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HomeMy WebLinkAboutAgenda - 06-02-1997 - 9b 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: June 2, 1997 Action Agenda Item No. q_b SUBJECT: 1996-97 Audit Proposal and Contract DEPARTMENT: Finance PUBLIC HEARING: (Y/N) BUDGET AMENDMENT: (Y/1) ATTACHMENT(S): INFORMATION CONTACT: Contract Ken Chavious Ext. 2453 Engagement Letter TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 227-2031 PURPOSE: To review the audit proposal process and consider awarding a contract for the provision of audit services for the fiscal year ending June 30, 1997. BACKGROUND: In early March, 1997, an Audit Committee was formed for the purpose of assisting the Finance Director in matters related to the selection of the County's auditors as well as reviewing other audit related matters throughout the annual audit process. This committee consists of the Finance Director,the Director of Purchasing and Central Services,the Director of Revenue, a Budget Analyst and an Assistant County Manager. The initial task of the committee was to complete a request for proposal (RFP)process for audit services. While County staff are pleased with the current auditors, Deloitte& Touche, LLP, it is a common and recommended practice in local government financial circles that a governmental unit periodically seek proposals for these services. This process is not necessarily done to make a change, but to ensure that the level and quality of services received by the unit is adequate when compared to what others firms may have to offer. A RFP was drafted,reviewed and approved by the Committee in early April, 1997. The RFP requested responses to various items specifically related to performing audit services for the County. The RFP was sent to the top seven firms, located in this area of the state, most noted for the performance of governmental audits. The committee received four responses to the RFP with fee quotes ranging from$37,500 to $56,300. All four firms responding had experience in auditing governmental units. The committee chose to interview all four firms. Each firm was requested to bring the individuals proposed to work on the County audit, since the ability to interact favorably with County staff is a critical consideration in any audit firm selected. Other criteria for evaluation included,but was not limited to: 2 • Experience levels of both the individuals and the firm with County government audits; • Audits of Counties of comparable size and program type; • Ability to provide services which are required by the county from time to time and may fall outside the audit process; and • Other factors,such as degree of automation which would provide a more efficient means for producing the audit schedules and work papers, as well as the Comprehensive Annual Financial Report(CAFR). It should be noted that the award of proposals for professional services is based on the criteria associated with the expected quality of service, and not on price. While price may be a factor in the evaluation, it is not the determining factor. After considerable deliberation,the Audit Committee agreed that two of four firms would best meet the County's needs. However,the committee recommends that Deloitte-Touche be selected for the following reasons: • Best overall experience with audits of County governments; • The on-site individuals had more County audit experience than other firms; • This firm demonstrated extensive knowledge regarding the new standards for issues related to the single audit and schedule of financial assistance. Single audit changes will be reflected in the current year's audit. Further,there are significant changes on the horizon as it respects reporting in compliance with the Government Accounting Standards Board(GASB) requirements. The audit firm selected will play a key role in assisting Orange County in complying with, and implementation of,the new standards. • This firm's ability to provide automation capabilities was the best of all firms interviewed. It will be possible for the County to produce its schedules and work papers in significantly less time by using software that has been developed by Deloitte Touche and which will be made available to the County at no charge. This software will be available throughout the year to allow County Staff to produce reports which can be used as management tools(e.g. expenditure and revenue trends, cash flow projections, investment interest allocation). • Although the Audit Committee did not place undue emphasis upon the historical knowledge held by Deloitte Touche,their experience in working with Orange County will undoubtedly be advantageous within the next year as we pursue the November 1997 bond referendum,as well as implementation of the Strategic Automation Plan initiative regarding replacement of the County's business system software. Deloitte& Touche's proposed price for the 1996-97 audit is $56,300. The County's agreement with this firm for the 1995-96 audit was$58,250. The Board is requested to approve a contract for a one- year engagement,with the intent to renew annually for three to five years. As a matter of policy,the Audit Committee has recommended that the RFP process be repeated every three(3)to five(5) years. RECOMMENDATION(S): The Manager recommends that the Board award the audit contract for the fiscal year ending June 30, 1997 to Deloitte&Touche, LLP, in an amount not to exceed $56,300; and authorize the Chair to sign on behalf of the Board. LGC-205(Rev.1/1/1997) CONTRACT TO AUDIT ACCOUNTS 3 File in Triplicate. of Orange County Governmental Unit On this 23rd day of May . 