HomeMy WebLinkAbout2012-019 Finance - Audit Contract with Martin Starnes & Associates CPAs PAa2~i~- o~ 9
1~/~ARTIN • STAR.NES ~ S ~~'~~°U~
~ ASSOCIATES, CPAs, P.A.
"A Professional Association of Certified Public Accountants and Management Consultants"
January 12, 2012
Clarence G. Grier, Financial Services Director
Orange County
200 South Cameron Street
Hillsborough, NC 27278
We are pleased to confirm our understanding of the services we are to provide Orange County, for the
year ended June 30, 2012. 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, as of and for the year ended June 30, 2012. Accounting standards generally accepted in the
United States of America provide for certain required supplementary information (RSI), such as
Management's Discussion and Analysis (MD&A), to supplement Orange County's basic financial
statements. Such information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board who considers it to be an essential part of financial reporting
for placing the basic financial statements in an appropriate operational, economic, or historical context.
As part of our engagement, we will apply certain limited procedures to Orange County's RSI in
accordance with auditing standards generally accepted in the United States of America. These limited
procedures will consist of inquiries of management regarding the methods of preparing the information
and comparing the information for consistency with management's responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements.
We will not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The
following RSI is required by generally accepted accounting principles and will be subjected to certain
limited procedures, but will not be audited: 1) ManagemenYs 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).
We have also been engaged to report on supplementary information other than RSI that accompanies
Orange County's financial statements. We will subject the following supplementary information to the
auditing procedures applied in our audit of the financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the financial statements or to the financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of
America and will provide an Qpinion on it in relation to the financial statements as a whole: 1) the
combining and individual fund financial statements, 2) budget and actual schedules, 3) supplemental ad
valorem tax schedules, and 4) 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 not provide an opinion or any assurance: 1) the introductory information and 2) the statistical
tables.
730 13th Avenue Drive SE • Hickory, North Carolina 28602 • Phone 828-327-2727 • Faac 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 supplementary information referred to in the second paragraph when
considered in relation to the 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, non-compliance with which could have a material effect on
the financial statements in accordance with Government 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 opinions 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 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 opinions 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 identifying government award
programs and understanding and complying with compliance requirements, and 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 non-audit 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 monitoring ongoing activities to help ensure that appropriate goals and
objectives are met and that there is reasonable assurance that government programs are administered in
compliance with compliance requirements. 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 cornponent
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 the accuracy and completeness of that information. Your responsibilities also include identifying
significant vender relationships in which the vendor has responsibility for program corripliance and for the
accuracy and completeness of that information. Your responsibilities include adjusting the financial
statements to correct material misstatements and 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. You are responsible for the preparation of the supplementary information in conformity with
U.S. generally accepted accounting principles. You agree to include our report on the supplementary
information in any document that contains and indicates that we have reported on the supplementary
information. You also agree to include the audited financial statements with any presentation of the
supplementary information that includes our report thereon or make the audited financial statements
readily available to users of the supplementary information no later than the date the supplementary
information is issued with our report thereon.
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.
With regard to the electronic dissemination of audited financial statements, including financial sta.tements
published electronically on your website, you understand that electronic sites are a means to distribute
information and, therefore, we are not required to read the information contained in these sites or to
consider the consistency of other information in the electronic site with the original document.
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 wilI not
perform a detailed examination of all transactions, there is a risk that material misstatements or non-
compliance 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, and of any material abuse that comes to our attention. 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 non-compliance 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 non-compliance 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, GovernmentAuditingStandards, and OMB 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, including grant agreements. However, the objective of
our audit 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 obta.in 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 and related addenda 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 your personal
information. In addition, we will secure confidentiality agreements with all service providers to maintain
the confidentiality of your 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.
We will provide copies of our reports to Orange County; however, management is responsible for
distribution of the reports and the financial statements. Unless restricted by law or regulation, or
containing privileged and confidential information, copies of our reports are to be made available for
public inspection.
At the conclusion of the engagement, we will complete the appropriate sections of the Data Collection
Form that summarizes our audit findings. It is management's responsibility to submit the reporting
package (including financial statements, schedule of expenditures of federal awards, summary schedule of
prior audit findings, auditors' reports, and corrective action plan) along with the Data Collection Form to
the federal audit clearinghouse. We will coordinate with you the electronic submission and certification.
If applicable, we will provide copies of our report for you to include with the reporting package you will
submit 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 auditors' reports or nine months after the end of the audit
period.
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 or 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 audit documentation.
