HomeMy WebLinkAboutMcDirmit, Davis, & Company, LLC Audit - 2019 10 01CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS
October 1, 2019
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 as of and for the year ended
September 30, 2019, 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.
In addition, we will audit the entity's compliance over major federal award programs for the period ended
September 30, 2019. 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 objectives of our expressing an
opinion on each opinion unit and an opinion on compliance regarding the entity's major federal award
programs.
Accounting principles generally accepted in the United States of America, (U.S. GAAP,) as promulgated
by the Governmental Accounting Standards Board (GASB) 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 required supplementary
information (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 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
basic financial statements or to the basic financial statements themselves, and additional procedures in
accordance with auditing standards generally accepted in the United States of America. We intend to
provide an opinion on the supplementary information in relation to the basic financial statements as a
whole.
1. Combining nonmajor fund financial statements
2. Individual nonmajor fund schedule.
1VICIARMrr DAVIS . LLC
934 N. MAGNOLIA A VENUP:, SUTFE 100 ORLANDU. F oml)A 32803
1:407-843-5406 1 1=:407-649-9339 1 WWW.MCDIRM1TDAVIS.001,1
City ofWinter Springs Page
Engagement Letter
Schedule ofExpenditures ofFederal Awards
VVewill subject the schedule of expenditures of federal awards to the auditing procedures applied in our
audit of the basic financial statements and certain additional proceduree, including compering and
reconciling the schedule tothe underlying accounting and other records used to prepare the financial
statements or to the financial statements themo*|vaa, and additional procedures in accordance with
auditing standards generally accepted in the United States of America. We intend to provide an opinion
on whether the schedule of expenditures of federal ewovda is presented fairly in all material respects in
relation tothe financial statements as avvho|e.
Also, the document vvnsubmit bzyou will include the following other additional information that will not be
subject to the auditing procedures applied in out audit of the basic financial statements:
1.Statistical Section
2. Introductory Section
Data Collection Form
Prior to the completion of our engagement, we will complete the sections of the Data Collection Form that
are our responsibility. The homn will summarize our audit Ondinga, amounts and conclusions. It in
management's responsibility to submit reporting package including financial statements, schedule of
expenditure of federal avvando, summary schedule of prior audit findings and corrective action plan along
with the Data Collection Form tothe federal audit clearinghouse. The financial reporting package must be
text meorchab|a, unenoryphad, and unlocked. C)themvisn, the reporting package will not be accepted by the
federal audit clearinghouse. We will assist you in the electronic submission and certification. You may
request from us copies of our report for you to include with the reporting package submitted to pass -
through entities.
The Data Collection Form in required to be submitted within the earlier nf3O days after receipt ofour
auditors' reports or nine months after the end of the audit perind, un|nna specifically waived by a federal
cognizant or oversight agency for audits. Data Collection Forma submitted untimely are one of the factors
inassessing programs otmhigher risk.
Audit ofthe Financial Statements
We will conduct our audit in accordance with auditing standards generally accepted in the United States
ufAmerica (U.G. GAAS), the standards applicable tnfinancial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States of America, the audit requirements of
Title U.S. Code of Federal Regulations (CFR) Part2OO. Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards (Uniform Guidance), and any state or regulatory
requirements. Those standards and the Uniform Guidance 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 basic financial statements. The procedures selected depend on the auditor's judgment,
including the 000enarnont of the risks of material misstatement of the basic financial etabemento, whether
due to error, fraudulent financial reporting, misappropriation of assets, or violations of |awm, governmental
nagu|ationa, 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 managamant, as well as evaluating the
overall presentation of the basic financial statements. If appropriate, our procedures will therefore include
tests of documentary evidence that support the transactions recorded in the aouounts, tests of the
physical existence of invnntorieo, and direct confirmation of cash, inventnnentm, and certain other onoetn
and liabilities by correspondence with creditors and financial institutions. As part ofour audit proceaa, we
will request written representation from your attorneys, and they may bill you for responding. At the
conclusion ofour audit, we will also request certain written representation from you about the basic
financial statements and related matters.
