Loading...
Hoyman Dobson FY '10-'12ID saY Mayor and Commissioners City of Okeechobee 55 S.E. Third Avenue Okeechobee, Florida 34974 July 8, 2010 We are pleased to confirm our understanding of the services we are to provide the City of Okeechobee for the years ending September 30, 2010, 2011 and 2012. We will audit the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information, which collectively comprise the basic financial statements of the City of Okeechobee as of and for the years ending September 30, 2010, 2011 and 2012. Accounting standards generally accepted in the United States provide for certain required supplementary information (RSI), such as management's discussion and analysis (MD &A), to supplement the City of Okeechobee's basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. As part of our engagement, we will apply certain limited procedures to the City of Okeechobee's RSI in accordance with auditing standards generally accepted in the United States of America. These limited procedures will consist of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We will not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The following RSI is required by generally accepted accounting principles and will be subjected to certain limited procedures, but will not be audited: 1. Management's Discussion and Analysis 2. Required supplementary pension information 3. Budgetary comparison schedules for certain governmental funds 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 supplementary information referred to in the second paragraph when considered in relation to the financial statements as a whole. Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America and the standards for financi audits contained in Government Auditing Standards, issued by the Comptroller General of the Un' States, and will include tests of the accounting records of the City of Okeechobee andfer proced 215 Baytree Drive Melbourne, FL 32940 p: (321) 255.0088 f (321) 259.8648 4767 New Broad Street Orlando, FL 32814 p: (407) 422.1681 f: (407) 514.2604 www.hoyman.com Mayor and Commissioners City of Okeechobee Page Two we consider necessary to enable us to express such opinions. If our opinions on the financial statements are 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 opinions, we may decline to express opinions or to issue a report as a result of this engagement. We will also provide a report (that does not include an opinion) 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 as required by Government Auditing Standards. The report on internal control and compliance will 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, and specific legislative or regulatory bodies and is not intended to be and should not be used by anyone other than these specified parties. If during our audit we become aware that the City of Okeechobee is subject to an audit requirement that is not encompassed in the terms of this engagement, we will communicate to management and those charged with governance that an audit in accordance with U.S. generally accepted auditing standards and the standards for financial audits contained in Government Auditing Standards may not satisfy the relevant legal, regulatory, or contractual requirements. 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 assist with preparation of your financial statements and related notes. You are responsible for making all management decisions and performing all management functions relating to the financial statements 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 that you have reviewed and approved the financial statements 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 for evaluating the adequacy and results of those services and accepting responsibility for them. Management is responsible for establishing and maintaining effective internal controls, including monitoring ongoing activities, to help ensure that appropriate goals and objectives are met; for the selection and application of accounting principles; and for the fair presentation in the financial statements of the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the the City of Okeechobee and the respective changes in financial position and cash flows, where applicable, in conformity with U.S. generally accepted accounting principles. 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 include adjusting the financial statements to correct material misstatements and fo confirming to us in the representation letter that the effects of any uncorrected misstatements aggreg by us during the current engagement and pertaining to the latest period presented arettmaterial, individually and in the aggregate, to the financial statements taken as a whole. Mayor and Commissioners City of Okeechobee Page Three 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 affecting the government involving (1) management, (2) employees who have significant 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 for taking timely and appropriate steps to remedy any fraud, illegal acts, violations of contracts or grant agreements, or abuse that we may report. You are responsible for the preparation of the supplementary information in conformity with U.S. generally accepted accounting principles. You agree to include our report on the supplementary information in any document that contains and indicates that we have reported on the supplementary information. You also agree to present the supplementary information with the audited financial statements. 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 financial 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 the timing and format for providing that information. 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 (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 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. 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. Our responsibility as auditors is limited to the period covered by our audit and does not extend to late periods for which we are not engaged as auditors. Mayor and Commissioners City of Okeechobee Page Four 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 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. 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 and Government Auditing Standards. 