HomeMy WebLinkAbout2005 S Finance - Cherry, Bekaert & ITolland, L.L.P Audit Contract for the June 30, 2005 Fiscal Year4~'F s/r~ae o.~
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JUN 1 2005
LGC-205 (Rev. 1/1/2004) CONTRACT TO AUDIT ACCOUNTS LOCgL G01fERNT
File in Triplicate. Gp31~f `~~ ~~ I pN
of Orange County. North Carolina iVl
Govemmental Unit
On this 8th day of April, 2005, Cherry, Bekaert & ITolland, L.L.P., 2626 Glemvood Avenue, Suite 300, Raleigh, North Carolina 28608,
hereinafter referred to as the Auditor, and the County Commissioners of Orange County, North Carolina, hereinafter referred to as the
Governmental Unit, agree as follows:
I. 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 Govemmental Unit for the period beginning July 1, 2004 and
ending June 30, 2005. The combining, individual fund, and account group financial statements and schedules shall be subjected to
the auditing procedures applied in the audit of the combined financial statements and an opinion will be rendered in relation to the
combined financial statements taken as a whole.
2. At a minimum, the Auditor shall conduct his audit and render his report in accordance with generally accepted auditing standards.
Tile auditor snail perform the audit in accordance wish Government t~uditine 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 disclosures required by GAAP, explain that
departure from GAAP in the space below:
None
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.. r(ny limitations or restrictions
in scope which would lead to a qualifcation should be firlly explained in an attachment to this contract. The audit will have no
scope limitations except:
N/A
5. If this audit engagement is subject to the standards for audit as defined in the Government Auditi~ Standards, issued by the
Comptroller General of the United States, then the Auditor warrants by accepting this engagement that he/she has met the
requirements for a peer review and continuing education as specified in the Government 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 Govemment
Commission prior to 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 3l, 2005.
~. ii .S ugrecd Thal ~,ti.1Gi'uiiy accepted audltmg StanddCUS lllClude a revleW' Gf ule GGVe1Ttlnentai IJ nit's Syste:rl Uf Internal L'Untr(71 and
accounting as same relates to accountability oI' 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
"reportable conditions" in AU 325 of the AICPA Professional Standards. The Auditor shall Fle a conv 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 prepazation, 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 aonroved by the
Secretary of the Local Government Commission. (This also includes any progress billin2s.1 All invoices should be submitted in
triplicate to the Secretary of the Local Govemment Commission. The original and one copy will be returned to the Auditor.
Approval is not required on contracts and invoices for system improvements and similar services of anon-auditing nature.
9. In consideration of the satisfactory performance of the provisions of this agreement, the Governmental iJnit shall pay to the Auditor,
upon approval by the Secretary of the Local Govemment 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:
Audit - $61,000
Report Preparation - $10,000
10. After completing his audit, the Auditor shall submit to the Governing Board a written report of audit. This report shall include, at
least, 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.
11. The Auditor shall file with the Local Government Commission two copies of the report of audit, including one copy of the federal
Data Collection Form, if a federal single audit is conducted. Two copies of the report of audit should be submitted if an audit is
required to be performed only under the requirements of the State Single Audit Implementation Act or a financial audit is required to
be performed in accordance with Government Auditing Standards. 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 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 Govemment Commission. These audited financial statements are used in
the preparation of Official Statements for debt offerings, by municipal bond rating services, and to fulfill secondary market
disclosure requirements of the Securities and Exchange Commission.
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 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.
13. If an approved contract needs to be varied or changed for any reason, the change must be reduced to writing, signed by both parties,
pre-audited if necessary', and submitted to the Secretary of the Local Government Commission for approval. No change shall be
effective unless anoroved by the Secretarv of the Local Government Commission the Governing 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. [n 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 21 of this contract.
Engagement letters containing indemnification clauses will not be approved by the Local Government Commission.
1 ~. There are no special provisions except:
See attached engagement letter.
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 govemment and for which a separate audit report is issued.
17. The contract should be executed and submitted in triplicate to the Secretary of the Local Govemment Commission, 325 North
Salisbury Street, Raleigh, North Carolina 27603-1385.
18. 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 liovernment Commission. The audit should not be started before the contract is approved.
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 Government Commission.
20. If this audit engagement is not subject to Government Auditing Standards, then Item ~ 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.)
N/A
22. Will the audited financial statements be prepared in accordance with GASB Statement No. 34?_ X_ YES_ _NO
If the audited financial statements are prepared in accordance with GASB Statement No. 34 the references in Item 1 to the
combining, individual fund, and account group statements shall mean the basic financial statements, management's discussion
and analysis, and required supplementary statements as defined in GASB Statement No. 34. Auditing procedures applicable
to other supplementary schedules are not changed by the implementation of GASB Statement No. 34.
