HomeMy WebLinkAboutAugusta-Richmond County Admininstrator
Augusta Richmond GA
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June 19,2000
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JUL 1 4 2000
Mr. Randy Oliver
Augusta-Richmond County Administrator
Augusta-Richmond County Commission
Augusta-Richmond County, Georgia
Gentlemen:
AUGUSTA-AICHMOND COUNTY
ADMINISTRATOR'S OFFICE
We have prepared this engagement for consulting services based on the request of Augusta-Richmond
County's Administrator. Additionally, we have included an extension of our audit contractto provide
for a consistent evaluation of Augusta-Richmond County's operations.
This letter of arrangement between Augusta-Richmond County (the "Government") and Cherry, Bekaert
& Holland, L.L.P. sets for the nature and scope of the services we will provide, the Government's required
involvement and assistance in support of our services, the related fee arrangements and other terms and
conditions designed to assure that our professional services are performed to achieve the mutually agreed
upon objectives of the Government.
SUMMARY OF SERVICES
A. Consulting Services
We will provide the Government with financial consulting services which will be directed by the
Administrator of the Government. Cherry, Bekaert & Holland, L.L.P. personnel will not make
management decisions and will function as a support service under the supervision and
authorization of the Administrator. We will report directly to the Government's Finance
Committee. We will evaluate the Finance and Accounting Departments' organizational structure
and develop an implementation and maintenance plan that will better utilize the capabilities of
personnel. Our consulting engagement will include the following services:
1. Perform an evaluation of the operations and effectiveness of the Finance
Department.
2. Develop and document effective job descriptions and levels of responsibilities.
3. Provide training for Finance Department personnel.
4. Assist the Finance Department with updating the monthly financial statements.
Cherry. Bekaert & Holland. L.L.P.
1029 Greene Street (3090 I) . P.O. Box 2247 . Augusta. GA 30903 . (706) 724-3557 . Fax (706) 724-1667
Offices Throughout The Southeast. Represented Internationally Through Summit International Associates. Inc.
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June 19,2000
Our emphasis of this plan allows for a process in which personnel involved know their roles and
expectations.
This engagement will be coordinated by Kip Plowman and Ken Fields, Partners, who is responsible
for assuring the overall quality, value, and timeliness of our services to you. Paul Chancey,
Manager, and Bonnie Lamb, Supervisor, will be responsible for the daily engagement services.
B. Financial Audits
We will audit the general purpose financial statements of Augusta-Richmond County as of and for
the years ended December 31,2000 through 2002. The objective of our audit is the expression of
an opinion as to whether the general purpose financial statements are fairly presented, in all
material respects, in conformity with generally accepted accounting principles. The objective also
includes reporting on Augusta-Richmond County's compliance with laws and regulations and the
provisions of contracts and grant agreements and its internal controls as required by the Single
Audit Act Amendments of 1996 and OMB Circular A-133, Audits of States, Local Governments,
and Non-Profit Organizations. Our audit will be conducted in accordance with generally ac~epted
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 Amendments of 1996;
and the provisions of OMB Circular A-133, and will include tests of the accounting records of
Augusta-Richmond County and other procedures we consider necessary to enable us to express
such an opinion and to render the required Single Audit reports. If our opinion on the general
purpose financial statements or the Single Audit compliance 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 audit or are unable to express an opinion, we may decline to express an opinion or may not
issue a report as a result of this engagement.
Our procedures will include tests of documentary evidence supporting the transactions recorded
in the accounts, and may include tests of 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 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 rather than absolute assurance about whether the financial
statements are free of material misstatement, whether caused by error or fraud. As required by the
Single Audit Act Amendments of 1996 and OMB Circular A-133, our audit will include tests of
transactions related to federal award programs for compliance with applicable laws and regulations
and the provisions of contracts and grant agreements. However, because of the concept of
reasonable assurance and because we will not perform a detailed examination of all transactions,
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June 19,2000
there is a risk that material errors, irregularities, or illegal acts, including fraud or defalcations, may
exist and not be detected by us. In addition, an audit is not designed to detect errors, fraud, or other
illegal acts that are immaterial to the general purpose financial statements or to major programs.
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.
Any additional services that you may request, and that we agree to provide, will bethe subject of
separate written agreements.
This engagement will be led by Ken Fields and Kip Plowman, Partners, who are responsible for
assuring the overall.quality, value, and timeliness of our services to you. Paul Chancey will
continue to serve as the in-charge auditor during the field work.
Management Responsibility
The management of Augusta-Richmond County ("Management") 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 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.
