HomeMy WebLinkAbout2018-233 Finance - Mauldin and Jenkins audit 2018 i
LGC-205(Rev.2018)
CONTRACT TO AUDIT ACCOUNTS
Of Orange County
Primary Government Unit
not applicable
Discretely Presented Component Unit(DPCU) if applicable
On this 26th day of April ,2018
Auditor:Mauldin&Jenkins,PLLC Auditor Mailing Address: 200 Galleria Parkway
Atlanta,Georgia 30339 Hereinafter referred to as The Auditor
and Board of Commissioners (Governing Board(s)) of Orange
(Primary Government)
and not applicable : hereinafter referred to as the Governmental Unit(s),agree as follows:
(Discretely Presented Component Unit)
1. The Auditor shall audit all statements and disclosures required by accounting principles generally accepted in the
United States of America (GAAP) and additional required legal statements and disclosures of all funds and/or
divisions of the Governmental Unit (s) for the period beginning July 1 ,2017 , and
ending June 30 ,2018 . 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 shall be rendered in relation to (as applicable) the governmental activities, the business-
type activities, the aggregate DPCUs, 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
auditing standards generally accepted in the United States of America. 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 Uniform Administration Requirements,
Cost Principles, and Audit Requirements for Federal Awards, (Uniform Guidance) and the State Single Audit
Implementation Act, the Auditor shall perform a Single Audit. This audit and all associated audit
documentation may be subject to review by Federal and State agencies in accordance with Federal and State laws,
including the staffs of the Office of State Auditor (OSA) and the Local Goveriunent Commission (LGC). If the
audit and Auditor communication 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 (NC State Board). County and Multi-County
Health Departments: The Office of State Auditor will require Auditors of these Govermmental Units to perform
agreed upon procedures(AUPs) on eligibility determination on certain programs. Both Auditor and Governmental
Unit agree that Auditor shall complete and report on these AUPs on Eligibility Determination as required by Office
of the State Auditor(OSA) and in accordance with the instructions and timeline provided by OSA.
3. If an entity is determined to be a component of another government as defined by the group audit standards, the
entity's Auditor shall make a good faith effort to comply in a timely manner with the requests of the group auditor in
accordance with AU-6 §600.41 - §600.42.
4. This contract contemplates an unmodified opinion being rendered. If during the process of conducting the audit
the Auditor determines that it will not be possible to render an unmodified opinion on the financial statements
of the unit, the Auditor shall contact the SLGFD staff to discuss the circumstances leading to that conclusion
as soon as is practical and before the final report is issued. 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 scope which would lead to a qualification should be fully explained in an attachment
to this contract.
Contract to Audit Accounts (cont.) orange County
Primary Government Unit
not applicable
Discretely Presented Component Unit(DPCU)if applicable
5. If this audit engagement is subject to the standards for audit as defined in Gover°nrnent Auditing Standards, 2011
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 Gover°nMent
Auditing Standards. The Auditor agrees to provide a copy of their most recent peer review report regardless of the
date of the prior peer review report to the Governmental Unit and the Secretary of the LGC prior to the execution of
the audit contract. If the audit firm received a peer review rating other than pass, the Auditor shall not
contract with the Governmental Unit without first contacting the Secretary of the LGC for a peer review analysis
that may result in additional contractual requirements.
If the audit engagement is not subject to Government Accounting Standards or if financial statements are not
prepared in accordance with GAAP and fail to include all disclosures required by GAAP, 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. Audit report is due on:10/31/2018 . If it becomes
necessary to amend this due date or the audit fee, an amended contract along with a written explanation of the
delay shall be submitted to the Secretary of the LGC for approval.
7. It is agreed that generally accepted auditing standards include a review of the Governmental Unit's systems of
internal control and accounting as same relate to accountability of funds and adherence to budget and law requirements
applicable thereto; that the Auditor shall 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 shall include all matters defined as "significant deficiencies and material weaknesses" in AU-C
265 of the AXPA Professional Standards (Clarified). The Auditor shall file a copy of that report with the Secretary
of the LGC.
