HomeMy WebLinkAbout2010 06 28 Consent 201 Renewal of Contract for Audit Services With McDirmit Davis & Company, LLC COMMISSION AGENDA
CONSENT X
INFORMATIONAL
ITEM 201 PUBLIC HEARING
REGULAR
June 28, 2010 MG /DEPT UJ
Meeting Authorization
REQUEST: The City Manager And The Finance & Administrative Services Department Is
Requesting That The City Commission Authorize The City Manager To
Exercise The First Of Three One Year Renewals For The Contract For Audit
Services With The Firm Of McDirmit Davis & Company, LLC.
SYSNOPSIS: In FY 2007, the City Commission authorized the City Manager to execute a
three year contract for audit services with the firm of McDirmit Davis &
Company LLC to begin with the fiscal year end September 30, 2007 with the
possibility for three one -year renewals. The first of the possible 3 one year
renewals is for audit services for the fiscal year end September 30, 2010. The
second and third possible one year extensions will be for the fiscal year ends
September 30, 2011 and September 30, 2012 respectively.
CONSIDERATIONS:
• On June 25, 2007 the City Commission authorized the formation of a three
person Audit Selection Committee, which consisted of Commissioner Rick
Brown; The Finance Director; City Manager Designee.
• The Auditor Selection Committee recommended that the City Manager pursue
negotiations with first- ranked McDirmit Davis & Company, LLC and an
acceptable fee was negotiated.
• The Total Audit Fee for the Fiscal Year Ended September 30, 2009 was
$33,200 and included Audit Fees $28,200 and a Single Audit Fee of $5,000.00.
• The Budget for Fiscal Year Ended September 30, 2010, was approved to
include $33,200 for Audit and Single Audit Services and included an increase
of $11,000 for CAFR preparation fees for the Fiscal Year Ended September
30, 2009 if needed.
• A Single Audit was required for Fiscal Year Ended September 30, 2009.
• McDirmit Davis & Company, LLC was engaged to prepare the CAFR for
Fiscal Year Ended September 30, 2009.
• The fees proposed by McDirmit Davis & Company, LLC for the first year of
three possible one year renewals for Audit Services for Fiscal Year Ended
September 30, 2010 include Audit Fees, Single Audit Fee, if required, and
CAFR Preparation, if needed, are as follows:
Single Audit Fee CAFR Prep Possible Total
Fiscal Year Ended Audit Fee (if required) (if needed) Audit Fee
9/30/2010 $29,000 $5,000 $10,500 $44,500
• The proposed fees for Fiscal Year Ended 9/30/2010 would be an $800 increase
(2.8 %) for Audit fees and no change (0 %) for Single Audit Fees, if a Single
Audit is required and a $500 decrease (4.5 %) for CAFR Preparation if needed.
FISCAL IMPACT:
The budget for FY 2011will include $44,500 for audit and CAFR preparation
services which will cover the fees proposed by McDirmit Davis & Company,
LLC for the fiscal year ending September 30, 2010.
COMMUNICATION EFFORTS:
Contract will be mailed back to McDirmit Davis and Company, LLC for
counter signing.
RECOMMENDATION:
It is the recommendation of the City Manager and the Finance &
Administrative Services Department that the City Commission authorize the
City Manager to execute the first of three one year extensions to engage the
audit firm of McDirmit Davis & Co, LLC for fiscal year end September 30,
2010. The fees would be as stated in the agenda item above.
ATTACHMENTS:
A) Proposed Engagement Letter provided by McDirmit Davis & Co, LLC,
confirming the understanding of audit services to be provided for fiscal
year end September 30, 2010. The engagement letter is to be signed upon
authorization of the City Commission authorizing the City Manager to
execute the first of 3 year renewal contracts.
B) Copy of the opinion provided by Davidson, Jamieson & Christini, P.L.
CPA for the peer review of the system of quality control for the
accounting and auditing practice of McDirmit Davis & Co, LLC for the
year ended June 30, 2008.
MCDIRMIT /1/ DAVIS
CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS
May 3, 2010
City of Winter Springs, Florida
1126 East State Road 434
Winter Springs, FL 32708 -2799
We are pleased to confirm our understanding of the services we are to provide the City of
Winter Springs, Florida for the year ended September 30, 2010. We will audit the financial
statements of the govemmental 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 year ended September 30, 2010.
Accounting standards generally accepted in the United States provide for certain required
supplementary information (RSI), such as management's discussion and analysis (MD&A), to
supplement the City of Winter Springs's 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 City of Winter Springs's RSI
in accordance with auditing standards generally accepted in the United States of America.
These limited procedures will consist of inquiries of management regarding the methods of
preparing the information and comparing the information for consistency with management's
responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audit of the basic financial statements. We will not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance. The following RSI is required by
generally accepted accounting principles and 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 also accompanies the City of Winter Springs's
financial statements. We will subject the following supplementary information to the auditing
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 and will provide an opinion on it in relation to the
financial statements as a whole.