Paula Hodges 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 non-payment, 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,
~ ~.
~1 ~~~ . ~ua~~ Gf'Cts, ~Cc.
Martin Starnes & Associates, CPAs, P.A.
RESPONSE:
This letter correctly sets forth the understanding of Orange County, North Carolina.
By:
Title:
Date:
LGC-205 (Rev. 2011) CONTRACT TO AUDIT ACCOiTNTS
of _ . Oranae Countv, NC
Governmental Unit
On this 12th day of January 2012 Martin Starnes & Associates, CPAs, P.A.
Auditor
73013th Avenue Drive SE, Hickory, NC 28602
Mailing Address
the Auditor, and Board of Commissioners of
Orange County, NC
hereinafter referred to as
Governing Board Governmental Unit
to as the Governmental Unit, agree as follows:
hereinafter refened
l. The Auditor sha11 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, 2011 , and ending June 30 2012 . 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 state~nents 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 infonnation
(non-major government and enterprise funds, the internal service fund type, and the fiduciary fund types).
2. At a minimum, the Auditor shall conduct his/her aud~t 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 a~d the State Single Audit
Implementation Act, the auditor shall perform a Single Audit. This audit and all associated workpapers may Ue subject to review by
Federal and State agencies in accordance with Federal a~id 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 faii to include all disclosures required by GAAP, please provide
an explanation for that departure from GAAP in an attaclunent.
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. Anv limitations or restrictions
in scooe which would lead to a qualification should be fullv ex~lained in an attachment to this contract
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 by accepting this engagement, the Auditor warrants 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 conv of their most recent neer review report regardless of the date of the orior veer 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) If the audit firm
received a peer review rating other than pass, the auditor shall not contract with any Local Government Units without first contacting
the Secretary of the Local Government Commission for a peer review analysis that may result in additional contractual requirements.
If the audit engagement is not subject to GovernmentAccounting Standards, the Auditor shall provide an explanation as to why in
an attachment.
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 SLGFD
within four months of fiscal year end: OCtober 31. 2012 . If it becomes necessary to amend this due date or
the audit fee, an amended contract along with a written explanation of the delay must be submitted to the Secretary of the Local
Government Commission for approval.
It is agreed that generally accepted auditing standards include a review of the Governmental Unit's systems of internal control and
accounting as the systems relate to accountability of funds, adherence to budget requirements, and adherence to 1aw requirements.
In addition, 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 copv of that report with the Secretarv of the Local Government Commission.
8. All local government and public authority contracts for audit or audit-related work require the approval of the Secretary of the Local
Government Commission. This includes annual or special audits, agreed upon procedures related to Internal Control, 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. Invoices for services rendered under these contracts
Contract to Audit Accounts (cont.) orange County, NC
(Name of unit)
shall not be ~aid bv the Governmental Unit until the invoice has been approved bv the Secretarv of the Local Government
Commission. (This also mcludes any progress billmgs.) [G.S. 159-34 and 115C-447] The process for invoice approval has changed.
All invoices for Audit work must be submitted by email in PDF format to the Secretary of the Local Government Commission for
approvaL The invoices must be emailed to: I~c.invoice a,nctreasurer.com Email Subject line should read "unit name - invoice.
The PDF invoice marked approved with approval date will be returned by email to the Auditor for them to present to the Local
Government Unit for payment. 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 (Federai 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 fo bookkeeping
servicespermitted by revisedlndependenceStandards) Standard hourly rates ranging from $75-$250 per hour
Audit $85,800
Preparation of the annual financial statements
10. The auditor working with a local govenimental unit that has outstanding revenue bonds will include in the notes to the audited
financial statements, whether or not required by the revenue bond documents, a calculation demonstrating compliance with the
revenue bond rate covenant. Additionally, the auditor should be aware that any other bond compliance statements or additional
reports required in the authorizing bond documents need to be submitted to the Local Government Commission simultaneously with
the local government's audited financial statements unless otherwise specified in the boud documents.
11. A$er completing the audit, the Auditor shall submit to the Governing Board a written report of audit. This report shall include but
not be limited to the following information: (a) Management's Discussion and Analysis, (b) the ftnancial statements and notes of the
governmental unit and all of its component units prepared in accordance with generally accepted accounting principles, (c)
supplementary information requested by the client or required for full disclosure under the law, and (d) 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. If the audit firm is required by the NC CPA Board or the Secretary of the Local Government Commission to have a pre-issuance
review of their audit work, there must be a statement added to the engagement letter specifying the pre-issuance review including a
statement that the Unit of Government will not be billed for the pre-issuance review. The pre-issuance review must be performed
prior to the completed Audit being submitted to the Local Government Commission. The pre-issuance report must accompany the
audit report upon submission to the Local Government Commission.