1997 ,Deloitte & Touche LLP Auditor Post Office Box 2778, Raleigh, North Carolina -27602-2778 Mailing Address hereinafter referred to as County the Auditor,and Commissioners of Orange County .hereinafter referred Governing Hoard Governmental Unit to as the Governmental Unit,agree as follows: 1. The Auditor shall audit all statements and disclosures required by generally accepted accounting principles and additional required legal statements and disclosures of all funds and/or divisions of the Governmental Unit for the period beginning July 1 . 199 and ending June 30 . 199-7— The combining, individual fund, and account group financial statements and schedules shall be subjected to the auditing procedures applied in the audit of the combined financial statements and an opinion will be rendered in relation to the combined financial statements taken as a whole. 2. At a minimum.the Auditor shall conduct his audit and render his report in accordance with generally accepted auditing standards.The auditor shall perform the audit in accordance with Government Auditing Standards if required by the State Single Audit Implementation Act,as codified in G.S. 159.34.If required by OMB Circular A-133 and the State Single Audit Implementation Act,the auditor shall perform a Single Audit. 3. 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,except as follows(See Item 4): 4. This con&wt contemplates an unqualified opinion being rendered.Any limitations or restrictions in scope which would lead to o qualification should be fully explained in an attockin at to this contract.The audit will have no scope limitations except: None 5. If this audit engagement is subject to the standards for audit as defined in the Government Auditine Standards issued by the Comptroller General of the United States,then the Auditor warrants by accepting this engagement that he/she will meet the requirements for a peer review and continuing education as specified in the 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 Lotal Government Commission 1266 19 the execution of the audit contract. 6. It is agreed that time is of the essence in this contract.All audit*are to be performed and the report of audit submitted by October 31 1897 7. It is agreed that generally accepted auditing standards include a review of the Governmental Unit's system of internal control and accounting as same relates to accountability of funds and adherence to budget and law requirements applicable thereto:that the Auditor will make a written report,which may or may not be a part of the written report of audit, to the Governing Board setting forth his findings, together with his recommendations for improvement. That written report must include all matters defined as `reportable condition in AU 325 of the AICPA Professional Standards.The Auditor shall file a CODY of that report with the Secretary of the Local Government Commission. 8. All local government and public authority contracts for annual or special audits, bookkeeping or other assistance necessary to prepare the Unit's records for audit, financial statement preparation, any finance- related investigations. or any other audit-related work in the State of North Carolina require the approval of the Secretary of the Local Government Commission.Invoices for services rendered under these contracts shall not be paid by the Governmental Unit until the invoice has been approved by the Secretary of the Local Government Commission. (This also includes any progress billings.) All invoices should be submitted in triplicate to the Secretary of the Local Government Commission.The original and one copy will be returned to the Auditor.Approval is not required on contracts and invoices for system improvements and 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 fn which includes any cost the Auditor may incur from work paper or peer reviews or any other quality assurance program required by third parties(Feel and.State agencies or other organizations)as required under the Federal and State Single Audit Acts: �vy (Continued on Reverse) 10. After completing his audit, the Auditor shall submit to the Governing Board a written report of audit. This 4 report shall include,at least,the financial statements of the governmental unit and all of its component units , and notes thereto prepared in accordance with generally accepted accounting principles, combining and supplementary information requested by the client or required for full disclosure under the law, and the auditor's opinion on the material presented. The Auditor shall furnish the required number of copies of cite report of audit to the Governing Board as soon as practical after the dose of the accounting period. 