancial assistance, and related notes and for accepting full responsibility for such decisions. You will be required to acknowledge in the M/~RCUM RACHLIN ACCOUNTANTS ~ ADVISORS A division of Marcum uP Honorable Mayor, Village Council and Village Manager Village of Tequesta, Florida June 18, 2009 Page 3 management representation letter that you have reviewed and approved the fmancial statements, schedule of expenditures of federal awards and state financial assistance, and related notes prior to their issuance and have accepted responsibility for them. Further, you are required to designate an individual with suitable skill, knowledge, or experience to oversee any nonaudit services we provide and for evaluating the adequacy and results of those services and accepting responsibility for them. Management is responsible for establishing and maintaining internal controls, including monitoring ongoing activities; for the selection and application of accounting principles; for the fair presentation in the financial statements of the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of Tequesta and the respective changes in financial -position and, where applicable, cash flows in conformity with U.S. generally accepted accounting principles; and for federal award program and state fmancial assistance project compliance with applicable laws and regulations and the provisions of contracts and grant agreements. Management is also responsible for making all fmancial records and related information available to us, including identifying significant vendor relationships in which the vendor has responsibility for program compliance and for the accuracy and completeness of that information. Your responsibilities include adjusting the financial statements to correct material misstatements and confirming to us in the representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud or illegal acts affecting the government involving (1) management, (2) employees who have significant roles in internal control, and (3) others where the fraud or illegal acts could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the government received in communications from employees, former employees, grantors, regulators, or others. in addition, you are responsible for identifying and ensuring that the entity complies with applicable laws, regulations, contracts, agreements, and grants. Additionally, as required by OMB Circular A-133, the Florida Single Audit Act and Chapter 10.550 of the Rules of the Auditor General of the State of Florida, it is management's responsibility to follow up and take corrective action on reported audit findings and to prepare a summary schedule of prior audit findings and a corrective action plan. Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying for us previous audits or other engagements or studies related to the objectives discussed in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits or other engagements or studies. You are also responsible for providing management's views on our current findings, conclusions, and recommendations, as well as your planned corrective actions. N~RCUM RACHLIN ACCOUNTANTS ~ ADVISORS A division of Marcum uv Honorable Mayor, Village Council and Village Manager Village of Tequesta, Florida June 18, 2009 Page 4 With regard to using the auditor's report, you understand that you must obtain our prior written consent to reproduce or use our report in bond offering official statements or other documents. With regard to the electronic dissemination of audited financial statements, including financial statements published electronically on your website, you understand that electronic sites are a means to distribute information and, therefore, we are not required to read the information contained in these sites or to consider the consistency of other information in the electronic site with the original document. Audit Procedures-General An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the entity or to acts by management or employees acting on behalf of the entity. Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse. Because an audit is designed to provide reasonable, but not absolute assurance and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements or noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements or major programs. However, we will inform you of any material errors and any fraudulent financial reporting or misappropriation of assets that come to our attention. We will also inform you of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. We will include such matters in the reports required for a Single Audit. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, funding sources, creditors, and financial. institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will require certain written representations from you about the financial statements and related matters. Audit Procedures-Internal Controls Our audit will include obtaining an understanding of the entity and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial M/~RCUM RACHLIN ACCOUNTANTS ~ ADVISORS A division of Marcum ur Honorable Mayor, Village Council and Village Manager Village of Tequesta, Florida June 18, 2009 Page 5 statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements. Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards. As required by OMB Circular A-133, the Florida Single Audit Act and Chapter 10.550, Rules of the Auditor General of the State of Florida, we will perform tests of controls over compliance to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements applicable to each major federal and state award program. However, our tests will be less in scope than would be necessary to render an opinion on those controls and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to OMB Circular A- 133, the Florida Single Audit Act and Chapter 10.550, Rules of the Auditor General of the State of Florida. An audit is not designed to provide assurance on internal control or to identify significant deficiencies. However, during the audit, we will communicate to management and those charged with governance internal control related matters that are required to be communicated under AICPA professional standards, Government Auditing Standards, OMB Circular A-133, the Florida Single Audit Act and Chapter 10.550, Rules of the Auditor General of the State of Florida. Audit Procedures-Compliance As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will. perform tests of the Village of Tequesta's compliance with applicable laws and regulations and the provisions of contracts and agreements, including grant agreements. However, the objective of those procedures will. not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards. OMB Circular A-133, the Florida Single Audit Act and Chapter 10.550, Rules of the Auditor General of the State of Florida, requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with applicable laws and regulations and the provisions of contracts and grant agreements applicable to major programs. Our procedures will consist of tests of transactions and other applicable procedures described in the OMB Circular A-133 Compliance Supplement and the State of Florida Compliance Supplement for the types of compliance requirements that could have a direct and material effect on each of the Village of Tequesta's major programs. The purpose of these procedures will be to express an opinion on the Village of Tequesta's compliance with requirements applicable to each of its major programs in our report on compliance issued pursuant to OMB Circular A-133 and the Florida Single Audit Act. Audit Administration, Fees, and Other We may from time to time, and depending on the circumstances, use third-party service providers in serving your account. We may share confidential information about you with these service providers, but remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain N~RCUM RACH LI N ACCOUNTANTS ~ ADVISORS A division of Marcum ~~r Honorable Mayor, Village Council and Village Manager Village of Tequesta, Florida June 18, 2009 Page 6 internal policies, procedures, and safeguards to protect the confidentiality of your personal information. Furthermore, we will remain responsible for the work provided by any such third-party service providers. We understand that your employees will prepare all cash, accounts receivable, or other confirmations we request and will locate any documents selected by us for testing. At the conclusion of the engagement, we will complete the appropriate sections of and sign the Data Collection Form that summarizes our audit findings. We will provide our reports to the Village of Tequesta; however, it is management's responsibility to submit the reporting package (including financial statements, schedule of expenditures of federal awards, summary schedule of prior audit findings, auditors' reports, and corrective action plan) along with the Data Collection Form to the designated federal clearinghouse and, if appropriate, to pass-through entities. The Data Collection Form and the reporting package must be submitted within the earlier of 30 days after receipt of the auditors' reports or nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency far audits. At the conclusion of the engagement, we will provide information to management as to where the reporting packages should be submitted and the number to submit. The audit documentation for this engagement is the property of MazcumRachlin, a division of Marcum LLP and constitutes confidential information. However, pursuant to authority given by law or regulation, we may be requested to make certain audit documentation available to a regulatory agency or its designee, a federal or state agency providing direct or indirect funding, or the U.S. Government Accountability Office for purposes of a quality review of the audit, to resolve audit findings, or to carry out oversight responsibilities. We will notify you of any such. request. If requested, access to such audit documentation will be provided under the supervision of MazcumRachlin personnel. Upon request, we may provide copies of selected audit documentation to the aforementioned parties. These parties may intend, or decide, to distribute the copies or information contained therein to others, including other governmental ~ gencies. Furthermore, provided the Village of Tequesta is in full compliance with its contract with MazcumRachlin, MazcumRachlin will only allow a successor auditor to view, and not copy, MazcumRachlin's working papers, subject to other restrictions as otherwise determined by MazcumRachlin. The audit documentation for this engagement will be retained for a minimum of five years after the report release date or for any additional period requested by a regulatory agency. If we are aware that a federal or state awarding agency or auditee is contesting an audit finding, we will contact the party(ies) contesting the audit finding for guidance prior to destroying the audit documentation. We expect to begin our audit on approximately December 1, 2009 and to issue our reports