Fort Walton Beach Council agenda — 10-12-2010 Regular — reading text

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 Government Auditing Standards. As required by OMB Circular A -133 and Chapter 10. 550, Rules of the (Florida) Auditor General, 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 and state 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 and Chapter 10. 550, Rules of the (Florida) Auditor General. 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, OMB Circular A -133, and Chapter 10. 550, Rules of the ( Florida) Auditor General. 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 Fort Walton Beach, Florida' 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.  Honorable Mayor and City Council Members City of Fort Walton Beach, Florida October 1, 2010 Page six OMB Circular A -133 and Chapter 10. 550, Rules of the ( Florida) Auditor General 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 federal programs and state projects. Our procedures will consist of tests of transactions and other applicable procedures described in the OMB Circular A -133 Compliance Supplement and related addenda for the types of compliance requirements that could have a direct and material effect on each of Okaloosa County, Florida' s major programs. The purpose of these procedures will be to express an opinion on Okaloosa County, Florida' s compliance with requirements applicable to each of its major programs in our report on compliance issued pursuant to OMB Circular A -133 and Chapter 10. 550, Rules of the ( Florida) Auditor General. Engagement Administration, Fees, and Other You may request that we perform additional services not addressed in this engagement letter. If this occurs, we will communicate with you regarding the scope of the additional services and the estimated fees. We also may issue a separate engagement letter covering the additional services. In the absence of any other written communication from us documenting such additional services, our services will continue to be governed by the terms of this engagement letter. 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 the Data Collection Form that summarizes our audit findings. 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 corrective action plan) along with the Data Collection Form to the federal audit clearinghouse. We will coordinate with you the electronic submission and certification. If applicable, we will provide copies of our report for you to include with the reporting package you will submit 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. The audit documentation for this engagement is the property of O' Sullivan Creel, LLP and constitutes confidential information. However, pursuant to authority given by law or regulation, we may be requested to make certain audit documentation available to 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 Angela D. Balent, CPA. 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.  Honorable Mayor and City Council Members City of Fort Walton Beach, Florida October 1, 2010 Page seven 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 an oversight agency. If we are aware that a federal or state 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 expect to begin our preliminary fieldwork in October 2010 to issue our reports no later than March 15, 2011. Angela D. Balent, CPA, is the engagement partner and is responsible for supervising the engagement and signing the reports or authorizing another individual to sign them. Our fee for these services will be at our standard hourly rates plus out -of-pocket costs ( such as report reproduction, word processing, postage, travel, copies, telephone, etc.) except that we agree that our gross fee will not exceed $ 51, 984, for each of the years ended September 30, 2010, 2011, 2012, 2013, and 2014. Our standard 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. In accordance with our firm policies, work may be suspended if your account becomes 30 days or more overdue and may not be resumed until your account is paid in full. Interest at a rate of 12 percent per annum will accrue on any balance not paid within 30 days of the invoice date. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed upon written notification of termination, even if we have not completed our report( s). You will be obligated to compensate us for all time expended and to reimburse us for all out -of-pocket costs through the date of termination. The above fee is based on anticipated cooperation from 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. Per the City of Fort Walton Beach, Florida' s request, this contract may be extended for an additional five 5) year period. Fees for the additional five (5) year periods will be negotiated at that time. During the course of our engagement, we may communicate with you using electronic media ( e -mail or client portal). You understand and authorize this method of communication with the understanding this may include sensitive material including drafts of financial statements and final copies of your statements for your distribution through electronic means. From time to time, O' Sullivan Creel, LLP may have business, financial or other information that it believes could be of value to you and/ or the County. Your signature on this engagement letter authorizes our use of your name, address and /or email address for the purpose of forwarding such information to you until such time as you specifically notify us that you no longer desire to receive such information. This authorization will continue in effect until you notify us otherwise.  Honorable Mayor and City Council Members City of Fort Walton Beach, Florida October 1, 2010 Page eight Parties to this engagement agree that any dispute that may arise regarding the meaning, performance, or enforcement of this engagement will, prior to resorting to litigation, be submitted to mediation upon the written request of any party to the engagement. All mediations initiated as a result of this engagement shall be administered by the American Arbitration Association ( AAA) and in accordance with the Mediation Rules for Professional Accounting and Related Disputes" as then adopted by the AAA. The results of this mediation shall be binding only upon agreement of each party to be bound. Costs of any mediation proceeding shall be shared equally by both parties. Our professional standards require that we perform certain additional procedures, on current and previous years' engagements, whenever a partner or professional employee leaves the firm and is subsequently employed by or associated with a client. Accordingly, the County agrees it will compensate O' Sullivan Creel, LLP for any additional costs incurred as a result of the County' s employment of a partner or professional employee of O' Sullivan Creel, LLP. O' Sullivan Creel makes a considerable investment in the recruiting and training of our team members and we are proud of our dedication to client service that is carried out through our people. In recognition of the important role our employees play within our firm and with the organizations we serve, it is hereby agreed that neither you nor any affiliate entities, or individuals, will solicit for employment, nor enter into independent contractual relationships with, any individual who is, or was, an employee of O' Sullivan Creel, LLP during the term of this engagement and for a period of twelve months following the conclusion of all services rendered to you by O' Sullivan Creel, LLP whether such services are the subject of this specific engagement or not. Should this non -solicitation clause be breached, you will agree to pay to O' Sullivan Creel, LLP a fee of 50 percent of the individual employee' s most recent base compensation. Such payment will be remitted, in full, within 30 days of the employee' s beginning employment, or self - employment, on your behalf. It is agreed by the County and O' Sullivan Creel, LLP or any successors in interest that no claim arising out of services rendered pursuant to this agreement by or on behalf of the County shall be asserted more than two years after the date of the last report issued by O' Sullivan Creel, LLP. Government Auditing Standards require that we provide you with a copy of our