11. The Auditor shall file with the Local Government Commission three copies of the reporting package, which includes the audit report,(four Copies for councils of governments)if a single audit is conducted. If there is a finding in a direct federal program, one additional copy of the audit report must be submitted to the Local Government Commission for each direct federal grantor with a finding.Two copies of the report of audit should be submitted if an audit in accordance with Government Auditing Standards is conducted and one copy if no single audit or audit in accordance with Government Auditing Standards is required. Copies of the report should be filed with the Local Government Commission when (or prior to) submitting the invoice for the services rendered.All Copies of the report submitted must be bound. The report of audit, as filed with the Secretary of the Local 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 reports 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 circumsunums 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 therefor. Upon approval by the Secretary of the Local Government Commission, this agreement may be varied or changed to include the increased time and/or compensation as may be agreed upon by the Governing Board and the Auditor. 13. If an approved contract needs to be varied or changed for any reason,the change must be reduced to writing, signed by both parties, preaudited if necessary, and submitted to the.Secretary of the Local Government Commission for approval. No change shall be effective unless approved by the Secretary of the Local Government Commission.the Governing Board.and the Auditor. 14. Whenever the Auditor uses an engagement letter with the Client. Items 9 and 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 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 20 of this contract Engagement letters containing indemnification clauses will not be approved by the Local Government Commission. 15. There are no special provisions except: See attached Engagement Letter 16. A separate contact should not be made for each division to be audited or report to be submitted.A separate contract must be executed for each component unit which is a local government and for which a separate audit report is issued. 17. The contract should be executed and submitted in triplicate to the Secretary of the Local Government Commission,325 North Salisbury Street,Raleigh,North Carolina 27603.1385. 18. Upon approval,the original contract will be returned to the Governmental Unit,a copy will be forwarded to the Auditor,and a copy retained by the Secretary of the Local Government Commission.The audit should not be started before the contract is approved. 19. Then 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. All of the above paragraphs are understood and shall apply to this agreement,except the following numbered paragraphs shall be deleted(See Item 15.) Deloitte & Touche LLP Orange County . Audit firm Gowtamental Unit By, K. Alan Lonbom By.W.i:lliam L. Crowther, Chairman / P pname) p'Laet type or print name area yW 7 _ egnature) (Signature of Msmc or CJMWMMM of eMAiraio f board) Approved by the Secretary of the Local This instrument has been preaudited in the manner Government Commission as pprovided in Article 3, required by The Local Government Budget and Fiscal Chapter 159 of the General Statutes or Article 31, Control Act or by the School Budget and Fiscal Control Part 3.Chapter 115C of the General Statutes. Act Kenneth T. Chavious For the Secretary,local Government Commission Governmental Unit Fuunte Officer(Pies"type or print name) (Signature) (Signature) Date Date t, (Preaudit Certifina cum&be dated.) 5 Deloifte & Touche LLP Suite 1800 Telephone:(919)546-8000 First Union Capitol Center Telex:4995716 150 Fayetteville Street Mall Facsimile:(919)833-3276 P.O.Box 2778 Raleigh,North Carolina 27602-2778 May 23, 1997 The Board of County Commissioners Orange County,North Carolina Dear Ladies and Gentlemen: We are pleased to serve as independent accountants and auditors for Orange County,North Carolina (the "County")for the year ending June 30, 1997. Mr. K.Alan Lonbom will be responsible for the services that we perform for the County. It will be the responsibility of Mr. Lonbom to ensure that the County receives quality service. Mr. Lonbom will,as considered necessary,call on other individuals with specialized knowledge,either in this office or elsewhere in our Firm,to assist in the performance of our services. While auditing and reporting on the County's general purpose financial statements for the year ending June 30, 1997, is the service that we will provide,we would also like to assist the County on issues as they arise throughout the year. Hence,we hope that the County will call Mr. Lonbom whenever management believes he can be of assistance. This letter sets forth our understanding of the terms and objectives of our engagement,the nature and scope of the services we will provide and the related fee arrangements. Audit of General Purpose Financial Statements and Other Reporting We will audit the County's general purpose financial statements as of and for the year ending June 30, 1997. In addition, we will report on the County's Schedule of Federal and State Financial Assistance and compliance with laws and regulations related to federal and state financial assistance. Our audit will be conducted in accordance with Government Auditing Standards, issued by the Comptroller General of the United States, Office of Management and Budget Circular A-133,Audits of