13. The Auditor shall electronically submit the report of audit to the Local Government Commission when (or prior to) submitting the
invoice for 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 financ'ial statements are used in the
preparation of Official Statements for debt offerings (the auditors' opinion is not included), by municipal bond rating services, to
fulfill secondary market disclosure requirements of the Securities and Exchange Commission, and other lawful purposes of the
government, without subsequent consent of the auditor. If it is determined by the Local Government Commission 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 Local Government Commission.
The Local Government Commission's process for submitting audit reports is subject to change. Auditors should use the submission
process in effect at the time of submission.
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.
14. The auditor can be reached for matters concerning this contract at the following email address: mspivey@martinstarnes.com
The finance officer or other responsible employee/official can be reached for matters concerning this contract at the following email
address: cgrier@co.orange.nc.us
15. 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
~ Cnntract to Audit Accounts (cont.) Orange County, NC
(Name of unit)
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.
16. 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 by email in PDF format to the Secretary of the Local Government Commission for approval. Email address is
l~c.contract~nctreasurer.com No change shall be effective unless anproved bv the Secretarv of the Local Government Commission
the Governin Board and the Auditor.
17. Whenever the Auditor uses an engagement letter with the client, Item 18 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 tenns 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 23 of this contract.
Engagement letters containing indeiruiification clauses will not be approved by the Local Government Commission.
18. Special provisions should be limited. Please list any special provisions in an attachment.
19. 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.
20. The contract must be execuYed, pre-audited, physically signed by all parties and submitted by email in PDF format including unit
and auditor signatures to the Secretary of the Local Government Commission. The email address is lec.contract a,nctreasurer.com
Electronic signatures are not accepted at this time.
21. The contract is not valid until it is approved by the Local Government Coirunission. The staff of the Local Government Commission
shall notify the unit and auditor of contract approval by email. The audit should not be started before the contract is approved.
22. There are no other agreements between the parties hereto and no other agreements relative hereto that shall be enforceabie unless
entered into in accordance with the procedure set out herein and approved by the Secretary of the Local Government Commission.
23. All of the above paragraphs are understood and shall apply to this agreement, except the following numbered paragraphs shall be
deleted: (See Item 17.)
Audit Firm Signature: Unit Signatures (continued):
Firm Martin Starnes & Associates, CPAs, P.A.
Marcie J. Spivey, Audit Director
(Please type or print name)
1J/1/'1 ~ ~ i,~ /
(Signature of authorized audi~ prese tative)
Emait Address: mspivey@martinstarnes.com
BY N/A
(Chair of Audit Committee- please type or print name)
(Signature of Audit Committee Chairperson)
Date N/A
(If unit has no audit committee, this section should be marked
~~N/A.")
Date January 12, 2012
Unit Signatures:
By Bernadette Pelissier, Chair
(Please t e or print name and title ^
~~~ P c2"'~--z._~ `
(Signature of Mavor/Chai erson of governing board)
Email Address
Date Governing Body Approved Audit Contract
Email address N/A
This insirument has been preaudited in the manner required by The
Loca1 Govemment Budget and Fiscai Control Act or by the School
Budget and Fiscal Control Act. Additionally, the following date is
the date this audit contract was approved by the governing body.
Clarence G. Grier, Financial Services Director
Governmental Unit Finance Officer (Please type or print name)
C~ c~.,~,. .~. J.~n~.
(Signature)
Date Z' ~I~ ~ 2
(Preaudit C~rtificate must be dated.)
Email
address ~9rier@co.orange.nc.us
B+OY~E, FURR
~OMP~°~.NY, LLP
CERTIFIED PUBLIC ACCOUNTANTS
SAMUGL A. BOYCE, PARTNER
B0t3BtE W. FURR, PAf3T(YER
May 5, 2009
Martin Starnes & Associates, CPAs, PA and the
Peer Review Committee, North Carolina Association
of Certified Public Accountants
SANDY P. NCWELL, CPA
JO ELLEN B. Lov, CPA
DAVID E. BOYCE, CPA
PATRICIA T. WAGtYER, CPA
CHHRl1. W. GAZALEH, CPA
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.aicpa.ora/prsummar~
As required by the standards, engagements selected for review included engagements
performed under the Government Auditing Standards and aud'its of employee benefit ptans.
