HomeMy WebLinkAbout2008-027 Finance - Cherry Bekaert & Holland 2007 Audit~F - 5/3~d?
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CONTRACT TO AUDIT ACCOUNTS
of Orange County, North Carolina
Govcromenml Uait
MAY 14 2007
LOCALt30VERPIMENT
COMMISSION
day of APB 2007 McGladrey & Pullen, LLP
Auditor
P n Rnx ?.470_ Greensboro. NC 27402-2470
Mailing Address
hereinafter referred to as
the Auditor, and the Com;nissioners of Orange County, NC , hereinafter referred
Governing Board GOVe~,meni?-~ Unit
to as the Governmental Unit, agree as follows: ,
1. The Auditor shall audit all statements and disclosures required by generally accepted aceounting prnctplea and additional required
legal statements and disclosures of all funds and/or divisions of the Governmental Unit for the period beginning
Jaty t 2006 and ending June 30 2007 • The, management's discussion and analysis,
non-major combining, and individual fund statements and schedules shall be subjected to the auditing procedures applied in Ote
audit of the basic financial statements and an opinion will be rendered in relation w (~ applicable) the governmental activities, the
business-type activities, the aggregate discretely presented component units, each major governmental and enterprise fund, and Ute
aggregate m~;n;ng fund information (nonmajor government sbe enterprise funds, the internal service fund type, and the fiduciary
fund types).
2. At a minimum, the Auditor shall cerinuct his audit and render his report in accordance with generally accepted auditing standards.
The Auditor shall perform the audit in accordance with GaverrLent Aud;tina Standards if required by the State Single Audit
Implementation Act, as codified in G.S. 159-34. If required by OMB Circular A-133 and the State Single Audit Implementation
Act, the auditor shall perform a Single Audit
3. This contract contemplates an unqualified opinion being rendered If financial statements are not prepared in accordance with
generally accepted accounting Principles (GAAP), or the statements fail to include all disclosuues required by GAAP, explain that
departure from GAAP in the space below:
No departures are contemplated.
4. This contract contemplator an anqualifred opinion being rendered The audit shall include such tests of the accounting records and
such other auditing procedures as are considered by the Auditor to be necessary in the circumstances. Any limitations or
restrictions in scope which would lead to a qualification should be fully explained in an attachment to this contract. The audit will
have no scope lmitatoas except: No limitations are contemplated.
5. If this audit engagement is subject to the standards for audit as defined in l'*nver~ent Attditine Stand?*~= issued by the
• Comptroller General of the United States, then the Auditor warrants by accepting this engagement that helsbe has met the
requirements for a peer review abe continuing education as specified in cnvemment Au_~~tLna Standards. The Auditor agrees to
provide a copy of their most recent peer review report to the Governmental Unit and the Secretary of the Local Government
Commissiononor t4 the execution of the audit contract. (See Item 20.)
6. It is agreed that time is of the essence in this contract. All audits are to be Performed and the report of audit submitted by
October 31 2007
7. It is agreed [bat generally accepted auditing standards include a review of the Governmental Unit's system of internal control and
aceounting as same relates to accountability of funds and adherence to budget and law requirements applicable thereto; that the
AudiWr will make a written report, which may or may not be a part of the written report of suuiit, to the Governing Board setting
forth his findings, together' with his recemmendations for improvement. That written report must include all matters defined as
"reportable conditions" in AU 32s of the AICPA Professional Standards. The Auditor shall file a cony of that report with the
Secre of the r.,rat Government Commission.
8. All local government and public authority contracts for annual or special audits, bookkeeping or other assistance necessary to
prepare the Unit's records for auudit, 5nancial statement preparation, any finance-related investigations, or any other surdit-related
work in the State of Nortli Carolina require the approval of the Secretary of the Local Government Commission. Invoices for
w,rn ~ r;er these contracts shall not be pad by the Governmental Unit tmtil rhP ;nvn; a h .been anoroved by the
C-crotarv of the Local Government Commission Pfhis also includes anv oro¢ress billines.l [G.S. 159-34 and 11sC~47] All
invoices should be sudrmitted in triplicate to the Secretary of the Local Government Commission. The original and one copy will
be returned to the Auditor. Approval is not required on contracts snd invoices for system improvements and similar services of a
non-auditing nature.