MCDIRMIT DAVIS & COMPANY, LLC
605 E. ROBINs0N STREET, SUITE 635 • ORLANDO, FLORIDA 321801
TELEPHONE 407 -$43 -5406 • FAX 407 -649 -9339 • EMAIL: INFO @ , MCDIRMITDAV1S.COM
M F.MRF.R, '. PRI \' Art : COMPANIES PRACTICE .SF(II()N • .A MI RI AN INSTITt'TF OF CFRTIFIFn PI'. RI IC ACCOLNTAN'TS • FLORIDA INSTITI TE OF CERTIFIED PUBLIC AC COU t'flANTS
City of Winter Springs Page 2
Engagement Letter
1. Combining nonmajor fund financial statements
2. Individual nonmajor fund schedules
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.
1. Statistical Section
2. Introductory Section
Audit Objectives
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 conformity with U.S. 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
taken 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 of the City of Winter Springs and other procedures
we consider necessary to enable us to express such opinions. If our opinions on the financial
statements are other than unqualified, we will fully discuss the reasons with you in advance. If,
for any reason, we are unable to complete the audit or are unable to form or have not formed
opinions, we may decline to express opinions or to issue a report as a result of this
engagement.
We will also provide a report (that does not include an opinion) on internal control related to the
financial statements and compliance with laws, regulations, and the provisions of contracts or
grant agreements, noncompliance with which could have a material effect on the financial
statements as required by Government Auditing Standards. The report on internal control and
compliance will include a statement that the report is intended solely for the information and use
of management, the body or individuals charged with governance, others within the entity, and
specific legislative or regulatory bodies and are not intended to be and should not be used by
anyone other than these specified parties. If during our audit we become aware that the City of
Winter Springs is subject to an audit requirement that is not encompassed in the terms of this
engagement, we will communicate to management and those charged with governance that an
audit in accordance with U.S. generally accepted auditing standards and the standards for
financial audits contained in Government Auditing Standards may not satisfy the legal,
regulatory, or contractual requirements.
Management Responsibilities
Management is responsible for the basic financial statements and all accompanying information
as well as all representations contained therein. As part of the audit, we will assist with
preparation of your financial statements and related notes. You are responsible for making all
management decisions and performing all management functions relating to the financial
statement and related notes and for accepting full responsibility for such decisions. You will be
required to acknowledge in the management 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.
City of Winter Springs Page 3
Engagement Letter
Further, you are required to designate an individual with suitable skill, knowledge, or experience
to oversee any nonaudit services we provide and for evaluating the adequacy and results of
those services and accepting responsibility for them.
Management is also responsible for establishing and maintaining effective intemal controls,
including monitoring ongoing activities, to help ensure that appropriate goals and objectives are
met; for the selection and application of accounting principles; and for the fair presentation in the
financial statements of the respective financial position of the governmental activities, the
business -type activities, each major fund, and the aggregate remaining fund information of the
City of Winter Springs and the respective changes in financial position and cash flows, where
applicable, in conformity with U.S. generally accepted accounting principles.
Management is also responsible for making all financial records and related information
available to us and for ensuring that management and financial information is reliable and
properly recorded. Your responsibilities include adjusting the financial statements to correct
material misstatements and for confirming to us in the representation letter that the effects of
any uncorrected misstatements aggregated by us during the current engagement and pertaining
to the latest period presented are immaterial, both individually and in the aggregate, to the
financial statements taken as a whole.
You are 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 government
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. Your
responsibilities include informing us of your knowledge of any allegations of fraud or suspected
fraud, or illegal acts affecting the govemment received in communications from employees,
former employees, grantors, regulators, or others. In addition, you are responsible for
identifying and ensuring that the entity complies with applicable laws, regulations, contracts,
agreements, and grants and for taking timely and appropriate steps to remedy any fraud, illegal
acts, violations of contracts or grant agreements, or abuse that we may report. You are
responsible for the preparation of the supplementary information in conformity with U.S.
generally accepted accounting principles. You agree to include our report on the supplementary
information in any document that contains and indicates that we have reported on the
supplementary information. You also agree to present the supplementary information with the
audited financial statements.
Management is responsible for establishing and maintaining of a process for tracking the status
of audit findings and recommendations. Management is also responsible for identifying for us
previous financial audits, attestation engagements, performance audits or other studies related
to the objectives discussed in the Audit Objectives section of this letter. This responsibility
includes relaying to us corrective actions taken to address significant findings and
recommendations resulting from those audits, attestation engagements, performance audits or
other studies. You are also responsible for providing management's views on our current
findings, conclusions, and recommendations, as well as your planned corrective actions, for the
report, and for the timing and format for providing that information.
