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HomeMy WebLinkAboutContract 21392139 October 3, 2008 William Elrite City of Columbia Heights 590 40th Avenue Northeast Columbia Heights MN 55421-3878 Dear Bill: Enclosed are two copies of the 2008 engagement letter. The engagement letter is essentially a continuation of our engagement letter dated August 21, 2001. As such, I have labeled the document as addendum #8. For your reference, the table below summarizes the chronology of engagement letter addendums. 2(101 2On2 2003 2004 2005 ?v06 2007 2(N)8 originalengagementletter(8/21101) ~ 34,765 $ 35,440 $ 3(1,130 $ 36,830 s - $ - $ - $ - addendum #FI SAS 99 - - - - - - - - (iASB 34 - 3,OW - - - - - - addendum #2 t'323/(kl) SAS 99 - - x,500 - - - - - CiASB i4 - - 3,000 - - - - - CAIR preparation - - 8,650 - - - - - addendum #i3 (324/OS ): Wordingchangeonly - - - - - ', - - - addendum #i4 (525105): SAS 99 - - - 2,500 - - - - GASB 34 - - - 3,000 - - - - addendum ~5 11/18%06 ): Base fee - - - - 36,830 - - - sns ~~r~ - - - - Zsoo - - - GAS13 34 - - - - 3,000 - - - acklenchim #6 (08/23/06): Base fce - - - - - 36,830 36,830 36.830 SAS 99 - - - - - 2,1(10 2,500 ? StN) GASB 34 - - - - - 3,0(11) 3,000 3,000 addendum #7 (9/14/07) and addendum #8110/3/08}: ~ ~l n crcas ed s cope re I ated t o ad di tiaaal standards in lieuofacostof livingincrease - - - - - 2,000 4,000 4,(RA) °,4 765 w3° 440 $a. ion y42,33L' e, :2330 e~„4,330 $46,330 S-1G,33E) i°Additionalstate legal compliance sections (od~ermiscellaneous provisions andtax inerementprnvisions; additional accotmting standards(GASBStatemcnts40throuh47);fullimlenentationauditin statxltuds(3AS104throu 111). 4x10 V`Jnite Bear F'arf~~avay V'Jfiiie Bear Le~:e, Mirtoesota 55110 ~ 651 426 IC10(7 1303 South F~~rrF7tage Roa(i Suite 13 Hastings, i~innes(,ta 5503:3 651 43Ci 49°0 651 426 5004 Fa;~ wvv~~r.irlbt~r-r,om 651 426 50E14 ~~~~x ~~rtyi I' 1~ dih t' ii i ~i ~. d-.., ~ d ~3~. lm. ~ I i ~_... _, IU2H2u4.1 City of Columbia Heights Contract for Auditing Services October 3, 2008 Page As shown above, for the 2008 audit we are proposing no change in our fee over the 2007 audit. The scope of services currently includes a federal single audit. if the City expends less than $500,000 in federal awards in 2008, a single audit is not required, therefore we will modify our fee. Thanks for the continued opportunity to be of service. If you have any questions, please call me. Sincerely, 1-ALB TAUTGES REDPATN, LTD. 1 David J. Mol, CPA DJM:cIc Enclosure Certified Pudlie Aeceuntants and Cons«[tac7ts ~ !~_ October 3, 2008 City of Columbia Heights 590 40th Avenue Northeast Columbia I-Ieights MN 55421-3878 Addendum #8 To Engagement Letter Dated August 21, 2001 We are pleased to confirm our understanding of the services we are to provide the City of Columbia Heights, Minnesota for the year ending December 31, 2008- The scope of services includes the following: We will audit the financial statements of the governmental activities, the business- type activities, each major fund, and the aggregate remaining fund information, which collectively comprise the entity's basic financial statements of the City of Columbia Heights, Minnesota as of and for the year ending December 31, 2008. The following supplementary information required by generally accepted accounting principles that will be subjected to certain limited procedures, but will not be audited o Management's discussion and analysis o Budgeta-y comparison schedules presented as RSI Also, the following information accompanying the basic financial statements will be subjected to the auditing procedures applied in our audit of the financial statements upon which we will provide an opinion in relation to the basic financial statements: o Schedule of expenditures of federal awards o Combining and individual fund statements The document will also include additional information that will not be subject to the auditing procedures applied in our audit of the financial staten~ients, and for wl~~ich our accountant's report will disclaim an opinion as follows: o Introdtactory section o Statistical section 6810 White Bear Parl<w<~y While Bear Labe, M;~~neso~~ 55110 ~ C~1 426 7000 651 426 5Q04 Fax ~ w~rJw.h(htr coi~~ City of Columbia Heights Contract for Auditing Services October 3, 