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HomeMy WebLinkAboutAgenda - 12-07-2009 - 4lORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: December 7, 2009 Action Agenda Item No. ~- " SUBJECT: Amendment of Audit Contract DEPARTMENT: Finance PUBLIC HEARING: (Y/N) No ATTACHMENT(S): Contract INFORMATION CONTACT: Gary Humphreys 245-2453 PURPOSE: To amend the contract with McGladrey and Pullen extending the date for completion of the County audit till December 31, 2009. BACKGROUND: The Local Government Commission requires the County's audit contract be amended if the audit of the financial statements is not completed in time for the statements to be submitted to the State by the last day of November. The primary reason for the audit being extended is that additional programs met the threshold for being considered a major program. This was not revealed until late in the process as part of the review of the Schedule of State and Federal Expenditures. The financial statements including the single audit will not be completed and reviewed until sometime in December. Staff and McGladrey and Pullen recommend extending the contract until December 31, 2009. FINANCIAL IMPACT: There is no financial impact to the extension of the contract. RECOMMENDATION(S): The Manager recommends the Board approve the amendment of the audit contract for FY 2008-09 with McGladrey and Pullen extending the date for completion of the County audit and authorizing the Chair to sign on behalf of the Board subject to final review by staff and the County Attorney. t.cc-2o5 (ltev. 2009) CONTRACT TO AUDIT ACCOUNTS Fite in Trlptinte. of Oran~2e County. North Carolina Govemmeotat unit On this _23rd day of November 2009 McGladrey & Pullen, LLP Auditor P O Box 2470 Greensboro NC 27402-2470 Mailing Address hereinafter referred to as the Auditor, and the County Commissioners of Oranee County ,hereinafter referred to as the Governing Board Governmental Unit Governmental Unit, agree as follows: 1. The Auditor shall audit all statements and disclosures required by generally accepted accounting principles and additional required legal statements and disclosures of all funds and/or divisions of the Governmental Unit for the period beginning July 1 2008 .and ending lone 30 2009. .The non-major combining, and individual fund stazements and schedules shall be subjected to the auditing procedures applied in the audit of the basic fmancial statements and an opinion will be rendered in relation to (as applicable) the governmental activities, the business-type activities, the aggregate discretely presented component units, each major governmental and enterprise fund, and the aggregate remaining fund information (nonmajor government and enterprise funds, the internal service fund type, and the fiduciary fund types). 2. At a minimum, the Auditor shall conduct his/her audit and render his/her report in accordance with generally accepted auditing standards. The Auditor shall perform the audit in accordance with Government Auditing 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 This audit and all associated workoavers may be subiected to 3. 7fiis contract contemplates an unqualified opinion being rendered If financial stazements are not prepared in accordance with generally accepted accounting principles (GAAP), or the statements fail to include all disclosures requited by GAAP, explain thaz departure from GAAP in the space below: No departures contemplated. 4. This contract contemplates an unqualified 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 resMctions in scope which would lead to a quahficarion should be fully explained in an attachment to this contract. The audit will have no scope limitazions except: No limitations are contemplated. 5. If this audit engagement is subject to the standards for audit as defined in Government Auditine Standards. July 2007 revisions, issued by the Comptroller General of the United States, then the Auditor warrants by accepting this engagement thaz he has met the requirements for a peer review and continuing education as specified in f',overnment Auditine 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 Commission np 'or to the execution of the audit contract. (See Item 20J 6. It is agreed that time is of the essence in this contract. A11 audits are to be performed and the report of audit submitted by December 31 2009 If it becomes necessary to amend the due date of the audit a written explanation of the delay must accompany the amended contract 7. It is agreed that generally accepted auditing standards include a review of the Governmental Unit's system of internal control and accounting as same relates to accountability of funds and adherence to budget and law requirements applicable thereto; that the Auditor will make a written report, which may or may not be a part of the written report of audit, to the Governing Board setting forth his fmdings, together with his recommendations for improvement. That written report must include all matters defined as "significant deficiencies and material weaknesses' in AU 325 of the AICPA Professional Standards. The Auditor shall file a copy of that report with the Secretary of the Local 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 audit, financial statement preparation, any finance-[elated investigations, or any other audit- related work in the State of North Carolina require the approval of the Secretary of the Local Government Commission. Invoices for services rendered under these contracts shall not be void by the Governmental Unit until the invoice has been approved by the Secretary of the Local Govertrment Co 'ssioa (This also includes any oror~ess brllines.) [G.S. 159-34 and I15C-447] All invoices should be submitted 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 and invoices for system improvements and similaz services of anon-auditing nature. 9. In considerazion 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, the following fee which includes any cost the Auditor may incur from work paper or peer reviews or any other quality assurance program required by third parties (Federal and Staze grantor and oversight agencies or other organizations) as required under the Federal and State Single Audit Acts: Year-end bookkeeping assistance - [For audits.subject to Government Auditing Standards, this is limited W bookkeeping services permitted by revised Independence Standards] NONE ANTICIPATED. Anv services Qerformed in addition to normal audit procedures will be char¢ed at standard rates. Audit • 592 700 plus variable rate at standard costs due to the delays enrnuntered. Anv additional maior programs above four (4) will be billed at 54.200 each. Preparation of the Financial statements - S5.250 for the preparation of the schedules of property tax receivables for the Towns of Chanel Hill, Carrboro and Hillsboroueh. 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 financial statements of the governmental unit and all of its component units and notes thereto prepared in accordance with generally accepted accounting principles, combining and supplementary information requested by the client or required for full disclosure under the law, and the Auditor's opinion on the maerial 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. I1. The Auditor shall File with the Local Govemment Commission two bound copies of the report of audit. In addition, if the North Carolina Office of the State Auditor designates certain programs to be audited as major programs, a turnaround document and a representation letter addressed to the State Auditor shall be submitted to the Local Government Commission. Two bound 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. Three bound copies of the audit are to be submitted for Councils of Governments. Two bound copies of the audit should be submitted for tax levying Municipalities. Otherwise, one bound copy shall be submitted. Bound copies of the report shall be filed with the Local Govemment Commission when (or prior to) submitting the invoice for the services rendered. The report of audit, as filed with the Secretary of the Local Govemment Commission, becomes a matter of public record for inspection and review in the offices of the Secretary by any interested parties. Any subsequent revisions to these reports must be sent to the Secretary of the Local Government Commission. These audited financial statements are used in the preparation of Official 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 additional investigation and the additional compensation required therefore. Upon approval by the Secretary of the Local Govemment Commission, this agreement may be varied or changed to include the increased time and/or compensation as may be agreed upon by the Governing Board and the Auditor. 13. [f an approved contract needs to be varied or changed for any reason, the change must be made in writing, signed and dated by all parties and pre-audited if the change includes a change in audit fee. This document and a written explanation of the change must be submitted in tripilicate to the Secretary of the Local Govemment Commission for approval. No chance shall be effective unless anoroved by the Secretary of the Local Govemment Commission the Govemine Board. and the Auditor. 14. Whenever the Auditor uses an engagement letter with the client, Item 15 is to be completed by referencing the engagement letter and aztaching a copy of the engagement letter to the contract to incorporate the engagement letter into the contract. In case of conflict between the terms of the engagement letter and the terms of this contract, the terms of this contract will wntrol. Engagement letter terms are deemed to be void unless the conflicting terms of this contract are specifically deleted in Item 20 of this contract. Engagement letters containing indemnification clauses will not be approved by the Local Govemment Commission. 15. There are no special provisions except: The attached arrangement lefts is an integral part of this txmtract and should be read in its entirety when reading this contract. 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 triolicaze to the Secretary of the Local Govemment Commission. The mailing address is 325 North Salisbury Street, Raleigh, North Carolina 27603-1385. The physical address is 4505 Fair Meadow Lane, Suite 102, Raleigh, North Carolina 27607-6449. 18. The contract is a tri-party agreement and is not valid until it is approved by the Local Govemment Commission. Upon approval, the original contract will be returned to the Governmental Unit, a copy will be forwarded to the Auditor, and a copy retained by the Secretary of the Local Govemment Commission. The audit should not be slatted before the contract is aooroved. 19. There 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 Govemment Commission. 20. If this audit engagement is not subject to Govemment Auditine 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 engagement, except for the following numbered paragraphs shall be deleted: (See Item 14) Firm McGladrev & Pullen. LLP BY (Please type or print name and tide) By John J. Gilberto Partner le t pri t n ) (S' atu of au orized auditnfirm representative) Date ~~ ~ ~ ~ 7l ~"~ ~~ Approved by the Secretary of the Local Government Commission as provided in Article 3, Chapta 159 of the General Statutes or Article 31, Pan 3, Chapta I15C of the General Statutes. For the Secretary, Local Govemment Commission (Signature) Dale (Sig~uttue of Mayor a Cluirpe[son of governing board) Date sy (Chairpastm of Audit Committee (Please type or print name) (Signature of Audit Committee Chairperson) Date (If unit does rot have an audit comminee, this section should be marked'NlA.') This instrument has been ptesudited m the manna required by The Local Govemment Budget and Fiscal Ctmtrol Act or by the School Budget and Fiscal Control Act. Governmental Unit Fwnce Officer (Please type or print name) - (Signature) Dale (Preaudit Certificate must be dated.)