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.
City of Winter Springs Page 4
Engagement Letter
Audit Procedures - General
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements; therefore, our audit will involve judgment about the number of
transactions to be examined and the areas to be tested. We will plan and perform the audit to
obtain reasonable rather than absolute assurance about whether the financial statements are
free of material misstatement, whether from errors, fraudulent financial reporting,
misappropriation of assets, or violations of laws or governmental regulations that are attributable
to the entity or to acts by management or employees acting on behalf of the entity. Because the
determination of abuse is subjective Govemment Auditing Standards do not expect auditors to
provide reasonable assurance of detecting abuse.
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
misstatement may exist and not be detected by us. In addition, an audit is not designed to
detect immaterial misstatements, or violations of laws or governmental regulations that do not
have a direct and material effect on the financial statements. However, we will inform you of
any material errors and any fraudulent financial reporting or misappropriation of assets that
come to our attention. We will also inform you of any violations of laws or governmental
regulations that come to our attention, unless clearly inconsequential. Our responsibility as
auditors is limited to the period covered by our audit and does not extend to later periods for
which we are not engaged as auditors.
Our procedures will include tests of documentary evidence supporting the transactions recorded
in the accounts, and may include tests of the physical existence of inventories, and direct
conformation of receivables and certain other assets and liabilities by correspondence with
selected individuals, funding sources, creditors, and financial institutions. We will request
written representations from your attorneys as part of the engagement, and they may bill you for
responding to this inquiry. At the conclusion of our audit, we will also require certain written
representations from you about the financial statements and related matters.
Audit Procedures - Internal Controls
Our audit will include obtaining an understanding of the entity and its environment, including
internal control, sufficient to assess the risks of material misstatement of the financial
statements and to design the nature, timing, and extent of further audit procedures. Tests of
controls may be performed to test the effectiveness of certain controls that we consider relevant
to preventing and detecting errors and fraud that are material to the financial statements and to
preventing and detecting misstatements resulting from illegal acts and other noncompliance
matters that have a direct and material effect on the financial statements. Our tests, if
performed, will be less in scope than would be necessary to render an opinion on internal
control and, accordingly, no opinion will be expressed in our report on internal control issued
pursuant to Govemment Auditing Standards.
An audit is not designed to provide assurance on internal control or to identify significant
deficiencies. However, during the audit, we will communicate to management and those
charged with govemance internal control related matters that are required to be communicated
under AICPA professional standards and Govemment Auditing Standards.
City of Winter Springs Page 5
Engagement Letter
Audit Procedures - Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of
material misstatement, we will perform tests of the City of Winter Springs's compliance with the
provisions of applicable laws, regulations, contracts, agreements and grants. However, the
objective of our audit 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 Govemment Auditing
Standards.
Audit Administration, Fees, and 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.
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.
We expect to begin our audit in December, 2010, and to issue our reports no later than March
20, 2011. Kelly Leary is the engagement partner and is responsible for supervising the
engagement and signing the reports or authorizing another individual to sign them.
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)
2010 $ 29,000 $ 5,000 $ 10,500
Govemment Auditing Standards require that we provide you will a copy of our most recent
external peer review report and any letter of comment, and any subsequent peer review reports
and letters of comment received during the period of the contract. Our 2008 peer review report
accompanies this letter.
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 & COMPANY, LLC
1 //// to
Kell Lea e C.P.A.
RESPONSE:
This letter correctly sets forth the understanding of the City of Winter Springs.
By:
Title:
Date:
Davidson, Jamieson & Cristini, P.L.
Certified Public Accountants
1956 Bayshore Boulevard
Dunedin, Florida 34698 -2503
(727)734 -5437 or 736 -0771
FAX (727) 733 -3487 Member
Members of the Firm American Institute of
John N. Davidson, CPA *, CVA Certified Public Accountants
Harry B. Jamieson, CPA* Florida Institute of
Richard A. Cristini, CPA *, CPPT, CGFM Certified Public Accountants
*Regulated by the
State of Florida
September 25, 2008
To the Shareholders
McDirmit Davis & Company, LLC
We have reviewed the system of quality control for the accounting and auditing practice of
McDirmit Davis & Company, LLC (the firm) in effect for the year ended June 30, 2008. A system
of quality control encompasses the firm's organizational structure, the policies adopted and
procedures established to provide it with reasonable assurance of conforming with professional
standards. The elements of quality control are described in the Statements on Quality Control
Standards issued by the American Institute of CPAs (AICPA). The firm is responsible for designing
a system of quality control and complying with it to provide the firm reasonable assurance of
conforming with professional standards in all material respects. Our responsibility is to express an
opinion on the design of the system of quality control and the firm's compliance with its system of
quality control based on our review.
