Fort Walton Beach Council agenda — 03-13-2007 regular agenda — reading text

please find attached proposed fee schedule and our arrangement letter for audit services for the years ended September 30, 2007, 2008 and 2009. Our updated arrangement letter calls for only a three percent increase in fees for each ofthe years ended September 30, 2007, 2008 and 2009. If the extension of our contract is acceptable under these tenus, please sign the attached engagement letters and keep one copy for your records. The other is to be returned to us. We appreciate the opportunity to serve the City of Fort Walton Beach. Sincerely, O' SULLIVAN CREEL, LLP Certified Public Accountants & Consultants UM/d~~ k~~ ph W. Henderson, CPA Cc: Lisa Absher, Finance Director MCGLADREYNETWORK E An Independen1!y Owned Member WOI1dwide Services Through RSM International  City of Fort Walton Beach, Florida FEE SCHDULE For the years ending September 30, 2007, 2008 and 2009 Year Ended Audit Fee 2007 60, 264.27 2008 62, 072, 20 2009 63, 934. 36 Notes: The fees above assume a Federal and or State Single Audit in the years noted as well as tradtional support provided by the City, In addition, we have informed you of several standards changes and we have attempted to factor in the changes in our audit procedures as a result of new standards currently known to us, The fees do not contemplate out- of- scope work that may be caused by natural disasters or other out- of-scope modifications. However, we will inform you of any circumstances that could impact the fees quoted as soon as they become known to us.  O'SUWVAN CREEL~,LLP Certified Public Accountants & Consultants 45 Bea] Parkway, N.E. P. O. Box ] 600 Fort Walton Beach, FL 32549 850) 244- 5121 Fax ( 850) 664- 2562 March 6, 2007 www.osullivancree]. com Honorable Mayor and City Council Members City of Fort Walton Beach, Florida 107 SW Miracle Strip Parkway Fort Walton Beach, Florida 32548 This letter is to explain our understanding of the arrangements for the services we are to perform for the City of Fort Walton Beach, Florida for the years ending September 30, 2007, 2008, and 2009. We ask that you either confirm or amend this understanding. We will perform an audit of the City of Fort Walton Beach, Florida' s governmental activities, business- type activities, aggregate discretely presented component units, each major fund, aggregate remaining fund information, and the budgetary comparison as of and for the years ending September 30, 2007, 2008, and 2009, which collectively comprise the basic financial statements. We understand that these financial statements will be prepared in accordance with accounting principles generally accepted in the United States of America. If applicable, we will also perform the audit of the City of Fort Walton Beach, Florida for the years ending September 30, 2007, 2008, and 2009 so as to satisfy the audit requirements imposed by the Single Audit Act and the U.S. Office of Management and Budget COMB) Circular No. A- l33 and Chapter 10. 550, Rules of the Florida Auditor General, if applicable. We will conduct the audit in accordance with auditing standards generally accepted in the United States of America; Government Auditing Standards issued by the Comptroller General of the United States; and, if applicable, the provisions of the Single Audit Act, OMB Circular A- 133 and OMB' s Compliance Supplement and Chapter 10. 550, Rules of the Florida Auditor General. Those standards, circulars, supplements or guides require that we 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, fraudulent financial reporting, or misappropriation of assets. Accordingly, a material misstatement, whether caused by error, fraudulent financial reporting, or misappropriation of assets, may remain undetected. An audit includes examining evidence supporting the amounts and disclosures in the financial statements on a test basis. As a result, an audit is not designed to detect errors or fraud that are immaterial to the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. MCCLADREYNETWORK E M fndependen1fy Owned Member Worldwide SeNices Through RSM International Honorable Mayor and City Council Members City of Fort Walton Beach, Florida March 6, 2007 Page two An audit of financial statements also includes obtaining an understanding of internal control sufficient to plan the audit and to determine the nature, timing and extent of audit procedures to be performed. An audit is not designed to provide assurance on internal control or to identify significant deficiencies or material weaknesses. However, we will communicate to management and the audit committee any significant deficiencies or material weaknesses that become known to us during the course of the audit. We believe that our audit will provide a reasonable basis for our report( s). In addition to our report on the City' s financial statements, we will also issue the following reports or types of reports, if applicable: A report on the fairness of the presentation of the City' s Schedule of Expenditures of Federal and State Awards for the years ending September 30, 2007, 2008, and 2009. Reports on