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HomeMy WebLinkAbout2004 03 22 Consent 203 Fee Proposal Agenda Item.doc COMMISSION AGENDA ITEM 203 Consent X Information Public Hearin Re ular MGR. ~ lDept.~ March 22. 2004 Meeting REQUEST: The Commission authorize the City Manager to execute a three year contract for audit services with the firm of McDirmit, Davis, Puckett and Company, LLC. PURPOSE: To authorize the City Manager to execute a contract for audit services. CONSIDERATIONS: . On March 8, 2004 the Auditor Selection Committee presented its recommendations to the Commission and the Commission authorized the City Manager to pursue negotiations with the top ranked firm. . The City Manager subsequently negotiated an acceptable fee proposal from the Number 1 ranked firm of McDirmit, Davis, Puckett & Company, LLC. . The fees proposed by McDirmit, Davis, Puckett & Company, LLC are as follows: Fiscal Year 2003-2004 2004-2005 2005-2006 Base Audit Fee 24,300 25,100 25,800 Optional CAFR Preparation 4,500 4,700 4,900 Single Audit Fee (if required) 4,000 4,000 4,000 Total Possible 32,800 33,800 34,700 FUNDING: The budget for fiscal year 2004 includes $35,000 for audit services as per the contract to extend McDirmit, Davis, Puckett and Company, LLC for fiscal year 2003. RECOMMENDATIONS: The City Manager recommends the Commission authorize the City Manager to execute a three year contract with the firm ofMcDirmit, Davis, Puckett & Company, LLC. ATTACHMENTS: Fee quote from McDirmit, Davis, Puckett & Company, LLC. COMMISSION ACTION: ~ MCDIRMIT DAVIS PUCKETT March 15, 2004 City of Winter Springs, Florida Fee Quote for Auditing Services Fiscal Year 2003-2004 2004-2005 2005-2006 Base Audit Fee $24,300 25,100 25,800 Optional CAFR Preparation $4,500 4,700 4,900 The above fee quote includes increased intemal control review on an annual basis and the assumption that the city accounting staff will prepare the combining financial statements. statistical section and the management discussion and analysis section. The City may exercise an option to prepare its own CAFR in any year and eliminate the CAFR preparation fee. In addition, if in any year, the City receives federal grant funds and is required to issue a single audit, the additional fee will be: Minor Programs only Additional fee if one or more major programs $3,000 1,000 $4.000 Services outside the scope of the audit and inquires that require significant research time will be charged on a per diem basis with the following hourly rates: Audit Stockholder Audit Manager Audit Senior Audit Staff $180 125 90 70 McDirmit Davis Puckett & Company, LLC Cs:ch- C. (i1 ~ Elden G. McDirmit, CPA MCDIRMIT DAVIS PUCKETT & COMPANY. LLC <.: ~, ~ 'I' I FIE () PUll Lie "C C 0 l' I\: 'r A N r s ^ N 0 ^ 0 .; J S 0 R S 605 E, ROBINSON STR~l!T, Sum 635. OttI.Al\:I1O. FLORI!)^ 32801 TcLErH()"". d07-RdZ-S406' FAX 407-649-9339. EMAII.: INl'()(aJ~nl'C"^.co~ MI'MIIPR!':: r't "." " "'1. (j\MI'^~I"$ PR:A.C"Tl(,"I: .Slo, '"t1r''\S . ^ M~.tJt:^~ ll'\iTln:-rH o~: CLM"1I'Il'.!) ~i:fll.IC A',:':(')lNt^\.:TS.. FI,!U~I',,)^ 1\;""I~":j1' ()J' r."w";;IFf, r....BI.IC AC('Ol~"T^,~~ WJ MCDIRMIT DAVIS PUCKETT March 15, 2004 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, 2004. We will audit the financial statements of the City of Winter Springs as of and for the year ended September 30, 2004. Audit Objectives The objective of our audit is the expression of an opinion as to whether your financial statements are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America. 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 an opinion. If our opinion on the 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 intemal 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 financial statements in accordance with accounting principles generally accepted in the United States of America. MCDIRMIT D^VIS PUCKETT & COMPANY, LLC C~;RTI~I~O PUBt.IC ACCOt:l\'TJ>.l\'TS ^~n ^OV1,O~~ 605 E, ROllJ;o.IS(lN STRt:E'l'. Sllm: 635' ORLANOO. rI.OIlIO... 321101 TEl.f,PIWNF, 407.843-5<106' F"x 407.(,4<).9339. c\AAIL.: Nl'IJ@MOrc':J'A,COM ).11'~'" v.~: ~."'" 'l-,I.'\lM"~I'.~ ~',^('TI(,'F .~,,"'T\I)'. ^"','.,C^:-< '~,,"'Tt;I"',O~ (;1,~TW"'.11 f't;., ", A"'I.'NT^"~~. f..O""'^ I:-;~,.,n:n: 0, cu",,...n I'<JIII.I( ,l,(':I'>\:~T'~l~ City of Winter Springs Engagement Letter March 15, 2004 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 from errors, fraudulent financial reporting, misappropriation of assets, or violations of laws or governmental regulations that are attributable to the entity or acts by management or employees acting on behalf of the entity. 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 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 that come to our attention and we will inform you or any fraudulent financial reporting or misappropriation of assets that comes 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 matters that mj~,ht 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 March 15, 2004 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' 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 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. (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 necessalY 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 goveming 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 during the month of November 2004 and to issue our reports no later than January 31, 2005. Our fee for the year ending September 30, 2004 is as follows: Base Audit Fee $24,300 CAFR Preparation $4,500 r City of Winter Springs Engagement Letter March 15,2004 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. Also, if we are requested to perform any additional services, these additional services will be billed at the following hourly rates: Audit Stockholder Audit Manager Audit Senior Audit Staff $180 125 90 70 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 fetter, please sign the enclosed copy and return it to us. Very truly yours, McDirmit Davis Puckett & Company, LLC ~ C. )?