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HomeMy WebLinkAboutMcDirmit, Davis, Puckett & Company Audit -2001 01 18 ,/" MCDIRMIT, DAVIS, PUCKETT & COMPANY, P.A. CERTifiED PUBLIC ACCOUNTANTS AND CONSULTANTS 605 E. Robinson Street, Suite 635 Post Office Box 1185 Orlando, Florida 32802-1185 Telephone: (407) 843-5406 Fax: (407) 649-9339 E-Mail: info@mdpcpa.com January 18, 2001 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 years ended September 30, 2000, 2001 and 2002. We will audit the general purpose financial statements of the City of Winter Springs as of and for the years ended September 30, 2000, 2001 and 2002. Audit Objectives The objective of our audit is the expression of an opinion as to whether your general purpose financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles. Our audit will be conducted in accordance with 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 an opinion. If our opinion on the general purpose financial statements is 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 an opinion, we may decline to express an opinion or to issue a report as a result of this engagement. We will also provide reports (that do not include opinions) on internal control related to the financial statements and compliance with laws, regulations, and the provisions or grant agreements, noncompliance with which could have a material effect on the financial statements as required by Government Auditing Standards. Management Responsibilities Management is responsible for establishing and maintaining internal control and for compliance with laws, regulations, contracts, and agreements. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of the controls. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorizations and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles. ~ ~ Members: Private Companies Practice Section' American Institute of Certified Public Accountants. Florida Institute of Certified Public Accountants "--'---~-~.r"',,~r "'''"-:' .~_._~......,:: - City of Winter Springs Engagement Letter January 18, 2001 Page Two Management Responsibilities - (Continued) Management is responsible for making all financial records and related information available to us. We understand that you will provide us with such information required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, but the responsibility for the financial statements remains with you. That responsibility includes the establishment and maintenance of adequate records and effective internal control over financial reporting, the selection and application of accounting principles, and the safeguarding of assets. Management is responsible for 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 general purpose financial statements taken as a whole. 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 caused by error or fraud. 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 a material misstatement may exist and not be detected by us. In addition, an audit is not designed to detect immaterial errors, fraud or other illegal acts or illegal acts that do not have a direct effect on the general purpose financial statements. However, we will inform you of any material errors and any fraud that comes to our attention. We will also inform you of any other illegal acts that corne to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any 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. Identifying and ensuring that the City of Winter Springs complies with laws, regulations, contracts, and agreements is the responsibility of management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we will perform tests of the City of Winter Springs' compliance with applicable laws and regulations and the provisions of 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. City of Winter Springs Engagement Letter January 18, 2001 Page Three Audit Procedures - Internal Controls In planning and performing our audit, we will consider the internal control sufficient to plan the audit in order to determine the nature, timing, and extent of our auditing procedures for the purpose of expressing our opinion on the City of Winter Springs' general purpose financial statements. We will obtain an understanding of the design of the relevant controls and whether they have been placed in operation, and we will assess control risk. 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 general purpose 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 general purpose financial statements. (Tests of controls are required only if control risk is assessed below the maximum level.) 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. An audit is not designed to provide assurance on internal control or to identify reportable conditions. However, we will inform the governing body or audit committee of any matters involving internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements. Audit Administration, Fees, and Other We understand that your employees will prepare all cash or other confirmations we request and will locate any invoices selected by us for testing. We expect to begin our audit on approximately February 1, 2001 and to issue our reports no later than March 20, 2001. Our fees for the year ending September 30, 2000, 2001 and 2002 are as follows: Fiscal Year 1999-2000 2000-2001 2001-2002 Base Audit Fee $25,000 22,000 22,700 CAFR Preparation $3,000 3,100 3,200 ---:_~,;--'I";:,:,.,,--------" City of Winter Springs EngagenlentLetter January 18, 2001 Page Four Audit Administration, Fees, and Other - (Continued) In addition, if the city receives federal or state grant funds subject to single audit requirements, the additional audit fee will be $3,000 if there are minor programs only or $4,000 if there is a major program. Due to the major impact that GASB 34 will have on municipal financial statements, it is understood that all services rendered by us to plan and implement this pronouncement will be additional fees. These additional services will be billed at the following hourly rates: Audit Stockholder Audit Manager Audit Senior Audit Staff $135 115 80 58 It is understood that if our audit manager, Kelly Leary, leaves the firm during the three year period, the City of Winter Springs may terminate this contract if they do not feel her replacement is qualified. 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 yours, McDirmit, Davis, Puckett & Company, P.A. (j)ct-~_~ C- . )11 c()~ (' (-A J RESPONSE: This letter correctly sets forth the understanding of the City of Winter Springs. By: ;?~/u ~ -? Title: r~~ Date: 1- 02. I) - - 6/ MEMORANDUM TO: Mayor and Commission Mr. Anthony A Garganese, City Attomey~ Audit Engagement Letter FROM: SUBJECT: DATE: January 22, 2001 I have reviewed the attached audit engagement letter from McDirmit, Davis, Puckett & Company, P.A. and found it to be consistent with the provisions of Consent Agenda Item "B", and sufficient for Commission approval.