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HomeMy WebLinkAboutKPMG FISCAL YEAR END 2008 COST ALLOCATION ENGAGEMENT RENEWAL OPTION BASED ON ENGAGMENT LETTER DATED SEPT 14, 2007 =u KPMG LLP Suite 2000 303 Peachtree Street, NE Atlanta, GA 30308 Telephone 404 222 3000 Fax 404 222 3050 Internet www.u5.kpmg.com May 26, 2009 Ms. Kathy Williams Finance Analyst Augusta-Richmond County 530 Greene Street, Suite 207 Augusta, Georgia 30901 Dear Ms. Williams: RE: Fiscal Year End 2008 Cost Allocation Engagement Renewal Option Based on Engagement Letter Dated September 14, 2007 Augusta-Richmond County staff has requested to exercise the optional renewal for KPMG's assistance with the preparation of the FY 08 Full Cost and OMS Circular A-87 Cost Allocation Plans as described in the executed engagement letter dated September 14, 2007. Signature and acceptance of this engagement letter will provide a contractual agreement for KPMG to provide the FY 08 Cost Allocation Plan assistance. This engagement letter is subject to the standard terms and conditions included as an attachment in the original September 14, 2007 engagement letter. The total engagement fee of $27,500 will be billed according to the schedule detailed in the original engagement letter which is the following: 50% of the fee thirty days after the initiation of fieldwork, 25% upon delivery of the draft plans, and 25% upon delivery of the final plans. Attached to this letter is Appendix A: "Scope of Services" for the FY 08 Cost Allocation Plan assistance engagement. The scope, approach, and workplan are consistent with the September 14, 2007 engagement letter. KPMG LLP, a u.s. limited liability partnership, is the U.S. member firm of KPMG International, a Swiss cooperative. =u We appreciate the opportunity to perform work for Augusta-Richmond County under the renewal option. We look forward to discussing our approach with you and especially to performing these important services for the County. If you should have any questions, please contact me at (407) 563-2227 or David Roberts at (404) 222-3625. Very truly yours, David L. Dennis Partner KPMG LLP Enclosure: Attachment A - FY 08 Cost Allocation Assistance Scope of Services ACCEPTED: UJ Jl. :xl . / /-- Authorized Signatu~ LAAI4 i 01- Title Attachment A - FY 08 Cost Allocation Assistance Scope of Services The County is requesting assistance with the development of the Full Cost and OMB Circular A-87 Cost Allocation Plans based on expenditures for the period ending December 31,2008. The first plan will be a "full-cost" plan for use in allocating indirect costs to enterprise funds, internal service funds, and certain special revenue funds. The second plan will be prepared in accordance with the Federal Office of Management and Budget Circular A-87, Cost Principles for State and Local Governments and may be used for allocating indirect costs to the County's federal grant programs. The County is responsible for submitting its cost allocation plan for negotiation and approval if requested by its federal cognizant agency. Please note, current OMB Circular A-87 regulations do not require the County to submit its cost allocation plan for negotiation and approval unless specifically requested by its federal cognizant agency. KPMG Project Team Mr. David Dennis, a partner in KPMG's Orlando office, will serve as the engagement partner. Mr. David Roberts, a manager in KPMG's Atlanta office, will serve as the engagement manager and will serve as the KPMG primary point of contact for this engagement. Ms. Cathryn van Namen and Heather Lane both in KPMG's Government practice will serve as primary staff for this engagement. All members of KPMG's project team have prior experience providing cost allocation services to the County. Engagement Objective The objective of this engagement is to assist the County in developing the indirect cost allocation plans (CAP). To meet this objective, KPMG proposes to assist the County as follows: . Deliverable I - Assist with the preparation of the County's Full Cost Allocation Plan based on County-provided data. The Plan will be prepared in accordance with the full costing concepts that recognize and incorporate central service expenditures of County departments and offices, including "general government" costs. The plan will be prepared based on expenditures incurred for the fiscal year ended December 31, 2008. . Deliverable II - Assist with the preparation of the County's OMB Circular A-87 CAP based on County-provided data. The A-87 plan contains a determination of allowable costs for providing supporting service. The Attachment A - Page 1 of 5 . Attachment A - Page 2 of 5 CAP will be prepared based on expenditures incurred for the fiscal year ended December 31,2008. Work Plan Approach KPMG is prepared to start the project within three weeks from the receipt of the signed engagement letter or executed contract. We estimate that an elapsed calendar time of 90 days from the date of commencement would be required to assist you in the development of the draft reports. This time frame is dependent upon the timeliness of requested information furnished by the County. The County will be responsible for the collection of all statistical information used as allocation basis, as well as all decisions regarding allocation statistics, cost pools, and receiving departments used in the cost allocation plan. KPMG's role will be to advise the County and compile the indirect cost plans after the County has made key decisions. The following chart depicts a view of project timing by phase. Phase 1. Project Initiation and Fieldwork 2. Data Collection and Analysis 3. Issue Draft Reports (up to 90 days after project starQ 4. Issue Final Reports and Project Closeout As part of our initial planning meeting, we will work with the County's staff to finalize the timeline. It is anticipated that up to one week of on-site fieldwork at the County's offices will be required for this project. Interviews conducted with County personnel during this time are typically 45 to 60 minutes for central service departments identified for allocation in the plan. Project Time Line Estimated Project Start Date June 2009 Estimated Project End Date September 2009 Project Overview The KPMG Team will follow a phased approach to meet the engagement objective for the County. The project schedule estimates a 90-day time span to generate the draft reports. KPMG will finalize the reports within approximately 30 days of receipt of the County's written comments. Throughout the engagement, the County will be responsible for all decisions made relative to the composition of the plan, i.e. cost pools that are allocated, allocation statistics used to allocate costs etc. KPMG staff will prepare cost reports based on data provided by the County. Organize a project team comprised of KPMG Team personnel and at least one County staff. Issue the County an information request letter. We will work with County staff to keep them informed as our work progresses. 