HomeMy WebLinkAboutMcDirmit, Davis, & Company, LLC Audit - 2015 09 17 MCDIRMIT /// DAVIS
CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS
August 25, 2015
City of Winter Springs, Florida
The following represents our understanding of the services we will provide the City of Winter
Springs.
You have requested that we audit the financial statements of the governmental activities,
business-type activities, each major fund, and the aggregate remaining fund information, which
collectively comprise the basic financial statements of the City of Winter Springs as of and for
the years ended September 30, 2015, 2016, and 2017, and the related notes to the financial
statements which collectively comprise the City of Winter Springs' basic financial statements as
listed in the table of contents. We are pleased to confirm our acceptance and our
understanding of this audit engagement by means of this letter. Our audit will be conducted
with the objective of our expressing an opinion on each opinion unit.
Accounting standards generally accepted in the United States require that supplementary
information (RSI), such as management's discussion and analysis (MD&A), be presented to
supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board who
considers it to be an essential part of financial reporting for placing the basic financial
statements in an appropriate operational, economic, or historical context. As part of our
engagement, we will apply certain limited procedures to the RSI in accordance with auditing
standards generally accepted in the United States of America. These limited procedures will {
consist primarily of inquiries of management regarding their methods of measurement and
presentation, and comparing the information for consistency with management's responses to
our inquiries. We will not express an opinion or provide any form of assurance on the RSI. The
following RSI is required by accounting principles generally accepted in the United States of
America. This RSI will be subjected to certain limited procedures, but will not be audited:
1. Management's Discussion and Analysis
2. Supplementary Pension Schedules
3. Supplementary OPEB Schedules
Supplementary information other than RSI will accompany the City of Winter Springs' basic
financial statements. We will subject the following supplementary information to the auditing F
procedures applied in our audit of the financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and
other records used to prepare the financial statements or to the financial statements
themselves, and other additional procedures in accordance with auditing standards generally
accepted in the United States of America. Our auditor's report will provide an opinion on the
supplementary information in relation to the financial statements as a whole.
1. Combining nonmajor fund financial statements
2. Individual nonmajor fund schedules
MCDIRMIT DAvis & COMPANY, LLC
934 NORTH MAONOLIA AVENUE,SOITE 100•ORLANDO,FLDRIDA 32803
TELEPHONE 407-843-5406 •FAx 407-649-9339•Eb1AIL.INF0@)ACDIRM[TDAV1S.00N1
MEMBERS:PRIVATE CONIPANICS PRACTICE SEcnoD •AMERICAN INSITUTE OF CERTIFIED P;IULR-AiL'OVN1'ANIS-FLORIDA INSTITUTE OF CERTIFIED PUOLw ACCOUNTANTS
City of Winter Springs Page 2
Engagement Letter
The following other information accompanying the financial statements will not be subjected to
the auditing procedures applied in our audit of the financial statements, and for which our
auditor's report will not provide an opinion or any assurance.
T. Statistical Section
2. Introductory Section
The Objective of an Audit
The objective of our audit is the expression of opinions as to whether your basic financial
statements are fairly presented, in all material respects, in accordance with generally accepted
accounting principles and to report on the fairness of the supplementary information referred to
in the second paragraph when considered in relation to the financial statements as a whole.
Our audit will be conducted in accordance with auditing standards generally accepted in the
United States of America and the standards for financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States, and will include
tests of the accounting records and other procedures we consider necessary to enable us to
express such opinions. We cannot provide assurance that unmodified opinions will be
expressed. Circumstances may arise in which it is necessary for us to modify our opinions or
add emphasis-of-matter or other-matter paragraphs. If our opinions on the financial statements
are other than unmodified, we will discuss the reasons with you in advance. If, for any reason,
we are unable to complete the audit or are unable to form or have not formed opinions, we may
decline to express opinions or to issue a report as a result of the engagement.
General Audit Procedures
We will conduct our audit in accordance with auditing standards generally accepted in the
United States of America (U.S. GAAS) and, in accordance with Government Auditing
Standards, and any state or regulatory requirements. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the basic financial statements
are free from material misstatement. An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to error, fraudulent financial reporting,
misappropriation of assets, or violations of laws, governmental regulations, grant agreements,
or contractual agreements. An audit also includes-evaluating the appropriateness of accounting
policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
Internal Control Audit Procedures
Because of the inherent limitations of an audit, together with the inherent limitations of internal
control, an unavoidable risk that some material misstatements may not be detected exists, even
though the audit is properly planned and performed in accordance with U.S. GRAS and
Government Auditing Standards.
In making our risk assessments, we consider internal control relevant to the entity's preparation
and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. However, we will communicate to you in writing
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Engagement Letter
concerning any significant deficiencies or material weaknesses in internal control relevant to the
audit of the financial statements that we have identified during the audit.