Our review was conducted in accordance with standards established by the Peer Review Board of the
AICPA. During our review, we read required representations from the firm, interviewed firm
personnel and obtained an understanding of the nature of the firm's accounting and auditing practice,
and the design of the firm's system of quality control sufficient to assess the risks implicit in its
practice. Based on our assessments, we selected engagements and administrative files to test for
conformity with professional standards and compliance with the firms' system of quality control.
The engagements selected represented a reasonable cross - section of the firm's accounting and
auditing practice with emphasis on higher -risk engagements. The engagements selected included
among others, audits of Employee Benefit Plans and engagements performed under Government
Auditing Standards. Prior to concluding the review, we reassessed the adequacy of the scope of the
peer review procedures and met with firm management to discuss the results of our review. We
believe that the procedures we performed provide a reasonable basis for our opinion.
In performing our review, we obtained an understanding of the system of quality control for the
firm's accounting and auditing practice. In addition, we tested compliance with the firm's quality
control policies and procedures to the extent we considered appropriate. These tests covered the
application of the firm's policies and procedures on selected engagements. Our review was based on
selected tests therefore it would not necessarily detect all weaknesses in the system of quality control
or all instances of noncompliance with it. There are inherent limitations in the effectiveness of any
system of quality control and therefore noncompliance with the system of quality control may occur
and not be detected. 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 because 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 McDirmit
Davis & Company, LLC in effect for the year ended June 30, 2008, has been designed to meet the
requirements of the quality control standards for an accounting and auditing practice established by
the AICPA and was complied with during the year then ended to provide the firm with reasonable
assurance of conforming with professional standards.
a
MCDIRMIT /1/ DAVIS
CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS
August 28, 2007
City of Winter Springs, Florida
1126 East State Road 434
Winter Springs, FL 32708 -2799
We are pleased to confirm our understanding of the services we are to provide the City of
Winter Springs for the years ended September 30, 2007, 2008, and 2009. 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 entity's
basic financial statements, of the City of Winter Springs as of and for the years ended
September 30, 2007, 2008, and 2009. Accounting standards generally accepted in the United
States provide for certain required supplementary information (RSI), such as management's
discussion and analysis (MD&A), to accompany the City of Winter Springs' basic financial
statements. As part of our engagement, we will apply certain limited procedures to City of
Winter Springs' RSI. These limited procedures will consist principally of inquiries of
management regarding the methods of measurement and presentation, which management is
responsible for affirming to us in its representation letter. Unless we encounter problems with
the presentation of the RSI or with procedures relating to it, we will disclaim an opinion on it.
The following RSI is required by generally accepted accounting principles and will be subjected
to certain limited procedures, but will not be audited:
1. Management's Discussion and Analysis.
Supplementary information other than RSI, such as combining and individual fund financial
statements, also accompanies the City of Winter Springs' basic financial statements. We will
subject the following supplementary information to the auditing procedures applied in our audit
of the basic financial statements and will provide an opinion on it in relation to the basic financial
statements:
1. Combining nonmajor fund financial statements,
2. Individual nonmajor fund schedules, and
3. Schedules of the governmental capital asset schedule by function and activity.
The following additional information accompanying the basic 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 disclaim an opinion.
1. Introductory section, and
2. Statistical section.
MCDIRMIT DAVIS & COMPANY, LLC
605 E. ROBINSON STREET, SUITE 635 • ORLANDO, FLORIDA 32801
TELEPHONE 407 -843 -5406 • FAX 407 -649 -9339 • EMAIL: INFO@MCDIRMITDAVIS.COM
MEMBERS: PRIVATE COMPANIES PRACTICE SECTION • AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS • FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
!J,
City of Winter Springs Page 2
Engagement Letter
Audit Objectives
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 conformity with United States
generally accepted accounting principles and to report on the fairness of the additional
information referred to in the first paragraph when considered in relation to the financial
statements taken as a whole. Our audit will be conducted in accordance with U.S. generally
accepted auditing standards 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 of the City of Winter Springs and other procedures we consider
necessary to enable us to express such opinions. If our opinions on the financial statements
are other than unqualified, we will fully discuss the reasons with you in advance. If, for any
reason, we are unable to complete the audit or are unable to form or have not formed opinions,
we may decline to express opinions or to issue a report as a result of this engagement.
We will also provide a report (that does not include an opinion) on internal control related to the
financial statements and compliance with the provisions of applicable laws, regulations,
contracts, agreements, and grants, noncompliance with which could have a material effect on
the financial statements as required by Govemment Auditing Standards. The report on internal
control and compliance will include a statement that the report is intended solely for the
information and use of the audit committee, management, and specific legislative or regulatory
bodies and is not intended to be and should not be used by anyone other that these specified
parties. If during our audit we become aware that the City of Winter Springs is subject to an
audit requirement that is not encompassed in the terms of this engagement, we will
communicate to management and those charged with governance that an audit in accordance
with U.S. generally accepted auditing standards and the standards for financial audits contained
in Government Auditing Standards may not satisfy the relevant legal, regulatory, or contractual
requirements.
