HomeMy WebLinkAbout2002 S Finance - Cherry, Bekaert & Holland RETURN THIS COPY TO THE CLERK'S
OFFICE FOR THE PERMANENT AGENDA FILE
LE
March 25, 2002
Mr. Kenneth T. Chavious, Finance Director
Orange County
208 S. Cameron St.
P.O. Box 8181
Hillsborough,NC 27278
Dear Mr. Chavious:
This letter of arrangement between the Orange County (the "County") and Cherry, Bekaert & Holland,
L.L.P. sets forth the nature and scope of the services we will provide,the County's required involvement
and assistance in support of our services, the related fee arrangements and other terms and conditions
designed to assure that our professional services are performed to achieve the mutually agreed upon
objectives of the County.
SUMMARY OF SERVICES
A. Financial Audits
We will audit the basic financial statements of the County as of and for the year ending June 30, 2002, 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;the provisions of OMB Circular A-133, "Audits
of States, Local Governments and Non-Profit Organizations"; and the State Single Audit Implementation
Act. Our audit will include tests of accounting records, a determination of major programs in accordance
with Circular A-133 and 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 present fairly, in
all material respects, the financial position, results of operations, and cash flows of the County 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 basic financial statements taken as a whole. We also will
perform tests of compliance as required by Government Auditing Standards, the provisions of OMB
Circular A-133, and the State Single Audit Implementation Act, 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 objective of our audit is the expression of an opinion about whether your basic financial statements
are fairly presented, in all material respects, in conformity with accounting principles generally accepted
in the United States of America. The objective also includes reporting on the County's:
Internal control related to the basic 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 basic financial statements in accordance with Government Auditing Standards.
Internal control related to major programs and an opinion on whether Orange County complied 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,OMB Circular A-133,"Audits of States,Local Governments,and Non-Profit Organizations",
and the State Single Audit Implementation Act.
The reports on internal control and compliance will each include a statement that the report is intended
solely for the information 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.
We will begin our audit on a future agreed-upon date that we both mutually agree to and will issue our
report no later than October 31, 2002.
You agree that Orange County will prepare the Management's Discussion and Analysis for their respective
basic financial statements, and will have all journal entries, fund analysis, review of the general ledger
system, and any infrastructure issues addressed as required by GASB 34.
I will lead the engagement and will be responsible for assuring the overall quality, value, and timeliness
of our services to you.
YOUR EXPECTATIONS
As part of our planning process, we have discussed with you your expectations of Cherry, Bekaert &
Holland, L.L.P., your concerns about your local government, your views on risks facing you, any
relationship issues with Cherry, Bekaert & Holland, L.L.P., and specific engagement arrangements and
timing. Our services 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 meet,
and/or exceed, your expectations. Our service plan will be reviewed with you periodically and will serve
as a benchmark against which you will be able to measure our performance.
LIMITATIONS OF THE AUDITING PROCESS
Our audit will include procedures designed to obtain reasonable, rather than absolute, assurance of
detecting misstatements due to errors or fraud that are material to the basic financial statements. As you
are aware, however, there are inherent limitations in the auditing process. For example, audits 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 error or fraud that is immaterial to the basic general purpose financial statements.
As required by the Single Audit Act Amendments of 1996, 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 County's internal control structure, as required by auditing
standards generally accepted in the United States of America, Government Auditing Standards, the
provisions of OMB Circular A-133, and the State Single Audit Implementation Act, 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 and fraud or illegal acts. An audit is not
designed to provide assurance on internal control. As part of our consideration of the County's internal
control structure, however, we will inform you of 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 Circular A-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.
We are prepared at your request to perform a more in-depth assessment of the County's internal control
tructure, and report our findings and recommendations, or to conduct an examination engagement on the
effectiveness of your internal control structure. We would be pleased to discuss fees for these services,
which depend on their scope.
