2005-057
RESOLUTION NO. 2005-57
A RESOLUTION OF THE CITY COMMISSION OF THE
CITY OF AVENTURA, FLORIDA, AUTHORIZING THE
CITY MANAGER ON BEHALF OF THE CITY TO
EXECUTE AND OTHERWISE ENTER INTO THE
ATTACHED AUDIT ENGAGEMENT AGREEMENT
BETWEEN THE CITY OF AVENTURA AND McGLADREY
& PULLEN, LLP; AUTHORIZING THE CITY MANAGER TO
DO ALL THINGS NECESSARY TO CARRY OUT THE
AIMS OF THIS RESOLUTION; AND PROVIDING AN
EFFECTIVE DATE.
WHEREAS, the City of Aventura, pursuant to applicable state law, has solicited
and reviewed proposals from firms to perform the City's independent audit; and
WHEREAS, Resolution No. 2005-38 established a ranking of firms to serve as
said auditor and authorized negotiations with the top ranked firm; and
WHEREAS, City Staff has negotiated fees and scope of services with the top rated firm
(McGladrey & Pullen, LLP) and recommends approval of the Audit Engagement
Agreement.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE
CITY OF AVENTURA, FLORIDA, THAT:
Section 1. The City Manager is hereby authorized on behalf of the City of
Aventura to execute and otherwise enter into that certain Audit Engagement Agreement
between the City of Aventura and McGladrey & Pullen, LLP for auditing services.
Section 2. The City Manager is hereby authorized to do all things necessary and
expedient in order to effectuate the execution of the attached Agreement described in
Section 1 above, and to carry out the aims of this Resolution.
Section 3. This Resolution shall become effective immediately upon its
adoption.
The foregoing Resolution was offered by Vice Mayor Joel, who moved its
adoption. The motion was seconded by Commissioner Auerbach, and upon being put to
a vote, the vote was as follows:
Commissioner Zev Auerbach yes
Commissioner Bob Diamond yes
Commissioner Harry Holzberg yes
Commissioner Michael Stern yes
Commissioner Luz Urbaez-Weinberg yes
Vice Mayor Billy Joel yes
Mayor Susan Gottlieb yes
Resolution No. 2005- 57
Page 2
PASSED AND ADOPTED this 11th day of Oc ober, 2005
~
USAN GOTTLIEB, MAYOR
APPROVED A TO LEGAL SUFF-!CtENCY:
Yn1
CITY ATTORNEY
AUDIT ENGAGEMENT AGREEMENT
AUDITOR AGREEMENT
THIS IS AN AGREEMENT dated the 12th day of October, 2005, by and between:
THE CITY OF AVENTURA, a municipal corporation of the State of Florida,
with a business address of 19200 West Country Club Drive, Aventura, F,
Florida 33180, hereinafter referred to as "CITY",
and
McGladrey & Pullen, LLP, authorized to do business in the State of Florida,
with a business address of 100 NE Third Avenue, Suite 300, Fort Lauderdale,
FI 33301, hereinafter referred to as "AUDITORS".
WITNESSETH:
In consideration of the mutual terms and conditions, promises, covenants and payments
hereinafter set forth, CITY and AUDITORS agree as follows:
ARTICLE 1
PREAMBLE
In order to establish the background, context and form of reference for this Agreement and to
generally express the objectives, and intentions of the respective parties herein, the following
statements, representations and explanations shall be accepted as predicates for the
undertakings and commitments included within the provisions which follow and may be relied
upon by the parties as essential elements of the mutual considerations upon which this
Agreement is based.
1.1 On June 7, 2005, the CITY advertised its request for proposal No. 05-07-13-2
(hereinafter, "RFP") which set forth the CITY's desire to hire a firm to provide:
Independent Audit Services for the City of Aventura
RFP No. 05-07-13-2
1.2 On July 13, 2005, the responses to the RFP were opened at the offices of the City
Manager.
1.3 On September 6, 2005, the CITY Commission selected and ranked three (3) firms
from the list of proposers and authorized the CITY Administration to negotiate the terms of an
agreement with the highest proposer.
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1.4 On October 11 , 2005, the CITY awarded the RFP to AUDITORS and authorized the
proper City officials to enter into this Agreement with AUDITORS to render the professional
services more particularly described herein below.