By_ . Bekaert & Holland. L.L.P
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(Signature o authorized audit firm representative)
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Approved by the Secretary of the Local Govemment
Commission as provided in Article 3, Chapter 159 of the General
Statutes or Article 31, Part 3, Chapter IISC of the General
Statutes. ~,(9 ~J~~ ~~~'~,~~~~~
For the Secretary. Local Government Commission
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(Signature.)I
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By N16S{'s ~'a~, J r.
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(Signature of Mayor or Chai erson of governi bo~d)
Date ~ ~ D ~ /
By t~ _ / V/~
(Chairperson of Audit Committee (Please type or print
name)
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(Signature of Audit Committee Chairperson)
Date (/
(If unit does not have an audit committee. this section should be
marked "N/A.")
This instrument has been pre-audited in the manner required by
The Local Government Budget and Fiscal Control Act or by the
Schoo(Bu/dget and Fiscal Control Act. _~,,
(Please type or print name)
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(Signature) ~
Date ~ a //~' ~~o S
( re-audit Certificate must be dated.)
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Cherry, Bekaert & Holland, L.L. JUN
The Firm of Choice. 1 2005 vli~wal-.cbh.com
Ln^ e 1 ~~~y~'~ 2626 Glenwood Avenue -Suite 300
1!4111_ IH Raleigh, North Carolina 27608
G` V 1iR ~~ ~ ~' ®i ! phone 919.782.1040
I ~ fax 919.783.0976
April 8, 2005
Mr. Kenneth T. Chavious, Finance Director
Orange County
208 South Cameron Street
Hillsborough, North Carolina 27278
Dear Ken:
This letter of arrangement between Orange County, North Carolina "the entity' and Cherry, Bekaert &
Holland, L.L.P. sets forth the nature and scope of the ser.~ices we will provide, the entity's required
involvement and assistance in support of our services, the related fee arrangements and otherterms and
conditions designed to assure that our professional services are performed to achieve the mutually agreed
upon objectives of the entity.
SUMMARY OF SERVICES
We will audit the financial statements of the governmental activities, the business-type activities, each
major fund and the aggregate remaining fund information, which collectively comprise the basic financial
statements of the entity as of and for the year ended June 30, 2005.
We will also audit the schedules of property taxes receivable for the Town's of Hillsborough, Chapel Hill,
and Carrboro as of June 30, 2005, and the related schedules of 2004 tax levy and collections for the years
then ended.
Our audits will be conducted in accordance with auditing standards generally accepted in the United States
of America; Government Auditing Standards, issued by the Comptroller General of the United States; the
Single Audit Act Amendments of 1996; the provisions of OMB Circular A-133; and the State Single Audit
Implementation Act, and will include test of accounting records, a determination of major programs in
accordance with Circular A-133, the State Single Audit Implementation Act, and other procedures as
deemed necessary to enable us to express such an opinion and to render the required reports. The
objective of an audit is the expression of our opinion concerning whether the basic financial statements are
fairly presented, in al! material respects, in conformity with accounting principles generally accepted in the
United States of America.
In connection with our audit, we will report on the fairness of presentation of the schedules of federal and
state financial assistance in relation to the financial statements taken as a whole. We will also perform
tests of compliance as required by GovemmentAuditing Standards, the provisions of OMB CircularA-133,
and the Audit Manual for Governmental Auditors in North Carolina, and issue our reports thereon.
If any of our opinions resulting from the procedures described above are other than unqualified, we will fully
discuss the reasons with you in advance.
The reports on internal control and compliance will each include a statement that the report is intended
solely for the information and use of the audit committee, management, specific legislative or regulatory
bodies, federal and State 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.
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BAKER TILLY
INTERNATIONAL
As part of our engagement, we will prepare the financial statements and note disclosures from individual
fund trial balances that you will provide. However, management is responsible forthe financial statements
and note disclosures.
In your representation to us, you will be asked to acknowledge our role in this regard, and your review,
approval, and responsibility for the financial statements and note disclosures. Further, you are responsible
for designating a qualified management-level individual to be responsible and accountable for overseeing
these services.