9. In consideration of the satisfactory performance of the provisions of this agreement, the Governmental Unit shall pay to the
Auditor, upon approval by the Secretary of the Local Government Commission, tbe following fee which includes any cost the
Auditor may incur from work paper or peer reviews or air other quality assurance program regtrired by third parties (Federal and
State grantor and oversight agencies or other organizations) as required under the Federal and State Single Abeit Acts:
Year<nd bookkeeping assistance - [For aadrtr sabjed to Government Aadititrg Standards, this is limited to bookkeeping
servicespermitadkyrevisedlndependenceStandardsl noraGwrmcowrm.s:r~.m,aQ..~.~~~r•aa~w~~•~•~•~~rr~.,m~
Audit -
.srvooo r~ueco~a ~.u,ooo~abs~cv~.s.d armec~r)od+-wor+~r~"a~•m.e eor cs~ lQ era®.uixuo.a^ssaao vin.
Prepantioa of the flnaucial statements
S4.3Ud rathe PWurim dshdaYx of p,apary ux rtoeivables far Uie Tovm orChrpel Hill, Cavha1o pod HaleeUwwMgh.
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10. After completing his audit, the Auditor shall submit to the Governing Board a written report of audit This report shall include, at
least, Management's Discussion and Analysis, the Snancial statements of the governmental unit and all of its component omits and
• notes thereto prepared in accordance will[ generally accepted accounting principles, combining and supplementary infomuation
requested by the client or required for full disclosure under the law, and the Auditor's opinion on the material Presented. The
Auditor shall famish the required number of copies of the report of audit to the Governing Board as soon as Practical after the
close of the accounting period.
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11. The Arditor shall file with the Local Government Commission two copies of the report of sudi; including one copy of Ote
federal Data Collection Form, if a federal single audit is conducted. In addition, if tbe North Carolina Office of the State Auditor
designates certain programs to be audited as major programs, a one page ttrrnaround document and a representation letter addressed
• to the State Auditor shall be submitted to the Local Government Commission. Two copies of the report of audit should be
submitted if the audit is performed only under the provisions of the State Single Audit Implementation Act or a financial audit is
required to be performed in accordance with Government Auditing Standards. Throe copies of the audit should be submitted for
Councils of Governments. Otherwise, one copy shall be submitted. Copies of the report shall be filed with the Local Government
Commission when (or prior to) submitting the invoice for the services rendered. All copies of the report submitted must be bound.
The report of audit as filed with the Secretary of the Local Goverment Commission, becomes a matter of public record for
inspection and review in the offices of the Secretary by any interested parties. Any subsequent revisions w these reports must be
sent to the Secretary of the Local Government Commission. These audited financial statements are used in the preparation of
(1t5cial Statements for debt offerings (the auditors' opinion is not included), by municipal bond rating services, to fulfill secondary
market disclosure requirements of the Securities and Exchange Commission, and other lawful purposes of the government without
subsequent consent of the auditor.
12. Should circumstances disclosed by the audit call for a more detailed investigation by the Auditor than necessary under ordinary
circumstances, the Auditor shall inform the Governing. Board in writing of the need for such additioml investigation and the
additional compensation required therefore. Upon approval by the Secretary of the Local Goverment Commission, this agreement
may be varied or changed to include the increased time and/or compensation as may be agreed upon by the Govering Board and
the Auditor.
13. If an approved contract needs W be varied or changed for any reason, the change must be retltrced to writing, signed by boot
parties, presudited if necessary, and submitted to the Secretary of the Local Government Commission for approval No cbapgg
shall be effective tmless atnrroved by the Secretary of the Local Government Commission. the Govemina Board. and the Auditor.
