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HomeMy WebLinkAboutProfessional Services Agreement with Gibbons, Scott & Dean LLP CPAGibbons, Scott & Dean LLP CERTIFIED PUBLIC ACCOUNTANTS Professional Building Terry L. Scott, CPA 1803 Ellis Avenue (208) 459-4649/336-5872 John P. Dean, CPA Caldwell, Idaho 83605 FAX (208) 454-9091 February 10, 1997 The Honorable Mayor and Council City of Meridian Meridian, Idaho 83642 We are pleased to confirm our understanding of the services we are to provide for City of Meridian for the year ended September 30, 1996 We will audit the general purpose financial statements of City of Meridian as of and for the year ended September 30, 1996 Also, the document we submit to you will include the following additional information that will be subjected to the auditing procedures applied in our audit of the financial statements. 1. Operation in tax Rolls 2. Schedule of Federal Financial Assistance Our audit will be a Single Audit conducted in accordance with generally accepted auditing standards; the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act of 1984; and the provisions of OMB Circular A-128, "Audits of State and Local Governments", and will include tests of the accounting records of the City of Meridian and other procedures we consider necessary to enable us to express an unqualified opinion that the financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles and to report on the Schedule of Federal Financial Assistance and on the City of Meridian's compliance with laws and regulations and its internal controls as required for a Single Audit. If our opinion is other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the single audit engagement, we will not issue a report as a result of this engagement. The management of the City of Meridian is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorizations and recorded properly to permit the preparation of MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS IDAHO SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS general purpose financial statements in accordance with generally accepted accounting principles, and that federal financial assistance programs are managed in compliance with applicable laws and regulations. In planning and performing our audits for the year ended September 30, 1996, we will consider the internal control structure in order to determine our auditing procedures for the purpose of expressing our opinions on the City of Meridian's general purpose financial statements and on its compliance with requirements applicable to major programs and to report on the internal control structure in accordance with OMB Circular A-128, and not to provide assurance on the internal control structure. We will obtain an understanding of the design of the relevant polices and procedures and whether they have been placed in operation, and we will assess control risk. Tests of controls may be performed to test the effectiveness of certain policies and procedures that we consider relevant to preventing and detecting errors and irregularities that are material to the general purpose 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 general purpose financial statements. (Tests of controls are required only if control risk is assessed below the maximum level.) Our tests, if performed, will be less in scope than would be necessary to render an opinion on the internal control structure policies and procedures and, accordingly, no opinion will be expressed. We will perform tests of controls, as required by OMB Circular A- 128, to evaluate the effectiveness of the design and operation of internal control policies and procedures that we consider relevant to preventing or detecting material noncompliance with specific requirements, general requirements, and requirements governing claims for advances and reimbursements and amounts claimed or used for matching that are applicable to each of the City of Meridian's major federal financial assistance programs. Our tests will be less in scope than would be necessary to render an opinion on the internal control structure policies and procedures and, accordingly, no opinion will be expressed. We will inform you of any matters involving internal control structure and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure. that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements. We will also inform you of any nonreportable conditions or other matters involving the internal control structure, if any, as required by OMB Circular A- 128. Gibbons, Scott & Dean LLP CEAT/F/ED PURL /C ACCOUNTANTS Compliance with laws, regulations, contracts, and grant agreements applicable to the City of Meridian is the responsibility of the City's management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we will perform tests of the City of Meridian's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our audit will not be to provide an opinion on overall compliance with such provisions, and we will not express such an opinion. Our audit will be conducted in accordance with the standards referred to in the second paragraph. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether material noncompliance with the requirements governing types of services allowed or unallowed; eligibility; matching, level of effort, or earmarking; reporting; special tests and provisions; claims for advances and reimbursements; and amounts claimed or used for matching that are applicable to major programs occurred. The purpose of our audit will be to express an opinion on the City of Meridian's compliance with the specific requirements applicable to major programs listed in the previous sentence. We will perform certain procedures to test the City of Meridian's compliance with the general requirements applicable to its federal financial assistance programs as required by OMB Circular A-128. Our procedures will be limited to the applicable procedures described in the OMB's Compliance Supplement for Single Audits of State and Local Governments. Our procedures will be substantially less in scope than an audit, the objective of which is the expression of an opinion on the general requirements, and we will not express such an opinion. 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 representa- tions 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 request certain written representations from you about the financial statements and related matters. 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. Also, we will plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. As required by the Single Audit Act of 1984, our audit will include tests of transactions related to federal assistance programs for compliance with applicable laws and regulations. However, because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions, there is a risk Gibbons, Scott & Dean LLP CERTIF/EO PUBLIC ACCOUNTANTS that material errors, irregularities, or illegal acts, including fraud or defalcations, may exist and not be detected by us. We will inform you, however, of any matters of that nature that come to our attention, and 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. We understand that you will provide us with the basic information required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, but the responsibility for the financial statements remains with you. This responsibility includes the maintenance of adequate records and related internal control structure policies and procedures, the selection and application of accounting principles, and the safeguarding of assets. We understand that your employees will prepare all cash or other confirmations we request and will locate any invoices selected by us for testing. The workpapers for this engagement are the property of Gibbons, Scott & Dean LLP and constitute confidential information. However, we may be requested to make certain workpapers available to grantor agencies pursuant to authority given to it by law or regulation. If requested, access to such workpapers will be provided under the supervision of Gibbons, Scott & Dean LLP personnel. Furthermore, upon request, we may provide photocopies of selected workpapers to grantor agencies. The grantor agencies may intend, or decide, to distribute the photocopies or information contained therein to others, including other governmental agencies. Our fees for these services will be based on the actual .time spent at our standard hourly rates, plus other out-of-pocket costs such as report production, typing, postage, etc. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to our audit. Our invoices for these fees will be rendered as work progresses and are payable on presentation. Based on our preliminary estimates, the fee should be between 54,500 for the fiscal phase of the audit plus an additional 52,000 for the compliance phase of the audit applicable to the grants. This estimate is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. Our audits are warranted to be accepted under quality control reviews and in the event that audits are determined to be defective, they will be made whole at no additional cost. Gibbons, Scott & Dean LLP CERTIFIED PUBL/CACCOUNTANTS We appreciate the opportunity to be of service to the City of Meridian 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. Very truly yours, . ~~ ~ ~~ ~~ GIBBONS, SCO T & DEAN LLP Certified Public Accountants RESPONSE: This letter correctly sets forth the understanding of the Citv of Meridian . ~- 2d ~ Da e City of of Meridian Idaho Mayor Cite ~ ~,, arpr~ved Ly City Council 2 1a 97 ' SEAL :. ~ ~~ Gibbons, Scott & Dean LLP CEAT/FIED PUBLIC ACCOUNTANTS