8. All local government and public authority contracts for audit or audit-related work require the approval of the
Secretary of the LGC. This includes annual or special audits, agreed upon procedures related to internal controls,
bookkeeping or other assistance necessary to prepare the Governmental 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 shall not be paid by the Governmental Unit until the
invoice has been a1212ro3: the Secretary of the LGC. (This also includes any progress billings.) [G.S. 159-34
and 115C-447] All invoices for Audit work shall be submitted in PDF format to the Secretary of the LGC for
approval. The invoices shall be sent via upload through the current portal address:
l�tt��s:'nctre ztiw erslgici.lc�3;�1 ile,net. Subject line should read "Invoice — [Unit Name]. The PDF invoice marked
`approved' with approval date shall be returned by email to the Auditor to present to the Governmental 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 contract, the Primary Government shall
pay to the Auditor, upon approval by the Secretary of the LGC, the 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.
(Note: Fees listed on Fees a=.). This does not include fees for any Pre-Issuance reviews that may be required by the
NC Association of CPAs(NCACPA)Peer Review Committee or NC State Board of CPA Examiners (see Item#12).
10. If the Governmental Unit has outstanding revenue bonds,the Auditor shall submit to the SLGFD either in the notes to
the audited financial statements or as a separate report, a calculation demonstrating compliance with the revenue
bond rate covenant. Additionally, the Auditor shall submit to the SLGFD simultaneously with the
Page 2 of 9
Contract to Audit Accounts (cont.) Orange County
Primary Government Unit
not applicable
Discretely Presented Component Unit(DPCU)if applicable
Governmental Unit's audited financial statements any other bond compliance statements or additional reports
required by the authorizing bond documents, unless otherwise specified in the bond documents.
11. After 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
financial statements and notes of the Governmental Unit and all of its component units prepared in accordance with
GAAP, (c) supplementary information requested by the Governmental Unit 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 fiscal year end.
12. If the audit firm is required by the NC State Board, the NCACPA Peer Review Committee, or the Secretary of the
LGC to have a pre-issuance review of its audit work, there shall be a statement in the engagement letter indicating
the pre-issuance review requirement. There also shall be a statement that the Governmental Unit shall not be
billed for the pre-issuance review. The pre-issuance review shall be performed prior to the completed audit being
submitted to the SLGFD. The pre-issuance review report shall accompany the audit report upon submission to the
SLGFD.
13. The Auditor shall electronically submit the report of audit to the SLGFD as a text-based PDF file when (or prior
to) submitting the invoice for services rendered. The report of audit, as filed with the Secretary of the LGC, becomes
a matter of public record for inspection, review and copy in the offices of the SLGFD by any interested parties. Any
subsequent revisions to these reports shall be sent to the Secretary of the LGC along with an Audit report
Reissuance form. These audited financial statements, excluding the Auditors' opinion, may be used in the
preparation of official statements for debt offerings, by municipal bond rating services to fulfill secondary market
disclosure requirements of the Securities and Exchange Commission and f o r other lawful purposes of the
Governmental Unit without subsequent consent of the Auditor. If the SLGFD determines that corrections
need to be made to the Governmental Unit's financial statements, those corrections shall be provided within three
days of notification unless another deadline is agreed to by the SLGFD.
If the OSA designates certain programs to be audited as major programs, as discussed in item #2, a turnaround
document and a representation letter addressed to the OSA shall be submitted to the SLGFD.
The SLGFD's process for submitting contracts, audit reports and invoices is subject to change. Auditors shall use
the submission process in effect at the time of submission. The most current instructions will be found on our
website: https://Nvww.nctreasurer.com/slg/Pages/Audit-Forms-and-Resources.aspx
14. 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
LGC, this contract may be varied or changed to include the increased time, compensation,or both as may be agreed
upon by the Governing Board and the Auditor.
15. If an approved contract needs to be amended for any reason, the change shall be made in writing, on the
Amended LGC-205 contract form and pre-audited if the change includes a change in audit fee. This amended
contract shall be completed in full, including a written explanation of the change, signed and dated by all original
parties to the contract. It shall then be submitted through the audit contract portal to the Secretary of the LGC for
approval. The portal address to upload the amended contract is https:/hicti-easurersl(zfcl.Icapfile.net. No chan.jze to
the audit contract shall be effective unless approved by the Secretary of the LGC, the Governing`Board, and the
Auditor.