2008 Page 2 State Legal Compliance Audit • Copying and binding of financial statements Audit Objectives The objective of our audit is the expression of opinions as to whether your basic linancial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles and to report on the fairness of the additional information referred to in the first par~~igraph when considered in relation to the basic financial statements taken as a whole. The objective also includes reporting on: Internal control related to the financial statements and compliance with laws, regulations, and the provisions of contracts or grant agreements, noncompliance with which could have a material effect on the financial statements in accordance with Guvernrnertt Auditing Standards. Internal control related to major programs and an opinion (or disclaimer of opinion) on compliance with laws, regulations, and the provisions of contracts or grant a~recments 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, A~rdits of States, Local Gove~~zr~ients, and Non-Profit Organizatio~is. The reports on internal control and compliance will each include a statement that the report is intended for the information and use of management, the body or individuals charged with governance, others within the entYty specific legislative or regulatory bodies, federal awarding agencies, and if applicable, pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Our audit will be conducted in accordance with generally accepted auditing standards established by the Auditing Standards Board (United States); 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; and the provisions of OMB Circular A-133, and will include tests of accounting records, a determination of major program(s) in accordance with OMB Circular A-133, and other procedures we consider necessary to enable us to express such opinions and to render the required reports. If our opinions on the financial statements or the Single Audit compliance opinions are other than unduaiified, we will fully discuss the reasons with you m advance. lf, for any reason, we are unable to complete the audit or are unable to form or have not formed opinions, we may decline to express opinions or to issue a report as a result of this engagement. City of Columbia Heights Contract for Auditing Services October 3, 2008 Page 3 Management Responsibilities Management is responsible for the basic financial statements and all accompanying information as well as all representations contained therein. As part of the audit, we will prepare a draft of your financial statements, schedule of expenditures of federal awards, and related notes. You are responsible for making all management decisions and performing all management functions relating to the financial statements, schedule of expenditures of federal awards, and related notes and for accepting full responsibility for such decisions. You will be required to acknowledge in the management representation letter that you have reviewed and approved the financial statements, schedule of expenditures of federal awards, and related notes p17or to their issuance and have accepted responsibility for them. Further, you are required to designate an individual with suitable skill, knowledge, or experience to oversee any nonaudit services we provide and for evaluating the adequacy and results of those services and accepting responsibility for them. Management is responsible for establishing and maintaining internal controls, including monitoring ongoing activities; for the selection and application of accounting principles; for the fair presentation in the financial statements of the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Columbia Heights, Minnesota and the respective changes in financial position and, where applicable, cash flows in conformity with U.S. generally accepted accounting principles; and for federal award program compliance with applicable laws and regulations and the provisions of contracts and grant agreements. Management is also responsible for making all financial records and related information available to us, including identifying significant vendor relationships in which the vendor has the responsibility for program compliance and for the accuracy and completeness of that information. Management's