1.5 Negotiations pertaining to the services to be performed by the AUDITORS were
undertaken and this Agreement incorporates the results of such negotiation.
ARTICLE 2
SERVICES AND RESPONSIBILITIES
2.1 AUDITORS hereby agree to perform the professional auditing services described in
the AUDITORS response ("Exhibit "B") to the RFP dated June 7, 2005 and as set forth in
Exhibit "A." Both Exhibits "A" and "B" are attached hereto and by this reference made a
part hereof. In case of a conflict or a perceived conflict, the terms and conditions set forth in
Exhibit "A" shall govem. Further, the Arrangement Letter attached hereto (Attachment I)
shall be attached hereto and by this reference made a part hereof. In the case of a conflict
between Attachment I and any other provision of this Agreement, the Agreement shall
govem.
2.2 During the conduct of the audit, AUDITORS shall schedule regular meetings, with the
CITY's Finance Support Services Director or designee at least weekly to discuss the
progress of the work.
2.3 AUDITORS shall furnish all services, labor, equipment, and materials necessary and
as may be required in the performance of this Agreement and all work performed under this
Agreement shall be done in a professional manner.
2.4 AUDITORS hereby represent to CITY, with full knowledge that CITY is relying upon
these representations when entering into this Agreement with AUDITORS, that AUDITORS
have the professional expertise, experience and manpower to perform the services to be
provided by AUDITORS pursuant to the terms of this Agreement.
ARTICLE 3
TIME FOR PERFORMANCE
AUDITORS shall perform the services identified in Article 2 and Exhibit "A" hereof and
deliver to the CITY in final form the report of the independent auditor, management letter, the
single audit report, and any other report as required for each fiscal year by no later than
February 17th of each year for the City's Audit and no later than September 1 st for the
Charter School audit of each year during the term of this Agreement. Minor adjustments to
the timetable for completion approved by CITY in advance, in writing, will not constitute non-
performance by AUDITORS per this Agreement. Additional services requested by City
Manager, or changes in scope, will be reviewed and any impact on the schedule determined
and the schedule modified accordingly.
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ARTICLE 4
DELAY IN PERFORMANCE
4.1 Liauidated Damaaes for Delav,
4.1.1 CITY shall be entitled to retain the sum of One Hundred and Fifty Dollars ($150.00) for
each day, or part thereof, that the work remains uncompleted beyond the timetable set forth
in Article 3 hereof when such delay is caused by the failure of the AUDITOR to perform as
agreed herein. It is recognized and agreed that damages in such events are difficult to
ascertain, though great and irreparable, and that this agreement with respect to liquidated
damages shall in no event disentitle CITY to injunctive relief and this sum is not construed as
a penalty.
4.1.2 Anything to the contrary notwithstanding minor adjustments to the timetable for
completion approved by CITY in advance, in writing, will not constitute a delay by AUDITORS
for which liquidated damages are due. Furthermore, a delay due to an Act of God, fire,
lockout, strike or labor dispute, riot or civil commotion, act of public enemy or other cause
beyond the control of AUDITORS shall extend this Agreement for a period equal to such
delay and during this period such delay shall not constitute a delay by AUDITORS for which
liquidated damages are due.
ARTICLE 5
COMPENSATION AND METHOD OF PAYMENT
5.1 CITY agrees to compensate AUDITORS for all services performed by AUDITORS
pursuant to the provisions of this Agreement in AN AMOUNT NOT TO EXCEED Sixty one
thousand dollars ($66,000) (the "Fee"). This amount may not be exceeded without a written
amendment to this Agreement. This Fee is broken down for each segment of the various
required audits as follows:
Compensation for City's Annual Audit........... ... ..... ....... ..... ... .... ..... ......$ 50,500
These Fees include federal and state single audit, if required, out-of-pocket
expenses and the cost of drafting and typing the Comprehensive Annual
Financial Report (CAFR). Furthermore, the Fee will be reduced if the CITY
performs the following tasks or if a federal and/or state single audit is not
required by the amount(s) set forth below:
Compiling and Typing the Financial
Statements and Statistical Section of CAFR.................... ..... ...$ 5,000
Printing and binding 50 copies ofthe CAFR........ ..... ................. ...$ 1,500
Federal Single Audit, if not required
State Single Audit, if not required
$ 4,000
$ 4,000
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Compensation for Charter School Annual Audit........................... .... $ 15,500
These Fees include out-of-pocket expenses and the cost of drafting and typing
the Audited Financial Statements of the Charter School. Furthermore, the Fee
will be reduced if the CITY performs the following tasks by the amount(s) set
forth below:
Compiling and Typing the Financial Statements
of the Audited Financials ...