14. Whenever the Auditor uses an engagement letter with the client, Item 15 may be completed by referencing the engagement letter
and attaching a copy of the engagement letter to the contract to incorporate the engagement letter into the contract. In terse of
conflict between the terms of the engagement letter and the terms of this contract, the terms of this contract will control.
Engagement letter terra are deemed to be void unless the conflicting terms of this contract are specifically deleted in Item 21 of
this contract. Engagement letters containing indemnification clauses will not be approved by the Local Goverment Commission.
15. There are no special provisions except:
71,e aaenc~d artaa6emrai boa it iu iarPal pen of this w[4isit and should be and in ib aniaety wlm ~B atis cooaacr.
16. A separate contract should not be made for each division to be audited or report to be submitted. A separate contract must be
executed for each component unit which is a local government and for which a separate audit report is issued.
17. The contract should be executed and submitted in triolicate to the Secretary of the Local Government Commission. The mailing
address is 325 North Salisbury Street Raleigh, North Carolina 27603-1385. The physical address is 4505 Fay Meadow Lane,
Suite 102, Raleigh, North Carolina 27607-6449.
lg. Upon approval, the original contract will be returned to the Governmental Uni; a copy will be forwarded to the Auditor, and a
• copy retained by the Secretary of the Local Government Commission. The audit should not be started before the contract is
arroroved.
19. Thera are no other agreements between the parties hereto and no other agreements relative hereto that shall be enforceable unless
entered into in accordance with the procedure set out herein and approved by the Secretary of the Local Govermnent Commission.
20. If this audit engagement is not subject to Government Auditing Standards. then Item 5 shall be listed as a deleted provision in Item
21. An explanation must be given for deleting this provision.
21. All of the above paragraphs are understood and shall apply to this agreement except the following numbered paragraphs shall be
deleted: (See Item 14.)
Firm McGladrey & Pu/ll~en, /T .i •p (P type or print na d title
By ~jin ~S . Gi ~tXf~Q. P ~'del-- (Si of Mayor or Chavpetson o v ard)
(Please type or print name) ~~~
Date
gnattue authorized audit firm representative) B /y/~
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Date T ~y f~0 7 (Chaicpersoo of A 't Committee (Please type or print Dame)
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(Signature f Audit Committce Chairperson)
Approved by the Secretary of the local Government Date
Commissien as provided in Article 3, Chapter 159 of the (If snit does sot have an audit committee, this section should be
General Statutes or Article 31, Pert 3, Chapter 115C of t~
General St
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For the Secretary, Gov t Commission Local Government Budget sod Fiscal Control Act or by the School
1 Budget and Fiscal Control Act.
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Da[C ; Goveramearal Uoit Finaace Offic/er (/Pleya~se type or print tome)
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(P edit CettiHcate ~ be dated.)
*~*
McGladrey& Pullen 3
• Certified Publ'K Accrwrttants
•
April 23, 2007
The Honorable Manager and Members
of the County Commisdoners
Orange County, North Carolina
P.O. Box 8181
Hillsborough, North Carolina 27278
Attention: Mr. Kenneth T. Chavious, Finance Director
w~ctaa~>r wnen, ur
230 North Elm St, Ste 1100. Greensboro, NC Z140F2436
PA. Box 241D. Greensboro, NC 27402 2110
0 336.213.4461 F 3362142519
rrrrrrmcgladreycom
This letter is to explain our understanding of the arrangements for the services we are to perform for the Orange
County, North Carolina (`County") for the year ending June 30, 2007. We ask that you either confirm or amend this
understanding.
We will perform an audit of the County's govemmeMal activities, business-type activities, discretely presented
component unit, each major fund, and aggregate remaining fund information as of and for the year ending June 30,
2007 which cdlectively comprise the basic finandal statements. We understand that these. financial statements will
be prepared in acxordance with accounting principles generally accepted in the United States of America. The
objective of an audit of financial statements is to express an opinion on those statements.