Any additional services that you may request, and that we agree to provide, will be the subject of separate
written arrangements. Should the entity wish to include or incorporate by reference these financial
statements and our report thereon into any official statement or any other document related to the offering
of debt securities at some future date, we would consider our consent to the inclusion of our report into
another such document at that time. However, we are required by auditing standards generally accepted in
the United States of America to perform certain procedures before we can give our permission as to the
inclusion of our report into another such document. You agree that you will not include or incorporate by
reference these financial statements and our report thereon into any other document without our prior
written consent.
I will be responsible for assuring the overall quality, value, and timeliness of our services to you, and will
lead the engagement.
YOUR EXPECTATIONS
As part of our planning process, we will discuss with you your expectations of Cherry, Bekaert & Holland,
L.L.P., changes that occurred during the year, yourviews on risks facing you, any relationship issues with
Cherry, Bekaert & Holland, L.L.P., and specific engagement arrangements and timing. Our service plan,
which includes our audit plan, is designed to provide a foundation for an effective, efficient, and quality-
focused approach to accomplish the engagement objectives and #o meet or exceed your expectations.
Our service plan wil- be reviewed with you periodically and will serve as a benchmark against which you will
be able to measure our performance.
TERMS AND CONDITIONS SUPPORTING FEE
As a result of our planning process, the entity and Cherry, Bekaert & Holland, L.L.P. have agreed to a fee,
subject to the following conditions.
To facilitate meeting our mutual objectives, the entity will provide in a timely manner audit schedules and
supporting information, including timely communication of all significant accounting and financial reporting
matters, as well as working space and clerical assistance as mutually agreed upon and as is normal and
reasonable in the circumstances. When and if for any reason the entity is unable to provide such
schedules, information and assistance, Cherry, Bekaert 8~ Holland, L.L.P. and the entitywill mutually revise
the fee to reflect additional services, if any, required of us to achieve these objectives.
In providing our services, we will consult with the entity with respect to matters of accounting, financial
reporting, or other significant business issues. Accordingly, time necessary to effect a reasonable amount
of such consultation is reflected in our fee. However, should a matter require research, consultation, or
audit work beyond that amount, Cherry, Bekaert & Holland, L.L.P. and the entity will agree to an
appropriate revision in services and fee.
Except for any changes in fees, which may result from the circumstances described above, our fees will be
limited to those set forth below.
FEE
Financial Audit -Our fees for these services will be based upon our customary billing practices at the time
of the engagement. Bills for services will be rendered as work progresses and are due within 15 days from
invoice date. A service charge will be added to past due accounts equal to 1 1 /2% per month (18% annual
rate) on the previous month's balance less payments received during the month, with a minimum charge of
$2.00 per month.
The fee for our audit as described in this letter will not exceed $71,000. This 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. Any modification to the fee shall be in
writing and signed by both parties. You agree to pay all costs of collection (including reasonable attorneys'
fees) that we may incur in connection with the collection of unpaid invoices.
The fees are based on auditing standards effective as of the date of this engagement letter. If new auditing
standards are issued and are effective for the period under audit described in this engagement letter that
require additional audit procedures that were not known at the date of this engagement letter, we will
estimate the impact of any new such standard on the nature, timing and extent of our planned audit
procedures and will communicate with you concerning the scope of the additional procedures and the
estimated fees.
LIMITATIONS OF THE AUDITING PROCESS
Our audit will include procedures designed to obtain reasonable assurance of detecting misstatements due
to errors or fraud that are material to the financial statements. Absolute assurance is not attainable
because of the nature of audit evidence and the characteristics of fraud. For example, audits performed in
accordance with GAAS are based on the concept of selective testing of the data being examined and are,
therefore, subject to the limitation that material misstatements due to errors or fraud, if they exist, may not
be detected. Also, an audit is not designed to detect matters that are immaterial to the financial statements.
In addition, an audit conducted in accordance with GARS does not include procedures specifically
designed to detect illegal acts having an indirect effect (e.g., violations of fraud and abuse statutes that
result in fines or penalties being imposed on the entity) on the financial statements.
As required by the Single Audit Act Amendments of 1996 and OMB Circular A-133, and the State Single
Audit Implementation Act our audit will include tests of transactions related to major federal and State
award programs for compliance with applicable laws and regulations and the provisions of contracts and
grant agreements. 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 errors,
fraud, other illegal acts, or noncompliance may exist and not be detected by us. In addition, an audit is not
designed to detect immaterial errors, fraud, or other illegal acts or illegal acts that do not have a direct
effect on the basic financial statements or to major programs. It should be recognized that our audit
generally provides no assurance that illegal acts will be detected, and only reasonable assurance that
illegal acts having a direct and material effect on the determination of financial statement amounts will be
detected. However, we will inform you with respect to material errors and fraud, or illegal acts that come to
our attention during the course of our audit. We will include such matters in the reports as required for a
Single Audit.