Internal Control Structure
In planning and performing our audit, we will consider the internal control structure in order to
determine our auditing procedures for the purpose of expressing our opinions on Augusta-
Richmond County's general purpose financial statements, on its compliance with requirements
applicable to major federal financial assistance programs, and to report on the internal control
structure in accordance with OMB Circular A-I33. Our audit is not designed to provide assurance
on internal control.
. We will update our understanding of the design of the relevant policies 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. 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.
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We will perform tests of controls, as required by OMB Circular A-B3, 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 Augusta-Richmond County'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, sUminarize, 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-133.
Compliance Responsibility
Compliance with laws, regulations, contracts, and grant agreements applicable to Augusta-
Richmond County is the responsibility of Augusta-Richmond County'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 Augusta-Richmond County'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
of this letter. 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 Augusta-Richmond County's compliance with the specific requirements
applicable to major programs listed in the previous sentence.
We will perform certain procedures to test Augusta-Richmond County's compliance with the
general requirements applicable to its federal financial assistance programs as required by OMB
Circular A-133. Our procedures will be limited to the applicable procedures described in 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.
Augusta-Richmond County Commission
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June 19,2000
Terms and Conditions Supporting Fee
As a result of our planning process, the Government and Cherry, Bekaert & Holland, L.L.P. have
agreed to a fee, subject to the following conditions.
To facilitate meeting our mutual objectives, the Government will provide in a timely manner audit
schedules and supporting information, including timely communication of all significant
accounting and financial reporting matters, as well as working space and clerical assistance as
mutually agreed upon and as is normal and reasonable in the circumstances. When and if for any
reason the Government is unable to provide such schedules, information and assistance, Cherry,
Bekaert & Holland, L.L.P. and the Government will mutually revise the fee to reflect additional
services, if any, required of us to achieve these objectives.
In providing our services, we will consult with the Government with respect to matters of
accounting, financial reporting or other significant business issues. Accordingly, time necessary
to effect a reasonable amount of such consultation is reflected in our fee. However, should a matter
require research, consultation or audit work beyond that amount, Cherry, Bekaert & Holland,
L.L.P. and the Government will agree to an appropriate revision in services and fee.
Except for any changes in fees which may result from the circumstances described above, our fees
will be limited to those set forth below.
We will prepare a schedule of required documents and a timetable for completion by Government
personnel. We understand that you will provide us with the 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 indudes 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 type confirmations and other items we request and will
locate invoices selected by us for testing.
We understand the Government's reporting requirements with the Georgia Department of Audits
and will schedule the audit accordingly. We anticipate delivering the report to you by June 30,
provided we receive your adjusted trial balances by March 31, and receive maximum cooperation
from your personnel.
Representation from Management
Management is responsible for the fair presentation of the financial statements in conformity with
generally accepted accounting principles, for making all financial records and related information
available to us, and for identifying and ensuring that the entity complies with the laws and
regulations applicable to its activities. At the conclusion of the engagement, the
Government's management will provide to us a representation letter that, among other things,
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Augusta-Richmond County Commission
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June 19,2000
addresses these matters and confirms certain representations made during the audit, including, to
the best of their knowledge and belief, the absence of fraud involving management or those
employees who have significant roles in the entity's internal control, or others where it could have
a material effect on the financial statements. These representations include management's
acceptance and understanding of their responsibilities with respect to the internal control structure
and internal audit function as described in this engagement letter.
Communications
At the conclusion of the engagement, we will provide management, in a mutually agreeable format,
our recommendations designed to help the Government make improvements in its internal control
structure and operations, and other matters that may come to our attention (see "Responsibilities
as to Internal Controls" above).
Access to Working Papers
The working papers for the engagement are the property of Cherry, Bekaert & Hollapd, L.L.P. and
constitute confidential information. Except as discussed below, any requests for access to our
working papers will be discussed with you prior to making them available to requesting parties.
Our Firm, as well as all other major accounting firms, participates in a "peer review" program,
covering our audit and accounting practices. This program requires that once every three years we
subject our quality assurance practices to an examination by another accounting firm. As part of
the process, the other firm will review a sample of our work. It is possible that the work we
perform for you may be selected by the other firm for their review. If it is, they are bound by
professional standards to keep all information confidential. If you object to having the work we
do for you reviewed by our peer reviewer, please notify us in writing.
Subpoenas
In the event we are requested or authorized by you or required by government regulation,
subpoena, or other legal process to produce our working papers or our personnel as witnesses with
respect to our engagement for you, you. 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 expense, as well as the
fees and expenses of our counsel, incurred in responding to such a request.
C. Other Services - Taxes
We will prepare the Augusta-Richmond County Public Facilities, Inc.' s federal information return,
Form 990, for the years ended December 31, 2000 through 2002.
