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HomeMy WebLinkAboutDocumentation_Regular_Tab 22_09/13/2007VILLAGE OF TEQUESTA MEETING AGENDA ROUTING SHEET MEETING DATE: September 13, 2007 REQUESTED ACTION/SUMMARY: Establish an Audit Committee to select an Auditor to Perform the Annual Financial Audit for Fiscal Years Ending after 9/30/2007. RESOLUTION OR ORDINANCE NUMBER: Res # 68-06/07 ORIGINATING DEPARTMENT: Finance Department FUNDING SOURCE: Current Budd ACCOUNT NUMBER: N/A CURRENT BUDGETED AMOUNT AVAILABLE: N/A BUDGET TRANSFER REQUIRED: No APPROPRIATE FUND BALANCE: No APPROVALS: DEPARTMENT HEAD: JoAnn Forsythe FINANCE DIRECTOR: JoAnn Fors VILLAGE MANAGER: VILLAGE MANAGER RECOMMENDATION: APPROVE ITEM: ^ DENY ITEM: ^ VILLAGE ATTORNEY: APPROVED FOR LEGAL SUFFICIENCY ^ Yes X No ^ Not Applicable (n/a) MEMORANDUM DATE: AUGUST 31, 2007 TO: MICHAEL COUZZO, VILLAGE MANAGER CC: LORI MCWILLIAMS, VILLAGE CLERK FROM: JOANN FORSYTHE, FINANCE DIRECTOR RE: AGENDA ITEM -APPOINT AN AUDIT COMMITTEE TO SELECT AUDITORS Please add the attached agenda item to the September 13, 2007 Regular Meeting of the Village Council. 'I"his item is a request to appoint an audit committee to select an auditor to conduct the State mandated annual financial audit in accordance with Florida Statutes. 8/31/072:35 PM RESOLUTION NO. 68-06/07 A RESOLUTION OF THE VILLAGE COUNCIL OF THE VILLAGE OF TEQUESTA, PALM BEACH COUNTY, FLORIDA, APPROVING THE ESTABLISHMENT OF AN AUDIT COMMITTEE TO ASSIST THE COUNCIL IN THE SELECTION OF AN AUDITOR TO CONDUCT THE STATE MANDATED ANNUAL FINANCIAL AUDIT. IN ACCORDANCE WITH SECTION 218.391, FLORIDA STATUTES THE COMMITTEE SHALL PERFORM THE FOLLOWING ACITVITIES: 1. Establish the factors to use for evaluation of audit services to be provided by a certified public accounting firm (these factors shall include, but are not limited to, the ability of firm personnel, the firm's experience, and the firm's ability to furnish the required services); 2. Publicly announce a request for proposals ("RFP") and provide a brief description of the audit and indicate how interested firms can apply for consideration; 3. Provide interested firms with the RFP, which shall include information on how proposals are to be evaluated and such other information the Committee determines is necessary for firms to prepare proposals; 4. Evaluate proposals provided for qualified firms (if compensation is a factor, it cannot be the sole or predominant factor used); 5. Rank and recommend in order of preference no fewer than three firms deemed to be the most highly qualified based on the established criteria. Whereas, the Council shall then select one of the firms recommended by the Committee using one of two methods: A. If compensation was not one of the factors considered by the Committee and was not used to evaluate the firms, the Council shall negotiate a contract with the top ranked firm. If it is unable to reach an agreement, it may move down the list. It may reopen negotiations with any of the top three firms, so long as it does not negotiate with more than one firm at a time. OR B. If compensation was one of the factors considered by the Committee and was used to evaluate the firms, the Council shall select the highest-ranked qualified firm or must document in the public records the reason for not selecting that firm. Whereas, the Village Council may appoint a designee to negotiate the contract on its behalf. Whereas, the statute does not specify the size or composition of the Committee, nor does it prohibit one member of the Council from servicing on the Committee. Whereas, in order to initiate the auditor selection process, the Village Council must first appoint the Committee to perform the duties set forth above. NOW, THEREFORE, BE IT ORDAINED BY THE VILLAGE COUNCIL OF THE VILLAGE OF TEQUESTA, PALM BEACH COUNTY, FLORIDA, AS FOLLOWS: Section 1 Resolution No. xx-06/07 authorizing the establishment of an audit committee to assist the Village Council in the selection of an auditor and authorizing the Village Manager to proceed on behalf of the Village, is hereby approved . Section 2 This Resolution shall become effective immediately upon passage. The foregoing Resolution was offered by ,who moved its adoption. The motion was seconded by ,and upon being put to a vote, the vote was as follows: For Adoption Against Adoption Mayor Jim Humpage Vice-Mayor Pat Watkins Council Member Dan Amero Council Member Tom Paterno Council Member Calvin Turnquest The Mayor thereupon declared the Resolution duly passed and adopted this 13th day of September, 2007. MAYOR OF TEQUESTA Jim Humpage ATTEST: Lori McWilliams, CMC Village Clerk 2 Cvlx~l ~~oltz Accountants Advisors July 25, ?007 Honorable Mayor, Village Council and ViIla17e Manager Village of Tequesta 345 Tequesta Drive Tequesta, FL 33469 We are pleased to renew our long-standing engagement and to confirm our understanding of the services we are to provide the Village of Tequesta (the Village) for the year ended September 30, ?007 with an additional option by the Village of 2 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 entity's basic financial statements, of the Village of Tequesta as of and for the year ended September 30, ?007. 