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 professionai 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.
~`9y`~, ~'~ ~ ~,~~~., .~ ~~
BOYCE, FURR & COMPANY, LLP
4JOO FALLS OF TIiE NEUSE ROAD • SUITE 22O s RALEIGH, NORTH CAROLINA 2 7609
919.862.0004 • Fnx: 919.$~2.~009 ' WWW.BOYCEFURRCPA.GOA9
LGG205 (Rev. 2011) CONTRACT TO AUDIT ACCOUNTS
of Oranqe Countv. NC
Governmental Unit
On this 12th day of ~anuary 2012 Martin Starnes & Associates, CPAs, P.A.
Auditor
73013th Avenue Drive SE, Hickory, NC 28602
Mailing Address
hereinafter referred to as
the Auditor, and Board of Commissioners o f Orange County, NC , hereinafter referred
Governing Board Govermnental 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 fimds and/or divisions of the Governmental Unit for the period beginning
July 1, 2011 , and ending June 30 2012 . 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
(non-major 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 perfonn 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 O~ce 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 ali disclosures required by GAAP, please provide
an explanation for that departure from GAAP in an attachment.
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 scooe which would lead to a aualification should be fully explained in an attachment fo this contract
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 by accepting this engagement, the Auditor warrants 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 conv of their most recent neer review report reeardless of the date of the prior neer 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) If the audit firm
received a peer review rating other than pass, the auditor shall not contract with any Local Government Units without first contacting
the Secretary of the Local Government Commission for a peer review analysis that may result in additionat contractual requirements.
If the audit engagement is not subject to Government Accounting Standards, the Auditor shall provide an explanation as to why in
an attachment.
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 SLGFD
within four months of fiscal year end: October 31. 2012 . If it becomes necessary to amend this due date or
the audit fee, an amended contract along with a written explanation of the delay must be submitted to the Secretary of the Local
Government Commission for approval.
It is agreed that generally accepted auditing standards include a review of the Governmental Unit's systems of internal control and
accounting as the systems relate to accountability of funds, adherence to budget requirements, and adherence to law requirements.
In addition, 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 ali matters
defined as "significant deficiencies and material weaknesses" in AU 325 of the AICPA Professional Standards. The Auditor shall
file a co~v of that report with the Secretarv of the Loca1 Government Commission.
8. All local government and public authority contracts for audit or audit-related work require the approval of the Secretary of the Local
Government Commission. This includes annual or special audits, agreed upon procedures related to Internal Controi, 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. Invoices for services rendered under these contracts
~ontract to Audit Accounts (cont.) Orange County, NC
(Name of unit)
shall not be naid bv the Governmental Unit until the invoice has been approved bv the Secretarv of the Local Government
Commission. (This aiso includes any progress billings.) [G.S. 159-34 and 115C-447] The process for invoice approval has changed.
All invoices for Audit work must be submitted by email in PDF format to the Secretary of the Local Government Commission for
approval. The invoices must be emailed to: l~c.invoice~nctreasurer.com Email Subject line should read "unit name - invoice.
The PDF invoice marked approved with approval date will be returned by email to the Auditor for them to present to the Local
Government Unit for payment. 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 Governinent 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, thds is limited to bookkeeping
services permitted by revised Indepentlence Standards] Standard hourly rates ranging from $75-$250 per hour
Audit $85,800
Preparation of the annual financial statements
10. The auditor working with a local govenimental 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 Local Government Commission 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 wriYten report of audit. This report shall include but
not be limited to the following information: (a) Management's Discussion and Analysis, (b) the financial statements and notes of the
governmental unit and all of its component units prepared in accordance with generally accepted accounting principles, (c)
supplementary information requested by the client or required for full disclosure under the law, and (d) 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. If the audit firm is required by the NC CPA Board or the Secretary of the Local Government Commission to have a pre-issuance
review of their audit work, there must be a statement added to the engagement letter specifying the pre-issuance review including a
statement that the Unit of Government will not be billed for the pre-issuance review. The pre-issuance review must be performed
prior to the completed Audit being submitted to the Local Government Commission. The pre-issuance report must accompany the
audit report upon submission to the Local Government Commission.
13. The Auditor shall electronically submit the report of audit to the Local Government Commission when (or prior to) submitting the
invoice for 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
fuifill secondary market disclosure requirements of die Securities and Exchange Commission, and other lawful purposes of the
government, without subsequent consent of the auditor. If it is determined by the Local Government Commission 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 ta by the Local Government Commission.