6/09/09 Kick-off meeting with the County staff responsible for working with KPMG in the development of the Cost Allocation Plans (CAP) to discuss the engagement objectives. Classify cost centers, services performed, products delivered etc., and identify allocation bases. Collect financial data to develop the indirect cost pools. 6/11/09 Meet with County central services to identify departments' functional activities. KPMG will assist central service department managers to determine the reasonable basis for allocating each of their department's functions. 2 Analyze the County's expenditures to determine the costs for the indirect cost pools for the CAP. 6/09/09 08/28/09 Data collection of departments charging user fees. Conduct interviews as necessary. Review the Cost Determination Matrix (CDM) reconciliation to the audited financial statements used in the CAPs. 3 Enter the allocation information into our CDM system. Complete double step-down analysis using CDM and develop the associated supporting schedules necessary to prepare the CAPs. Generate the Cost Allocation Plans, including financial and statistical schedules. Develop indirect cost pool narratives and explanations. Issue draft report deliverables. Follow Up with County. Revise CAPs as necessary and issue final reports. 08/17/09 08/28/09 4 Final timeline dependent on County's ability to review draft report and provide feedback timely. 08/31/09 09/25/09 Finalize work papers and submit to KPMG Records Center. *Phase 1. Project Initiation and Fieldwork 2. Data Collection and Analysis 3. Issue Draft Reports 4. Issue Final Re orts and Pro'ect Closeout Attachment A - Page 3 ot5 . The County will provide data for central service departments at division / department / fund level (or their equivalent) summaries that provide a reasonable basis for allocating each function's activity to the benefiting departmentld ivision. . The County is requested to review the draft reports and provide comments to KPMG within 30 days of receiving the draft report. KPMG will issue the final reports within 30 days of receiving the County's comments. Should the County not provide written comments or request an extension for the review of the draft reports, KPMG will consider the draft reports as finalized and issue the reports in final form. . The County will provide relevant operational, technical, and background information as required by the engagement team. . The County will provide assistance to help KPMG achieve the successful completion of the engagement. Such assistance will include: · Assistance in gaining timely access to documentation, systems, and key personnel · Timely feedback at key decision points · Active participation to facilitate the timely re~olution of project-related issues. . The County will provide a common office space adequate for up to 2 KPMG personnel. The office will include access to a telephone, printer/copier and internet connectivity. . The County will provide meeting space as needed to conduct interviews and work sessions throughout the project. /'. Project Assumptions Our assumptions for the engagement are as follows: Deliverables and Other Matters Our analysis will be prepared under the Consulting Standards issued by the American Institute of Certified Public Accountants (AICPA) and does not constitute an examination, compilation or agreed upon procedures in accordance with the standards established by the AICPA. This analysis will be prepared based on information received from the County. No independent verification of this information will be made by KPMG and we assume no responsibility for the accuracy or reliability of the information provided to us. The analysis will be intended solely for the use of the County and may not be provided to any third party without the written consent of KPMG and should not be relied upon for any other purposes. Attachment A - Page 4 of 5 Attachment A - Page 5 of 5 . . Additional Considerations It has been our experience that the County's participation is necessary for this type of engagement to be successful. It is imperative that we receive timely cooperation regarding requested data for effective use of KPMG and County resources, as well as the CDM system. KPMG requests that information provided by the County to be summarized and subtotaled by Department/Division (or equivalent) for the General Fund and by Fund for non General Fund activities. Information requested by KPMG should be provided in both electronic and hard copy formats. We require temporary office space and telephone services for local calls while on-site. Additionally, we understand that it is our responsibility to provide our own computer hardware and software, supplies, clerical support, and data entry support, and that no County staff or equipment will be provided for this project exceptas interviewees. By accepting this engagement letter, County management accepts responsibility for the substantive outcomes of this engagement and, therefore, has a responsibility to be in a position in fact and appearance to make an informed judgment on the results of this engagement and that the County will comply with the following: . Designate a qualified management-level individual to be responsible and accountable for overseeing the engagement. . Establish and monitor the performance of the engagement to ensure that it meets management's objectives. . Make any decisions that involve management functions related to the engagement and accept full responsibility for such decisions. . Evaluate the adequacy of the services performed and any findings that result.