Page 3 of 9
Contract to Audit Accounts (cont.) Orange County
Primary Government Unit
not applicable
Discretely Presented Component Unit(DPCU)if applicable
16. A copy of the engagement letter, issued by the Auditor and signed by both the Auditor and the Governmental Unit shall
be attached to the contract, and by reference here becomes part of the contract. In case of conflict between the terms of
the engagement letter and the terms of this contract,the terms of this contract shall take precedence. Engagement letter
terms that conflict with the contract are deemed to be void unless the conflicting terms of this contract are specifically
deleted in Item 423 of this contract. Engagement letters containing indemnification clauses shall not be accepted by
the SLGFD.
17. Special provisions should be limited. Please list any special provisions in an attachment. See attached Engagement Letter
18. A separate contract should not be made for each division to be audited or report to be submitted. If a DPCU is
subject to the audit requirements detailed in the Local Government Budget and Fiscal Control Act and a separate
audit report is issued, a separate audit contract is required. If a separate report is not to be issued and the DPCU is
included in the primary government audit, the DPCU shall be named along with the parent government on this audit
contract. DPCU Board approval date, signatures from the DPCU Board chairman and finance officer also shall be
included on this contract.
19. The contract shall be executed, pre-audited, physically signed by all parties including Governmental Unit and
t h e Auditor and then submitted in PDF format to the Secretary of the LGC. The current portal address to upload
the contractual documents is https://ncti-easui-erslgfcl.leapfile.net. Electronic signatures are not accepted at this time.
Included with this contract are instructions to submit contracts and invoices for approval as of November 2017.
These instructions are subject to change. Please check the NC Treasurer's web site at
https://www.nctreasurer.com/sl /g_Pages/Audit-Forms-and-Resources.q px for the most recent instructions.
20. The contract is not valid until it is approved by the Secretary of the LGC. The staff of the LGC shall notify
the Governmental Unit and Auditor of contract approval by email. The audit should not be started before
the contract is aR rti oved.
21. 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
LGC.
22. E-Verify. Auditor shall comply with the requirements of NCGS Chapter 64 Article 2. Further, if Auditor utilizes
any subcontractor(s),Auditor shall require such subcontractor(s)to comply with the requirements of NCGS
Chapter 64, Article 2.
23. All of the above paragraphs are understood and shall apply to this contract, except the following numbered
paragraphs shall be deleted: (See Item 16 for clarification).
Number 22, because Auditor does not have 25 or more employees in the State of North Carolina.
SIGNATURE PAGES FOLLOW FEES PAGE
Page 4 of 9
Contract to Audit Accounts (cont.) Orange County
Primary Government Unit
not applicable
Discretely Presented Component Unit(DPCU)if applicable
FEES - PRIMARY GOVERNMENT
AUDIT: $ 953500
WRITING FINANCIAL STATEMENTS: $
ALL OTHER NON-ATTEST SERVICES: $
For all non-attest services the Auditor shall adhere to the independence rules of the AICPA Professional Code of Conduct
and Governmental Auditing Standards(as applicable). Bookkeeping and other non-attest services necessary to perform
the audit shall be included under this contract. However,bookkeeping assistance shall be limited to the extent that the
Auditor is not auditing his or her own work or making management decisions. The Governmental Unit shall designate an
individual with the suitable skills,knowledge, and/or experience necessary to oversee the services and accept
responsibility for the results of the services. Financial statement preparation assistance shall be deemed a"significant
threat"requiring the Auditor to apply safeguards sufficient to reduce the threat to an acceptable level. The Auditor shall
maintain written documentation of his or her compliance with these standards in the audit work papers.
Prior to submission of the completed audited financial report, applicable compliance reports and amended contract(if
required)the Auditor may submit invoices for approval for services rendered, not to exceed 75%of the total of the stated
fees above. If the current contracted fee is not fixed in total, invoices for services rendered may be approved for up to
75% of the prior year audit fee.
