Loading...
HomeMy WebLinkAboutArrangement between Augusta,Georgia and Cherry, Bekaert Augusta Richmond GA DOCUMENTNAME;Anor::le~n+ I:~+~ A4JU6+aJ &e.OY'3ll- ~hd CJ"C'r-j I oeKDeV+- DOCUMENTTYPE~'~l?()~1i~ YEAR: ~o3 BOX NUMBER: Yf.-O FILE NUMBER \ 'I 0 ~i NUMBER OF PAGES: ~ i' " -; ~(Q)~V ,Deceml:ier 22, 2003 Augusta-Richmond County Commission Augusta; Georgia This letter of arrangement between Augusta, Georgia and Cherry, Bekaert & 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, 2003. , , Our audit will be conducted in accordanc~ with auditing stan4ards 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 ofOMB Circular A-l33; 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 genenilly 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 t - 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 ofOMB Circular A-l33, 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 reaso~s with you in advance. Cherry. Bekaert & Holland, LLP. 1029 Greene Street (30901) . P.O. Box 2247 . Augusta. GA 30903 . (706) 724-3557 . Fax (706) 724-1667 Offices Throughout The Southeast. An Independent Member of Baker Tilly International :- 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 [mancial 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 I).ote disclosures. Any additional services that yot! 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 requiredby 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 Plownian and Bonnie Cox, who will be responsible for assuring the overall quality, value, and timeliness of our services to you, wilUead 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 reviewedwith.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 resp\;:ct 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 nature and scope cif our audit procedures have changed from the prior year engagement as a result of an auditing staridard that has been recently issued by the Auditing Standards Board of the American Institute of . Certified Public Accountants (the "AICP A"). Specifically, the MCP A has issued Statement on Auditing Standards ("SAS") No. 99, Consideration of Fraud in a Financial Statement Audit, which is effective for this fiscal year. We have assessed the impact of this auditing standard on the nature, timing and extent of our planned audit procedures, which includes 100 additional hours of fieldwork and an estimated increase in fees of $11,430. 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 S,olid 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 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 aild will not exceed $1,000. LIMIT A TIONS 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 nof 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 AuditActAmendmentsof1996 and OMB CircularA-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 immateri'al 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 report?ble 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-133. As required by OMB Circular A-I33, 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-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 misstatement, 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 pursuantto Government Auditing Standards. OMB 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 arid 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, Ueorgia's major programs. The purpose of those procedures will be to express an opinion on Augusta, Georgia's compliance with requirements applicable to major programs in our report on compliance issued pursuant to OMB 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 OMB Circular A-133, it is management's responsibility to follow up and take corrective action on prior audit findings and to prepar~ a summary schedule of prior audit findings and a corrective action plan. The surrumlry schedule of prior audit findings arid 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 confirm"s certain representations made during the audit, including, to the best oftheir knowledge and belief, the absence offraud 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 Government's management providing these representations to us, both in the planning and performance of the audit, and in considering fees that we will charge to perform the audit. Because we will be relying on management's representation, 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 employee or officer of the Government, regardless of whether such an employee was acting in the Government's interest and even if Cherry, Bekaert & Holland, L.L.P. acted negligently or wrongfully in failing to uncover or detect such misrepresentation. 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 Internal 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 Commission. 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. 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. Ifwe 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 persOlmel 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 ahd 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. Kip Plowman, CPA Partner Enclosure RESPONSE: :'S ~tl~e:~2nderstmding of ilie Augus~ ~orgia. Title: 1J{ ~~ J . .