$ 2,300
Printing and binding 35 copies of each ofthe Audited Financials .. ....$ 1,000
The Fee for subsequent contract years, ending 2006, 2007, 2008 and 2009 will be adjusted
from the current contract Fee using the Consumer Price Index for "All Urban Consumers for
Miami\Fort Lauderdale, Florida" as published by the U.S. Department of Labor Statistics or its
successor agency for the twelve (12) months ending July of each year to be effective for the
next engagement.
5.2 Method of Billino and Pavment.
5.2.1 AUDITORS shall be entitled to invoice monthly based on the hours of work completed
during the course of the engagement and out-of-pocket expenses incurred as accepted by
CITY.
5.2.2 CITY will make its best efforts to pay AUDITORS within thirty (30) days of receipt of
proper invoice the total shown to be due on such invoice.
5.2.3 Payment will be made to AUDITORS at:
McGladrey & Pullen, LLP
Certified Public Accountants
100 Northeast Third Avenue, Suite 300
Fort Lauderdale, FI 33301
ARTICLE 6
CHANGES IN SCOPE OF WORK
CITY or AUDITORS may request changes that would increase decrease or otherwise modify
the Scope of Services to be provided under this Agreement. Such changes must be in
accordance with the provisions of the Code of Ordinances of the CITY and must be
contained in a written amendment, executed by the parties hereto, with the same formality
and with equality and dignity prior to any deviation from the terms of this Agreement,
including the initiation of any extra work. In no event will the AUDITORS be compensated for
any work which has not been described in a separate written agreement executed by the
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including the initiation of any extra work. In no event will the AUDITORS be compensated for
any work which has not been described in a separate written agreement executed by the
parties hereto. Provided, however, notwithstanding the foregoing if the addition of such
additional services will not exceed the Fee set forth in 5.1 above and the AUDITORS agree
to be compensated in accordance with the hourly rate set forth in Exhibit "8" the City
Manager may authorize such additional work in writing.
ARTICLE 7
MISCELLANEOUS
7.1 Ownership of Documents. Reports, surveys, studies and other data provided in
connection with this Agreement are and shall remain the property of CITY whether or not the
project for which they are made is completed.
7.1.1 AUDITORS further acknowledge that CITY may post its audited financial statements
on CITY's website. Such statements may be posted by CITY without the prior authorization
of AUDITORS. No additional fee or compensation will be paid to the AUDITORS by CITY for
such posting.
7.1.2 The CITY will not include its audited financial statements in any offering statement
without the prior authorization of the AUDITORS. AUDITORS acknowledge that they will
assist and provide their services to CITY, at the hourly rates of $220 for partner, $160 for
manager, $150 for supervisory staff and $110 for staff, all as revised by the CPI index
pursuant to Section 5.1 of this Agreement, in the event that CITY requests AUDITORS to
review and provide comments on the unaudited material or information associated with any
audited financial statement which is included in an offering statement related to any bond
transaction of CITY.
7.2 Term and Termination.
7.2.1 This Agreement may be terminated by either party for cause, or by the CITY for
convenience, upon thirty (30) days written notice by the CITY to AUDITORS in which event
the AUDITORS shall be paid their compensation for services performed to termination date.
In the event that the AUDITORS abandon this Agreement for their convenience (without
cause) they shall indemnify the CITY against any loss pertaining to this termination up to a
maximum of the full annual contracted fee amount.
7.2.2 This Agreement shall take effect as of the date of award by the City Commission and
shall end upon the AUDITORS completion of the work described herein, however, such date
shall not be later than February 17, 2007. Thereafter, this Agreement may be renewed for
three (3) additional one (1) year periods subject to Agreement by both parties, and providing
that all terms, conditions and specifications remain the same.