City ofWinter Springs Page
Engagement Letter
Because of the inherent limitations of an audit, together with the inherent limitations of internalcontrol, an
unavoidable risk that some material misstatements (whether caused by ennre, fraudulent financial
naporUng, misappropriation of oonets, or violations of |evva or governmental regulation) may not be
debaobad existe, even though the audit in properly planned and performed in accordance with U.S. G/V\S
and Government Auditing Standards. Please note that the determination of abuse is subjective and
Government Auditing Standards does not require auditors todetect abuse.
In making our rink oaoesomento, we consider internal control relevant to the entity's preparation and fair
presentation of the financial statements in order to design audit procedures that one appropriate in the
circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity's internal
control. Hovvever, we will communicate to you in writing concerning any significant deficiencies or material
weaknesses in internal control relevant to the audit of the basic financial statements that we have
identified during the audit. Our responsibility as auditors is limited to the period covered by our audit and
does not extend toany other periods.
We will issue e written report upon completion of our audit of the City'n basic financial statements. Our
report will be addressed to the governing body of the City. 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 paragraph(s), or withdraw from the engagement.
In accordance with the requirements nfGovernment Auditing Stondardo, we will also issue a written
report describing the scope of our testing over internal control over financial reporting and over
compliance with |avva, nagu|adona, and provisions of grants and contracts, including the results of that
testing. Hovvever, providing an opinion on internal control and compliance over financial reporting will not
be an objective of the audit and, therefore, no such opinion will be expressed.
Audit mfMajor PmognanmConnp1ionoe
Our audit of the City'a major federal award program(e) compliance will be conducted in accordance with
the requirements of the Single Audit Act, as amended; and the Uniform Guidance, and will include tests of
accounting nacnvdo, adeterminadon ofmajor programs in accordance with the Uniform Guidance and
other procedures we consider necessary to enable us to express such an opinion on majorfodeoa|avvard
program compliance and to render the required reports. We cannot provide assurance that onunmodified
opinion on compliance will be expressed. Circumstances may arise in which it is necessary for us to
modify our opinion orwithdraw from the engagement.
The Uniform Guidance requires that vvealso plan and perform the audit to obtain reasonable assurance
about whether the entity has complied with applicable |avvo and regulations and the provisions of
contracts and grant agreements applicable tn major federal award programs. Our procedures will consist
of determining major federal programs and performing the applicable procedures described in the U.G.
Office of Management and Budget OMB Compliance Supplement for the types of compliance
requirements that could have a direct and material offant on each of the entity's major programs. The
purpose of those procedures will be to express an opinion on the entity's compliance with requirements
applicable to each of its major programs in our report on compliance issued pursuant to the Uniform
Guidance.
Also, as required by the Uniform Guidance, 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 of the entity's major federal award
programs. Hovvever, our tests will be |eon in scope than would be necessary to render an opinion on
these controls and, accordingly, no opinion will be expressed in our report.
We will issue o report on compliance that will include on opinion or disclaimer of opinion regarding the
entity's major federal award progruma, and a report on internal controls over compliance that will report
any significant deficiencies and material weaknesses identified; however, such report will not express an
opinion oninternal control.
City ofWinter Springs
Engagement Letter
Management Responsibilities
Our audit will be conducted on the basis that management acknowledge and understand that they have
1. For the preparation and fair presentation of the basic financial statements in accordance with
accounting principles generally accepted inthe United States ofAmerica;
3. For the deoign, imp|emenbatinn, and maintenance of internal control relevant to the preparation
and hair presentation of basic finanuial statements that are free from material misstatement,
whether due tofraud orerror,
3. For identifying, in its accounts, all federal awards received and expended during the period and
the federal programs under which they were reoeived, including federal awards and funding
increments received prior to Deoember2G. 2014 (if any), and those received in accordance with
the Uniform Guidance (generally received after December 26.2O14);
4. For maintaining records that adequately identify the source and application of funds for federally
funded activities;
.