Compliance with Laws and Regulations
As part of obtaining reasonable assurance about whether the financial statements are free of
material misstatement, we will perform tests of City of Winter Springs' compliance with the
provisions of applicable laws, regulations, contracts, and agreements. However, the objective
of our audit will not be to provide an opinion on overall compliance and we will not express such
an opinion.
Management Responsibilities
Our audit will be conducted on the basis that management acknowledge and understand that
they have responsibility:
a) For the preparation and fair presentation of the financial statements in accordance with
accounting principles generally accepted in the United States of America;
b) For the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material
misstatement, whether due to error, fraudulent financial reporting, misappropriation of
assets, or violations of laws, governmental regulations, grant agreements, or contractual
agreements; and
c) To provide us with:
a. Access to all information of which management is aware that is relevant to the
preparation and fair presentation of the financial statements such as records,
documentation, and other matters;
b. Additional information that we may request from management for the purpose of
the audit; and
c. Unrestricted access to persons within the entity from whom we determine it
necessary to obtain audit evidence.
d) For including the auditor's report in any document containing financial statements that
indicates that such financial statements have been audited by the City's auditor;
e) For identifying and ensuring that the City complies with the laws and regulations
applicable to its activities; and
f) For adjusting the financial statements to correct material misstatements and confirming
to us in the management representation letter that the effects of any uncorrected
misstatements aggregated by us during the current engagement and pertaining to the
current year period(s) under audit are immaterial, both individually and in the aggregate,
to the financial statements as a whole.
With regard to the supplementary information referred to above, you acknowledge and
understand your responsibility: (a) for the preparation of the supplementary information in
accordance with applicable criteria; (b) to provide us with the appropriate written representations
regarding supplementary information; (c) to include our report on the supplementary information
in any document that contains the supplementary information and that indicates that we have
reported on such supplementary information; and (d) to present the supplementary information
with the audited financial statements, or if the supplementary information will not be presented
with the audited financial statements, to make the audited financial statements readily available
to the intended users of the supplementary information no later than the date of issuance by you
of the supplementary information and our report thereon.
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Engagement Letter
As part of the audit, we will assist with preparation of your financial statements and related
notes. You will be required to acknowledge in the written representation letter our assistance
with preparation of the financial statements and that you have reviewed and approved the
financial statements and related notes prior to their issuance and have accepted responsibility
for them.
With respect to any nonattest services we perform, City of Winter Springs' management is
responsible for(a) making all management decisions and performing all management functions;
(b) assigning a competent individual to oversee the services; (c) evaluating the adequacy of the
services performed; (d) evaluating and accepting responsibility for the results of the services
performed; and (e) establishing and maintaining internal controls, including monitoring ongoing
activities. Govemment Auditing Standards require that we document an assessment of the
skills, knowledge, and experience of management, should we participate in any form of the
preparation of the basic financial statements and related schedules or disclosures as these
actions are deemed a non-audit service.
As part of our audit process, we will request from management, written confirmation concerning
representations made to us in connection with the audit.
Reporting
We will issue a written report upon completion of our audit of City of Winter Springs' basic
financial statements. Our report will be addressed to the governing body of City of Winter
Springs. We cannot provide assurance that unmodified opinions will be expressed.
Circumstances may arise in which it is necessary for us to modify our opinions, add an
emphasis-of-matter or other-matters paragraph(s), or withdraw from the engagement.
In accordance with the requirements of Government Auditing Standards, we will also issue a
written report describing the scope of our testing over internal control over financial reporting
and over compliance with laws, regulations, and provisions of grants and contracts, including
the results of that testing. However, providing an opinion on internal control and compliance will
not be an objective of the audit and, therefore, no such opinion will be expressed.
Other
We understand that your employees will prepare all cash and other confirmations we request
and will locate any documents selected by us for testing. Also, we will submit a letter outlining
schedules to be prepared by your employees.
With regard to the electronic dissemination of audited financial statements, including financial
statements published electronically on your website, you understand that electronic sites are a
means to distribute information and, therefore, we are not required to read the information
contained in these sites or to consider the consistency of other information in the electronic site
with the original document.
We will provide copies of our reports to the City of Winter Springs; however, management is
responsible for distribution of the reports and the financial statements. Unless restricted by law
or regulation, or containing privileged and confidential information, copies of our reports are to
be made available for public inspection.
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Engagement Letter
Provisions of Engagement Administration,Timing and Fees
We expect to perform interim testing in September, year-end fieldwork in December and to
issue our reports no later than March 31 of each year. Kelly Leary is the engagement partner
for the audit services specified in this letter. Her responsibilities include supervising McDirmit
Davis and Company's services performed as part of this engagement and signing or authorizing
another qualified firm representative to sign the audit report.