The 75% cap for interim invoice approval for this audit contract is S 625
**NA if there is to be no interim billing
FEES—DPCU (IF APPLICABLE)
AUDIT: $ -
WRITING FINANCIAL STATEMENTS: $
ALL OTHER NON-ATTEST SERVICES: $
For all non-attest services the Auditor shall adhere to the independence rules of the AICPA Professional Code of Conduct
and Governmental Auditing Standards(as applicable). Bookkeeping and other non-attest services necessary to perform
the audit shall be included under this contract. However,bookkeeping assistance shall be limited to the extent that the
Auditor is not auditing his or her own work or malting management decisions. The Governmental Unit shall designate an
individual with the suitable shills, knowledge, and/or experience necessary to oversee the services and accept
responsibility for the results of the services. Financial statement preparation assistance shall be deemed a"significant
threat"requiring the Auditor to apply safeguards sufficient to reduce the threat to an acceptable level. The Auditor shall
maintain written documentation of his or her compliance with these standards in the audit work papers.
Prior to submission of the completed audited financial report, applicable compliance reports and amended contract(if
required)the Auditor may submit invoices for approval for services rendered, not to exceed 75% of the total of the stated
fees above. If the current contracted fee is not fixed in total,invoices for services rendered may be approved for up to
75% of the prior year audit fee.
The 75% cap for interim invoice approval for this audit contract is $
**NA if there is to be no interim billing
Page 5 of 9
Contract to Audit Accounts(coat.) Orange County
Primary Government Unit
not applicable
Discretely Presented Component Unit(DPC,T)if applicable
Communication regar•dirtg audit contract requests for PRE-AUDIT CERTIFICATE:Required by G.S.159-28
modification or official approvals will he sent to the {a)
email addresses provided in the spaces below.
Audit Firm Signature: . Tl1is instrument has been pre-audited in the manner
Mauldin & Jenkins, PLLC required by The Local Government BudgetandFiscal
Namvof Audit Firm Control Act or by the School Budget and Fiscal Control
By Joel Black Act./�
Guth 'zed Audit representative name:Type or print B � (�o Ttnd-asm
PrimarV GoNlernment Unit Finance Officer:
Sign< ure of authorized audit turn representative Type or p • t n
Date
}mbiack @mjcpa.com
Email Address of Audit Firm
Priry vve n nt Finance Officer Signature
ma
]Date 51 2-/1 V
re-audit Certi cafe must be date .}
Governmental Un Signatures-
b &()V ty A 1A C - -
IB''}me IVY ernf r `-"J( n l C "t W m a V
Mayor/Chai ersa •' p or print name and title
//////o ICI( /
ail Address of Finance Officer
Signature o Mayor ,hair er n of g verning board
Date 3 I
By Bate Primary Government Governing Body
Chair of Audit Committee-Type or print name Approved Audit Contract-G.S. 159-34(a)
yk
Signature of Audit Committee Chairperson
Date
:k If Governmental Unit has no audit con2rnittee, mark-
this section "XIA"
***Please provide us the most current email addresses available as we use this information
to update our contact database***
Page 6 of 9
Contract to Audit Accounts (cont.) Orange County
Primary Government Unit
not applicable
Discretely Presented Component Unit(DPCU)if applicable
x* This page to only be completed by Discretely Presented Component Units If Applicable **
Communication regarding audit contract requests for
modification or official approvals will be sent to the PRE-AUDIT CERTIFICATE:Required by G.S.159-28
email addresses provided in the spaces below. (a)
DPCU Governmental Unit Signatures: This instrument has been pre-audited in the manner
required by The Local Government Budget and Fiscal
Name of Discreetly Presented Component Unit Control Act or by the School Budget and Fiscal Control
Act.
By
DPCU Board Chairperson:Type or print name and title
By
Signature of Chairperson of DPCU governing board DPCU Finance Officer:
Type or print name
Date
DPCU Finance Officer Signature
By Date
Chair of Audit Committee-Type or print name (Pre-audit Certificate must be dated.)