7.3 Records. AUDITORS shall keep books and records and require any and all
subcontractors to keep books and records as may be necessary in order to record complete
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(3) years after the completion of all work to be performed pursuant to this Agreement, unless
contacted by CITY and advised such records must be kept for a longer period. AUDITORS
shall further be required to respond to the reasonable inquiries of successor auditors and
allow successor auditors to review AUDITORS' working papers related to matters of
continuing accounting, reporting or auditing significance. Incomplete or incorrect entries in
such books and records will be grounds for disallowance by CITY of any fees or expenses
based upon such entries.
7.4 Indemnification.
7.4.1 The AUDITORS shall protect, defend, reimburse, indemnify, and hold harmless the
CITY and the CITY"S officers, agents, and employees free and harmless from and against
any and all claims, losses, penalties, damages, settlements, costs, charges, attorneys or
other professional fees, or other expenses or liabilities of every kind and character arising
out of or relating to any and all claims, liens, demands, obligations, actions, or proceedings
directly or indirectly arising out of or resulting from the mistakes or negligence, gross
negligence, willful and wanton acts and the performance of this Agreement by the
AUDITORS, or their respective officers, employees, agents, servants, partners or
principals. The AUDITORS agree to investigate, respond, adjust, and provide a defense
for any such claims, demands, and actions at AUDITORS' sole expense and agrees to
bear and remain liable for all such other costs and expenses relating thereto, even if such
claim is groundless, false, or fraudulent. Notwithstanding the foregoing, AUDITORS'
indemnity shall not extend to liability for damages to persons or property to the extent such
damage was caused by any act, omission, or default of the CITY, or by the CITY'S officers,
agents, and employees.
7.4.2 The parties recognize that various provisions of this Agreement, including but not
necessarily limited to this Section, provide for indemnification by the AUDITORS and that
Florida Statutes may require a specific consideration be given therefore. The parties
therefore agree that the sum ofTen Dollars and 00/100 ($10.00), receipt of which is hereby
acknowledged, is the specific consideration for such indemnities, and the providing of such
indemnities is deemed to be part of the specifications with respect to the services to be
provided by AUDITORS. Furthermore, the parties understand and agree that the covenants
and representations relating to this indemnification provision shall serve the term of this
Agreement and continue in full force and effect as to the party's responsibility to indemnify.
7.5 Insurance.
7.5.1 The AUDITORS shall not commence work under this Agreement until they have
obtained all insurance required under this paragraph and such insurance has been approved
by the City Manager of the CITY nor shall the AUDITORS allow any Subcontractor to
commence work on his sub-contract until all similar such insurance required of the
subcontractor has been obtained and approved.
7.5.2 Certificates of insurance, reflecting evidence of the required insurance shall be filed
with the City's Risk Manager prior to the commencement of this Agreement. These
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Certificates shall contain a provision that coverage's afforded under these policies will not be
cancelled until at least forty-five days (45) prior written notice has been given to the CITY.
Policies shall be issued by companies authorized to do business under the laws of the State
of Florida. Financial Ratings must be not less than "A-VI" in the latest edition of "Best Key
Rating Guide", published by A.M. Best Guide.
7.5.3 Insurance shall be in force until the obligations required to be fulfilled under the terms
of the Agreement are satisfied. In the event the insurance certificate provided indicates that
the insurance shall terminate and lapse during the period of this Agreement, then in that
event, the AUDITORS shall fumish, at least forty-five (45) days prior to the expiration of the
date of such insurance, a renewed certificate of insurance as proof that equal and like
coverage for the balance of the period of the Agreement and extension there under is in
effect. The AUDITORS shall not commence nor continue to provide any services pursuant to
this Agreement unless all required insurance remains in full force and effect. AUDITORS
shall be liable to CITY for any lapses in service resulting from a gap in insurance coverage.
