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HomeMy WebLinkAboutContract 1616 Tautges Redpath, Ltd. Certified Public Accountants and Consultants 6UENT COPY August 21, 2001 City of Columbia Heights, Minnesota c/o Bill Elrite, Finance Director 590 40th Avenue NE Columbia Heights, MN 55421 We are pleased to confirm our understanding of the services we are to provide the City of Columbia Heights, Minnesota for the years ending December 31, 2001, 2002, 2003 and 2004. We understand the fmancial statements will be presented in accordance with the fmancial reporting model as described in GASB Statement 34 for the years ending December 31, 2003 and 2004. The scope of services includes the following: We will audit the f'mancial statements of the City of Columbia Heights, Minnesota as 'of and for the years ending December 31, 2001, 2002, 2003 and 2004. We will provide an "in-relation-to" opinion on the combining, individual fund, account group and EDA component unit f'mancial statements. 2. Copying and binding the Comprehensive Annual Financial Report. (75 copies) 3. State Legal Compliance Audit 4. Preparation of separate Management Report. 5. Federal Single Audit. Audit Obiectives The objective of our audit is the expression of an opinion as to whether the general purpose f'mancial statements are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America and to report on the fairness of the additional information referred to in the first paragraph when considered in relation to the general purpose £mancial statements taken as a whole. The objective also includes reporting on: Internal control related to the fmancial statements and compliance with laws, regulations, and the provisions of contracts or grant agreements, noncompliance with which could have a material effect on the fmancial statements in accordance with Government Auditing Standards. 4810 White Bear Parkway, White Bear Lake, Minnesota 55110, USA Telephone: 651 426 7000 Fax: 651 426 5004 HLB Tautges Redpath, Ltd. is a member of [] International. A world-wide organization of accounting firms and business advisers. City of Columbia Heights, Minnesota Contract for Auditing Services August 21, 2001 Page 2 Intemal control related to major programs and an opinion (or disclaimer of opinion) on compliance with laws, regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 1996 and OMB Circular A- 133, Audits of States, Local Governments, and Non-Profit Organizations. The reports on internal control and compliance will each include a statement that the report is intended for the information and use of the audit committee, management, specific legislative or regulatory bodies, federal awarding agencies, and if applicable, pass-through entities. Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America, the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; the provisions of OMB Circular A-133; and, the minimum procedures for auditors as prescribed by MS 6.65, and will include tests of the accounting records, a determination of major programs in accordance with OMB Circular A-133 and other procedures we consider necessary to enable us to express such an opinion. If our opinion on the general purpose fmancial statements or the single audit compliance opinion 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. Management Responsibilities Management is responsible for establishing and maintaining internal control and for compliance with laws, regulations, the provisions of contracts, agreements and grants. 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 and that transactions are executed in accordance with management's authorizations and recorded properly to permit the preparation of general purpose f'mancial statements in accordance with generally accepted accounting principles, and that federal award programs are managed in compliance with applicable laws and regulations and provisions of contract and grant agreements. 99745.1 City of Columbia Heights, Minnesota Contract for Auditing Services August 21, 2001 Page 3 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, including the Schedule of Expenditures of Federal Awards, but the responsibility for the fmancial statements remains with you. That responsibility includes the establishment and maintenance of adequate records and effective internal control over financial reporting and compliance, 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 fmancial statements taken as a whole. Additionally, as required by OMB Circular A-133, it is management's responsibility to follow-up and take corrective action on reported audit fmdings and to prepare a summary schedule of prior audit findings and a corrective action plan. Audit Procedures - General An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fmancial 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. As required by the Single Audit Act Amendments of 1996 and OMB Circular A-133, our audit will include test of transactions related to major federal award programs for compliance with applicable laws and regulations and the provisions of contracts and grant agreements. 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 misstatements (whether caused by errors or fraud), illegal acts, or noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect immaterial misstatements, immaterial illegal acts, or illegal acts that do not have a direct effect on the financial statements or major programs. However, we will inform you of any material errors and any fraud that come to our attention. We will also inform you of any other illegal acts that come to our attention, unless clearly inconsequential. We will include such matters in the reports required for a Single Audit. 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. 99745.1 City of Columbia Heights, Minnesota Contract for Auditing Services August 21, 2001 Page 4 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 request certain written representations from you about the financial statements and related matters. 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 Columbia Heights, Minnesota's general purpose financial statements and on its compliance with requirements applicable to major programs. 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 relative to the general purpose financial statements 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 in our report on internal control issued pursuant to Government Auditing Standards. As required by OMB Circular A-133, 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 major federal award program. However, our tests will be less in scope than would be necessary to render an opinion on those controls and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to OMB Circular A-133. 