Management Responsibilities
Management is responsible for establishing and maintaining effective internal controls, including
monitoring ongoing activities; for the selection and application of accounting principles; and for
the fair presentation in the financial statements of the respective financial position of the
governmental activities; the business -type activities, each major fund, and the aggregate
remaining fund information of the City of Winter Springs and the respective changes in financial
position and cash flows, where applicable, in conformity with U.S. generally accepted
accounting principles. Management is responsible for the basic financial statements and all
accompanying information as well as all representations contained therein.
You are responsible for management decisions and functions. Further, you are required to
designate a qualified management -level individual to be responsible and accountable for
overseeing our services.
Management is responsible for making all financial records and related information available to
us and for the accuracy and completeness of that information. Management's responsibilities
include adjusting the financial statements to correct material misstatements and for confirming
to us in the representation letter that the effects of any uncorrected misstatements aggregated
by us during the current engagement and pertaining to the latest period presented are
immaterial, both individually and in the aggregate, to the financial statements taken as a whole.
i
City of Winter Springs Page 3
Engagement Letter
You are 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 government
involving (1) management, (2) employees who have significant roles in intemal control, and (3)
others where the fraud or illegal acts could have a material effect on the financial statements.
Your responsibilities include informing us of your knowledge of any allegations of fraud or
suspected fraud affecting the government received in communications from employees, former
employees, grantors, regulators, or others. In addition, you are responsible for identifying and
ensuring that the entity complies with applicable laws, regulations, contract, agreements, and
grants for taking timely and appropriate steps to remedy any fraud, illegal acts, violations of
contracts or grant agreements, or abuse that we may report.
Management is responsible for establishment and maintenance of a process for tracking the
status of audit findings and recommendations. Management is also responsible for identifying
for us any previous audits or other engagements or studies related to the objectives discussed
in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective
actions taken to address significant findings and recommendations resulting from those audits
or other engagements or studies. You are also responsible for providing management's views
on our current findings, conclusions, and recommendations, as well as your planned corrective
actions, and the timing and format related thereto.
Audit Procedures - General
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements; therefore, our audit will involve judgment about the number of
transactions to be examined and the areas to be tested. We will plan and perform the audit to
obtain reasonable rather than absolute assurance about whether the financial statements are
free of material misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3)
misappropriation of assets, or (4) violations of laws or governmental regulations that are
attributable to the entity or to acts by management or employees acting on behalf of the entity.
Because the determination of abuse is subjective, Government Auditing Standards do not
expect auditors to provide reasonable assurance of detecting abuse.
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
misstatements may exist and not be detected by us. In addition, an audit is not designed to
detect immaterial misstatements or violations of laws or governmental regulations that do not
have a direct and material effect on the financial statements. However, we will inform you of
any material errors and any fraudulent financial reporting or misappropriation of assets that
come to our attention. We will also inform you of any violations of laws or governmental
regulations that come to our attention, unless clearly inconsequential. Our responsibility as
auditors is limited to the period covered by our audit and does not extend to later periods for
which we are not engaged as auditors.
Our procedures will include tests of documentary evidence supporting the transactions recorded
in the accounts, and may include tests of the physical existence of inventories, and direct
confirmation of receivables and certain other assets and liabilities by correspondence with
selected individuals, creditors, and financial institutions. We will request written representations
from your attorneys as part of the engagement, and they may bill you for responding to this
inquiry. At the conclusion of our audit, we will also require certain written representations from
you about the financial statements and related matters.
t
City of Winter Springs Page 4
Engagement Letter
Audit Procedures - Internal Controls
Our audit will include obtaining an understanding of the entity and its environment, including
internal control, sufficient to assess the risks of material misstatement of the financial
statements and to design the nature, timing, and extent of further audit procedures. Tests of
controls may be performed to test the effectiveness of certain controls that we consider relevant
to preventing and detecting errors and fraud that are material to the basic financial statements
and to preventing and detecting misstatements resulting from illegal acts and other
noncompliance matters that have a direct and material effect on the financial statements. Our
tests, if performed, will be Tess in scope than would be necessary to render an opinion on
internal control and, accordingly, no opinion will be expressed in our report on internal control
issued pursuant to Government Auditing Standards.
An audit is not designed to provide assurance on internal control or to identify significant
deficiencies. However, during the audit, we will communicate to management and those
charged with governance internal control related matters that are required to be communicated
under professional standards and Government Auditing Standards.