7.5.4 REQUIRED INSURANCE
7.5.4.1. PROFESSIONAL LIABILITY insurance. Limit of $1,000,000 per occurrence
The City does not require AUDITORS to name City as "additional insured"
7.5.4.2. WORKERS COMPENSATION insurance shall be maintained during the life of
this Agreement to comply with statutory limits for all employees, and in the case any work is
sublet, the AUDITORS shall require the Subcontractors similarly to provide Workers
Compensation Insurance for all the latter's employees unless such employees are covered
by the protection afforded by the AUDITORS. The AUDITORS and their subcontractors shall
maintain during the life ofthis policy Employers Liability Insurance. The following limits must
be maintained:
Workers Compensation
Employer's Liability
Statutory
$100,000 - Each Accident
$500,000 - Disease-policy limit
$100,000 - Disease-each employee
If AUDITORS claim to be exempt from this requirement, AUDITORS shall provide CITY
proof of such exemption along with a written request for CITY to exempt AUDITORS,
written on AUDITORS' letterhead.
7.5.4.3 The CITY reserves the right to require any other insurance coverage it deems
necessary depending upon the exposures.
7.5 Independent Contractor. This Agreement does not create an employee/employer
relationship between the parties. It is the intent of the parties that the AUDITORS are
independent contractors under this Agreement and not the CITY's employees for all
purposes, including but not limited to, the application of the Fair Labor Standards Act
minimum wage and overtime payments, Federal Insurance Contribution Act, the Social
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Security Act, the Federal Unemployment Tax Act, the provisions of the Internal Revenue
Code, the State Workers Compensation Act, and the State unemployment insurance law.
The AUDITORS shall retain sole and absolute discretion in the judgment of the manner and
means of carrying out AUDITORS' activities and responsibilities hereunder. The AUDITORS
agree that they are a separate and independent enterprise from the CITY, that they have full
opportunity to find other business, that they have to make their own investment in their
business, and that they will utilize a high level of skill necessary to perform the work. This
Agreement shall not be construed as creating any joint employment relationship between the
AUDITORS and the CITY and the CITY will not be liable for any obligation incurred by
AUDITORS, including but not limited to unpaid minimum wages and/or overtime premiums.
7.6 Assianments: Amendments.
7.6.1 This Agreement, or any interest herein, shall not be assigned, transferred or otherwise
encumbered, under any circumstances, by AUDITORS without the prior written consent of
CITY. However, this Agreement shall run to the CITY and its successors and assigns.
7.6.2 It is further agreed that no modification, amendment or alteration in the terms or
conditions contained here shall be effective unless contained in a written document executed
with the same formality and of equal dignity herewith.
7.7 No Continaent Fees. AUDITORS warrant that they have not employed or retained
any company or person, other than a bona fide employee working solely for the AUDITORS
to solicit or secure this Agreement, and that they have not paid or agreed to pay any person,
company, corporation, individual or firm, other than a bona fide employee working solely for
AUDITORS any fee, commission, percentage, gift, or other consideration contingent upon or
resulting from the award or making of this Agreement. For the breach or violation of this
provision, the CITY shall have the right to terminate the Agreement without liability at its
discretion, to deduct from the contract price, or otherwise recover the full amount of such fee,
commission, percentage, gift or consideration.
7.8 Notice. Whenever any party desires to give notice unto any other party, it must be
given by written notice, sent by registered United States mail, with retum receipt requested,
addressed to the party for whom it is intended and the remaining party, at the places last
specified, and the places for giving of notice shall remain such until they shall have been
changed by written notice in compliance with the provisions of this section. For the present,
the AUDITORS and the CITY designate the following as the respective places for giving of
notice:
CITY:
Eric M. Soroka, City Manager
City of Aventura
19200 West Country Club Drive
Aventura, Florida 33180
Telephone No.
Facsimile No.
(305) 466-8910
(954) 466-8919
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Copy To:
Weiss, Sorota, & Helfman, P.A.
2665 South Bayshore Drive, Suite 204
Miami, Florida 33133
Telephone No.
Facsimile No.
(305) 854-0800
(305) 854-2323
AUDITORS:
McGladrey & Pullen, LLP
Certified Public Accountants
100 NortheastThird Avenue, Suite 300
Fort Lauderdale, FI 33301
Telephone No.
Facsimile No.
(954) 462-6300
(954) 462-4607
7.9 Bindinq Authoritv. Each person signing this Agreement on behalf of either party
individually warrants that he or she has full legal power to execute this Agreement on behalf
ofthe party for whom he or she is signing, and to bind and obligate such party with respect to
all provisions contained in this Agreement.
7.10 Headinqs. Headings herein are for convenience of reference only and shall not be
considered on any interpretation of this Agreement.