5. For preparing the schedule of expenditures of federal avvondo (including notes and nnnmanh
assistance received) inaccordance with the Uniform Guidance;
G. For the design, implementation, and maintenance of internal control over federal awards;
7. For establishing and maintaining effective internal control over federal awards that provides
reasonable assurance that the nonfederal entity is managing federal awards in compliance with
federal statutes, regulations, and the terms and conditions of the federal awards-,
8. For identifying and ensuring that the entity complies with federal ntatutaa, regu)ationo, and the
terms and conditions offederal award programs and implementing eyobsme designed to achieve
compliance with applicable federal otatuhaa, nagu|otions, and the terms and conditions of federal
ovvonj programs;
Q. For disclosing acounate|y, uurpenUy, and completely the financial results of each federal award in
accordance with the requirements nfthe award;
10. For identifying and providing report copies of previous auditn, attestation engagemontn, or other
studies that directly relate to the objectives of the audit, including whether related
recommendations have been implemented;
11. For taking prompt action when instances nfnoncompliance are identified�
12. For addressing the findings and recommendations of auditors, for establishing and maintaining a
process to track the status of such findings and recommendations and taking corrective action on
reported audit findings from prior periods and preparing a summary schedule of prior audit
findings;
13. For following up and taking corrective action on current year audit findings and preparing a
corrective action plan for such findings;
14. For submitting the reporting package and data collection form to the appropriate parties;
15. For making the auditor nvvave of any significant contractor relationships where the contractor is
responsible for program compliance;
16. To provide us with:
a. Aooeoa to all information of which management is aware that is relevant to the
preparation and fair presentation of the basic financial statements such as recorde,
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.
17. 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(o)
under audit are immateria|, both individually and in the oggregote, to the basic financial
statements as awho}��
.
18. For acceptance ofnonatteotservices, including identifying the proper party tooversee nonatteet
vvorx�
.
19. For maintaining adequate record, selection and applying phnuip|eo, and safeguarding assets;
City ofWinter Springs
Engagement Letter
20For informing us of any known or suspected fraud affecting the entity involving menagenlent,
employees with significant role in internal oonbn| and others where fraud could have a mabahm|
effect oncompliance;
21. For the accuracy and completeness ofall information provided;
22. For taking reasonable measures to safeguard protected personally identifiable and other sensitive
information; and
23. For confirming your understanding of your responsibilities as defined in this letter to us in your
management representation letter.
With regard to the supplementary information referred to ebovm, including the schedule of expenditures of
federal ovvardo, you acknowledge and understand your responsibility: (a) for the preparation of the
supplementary information in accordance with opp|ioob|o criteria; (b) to provide us with the appropriate
written ompnsoantyUone regarding supplementary information; (o) 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 basic financial etatmmenta, or if the supplementary information will not be
presented with the audited basic financial otetemenb», to make the audited basic financial statements
readily available to the intended users of the supplementary information no later than the date of issuance
byyou ofthe supplementary information and our report thereon.
As part of our audit process we will request from monagement, written confirmation concerning
representations made to us in connection with the audit.
We understand that your employees will prepare all confirmations we request and will locate any
documents selected by us for testing.
If you intend to publish or otherwise reproduce the financial statements and make reference to our firm,
you agree to provide us with printers' proofs or masters for our review and approval before printing. You
also agree to provide us with a copy of the final reproduced material for our approval before it is
Fees and Timing
The timing of our audit will be scheduled for performance and completion as follows:
Document internal control and preliminary tests
Perform audit procedures
Begin I Complete
December 2019
Tommy Campbell Is the engagement partner for the audit services specified in this letter. Her
responsibilities include supervising W1oDinnit Davis's services performed as part of this engagement and
signing or authorizing another qualified firm representative to sign the audit report.
City of Winter Springs Page 6
Engagement Letter
Our fee for the manvioan described in this letter will be an foUnvvn, inclusive of all coots and out-of-pocket
expenses, unless the scope of the engagement is ohanged, the assistance that City of Winter Springs
has agreed to furnish in not ppovided, or unexpected conditions are enoountered, in which case vvewill
discuss the situation with you before proceeding.
