HomeMy WebLinkAboutCHERRY BEKARET HOLLAND LLP AUGUSTA
Augusta Richmond GA
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DOCUMENT TYPE:
YEAR: 20D~
BOX NUMBER: \ ~
FILE NUMBER: J le l.p ~ 1
NUMBER OF PAGES: cr
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January 3, 2003
Augusta-Richmond County Commission
Augusta, Georgia
This letter of arrangement between Augusta-Richmond County, Georgia and Cherry, Bekaert & Holland,
L.L.P. sets forth the nature and scope of the services we will provide, Augusta-Richmond County, 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-Richmond County, Georgia.
SUMMARY OF SERVICES
We will audit the general-purpose financial statements and the combining and individual fund and aGed
group financial statements of Augusta-Richmond County, Georgia as of and for the years ended December
31,2002,2003, and 2004 in accordance with auditing standards generally accepted in the United States of
America; Governmental Auditing Standards, issued by the Comptroller General of the United States; the
Single Audit Act Amendments of 1996; the provisions ofOMB Circular A-133; and the Audit Manualfor
Local Governmental Units and Recipients of Grant Funds issued by the Tennessee Department of Audit,
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 general-
purpose financial statements and combining and individual fund and account group [mancial 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 audits, we will report on the fairness of presentation of the schedules of federal and
state financial assistance in relation to the general-purpose financial statements taken as a whole. We will
also perform tests of compliance as required by Government Auditing Standards, the provisions of OMB
Circular A -1331, and the A udit 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.
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,lnc.
Any additional service5; that you may request, and that we agree to provide, will be the subject of separate
written arrangements. Should Augusta-Richmond County, Georgia wish t~ 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, who will be responsible for assuring the overall quality, value, and timeliness of our services
to you, will lead the engagement. Bonnie Cox will continue to serve as the in-charge auditor during
fieldwork.
YOUR EXPECTATIONS
As part of our planning process, we have discussed with you your expectations of Cherry, Bekaert &
Holland, L.L.P., your concerns about your business, changes in your business and industry, 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-Richmond County, 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-Richmond County, 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-
Richmond County is unable to provide such schedules, information and assistance, Cherry, Bekaert &
Holland, L.L.P. and Augusta-Richmond County, 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-Richmond County, Georgia with respect to matters
of accounting, [mancial 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-Richmond
County, 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.
Augusta-Richmond County Commission
- Cherry, Bekaert & Holland, L.L.P. -
Page 2 of7
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FEE
Financial Audits - Our annual fees for these services will be based upon our standard billing practices at the
time of the engagement. Bills for services will be rendered as work progresse.s 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 annual fee for our audits as described in this letter will not exceed
$118,000 per year. 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.
Included in the annual audit fees are an additional 40 hours from partners and senior managers from our
government services industry team, to assist Augusta-Richmond County's efforts to obtain budgetary and
financial reporting certifications from the Government Finance Officers' Association.
Other Services - Our fees for the preparation of the audit of Augusta-Richmond County, Georgia's State of
Georgia Grant Certification Forms, and the agreed-upon procedures on Augusta-Richmond County,
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 years ended December 31,
2002,2003, and 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 ofthe 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 audits will include procedures designed to obtain reasonable, rather than absolute, assurance of
detecting misstatements due to errors or fraud that are material to the general-purpose 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 general-purpose 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 general-purpose 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.
Augusta-Richmond County Commission - Cherry, Bekaert & Holland, L.L.P. _
Page 3 of7
If, for any reason, we are unable to complete the audits, or are unable to form or have not formed an opinion
on the general-purpose 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 audits, we will consider Augusta-Richmond County, Georgia's internal control structure, as
required by auditing standards generally accepted in the United States of America and Governmental
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 general-purpose financial statements. You
recognize that the general-purpose 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-Richmond County, 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 OMB Circular
A-B3.
As required by OMB Circular A-B3, 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 OMB Circular
A-B3.
We are prepared at your request to perform a more in-depth assessment of Augusta-Richmond County,
Georgia's internal control structure and report our findings and recommendations, or to conduct an
examination engagement on the effectiveness of your internal control structure. We would be pleased to
discuss fees for these services, which depend on their scope.
RESPONSIBILITIES AS TO COMPLIANCE
Our audits 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 general-purpose financial statements
are free of material misstatement, we will perform tests of Augusta-Richmond County, 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.
Augusta-Richmond County Commission
- Cherry, Seiwert & Holland, L.L.P. -
Page 40f7
,
. OMS Circ~lar A-I33 require:; that we also plan and perform the audits to ob~ reasopable 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 OMB Circular A-133 Compliance Supplement for the types of compliance requirements
that could have a direct and material effect of each of Augusta-Richmond County, Georgia's major
programs. The purpose of those procedures will be to express an opinion on Augusta-Richmond County,
Georgia's compliance with requirements applicable to major programs in our report on compliance issued
pursuant to OMB Circular A-B3.
REPRESENTATION FROM MANAGEMENT
Management is responsible for the fair presentation of the general-purpose 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-B3, 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 oftheir 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 general-purpose 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.