We will also perform the audit of the County as of June 30, 2007 so as to satisfy the audit requirements imposed by
the Single Audit Act and the U.S. Office of Management and Budget (°OMB'~ Circular No. A-133 and the state of
North Carolina Single Audit Implementation Act.
We will conduct the audit in accordance with auditing standards generally accepted in the United States of America;
GovemmentAudting Standanis issued by the Comptroller General of the United States; the provisions of the Single
Audit Act, OMB Circular A-133 and OMB`s Compliance Supplement; and the State Single Audit Implementation Act.
Those standards, circulars, supplements or gu'ldes require that we plan and perform the audit to obtain reasonable
rather than absolute, assurance about whether the financial statements are flee 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 indudes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. As a result, an audit is not designed to detect errors or fraud that are immaterial to the finandai
statements. An audit also includes assessing the accounting prindples used and significant estimates made by
management, as well as evaluatmg the overall financial statement presentation. We believe that our audit will
provide a reasonable basis for our reports.
In addition to our reports on the County's financial statements we will also issue the following reports or types of
reports:
A report on the fairness of the presentation of the County's schedule of expenditures of Federal and State awards
for the year ending June 30, 2007.
Reports on internal control related to the financial statements, and major programs. These reports will descn'be
the scope of testing of internal control and the results of our tests of internal controls.
• McGla~ey E PuNen, LLP is a member firm of R5M International -
an afilBafion of separate and independent legal entitres
Orange County, North Carogna
Apn'I 23, 2007 .
Page 2
Reports on compliance with laws, regulations, and the provision of crontracts or grant agreemer>ts. We wiq report
on arty noncompgance which could have a material effect on the financial statements and arty notx:ornpliarrce
wh'~ctr could have a direct and material effect on each mapr program.
A schedule of findings and questioned costs.
Communication with the County's Board relating to the conduct of the audit as required by GovemmentAudidng
Standards.
The funds that you have told us are maintained by the County and that are th be included as part of our audd are
listed below:
General fund
Special revenue funds
Capital projects funds
Proprietary funds
Fiduciary funds
The federal and state financial assistance programs that you have told us that the County participates in and that are
to be included as part of the single audrt compliance examination are listed in Attachment A.
The component unit whose financial statements you have told us are io be combined with and included as part of the
County's basic financial statements is the Orange County ABC Board. The Orange County ABC Board will be •
disclosed through discrete presentation as a component unit, as required by Governmental Aa:ounting Standards
Board (°GASB'~ 14. Another CPA Frm will audd the Orange County ABC Board.
Our reports on internal control will include arty sign~icant deficiencles 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 reports on compliance will
address material errors, fraud, 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 or 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 condition of the County's records, the availability of sufficient, competent
evidential matter, or indications of a significant risk of material misstatement of the financlai statements because of
error, fraudulent financial reporting, misappropriation of assets, or noncompliance whicth in our professional judgment
prevent us from completing the audit or forming an opinion, we retain the ungateral right to take any course of action
permitted by professional standards, including declining to express an opinion or issue a report, or withdrawal from
the engagement.
As you know, management is responsq~le for (1) the preparation of the County's financlal statements and the
schedule of Federal and State awards, (2) establishing and maintaining effective internal contrd over financial
reporting and safeguarding assets and internal control over compgance, including monitoring ongang activities, and
for informing us of all significant defiaencies in the design or operation of such controls of which it has knowledge (3}
properly recording transactions in the records, (4) identifying and ensuring that the County complies with the laws
and regulations applicable to its activities, and for informing us about all known material violations of such laws or
regulations, (5) the design and impl~nentation of programs and controls to prevent and detect fraud, and for
informing us about aq known or suspected fraud affecting the entity involving management, empkryees who have
significant roles in ir>temal cx~rrtrol and others where the fraud could have a material effect on the financal .
statements, (6) informing us of its knowledge of any agegations of fraud or suspected fraud affecfmg the entity
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