responsibilities include 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 financial statements taken as a whole. You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud or illegal acts affecting the government involving (1) management, (2) employees who have significant ivi~,~ ui ~~ii~,iicul winiw, uilu ~J) vu~~l~ wllc~c ti1G lldUll Vi lllG~al al;lJ GUUlU naVC a IllaleI7a1 effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the government received in communications from employees, former employees, grantors, regulators, or others. In addition, you al-e responsible for identifying and ensuring that the entity complies with applicable laws, regulations, contracts, agreements, and grants. t~dditionally, as required by City of Columbia Heights Contract for Auditing Services October 3, ?008 Page d OMB Circular A-133, it is management's responsibility to follow up and take corrective action on reported audit findings and to prepare a summary schedule of prior audit findings and a corrective action plan. Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying for us previous audits or other engagements or studies related to the objectives discussed in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits or other engagements or studies. You are also responsible for providing management's views on our current findings, conclusions, and recommendations, as well as you;° planned corrective actions. 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 (I) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or ('4) violations of laws or governmental regulations that are attributable to the entity or to acts by management or employees acting on behalf of the entity. Because the determination of abuse is subjective, Goverwnel~tt A«cliting Stcz~~dcrl~~ls do not expect auditors to provide reasonable assurance of detecting abuse. Because an audit is designed to provide reasonab}e, but not absolute assurance and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements or noncompliance 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 or major programs. However, we will inform you of any material errors and any fraudulent financial reporting or misappropriation of assets that come to our attention. We will also inform you of any violations of laws or governmental re~u}ations 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 .....,.~.a .....~., , vui audit uliu uvc> uvt ~~ttrllu tv ally latcl tIC11VUJ 1U1 wllil.ll wC 211C IIUt CI1gi1~CU aJ itUUlll)1'J. 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, funding sources, creditors, and financial institutions. We will uhsau~_ i City of Columbia Heights Contract for Auditing Services October 3, 2008 Page 5 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. Audit Procedures-Internal Controls Our audit will include obtaining an understanding of the entity and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. 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. 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 Goverrvnel~t Atrclitir~zg Stundctrcls. As required by OMB Circular A-133, we will perform tests of controls over compliance 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-] 33. An audit is not designed to provide assurance on internal control or to identify significant deficiencies. However, during the audit, we will communicate to management and those charged with governance internal control related matters that are required to be communicated under professional standards, Goti~er-~~t»tent Auclilin,~ Stcuzclurds, and OMB Circular A-133. Audit Procedures-Compliance As part of obtaining reasonable assurance about whether the financial 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 .,ur ia..Yvi~ vu ~.wu}u~uii~,~. t,~xn.u ~~ut~uuin w vcicrttttttrtrt ncutttur~t; ,~[etteue[t[t.>. 