HomeMy WebLinkAboutContract 22632263
January 15, 2010
City of Columbia Heights
590 40th Avenue Northeast
Columbia Heights MN 55421-3878
We are pleased to confirm our understanding of the services we are to provide the City of
Columbia Heights, Minnesota far the year ending December 31, 2009. 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 far the year ending December 31, 2009.
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 Budgetary comparison schedules presented as RSI
o Schedule of Funding Progress - OPEB
Also, the iviio wing iiui~rtita.tioit atiolltpaltylilg trlC bash; flIlanClal SLdtemenLS Wlll l"tie
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 statements, and for which our
accountant's report v~ill disclaim an opinion as follows:
o Introductory section
o Statistical section
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City of Columbia Heights
Contract for Auditing Services
January 15, 2010
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 financial
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 paragraph 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
Government 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
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-Profzt Organizations.
The reports on internal eontrol and compliance will each include a statement that the
report is intended solely for the information and use of management, the body or individuals
charged with governance, others within the entity specific legislative or regulatory bodies,
federal awarding agencies, and if applicable, pass-through entities and is not intended to be
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Our audit wiil 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; 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 unqualified, we will fi~11y 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 opinions, we may decline to express opinions or to issue a
report as a result of this engagement.
1233513.1
City of Columbia Heights
Contract for Auditing Services
January 15, 2010
Page 3
Manactement Responsibilities
Management is responsible for the basic financial statements and all accompanying
information as well. as all representations contained therein. Management is also responsible
for preparation of the schedule of expenditures of federal awards in accordance with the
requirements of OMB Circular A-133. As part of the audit, we will assist with the
prepararation 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 our assistance
with preparation of the financial statements and the schedule of expenditures of federal
awards and that you have reviewed and approved the financial statements, schedule of
expenditures of federal awards, and related notes prior 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 far
evaluating the adequacy and results of those services and accepting responsibility for them.
Management is responsible for establishing and maintaining effective internal controls,
including internal controls over compliance and for monitoring ongoing activities, to help
ensure that appropriate goals and objectives are met. You are also responsible 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, the aggregate discretely presented component units, each major fund, and the
aggregate remaining fund information of the City of Columbia Heights, Minnesota and the
resnectve c'rtan~es in nnanciai nnsitinn and whPrP anniirah~P each finwc in rnnfnrmit~~ ~x~ith
~ -o - - - -- - --- - r - ---- - - i ..----- --rr--------~ ------ --....., ___ _..___.,_____.~ .._.._
U.S. generally accepted accounting principles; and for compliance with applicable laws and
regiilatronS Arid tl'ie provisioiiS of %ontra%t5 and grant agreeilleiltS.
Management is also responsible for making all financial records and related information
available to us and for ensuring that management and financial information is reliable and
properly recorded. Your responsibilities also include, including identifying significant
vendor relationships in which the vendor has responsibility for program compliance and for
the accuracy and completeness of that information. Your responsibilities include adjusting
the financial statements to correct material misstatements and 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
1233513.1
City of Columbia Heights
Contract for Auditing Services
January 15, 2010
Page 4
roles in internal control, and (3) others where the fraud or illegal acts could have a material
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 are responsible for identifying and ensuring that the entity complies with
applicable laws, regulations, contracts, agreements, and grants. Additionally, as required by
OMB Circular A-133, it is management's responsibility to follow up and take corrective
action on reported 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 far tracking the
status of audit findings and recommendations. Management is also responsible for
identifying for us previous audits, attestation engagements, performance audits or other
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, attestation engagements, performance
audits or other studies. You are also responsible for providing management's views on our
current findings, conclusions, and recommendations, as well as your planned corrective
actions, for the report, and for timing and format for providing that information.
With regard to the electronic dissemination of audited financial statements, including
financial statements published electronically on your website, you understand that electronic
sites are a means to distribute information and, therefore, we are not required to read the
information contained in these sites or to consider the consistency of other information in the
electronic site With t>ie original dociti>3eait.
~udi# P~ca~ed~re~ - Ce~e:a6
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 (1) 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, Government
Auditing Standards do not expect auditors to provide reasonable assurance of detecting
abuse.
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
material misstatements may exist and not be detected by us. In addition, an audit is not
1233513.1
City of Columbia Heights
Contract for Auditing Services
January 15, 2010
Page 5
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 regulations 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
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, funding sources, 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 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 otl'ier i~oncort-inliance matters that have a direct acid material effect oli the inanciai
statements. Our tests, if performed, will be less in scope than would be necessary to render
ar'i op.mon oai anternal control and, accordingly, rao cp~mcn will be expressed in cur report cn
internal control issued pursuant to Government Auditing Standards.