internal control related to the financial statements, and major Federal programs and State projects. These reports will describe the scope of testing of internal control and the results of our tests of internal controls. Reports on compliance with laws, regulations, and the provision of contracts or grant agreements. We will report on any noncompliance which could have a material effect on the financial statements and any noncompliance which could have a direct and material effect on each major Federal program and State project. A Schedule of Findings and Questioned Costs. The funds that you have told us are maintained by the City and that are to be included as part of our audit are listed as follows: Governmental General Fund Capital Projects Fund Debt Service Fund Special Revenue Fund Proprietary Utilities Fund Sanitation Fund Golf Fund Fiduciary Pension Trust Funds Agency Fund Honorable Mayor and City Council Members City of Fort Walton Beach, Florida March 6, 2007 Page three The component unit whose financial statements you have told us are to be discretely presented in the City' s, basic financial statements is the Fort Walton Beach Community Redevelopment Agency. Our report on internal control will include any reportable conditions and material weaknesses in the system of which we become aware as a result of obtaining an understanding of internal control and performing tests of internal control consistent with requirements of the standards and circular identified above. Our report on compliance will address material errors, traud; violations of compliance requirements, and other responsibilities imposed by state and Federal statutes and regulations and assumed by contracts; and any state or Federal grant, entitlement of loan program questioned costs of which we become aware, consistent with requirements of the standards and circulars identified above. If circumstances arise relating to the conditions of your records, the availability of sufficient, competent evidential matter, or indications of a significant risk of material misstatement of the financial statements because of error, traudulent financial reporting, misappropriation of assets, or noncompliance which in our professional judgment prevent us trom completing the audit, we retain the unilateral right to take any course of action permitted by professional standards, including withdrawal trom the engagement. As you know, management is responsible for 1) the preparation of the City of Fort Walton Beach, Florida' s financial statements 2) the Schedule of Expenditures of Federal and State Awards, if applicable, 3) establishing and maintaining effective internal control over financial reporting and safeguarding assets and internal control over compliance, 4) properly recording transactions in the records, 5) identifYing and ensuring that the City of Fort Walton Beach, Florida complies with the laws and regulations applicable to its activities, 6) making all financial records and related information available to us, and 7) for adjusting the financial statements to correct material misstatements, 8) following up and taking corrective action on audit findings, including the preparation of a summary schedule of prior audit findings, and a corrective action plan, if applicable, and 9) submitting the reporting package. At the conclusion of our audit, we will request certain written representations trom management about the financial statements and matters related thereto. We will also require that you affirm to us 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. The City of Fort Walton Beach, Florida hereby indemnifies O' Sullivan Creel, LLP and its partners, principals, and employees and holds them harmless trom all claims, liabilities, losses, and costs arising in circumstances where there has been a knowing misrepresentation by a member ofthe City of Fort Walton Beach, Florida' s management, regardless of whether such person was acting in City of Fort Walton Beach, Florida' s interest. This indemnification will survive termination ofthis letter. Honorable Mayor and City Council Members City of Fort Walton Beach, Florida March 6, 2007 Page four You have informed us that you intend to prepare a comprehensive annual financial report ( CAFR) and submit it for evaluation by the Government Finance Officers Association' s Certificate of Achievement for Excellence in Financial Reporting. The working papers for this engagement are the property of O' Sullivan Creel, LLP. However, you acknowledge and grant your assent that representatives of the cognizant or oversight agency or their designee, other government audit staffs, and the U.S. General Accounting Office shall have access to the audit working papers upon their request; and that we shall maintain the working papers for a period of at least three years after the date of the report, or for a longer period if we are requested to do so by the cognizant or oversight agency. Access to requested workpapers will be provided under the supervision of O' Sullivan Creel, LLP audit personnel and at a location designated by our Firm. During the course of our engagement, we may