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 Okeechobee's compliance with the provisions of applicable laws, regulations, contracts, agreements, and grants. However, the objective of our audit 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. Engagement Administration, Fees, and Other We may from time to time, and depending on the circumstances, use third -party service providers in serving your account. We may share confidential information about you with these service providers, but remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures, and safeguards to protect the confidentiality of your personal information. In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information and we will take reasonable precautions to determine that they have appropriate procedures in place to prevent the unauthorized release of your confidential informatio to others. In the event that we are unable to secure an appropriate confidentiality agreement, you wil asked to provide your consent prior to the sharing of your confidential information w he third service provider. Furthermore, we will remain responsible for the work provided by y such third -p vice providers. ID Mayor and Commissioners City of Okeechobee Page Five We understand that your employees will prepare all cash or other confirmations we request and will locate any documents selected by us for testing. We will provide copies of our reports to the City of Okeechobee; however, management is responsible for distribution of the reports and the financial statements. Unless restricted by law or regulation, or containing privileged and confidential information, copies of our reports are to be made available for public inspection. The audit documentation for this engagement is the property of Hoyman Dobson and constitutes confidential information. However, pursuant to authority given by law or regulation, we may be requested to make certain audit documentation available to U.S. Government Accountability Office or its designee, 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 Hoyman Dobson 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 date or for any additional period requested by the U.S. Government Accountability Office. If we are aware that a federal awarding agency 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. Deborah A. Goode is the engagement director and is responsible for supervising the engagement and signing the reports or authorizing another individual to sign them. Our fee for the audits will be $27,300 per year. 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. Should it appear we would be required to perform any services your personnel have been assigned, to allow for an efficient and timely engagement, or if we see areas where the task undertaken is not as anticipated, we will consult with you to determine if our firm or your staff will take the action necessary to complete the assignment. We will provide a Supplemental Service Agreement (Appendix A) for your signature and authorization: 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. Government Auditing Standards require that we provide you with a copy of our most recent external review report and any letter of comment, and any subsequent peer review reports and lrs of com received during the period of the contract. Our 2008 peer review accompanies this lett er You have the right and we reserve the right to withdraw from this engagement upon written notification. In such an event, it is the policy of the firm to bill a client for services provided and charges incurred on the client's behalf before the point of withdrawal. Parties to this engagement agree that any dispute that may arise regarding the meaning, performance, or enforcement of this engagement, shall be submitted to mediation on a form decided upon by both parties, prior to resorting to litigation. 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. Hoyman Dobson prides itself in employing quality individuals and underwrites substantial associate training each year. While engaged to provide these professional services you may become familiar with various members of Hoyman Dobson and wish to extend an offer of employment. Hoyman Dobson values each associate and does not wish to incur turnover, but also does not desire to hinder opportunities that may present themselves to these associates. Recognizing Hoyman Dobson's investment and training in each associate, you agree to reimburse Hoyman Dobson one -third of the individual's current salary should you extend an offer of employment and it be accepted. Additionally, if an employment offer is discussed during the course of the engagement, the Company acknowledges it may have impaired our independence. If an impairment of independence is deemed to have occurred Hoyman Dobson may have to withdraw from the engagement and thus not be able to issue a report. If this occurs the Company agrees to reimburse Hoyman Dobson for fees incurred. By mutual agreement of both parties, this contract can be extended beyond this initial contract period. We appreciate the opportunity to be of service to the City of Okeechobee 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, a.,41 4 -Sd0414_, Deborah A. Goode, CPA Director Hoyman Dobson RESPONSE: This lette correctly Dowling Watford Jr Title: .I ybx: Pro Tenupore By: Mayor and Commissioners City of Okeechobee Page Six ets•forth the un nding of the City of Okeechobee. REVIEWED FOR LFCAL i may John R. Cook, City Attorne Y7 Reason for requiring the change order Nature of work to be performed Discussion with client Estimated cost of change/ additional work Approved: Manager Director APPENDIX A HOYMAN, DOBSON COMPANY, P.A. SUPPLEMENTAL SERVICE AGREEMENT Client Proposed by Year Ended Date Prepared At this time we anticipate having to perform the following services in order to complete your year end and financial statements: Estimated Estimated Accountant Rate Hours Totals You will be billed for the actual time expended on the services at our normal hourly rates. The terms and conditions of payment will be the same as in our engagement letter. Any revision of timetable Accepted: Client Date Rejected: Manager Director Reason: Rejected: Client: APPENDIX A SUPPLEMENTAL SERVICE AGREEMENT PAGE 2 Date: Date: I do not want Hoyman Dobson to do the additional services required. I will be responsible for getting our personnel to perform the services. 1 realize that this will cause a delay in delivery of our financial statements and tax returns. ICRI CARR RIGGS INGRAM Carr, Riggs Ingram, LLC 1713 Mahan Drive Tallahassee, Florida 32308 (850) 878 -8777 (850) 878-2344 (fax) www.cricpa.com September 9, 2008 To the Directors Hoyman, Dobson Company, P.A. We have reviewed the system of quality control for the accounting and auditing practice of Hoyman, Dobson Company, P.A. (the firm) in effect for the year ended May 31, 2008. 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 Control 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 fuin'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 fi>_in's accounting and auditing practice with emphasis on higher -risk engagements. The engagements selected included among others, audits of Employee Benefit Plans and engagements performed under Government Auditing Standards. Prior to concluding the review, we reassessed the adequacy of the scope of the peer review procedures and met with firm management to discuss the results of our review. We believe that the procedures we perfoi_ined 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 Hoyman, Dobson Company, P.A. Page 2 and therefore noncompliance with the system of quality control may occur and not be detected. Projection of any evaluation of a system of quality control to future 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 opinion, the system of quality control for the accounting and auditing practice of Hoyman, Dobson Company, P.A. in effect for the year ended May 31, 2008, 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. r 4 1.44-,VEr 4 01:4-0%. Carr, Riggs Ingram, LLC