Signature of Audit Committee Chairperson Email Address of Finance Officer
Date
** If Governmental Unit has no audit committee, mark
this section "N/A" Date DPCU Governing Body Approved Audit
Contract- G.S. 159-34(a)
***Please provide us the most current email addresses available as we use this information
to update our contact database***
Page 7 of 9
Contract to Audit Accounts (cont.) Orange County
Primary Government Unit
not applicable
Discretely Presented Component Unit(DPCU)if applicable
Steps to Completing the Audit Contract
1. Complete the header information—If a DPCU is subject to the audit requirements found in the Local Government
Budget and Fiscal Control Act and a separate report is being issued for that DPCU, a separate audit contract for the
DPCU is required. If a separate report is not being issued for the DPCU—it is being included in the Primary
Government's audit—the DPCU shall be named with the Primary Government on the audit contract for the
Primary Government. The Board Chairperson of the DPCU shall sign the audit contract in addition to the elected
leader of the Primary Government.
2. Item No. 1 —Complete the period covered by the audit
3. Item No. 6 —Fill in the audit due date. For Governmental Unit (s), the contract due date can be no later than 4
months after the end of the fiscal year, even though amended contracts may not be required until a later date.
4. Item No. 8 — If the process for invoice approval instructions changed, the Auditor should make sure he and his
administrative staff are familiar with the current process. Instructions for each process can be found at the
following link. https://�vwNv.netreasurer.com/slg/Pages/Audit-Forms-and-Resources.aspx
5. Item No. 9—Please note that the new fee section has been moved to page 5.
6. Item No. 16—Has the engagement letter been attached to the contract that is being submitted to SLGFD?
a. Do the terms and fees specified in the engagement letter agree with the Audit contract? "In case of
conflict between the terms of the engagement letter and the teems of this contract, the terms of this
contract shall take precedence."
b. Does the engagement letter contain an indemnification clause? The audit contract shall not
be approved if there is an indemnification clause—refer to LGC Memo#986.
7. Complete the fee section for BOTH the Primary Government and the DPCU(if applicable) on the fees
page; please note:
• The cap on interim payments is 75% of the current audit fee for services rendered if the contracted fee
amount is a fixed amount. If any part of the fee is variable, interim payments are limited to 75% of the
prior year's total audit fee. If the contract fee is partially variable, we shall compare the authorized
interim payment on the contract to 75% of last year's actual approved total audit fee amount according to
our records. There is a report of audit fees paid by each governmental unit on our web site:
https://www.nctreasurer.com/sl,2/lfm/audit acct/Pages/defa.ult.aspx select"audit fees"
Please call or email Lorna Hodge at 919-814-4299 lorna.hodgennctreasurer.com if you have any
questions about the fees on this list.
• For variable fees for services, are the hourly rates or other rates clearly stated in detail? If issued
separately in an addendum, has the separate page been acknowledged in writing by the Governmental
Unit?
Page 8 of 9
Contract to Audit Accounts (cont.) Orange County
Primary Government Unit
not applicable
Discretely Presented Component Unit(DPCU)if applicable
• For fees for services that are a combination of fixed and variable fees, are the services to be provided for
the fixed portion of the fee clearly stated? Are the hourly rates or other rates clearly stated for the
variable portion of the fee? (Note: See previous bullet point regarding variable fees.)
• If there is to be no interim billing,please indicate N/A instead of leaving the line blank.
8. Signature Area — There are now 2 Signature Pages: one for the Primary Government and one for the DPCU.
P 1 e a s e o n 1 y s end the page(s) that are applicable to your Unit of Government and do not include the
instructions pages. Make sure all signatures have been obtained, and properly dated. The contract shall be
approved by Governing Boards pursuant to G.S. 159-34(al. If this contract includes the audit for a DPCU
that is a Public Authority that falls under the Local Government Budget and Fiscal Control Act, it shall be named
in this contract and the Board Chairperson of the DPCU also shall sign the contract in the area indicated. If the
DPCU is filing a separate audit, a separate audit contract is required for that DPCU.
9. Please place the date the Primary Government's Governing Board and the DPCU's Governing Board (if
applicable) approved the audit contract in the space provided.
a. Please make sure that you provide email addresses for the audit firm and finance officer as these will be
used to communicate official approval of the contract.
b. Has the pre-audit certificate for the Primary Government(and the DPCU if applicable)been signed and
dated by the appropriate party?
c. Has the name and title of the Mayor or Chairperson of the Unit's Governing Board and the DPCU's
Chairperson (if applicable)been typed or printed on the contract and has he/she signed in the correct area
directly under the Auditor's signature?