7.11 Exhibits. Each Exhibit referred to in this Agreement forms an essential part of this
Agreement. The exhibits if not physically attached should be treated as part of this
Agreement and are incorporated herein by reference.
7.12 Severabilitv. If any provision of this Agreement or application thereof to any person or
situation shall to any extent, be held invalid or unenforceable, the remainder of this
Agreement, and the application of such provisions to persons or situations other than those
as to which it shall have been held invalid or unenforceable shall not be affected thereby, and
shall continue in full force and effect, and be enforced to the fullest extent permitted by law.
7.13 Governinq Law. This Agreement shall be governed by the laws of the State of
Florida with venue lying in Miami-Dade County, Florida.
7.14 Extent of Aqreement. This Agreement represents the entire and integrated
agreement between the CITY and the AUDITORS and supersedes all prior negotiations,
representations or agreements, either written or oral.
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IN WITNESS OF THE FOREGOING, the parties have set their hands and seals the day
and year first written above.
ATTEST:
ERIC M. SOROKA, CITY MANAGER
APPROVED AS TO FORM.
OFFICE OF THE CITY ATTORNEY
AUDITORS
WITNESSES:
BY:
Print Name:
Title:
ATTEST:
SECRETARY
STATE OF FLORIDA
)
COUNTY OF BROWARD )
)
BEFORE ME, an officer duly authorized by law to administer oaths and take
acknowledgments, personally appeared as
of , Certified Public
Accountants and Consultants, and acknowledged they executed the foregoing Agreement as
the proper official of , for the use and purposes mentioned in
it and that the instrument is the act and deed of
IN WITNESS OF THE FOREGOING, I have set my hand and official seal at in the
State and County aforesaid on this day of , 2005.
NOTARY PUBLIC
My Commission Expires:
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ATTACHMENT I
To
Audit Engagement Agreement
October 3,2005
City of Aventura, Florida
19200 West County Club Drive
Aventura, FL 33180
Attention: The Honorable Mayor and City Commission
This letter is to explain our understanding of the arrangements for the services we are to
perform for the City of Aventura, Florida (the "City") for the fiscal years ending
September 30, 2005 through 2009 and fiscal years ending June 30, 2006 through 2009
for the Aventura City of Excellence School. We ask that you either confirm or amend
this understanding.
We will perform audits of the City's governmental activities, business-type activities,
each major fund, and aggregate remaining fund information as of and for the years
ending September 30, 2005 through 2009, which collectively comprise the basic
financial statements. We understand that these financial statements will be prepared in
accordance with accounting principles generally accepted in the United States of
America. The objective of an audit of financial statements is to express an opinion on
those statements.
We will perform audits of the Aventura City of Excellence Charter School (the "Charter
School") as of and for the years ending June 30, 2006 through 2009. We understand
that these financial statements will be prepared in accordance with accounting
principles generally accepted in the United States of America.
Our acceptance of this engagement is subject to our satisfactorily completing
communication with and review of the working papers of your previous auditors. We will
notify you promptly if we become aware of anything during that communication or
review which results in our not being able to continue this engagement.
We will also perform the audits of the City so as to satisfy the audit requirements
imposed by the Single Audit Act and the U.S. Office of Management and Budget (OMB)
Circular No. A-133, should they become necessary during the contract period.
We will conduct the audits in accordance with auditing standards generally accepted in
the United States of America and Government Auditing Standards issued by the
Comptroller General of the United States. Those standards require that we plan and
perform the audits to obtain reasonable rather than absolute, assurance about whether
the financial statements are free of material misstatement whether caused by error,
fraudulent financial reporting, or misappropriation of assets. Accordingly, a material
misstatement, whether caused by error, fraudulent financial reporting, or
misappropriation of assets, may remain undetected. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements.
As a result, an audit is not designed to detect errors or fraud that are immaterial to the
financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits will provide a reasonable
basis for our reports.
In addition to our reports on the City's financial statements, we will also issue the
following reports or types of reports:
Reports on internal control related to the financial statements. These reports will
describe the scope of testing of internal control and the results of our tests of
internal controls.
Reports on compliance with laws, regulations, and the provision of contracts or
grant agreements. We will report on any noncompliance, which could have a
material effect on the financial statements.