FEES
Our fees for these services will be based on actual time spent based on our standard billing procedures,plus
out-of-pocket costs such as report production, typing, postage, etc. Our hourly rates vary according to the
degree of responsibility involved and the experience level of the personnel assigned to the engagement.
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Augusta-Richmond County Commission
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June 19,2000
. Our fees will be as follows:
A. Consulting Services
The initial consulting service will be based on using one senior and one supervisor level consultant
for up to 20 hours each per week. Our preliminary estimate is this project would take a total of
approximately 600 hours. As the scope of the project is better defined, we will adjust the number
of hours per week as deemed necessary by the Government.
The following fee schedule is our standard hourly billing rates for this type of engagement:
Staff Members
Senior Consultants
Supervisors
Managers
Partners
$65.00 - $100.00
$75.00 - $100.00
$90.00 - $110.00
$130.00 - $180.00
$200.00 - $250.00
Based on the nature of your organization, we would bill the Government on this consulting
engagement at 80% of our standard hourly billing rates.
These fees will be billed monthly as incurred. From time to time, we will adjust our standard
hourly rates for inflation and 'other reasons.
B. Financial Audit
The fee for these services is based on our standard billing practices and will be $118,000. These
fees are the same as our fees for the last 3 years.
Consistent with our 1999 financial audit, we will partner with the accountingfmn of Banks, Finley,
White & Company to perform the Single Audit portion of the annual ~udit.
Our audit fee schedule anticipates that the Government's Finance Department will implement the
necessary changes resulting from GASB 34. Since we have implemented these changes at other
clients, we will be available to provide additional GASB 34 consulting services based on the above
hourly rates.
C. Other Services - Taxes
Our fees for these services will be based on actual time spent on the preparation of the Form 990.
These fees will not exceed $2,000.
Services performed in connection with items not described above will be billed separately based on
standard billing procedures.
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June 19,2000
Government Auditing Standards requires that we provide you with a copy of our most recent quality
review report. Our 1998 peer review report accompanies this letter;
We appreciate the opportunity to be of service to Augusta-Richmond County and believe this letter
accurately summarizes the significant terms of our engagement. If you have 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.
S incerel y,
CHERRY, BEKAERT & HOLLAND, L.L.P.
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RESPONSE:
This letter correctly sets forth the understanding of Augusta-Richmond County, Georgia, with regards to
the professional services listed above.
Augusta-Richmond County Georgia
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Date:
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To the Partners
Cherry, Bekaert & Holland, L.L.P.
We have reviewed the system of quality control for the accounting and auditing practice of Cherry,
Bekaert & Holland, L.L.P. (the firm) in effect for the year ended April 30, 1998. A system of
quality control encompasses the firm's organizational structure and the policies adopted and
procedures established to provide it with reasonable assurance of complying with professional
standards. The elements of quality control are described in the Statements on Quality Control
Standards issued by the American Institute of Certified Public Accountants (the "AICP A"). The
design of the system, and compliance with it, are the responsibilities of the firm. In addition, the
firm has agreed to comply with the membership requirements of the SEC Practice Section of the
AICP A Division for CPA Firms (the Section). Our responsibility is to express an opinion on the
design of the system, and the firm's compliance with that System and the Section's membership
requirements based on our review.
Our review was conducted in accordance with standards established by the Peer Review Committee
of the Section. In performing our review, we obtained an understanding of the system of quality
control for the firm's accounting and auditing practice. In addition, we tested compliance with the
firm's quality control policies and procedures and with the membership requirements of the Section
to the extent we considered appropriate. These tests covered the application of the firm's policies
and procedures on selected engagements. Because our review was based on selective tests, it would
not necessarily disclose all weaknesses in the system of quality control or all instances oflack of
compliance with it or with the membership requirements of the Section. As is customary in a peer
review, we are issuing a letter under this date that sets forth comments relating to certain policies
and procedures or compliance with them. These matters were not considered to be of sufficient
significance to affect the opinion expressed in this report.
Because there are inherent limitations in the effectiveness of any system of quality control,
departures from the system may occur and not be detected. Also, projection of any evaluation of a
system of quality control to future periods is subject to the risk that the system of quality control
may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
In our opinion, the system of quality control for the accounting and auditing practice of Cherry,
Bekaert & Holland, L.L.P. in effect for the year ended April 30, 1998, has been designed to meet the
requirements of the quality control standards for an accounting and auditing practice established by
the AICPA, and was complied with during the year then ended to provide the.finn with reasonable
assurance of conforming with professional standards. Also, in our opinion, the firm was in
conformity with the membership requirements of the Section in all material respects.
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Milwaukee, Wisconsin
October 7, 1998
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