Audit Procedures - Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of
material misstatement, we will perform tests of the City of Winter Springs' compliance with the
provisions of applicable laws, regulations, contracts, agreements, and grants. However, the
objective of our audit 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.
Audit Administration, Fees, and Other
We understand that your employees will prepare all cash or other confirmations we request and
will locate any documents selected by us for testing.
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.
The audit documentation for this engagement is the property of McDirmit Davis & Company and
constitutes confidential information. However, pursuant to authority given by law or regulation,
we may be requested to make certain audit documentation available to cognizant or oversight
agency or its designee, a federal agency providing direct or indirect funding, or the U.S.
Government Accountability Office for purposes of an 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
McDirmit Davis & Company personnel. Furthermore, upon request, we may provide copies of
selected audit documentation to the aforementioned parties.
City of Winter Springs Page 5
Engagement Letter
The audit documentation for this engagement will be retained for a minimum of five years after
the report release date or for any additional period requested by the cognizant or oversight
agency. If we are aware that a federal awarding agency or auditee is contesting an audit
finding, we will contact the party(ies) contesting the audit finding for guidance prior to destroying
the audit documentation.
We expect to begin our audit in December and to issue our reports no later than February 15,
as long as we have received the CAFR and reviewed it.
Our fees for these services will be as follows:
Fiscal Year Ending Additional Fees for
September 30: Audit Fee Single Audit (If Required)
2007 $26,600 $4,400
2008 27,400 4,700
2009 28,200 5,000
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, 2010,
2011, and 2012.
Government Auditing Standards require that we provide you with a copy of our most recent
external peer review report and any letter of comment, and any subsequent peer review reports
and letters of comment received during the period of the contract. Our current peer review
accompanies this letter.
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.
Very truly your,
7
Kelly Leary, CPA 0
RESPONSE:
This letter correctly sets forth the understanding of the City of Winter Springs.
By: e.1,//
Min a,�,d W . Yr°�c - l�e-(h O r,
Title: CA maACL(
Date: q 0-1 aoo7
Davidson, Jamieson & Cristini, P.L.
Certified Public Accountants
1956 Bayshore Boulevard
Dunedin, Florida 34698 -2503
(727)734 -5437 or 736 -0771
_ FAX (727) 733 -3487 Member
Members of the Firm American Institute of
John N. Davidson, CPA', CVA Certified Public Accountants
Harry B. Jamieson, CPA* Florida Institute of
Richard A. Cristini, CPA *, CPPT, CGFM Certified Public Accountants
*Regulated by the
October 19, 2005 State of Florida
To the Stockholders
McDirmit, Davis & Company, LLC
We have reviewed the system of quality control for the accounting and auditing practice of McDirmit, Davis
& Company, LLC (the firm) in effect for the year ended June 30, 2005. A system of quality control
encompasses the firm's organizational structure, the policies adopted and procedures established to provide
it with reasonable assurance of conforming with professional standards. The elements of quality control are
described in the Statements on Quality Control Standards issued by the American Institute of CPAs ( AICPA).
The firm is responsible for designing a system of quality control and complying with it to provide the firm
reasonable assurance of conforming with professional standards in all material respects. Our responsibility
is to express an opinion on the design of the system of quality control, and the firm's compliance with the
system of quality control based on our review.
Our review was conducted in accordance with standards established by the Peer Review Board of the
_ AICPA. In performing our review, we read required representations from the firm, interviewed firm
personnel and obtained an understanding of the nature of the firm's accounting and auditing practice, and
_ the design of the firm's system of quality control sufficient to assess the risks implicit in its practice. Based
on our assessments, we selected engagements and administrative files to test for conformity with professional
standards and compliance with the firm's system of quality control. The engagements selected represented
a reasonable cross- section of the firm's accounting and auditing practice with emphasis on higher -risk
engagements. The engagements selected included among others, audits of Employee Benefit Plans and
engagements performed under Government Auditing Standards. Prior to concluding the review, we
reassessed the adequacy of the scope of the peer review procedures and met with firm management to discuss
the results of our review. We believe that the procedures we performed provide a reasonable basis for our
opinion.
In performing our review, we obtained an understanding of the system of quality control for the firm's
accounting and auditing practice. In addition, we tested compliance with the firm's quality control policies
and procedures to the extent we considered appropriate. These tests covered the application of the firm's
policies and procedures on selected engagements. Our review was based on selected tests therefore it would
not necessarily detect all weaknesses in the system of quality control or all instances of noncompliance with
it. There are inherent limitations in the effectiveness of any system of quality control and therefore
noncompliance with the system of quality control may occur and not be detected. Projection of any
evaluation of a system of quality control to further periods is subject to the risk that the system of quality
control may become inadequate because of changes in conditions, or because 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 McDirmit, Davis &
Company, LLC in effect for the year ended June 30, 2005, has been designed to meet the requirements of
the quality control standards for an accounting and auditing practice established by the AICPA and was
complied with during the year then ended to provide the firm with reasonable assurance of conforming with
professional standards.