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 County'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 Government Auditing 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 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 the applicable procedures described in the OMB Circular A-133 Compliance
Supplement and the Compliance Supplement provided by the Local Government Commission for auditors
in North Carolina for the types of compliance requirements that could have a direct and material effect of
each of the County's major programs. The purpose of those procedures will be to express an opinion on
the County's compliance with requirements applicable to major programs in our report on compliance
issued pursuant to OMB Circular A-133 and the State Single Audit Implementation Act.
At the conclusion of the engagement, it is management's responsibility to submit the reporting package
(including the basic financial statements, schedule of expenditures of federal and state awards, summary
schedule of prior audit findings, auditor's reports, and corrective action plan) along with the Data
collection Form to the designated federal clearinghouse and, if appropriate,to pass-through entities. The
Data Collection Form and the reporting package must be submitted within the earlier of 30 days after
receipt of the auditor's reports or 13 months after the end of the audit period, unless a longer period is
agreed to in advance by the cognizant or oversight agency for audit.
Our procedures relative to compliance with laws and regulations and internal control over financial
reporting are limited to those discussed herein. We would be happy to discuss our procedures with you
further at your request.
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 basic
financial statements to correct material misstatements. Additionally, as required by OMB Circular A-133
and the State Single Audit Implementation Act, it is management's 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. At the conclusion of the engagement, the
County's management 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 internal control,or others where it could have a material effect on the basic
general purpose 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 basic
general purpose financial statements are immaterial, both individually and in the aggregate, to the basic
general purpose financial statements taken as a whole.
COMMUNICATIONS
At the conclusion of the engagement, we will provide management, in a mutually agreeable format, our
recommendations designed to help the County make improvements in its internal 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 the County Commissioners. Such matters include (1)the initial
selection of and changes in significant accounting policies and their application; (2)the process used by
management in formulating particularly sensitive accounting estimates and the basis for our conclusion
regarding the reasonableness of those estimates; (3) audit adjustments that could, in our judgement, either
individually or in the aggregate be significant to the basic financial statements or our report; (4) any
disagreements with management concerning a financial accounting,reporting or auditing matter that could
be significant to the basic financial statements; (5) our views about matters that were the subject of
management's consultation with other accountants about auditing and accounting matters; (6)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;
(7) serious difficulties that we encountered in dealing with management related to the performance of the
audit; and (8) total fees for management advisory services during the year under audit, including a
description of the types of such services rendered.
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 County. 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 work we perform for you may be selected by the
other firm for their review. 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 reviewed by our peer reviewer,please notify
us in writing.
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.
OTHER MATTERS
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 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 or controversy.
If any dispute, controversy,or claim arising out of or in connection with the performance or breach of this
agreement cannot be resolved by mediation, then the dispute, controversy, or claim would be settled by
arbitration in accordance with the rules of the American Arbitration Association(AAA)for the Resolution
of Accounting Firm Disputes. The award issued by the arbitration panel maybe confirmed in a judgment
by any federal or state court of competent jurisdiction.
TERMS AND CONDITIONS SUPPORTING FEE
As a result of our planning process, the County and Cherry, Bekaert& Holland, L.L.P. have agreed to a
fee, subject to the following conditions.
To facilitate meeting our mutual objectives, the County 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 County is unable to provide
such schedules, information and assistance, Cherry, Bekaert & Holland, L.L.P. and the County will
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 County 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 County 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.
FEES
Our fees for the services described above will be based upon our standard billing practices at the time of
the engagement. Our fees will be billed periodically as charges are incurred and are payable on
presentation. A service charge will be added to past due accounts equal to 1-1/2% per month (18%
annually) on the previous month's balance less payments received during the month, with a minimum
charge of$2.00 per month. Based on our contract to audit accounts,the fee will not exceed$59,300. 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.
Base Charge—Financial Audit $42,500
Base Charge—Compliance Audit 18,500 (includes 8 major programs)
Charge per Program for Additional
Compliance Testing 1,900
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 call me at 483-7131.