10. If the Auditor is performing an audit under the yellow book or single audit rules, has year-end bookkeeping
assistance been limited to those areas permitted under the revised GAO Independence Standards? Although not
required, we encourage Governmental Units and Auditors to disclose the nature of these services in the contract
or an engagement letter. Fees for these services should be shown in the space indicated on the fees page.
11. Has the most recently issued peer review report for the audit firm been included with the contract? This is
required if the audit firm has received a new peer review report that has not yet been forwarded to us. The audit
firm is only required to send the most current Peer Review report to us once—not multiple times.
12. After all the signatures have been obtained and the contract is complete, please convert the contract and all other
supporting documentation to PDF. When submitting for approval send the documents as one PDF file to include
the Audit contract, any applicable addendums, the engagement letter and Peer Review Report. Submit these
documents using the most current submission process which can be obtained at the NC Treasurer's web site
https•//www nctreasurei-com/slg/Audit%2OForms%20and%2ORcsources/Instructions%20for%2OContract%2OSu
bmission.pdf
13. If an audit cannot be completed by the due date,the Auditor or Governmental Unit shall file an Amended Contract
form (Amended LGC-205). This form shall be signed by the Governmental Unit representative and the Auditor.
The explanation for the delay in completing the audit is part of this contract amendment form and shall be provided.
The parties that signed the original audit contract shall sign the amended contract form as well. If the signing
representatives are unable to sign the amended contract, please include an explanation for this in the submitted
amended contract form.
Page 9 of 9
P B M a re 5�
Report on the Firm's System of Quality Control
To the Shareholders of Mauldin & Jenkins, LLC
and the National Peer Review Committee:
We have reviewed the system of quality control for the accounting and auditing practice of
Mauldin & Jenkins,LLC (the firm), applicable to engagements not subject to PCAOB permanent
inspection, in effect for the year ended May 31, 2017. 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 (Standards).
A summary of the nature, objectives, scope, limitations of, and the procedures performed in a
System Review as described in the Standards may be found at www.aicpa.org/prsummary. The
summary also includes an explanation of how engagements identified as not performed or
reported in conformity with applicable professional standards, if any, are evaluated by a peer
reviewer to determine a peer review rating.
Firm's Responsibility
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. The firm is also responsible for
evaluating actions to promptly rermediate engagements deemed as not performed or reported in
conformity with professional standards, when appropriate, and for remediating weaknesses in its
system of quality control, if any.
Peer Reviewer's Responsibility
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.
Required Selections and Considerations
Engagements selected for review included engagements performed under Government Auditing
Standards, including compliance audits under the Single Audit Act; audits of employee benefit
plans, an audit performed under FDICIA, and examinations of service organization's SOC I and
SOC 2 engagements.
As part of our peer review, we considered reviews by regulatory entities as communicated by the
firm, if applicable, in determining the nature and extent of our procedures.
PBMares,LLP 1 725 Jackson Street,Suite 210 1 Fredericksburg,VA 224011 P 540.371.3566 1 1.800.296.3710 1 F 5210.371.3598
-2-
Opinion
P n
In our opinion, the system of quality control for the accounting and auditing practice of Mauldin
& Jenkins, LLC applicable to engagements not subject to PCAOB permanent inspection in effect
for the year ended May 31, 2017, has been suitably designed and complied with to provide the
firm with 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. Mauldin & Jenkins, LLC has received a peer review rating of pass.
L�3 LLP
PBMares, LLP
October 30, 2017
AULDIN
& ENKINS
April 26, 2018
The Board of County Commissioners and
Bonnie Hammersley, County Manager
Orange County,North Carolina
200 South Cameron Street
Hillsborough,North Carolina 27278
Attn: Mr. Gary Donaldson, Chief Financial Officer, and Ms. Bonnie Hammersley, County Manager
We are pleased to confirm our understanding of the terms of our engagement and the nature and limitations
of the services we are to provide for Orange County,North Carolina (the "County").