5
MCDIRMIT /1/ DAVIS
CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS
May 3, 2010
City of Winter Springs, Florida
1126 East State Road 434
Winter Springs, FL 32708 -2799
We are pleased to confirm our understanding of the services we are to provide the City of
Winter Springs, Florida for the year ended September 30, 2010. We will audit the financial
statements of the govemmental 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 year ended September 30, 2010.
Accounting standards generally accepted in the United States provide for certain required
supplementary information (RSI), such as management's discussion and analysis (MD&A), to
supplement the City of Winter Springs's basic financial statements. Such information, although
not a part of the basic financial statements, is required by the Govemmental 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 City of Winter Springs's RSI
in accordance with auditing standards generally accepted in the United States of America.
These limited procedures will consist of inquiries of management regarding the methods of
preparing the information and comparing the information for consistency with management's
responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audit of the basic financial statements. We will not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance. The following RSI is required by
generally accepted accounting principles and 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 also accompanies the City of Winter Springs's
financial statements. We will subject the following supplementary information to the auditing
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 and will provide an opinion on it in relation to the
financial statements as a whole.
MCDIRMIT DAVIS & COMPANY, LLC
605 E. ROBINSON STREET, SUITE 635 • ORLANDO, FLORIDA 32801
TELEPHONE 407- 843 -5406 • FAX 407 -649 -9339 • EMAIL: INFO@MCDIRMITDAVIS.COM
NI1 MBE RSI PRIVATE COMPANIES PRACTICE SE( °LION • AMERICAN INSTITUTE OF CI RTIFIFD P1 I3[ IC ACCOLNTANTS • FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
City of Winter Springs Page 2
Engagement Letter
1. Combining nonmajor fund financial statements
2. Individual nonmajor fund schedules
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.
1. Statistical Section
2. Introductory Section
Audit Objectives
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 conformity with U.S. 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
taken 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
Govemment Auditing Standards, issued by the Comptroller General of the United States, and
will include tests of the accounting records of the City of Winter Springs and other procedures
we consider necessary to enable us to express such opinions. If our opinions on the financial
statements are other than unqualified, we will fully discuss the reasons with you in advance. If,
for any reason, we are unable to complete the audit or are unable to form or have not formed
opinions, we may decline to express opinions or to issue a report as a result of this
engagement.
We will also provide a report (that does not include an opinion) on internal control related to the
financial statements and compliance with laws, regulations, and the provisions of contracts or
grant agreements, noncompliance with which could have a material effect on the financial
statements as required by Govemment Auditing Standards. The report on internal control and
compliance will include a statement that the report is intended solely for the information and use
of management, the body or individuals charged with govemance, others within the entity, and
specific legislative or regulatory bodies and are not intended to be and should not be used by
anyone other than these specified parties. If during our audit we become aware that the City of
Winter Springs is subject to an audit requirement that is not encompassed in the terms of this
engagement, we will communicate to management and those charged with governance that an
audit in accordance with U.S. generally accepted auditing standards and the standards for
financial audits contained in Government Auditing Standards may not satisfy the legal,
regulatory, or contractual requirements.
Management Responsibilities
Management is responsible for the basic financial statements and all accompanying information
as well as all representations contained therein. As part of the audit, we will assist with
preparation of your financial statements and related notes. You are responsible for making all
management decisions and performing all management functions relating to the financial
statement and related notes and for accepting full responsibility for such decisions. You will be
required to acknowledge in the management 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.
City of Winter Springs Page 3
Engagement Letter
Further, you are required to designate an individual with suitable skill, knowledge, or experience
to oversee any nonaudit services we provide and for evaluating the adequacy and results of
those services and accepting responsibility for them.
Management is also responsible for establishing and maintaining effective internal controls,
including monitoring ongoing activities, to help ensure that appropriate goals and objectives are
met; for the selection and application of accounting principles; and for the fair presentation in the
financial statements of the respective financial position of the governmental activities, the
business -type activities, each major fund, and the aggregate remaining fund information of the
City of Winter Springs and the respective changes in financial position and cash flows, where
applicable, in conformity with U.S. generally accepted accounting principles.
Management is also responsible for making all financial records and related information
available to us and for ensuring that management and financial information is reliable and
properly recorded. Your responsibilities include adjusting the financial statements to correct
material misstatements and for confirming to us in the representation letter that the effects of
any uncorrected misstatements aggregated by us during the current engagement and pertaining
to the latest period presented are immaterial, both individually and in the aggregate, to the
financial statements taken as a whole.
