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HomeMy WebLinkAboutAgenda - 06-07-1993 - III-A 1 ORANGE COUNTY BOARD OF COMMISSIONERS Action Agenda Item No.1D54 ACTION AGENDA ITEM ABSTRACT Meeting Date: June 7, 1993 SUBJECT: 1992-93 Audit Contract DEPARTMENT: Finance PUBLIC HEARING YES: NO: X ATTACHMENT(S) : INFORMATION CONTACT: Ken Chavious Ext 2453 Contract TELEPHONE NUMBER- Engagement Letter Hillsborough - 732-8181 Chapel Hill - 968-4501 Mebane - 227-2031 Durham - 688-7331 PURPOSE: To consider awarding a contract to develop the audit for the fiscal year ending June 30, 1993 . BACKGROUND: Local governments are required by G.S. 159-34 to have an annual audit of their financial records by an independent auditor. The audit for 1992 was performed by Deloitte and Touche, an international accounting firm with an excellent reputation in the field of Governmental Accounting and Auditing. Deloitte & Touche has proposed a contract to perform the 1993 audit for a fee of $49,800. The audit costs consist of $31,500 for the Comprehensive Annual Financial Report and certification of tax levy and $18, 300 for the Single Audit of grant funds. The proposed costs reflect an increase of $2 , 800 over the previous year. The majority of this increase is in the Single Audit area and can be attributed to changes in audit requirements and increases in the volume of transactions in existing programs, as well as the addition of new programs. The major program increases for the current year have been mainly in the Social Services area. Particularly, the JOBS, Day Care and Income Maintenance programs. New programs to be audited include Home and Community Care, Child Care Coordination and two Section 8 Housing programs. The majority of costs associated with the Single audit are recuperated through indirect cost reimbursements received from State and Federal grantors. RECOMMENDATION(S) : The manager recommends that the Board approve the audit contract with Deloitte & Touche for fiscal year 1992-93 and authorize the Chair to sign. 3 10. The contract should be executed and submitted in triplicate to the Secretary of the Local Government Commission, 3^_5 . North Salisbury Street, Raleigh, North Carolina 27603-1388. 11. 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. 12. This contract contemplates an unqualified opinion being rendered. Any Iimitations or restrictions in scope which would Iead to a qualification should be fully explained in an attachment to this contract, Contracts with such limitations will not be approved unless satisfactory explanation is made. 13. If an approved contract needs to be varied or changed, the change must be reduced to writing, signed by both parties, 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. A separate contract should not be made for each division to be audited or report to be submitted:The scope of the audit and the fee for the audit should be clearly stated. Stated fees include 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 agencies or other organizations). 15. Three copies(one copy for units not having a single audit),of the report of audit and any other written report by the Auditor shall be filed with the Secretary of the Local Government Commission when (or prior to) submitting the invoice for the services rendered no later than four months after the close of the fiscal year (for fiscal years ending June 30 this would be October 31). 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. These reports are used in the preparation of Official Statements fox-debt offerings as well as by municipal bond rating services. 16. There are no special provisions except: SEE ENGAGEMENT LETTER ATTACHED 17. Whenever the Auditor uses an engagement letter with the client, Item 16 should be completed by referencing the engage- ment 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 21 of this contract. 18. A Governmental Unit not having a single audit on federal and State funds would list Item 7 in Item 21 of the contract as being a deleted provision. An explanation must be given in Item 21 for any Governmental Unit not receiving a single audit on federal and State funds (e.g., a single audit is not required under the Federal and State Single Audit Acts and is not being performed). 19. If this audit engagement Is subject to the standards for audit as defined in the Government Auditing 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 an external quality control review specified in the Government Auditing Standards. Copies of any written communications that are a result of an external quality control review will be made available to the Secretary of the Local Government Commission upon his request. 20. There are no other agreements between the parties hereto and no other agreements relative hereto that shall be enforceable unless entered into in accordance with the procedure set out herein and approved by the Secretary of the Local Govern- ment Commission. 21. All of the above paragraphs are understood and shall apply to this agreement, except the following numbered paragraphs shall be deleted: (See Items 17 and 18.) DELOITTE & TOUCHE ORANGE COUNTY, NORTH CAROLINA Audit firm Governmental Unit By REX PRICE, PARTNER By ue type orfrr nt) _ y (Please type or print name and Ls) ( gnats) (Signature of Mayor or Chairperson of governing board) Approved by the Secretary of the Local Government This instrument has been preaudited in the manner re- Commission as provided in Article 3, Chapter 159 of the quired by The Local Government Budget and Fiscal Con- General Statutes or Article 31, Part 3, Chapter 115C of trol Act or by The School Budget and Fiscal Control Act. the General Statutes. For the Secretary, Local Government Commi aion Governmental Unit Finance Offices (Please type or print) (Signature) (Signature) Date Date 5 The Board of County Commissioners Orange County, North Carolina Page Two However, because of the characteristics of irregularities, particularly 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 about the financial statements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. The objective of our audit is the expression of an opinion on the County's financial statements. Our ability to express that opinion, and the wording of our opinion, will, of course, be dependent on the facts and circumstances at the date of our report. If our auditors' report requires modification, the reasons therefore will be discussed with you prior to its issuance. Management's Responsibility We direct your attention to the fact that the financial statements are the responsibility of management. In this regard, management has the responsibility for designing effective internal controls, for properly recording transactions in the accounting records, for making appropriate accounting estimates, for safeguarding assets, and for the overall accuracy of the financial statements. Other Communications Arising from the Audit In connection with the planning and the performance of our audit, generally accepted auditing standards require that we communicate to the Board of County Commissioners, to the extent that they come to our attention, irregularities and illegal acts that are clearly not inconsequential, and reportable conditions. Reportable conditions are significant deficiencies in the design or operation of the internal control structure that could adversely affect the County's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. We may also have other comments for management on matters we have observed and possible ways to improve the efficiency of your operations or other recommendations concerning the internal control structure. 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 communication to senior management and/or the Board of County Commissioners. Assistance to be supplied by your personnel, including preparation of schedules and analyses of accounts, will be discussed with the appropriate personnel. Timely completion of this work will facilitate the conclusion of our audit.