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HomeMy WebLinkAboutDeloitte and Touche -1999 05 07 Ddoitte & Touche uP Certified Public Accountants Apri122, 1999 Members of the. City Commission City of Winter Springs, Florida 1126 East State Road 434 Winter Springs, Florida 32708 Deaz Commission Members: Suite 1800 200 South Orange Avenue Orlando, Florida 32801 Telephone: (407) 246-8200 Facsimile: (4071422-0936 We aze pleased to serve as independent accountants and auditors for the City of Winter Springs (the "City") for the yeaz ended September 30, 1999, with renewal options for each of the years ended September 30, 2000 and 2001, respectively. Mr. Ron Conrad will be responsible for the services that we perform for the City. It will be the responsibility of Mr. Conrad to ensure that the City receives quality service. Mr. Conrad will, as he considers necessary, call on other individuals with specialized knowledge, either in this office or elsewhere in our firm, to assist in the performance of our services. It is our usual practice to have a consulting partner on each client assignment. The purpose of this arrangement is to have a partner who can substitute for Mr. Conrad in his absence or work with him when a second viewpoint is desired. Mr. Alex White will be the consulting partner for this engagement. While auditing and reporting on the City's fmancial statements for the yeaz ended September 30, 1999 is the service that we aze to provide under this engagement letter, we would also be pleased to assist the City on issues as they arise throughout the yeaz. Hence, we hope that the City will call Mr. Conrad whenever management believes he can be of assistance. This letter sets forth our understanding of the terms and objectives of our engagement, the nature and scope of the services we will provide, and the related fee arrangements. Audit of Financial Statements Our audit of the general purpose fmancial statements for the City of Winter Springs, Florida, as of and for the yeaz ending September 30, 1999 and optional years, will be conducted in accordance with generally accepted auditing standards and standazds applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. We will plan and perform our audit to obtain reasonable assurance about whether the financial statements aze free of material misstatement, whether caused by error or fraud, and we will perform tests of the City's compliance with certain provisions of laws, regulations, contracts, and grants. However, because of the chazacteristics of fraud, particulazly those involving concealment and falsified documentation (including forgery), a properly planned and performed audit may not detect a material misstatement. Therefore, an audit conducted in accordance with generally accepted auditing standazds is designed to DeloitbeTouche Tohmatsu Intennation~ Apri122, 1999 Page 2 obtain reasonable, rather than absolute, assurance that the financial statements are free of material misstatement. An audit is not designed to detect error or fraud that is immaterial to the financial statements or to detect immaterial instances of noncompliance. As part of our audit, we will consider the City's internal control and assess control risk, as required by generally accepted auditing standards and Government Auditing Standards, for the purpose of establishing a basis for determining the nature, timing, and extent of auditing procedures necessary for expressing an opinion on the financial statements, and not to provide assurance on the City's internal control or to identify reportable condifions. 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall fmancial statement presentation. Our auditing 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 make audit inquiries and request written responses from the City's attorneys as part of the engagement, and they may bill the City for responding to this inquiry. The objective of an audit carried out in accordance with the standards described above is (1) the expression of an opinion concerning whether the fmancial statements present fairly, in all material respects the fmancial position, results of operations, and cash flows of the City in conformity with generally accepted accounting principles, (2) reporting on the internal control relevant to an audit of the fmancial statements, and (3) reporting on the City's compliance with laws and regulations, which could have a material effect on the fmancial statements. The report on our understanding of the City's internal control and the assessment of control risk made as part of the fmancial statement audit will include (1) the scope of our work in obtaining an understanding of the City's internal control and in assessing the control risk, and (2) the reportable conditions, including the identification of material weaknesses identified as a result of our work in understanding and assessing the control risk. In addition, we will render a report on illegal acts, as required, depending on the results of our audit procedures. Our ability to express an opinion and render those reports, and the wording of our opinion and reports, will, of course, be dependent on the facts and circumstances at the date of our reports. 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 decline to issue a report as a result of this engagement. If we are unable to complete our audit or if our auditors' reports require modification, the reasons therefor will be discussed with City management. Neither our audit of the City's fmancial statements for the year ending September 30, 1999 and subsequent optional years, nor any other services provided pursuant to this engagement letter, will provide any assurances, nor will we express any opinion, that the City's systems or any other systems, such as those of the City's vendors, service providers, customers, or other third parties, are year 2000 compliant. In addition, we are not engaged to perform, nor will we perform as part of this engagement, Apri122, 1999 Page 3 any procedures to test whether the City's systems or any other systems aze yeaz 2000 compliant or whether the plans and activities of the City or any third parties are sufficient to address and correct system or any other problems that might arise because of the year 2000, nor will we express any opinion or provide any other assurances with respect to these matters. State Grant Audit Requirement This engagement letter encompasses the state grant compliance audit procedures currently required for the City, including related fees. Management's Responsibility The financial statements aze the responsibility of management. In this regazd, management has the responsibility for, among other things, establishing and maintaining effective internal control over financial reporting, for properly recording transactions in the accounting records, for making appropriate accounting estimates, for safeguazding assets, for the overall accuracy of the fmancial statements and their conformity with generally accepted accounting principles, and for making all fmancial records and related information available to us. Management is also responsible for compliance with laws, regulations, contracts, and grants, and for establishing and maintaining effective internal control to ensure such compliance with those requirements applicable to its activities. We will advise you about accounting principles and their application and will assist in the prepazation of your fmancial statements, but the responsibility for the financial statements remains with you. We will make specific inquiries of management about the representations embodied in the financial statements. As part of our audit procedures, we will request that