Very truly yours,
HERRY, BEKAERT & HOLLAND,L.L.P.
Eddie Burke, CPA ~
Partner
ACCEP B
TITLE
MAY 14
2002
LGC-205(1(cv.1/1)2002) CONTRACT TO AUDIT ACCOUNTS
y- '? Bile itl'I'rlplicale. L G C
of Orange County, North Carolina
s 'Y` Guvcmnlcntal Unit
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_ �' Olt this 25th Jay of March 2002 ,S,h2LL;L, RPlraPrt unhand, LLP
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Auditor
P.O. Drawer 47, Fayetteville, NC 28302
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-- Mailing Address
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hereinafter referred to as
County CommissionersofOrange County hereinafter referred
1 Ilia Auditor,and
ROM (iuvenaag Hoiud (iavenulu:nlal(lair
to as the l iuvermulental l htil,agree as li)Iluws:
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r 1. 'I he Auditor shall audit all statements and disclosures required by generally accepted accounting principles and additional
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1equired legal statelllellts and disclosures of all lUads andlor dIVISIWIS Of the GOVCrI1lnCmtll UUII for the pentad beginning
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-__July 1 ,_24D_l_.and ending "t'IInP �Q gnn? "1'ha combining,individual fatal,and account
group linaueial atatcnlcnts and schedules shall M ulbjcdcd Io the au ilid og procedures applied in lho audit ul'the carbine)
s X' liu:unciai atuelents and an upiniun will be tendered in Illation to dw combined linancirl statements taken as a whole.
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2 Al a mininwnl, Ilia Auditor shall conduct his audit and render his report in accordance with generally accepted auditing
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standards.'file Auditor shall perform the audit in accordance Willi Government Auditine Standards if required by the State Single
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Audi[ buplementation Act, as codified in G.S. 15J-34. If required by OMB Circular A-133 slut the Stott Single Audit
�� huplenleltrtiun Act,the auditor shell px:rl'unu a Single Audit.
I'lus cmltfwcv cuntem phues Ira funpmhyle4l upiniun being rerldL'red If f111a11eUh slaltmlCllls are n01 prepared 111 a:W(dtl1cC Wldl
generally accepted accounting principles(GAAP),or the statements fail to include all disclosures required by GAAP,explain
Thal departure from GAAP in the space bcluw:
q. This cuntruct cunfempi✓tes all lolyu✓liyied upiniun being rendered The audit shall include such teats of the accounting records
and such other auditing procedures as are considered by die Auditor to be necessary in the circumstances.Any ltmilruiutu or
r -estrie iatu•in scope which wunld lead to a qualiyicmi✓rt should be.1411Y r+-l'plained in oil altachnient to this cuntruct.Ilia audit
will have no scope limitations except
# � 5. II'this audit engagement is subject to the standards for audit as d/lin r ed in Government Auditing Standards,issued by the
('Wnptrullcr(ienarrl of the Unite)States,then the Auditor warrants by accepting this engagement that he/she has net the
rcyuircnneus for a pier review and continuing education as specified in Government Auditjppg Standards.The Auditor agrees lit
provide u copy of their most recent peer review report to the(iuvemnenlal Unit and the Secretary of the La al Government
('uuuuissiWl nriur a the execution of the audit contract. (See ltem 2LL)
6. It is agreed that time is of dlc Market in this contract.All audits are to be performed and the report of audit submitted by
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7. II Is:IgrCCd that gC11Cr:111y aCCCpIL•d aUdlhllg sl:Uldads include review of Ilia Govcrumcntal Unit's system of initrnal control and
y :eCUllllhllg as saline fC1aICS to accountability Up funds and ad1kcreacc to budget and law feyWfullields appllcabha the 'o;111 the
r s Auditor will rake a written report,which may or may not b a part of the written report of audit,to the Governing Hoard selling
hall,his findings,together will'his recumnlendutions for iulprovemenl.That written report must include all matters delinel as
..le purtable wnditiuns"in AlJ 325 of the AICPA Proleasional Standards. Auditor shall file a cony of that report with the
Seel ,..,, .,l',6,•1 'al(iuycrumeut Cutu111iss1U11.