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's basic financial statements. As part of our engagement, we will apply certain limited procedures to the Village'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 procedures 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: ]. Management's Discussion and Analysis 2. Schedule of Funding Progress 3. Schedule of Employer Contributions Supplementary information other than RSI, such as combining and individual fund financial statements, 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 2. Schedule of Expenditures of State Financial Assistance 3. 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 ~/- - Rachlin Cohen & Holtz uP One Southeast Third Avenue ^ Tenth Floor ^ Miami, Florida 33131 ^ Phone 305.377.4228 ^ Fax 305.377.8331 ^ www.raChlln.COm An Independent Member of Baker Tilly International M I A M I ^ F O R T L A U D E R D A L E ^ W E S T P A L M B E A C H Honorable Mayor, Village Council and Village Manager Village of Tequesta July 25, 2007 Page 2 Audit Objectives The objective of our audit is the expression of opinions as to whether your 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 financial statements taken as a whole. The objective also includes reporting on- • Internal control related to the financial statements and compliance with laws, regulations, contracts, agreements, and grants, noncompliance with which could have a material effect on the tnancial 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, Acrdits of States, Local Governments, and Non- Profit Organi;atiais and 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 for the information and use of the council, management, specific legislative or regulatory bodies, federal 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 U.S. generally accepted auditing standards; the standards for financial audits contained in Government ,4crditing 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 Circular A-133, and the Florida Single Audit Act, and other procedures we consider necessary to enable us to express such an opinion and to render the required reports. If our opinions on the financial statements or the Single Audit compliance opinions is 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 establishing and maintaining internal controls, including monitoring ongoing activities; for the selection and application of accounting principles; for the fair presentation in the f~u~ancial 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 compliance with applicable laws d~ 0 Accountants Advisors Honorable Mayor, Village Council and Village Manager Village of Tequesta July 25, ?007 Page 3 and regulations and the provisions of contracts and grant agreements. Management is responsible for the basic financial statements and all accompanying information as well as representations contained therein. You are responsible for management decisions and functions. As part of the audit, we will assist with the preparation of the draft of your financial statements, schedule of expenditures of federal awards and state financial assistance, and related notes. In accordance with Cover-riment Auditing Standards, you will be required to review and approve those financial statements prior to their issuance and have a responsibility to be in a position in fact and appearance to make an informed judgment on those financial statements. Further, you are required to designate a qualified management-level individual to be responsible and accountable for overseeing our services. Management is responsible for making all financial records and related information available to us, including any significant vendor relationships in which the vendor has the responsibility for program compliance and for the accuracy and completeness of that information. Management's responsibilities include adjusting the financial statements to correct material misstatements and for confirming to us in the representation letter that the effects of any uncorrected misstatement 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. Yow- responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud or illegal acts affecting the govermnent 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 and Chapter 10.550 rules of the Auditor General, 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 establishment and maintenance of 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 a~ your planned corrective actions, and the timing and format related hereto. 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 C~h~z alHoltz 1lccountants Advisors Honorable Mayor, Village Council and Village Manager Village of Tequesta July 25, ?007 Page 4 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 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 comes 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 matters that might arise during 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, 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 also 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 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 GovernmentAuditing Standards. As required by OMB Circular A-133 and Chapter 10.5.50 Rules of the Auditor General, 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 