Fiscal Year Ending Additional Fees for Single Additional Fees for
September 30: Audit Fee CAFIRPreparation (if
2019 $32.000 $5.000 $1O.5OO
If the City is required to have o Single Audit, the additional fee will be $5.000. If CAM Preparation is
requeabad. the additional fee will be $10.500. If the City of Winter Springs exercises the renewal option,
wewill submit aseparate engagement letter for the years ending September 3O.2O2O.
Other Matters
During the course of the engagement, we may communicate with you or your personnel via fax ore-mai[
and you should be aware that communication in those mediums contains a risk of misdirected or
intercepted communications.
Regarding the o|eoknnio dissemination of audited financial sbatemente, including financial statements
published electronically on your inhannetwebeite. you understand that electronic sites are means to
distribute information and, therefona, 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.
The audit documentation for this engagement is the property ofW1oDinnit Davis & Company. LLC and
constitutes confidential information. Hovvever, we may be requested to make certain audit documentation
available to regulators pursuant to authority given to it by law or negu|otion, or to peer reviewers. If
requested, access to such audit documentation will be provided under the supervision of McDirmit Davis's
personnel. Furthormona, upon requeut, we may provide copies of selected audit documentation to
regulators. The regulators may intend, or decide, to distribute the copies or information contained therein
to othere, including other governmental agencies. We oQnae to retain our audit documentation or
vvorkpaperefor operiod ofmtleast five years from the date nfour report.
Further we will be available during the year to consult with you on financial management and accounting
matters of routing nature, With respect to any nonattest een/inea we perforn, we agree to propose
adjusting orcorrecting journal entries to be reviewed and approved by mana0ement, and to prepare the
financial statements.
We will not aaounno management responsibilities on behalf ofthe City. However, we will provide advice
and recommendations to assist management of the City in performing its responsibilities.
City of Winter Springs' management is responsible for (a) making all management decisions and
performing all management functions; (b) assigning acompehant individual tooversee the services; (o)
evaluating the adequacy of the oen/inen performed; (d) evaluating and accepting responsibility for the
namu{to of the nen/ioea performed; and (e) establishing and maintaining internal oontno|o, including
monitoring ongoing activities.
Our responsibilities and limitations ofthe engagement are aofollows:
w We will perform the services in accordance with applicable professional standards.
v This engagement is limited to the men/ioeo previously outlined. Our finn, in its sole professional
judgment, rnnen/eo the right to refuse to do any procedure or bake any action that could be
construed an making management decisions or assuming management reoponoibi|iden, including
determining account coding and approving journal entries.
City ofWinter Springs Page
Engagement Letter
During the course of the audit we may nbaenxa 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 orinwriting.
Government Auditing Standards require that we document an assessment of the skiUa, knnvvedge, 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.
We agree to retain our audit documentation or workpapers for a period of at least five years from the date
ofour report.
You agree to inform us of facts that may affect the basic financial statements of which you may become
ovvone during the period from the date of the auditor's report to the date the financial statements are
issued.
At the conclusion of our audit engagement we will communicate to those charged with governance the
following significant findings from the audit'.
w Our view about the qualitative aspects of the entity's significant accounting practices-,
= Significant difhoultien, if any, encountered during the audit;
* Uncorrected misstatements, other than those we believe are trivia[ if any;
w Disagreements with management, ifany;
m Other findings or ionuea, 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;
p K4atnrio|, corrected misstatements that were brought to the attention of management as a result of
our audit procedures;
* Representations vverequested from managennent�
° Management's consultations with other accountants, ifany; and
w Significant ioouea, if any, arising from the audit that were dioounsed, or the subject of
correspondence, with management.
In accordance with the requirements of Government Auditing Standards, we have attached a copy of our
latest external peer review report of our firm for your consideration and files.