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x g. All local gover11nC111 and public authority contracts for annual or special audits,bookkeeping of other assistance necessary to
011Cpi:lfe IfIC Unit's records fur audit,(111anC pal statement preparation,any finance-related investigations,or any other audit-related
Ic > wink in Ilia State of North Carolina rcyuirc Ilia approval M'll'e Secretary ul'thc Local Government Commission.Invoices to
h II nut b n I I b the(iov rmn ntal(hill ntil the invoice has beeun ld a be rosubmitted�hm e 1 1 1 contract billings.)All invoices slw
Local Govenent Culssion (This also u)WIL4C env nroaers c of the e
triplicate to the Secretary of the Local(iovernalenl Commission.The original and one copy will be returned to the Auditor.
Approval is not required oil contracts and invoices four system inlpfuveulenls unit sinlilur services of anon-auditing nature.
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9. lit 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 Laval Govemnned Conuuissiun,die following fee which includes any cost die
Auditor may ila ur lives work paper or peer reviews of any other quality assurance program required by third ponies(Ballarat and
State grantor and oversight agencies or other Orga1127111U11s)as rCgUlfCd under the Federal and Slate Single Audit Acts:
Year-end bookkeeping assistance-
N/A
Audit- $37,500— Financial audit $18 500— 4ing1P ^edit, 1�9GG fnr Parh aAdltional
g= single audit program $5 s 000
Preparation of the financial statemeals-
Ill. Alice completing his audit,the Auditor shall submit to the Governing Board u written report of audit.This report shall i 11cl uJe,at
least,Ilia(IIIa1c1:lI sI:11a111L•Ills of the gUVCrallicillid unit and Ulf oI Its Cu111pU1c111 Ulllls old rues rI1CfClo prepared 111 a:e'Ulda11CC
Willi generally accepted uccuunting principles,combining and supplenu it
infomwtiun requested by the client or required for
full disclosure under tilt:law,and the Auditor's opiniun W)lilt material prcscnleJ.'lle Auditor shall lumish the required number
/ ul Cup/es of Ilia ratnur oI alldll to(I1L'(;UVCflllllg Wand as soon as pl➢CIeY1 attar Ilia CIUSU of do aaa)unllllg period.
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11. The Auditor shall file Willi the Local Oovenunent('unnuission two copies of the report of audit,including one copy of the
z ? ledcrul Data Cohlcclilo Form,if a t'ederal single audit is condudul. Twit copies of the report of audit should be submittal il'an
audit is required to be performed only under the requirements of die State Single Audit hilplemeatation Act ur a tinau ial audit is
sR s reyuircd to be performed in accordance with Government Auditing Standards.Odlerwise,one copy shall be suMnilted.Copies of
the ration shall be filed with the Local Government Commission when(w prior to)submitting the invoice for the services
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rendered. All copies of the report submitted must be hour) The report of audit,us filed with the Secretary of the Local
Govermncnt Commission,becoules u 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 ubsenlan t are used in the preparation of Official Statements for debt offerings,by municipal bond rating
set vices,and w fulfill secondary market disclosure requirements of the Securities said Exchange Commission
I?. Should circumstances disclosed by the audit cull for a more detailed investigation by the Auditor it necessary under ordinary L circumstances,tie Auditor shall inform the(inventing Board in writing of the need for such additional investigation all the
additional compensation required therefor. Upon approval by the Secretary of the Local Govermllent Commission, this
> agrcwhtent may Iu varied or clanged to include the increased time and/or compensation as may be agreed upon by tie Governing
Huard and the Auditor.