The funds that you have told us are maintained by the City and that are to be included
as part of our audits are as listed in the City's 2004 financial statements.
Our reports on internal control will include any reportable conditions and material
weaknesses in the system of which we become aware as a result of obtaining an
understanding of internal control and performing tests of internal control consistent with
requirements of the standards identified above. Our reports on compliance will address
material errors, fraud; violations of compliance requirements, al1d other responsibilities
imposed by state and federal statutes and regulations and assumed by contracts; and
any state or federal grant, entitlement of loan program questioned costs of which we
become aware, consistent with requirements of the standards identified above.
If circumstances arise relating to the conditions of your records, the availability of
sufficient, competent evidential matter, or indications of a significant risk of material
misstatement of the financial statements because of error, fraudulent financial reporting,
misappropriation of assets, or noncompliance which in our professional judgment
prevent us from completing the audits or forming an opinion, we retain the unilateral
right to take any course of action permitted by professional standards, including
declining to express an opinion or issue a report, or withdrawal from the engagement.
As you know, management is responsible for 1) the preparation of the City and Charter
School's financial statements, 2) establishing and maintaining effective internal control
over financial reporting and safeguarding assets and internal control over compliance,
including monitoring ongoing activities, and for informing us of all significant deficiencies
in the design or operation of such controls of which it has knowledge, 3) properly
recording transactions in the records, 4) identifying and ensuring that the City and
Charter School complies with the laws and regulations applicable to their activities, and
for informing us about all known material violations of such laws or regulations, 5) the
design and implementation of programs and controls to prevent and detect fraud, and
for informing us about all known or suspected fraud affecting the entity involving
2
management, employees who have significant roles in internal control and others where
the fraud could have a material effect on the financial statements, 6) informing us of its
knowledge of any allegations of fraud or suspected fraud affecting the entity received in
communications from employees, regulators, or others, 7) making all financial records
and related information available to us, 8) for adjusting the financial statements to
correct material misstatements, 9) following up and taking corrective action on audit
findings, including the preparation of a summary schedule of prior audit findings, and a
corrective action plan, and 10) report distribution including submitting the reporting
packages. At the conclusion of each of our audits, we will request certain written
representations from management about the financial statements and matters related
thereto. We will also require that you affirm to us 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.
The City Commission is responsible for informing us of its views about the risks of fraud
within the entity, and its knowledge of any fraud or suspected fraud affecting the entity.
We will also determine that certain matters related to the conduct of the audits are
communicated to the City Commission including 1) fraud involving senior management
and fraud (whether caused by senior management or other employees) that causes a
material misstatement of the financial statements, 2) illegal acts that come to our
attention (unless they are clearly inconsequential), 3) disagreements with management
and other serious difficulties encountered in performing the audits, and 4) various
matters related to the entity's accounting policies and financial statements.
The working papers for this engagement are the property of McGladrey & Pullen, LLP.
However, you acknowledge and grant your assent that representatives of the cognizant
or oversight agency or their designee, other government audit staffs, and the U.S.
Government Accountability Office shall have access to the audit working papers upon
their request; and that we shall maintain the working papers for a period of at least three
years after the date of the report, or for a longer period if we are requested to do so by
the cognizant or oversight agency. Access to requested work papers will be provided
under the supervision of McGladrey & Pullen, LLP audit personnel and at a location
designated by our Firm.
You have informed us that you intend to prepare a Comprehensive Annual Financial
Report ("CAFR") and submit it for evaluation by the Government Finance Officers
Association's Certificate of Achievement for Excellence in Financial Reporting Program.
Our participation in the preparation of the CAFR is to consist of having the audit and
accounting report review performed by a person who is also a reviewer for the GFOA
certificate program and have them involved in the resolution of any accounting or
reporting questions that arise during the engagement. We will also read the material
included in the Introductory and Statistical Sections.
We will assist the City and Charter School in the preparation of their financial
statements. The two overarching principles of the independence standards of the
Government Auditing Standards issued by the Comptroller General of the United States
provide that management is responsible for the substantive outcomes of the works, and
therefore, has a responsibility and is able to make any informed judgment on the results
of the services described above. Accordingly, the City agrees to the following:
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Harry Kilgore, Director of Finance Support Services, will be accountable and
responsible for overseeing the preparation of the City and Charter School's
financial statements.