no later than March 31, 2010. Jerry Chiocca is the engagement partner and is responsible for supervising the engagement and signing the report. We estimate that our fees for this engagement will be as follows: 2009 - $59,500; 2010 - $61,710; and 2011 - $63,560 (excluding Federal or Florida Single Audit Act requirements -see below). Our hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to the audit. M/~RCUM RACHLIN ACCOUNTANTS ~ ADVISORS A division of Marcum uP Honorable Mayor, Village Council and Village Manager Village of Tequesta, Florida June 18, 2009 Page 7 The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If additional time is required because of unexpected circumstances or for changes in the requirements of the Governmental Accounting Standards Board or our professional auditing standards or changes in the funds structure of the Village of Tequesta, we will discuss these circumstances with you and amve at a new fee estimate before we incur the additional costs. If the Village of Tequesta is required to undergo a single audit in accordance with the Federal Single Audit Act and OMB Circular A-133, Audits of States, Local Governments, and Not for-Profit Organizations, during any year of this contract, the additional fees will be $7,000; $7,1.40; and $7,355 for the years ended September 30, 2009, 2010 and 2011.. This fee is dependent on the number of programs that have to be tested as a major program in accordance with the requir~,ments of the Federal Single Audit Act and OMB Circular A-133. If there is more than. one program to be tested as a major program, and depending on the nature of the major programs, as determined under the requirements of OMB Circular A-133, we will discuss the additional fees with you. In addition, if the Village of Tequesta is required to undergo a single audit in accordance with the Florida Single Audit Act and Chapter 10.550, Rules of the Auditor General of the State of Florida, the additional fees will be $7,000; $7,140; and $7,355 for the years ended September 30, 2009, 2010 and 2011. This fee is dependent on the number of state programs that have to be tested as a major program in accordance with the requirements of the Florida Single Audit Act. If there is more than one program to be tested as a major program and depending on the nature of the major programs, as determined under the requirements of the Florida Single Audit At, we will discuss the additional fees with you. Our invoices for these fees will be rendered as the work progresses, and are payable on presentation. In accordance with our firm policies, should any invoices remain unpaid for more than thirty days, we reserve the right to defer providing any additional services until all outstanding invoices are paid. A late payment charge of 1 % per month will be added to all unpaid balances after thirty days. You agree that we are not responsible for the impact on the Village of Tequesta of any delay that results from such non-payment by you. We acknowledge your right to terminate our services at any time, and you acknowledge our right to resign at any time (including instances where in our judgment, our independence has been impaired or we can no longer rely on the integrity of management), subject in either case to our right to payment for charges incurred to the date of termination or resignation. It is our goal to maintain a constructive and positive relationship with you. If for any reason you are dissatisfied with the quality or costs of our services, please let us know so we can discuss and, hopefully, rectify the problem. Should we be unable to amicably resolve any such dispute, we believe a prompt and fair resolution, without the time and expense of formal court proceedings, would be in our mutual interests. To this end, we both agree that any controversy (including fee disputes and malpractice claims) we may have shall be submitted to binding arbitration to be conducted in Florida before the American Arbitration Association (AAA) in accordance with. the Commercial Arbitration Rules of the AAA. We both waive any right to bring a court action, or to have a jury trial, and agree that the party prevailing in any arbitration shall be entitled to recover from the non- M/~RCUM RACHLIN ACCOUNTANTS ~ ADVISORS A division of Marcum ua honorable Mayor, Village Council and Village Manager Village of 7~equesta, Florida June 18, 2009 Page 8 prevailing party its reasonable attorney's fees and costs, including fees and costs which might be incurred in litigation related to the arbitration. In accordance with our firm's policy, the terms of this engagement letter are subject to approval by our internal Client Acceptance Committee- Government Auditing Standards require that we provide you with a copy of our most recent external peer review report and any letter of comment, and any subsequent peer review reports and letters of comment received during the period of the contract. Our most recent peer review report has been previously provided to you. Phis ::ontract is renewable at the option of the Village of Tequesta. We appreciate the opportunity to be of contr_ued service to the Village of Tequesta and believe this letter accurately summaries the significant terms of +;uf~ engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. Sincerely, r~•- ~~„ • Partner RF.Sf~ONSE: Thi:~; letter correctly sets forth the understanding of the Village of Tequesta. Sig?fed: ~~ ~~~~~~ By:- ~a.~ ~UQ~-t-l~~ n5 (Print Name) Title: Y ~ D ~' Date: 1.5~ 17.3 MnRCUM RACH LI N ACCOUNTANTS ADVISORS A division of Marcum ur