�rt . 13. 11'an approved contract needs to be varied or changed lot any reason,the change must be reduced to writing,signed by both
pmties,prcuudited if necessary,and submitted to the Secretary of the Local Government Commission for approval.No change
,hint h (f t unless ru
mnv'1 by the Secretin of tile e ocal Govemnlcut Comu rd and Lhe Auditor
14. Whenever the Audits!uses all engagement letter with the client,Item 1 S may be completed by refereeing the engagellunf letter
4r` and auuching u copy of ibe cngugwncnt letter to do contract W incorporate the engagcltant letter into the contract.In case of
t conflict W.ween die terms of the cogagelllent letter and the terms of alts collQtlt ,the terms of this contra will control.
EllgagC111C111 letter 1Cfllts LLfe deC111Cd W be
VUId unless tIC a:011tleflllg terms of this WmttaCl an specifically deleted In Item 21 of
Illla contract.EngtlgC111Cm1 IC1tCfY containing InJC11m1licatlon claaYCY WIII 1101 I7C approved by the LOCrI GOVCmrllCllt CWn1111Wi1011.
13. There are IIQYpCclal provisions except:x Engagement Letter
Attachments A it B
16. A separate contract a o be made f'or each division to be audited or repon W be submitted.A separate contract must be
executed for cacti culupollent ton,wllich is a local guverlllocut and lot which r selutrafC tludlt rCpUn IY IYRUL'd.
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611 17. The contract should be executed and submitted in trjplicutc to the Secretary ol'the Luca)(iovcrnna nt Commission.325 North
y Salisbury Street,Krleigh,North Carolina 27603-1385.
4 18. Ulan approval,the original contract will be returned to the(iovemmental Unit,a copy will be forwarded to the Auditor,and a
iA l'Ul>y rCW111Cd by ale Secretary Uf tie Local Government Coll Commission.
. fill' tilt 51t)111d IIOI be YltlrtCd bL'lllre the eO1llrYel IY
annroved.
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19. There are no Other agreements between the parties herein and to other agreements relative herein that shall be CntorcCable unless
entered into in accordance with the procedure set out herein d approved by the Secretary of the Loi:aa l Government Ri, ai"S
t Commission.
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211. If this nudit engugemem is not subject w Go°° m Auditing eta Jards,then Item 5 shall be listed as a deleted provision in
.` Item 21. An explanation must be given for deleting this provision.
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21. All of the above paragraphs are understood and shall apply to this agreement,except the following numbered parllgraphs shall be
Deleted:(See Item 14.)
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Sr 22 Will the audited financial statements be prepared lit accordance with GASS St
aleWemt Nu.34?La YES NO
If the audited financial statements are prepared in accordance with GASH Statement Nu.34 the references in Item 1 to
the combining,Individual fund,and account group stsicmeuts shag Weru the basic financial statements,Wrurgament's
3 discussion and analysis, and required supplementary statements as defined in GASS Statsoumt Nu. 34. Audltng
prwedurea applies
bit to other supplementary scliedul"are not changed by the implementation of GASH State Went
Nu.34.
By_
B Cherry Belcaert & HOl land- LLP ( l:aYC type ar pr It lnc and ltlsd
(Please type of print name)
(Signature of or f governing board)
ri (Signal of authorized audit titer re
prcsemaive)
Date u T—
�y Date 3 -r_S• Z
' By -I nu1ce
(Chairperson of Audit C (Pkase type or print ague)
Approved by the Secretary of the
Local Government
13 '- Cwanissiwl as provided in Article 3,Chapter 159 of da:
';{rrf (icnual SuuWCs w Article 31,Pan 3,C'haptcr I ISC of", (Signature of Audit Committee Chairperson)
General Statutes.
? AN HOLLOMAN Date
Fur the Secrcta ,Local o ernment Cot
ssion
(if unit flocs not have an audit conmitke,this atatiul should be
+Q M� njM nialkad'wA.')
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r r Date_ This instrument bas been presudited in the smaller required by The
u Local Govermtieat Budget and Fiscal(control Act W by the
School
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Budget ad Fiscal Control Act.