The City will establish and monitor the performance of the preparation of the
financial statements to ensure that they meet management's objectives.
The City will make any decisions that involve management functions related to
the financial statements and accepts full responsibility for such decisions.
The City will evaluate the adequacy of services performed and any findings that
result.
During the course of our engagement, we may accumulate records containing data,
which should be reflected in your books and records. You will determine that all such
data, if necessary, will be so reflected. Accordingly, you will not expect us to maintain
copies of such records in our possession.
From time to time and depending upon the circumstances, we may use third-party
service providers to assist us in providing professional services to you. In such
circumstances, it may be necessary for us to disclose confidential client information to
them. We enter into confidentiality agreements with all third-party service providers and
we are satisfied that they have appropriate procedures in place to prevent the
unauthorized release of your confidential information to others.
The assistance to be supplied by organization personnel, including the preparation of
schedules and analyses of accounts, has been discussed and coordinated with Harry
Kilgore, Director of Finance Support Services. The timely and accurate completion of
this work is an essential condition to our completion of the audits and issuance of our
audit reports.
Our fees are based on the time required by the individuals assigned to the engagement,
plus direct expenses. Individual hourly rates vary according to the degree of
responsibility involved and the skill required. Interim billings will be submitted as work
progresses and as expenses are incurred. Billings are due upon submission. Our fees
(inclusive of direct expenses) for the audits of the City and Charter School, as well as
any single audit reports, should they become required during the contract period, will
not exceed the amounts noted in Article 5.1 of the Audit Engagement Agreement,
unless the scope of the engagement is changed, the assistance which the City has
agreed to furnish is not provided, or unexpected conditions are encountered, in which
case we will discuss the situation with you before proceeding.
If it should become necessary for the City to request McGladrey & Pullen, LLP to render
any additional services to either supplement the services outlined in this letter or to
perform additional work as a result of the specific recommendations included in any
report issued on this engagement, then such additional work will be performed, only if
set forth in an addendum to this letter, at the same rates set forth in our sealed dollar
cost bid proposal dated July 13,2005.
Our professional standards require that we perform certain additional procedures, on
current and previous years engagements, whenever a partner or professional employee
leaves the firm and is subsequently employed by or associated with a client.
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Accordingly, the City agrees it will compensate McGladrey & Pullen, LLP for any
additional costs incurred as a result of the employment of a partner or professional
employee of McGladrey & Pullen, LLP.
In the event we are requested or authorized by the City or are required by government
regulation, subpoena, or other legal process to produce our documents or our personnel
as witnesses with respect to our engagements for the City, the City will, so long as we
are not a party to the proceeding in which the information is sought, reimburse us for
our professional time and expenses, as well as the fees and expenses of our counsel,
incurred in responding to such requests.
Professional standards and our Firm policies require that we perform certain additional
procedures whenever our reports are included, or we are named as accountants,
auditors, or "experts" in a document used in a public offering of debt securities. Our
report on the financial statements is not to be included in an official statement or other
document involved with the sale of debt instruments without our prior consent.
Additionally, if you intend to publish or otherwise reproduce the financial statements
and/or make reference to us or our audits, you agree to provide us with printer's proofs
or master for our review and consent before reproduction and/or release occurs. You
also agree to provide us with a copy of the final reproduced material for our consent
before it is distributed or released. Our fees for any additional services that may be
required under our quality assurance system as a result of the above will be at the same
rates set forth in our sealed dollar cost bid proposal dated July 13, 2005.
Any claim arising out of services rendered pursuant to this agreement shall be resolved
in accordance with the laws of Florida. It is agreed by the City and McGladrey & Pullen,
LLP or any successors in interest that no claim arising out of services rendered
pursuant to this agreement by or on behalf of the City shall be asserted more than two
years after the date of the last audit report issued by McGladrey & Pullen, LLP.
In accordance with Government Auditing Standards, a copy of our most recent peer
review report has been provided to you, for your information.
If this letter defines the arrangements, as you understand them, please sign and date
the enclosed copy, and return it to us. We appreciate your business.
McGladrey & Pullen, LLP
Robert R. Feldmann
Partner
Confirmed on behalf of the addressee:
Signature
Date
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