If, for any reason, we are unable to complete the audit, or are unable to form or have not formed an opinion
on the basic financial statements, we may decline to express an opinion or decline to issue a report as a
result of the engagement.
RESPONSIBILITIES AS TO INTERNAL CONTROLS
As a part of our audit, we will consider the entity's internal control structure, as required by auditing
standards generally accepted in the United States of America and Government Auditing Standards,
sufficient to plan the audit and to determine the nature, timing, and extent of auditing procedures necessary
for expressing our opinion concerning the basic financial statements. You recognize that the basic
financial statements and the establishment and maintenance of an effective internal control over financial
reporting are the responsibility of management. You also recognize that management is responsible for
identifying and ensuring that the entity complies with the laws and regulations applicable to its activities.
Appropriate supervisory review procedures are necessary to provide reasonable assurance that adopted
policies and prescribed procedures are adhered to and to identify errors, fraud, or illegal acts. An audit is
not designed to provide assurance on internal control.
As part of our consideration of the entity's internal control structure, however, we will inform you of
reportable conditions and other matters that come to our attention that represent significant deficiencies in
the design or operation of the internal control structure, if any, as required by OMB CircularA-133 and the
State Single Audit Implementation Act.
As required by OMB Circular A-133 and the State Single Audit Implementation Act, we will perform tests of
controls to evaluate the effectiveness of the design and operation of controls that we consider relevant to
preventing or detecting material noncompliance with compliance requirements, applicable to each major
federal and State award program. However, our tests will be less in scope than would be necessary to
render an opinion on those controls and, accordingly, no opinion will be expressed in our report on internal
control issued pursuant to OMB Circular A-133 and the State Single Audit Implementation Act.
You are also 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 entity involving (a)
management, (b) employees who have significant roles in internal control, and (c) others where the fraud
could have a material effect on the financial statements.. You are also responsible for informing us of your
knowledge of any allegations of fraud or suspected fraud affecting the company received in
communications from employees, former employees, regulators, or others.
RESPONSIBILITIES AS TO COMPLIANCE
Our audit will be conducted in accordance with the standards referred to in the section Summary of
Services. As part of obtaining reasonable assurance about whether the basic financial statements are free
of material misstatement, we will perform tests of the entity's compliance with applicable laws and
regulations and the provisions of contracts and agreements, including grant agreements. However, the
objective of those procedures will not be to provide an opinion on overall compliance and we will not
express such an opinion in our report on compliance issued pursuant to Voa~emmentAuditing Standards.
OMB Circular A-133 and the State Single Audit Implementation Act requires that we also plan and perform
the audit to obtain reasonable assurance about whetherthe 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 the applicable procedures described in the OMB Circular A-133 Compliance
Supplement and the Audit Manual for Governmental Auditors in North Carolina for the types of compliance
requirements that could have a direct and material effect of each of the entity's major programs. The
purpose of those procedures will be to express an opinion on the entity's compliance with requirements
applicable to major programs in our report on compliance issued pursuant toOMB CircularA-133 and the
State Single Audit Implementation Act.
REPRESENTATION FROM MANAGEMENT
Management is responsible for the fair presentation of the basic financial statements in conformity with
accounting principles generally accepted in the United States of America, for making all financial records
and related information available to us, and for identifying and ensuring that the entity complies with the
laws and regulations applicable to its activities. Management is also responsible for adjusting the financial
statements to correct material misstatements. Additionally, as required by OMB Circular A-133 and the
State Single Audit Implementation Act, it is management§ responsibility to follow up and take corrective
action on prior audit findings and to prepare a summary schedule of prior audit findings and a corrective
action plan. The summary schedule of prior audit findings and the corrective action plan should be made
available to us during the course of our engagement. Management, at the conclusion of the engagement,
will provide to us a representation letter that, among other things, addresses these matters and confirms
certain representations made during the audit, including, to the best of their knowledge and belief, the
absence of fraud involving management or those employees who have significant roles in the entity's
intemal control, or others where it could have a material effect on the basic financial statements. The
representation letter will also affirm to us that management believes that the effects of any uncorrected
misstatements aggregated pertaining to the current year finan jial statements are immaterial, both
individually and in the aggregate, to the financial statements taken as a whole.