The Local Government Commission's process for submitting audit reports is subject to change. Auditors should use the submission
process in effect at the time of submission.
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 repeesentation letter addressed to the State Auditor shall be submitted to the Local Government
Commission.
14. The auditor can be reached for matters concerning this contract at the following email address: mspivey@martinstames.com
The finance officer or other responsible employee/official can be reached for matters concerning this contract at the following email
address: ~rier@co.orange.nc.us
15. 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
additionat compensation required therefore. Upon approval by the Secretary of the Local Government Commission, this agreement
~ontract to Audit Accounts (cont.) Orange County, NC
(Name of unit)
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.
16. If an approved contract needs to be varied or changed for any reason, the change must Ue 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 by email in PDF format to the Secretary of the Local Government Commission for approval. Ernail address is
l~c.contract a,nctreasm•er.com No chanee shall be effective unless annroved bv the Secretarv of the Locai Government Commission
the GoverninQ Board, and the Audrtor.
17. Whenever the Auditor uses an engagement letter with the client, Item 18 is to be completed by referencing the engagement letter and
attaching a copy of the engageinent 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 23 of this contract.
Engagement letters containing indeiruiification clauses will not be approved by the Local Government Couunission.
18. Special provisions should be limited. Please list any special provisions in an attachment.
19. 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.
20. The contract must be executed, pre-audited, physically signed by all parties and submitted by email in PDF format including unit
and auditor signatures to the Secretary of the Local Government Commission. The email address is Isc.contract n nctreasurer.com
Electronic signatures are not accepted at this time.
21. The contract is not valid until it is approved by the Local Government Coirunission. The staff of the Local Government Commission
shall notify the unit and auditor of contract approval by email. The audit should not be started before the contract is apnroved.
22. 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 Loca1 Government Commission.
23. AL( of the above paragraphs are understood and shall apply to this agreement, except the following numbered paragraphs shall be
deleted: (See Item 17.)
Audit Firm Signature:
Firm Martin Starnes & Associates, CPAs, P.A.
Unit Signatures (continued):
BY N/A
(Chair of Audit Committee- please type or print name)
BY Marcie J. Spivey, Audit Director
(Please type or print name)
~~c~~.,~ `
(Signature of authorized audit firm represe tative)
Email Address: mspivey@martinstarnes.com
January 12, 2012
Unit Signatures:
Bernadette Pelissier, Chair
(Please type or print name and title
/~ ~~~ ~~~
(Signature of Mavor/Chair eo rson of governing board)
Email Address
Date Governing Body Approved Audit Contract
(Signature of Audit Committee Chairperson)
Date N/A
(If unit hae no audit committee, this section should be marked
„N/A.")
Email address N/A
This instrument has been preaudited in the manner rec~uired by The
Local Govemment Budget and Fiscal Control Act or by the School
Budget and Fiscal Control Act. Additionally, the following date is
the date this audit contract was approved by the governing body.
Clarence G. Grier, Financial Services Director
Governmental Unit Finance Officer (Please type or print name)
Gf a~,,. ~,. JJ . ~'J.~..,
(Signature)
Date Z ~ ~- ~ ~
(Preaudit Certi6cate must be dated.)
Email
address cgrier@co.orange.nc.us
BOYCE, FURR
COMP~',NY, LLP
CERTiF1ED PUBLIC ACCOUNTANTS
St~~uc~. A. Bovcc, P~r~TNCt~
Bo~niE W. Fui~~i, P~~~rrrEr~
May 5, 2009
Martin Starnes & Associates, CPAs, PA and the
Peer Review Committee, North Carolina Association
of Certified Public Accountants
Snt~mY P. NCWELL, CPA
.IO ~LLEN B. LOY, CPA
DAVID E. BOl'CE, CPA
PATRICIA T. WAGIVER, CPA
CHERYL W. GAZALGN, CPA
We have reviewed the system of quality controi 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 responsibie 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, Iimitations of, and the procedures
performed in a System Review are described in the standards at www.aicpa.orq/prsummar~
As required by the standards, engagements selecfed 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 wi#h 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.
~3~y~, fi~ ~ ~.,~~..y, .~ ~~
BOYCE, FURR & COMPANY, LLP
4900 FALLS OF THE NEUSE ROAD • SUITE 22O • RALEIGH, NORTH CAROLINA 27609
919.862.0004 • Fnx: 919.862.0009 ' WWW.DOYCEFURRCPA.CO\7