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 giant agreements applicable to major programs. Our procedures will consist of tests of transactions and other applicable mzxzoa i City of Columbia Heights Contract for Auditing Services October 3, 2008 Page 6 procedures described in the OMB CircularA-1.33 Cor~rrpliance Sc~~~pler~u:rrt for the types of compliance requirements that could have a direct and material effect on each of the City of Columbia Heights, Minnesota's major programs. The purpose of those procedures will be to express an opinion on the City of Cohimbia Heights, Minnesota's compliance with requirements applicable to each of its major programs in our report on compliance issued pursuant to OMB Circular A-133. The Minnesota Legal Compliance Audit Guide for Local Government requires that we test whether the auditee has complied with certain provisions of Minnesota Statutes. Our audit will include such test of the accounting records and other procedures as we consider necessary in the circumstances. Audit Administration, Fees and Other We understand that your employees will prepare all cash, accounts receivable, or other confirmations we request and will locate any documents selected by us for testing. At the conclusion of the engagement, we will complete the appropriate sections of and sign the Data Collection Form that summarizes our audit findings. We will provide copies of our reports to the City of Columbia Heights, Minnesota; however, it is management's responsibility to submit the reporting package (including financial statements, schedule of expenditures of federal awards, summary schedule of prior audit. findings, auditors' reports, and a corrective action plan) along with the Data Collecdon Form to the designated federal clearinghouse and, i~f 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 audit documentation for this engagement is the property of HLB Tautges Redpath, Ltd. and constitutes confidential information. However, pursuant to authority given by law or regulation, we may be requested to make certain audit documentation available to Grantor agency(ies), a federal agency providing direct or indirect funding, or the U.S. Government Accountability Office for purposes of a quality review of the audit, to resolve audit findings, or to caiay out oversight responsibilities. We will notify you of any such request. If rn rn,ncta,ri ~-n ACC t!, ~` nT-. ,iirt .a ., ..rnr; :IT L... :.7 ,, .I ~T ,. - rl. ,. !,F 7Ti P ,.,.~a,a.o,.,u, a...,~„~,~ av our.,, auw, uvCii,iie,nuuvn w'u, v~. pi'vViu~u uTiuci utc ~iipc:r'visivii Vt 11L17 Tautges Redpath, Ltd. personnel. Furthermore, upon request, we may provide copies of selected audit documentation to the aforementioned parties. These parties may intend, or decide, to distribute the copies or information contained therein to others, including other governmental agencies. io~s2ot i City of Columbia Heights Contract for Auditing Services October 3, 2008 Page 7 The audit documentation for this engagement will be retained for a minimum of five years after the report release or for any additional period requested by the grantor agency(ies). If we are aware that a federal. awarding agency, pass-through entity, or auditee is contesting an audit finding, we will contact the party(ies) contesting the audit finding for guidance prior to destroying the audit documentation. We agree that our fee for these services, including expenses, will not exceed $46,330. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. The above fee is based on anticipated cooperation from your personnel, completion of workpapers per the client to prepare list by your personnel, and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary due to a change in scope of services or delays in receiving audit information requests, we will discuss it with you and arrive at a new fee estimate. Government Auditing Standards require that we provide you with a copy of our most recent quality control review report anal letter of comment, if any. Our 2004 peer review report accompanies this letter. We are pleased to report that we did not receive a letter of comment. mzxzoa. i City of Columbia Heights Contract for Auditing Services October 3, ?008 Page 8 We appreciate the opportunity 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 en~a¢ement as described in this letter, please sign the enclosed copy and return it to us. Very truly yours, I-ILB TAUTGES REDPATH, LTD. David J. Mol, CPA Response: This letter correctly sets tort the un ding of the City of Columbia Heights, Minnesota: Title: May°r /~j Date: ~ j J~-'' "~` -_ .~ .°°.~ Title: City Manager Date: /`G~' ~ '' 'd Appendix A Page 1 tserr~er RR?n~bi`.r: Mdiora'i 5~~s;rty t,? Crnifi^r1 • PrPtate C;anipar~tes Pr~'ike Pub(re: ~tfct~urNSr°x; ~"` ~~ [~~ , f 4 ~ Se:#I~n cR.tsiar, of Flms. R ))) ii# It i.