(~~ RESPONSE: This letter correetl.y sets forth the understanding of the City of Winter Springs. /.,..-;:J . - ~" .":--/7/"7 cV B~: ,;:; /C::V~c.t:'ihV: ~~ ,r.t /.7 -' Titll~: Lz/\ . "r/vc..:--r-;~<- J _ ..'__ ~ Date: -:3 .~/~"? O-tJ<-.-! TOTAL P.06 - , ~ MCDIRMIT DA, VIS PUCKETT March 15, 2004 City of Winter Springs, Florida Fee Quote for Auditing Services Fiscal Year 2003-2004 2004-2005 2005-2006 Base Audit Fee $24,300 25,100 25,800 Optional CAFR Preparation $4,500 4,700 4,900 The above fee quote includes increased internal control review on an annual basis and the assumption that the city accounting staff will prepare the combining financial statements, statistical section and the management discussion and analysis section. The City may exercise an option to prepare its own CAFR in any year and eliminate the CAFR preparation fee. In addition, if in any year, the City receives federal grant funds and is required to issue a single audit, the additional fee will be: Minor Programs only Additional fee if one or more major programs $3,000 1.000 $4.000 Services outside the scope of the audit and inquires that require significant research time will be charged on a per diem basis with the following hourly rates: Audit Stockholder Audit Manager Audit Senior Audit Staff $180 125 90 70 McDirmit Davis Puckett & Company, LLC ~C. fJ1~ Elden G. McDirmit, CPA MCDlRMIT DAVIS PUCKETT & COMPANY. LLC c ~: K T I Fl. [) PUll Lie ^ ceo I.; " 'r A N 'f S ^ ~ 0 ^ 0 V r S 0 R S 605 E. ROBINSON STRllt:T, Sum 635 . OKl.A~no. Fl.nRID^ 32801 nLEI'H()"~, d07-Rd3.S406 . FAX 407-649-9339 . C"'AII.: INF()(qI~[)l'Cl'^.co~ MI'MJlr:~~:: r~IV~"'I. (nMI'^~I"'Ji P~A("Tft..'i: Sl.t, "tl(", . ^M~,ltlr:A~ t~nt1t""E O~ lMU'I'll',/) ~1:fll,U." AC:':(')t/'),:T^\.:TS. FI,O){II\A 1\.:~TI~;;1' <)" (:"II.I'i'IF(1 r"':Bl.I(: A.Cn)1.:"':T^N~ " ;, rIJj MCDIRMIT DAVIS PUCKETT March 15, 2004 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 30,2004. We will audit the financial statements of the City of Winter Springs as of and for the year ended September 30, 2004. Audit Objectives The objective of our audit is the expression of an opinion as to whether your financial statements are fairly presented, in all material respects, in conformity with' accounting principles generally accepted in the United States of America. 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 an opinion. If our opinion on the 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 financial statements in accordance with accounting principles generally accepted in the United States of America. f MCDlRMIT D^VlS PUCKETT & COMPANY, LLC Cr-.:RTI~I&D PUBl.IC ACCOt:l\'TI<l\'TS ^).:o AOV1S0~~ 60S E. ROI!IN5(,)N STR~ET. Sl/lTI:: 635' ORLA"'OO, r:lOllIOl\ 321101 r~l.f.t>Il()NF.407.843.S406' FAX 407.(,41).9339' EMAII..: NFlJ@MOrc':J'A.COM ).I,,~I\J v.~: ~."'.\ I~. CIlM"N'r.~ p'"c'm'" ~,."'T1I)' . ^ '\J'.IC^~ 1~""T\;I;. O~ (;,,<TII"".II 1'\:., )(. ^""(",NT,"7~ . fl.O""I^ 1~~1'.:'\:n: 0, Cf.~,.",':n \'1;111.1(, Al',."":~T'~" City of Winter Springs Engagement Letter March 15, 2004 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 from errors, fraudulent financial reporting, misappropriation of assets,> or violations of laws or governmental regulations that are attributable to the entity or acts by management or employees acting on behalf of the entity. 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 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 that come to our attention and we will inform you or any fraudulent financial reporting or misappropriation of assets that comes 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 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 indMduals. 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 March 15, 2004 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' 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 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. (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 during the month of November 2004 and to issue our reports no later than January 31,2005. Our fee for the year ending September 30, 2004 is as follows: Base Audit Fee $24.300 CAFR Preparation $4,500 ~ City of Winter Springs Engagement Letter March 15,2004 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. Also, if we are requested to perform any additional services. these additional services will be billed at the following hourly rates: Audit Stockholder Audit Manager Audit Senior Audit Staff $180 125 90 70 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, LLC ~ c./t:AA RESPONSE: This letter correctJ.y sets forth the understanding of the City of Winter Springs. By: ,/Ji(v~t/c-t"~~/~~--' ,r'f /7' .' Tit/'a: lA./\ ."//V6:/r:-,~<......... J 00,*.--9-""""- Date: 3~:r} () .~{}c..../ TOTAL P.06