We will apply the agreed-upon procedures detailed below, which were specified and agreed to by the
County, to the accounting records related to the receipts for the Aging Services office;AMS office; Solid
Waste office; Department of Environment, Agriculture, Parks & Recreation (DEAPR); Planning office;
Environmental Health office;Health and Human Services office;Library department; Tax Administration
office;Visitors' Bureau office; Child Support office; and Finance department(collectively,the"Offices")
for the fiscal year ended April 30, 2018. This engagement is solely to assist the County in evaluating
certain information related to the receipts made at the Offices. Our engagement to apply agreed-upon
procedures will be conducted in accordance with attestation standards established by the American
Institute of Certified Public Accountants. The sufficiency of the procedures to be performed is solely the
responsibility of the County. Consequently,.we make no representation regarding the sufficiency of the
procedures described below either for the purpose for which this report has been requested or for any other
purpose.
The specific agreed-upon procedures to be performed are outlined as follows:
1) We will obtain the general ledger details for the general ledger revenue accounts for each of the
Offices.
2) From the general ledger details obtained in step 1,we will select forty (40)transactions from each
general ledger account.
3) For each of the transactions selected in step 2, we will obtain the summary of daily receipts from
the respective Office.
4) For the summary of daily receipts obtained in step 3, we will obtain the corresponding(a) deposit
slip if the collection was for cash, checks, or cheque; (b) ACH posting batch from the third party
processor; or (c) credit card posting batch from the third party processor, collectively known as
"deposit verification."
200 GALLERIA PARKWAY S.E.,SUITE 1700-ATLANTA,GA 30339-5946•770-955-8600-800-277-0080-FAX 770-980-4489-www.mjcpa.com
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Orange County
April 26, 2018
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5) We will trace the selected general ledger transaction obtained in step 2 to the summary of daily
receipts obtained in step 3, noting any discrepancies.
6) We will compare the summary of daily receipts obtained in step 3 to the corresponding deposit
verification obtained in step 4, noting any discrepancies.
7) We will obtain a detail listing from each of the Offices subsidiary ledger system of all receipts
issued from May 1, 2017 through April 30, 2018.
8) We will review the receipt listings obtained in step 7 and identify any breaks, gaps, or
discontinuation in the sequential use of the receipt numbers.
9) For any discrepancies identified in step 8,we will obtain copies of the cancelled or voided receipts
to support the discrepancy. Any unsupported discrepancies will be noted.
10)From the detail subsidiary listing of receipts obtained in step 7, we will select a sample of forty
(40) receipts for each Office.
11)We will obtain a copy of the actual receipt issued for each item selected in step 10.
12)We will obtain the daily drawer reconciliation for each of the receipts selected in step 10.
13)We will obtain the corresponding(a) deposit slip if the collection was for cash, checks, or cheque;
(b) ACH posting batch from the third party processor; or (c) credit card posting batch from the
third party processor, collectively known as"deposit verification"for each receipt selected in step
10.
14)We will compare the receipts selected in step 11 with the daily drawer reconciliation obtained in
step 12, noting if the reconciliation was performed during the cash receipting process.
15)The daily drawer reconciliation, obtained in step 12, will be compared to the deposit verification
obtained in step 13, and any discrepancies will be noted.
Because the agreed-upon procedures listed above do not constitute an examination or review, we will not
express an opinion or conclusion on any of the specific elements, accounts, or items referred to in our
report. In addition,we have no obligation to perform any procedures beyond those listed above.
We will issue a written report upon completion of our engagement that lists the procedures performed and
our findings. Our report will be addressed to the Board of County Commissioners of Orange County,
North Carolina. If, for any reason, we are unable to complete any of the procedures, we will describe in
our report any restrictions on the performance of the procedures, or not issue a report and withdraw from
this engagement. You understand that the report is intended solely for the information and use of Orange
County, North Carolina, and should not be used by anyone other than these specified parties. Our report
will contain a paragraph indicating that had we performed additional procedures,other matters might have
come to our attention that would have been reported to you.