Public Records
Auditor shall, pursuant to and in accordance with Section 119.0701. Florida Gtadub*n. comply with the
public records laws of the State of Florida, and specifically shall:
o. Keep and maintain public record required by the City to perform the oonvimao nrwork set forth in
this Agreement;
b Upon the request of the Cih/a custodian of public record, provide the City with a copy of the
requested records to be inspected or copied within a reasonable time ada cost that does not
exceed the cost provided in Chapter 119, Florida Stmtuhnn, or as otherwise provided by the law;
u. Ensure that public records that are exempt or confidential and exempt from public naconjo
dion|nnupe requirements are not disclosed except an authorized by |mvv for the duration of the
contract term and following completion of the Agreement if the Auditor does not transfer the
records tothe City; and
d. Upon completion of the Aonanment, tnsnofer, at no cost to the City, all public record in possession
of the Auditor or heap and maintain public records required by the City to perform the service or
work provided in the Agreement. If the Auditor transfers all public record to the City upon
completion of the Agreement, the Auditor shall destroy any duplicate public records that are
exempt orconfidential and exempt from public disclosure requirements. |fthe Auditor keeps and
maintains public records upon completion of the Agreement, the Auditor shall meet all applicable
requirements for retaining public records. All records stored electronically must beprovided tothe
City, upon request from the City'o custodian of public reoordo, in a format that is compatible with
the information technology systems nfthe City.
City ofWinter Springs
Engagement Letter
Auditor acknowledges that any request toinspect nrcopy public records relating tothis Agreement must
be made directly to the City pursuant to Section 119.0701(3), Florida Statures. If notified by the City of a
public records request for records no in the possession of the City but in possession of the Auditor, the
Auditor shall provide such records to the City or allow the records to be inspected or copied within a
reasonable time. Auditor acknowledges that should Auditor fail to provide the public records tothe City
within a reasonable time. Auditor may be subject to penalties pursuant to Section 119.10. Florida
Statutes.
Please sign and nabunn the attached copy of this letter to indicate your acknowledgment of, and
agreement with, the arrangements for our audit of the basic financial statements including our respective
responsibilities.
We appreciate the opportunity to be your financial statement auditors and look forward to working with
you and your staff.
MUMOUM
This lett
By:
3 of the City ofWinter Springs.
Gregory, Sharer & Stuart, P.A.
Certified Public Accountants and Business Consultants
Report on the Firm's System of Quality Control
October 13, 2017
To the Owners of McDirmit Davis & Company, LLC
And the Peer Review Committee of the Florida Institute of CPAs
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, 2017. Our peer review was conducted in accordance
with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the
American Institute of Certified Public Accountants (Standards).
A summary of the nature, objectives, scope, limitations of, and the procedures performed in a System Review as
described in the Standards may be found at www.aicpa.org/prsummary. The summary also includes an explanation
of how engagements identified as not performed or reported in conformity with applicable professional standards, if
any, are evaluated by a peer reviewer to determine a peer review rating.
Firm's Responsibility
The firm is responsible for designing a system of quality control and complying with it to provide the firm with
reasonable assurance of performing and reporting in conformity with applicable professional standards in all
material respects. The firm is also responsible for evaluating actions to promptly remediate engagements deemed as
not performed or reported in conformity with professional standards, when appropriate, and for remediating
weaknesses in its system of quality control, if any.
Peer Reviewer's Responsibility
Our responsibility is to express an opinion on the design of the system of quality control and the firm's compliance
therewith based on our review.
Required Selections and Considerations
Engagements selected for review included engagements performed under Government Auditing Standards including
a compliance audit under the Single Audit Act and an audit of employee benefit plans.
As a part of our peer review, we considered reviews by regulatory entities as communicated by the firm, if
applicable, in determining the nature and extent of our procedures.
Opinion
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, 2017, has been suitably designed and complied with to provide
the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards
in all material respects. Firms can receive a rating of pass, pass with deficiency(ies), or fail. McDirmit Davis &
Company, LLC has received a peer review rating of pass.
'"tt . 6N16-U -Ira44;�l ?,Ar.
Gregory, Sharer & Stuart, P.A.
100 Second Avenue SOLIItl , SUite 600 !St. PetersbUrg, 'Plorida 337/01-43.36
(') 82"1-6161 1-'ax (727) 822-437/3 1 Gvw.Z sscpi.com