99745.1 City of Columbia Heights, Minnesota Contract for Auditing Services August 21, 2001 Page 5 An audit is not designed to provide assurance on internal control or to identify reportable conditions. However, we will inform you 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 jud~muent, 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. We will also inform you of any nonreportable conditions or other matters involving internal control, if any, as required by OMB Circular A-133. Audit Procedures - Compliance Our audit will be conducted in accordance with the standards referred to in the section titled Audit Objectives. As part of obtaining reasonable assurance about whether the general purpose f'mancial statements are free of material misstatement, we will perform tests of the City of Columbia Heights, Minnesota's compliance with applicable laws and regulations and the provisions of contracts and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards. OMB Circular A-133 requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with applicable laws and regulations and the provisions of contracts and grant agreements applicable to major programs. Our procedures will consist of the applicable procedures described in the OMB Circular A-135 Compliance Supplement. The purpose of those procedures will be to express an opinion on the City of Columbia Heights, Minnesota's compliance with requirements applicable to major programs in our report on compliance issued pursuant to OMB Circular A-133. 99745.1 City of Columbia Heights, Minnesota Contract for Auditing Services August 21, 2001 Page 6 Audit Administration~ Fees and Other We understand that your employees will prepare ail cash or other confirmations we request and will locate any invoices selected by us for testing. At the conclusion of the engagement, it is management's responsibility to submit the reporting package (including financiai statements, schedule of expenditures of federai awards, summary schedule of prior audit f'mdings, auditors' reports, and a corrective action plan) aiong with the Data Collection Form to the designated federai clearinghouse and, if appropriate, to pass-through entities. The Data Collection Form and the reporting package must be submitted within the earlier of 30 days after receipt of the auditors' reports or nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audits. At the conclusion of the engagement, we will provide information to management as to where the reporting packages should be submitted and the number to submit. The workpapers for this engagement are the property of HLB Tautges Redpath, Ltd. and constitute confidential information. However, we may be requested to make certain workpapers available to certain regulators or grantor agencies pursuant to authority given to it by law or regulation. If requested, access to such workpapers will be provided under the supervision of HLB Tautges Redpath, Ltd. personnel. Furthermore, upon request, we may provide photocopies of selected workpapers to regulators or grantor agencies. The regulator or grantor agency may intend, or decide, to distribute the photocopies of information contained therein to others, including other governmental agencies. 99745.1 City of Columbia Heights, Minnesota Contract for Auditing Services August 21, 2001 Page 7 Our fee for these services will be at our standard government audit rates plus out-of- pocket costs (such as postage, travel, copies, telephone, etc.). Our hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. If we elect to terminate our services for nonpayment, you will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket expenditures through the date of termination. A summary of our fees is as follows: Not-To-Exceed (excluding out-of-pocket expenses) City EDA Total 2001 $27,215 $7,550 $34,765 2002 27,740 7,700 35,440 2003 28,275 7,855 36,130 2004 28,820 8,010 36,830 The above fee is based on anticipated cooperation fi:om your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. The fees listed above are based on the reporting model in effect prior to GASB Statement 34. For 2003, additional audit fees resulting fi:om GASB Statement 34 are estimated to be $3,000. For 2004, the audit fee will be negotiated based on GASB 34 issues learned during the 2003 audit and other factors influencing audit preparation. Government Auditing Standards requires that we provide you with a copy of our most recent quality control review report. Our 1998 peer review report accompanies this letter as Appendix A. 99745.1 City of Columbia Heights, Minnesota Contract for Auditing Services August 21, 2001 Page 8 We appreciate the oppommity to be of service to the City of Columbia Heights, Minnesota 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 remm it to us. Very truly yours, HLB TAUTGES REDPATH, LTD. David J. Mol, CPA RESPONSE: This letter correctly sets forth the understanding of the City of Columbia Heights, Minnesota: By: Title: City Manager Title: Mayor 99745.1 Member: Aflzona 5odety of Certified Public Accountants Member: Private Companies Practice SeCtion. Division of Firms. American IrlstJtute of Certified Public AccountantS APPENDIX A To the Shareholders HLB Tautges, Redpattk Ltd. We have reviewed the system of quality control for the accounting and auditing practice of HLB Tautges, Redpath, Ltd. (the firm) in effect for the year ended September 30, 1998. Our review was conducted in conformity with standards established by the Peer Review Board of the American Institute of Certified Public Accountants (AICPA). We tested compliance wkh the firm's system of quality control to the extent we considered appropriate. These tests included a review of selected accounting and auditing engagements. In performing our review, we have given consideration to the quality control standards for an accounting and auditing practice issued by the AICPA. Those standards indicate that a firm's quality control policies and procedures should be appropriately comprehensive and suitably designed in relation to the firm's size, organizational structure, operating policies, and the nature of its practice. They state that variance in an individual's performance and understanding of professional requirements or the firm's quality control policies and procedure can affect the degree of compliance with a firm's prescribed quality control policies and procedures, and therefore, the effectiveness of the system. In our opinion, the system of quality control for the accounting and auditing Practice ofHLB Tautges, Redpath, Ltd. in effect for the year ended September 30, 1998, has been designed in accordance with the quality control standards for an accounting and auditing practice established by the AICPA and was being complied with for the year then ended to provide the firm with reasonable assurance of conforming with professional standards in the conduct of that practice. Phoenix, Arizona April 28, 1999 Certified Public Accountants 2777 East Camelback Road Suite J2S Phoenix, Arizona 85016-4302 Telephone (602) 760-2920 Fax (602) 760-2917