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HomeMy WebLinkAboutCHERRY BEKARET HOLLAND LLP Augusta Richmond GA DOCUMENT NAME: CfI ~ ~V ~I:;;IZA 10 ~T e- '\..\0 <.LI/-'" D L L; r-> "7 J I DOCUMENT TYPE: YEAR: d-DD 3 BOX NUMBER: :2. S- FILE NUMBER: II 4>6 Lf NUMBER OF PAGES: , ." .' . . ~ fib, /~ ~m mY, fJ~ Jf& -Ike- ()hJjJ44'J.fJ! . A\?P\RO~EP fE.B 1 8 20G3 CQ\\:.'fl Cl)tl\\~,\~S\OIl) 1~IlG\j)iM{\C~.il,()\\\) ~- I"~~ October 14, 2004 Augusta-Richmond County Commission Augusta, Georgia This letter of arrangement between Augusta, Georgia and Cherry, Sekaert & Holland, L.L.P. sets forth the nature and scope of the services we will provide, Augusta, Georgia'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 Augusta, Georgia. ' SUMMARY OF SERVICES We will audit the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information, which collectively comprise the basic financial statements of Augusta, Georgia as of and for the year ended December 31, 2004. Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America; Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; the provisions of OMS Circular A-133; and will include test of accounting records, a determination of major programs in accordance with Circular A-133, and other procedures as deemed necessary to enable us to express such an opinion and to render the required reports. The objective of an audit is the expression of our opinion concerning whether the basic financial statements are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America. In connection with our audit, we will report on the fairness of presentation of the schedules of federal and state financial assistance in relation to the financial statements taken as a whole. We will also perform tests of compliance as required by Government Auditing Standards, the provisions of OMS Circular A-133, and the Audit Manual for Local Governmental Units and Recipients of Grant Funds, and issue our reports thereon. If any of our opinions resulting from the procedures described above are other than unqualified, we will fully discuss the reasons with you in advance. The reports on internal control and compliance will each include a statement that the report is intended solely for the information and use of the audit committee, management, specific legislative or regulatory bodies, federal awarding agencies, and if applicable, pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. As part of our engagement, we will prepare the financial statements and note disclosures from individual fund trial balances that you will provide. However, management is responsible for the financial statements and note disclosures. In your representation to us, you will be asked to acknowledge our role in this regard, and your review, approval, and responsibility for the financial statements and note disclosures. /I)" _ "l" "" 1"J,.;n )1 r"i? A. ~. J A.J ~ ..f . "J!' UVLJ~Jd"o" !.50{f'-~J.Lc51.) ;\,,7a ~ r~1I.JtEdr@( /)'~. /i;llLl- 4?-A!44J't/l.ae "./' (/ owl G;6'W-- .' Any additional services that you may request, and that we agree to provide, will be the subject of separate written arrangements. Should Augusta, Georgia wish to include or incorporate by reference these financial statements and our report thereon into any official statement or any other document related to the offering of debt securities at some future date, we would consider our consent to the inclusion of our report into another such document at that time. However, we are required by auditing standards generally accepted in the United States of America to perform certain procedures before we can give our permission as to the inclusion of our report into another such document. You agree that you will not include or incorporate by reference these financial statements and our report thereon into any other document without our prior written consent. - Kip Plowman and Bonnie Cox, who will be responsible for assuring the overall quality, value, and timeliness of our services to you, will lead the engagement. YOUR EXPECTATIONS As part of our planning process, we will discuss with you your expectations of Cherry, Bekaert & Holland, L.L.P., changes that occurred during the year, your views on risks facing you, any relationship issues with Cherry, Bekaert & Holland, L.L.P., and specific engagement arrangements and timing. Our service plan, which includes our audit plan, is designed to provide a foundation for an effective, efficient, and quality- focused approach to accomplish the engagement objectives and to meet or exceed your expectations. Our service plan will be reviewed with you periodically and will serve as a benchmark against which you will be able to measure our performance. TERMS AND CONDITIONS SUPPORTING FEE As a result of our planning process, Augusta, Georgia and Cherry, Bekaert & Holland, L.L.P. have agreed to a fee, subject to the following conditions. To facilitate meeting our mutual objectives, Augusta, Georgia 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 Augusta, Georgia is unable to provide such schedules, information and assistance, Cherry, Bekaert & Holland, L.L.P. and Augusta, Georgia 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 Augusta, Georgia 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 Augusta, Georgia 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. FEE Financial Audit - Our fees for these services will be based upon our customary billing practices at the time of the engagement. Bills for services will be rendered as work progresses and are due within 15 days from invoice date. A service charge will be added to past due accounts equal to 1 1/2% per month (18% annual rate) on the previous month's balance less payments received during the month, with a minimum charge of $2.00 per month. The fee for our audit as described in this letter will not exceed $129,430, which includes $11,430 relating to SAS 99. This fee 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, Any modification to the fee shall be in writing and signed by both parties. You agree to , . pay all costs of collection (including reasonable attorneys' fees) that we may incur in connection with the collection of unpaid invoices. The fees are based on auditing standards effective as of the date of this engagement letter. If new auditing standards are issued and are effective for the period under audit described in this engagement letter that require additional audit procedures that were not known at the date of this engagement letter, we will estimate the impact of any new such standard on the nature, timing and extent of our planned audit procedures and will communicate with you concerning the scope of the additional procedures and the estimated fees. Other Services - Our fees for the preparation of the audit of Augusta, Georgia's State of Georgia Grant Certification Forms, and the agreed-upon procedures on Augusta, Georgia's compliance with the financial assurance provisions of the Municipal Solid Waste Landfill Criteria under Subtitle D of the Resource Conservation Recovery Act for the year ended December 31 , 2004, will be based upon our standard billing practices. The annual fees for these services will be based on actual time spent and will not exceed $2,000 each. Tax return - Our fees for the preparation of the Federal Form 990 for Richmond County Public Facilities, Inc. will be based upon our standard billing practices. The annual fees for these services will be based on actual time spent and will not exceed $1,000. LIMITATIONS OF THE AUDITING PROCESS Our audit will include procedures designed to obtain reasonable, rather than absolute, assurance of detecting misstatements due to errors or fraud that are material to the basic financial statements. As you are aware, however, there are inherent limitations in the auditing process. For example, audits are based on the concept of selective testing of the data being examined and are, therefore, subject to the limitation that material misstatements due to errors or fraud, if they exist, may not be detected. Also, an audit is not designed to detect error or fraud that is immaterial to the basic financial statements. As required by the Single Audit Act Amendments of 1996 and OMB Circular A-133, our audit will include tests of transactions related to major federal award programs for compliance with applicable laws and regulations and the provisions of contracts and grant agreements. Because an audit is designed to provide reasonable, but not absolute assurance and because we will not perform a detailed examination of all transactions, there is a risk that material errors, fraud, other illegal acts, or noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect immaterial errors, fraud, or other illegal acts or illegal acts that do not have a direct effect on the basic financial statements or to major programs. It should be recognized that our audit generally provides no assurance that illegal acts will be detected, and only reasonable assurance that illegal acts having a direct and material effect on the determination of financial statement amounts will be detected. However, we will inform you with respect to material errors and fraud, or illegal acts that come to our attention during the course of our audit. We will include such matters in the reports as required for a Single Audit. If, for any reason, we are unable to complete the audit, or are unable to form or have not formed an opinion on the basic financial statements, we may decline to express an opinion or decline to issue a report as a result of the engagement. RESPONSIBILITIES AS TO INTERNAL CONTROLS As a part of our audit, we will consider Augusta, Georgia's internal control structure, as required by auditing standards generally accepted in the United States of America and Government Auditing Standards, sufficient to plan the audit and to determine the nature, timing, and extent of auditing procedures necessary for expressing our opinion concerning the basic financial statements. You recognize that the basic financial statements and the establishment and maintenance of an effective internal control over financial reporting are the responsibility of management. You also recognize that management is responsible for " identifying and ensuring that the entity complies with the laws and regulations applicable to its activities. Appropriate supervisory review procedures are necessary to provide reasonable assurance that adopted policies and prescribed procedures are adhered