Our fees for these services will be at our standard hourly rates except when we agree that our
gross fee will be as follows:
Fiscal Year Ending Additional; Fees for Single Additional Fees for
September 30: Audit Fee Audit(if Required) CAFR Preparation {If
Requested)
2015 $ 29,500 $ 5,000 $ 10,500
2016 $ 30,500 $ 5,000 $ 10,500
2017 $ 30,500 $ 5,000 $ 10,500
The above fees are 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.
If the City of Winter Springs exercises the option of three one year renewals of the audit
contract, we will submit separate engagement letters for the years ending September 30, 2018,
2019 and 2020.
In accordance with the requirements of Govemment Auditing Standards, we have attached a
copy of our most recent external peer review report of our firm for your consideration and files.
During the course of the audit we may observe opportunities for economy in, or improved
controls over, your operations. We will bring such matters to the attention of the appropriate
level of management, either orally or in writing.
We agree to retain our audit documentation or workpapers for a period of at least five years
from the date of our report.
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Engagement Letter
At the conclusion of our audit engagement, we will communicate to those charged with
governance the following significant findings from the audit:
• Our view about the qualitative aspects of the entity's significant accounting practices;
Significant difficulties, if any, encountered during the audit;
* Uncorrected misstatements, other than those we believe are trivial, if any;
• Disagreements with management, if any;
Other findings or issues, if any, arising from the audit that are, in our professional
judgment, significant and relevant to those charged with governance regarding their
oversight of the financial reporting process;
• Material, corrected misstatements that were brought to the attention of management as
a result of our audit procedures;
• Representations we requested from management;
• Management's consultations with other accountants, if any; and
+ Significant issues, if any, arising from the audit that were discussed, or the subject of
correspondence, with management.
The audit documentation for this engagement is the property of McDirmit Davis & Company,
LLC and constitutes confidential information. However, pursuant to authority given by law or
regulation, we may be requested to make certain audit documentation available to regulators or
its designee, a federal agency providing direct or indirect funding, or the U.S. Government
Accountability Office for purposes of a quality review of the audit, to resolve audit findings, or to
carry out oversight responsibilities. We will notify you of any such request. If requested, access
to such audit documentation will be provided under the supervision of McDirmitDavis &
Company personnel. Furthermore, upon request, we may provide copies of selected audit
documentation to the aforementioned parties. These parties may intend, or decide, to distribute
the copies or information contained therein to others, including other governmental agencies.
In accordance with section 119.0701, Florida Statutes, Contractor agrees that all documents,
transactions, writings, papers, letters, tapes, photographs, sound recordings, data processing
software, or other material, regardless of the physical form, characteristics, or means of
transmission, made or received pursuant to this Agreement or in connection with any funds
provided by the City pursuant to this Agreement may be considered public records pursuant to
Chapter 119, Florida Statutes. Contractor agrees to keep and maintain any and all public
records that ordinarily and necessarily would be required by the City in order to perform the
services required by this Agreement. Contractor also agrees to provide the public with access
to public records on the same terms and conditions that the City would provide the records and
at a cost that does not exceed the cost provided by Chapter 119, Florida Statutes or as
otherwise provided by law. Contractor shall also ensure that public records that are exempt or
confidential and exempt from public records disclosure requirements are not disclosed except
as authorized by law. In addition, Contractor shall meet all requirements for retaining public
records and transfer, at no cost, to the City all public records in possession of the Contractor
upon termination of this Agreement and destroy any duplicate public records that are exempt or
confidential and exempt from public records disclosure requirements. All records stored
electronically must be provided to the City in a format that is compatible with the information
technology systems of the City. If the Contractor does not comply with a public records request,
the City shall have the right to enforce the provisions of this Paragraph. in event that the
Contractor fails to comply with this Paragraph, the City is required to enforce the provisions of
this Paragraph, or the City suffers a third party award of attorney's fees and/or damages for
violating the provisions of Chapter 119, Florida Statutes due to the Contractor's failure to comply
with the provisions of this Paragraph, the City shall be entitled to collect from the Contractor
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Engagement Letter
prevailing party attorney's fees and costs, and any damages incurred by the City, for enforcing
this Paragraph against the Contractor. And, if applicable, the City shall also be entitled to
reimbursement of any and all attorney's fees and damages which the City was required to pay a
third party because of Contractor's failure to comply with the provisions of this Paragraph. This
Paragraph shall survive the termination of this Agreement
We appreciate the opportunity to be of service to the City of Winter Springs and believe this
letter accurately summarizes the significant terms of our engagement. If you have any
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.
Sincerely,
McDIRMIT DAVIS &C MPANY, LLC
ff-4 KeV Leary, .P.A.
RESPONSE:
This letter correctl sets fo the understanding of the City of Winter Springs.
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