States, Local Governments and Nonprofit Institutions,and the State Single Audit Implementation Act. The objective of an audit carried out in accordance with these standards is(i)the expression of our opinion concerning whether the general purpose financial statements present fairly,in all material respects,the financial position,results of operations and cash flows of the proprietary find type of the organization in conformity with generally accepted accounting principles,(ii)reporting on the internal DeloNTouche Tohmatsu International b s May 23, 1997 The Board of County Commissioners Page 2 controls relevant to an audit of the general purpose financial statements, (iii)reporting on the organization's compliance with laws and regulations,which could have a material effect on the general purpose financial statements, (iv)reporting on whether the schedule of expenditures of federal and state awards is presented fairly in relation to the general purpose financial statements taken as a whole, (v) the reporting on our determination as to whether the organization's internal control provides reasonable assurance of compliance with federal laws and other laws and regulations and (vi) the expression of an opinion on whether the organization complied with specific terms and conditions of its major federal and state programs. Our ability to express that opinion and render those reports, and the wording of our opinion and reports,will, of course,be dependent on the facts and circumstances at the date of such reports. If we are unable to complete our audit or if our auditors' reports require modification,the reasons therefor will be discussed with County management. In addition, we will render a report on illegal acts, as required, depending on the results of our audit procedures. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the general purpose financial statements;therefore,our audit will involve judgment about the number of transactions to be examined and the areas to be tested. An audit also includes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall general purpose financial statement presentation. We design the audit to obtain reasonable assurance of detecting errors and irregularities that are material to the general purpose financial statements and we will perform tests of the County's compliance with certain provisions of laws, regulations, contracts and grants. However,because of the characteristics of irregularities,particular those involving forgery and collusion,a properly designed and executed audit may not detect such items. Therefore, an audit conducted in accordance with generally accepted auditing standards is designed to obtain reasonable,rather than absolute,assurance that the general purpose financial statements are free of material misstatement. As part of our audit, we will consider the organization's internal control and assess control risk,as required by Government Auditing Standards, for the purpose of establishing a basis for determining the nature, timing and extent of auditing procedures necessary for expressing our opinion on the general purpose financial statements, and not to provide assurance on the organization's internal control. The report on our understanding of the organization's internal control and the assessment of control risk made as part of the organization's general purpose financial statement audit will include (1) the scope of our work in obtaining an understanding of the internal control and in assessing the control risk and (2) the reportable conditions,including the identification of material weaknesses identified as a result of our work in understanding and assessing the control risk. May 23, 1997 The Board of County Commissioners Page 3 Our auditing 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,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. As part of our audit of compliance with the requirements of major federal and state award programs, we will obtain an understanding of the organization's internal control related to administering major federal and state awards and we will assess risk as required by OMB Circular A-133 for the purpose of establishing the nature, timing and extent of auditing procedures necessary for expressing our opinion concerning compliance with laws and regulations related to major federal and state award programs. As required by OMB Circular A-133 and the State Single Audit Implementation Act, our audit will also include tests of transactions related to federal and state award programs for compliance with applicable laws and regulations. However,because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions,there is a risk that material errors,irregularities or illegal acts,including fraud or defalcations,may exist and not be detected by us. We will advise you,however,of any matters of that nature that come to our attention,and will include such matters in the reports required for an audit in accordance with OMB Circular A-133. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that arise during any later periods for which we have not been engaged as.auditors and for which we have performed no auditing procedures. We understand that the County's employees will type all cash or other confirmations that we request and will locate any invoices selected by us for testing. We understand that our reports on the County's internal control structure as part of the general purpose financial statement audit and on compliance with laws and regulations are intended for the information of the County Manager,Members of the Board of County Commissioners,management and officials of federal and state agencies. Management's Responsibility The general purpose financial statements are the responsibility of management. In this regard, management has the responsibility for, among other things: establishing and maintaining effective internal control;for identifying and ensuring compliance with laws,regulations, contracts and grants and for establishing and maintaining effective internal control to assure such compliance with those requirements applicable to its activities;for properly recording transactions in the accounting records; for making appropriate accounting estimates;for safeguarding assets;for the overall accuracy of the general purpose financial statements and their conformity with general accepted accounting principles; 8 May 23, 1997 The Board of County Commissioners Page 4 and for making all financial records and related information available to us. It also is our understanding that you are responsible for implementing the requirements of applicable GASB Statements effective this fiscal year. We will advise you about accounting principles and their application and will assist in the preparation of your general purpose financial statements,but the responsibility for the general purpose financial statements remains with you. We will make specific inquiries of management about the representations embodied in the general purpose financial statements. As part of our audit procedures, we will request that management provide us with a representation letter acknowledging management's responsibility for the preparation of the general purpose financial statements and confirming certain representations made to us during our audit, and confirming management's responsibility for compliance with laws and regulations, applicable to federal and state financial assistance programs. The responses to those inquiries and related written,representations of management required by generally accepted auditing standards are part of the evidential matter that we will rely on as auditors in forming our opinion on the County's general purpose financial statements. Because of the importance of management's representations in performing an effective audit,the County agrees to release and 'indemnify Deloitte &Touche LLP, and its partners,principals and employees,from and against any and all actions,losses,damages, claims,liabilities,costs and expenses (including, without limitation,attorneys' fees and expenses,and the time of Deloitte &Touche LLP personnel involved)relating to our services under this engagement letter attributable to any misrepresentation by management that should not have been detected in an audit conducted in accordance with generally accepted auditing standards, as required in Item No. 2 of the Contract to Audit Accounts.. If the County intends to publish or otherwise reproduce in any document our report on the County's general purpose financial statements, or otherwise make reference to Deloitte &Touche LLP in a document that contains other information in addition to the audited general purpose financial statements (e.g.,in a debt or equity offering circular or in a private placement memorandum),the County agrees that prior to making any such use of our report, or reference to Deloitte &Touche LLP,County management will provide us with a draft of the document to read and obtain our approval for the inclusion or incorporation by reference of our report, or the reference to Deloitte& Touche LLP, in such document before the document is printed and distributed. The inclusion or incorporation by reference of our report in any such document would constitute the reissuance of our report and any request by the County to reissue our report or to consent to its inclusion or incorporation by reference in an offering or other document will be considered based on the facts and circumstances existing at the time of such request. The estimated fees outlined herein do not include any services that would need to be performed in connection with any such request to make use of our report, or reference to Deloitte &Touche LLP;fees for such services (and their scope)would be subject to our mutual agreement at such time and would be described in a separate engagement letter. 9 May 23, 1997 The Board of County Commissioners Page 5 Other Communications Arising From the Audit In connection with the planning and the performance of our audit,generally accepted auditing standards and Government Auditing Standards require that we ensure that certain matters are communicated to management and Members of the Board of County Commissioners related to the conduct of our audit,including,when applicable: • Our responsibility as auditors under generally accepted auditing standards • Significant accounting policies • Management judgments and accounting estimates • Significant audit adjustments (recorded and unrecorded) • Other information in documents containing audited financial statements • Disagreements with management • Consultation by management with other accountants on significant matters • Difficulties encountered in performing the audit • Major issues discussed with management prior to our retention as auditors. We may also have other comments for management on matters we have observed and possible ways to improve the efficiency of the County's operations or other recommendations concerning internal control. With respect to these other communications,it is our practice to discuss all comments,if appropriate, with the level of management responsible for the matters,prior to their communications to senior management and/or the Members of the Board of County Commissioners. 