Cherry, Bekaert & Holland, L.L.P. will rely on the entity's management providing these representations to
us, both in the planning and performance of the audit, and in considering the fees that we will charge to
perform the audit. Because we will be relying on management's representations, you agree to indemnify
Cherry, Bekaert & Holland, L.L.P., and its partners and employees, and hold them harmless from all claims,
liabilities, losses, and costs arising in circumstances where there has been a knowing misrepresentation by
an officer or employee of the entity regarding fraud or suspected fraud regardless of whether such officer or
employee was acting in the entitys interest.
COMMUNICATIONS
At the conclusion of the engagement, we will provide management, in a mutually agreeable format, our
recommendations designed to help the entity make improvements in its intemal control structure and
operations, and other matters that may come to our attention (see "Responsibilities as to Internal Controls"
above).
As part of this engagement we will ensure that certain additional matters are communicated to the
appropriate members of management and to the elected officials of the entity. Such matters include (1) our
responsibility under auditing standards generally accepted in the United States of America; (2) the initial
selection of and changes in significant accounting policies and their application; (3) our independence with
respect to the entity; (4) the process used by management in formulating particularly sensitive accounting
estimates and the basis for our conclusion regarding the reasonableness of those estimates; (5) audit
adjustments that could, in ourjudgment, either individually or in the aggregate be significant to the financial
statements or our report; (6) any disagreements with management concerning a financial accounting,
reporting or auditing matterthat could be significant to the financial statements; (7) ourviews about matters
that were the subject of management's consultation with other accountants about auditing and accounting
matters; (8) major issues that were discussed with management in connection with the retention of our
services, including, among other matters, any discussions regarding the application of accounting
principles and auditing standards; and (9) serious difficulties that we encountered in dealing with
management related to the performance of the audit.
GovernmentAuditing Standards require that we provide you with a copy of our most recent quality control
review report. We have previously provided to you a copy of this report.
ACCESS TO WORKING PAPERS
The working papers for the engagement are the property of Cherry, Bekaert & Holland, L.L.P. and
constitute confidential information. Except as discussed below, any requests for access to our working
papers will be discussed with you prior to making them available to requesting parties.
The workpapers for this engagement will be retained for a minimum of three years after the date the
auditors' report is issued or for any additional period requested by the entity. If we are aware that a federal
and State awarding agency, pass-through entity, or auditee is contesting an audit finding, we will contact
the party(ies) contesting the audit finding for guidance prior to destroying the workpapers.
Our Firm, as well as all other major accounting firms, participates in a "peer review" program, covering our
audit and accounting practices. This program requires that once every three years we subject our quality
assurance practices to an examination by another accounting firm. As part of the process, the other firm
will review a sample of our work. It is possible that the other firm for their review may select the work we
perform for you. If it is, they are bound by professional standards to keep all information confidential. If
you object to having the work we do for you rGViewed by our peer reviewer, please notify us in avriting.
SUBPOENAS
In the event we are requested or authorized by you or required by government regulation, subpoena, or
other legal process to produce our working papers or our personnel as witnesses with respect to our
engagement for you, you will, so long as we are not a party to the proceeding in which the information is
sought, reimburse us for our professional time and expense, as well as the fees and expenses of our
counsel, incurred in responding to such a request.
If any dispute, controversy or claim arises in connection with the performance or breach of this agreement,
either party may, on written notice to the other party, request that the matter be mediated. Such mediation
would be conducted by a mediator appointed by and pursuant to the rules of the American Arbitration
Association (AAA) or such other neutral facilitator acceptable to both parties. Both parties would exert their
best efforts to discuss with each other in good faith their respective positions in an attempt to finally resolve
such dispute, controversy, or claim.
Client and accountant both agree that any dispute over fees charged by the accountant to the client will be
submitted for resolution by arbitration in accordance with the Rules for Professional Accounting and
Related Services Disputes of the AAA. Any award rendered by the Arbitrator pursuant to this Agreement
may be filled and entered and shall be enforceable in the Superior Court of the County in which the
arbitration proceeds. In agreeing to arbitration, we both acknowledge that, in event of a dispute over fees
charge by the accountant, each of us is giving up the right to have the dispute decided in a court of law
be€ore a judge or jury and insead we are accepting the use of arbitration far resolution.
The prevailing party shall be entitled to an award of reasonable attorneys' fees and costs incurred in
connection with the arbitration of the dispute in an amount to be dete-mined by the arbitrator.
If the foregoing is in accordance with your understanding, please sign a copy of this letter in the space
provided and return it to us. If you have any questions, please feel free to give me a call at 919-782-1040.
Very truly yours,
ERRY, BEKAERT 8 HOLLAND, L.L.P.
Eddie urke, CPA
Partner
Enclosure
RESPONSE:
This letter correctly sets forth the understanding of the entity.
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