to and to identify errors, fraud, or illegal acts. An audit is not designed to provide assurance on internal control. As part of our consideration of Augusta, Georgia's internal control structure, however, we will inform you of reportable conditions and other matters that come to our attention that represent significant deficiencies in the design or operation of the internal control structure, if any, as required by OMS Circular A-133. As required by OMS Circular A-133, we will perform tests of controls to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements, applicable to each major federal award program. However, our tests will be less in scope than would be necessary to render an opinion on those controls and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to OMS Circular A-133. You are also responsible for 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 company involving (a) management, (b) employees who have significant roles in internal control, and (c) others where the fraud could have a material effect on the financial statements. You are also responsible for informing us of your knowledge of any allegations of fraud or suspected fraud affecting the company received in communications from employees, former employees, regulators, or others. RESPONSIBILITIES AS TO COMPLIANCE Our audit will be conducted in accordance with the standards referred to in the section Summary of Services. As part of obtaining reasonable assurance about whether the basic financial statements are free of material rnisstatement, we will perform tests of Augusta, Georgia's compliance with applicable laws and regulations and the provisions of contracts and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards. OMS Circular A-133 requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with applicable laws and regulations and the provisions of contracts and grant agreements applicable to major programs. Our procedures will consist of the applicable procedures described in the OMS Circular A-133 Compliance Supplement for the types of compliance requirements that could have a direct and material effect of each of Augusta, Georgia's major programs. The purpose of those procedures will be to express an opinion on the Augusta, Georgia's compliance with requirements applicable to major programs in our report on compliance issued pursuant to OMS Circular A-133, REPRESENTATION FROM MANAGEMENT Management is responsible for the fair presentation of the basic financial statements in conformity with accounting principles generally accepted in the United States of America, 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. Management is also responsible for adjusting the financial statements to correct material misstatements. Additionally, as required by OMS Circular A-133, it is management's responsibility to follow up and take corrective action on prior audit findings and to prepare a summary schedule of prior audit findings and a corrective action plan. The summary schedule of prior audit findings and the corrective action plan should be made available to us during the course of our engagement. Management, at the conclusion of the engagement, will provide to us a representation letter that, among other things, 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 basic financial statements. The representation letter will also affirm to us that management believes that the effects of any uncorrected misstatements aggregated pertaining to the .. .. current year financial statements are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. Cherry, Bekaert & Holland, L.L.P. will rely on the Company's management providing these representations to us, both in the planning and performance of the audit, and in considering the fees that we will charge to perform the audit. Because we will be relying on management's representations, you agree to indemnify Cherry, Bekaert & Holland, L.L.P., and its partners and employees, and hold them harmless from all claims, liabilities, losses, and costs arising in circumstances where there has been a knowing misrepresentation by an officer or employee of the Company regarding fraud or suspected fraud regardless of whether such officer or employee was acting in the Company's interest, and even if Cherry, Bekaert & Holland, L.L.P. acted negligently or wrongfully in failing to uncover or detect such misrepresentation regarding fraud or suspected fraud. This indemnification will survive termination of this letter. COMMUNICATIONS At the conclusion of the engagement, we will provide management, in a mutually agreeable format, our recommendations designed to help Augusta, Georgia make improvements in its internal control structure and operations, and other matters that may come to our attention (see "Responsibilities as to Intemal Controls" above). As part of this engagement we will ensure that certain additional matters are communicated to the appropriate members of management and the Augusta-Richmond County Council. Such matters include (1) our responsibility under auditing standards generally accepted in the United States of America; (2) the initial selection of and changes in significant accounting policies and their application; (3) our independence with respect