management provide us with a representation letter acknowledging management's responsibility for the preparation of the financial statements and for compliance with laws and regulations applicable to federal awazd programs, and confirming certain representations made to us during our audit. The responses to those inquiries and related written representations of management required by generally accepted auditing standazds aze part of the evidential matter that we will rely on as auditors in forming our opinion on the City's financial statements. Because of the importance of management's representations, the City agrees to release and indemnify Deloitte &Touche LLP and its personnel from all claims, liabilities, and expenses relating to our services under this engagement letter attributable to any misrepresentation by management. If the City intends to publish or otherwise reproduce in any document our report on the City's financial statements, or otherwise make reference to Deloitte &Touche LLP in a document that contains other information in addition to the audited financial statements (e.g., in a debt or equity offering circular or in a private placement memorandum), the City agrees that prior to making any such use of our report, or reference to Deloitte &Touche LLP, City management will provide us with a draft of the document to read and obtain our approval for the inclusion or incorporation by reference of our report, or the reference to Deloitte &Touche LLP, in such document before the document is printed and distributed. The inclusion or incorporation by reference of our report in any such document would constitute the reissuance of our report and any request by the City to reissue our report or to consent to its inclusion or incorporation by reference in an offering or other document will be considered based on the facts and circumstances existing at the time of such request. The estimated fees outlined herein do not include any services that would need to be performed in connection with any such request to make use of our report, or reference to Deloitte &Touche LLP; fees for such services (and their scope) would be subject to our mutual agreement at such time and would be described in a separate engagement letter. April 22, 1999 Page 4 Other Communications Arising From the Audit In connection with the planning and the performance of our audit, generally accepted auditing Sandazds and Government Auditing Standards require that we ensure that certain matters aze communicated to the City Commission as appropriate. We will report directly to the City Commission any fraud of which we become aware that involves senior management, and any fraud (whether caused by senior management or other employees) of which we become aware that causes a material misstatement of the fmancial statements. We will report to senior management any fraud perpetrated by lower level employees of which we become aware that does not cause a material misstatement of the financial statements; however, we will not report such matters directly to the City Commission, unless otherwise directed by the City Commission. We will inform the appropriate level of management of the City and ensure that the City Commission is adequately informed with respect to illegal acts that have been detected or have otherwise come to our attention in the course of our audit, unless the illegal act is cleazly inconsequential. If, after determining that the City Commission has been adequately informed of an illegal act that has been detected or which has otherwise come to our attention in the course of our audit, we conclude that (1) the illegal act has a material effect on the financial statements; (2) senior management has not taken, and the City Commission has not caused senior management to take, timely and appropriate remedial actions with respect to the illegal act; and (3) the failure to take appropriate remedial actions is likely to result in a departure from the standazd auditors' report or warrant our resignation from the audit engagement, we will directly report our conclusions to the City Commission and take such actions as aze required by state or federal law to report such matters to funding agencies and appropriate legal authorities. We will also report directly to City management and the City Commission, as appropriate, matters coming to our attention during the course of our audit that we believe aze reportable conditions. Reportable conditions aze significant deficiencies in the design or operation of internal control that could adversely affect the City's ability to record, process, summarize, and report financial data consistent with the assertions of management in the fmancial statements. In addition, we will communicate to the City Commission certain other matters relating to the conduct of our audit, including, when applicable: • Our responsibility as auditors under generally accepted auditing sandazds and Government Auditing Standards • Significant accounting policies • Management judgments and accounting estimates • Significant audit adjustments (recorded and unrecorded) • Other information in documents containing audited fmancial statements • Disagreements with management • Consultation by management with other accountants on significant matters • Difficulties encountered in performing the audit • Major issues discussed with management prior to our retention as auditors. Apri122, 1999 Page 5 We may also have other comments for management on matters we have observed and possible ways to improve the efficiency of the City's operations or other recommendations concerning internal control. With respect to these other communications, it is our practice to discuss all comments, if appropriate, with the level of management responsible for the matters, prior to their communication to senior management and/or the City Commission. Access to Working Papers by Regulators In accordance with the requirements of Government Auditing Standards, we are required to provide access to our working papers and photocopies thereof to a federal agency or the Comptroller General of the United States upon their request for their regulatory oversight purposes. If such a request is made, we will inform you prior to providing such access. The working papers for this engagement are the property of Deloitte &Touche LLP and constitute confidential information. Access to the requested working papers will be provided to representatives of the United States General Accounting Office or other appropriate government audit staffs under the supervision of Deloitte &Touche LLP audit personnel and at a location designated by our firm. If photocopies are requested, we will mark all information as confidential and maintain control over the duplication of all information. Fees Our professional fees for audit services under this engagement are estimated to be $36,000 for the year ending September 30, 1999, and each of the optional years ending September 30, 2000 and 2001. This estimate is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If time is necessary due to additional reporting requirements (i.e., Single Audit requirements) or additional audit procedures requested by the City, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. ***** We appreciate the opportunity to be of service to the City. If you have any questions; please let us know. If the above terms are acceptable to the City of Winter Springs and the services outlined are in accordance with your understanding, please sign the enclosed copy of this letter in the space provided and return it to us. Yours truly, Accepted and agreed to by the City of Winter Springs, Florida: ~' Title: City Manager Date: 5/7/99