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Orange County, North Carolina
CONTRACT TO AUDIT ACCOUNTS
For the period beginning July 1, 2001 and ending June 30, 2002
Attachment A
The funds which make up the 2001-2002 budget are as follows:
General Government:
General Fund
Special Revenue Fund
Capital Projects Fund
Proprietary Funds:
Enterprise Fund
Internal Service Fund
Fiduciary Funds:
Agency Fund
Trust Fund
Attachment B
Time being of the essence, it is agreed that adequate records, schedules and the general ledger(s)
necessary to the audit, shall be provided to the auditors by a future agreed upon date. Additionally,
the County shall provide the auditors with work space and facilities adequate for the conduct of the
examination and timely assistance in the retrieval of any required documentation.
n
MAY 14 2002
U
t.(;(•-205(Rev. 1i1i2W2) CONTRACT TO AUDIT ACCOUNTS
File in Triplicate. LGC
of Orange County, North Carolina
Govenuneutal Unit
0n this 25th —day of_ March 2002 ,_Cherry.. Rekaert & Holland, LLP
P.O. Drawer 47, Fayetteville, NC 28302 Auditor
- �- — Mailing Address
hereinafter referred to as
the Auditor,and County Commissioners 01 Orange County ,hereinafter referred
(iovenung Board Governmental thin
to as file l iovernntenlal Unit,agree as IbIlows:
I. 'I he 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-_,and ending Tien"0_____, 2nn2 _.'file combining,individual fund,and account
group financial statenicnis and schedules shall he subjected to the auditing procedures applied in file audit of file combined
financial statements and an opinion will be rendered in relation to the combined financial statements taken as a whole.
2. At a mininwm, the Auditor shall conduct his audit and render his report in accordance with generally accepted auditing
standards."Ihe Auditor shall perform the audit in accordance with Government Auditing Standards if required by the State Single
Audit Implementalion Act, us codified in G.S. 159-34. If required by OMB Circular A-133 and the Stale Single Audit
Implementation Act,the auditor shall perform a Single Audit.
3. This conlract contemplates tilt ttngnalyied opinion be;ng rendered. If financial statements are not prepared in accordance with
generally accepted accounting principles ((;AAP), or the statements fail to include all disclosures required by GAA1, explain
that departure from(;AAP in the space below:
4. this contract contemplates till togoaliijied 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 lindtatioms or
rrsm-ictions in scope which woah/lead to is quidoictition should be fully expla;ned in till attachment to this contract. The audit
will have no scope linritalions except:
5. If this audit engagement is subject to the standards fur audit as defined in Government Auditing Standards, issued by the
Comptroller Gencral 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 Government Auditing 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 Uior L 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 2002
7. It is agreed that generally accepted auditing standards include a review of life Governmental Unit's system of internal control and
accounting as runic relates to accountability of thuds and adherence to budget and law requirements applicable thereto;diuf 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 selling
forth his findings, together with his recommendations for improvement. 'Ilia( written report must include all matters defined as
"reportable conditions" in AU 325 of the AICPA Professional Standards. The Auditor shall file a copy of that report with the
Secretary of the Local(lovernmeni Commission.
H. All local government and public authority contracts for annual or special audits, bookkeeping or other assistance necessary to
prepare the Unit's records Ibr audit, financial statement preparation,any finance-related investigations,or any other audit-related
work in the State of Not ill Carolina require file approval of fhe Secretary of the Local Government Commission. Invoices for
services rendered under these contracts shall not be paid by the Governmental Unit until file invoice has been approved by the
Secretary of the Local Government Commission. (This also includes any prowcss billings.)All invoices should be submitted in
triplicate to the Secretary of(he Local Government Commission. The original and one copy will be returned to the Auditor.
