HomeMy WebLinkAboutKPMG FISCAL YEAR END 2008 COST ALLOCATION ENGAGEMENT RENEWAL OPTION BASED ON ENGAGMENT LETTER DATED SEPT 14, 2007
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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.
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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:
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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.
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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.