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-133.
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 AICPA professional standards, Government Auditing Standards, and
OMB Circular A-133.
12335]3.1
City of Columbia Heights
Contract for Auditing Services
January 15, 2010
Page 6
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
our report on compliance issued pursuant to Government Auditing Standards.
The Minnesota Legal Compliance Audit Guide for Local Government requires that we
test whether the auditee has complied with certain provisions of I`~Iinnesota Statutes. Our
audit will include such test of the accounting records and other procedures as we consider
necessary in the circumstances.
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 tests of transactions and other applicable
procedures described in the UMB Circular A-133 Compliance Supplement 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 these procedures will be to
express an opinion on the City of Columbia 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.
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, surrjmary schedule of prior audit findings, auditors' reports,
and a corrective action plan) along with the Data Collection Form to the designated federal
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.
1233513.1
City of Columbia Heights
Contract for Auditing Services
January 15, 2010
Page 7
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 carry out oversight responsibilities. We will notify you of any such request. If
requested, access to such audit documentation will be provided under the supervision of HLB
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.
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 ur~exr~ected circurristances 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 and letter of comment, if any. Our 2007 peer review
report accompanies this letter. We are pleased to report that we did not receive a letter of
comment.
1233513.1
City of Columbia Heights
Contract for Auditing Services
January 15, 2010
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 engagement as described in this letter, please sign the enclosed copy and return it to us.
Very truly yours,
HLB TAUTGES REDPATH, LTD.
~.. • L-
David J. Mol, CPA
Response:
This letter correctly sets forth the understanding of the City of Columbia Heights, Minnesota:
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1233513.]
Appendix A
Page 1
P Member:
,~ L~EM & COMPANY 1 •~• Private Companies Practice
Section. Division of~Firms.
American Institute of
~ Certified Pu61ic Accountants & Business Consultants Certified PublicACCOUntants
Arizona Society of Certified
Public Accountants
To the Shareholders
HLB Tautges, Redpath, 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,
2007. A system of quality control encompasses the firm's organizational structure, the
policies adopted and procedures established to provide it with reasonable assurance of
conforming with professional standards. The elements of quality control are described in
the Statements on Quality Central Standards issued by the American Institute of CPAs
(AICPA). The firm is responsible for designing a system of quality control and
complying with it to provide the firm reasonable assurance of conforming with
professional standards in all material respects. Our responsibility is to express an opinion
on the, design of the system of quality control and the firm's compliance with its system
of quality control based on our review.
Our review was conducted in accordance with standards established by the Peer Review
Board of the AICPA. During our review, we read required representations from the firm,
interviewed firm personnel and obtained an understanding of the nature of the firm's
accounting and auditing practice, and the design of the firm's system of quality control
sufficient to assess the risks implicit in its practice. Based on our assessments, we
selected engagements and administrative files to test for conformity with professional
standards and compliance with the firm's system of quality control. The engagements
selected represented a reasonable cross-section of the firm's accounting and auditing
practice with emphasis on higher-risk engagements. Prior to concluding the review, we
reassessed the adequacy of the scope of the peer revie=,~~ precedtares and met with fire
management to discuss the results of our review. We believe that the procedures we
performed provide a reasonable basis for our opinion.
In performing our review, we obtained an understanding of the system of quality control
for the firm's accounting and auditing practice. In addition, we tested compliance with
the firm's quality control policies and procedures to the extent we considered appropriate.
These tests covered the application of the firm's policies and procedures on selected
engagements. Our review was based on selected tests therefore it would not necessarily
detect all weaknesses in the system of quality control or all instances of noncompliance
with it. There are inherent limitations in the effectiveness of any system of quality
control and therefore noncompliance with the system of quality control may occur ar~d
not be detected. Projection of any evaluation of a system of quality control to future
4455 East Gamelback Road
Suite E290
Phoenix, Arizona 85018
Telephone (602) 667-6040
Fax (602) 667-6039
www.liemcpa.com
1233513.1
Appendix A
Page 2
HLB Tautges, Redpath, Ltd.
Page Two
periods is subject to the risk that the system of quality control may become inadequate
because of changes in conditions, or because the degree of compliance with the policies
or procedures may deteriorate.
In our apinion, the system of quality control for the accounting and auditing practice of
HLB Tautges, Redpath, Ltd. in effect for the year ended September 30, 2007, has been
designed to meet the requirements of the quality control standards for an accounting and
auditing practice established by the AICPA and was complied with during the year then
ended to provide the firm with reasonable assurance of conforming with professional
standards.
Phoenix, Arizona
March 6, 2008
I2335I3.1