Approval is not required on conlrucis 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 agreenietit, the Governmental Unit shall pay to the
Auditor, upon approval by the Secretary of the Local Government Commission, file following fee which includes any cost the
Auditor may incur fiont 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)us required under the Federal and State Single Audit Acts:
Ycar-end bookkeeping assistance- N/A
Audit- $37,500— Financial audit, $18.500— Single audit, $1.900 for Pac•h additional
single audit program
Preparation of the financial statements- $5,000
10. Alice completing his audit,the Auditor shall submit to the Governing Board a written report of audit.This report shall include,at
least, the financial slutcntents of'[lie governmental unit and all of Its component units and holes thereto prepared in accordance
with generally accepted accounting principles,combining and supplementary infurnlution 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 fhe report of audil to file Governing Board as soon us Imuclicul ulicr the close of the accounting period.
H.. The Auditor shall file with (he local Government Commission two copies of the report of audit, including one copy of the
federal Dulu Collection Form, it'u 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 Stale Single Audit Implcmentaliun Act or a financial audit is
required to be performed in accordance with Goyenunen(Auditing Standards.Otherwise,one copy shall be submitted.Copies of
file 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 tiled 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,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 infurnt the Governing Board in writing of the need for such additional investigation and the
additional compensation required therefor. Upon approval by the Secretary of the Local Government Commission, this
agreement n►uy 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. It an approved contract needs to be varied or changed for any reason, the change must be reduced to writing, signed by both
,)allies, ,)reuudited if necessary, and submitted to the Secretary of the Local Government Corrunission for approval. No change
AIAI be effective unless unproved by the Secretary of the I oval Government Commission the Governing Board,and the Auditor.
14, Whenever the Auditor uses all 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 cast;of
conflict between the terms of the cngugenuont letter and the terms of this contract, the terms of this contract will control.
Engagement letter terms are declined to be void unless the coullictnlg terms of this contract are Specifically deleted ill Item 21 of
this contract.Engagement letters containing indemnification clauses will not be approved by the Local Government Commission.
15. There are no special provisions except:
Engagement Letter
Attachments A & B
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 jir Ili rlicatc to the Secretary of the Local Government Commission, 325 North
Salisbury Street,Raleigh,North Carolina 27603-1385.
I8. Opun approval, the original contract will be returned to the Governmental Unit,u copy will be forwarded to the Auditor,and a
copy retained by the Secretary of the Local 6overunent Commission. '['lie audit should not be started before the contract
,aonroved.
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. It this audit engagement is not subject to Government Auditing Stan s,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.)
22. Will the audited financial statements be prepared in accordance with GASH Statement Nu.34?® YESONO
It like audited financial statements are prepared in accordance with GASH Statement Nu.34 the references in Item I to
the combining, individual fund, and account group statements shall clean the basic financial statements,n►auageu►eut's
discussion and analysis, and required supplementary statements as defiled In GASH Statement Nu. 34. Auditing
procedures applicable to uglier supplementary schedules are not changed by the Lnplemeutatiou of GASH Statement
Nu.34.
By k
�Q {(r LD
By Cherry, Bekaert & Holland_ LLP rcasctypeorpr' t tnc and njW
(Please type or print name) ✓
(Signature of or f governing board)
(Signatu of authorized audit firm representative)
Date J �l
Date
By
(Chairperson of Audit Con iltee(Please type or print name)
Approved by the Secretary of the Local Government
Commission as provided in Article 3,Chapter 159 of the "
General Statutes or At 31,Pan 3,Chapter 1 I SC of the (Signature of Audit Committee Chairperson)
General Statutes.
MANGE HOLLOMAN Date
For the Secreta Loca
, l o nmen
ert Con 'scion (If unit dues not have an audit committee,this section should be
ry � � nurrked"N/A.")
Date 1 IA gn t')2002 This instrument has been preaudited in the manner required by The
Local Government Budget and Fiscal Control Act or by the School
Budget and Fiscal Control Act.
Governmental nit Finance Officer(Please type or print name)
(Signature)
Date
(Preaudit Certificate gUla be dated.)