10 May 23, 1997 The Board of County Commissioners Page 6 Coordination of the Audit Our audit is scheduled for performance and completion as follows: Begin Complete Audit Performance Schedule: Interim June 16, 1997 June 30, 1997 Year-end August 4, 1997 September 30, 1997 Audit Communications: Report on audit of financial statements October 31, 1997 Report on reportable conditions,if any October 31, 1997 Other management comments October 31, 1997 Assistance to be supplied by your personnel,including preparation of schedules and analyses of accounts will be coordinated with Mr. Kenneth Chavious,Finance Director. Timely completion of this work will facilitate the conclusion of our audit. We are, of course, available to assist you in other areas that might arise. Other Services Deloitte &Touche LLP is also pleased to provide consulting services relative to the enhancement of the reporting capabilities of Orange County at no charge through the use of our Audit System 2 ("A.S/2")proprietary software. A copy of the AS/2 trial balance system will also be provided at no charge. Record Retention We will maintain the working papers for a minimum of three years from the date of the audit report. These working papers will be made available to representatives of the United States General Accounting Office or other government audit staffs upon their request and after they have properly notified you of their request to review the working papers. Professional Fees Our fees for these services will be based on the actual time spent at our standard hourly rates,plus travel and other out-of-pocket costs (e.g.,report production, typing and postage). Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. Total fees for this audit will be$56,300,including expenses. This fee is based on anticipated cooperation from your personnel and the assumption that unexpected 11 May 23, 1997 The Board of County Commissioners Page 7 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 before we incur the additional costs. We appreciate this opportunity to continue to serve Orange County, and we believe this letter 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. Yours truly, p ! LLn Response: This letter correctly sets forth the understanding of Orange County. By: Title: Date: { =U ERNST&YOUNG LLP 12 ■ 787 Seventh Avenue ■ Phone: 212 773 3000 New York,New York 10019 Deloitte&Touche LLP We have reviewed the system of quality control for the accounting and auditing practice of Deloitte&Touche LLP(the Firm) in effect for the year ended March 31, 1996. Our review was conducted in conformity with standards for peer reviews promulgated by the Peer Review Committee of the SEC Practice Section of the AICPA Division for CPA Firms (the Section). We tested compliance with the Firm's quality control policies and procedures at the Firm's National office and at selected practice offices in the United States and with the membership requirements of the Section to the extent we considered appropriate. These tests included the application of the Firm's policies and procedures on selected accounting and auditing engagements. We tested the supervision and control of portions of engagements performed outside the United States. In performing our review, we have given consideration-to the general characteristics of a system of quality control as described in quality control standards issued by the AICPA. Such a system should be appropriately comprehensive and suitably designed in relation to the firm's organizational structure, its policies, and the nature of its practice. Variance in individual performance can affect the degree of compliance with a firm's prescribed quality control policies and procedures. Therefore, adherence to all policies and procedures in every case may not be possible. As is customary in a peer review, we are issuing a letter under this date that sets forth comments relating to certain policies and procedures or compliance with them. These matters were not considered to be of sufficient significance to affect the opinion expressed in this report. In our opinion, the system of quality control for the accounting and auditing practice of Deloitte & Touche LLP in effect for the year ended March 31, 1996 met the objectives of quality control standards established by the AICPA, and was being complied with during the year then ended to provide the Finn with reasonable assurance of conforming with professional standards. Also, in our opinion, the Firm was in conformity with the membership requirements of the Section in all material respects. New York,New York November 25, 1996 4 Emst&Young LLP is a member of Ernst&Young International,Ltd.