You are 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 government
involving (a) management, (b) employees who have significant roles in intemal control, and (c)
others where the fraud could have a material effect on the financial statements. Your
responsibilities include informing us of your knowledge of any allegations of fraud or suspected
fraud, or illegal acts affecting the government received in communications from employees,
former employees, grantors, regulators, or others. In addition, you are responsible for
identifying and ensuring that the entity complies with applicable laws, regulations, contracts,
agreements, and grants and for taking timely and appropriate steps to remedy any fraud, illegal
acts, violations of contracts or grant agreements, or abuse that we may report. You are
responsible for the preparation of the supplementary information in conformity with U.S.
generally accepted accounting principles. You agree to include our report on the supplementary
information in any document that contains and indicates that we have reported on the
supplementary information. You also agree to present the supplementary information with the
audited financial statements.
Management is responsible for establishing and maintaining of a process for tracking the status
of audit findings and recommendations. Management is also responsible for identifying for us
previous financial audits, attestation engagements, performance audits or other studies related
to the objectives discussed in the Audit Objectives section of this letter. This responsibility
includes relaying to us corrective actions taken to address significant findings and
recommendations resulting from those audits, attestation engagements, performance audits or
other studies. You are also responsible for providing management's views on our current
findings, conclusions, and recommendations, as well as your planned corrective actions, for the
report, and for the timing and format for providing that information.
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.
City of Winter Springs Page 4
Engagement Letter
Audit Procedures - General
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements; therefore, our audit will involve judgment about the number of
transactions to be examined and the areas to be tested. We will plan and perform the audit to
obtain reasonable rather than absolute assurance about whether the financial statements are
free of material misstatement, whether from errors, fraudulent financial reporting,
misappropriation of assets, or violations of laws or governmental regulations that are attributable
to the entity or to acts by management or employees acting on behalf of the entity. Because the
determination of abuse is subjective Govemment Auditing Standards do not expect auditors to
provide reasonable assurance of detecting abuse.
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
misstatement may exist and not be detected by us. In addition, an audit is not designed to
detect immaterial misstatements, or violations of laws or governmental regulations that do not
have a direct and material effect on the financial statements. However, we will inform you of
any material errors and any fraudulent financial reporting or misappropriation of assets that
come to our attention. We will also inform you of any violations of laws or governmental
regulations that come to our attention, unless clearly inconsequential. Our responsibility as
auditors is limited to the period covered by our audit and does not extend to later periods for
which we are not engaged as auditors.
Our procedures will include tests of documentary evidence supporting the transactions recorded
in the accounts, and may include tests of the physical existence of inventories, and direct
conformation of receivables and certain other assets and liabilities by correspondence with
selected individuals, funding sources, creditors, and financial institutions. We will request
written representations from your attorneys as part of the engagement, and they may bill you for
responding to this inquiry. At the conclusion of our audit, we will also require certain written
representations from you about the financial statements and related matters.
Audit Procedures - Internal Controls
Our audit will include obtaining an understanding of the entity and its environment, including
intemal control, sufficient to assess the risks of material misstatement of the financial
statements and to design the nature, timing, and extent of further audit procedures. Tests of
controls may be performed to test the effectiveness of certain controls that we consider relevant
to preventing and detecting errors and fraud that are material to the financial statements and to
preventing and detecting misstatements resulting from illegal acts and other noncompliance
matters that have a direct and material effect on the financial statements. Our tests, if
performed, will be Tess in scope than would be necessary to render an opinion on internal
control and, accordingly, no opinion will be expressed in our report on internal control issued
pursuant to Government Auditing Standards.
An audit is not designed to provide assurance on internal control or to identify significant
deficiencies. However, during the audit, we will communicate to management and those
charged with governance internal control related matters that are required to be communicated
under AICPA professional standards and Govemment Auditing Standards.
City of Winter Springs Page 5
Engagement Letter
Audit Procedures - Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of
material misstatement, we will perform tests of the City of Winter Springs's compliance with the
provisions of applicable laws, regulations, contracts, agreements and grants. However, the
objective of our audit 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 Govemment Auditing
Standards.
Audit Administration, Fees, and 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.
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.
We expect to begin our audit in December, 2010, and to issue our reports no later than March
20, 2011. Kelly Leary is the engagement partner and is responsible for supervising the
engagement and signing the reports or authorizing another individual to sign them.
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)
2010 $ 29,000 $ 5,000 $ 10,500
Govemment Auditing Standards require that we provide you will a copy of our most recent
extemal peer review report and any letter of comment, and any subsequent peer review reports
and letters of comment received during the period of the contract. Our 2008 peer review report
accompanies this letter.
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 & COMPANY, LLC
1 1/ fo
Kell Lea ke, C.P.A. /
•
RESPONSE:
This letter correctly sets forth the understanding of the City of Winter Springs.
By:
Title: f Ty : �.��►
Date: - 7/ pi/ Jo