+ .>sr~+:rk~r n,ftute ;:f i.. nlCkCd r~ut141r: F[.i~urrl'arlLs ~f• Ta the Sharehi~lders #lI.F3 Taut~es, Re:dpath, l:,td, V~'e hal=e revie:>b~ed tl:e system t?£ yualt~• eantrc~l fir the ~xc:catrntn~ and e t~dit prttclici: cf f-f1 1"aut~es, f~edpatt~> Ltd. (tbe ~trm) in effect ~`ar the ~•ear ended September 3~, ~:~C~~. A s~=stern of quality contrai ertcornpasses the; iirng s ar~arrizatinnaf structure, the paticies adapted ~utd pracedrtres csta~Flsh~d to provide it ~~rith rcasanablc asstarancc: of c.anfarrziin~ w~ itli prnfessianal standards. Thee element, cif qu;?<lity ca€rtrol are described i a the S[atccnr:nts can (~uali~r Control Standards issued by tl7e .r-1ta~.erican Jnstitute of CPAs (~ICP~}. The firn~ is respansibie far designing a system of qualit}= cantral and carnpl~-ing ~~ith it to prati-ide the f rm reawsanable assurance of confarrrring ~~~da prafe~ssional standards in ail t•rtaterial respects. t"3trr respoasabilih° is to c;~:prc:ss an opinia~i nn the design of the s}=stern of gtaatit5' carttrr~i and tyre firnT's compliance with its system of qualm cantral based nn our rep=iev~r. tour n:a=ie~~~ vas c~>nducted in accordance ~~=itt standards estal•sli~l3~ i by the Peer P.evie~~ B[}ard Uf L'~e :~ICf'A. During our re:vie~,~, ti4'e read requirtd re°presentatians #ro the firm, inter~~ie~~•ed #irrn persat~nel and abtainec~ az~ understanding of the nature of the ~rrt~°s accounting and ataditing practice. and the design of the t3rnr's system cif quality cantral sufficient to assess the: risks implicit in its practice. Based act. nor assessrttcnts, e~==~: selected engagentertts at~d adrnirTistrati~~e 1~les tt> tesE fc~r e;urd'orTnit~= 4vifh prrafc:ssicaral st~.nd?rt~s tad c~tsapliazt~.~ ~~~it} lh~ frzxt's $ysteri~ e~f t~uatity contrni. T#ie en,~~~ements selected represented a rtrt~sanable cross-sc;ction of the ftrrra°s acc~~tlnting and actditing practice ~~~ith etTTplaa.~;i~ inn higher-risk engagements. The eragagetnents selected inciudcd arrrang athers, audits of T~:rnplnyee 13ene#it Flans and eng.~g+rrnenis perforrrred under Cnvernmertt ~~iuditing Standards. Prior to c:.oncludin~~ the reviee~=, ~~e reu.~sessed the adequacy rrf the scape. of the peer re~'iew procedures and met tii'ith #trrrr rnanagcment to discuss the results of nor r;.~liew. t?t''e believe that the praeedrrres eve perfrsrmed prov=ide a reasanable basis f~~r r~>.u opinion, In perfntrni;ag tour rer•ic_3~~, ~~e obtained an understanding af'thc: system erf qualit;,~ carttn~l fur the. firm's accounting ~rnd auditing practice.. In addition, eve tested ec~mpliance ~~rith the item's quafit~° carrtrr~l pc>tcies and pn~cedures to the extent ~~`e considered apprapriate. °i`hehe tests co~.ercd the application of the ~irzn=s palicie:~ and procedures n.n seiccte~d eirkagerncnts. C7ur rep=ie~~~ opt°as based. on selected tests tlii;rcfore, it ~vactid not nccessaril~~ detect all ~~,'eaknesses in the system of qu~Iity car~trrrl ar al itrstant:es of rancatrrpliattce ~3~~ith it. "There are inherent lirrzitations in the effecti~=mess of any sti°stem of ~tralit~• cantral artd therefore ttoncantpliance ~~,-ith the systettt of quality cantral ntay accur inc. not be detected. i'rc~jectic>n t~f an~.~ e~•'atuation rif a slpstern c7f qualfty control tr3 future Certified i'ut~iic ,4ccourtants •t~t55 East Camrt~ack 1'iQacl Site F2~S~ F ftC*G rtix, rte}Zt~n] 3~CF'8 T~Ee~he~a7e iv(7?, i3r~'.r~cs+~C~ 1028?Oa 1 Appendix A Page 2 1II.I3 T~~?tzt~es, Rcdpath, I..tt-l. Page T~~~c~ 1?eric?ds is subject tt~ the risk that the syste~~z of quality con#ro1 n~a}~ bec~~rne inade~u~te because of changes in conditions, or because: the. de~rcc: of cc~plianc.e s~~ith the policies or prouec~ures nay deteriorate. In our opini©n, the s~.Fstcm of c~ualit~~ control ~c3r the accc~~artin~; and audit practice cif i~~i Taut~es, ~etlpath, Ltd. in e2f~c:t for the ~=rar ended Se:ptcrrihcr ~t~. 2CtC6~, has been designed to rat~eet the rvqu€rement~s of thv quaht~= control s#and~rrds for L~ accounting and auditing practice estahlitiher~ by the :11C'P.~ and ~~-as compiled ti~,~itla during tlae y;.:~r theta ended to prc~~~de the faml ~~ith reasonable ~ssurancG of cc?nformir~~ «~ith professional standards, Phoenix. _~ri~c~na ,Tanuar~• 21, 2(}t~5 i o'zsaua i