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 and Chapter 10.550 Rules of the Auditor General. Cohen ~~Ioltz Accountants Advisors Honorable Mayor, Village Council and Village Manager Village of Tequesta July 25, 2007 Page 5 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 professional standards, Government Auditing Standards, OMB Circular A-133, and Chapter 10.550 Rules of the Auditor General. Audit Procedures-Compliance As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of 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 and Chapter 10.550 Rules of the Auditor General require 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 test of transactions and other applicable procedures described in the OMB Circular A-133 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 those 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 internal policies, procedures, and safeguards to protect the confidentiality of your personal information. In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information and we will take reasonable precautions to determine that they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others. In the event that we are unable to secure an appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your confidential information with the third-party service provider. Fu--thermore, 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; however. j . ' ` ;Holtz Accountants Advisors Honorable Mayor, Village Council and Village Manager Village of Tequesta July 2~, ?007 Page 6 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 a 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 for 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 Rachlin Cohen & Holtz 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 the Village of Tequesta or its designee, a federal 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 Rachlin Cohen & Holtz LLP personnel. Furthermore, 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 agencies. The audit documentation for this engagement will be retained for a minimum of five years after the report release or for any additional period requested by the Village of Tequesta. If we are aware that a federal awarding agency, pass-through entity, 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 estimate that our fees for this engagement will be $69,500 for ?007 (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. 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, we will discuss these circwnstances with you and arrive at a new fee estimate before we incur the additional costs. The estimated fee is based on two basic factors: 1. The implementation of the new statements on auditing statements number 103-111, which in summary are called the risk standards which call for additional procedures to be conducted as well as defining end of fieldwork date, etc. The implementation of these standards is estimated (based on information from attendance at the GFOA and SFGOA conferences this year) to be about 20% to 25%). Cohen Holtz Accountants - Advisors Honorable Mayor, Village Council and Village Manager Village of Tequesta July 25, ?007 Page 7 2. The increase in salary costs to our staff due to rising salaries at all accounting firms and the need to maintain the high level of quality personnel. In addition, if the Village is required to undergo an audit in accordance with the Federal Single Audit Act and OMB Circular A-133, Audits of States, Local Governments, and Not-for-Profit Organizations Receiving Federal Awards during any year of this contract, the additional fee will be $7,000 for the year ended September 30, ?007. This fee is dependent on the number of federal programs that have to be tested as a major program in accordance with the requirements of the Federal Single Audit Act and OMB Circular A-133. If there is more than one (1) program to be tested as a major program, as determined under the requirements of OMB Circular A-133, we will discuss the additional fees with you. In addition, if the Village is subject to the Florida Single Audit Act, the additional fee will be $7,000 for the year ended September 30, ?007. 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 (1) program to be tested as a major program, as determined under the requirements of the Florida Single Audit Act, 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 I% 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 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 resib anon. 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-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 Retention Committee. ' ;Cohen ' Holtz Accountants Advisors Honorable Mayor, Village Council and Village Manager Village of Tequesta July 2S, ?007 Page 8 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 provided to you. This contract is renewable at the option of the Village for two years. We appreciate the opportunity to be of continued service to the Village of Tequesta and believe this letter accurately summarizes the significant terms of our 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, ~ ~~ G. Jerry Chiocca, CPA Partner RESPONSE: This letter correctly sets forth the understanding of the Village of Tequesta. By: Title: Date: ..Cohen Holtz Accountants Advisors