to the entity; (4) the process used by management in formulating particularly sensitive accounting estimates and the basis for our conclusion regarding the reasonableness of those estimates; (5) audit adjustments that could, in our judgment, either individually or in the aggregate be significant to the financial statements or our report; (6) any disagreements with management conceming a financial accounting, reporting or auditing matter that could be significant to the financial statements; (7) our views about matters that were the subject of management's consultation with other accountants about auditing and accounting matters; (8) major issues that were discussed with management in connection with the retention of our services, including, among other matters, any discussions regarding the application of accounting principles and auditing standards; and (9) serious difficulties that we encountered in dealing with management related to the performance of the audit. Government Auditing Standards require that we provide you with a copy of our most recent quality control review report. Our most recent peer review report accompanies this letter. ACCESS TO WORKING PAPERS The working papers for the engagement are the property of Cherry, Bekaert & Holland, 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, The wOrkpapers for this engagement will be retained for a minimum of three years after the date the auditors' report is issued or for any additional period requested by Augusta, Georgia. If we are aware that a federal awarding agency, pass-through entity, or auditee is contesting an audit finding, we will contact the party(ies) contesting the audit finding for guidance prior to destroying the workpapers. 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 govemment 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. OTHER MATTERS If any dispute, controversy or claim arises in connection with the performance or breach of this agreement, either party may, on written notice to the other party, request that the matter be mediated. Such mediation would be conducted by a mediator appointed by and pursuant to the Rules of the American Arbitration Association or such other neutral facilitator acceptable to both parties. Both parties would exert their best efforts to discuss with each other in good faith their respective positions in an attempt to finally resolve such dispute or controversy. If any dispute, controversy, or claim arising out of or in connection with the performance or breach of this agreement cannot be resolved by mediation, then you agree that such dispute, controversy, or claim would be settled by arbitration in accordance with the rules of the American Arbitration Association (AAA) for the Resolution of the Accounting Firm Disputes. The award issued by the arbitration panel may be confirmed in a judgment by any federal or state court of competent jurisdiction. If the foregoing is in accordance with your understanding, please sign a copy of this letter in the space provided and return it to us. If you have any questions, please call Kip Plowman at 706-724-3557. Very truly yours, CHERRY, BEKAERT & HOLLAND, L.L.P. ~, ~-I--1J..u-'4'~ L,L.P, Kip Plowman, CPA Partner Enclosure RESPONSE: This letter correctly sets forth the understanding of Augusta, Georgia. By: ~j~. M ~'?V: Q g% Title: By: .. ( .' ~ Clifton ~ Gunderson LLP Certified Public Accountants & Consuhanls November 26, 2001 To the Partners of Cherry, Bekaert & Holland, L.L.P. and the SEC Practice Section Peer Review Committee We have reviewed the system of quality control tor the accounting and auditing practice of Cherry, Bekaert & Holland, L.L.P. (the firm) in effect for the year ended April 30,200 l. 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 AICPA). 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 AICPA 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 reVlew. Our review was conducted in accordance with standards established by the Peer Review Committee of the Section and included procedures to plan and perform the review that are summarized in the attached description of the peer review process. Our review would not necessarily disclose all weaknesses in the system of quality control or all instances of lack of compliance with it or with the membership requirements ofthe Section since it was based on selective tests, 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, 2001, has been designed to meet the requirements of the quality control standards for an accounting and auditing practice established by the AICP A, and was complied with during the year then ended to provide the' firm with reasonable assurance of complying with professional standards, Also, in our opinion, the firm complied during that year with the membership requirements of the Section in all material respects. As is customary in a peer review, we have issued a letter under this date that sets forth a comment relating to certain policies and procedures or compliance with them. The matter described in the letter was not considered to be of sufficient significance to affect the opinion expressed in this report. ~ .d.......,.&.." .---.- L L ,b Utliccs III I.l 'Cll,~' ;l1ll1 Vv'a,hm~\."', f)~: M._...... ., .,nt~,"8"D"'"