COMMUNICATIONS
At the conclusion ofthe engagements, we will provide management, in a mutually agreeable format, our
recommendations designed to help Augusta-Richmond County, Georgia 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).
As part of the engagements we will ensure that certain additional matters are communicated to the
appropriate members of management and Augusta-Richmond County, Georgia 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 judgement, either individually or in the aggregate be
significant to the financial statements or our report; (6) any disagreements with management concerning 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.
Augusta-Richmond County Commission
- Cherry, Sekaert & Holland, L.L.P. -
Page 5 of7
Government A uditing Standards require that we provide you with a copy of our most recent quality control
review report. Our November 26, 2001, peer review report accompanies thfs letter:
ACCESS TO WORKING PAPERS
The working papers for the engagements 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 the engagements will be retained for a minimum of three years after the dates the
auditors' reports are issued or for any additional period requested by Augusta-Richmond County, 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 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.
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 or Bonnie Cox at 706-
724-3557.
OTHER MATTERS
t,
either may, on written notice to the other party, request that the matter be mediated. Such mediation
would be con u a mediator appointed by and pursuant to the Rules of the American Arbitration
Association or such other I facilitator acceptable to both parties. Both parties would exert their best
efforts to discuss with each other m 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 connectio the performance or breach of this
agreement cannot be resolved by mediation, then you agree that such dispute, troversy, or claim would
be settled by arbitration in accordance with the rules of the American Arbitration ASSOCI' AAA) for the
Resolution of the Accounting Firm Disputes. The award issued by the arbitration panel may be c ed
in fI. jtld~meftt b)' my federal or state cotlrt of GOmpGtcllt j ut1sdiGtioil.
Augusta-Richmond County Commission
- Cherry, Sekaert & Holland, L.L.P. -
Page 6 0[7
Very truly yours,
CHERRY, BEKAERT & HOLLAND, Lff.P. t J / ;1/ J /)
~ B~~v- ti~/L'4.r.
Enclosure
RESPONSE:
This letter correctly sets forth the understanding of Augusta-Richmond County, Georgia.
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JJfiJ!~y: k;.
Title: 'MiA If
Augusta-Richmond County Commission
- Cherry, Seiwert & Holland, L.L.P. -
Page 70f7
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.' '-'.LLI.tAlD
~Gunderson LLP
Certilied Public Aceourrt~111$ & COI1S\Jltanl5
November 26, 2001
To the Partners of
Cherry, Bekaert & Holland, L.L.P.
and the SEC Practice Section Peer Review Comminee
We have reviewed the system of quality control for the accounting and auditing prclctice of
Cherry, Bekaert & Holland, L.L.P. (the firm) in effect for the year ended April 30, 2001. 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
~th_professional stimdlirdS. The elements of quality control are descnoed 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 offue fun}. In addition, the firm has'agreed to comply with the membership
requirements of the SECPractice Section of the AICPA Division for CPA Firms (the
S~cti()n). OUT respOnsibility is to express an opinion on the design of th.e system, and the
firin's compliance With that system and the Section's membership requirements based on our
reVIew,
Our review was conducted in accordance ",ith 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 sysJe01 of qualIty control or all instances of lack of
complia!lce with it or \viththe membership requirements ofthe'Section since it was based on
selective tests. Beoaus~ there are inherent limitations in the effeCtiveness of any system of
quality control, departi.lresfrom the system may occur and not be detected, Also, projection
of any evaluation ofa syst~m of quality control to future periods is 'subjecttothe risk that the
system of quality control may become inadequate because of changes incoiIditions, or that
the degree of compliance with the policies orprocedures 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, 200 I, has been
designed to meet the requirements of the quality control standard., for an accounting and
alJditing practice established by the Alep A, and was complied with during tIle year then
ended to provide the firm with reasonable assurance of complying with professional
standards. Also, ii:iout opinion, the finn complied during that year with the membership
requirements oftheSection 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.
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Ottic,." ill 1:\ >lalC'> dnd W".llIlIglllll. DC
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Office of The Clerk of. Commission
Lena J. Bonner, CMC
Clerk of Commission
Nancy Morawski
Deputy Clerk
Room 806 - Municipal Building
530 Greene Street - AUGUSTA, GA. 30911
(796) 821-1820 - FAX (706) 821-1838
March 13, 2003
Mr. Kip Plowman
Cherry, Sekaert & Holland, L.L.P.
1029 Greene Street
P.O. Sox 2247
Augusta, Georgia 30903
Dear Mr. Plowman:
Enclosed is a fully executed copy of the Letter of Arrangement between Augusta,
Georgia and Cherry, Sekaert & Holland LL.P., which was approved by the Augusta
Commission in its February 18, 2003 meeting to provide the audit services for years
ended December 31, 2002, 2003 and 2004 as set forth in this agreement.
Sy copy of this communication, I am forwarding a copy of this agreement to Mr. David
Persaud, Finance Director, for his files.
Should you have any questions or need any additional information, please feel free to
call me at 706-821-1820.
Very truly yours,
Lena J. Sonner
Clerk of Commission
Cc: Mr. David Persaud, Finance Director w/enclosures