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HomeMy WebLinkAbout1996 05 13 Regular Item F .' COMMISSION AGENDA ITEM F REGULAR xx CONSENT INFORMATIONAL May 13, 1996 Meeting MGR (1411/{ IDEPT ~ Authorization REQUEST: The City Manager and Finance Director request the Commission approve the selection of Auditors for the City of Winter Springs. PURPOSE: Appointment ofIndependent Auditors for the City of Winter Springs for a 3 year contract. CONSIDERATIONS: 1. On January 14,1996, the staff published an RF.P. for auditing services as required by the City Charter. 2. On March 25, 1996, Commission authorized the City Manager to negotiate a contract with Deloitte and Touche, the top selected firm. 3. Staff has successfully negotiated an agreement with Deloitte and Touche for three years not to exceed $36,000 in each year. It also includes a not to exceed amount of $2,000 in FlY 1997 for assistance needed to prepare the Certificate of Achievement for Financial Reporting. FUNDING: A. B. The $36,000 upset fee reflects a $6,000 savings over the current audit. Costs related to the annual audit are paid on an equal basis between the City's General Fund and the Enterprise Fund. Fund source - General fund - Finance Department Account#53180 and Utility Billing Department Account #53180. 2. Time of expenditure as invoiced on progression basis. 1. RECOMMENDATION: 1. Recommended action of the City Commission is the acceptance and approval of Deloitte and Touche LLP, as City Auditors for three years ending September 30, 1996, 1997 and 1998. 2. Recommended Funding is from the General Fund and Enterprises Fund. IMPLEMENTATION SCHEDULE: Upon approval and signing of engagement letter. ATTACHMENTS: Copy of proposed engagement letter. COMMISSION ACTION: April 11, 1996 PREUMINARY DRAFT To be returned to DELOlT1E & lOUCHE LLP snd not to be reproduced &0 a~v !orm without their /permn!$I@O. Members of the City Commission City of Winter Springs, Florida 1126 East State Road 434 Winter Springs, Florida 32708 Dear Commission Members: We are pleased to serve as independent certified public accountants for the City of Winter Springs, Florida (the "City") for the three years ending September 30, 1996, 1997 and 1998. Mr. Ronald A. Conrad will be in charge of all work we perform for the City. We believe that frequent and timely communication throughout the year reduces the problems that are often associated with an annual audit. In addition, we have found that we can often assist clients on current problems as they arise. We hope the City Commission will call Mr. Conrad whenever it feels that he can be of assistance. 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. John Bava will be the consulting partner for this engagement. 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. We will audit the general purpose financial statements of the City as of and for the years ending September 30, 1996, 1997 and 1998. Our audits will be conducted in accordance with Government Auditing Standards, issued by the Comptroller General of the United States. In addition, the Combining Financial Statements and Supplemental Schedules accompanying the general purpose financial statements will be subjected to the auditing procedures applied in our audits of the general purpose financial statements. City of Winter Springs, Florida April 11, 1996 Page 2 The objective of an audit carried out in accordance with these standards is (i) the expression of our opinion concerning whether the financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of the City in conformity with generally accepted accounting principles, (ii) reporting on whether the internal control structure provides reasonable assurance of compliance with laws and regulations where noncompliance could have a material effect on the financial statements; and (iii) reporting on the City's compliance with laws and regulations, which could have a material effect on the financial statements. Our audits will include tests of the accounting records of the City and such other procedures as we consider necessary to enable us to render the following reports each year: . Opinion on whether the City's financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles . Report on the internal control structure related to our audit of the financial statements . Report on compliance with laws and regulations noncompliance with which may be material to the financial statements. In addition, we will render reports on illegal acts and on findings and questioned costs, as required, depending on the results of our audit procedures. The management of the City is responsible for establishing and maintaining an internal control structure. To fulfill this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs for the internal control structure so that management is provided with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions, or that the effectiveness of the design and operation of policies and procedures may deteriorate. .REUMlNARY DRAFT To be returned to DlELOlTTE " TOUCHE LLP and not to be reproduced in any form withOUt their permlissione City of Winter Springs, Florida April 11, 1996 Page 3 PREUMINARY DRAfT To be returned to DELOITTE .. TOUCHE LLP and not to be reproduced in any ~oll'm without their I!)ermession. As part of our audits, we will consider the City's internal control structure and assess control risk, as required by Government Auditing Standards, for the purpose of establishing a basis for determining the nature, timing, and extent of auditing procedures necessary for expressing our opinion concerning the financial statements, and not to provide assurance on the internal control structure. The reports on our understanding of the City's internal control structure and the assessment of control risk made as part of the financial statement audits will include (1) the scope of our work in obtaining an understanding of the internal control structure and in assessing the control risk; (2) the City's significant internal controls or control structure, including the controls established to ensure compliance with laws and regulations that have a material impact on the financial statements; and (3) the reportable conditions, including the identification of material weaknesses identified as a result of our work in understanding and assessing the control risk. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audits will involve judgment about the number of transactions to be examined and the areas to be tested. Also, we will plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. However, because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions, there is a risk that material errors, irregularities, or illegal acts, including fraud or defalcations, may exist and not be detected by us. The City's management is also responsible for compliance with laws, regulations, contracts and grants, and for establishing and maintaining an internal control structure to assure such compliance with those requirements. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of the City's compliance with certain provisions of laws, regulations, contracts, and grants. However, our objective is not to provide an opinion on overall compliance with such provisions. Similarly, in performing our audits we will be aware of the possibility that illegal acts may have occurred. However, it should be recognized that our audits provide no assurance that illegal acts generally will be detected, and only reasonable assurance that illegal acts having a direct and material effect on the determination of [mancial statement amounts will be detected. 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 request written representations from your attorneys as part of the engagement, and they may bill you for responding to this mqUIry . City of Winter Springs, Florida April 11, 1996 Page 4 PRELIMINARY DRAfT To be returned to DElO~TTE & TOUCHE LLP and no~ to be reproduced in any form I'd d' h h C' , 'll'd' without theiD' .oerm.issDon. t IS our un erstan mg t at t e Ity s management WI proVI e us with the Daslc m1'ormatlOn required for our audits and that the City's management is responsible for the accuracy and completeness of that information. We will advise the City's management about accounting principles and their application and will assist in the preparation of the City's financial statements, but the responsibility for the financial statements remains with the City. This responsibility includes the maintenance of adequate records and related internal control structure policies and procedures, the selection and application of appropriate accounting principles, and the safeguarding of assets. As required by Government Auditing Standards, our reports on our tests of compliance with applicable laws and regulations related to our audits of the financial statements will contain a statement of positive assurance on those items that were tested for compliance, negative assurance on those items not tested, and a description of all material instances of noncompliance. Our audits are not specifically designed and cannot be relied on to disclose all reportable conditions (that is, significant deficiencies in the design or operation of the internal control structure). However, during the audits, if we become aware of such reportable conditions that affect the financial internal control systems or of ways that we believe management practices can be improved, we will communicate them to City Commission in a separate letter. At the conclusion ofthe audits, we will request the City's management to provide us a representation letter that, among other things, will confirm management's responsibility for the preparation of the financial statements in conformity with generally accepted accounting principles, and availability of financial records and related data, the completeness and availability of all minutes of City Commission (and committee) meetings, the absence of irregularities involving management or those employees who have significant roles in the control structure and for compliance with laws and regulations. We understand that our reports on the internal control structure as part of the financial statement audits and on compliance with laws and regulations are intended for the information of the City Commission, the City's management, and the Auditor General, State of Florida. State Grant Audit Requirement This engagement letter encompasses the state grant compliance audit procedures currently required for the City, including related fees. . to t City of Winter Springs, Florida April 11, 1996 Page 5 Fees Our invoices for fees under this engagement will be rendered as work progresses and are payable on presentation. Our professional fees for audit services under this engagement will not exceed $36,000 for each of the years ending September 30, 1996, 1997 and 1998, and will be subject to a limit of $70 per hour for time accumulated over the three year period. Should the City elect to participate in the Certificate of Achievement Program, our hourly rate related to such expanded reporting will be $70, subject to a maximum annual fee of $2,000. Our fees for this engagement assume the City will prepare the Comprehensive Annual Financial Report and 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, our related fees will be $70 per hour. * * * * * We appreciate the opportunity to be of service to the City and believe this letter accurately summarizes the significant terms of our engagement. If City Commission has any questions, please let us know. If City Commission agrees with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. RESPONSE: This letter correctly sets forth the understanding of the City of Winter Springs, Florida PREUMfiNARV DRAfT To be returned to DElO~lTIE & TOUCHE LlP mDli'\d rno~ tlo be reproduced nll'il a~v !orm without their pell'mQ$Sft@fil. By: Title: Date: