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LGC-205(Rev.2010) CONTRACT TO AUDIT ACCOUNTS
File in Triplicate.
of Orange County, NC
Governmental Unit
On this 15th day of June 2010 , Martin Starnes&Associates, CPAs, P.A.
Auditor
730 13th Avenue Drive SE, Hickory, NC 28602
Mailing Address
hereinafter referred to as
the Auditor,and Board of Commissioners of Orange County, NC hereinafter referred
Governing Board Governmental Unit
to as the 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 1 2009 , and ending June 30 2010 . The non-major combining, and individual fund
statements and schedules shall be subjected to the auditing procedures applied in the audit of the basic financial 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 workpapers may be subject to review by
Federal and State agencies in accordance with Federal and State laws including the staffs of the Office of State Auditor(OSA)and
the LGC. If the audit and/or workpapers are found in this review to be substandard the results of the review may be forwarded to
the North Carolina State Board of CPA Examiners.
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 disclosures required by GAAP, explain that
departure from GAAP in the space below:
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 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
limitations except:
5. If this audit engagement is subject to the standards for audit as defined in Government Auditing Standards, July 2007 revisions,
issued by the Comptroller General of the United States,then the Auditor warrants by accepting this engagement that he has met the
requirements for a peer review and continuing education as specified in Government Auditing Standards. The Auditor agrees to
provide a copy of their most recent peer review report regardless of the date of the prior peer review report to the
Governmental Unit and the Secretary of the Local Government Commission prior to the execution of the audit contract. (See Item
21.)
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 to the LGC by
October 31 2010 . 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 findings, 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-related 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 paid by the Governmental Unit until the invoice has been approved by the
Secretary of the Local Government Commission. (This also includes any progress billings) [G.S. 159-34 and 115C-447] All
invoices should be submitted in triplicate to the Secretary of the Local Government Commission.The original and one copy will be
Contract to Audit Accounts (cont.) Orange County, NC
(name of unit)
returned to the Auditor.Approval is not required on contracts and 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, 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
State 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 to bookkeeping
services permitted by revised Independence Standards] Standard hourly rates ranging from $75-$250 per hour
Audit $83,300
Preparation of the annual financial statements
10. The auditor working with local governmental unit that has outstanding revenue bonds will include in the notes to the audited
financial statements, whether or not required by the revenue bond documents, a calculation demonstrating compliance with the
revenue bond rate covenant. Additionally, the auditor should be aware that any other bond compliance statements or additional
reports required in the authorizing bond documents need to be submitted to the LGC simultaneously with the local government's
audited financial statements unless otherwise specified in the bond documents.
11. After completing the 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 material presented.The Auditor
shall furnish 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.
12. The Auditor shall file with the Local Government Commission two BOUND copies of the report of audit. If reports are received
unbound they will not be reviewed by the LGC and will be returned to the auditor for binding. 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.Units that operate a 911 fund need to provide an additional copy to the number stated
above. Bound copies of the report shall be filed with the Local Government Commission when(or prior to)submitting the invoice
for the services rendered.The report of audit,as filed with the Secretary of the Local Government 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
govenunent,without subsequent consent of the auditor. If it is determined by the LGC that corrections need to be made to the unit's
financial statements they should be provided within three days of notification unless,another time frame is agreed to by the LGC.
13. 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 Government 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.
14. If 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 triplicate to the Secretary of the Local Government Commission for approval. No change shall be effective unless
approved by the Secretary of the Local Government Commission,the Governing Board_and the Auditor.
15. Whenever the Auditor uses an engagement letter with the client,Item 16 is to 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 case of conflict
between the terms of the engagement letter and the terms of this contract,the terms of this contract will control.Engagement letter
terms are deemed to be void unless the conflicting terms of this contract are specifically deleted in Item 22 of this contract.
Engagement letters containing indemnification clauses will not be approved by the Local Government Commission.
Contract to Audit Accounts (cont.) Orange County, NC
(name of unit)
16. There are no special provisions except:
17. 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.
18. The contract must be executed, pre-audited, signed by all parties and submitted in triplicate 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 Fair Meadow Lane,Suite 102,Raleigh,North Carolina 27607-6449.
19. The contract is a tri-party agreement and is not valid until it is approved by the Local Government 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 Government Commission.The audit should not be started before the contract is approved
20. 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 Government Commission.
21. If this audit engagement is not subject to Government Auditing Standards,then Item 5 shall be listed as a deleted provision in Item
22. An explanation must be given for deleting this provision.
22. All of the above paragraphs are understood and shall apply to this agreement, except the following numbered paragraphs shall be
deleted:(See Item 15.)
Firm Martin Starnes&Associates, CPAs, P.A. By Valeri P. Foushee, C it
(P a type or t na d title)
By Marcie J. Spivey, Senior Audit Manager
(Please or 'nt name)
(Si lure of Mayor/ChairVetso of governing board)
(Signature of authorized audit firm representati e) Date 7/$/�Q/Q
Email Address: mspivey @martinstarnes.com Email Address
Date June 15, 2010 By
(Chair of Audit Committee-please type or print name)
Approved by the Secretary of the Local Government Commission as provided (Signature of Audit Committee Chairperson)
in Article 3,Chapter 159 of the General Statutes or Article 31,Part 3,Chapter
I I 5 of the General Statutes. Date
(If unit has no audit committee,this section should be marked"N/A.")
For the Secretary,Local Government Commission
Email address
(Signature) 'This instrument has been preaudited in the manner required by The Local
Date Government Budget and Fiscal Control Act or by the School Budget and
Fiscal Control Act.
Clarence G. Grier, Financial Services Director
Governmental Unit Finance Officer(Please type or print name)
C(a4 AX-1-
(Signature)
Date 12010
(Preaudit Certificate must be dated.)
Email address C JV;W� (A. or"le 4 n(. u S
r
BOYCE, FURR
COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS
SAMUEL A. BOYCE, PARTNER SANDY P. NEWELL, CPA
BOBBIE W FURR, PARTNER JO ELLEN B. Loy, CPA
DAVID E. BOYCE, CPA
PATRiaA T. WAGNER, CPA
CHERYL W. GAZALEH, CPA
May 5, 2009
Martin Starnes &Associates, CPAs, PA and the
Peer Review Committee, North Carolina Association
of Certified Public Accountants
We have reviewed the system of quality control for the accounting and auditing practice of
Martin Starnes & Associates, CPAs, PA (the firm) in effect for the year ended December 31,
2008. Our peer review was conducted in accordance with the Standards for Performing and
Reporting on Peer Reviews established by the Peer Review Board of the American Institute of
Certified Public Accountants. The firm is responsible for designing a system of quality control
and complying with it to provide the firm with reasonable assurance of performing and reporting
in conformity with applicable 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
therewith based on our review. The nature, objectives, scope, limitations of, and the procedures
performed in a System Review are described in the standards at www.aici)a.org/Drsummary.
As required by the standards, engagements selected for review included engagements
performed under the Government Auditing Standards and audits of employee benefit plans.
In our opinion, the system of quality control for the accounting and auditing practice of Martin
Starnes & Associates, CPAs, PA in effect for the year ended December 31, 2008, has been
suitably designed and complied with to provide the firm with reasonable assurance of
performing and reporting in conformity with applicable professional standards in all material
respects. Firms can receive a rating of pass, pass with deficiency(ies) or fail. Martin Starnes &
Associates, CPAs, PA has received a peer review rating of pass.
BOYCE, FURR & COMPANY, LLP
4900 FALLS OF THE NEUSE ROAD • SUITE 220 • RALEIGH, NORTH CAROLINA 27609
919.862.0004 • FAX: 919.862.0009 ' WWW.BOYCFFURRCPA.COM
�RTIN ❖ STARNES
& ASSOCIATES , CPAs , P.A.
"A Professional Association of Certified Public Accountants and Management Consultants"
June 15, 2010
Clarence Grier
Orange County Financial Services Dept.
200 South Cameron Street
Hillsborough,NC 27278
We are pleased to confirm our understanding of the services we are to provide Orange County,
NC for the year ended June 30, 2010. We will audit the financial statements of the governmental
activities, the business-type activities, the discretely presented component unit, each major fund,
and the aggregate remaining fund information, which collectively comprise the basic financial
statements of Orange County, NC as of and for the year ended June 30, 2010. 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 accompany
Orange County's basic financial statements. As part of our engagement, we will apply certain
limited procedures to Orange County's RSI. These limited procedures will consist principally of
inquiries of management regarding the methods of measurement and presentation, which
management is responsible for affirming to us in its representation letter. Unless we encounter
problems with the presentation of the RSI or with procedures relating to it, we will disclaim an
opinion on it. 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 and 2) the Law Enforcement Officer's Special Separation Allowance schedules (if
applicable), and 3)Other Post-Employment Benefit schedules (if applicable).
Supplementary information other than RSI also accompanies Orange County's basic financial
statements. We will subject the following supplementary information to the auditing procedures
applied in our audit of the basic financial statements and will provide an opinion on it in relation
to the basic financial statements: 1) The combining and individual fund financial statements and
other supplemental schedules and 2) the Schedule of Expenditures of Federal and State Awards.
The following additional information accompanying the basic financial statements will not be
subjected to the auditing procedures applied in our audit of the financial statements, and for
which our auditor's report will disclaim an opinion: 1) the introductory information and 2) the
statistical tables.
730 13th Avenue Drive SE♦ Hickory, North Carolina 28602♦ Phone 828-327-2727♦ Fax 828-328-2324
13 South Center Street• Taylorsville, North Carolina 28681 ♦ Phone 828-632-9025 ♦ Fax 828-632-9085
Toll Free Both Locations 1-800-948-0585 # Web site:wwwmartinstarnes.com
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 additional information referred
to in the first paragraph when considered in relation to the basic financial statements taken as a
whole. The objective also includes reporting 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
in accordance with Governmental Auditing Standards. The objective also includes reporting on
internal control related to major programs and an opinion (or disclaimer of opinion) on
compliance with laws, regulations, and the provisions of contracts or grant agreements that could
have a direct and material effect on each major program in accordance with the Single Audit Act
Amendments of 1996 and OMB Circular A-133, Audit of States, Local Governments, and Non-
Profit Organizations.
The reports on internal control and compliance will each 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 specific legislative or regulatory bodies, federal awarding
agencies, and if applicable, pass-through entities and is not intended to be and should not be used
by anyone other than these specified parties.
Our audit will be conducted in accordance with auditing standards generally accepted in the
United States of America; the standards for financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; the Single Audit Act
Amendments of 1996; and the provisions of OMB Circular A-133, and will include tests of the
accounting records, a determination of major program(s) in accordance with OMB Circular A-
133, and other procedures we consider necessary to enable us to express such opinion and to
render the required reports. If our opinions on the financial statements or the Single Audit
compliance opinions 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 an opinion or to issue a report as a result of this
engagement.
Management Responsibilities
Management is responsible for the basic financial statements and all accompanying information
as well as all representations contained therein. Management is also responsible for preparation
of the schedule of expenditures of federal and State awards in accordance with the requirements
of OMB Circular A-133. As part of the audit, if we assist with the preparation of your financial
statements, schedule of expenditures of federal and State awards, and related notes, you are
responsible for making all management decisions and performing all management functions
relating to the financial statements, schedule of expenditures of federal and State awards, 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 the preparation of the
financial statements and schedule of expenditures of federal and State awards and that you have
reviewed and approved the financial statements, schedule of expenditures of federal and State
awards, 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
internal controls over compliance, and for monitoring ongoing activities to help ensure that
appropriate goals and objectives are met. You are also responsible for the selection and
application of accounting principles; for the fair presentation in the financial statements of the
respective financial position of the governmental activities, the business-type activities, the
discretely presented component unit, each major fund, and the aggregate remaining fund
information of Orange County and the respective changes in financial position, and where
applicable, cash flows in conformity with U.S. generally accepted accounting principles; and for
compliance with applicable laws and regulations and the provisions of contracts and grant
agreements.
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 also include, identifying significant vender relationships
in which the vendor has responsibility for program compliance and for the accuracy and
completeness of that information. Your responsibilities include adjusting the financial statements
to correct material misstatements and for confirming to us in the representation letter 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.
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 or illegal acts 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. Additionally, as required by OMB Circular A-133, it is management's responsibility
to follow up and take corrective action on reported audit findings and to prepare a summary
schedule of prior audit findings and a corrective action plan. The summary schedule of prior
audit findings should be available for our review on the first day of interim fieldwork.
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 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 or noncompliance 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 or major programs.
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.
We will include such matters in the reports required for a Single Audit. Our responsibility as
auditors is limited to the period covered by our audit and does not extend to later periods for
which we are not engaged as auditors.
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 also 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.
As required by OMB Circular A-133, 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 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.
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, and OMB Circular A-133.
Audit Procedures—Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of
material misstatement, we will perform tests of Orange County's compliance with applicable
laws and regulations and the provisions of contracts and 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.
OMB Circular A-133 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 programs. Our procedures will
consist of tests of transactions and other applicable procedures described in the OMB Circular A-
133 Compliance Supplement for the types of compliance requirements that could have a direct
and material effect on each of Orange County's major programs. The purpose of these
procedures will be to express an opinion on Orange County's compliance with requirements
applicable to each of its major programs in our report on compliance issued pursuant to OMB
Circular A-133.
Audit 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 our personal information. In addition, we will secure confidentiality
agreements with all service providers to maintain the confidentiality of our information and we
will take reasonable precautions to determine that they have appropriate procedures in place to
prevent the unauthorized release of your confidential information to others. In the event that we
are unable to secure an appropriate confidentiality agreement, you will be asked to provide your
consent prior to the sharing of your confidential information with the third-party service
provider. Furthermore, we will remain responsible for the work provided by any such third-party
service providers.
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 and upload
the Data Collection Form and audit report that summarizes our audit findings. We will approve
for submission and submit to the federal clearinghouse after obtaining your approval. 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 Martin Starnes & Associates,
CPAs, P.A. 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 Martin Starnes & Associates,
CPAs, P.A. 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 date the auditors' report is issued. If we are aware that a federal 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.
Bryan Starnes is the engagement partner and is responsible for supervising the engagement and
signing the reports or authorizing another individual to sign them.
Our fees for these services are stated in the Contract to Audit Accounts. Our invoices for these
fees will be rendered in four installments as work progresses and are payable on presentation. In
accordance with our firm policies, work may be suspended if your account becomes overdue and
may not be resumed until your account is paid in full. 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 reports. 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 contract 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 peer review report and any letter of comment, and any subsequent peer review reports
and letters of comment received during the period of the contract. Our 2009 peer review report
accompanies our Contract to Audit Accounts.
We appreciate the opportunity to be of service to Orange County and believe this letter along
with our Local Government Commission contract 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,
oa'tta.' , exas, Pa.
Martin Starnes & Associates, CPAs, P.A.
RESPONSE:
This letter correctly sets forth the understanding of Orange County,North Carolina.
By: u A PMT:
Title: &r ,W-4 St d y;w
Date: O to r o