An agreed-upon procedures engagement is not designed to detect instances of fraud or noncompliance
with laws or regulations; however, we will communicate to you any known and suspected fraud and
Orange County
April 26, 2018
Page 2
noncompliance with laws or regulations affecting the procedures described above that come to our
attention. In addition, if, in connection with this engagement,matters come to our attention that contradict
the agreed upon procedures described above,we will disclose those matters in our report.Such disclosures,
if any, may not necessarily include all matters that might have come to our attention had we performed
additional procedures or an examination or review.
You are responsible for providing the information included in your general ledger and the subsidiary
ledger, and for selecting the criteria and procedures and determining that such criteria and procedures are
appropriate for your purposes. You are also responsible for, and agree to provide us with, a written
assertion about the subsidiary system reports, general ledger reports, and the information obtained
throughout the procedures. In addition, you are responsible for providing us with (1) access to all
information of which you are aware that is relevant to the performance of the agreed-upon procedures on
the subject matter, (2) additional information that we may request for the purpose of performing the
agreed-upon procedures, and(3)unrestricted access to persons within the entity from whom we determine
it necessary to obtain evidence relating to performing those procedures.
At the conclusion of our engagement, we will require certain written representations in the form of a
representation letter from management that, among other things, will confirm management's
responsibility for the accounting records related to the receipts.
Joel Black is the engagement partner and is responsible for supervising the engagement and signing the
report or authorizing another individual to sign it.
We plan to begin our procedures on approximately May 15, 2018 and, unless unforeseeable problems are
encountered, the engagement should be completed by August 15, 2018. At the conclusion of our
engagement, we will require certain written representations in the form of a representation letter from
management that, among other things, will confirm management's responsibility for the review and
evaluation of the findings of the receipt and.transaction procedures, as listed above.
We estimate that our fees for these services will be based on the actual time spent at our standard hourly
rates,plus other out of pockets, such as report production,word processing, etc. Our fee for these services
is estimated to be $69,750. Our standard hourly rates vary according to the degree of responsibility
involved and the experience level of the personnel assigned to your audit. Our invoices for these fees will
be rendered each month as work progresses and are payable on presentation. If we elect to terminate our
services for nonpayment, our engagement will be deemed to have been completed upon written
notification of termination even if we have not completed our report. You will be obligated to compensate
us for all time expended and to reimburse us for all out-or-pocket expenditures through the date of
termination.
Orange County
April 26, 2018
Page 2
We appreciate the opportunity to assist you and 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. If the need for
additional procedures arises, or the procedures need to be modified, our agreement with you will need to
be revised. It is customary for us to enumerate these revisions in an addendum to this letter. If additional
specified parties of the report are added,we will require that they acknowledge in writing their agreement
with the procedures performed or to be performed and their responsibility for the sufficiency of procedures.
Sincerely,
MAULDIN&JENKINS, LLC
Joel M. Black
RESPONSE:
This letter correctly sets forth the understanding of Orange County,North Carolina.
By:
Title:
AULDIN
ENKIN
April 26, 2018
The Board of County Commissioners and
Bonnie Hammersley, County Manager
Orange County,North Carolina
200 South Cameron Street
Hillsborough,North Carolina 27278
Attn: Mr. Gary Donaldson, Chief Financial Officer, and Ms. Bonnie Halmnersley, County
Manager
We are pleased to confirm our understanding of the services we are to provide Orange County,
North Carolina (the County) for the year ended June 30, 2018. We will audit the financial
statements of the governmental activities, the business-type activities, the aggregate discretely
presented component units, each major fund, and the aggregate remaining fund information,
including the related notes to the financial statements, which collectively comprise the basic
financial statements, of Orange County, North Carolina as of and for the year then ended. These
statements will include the budgetary comparison information for the General Fund. We will
obtain and place reliance on the report of other auditors for the Orange County ABC Board, a
discretely presented component unit of the County. 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 the 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 the
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 RS1 is required by U.S.
generally accepted accounting principles and will be subjected to certain limited procedures, but
will not be audited:
1. Management's Discussion and Analysis (MD&A).
2. Local Governmental Employees' Retirement System Schedule of County's Proportionate
Share of the Net Pension Liability.
3. Local Governmental Employees' Retirement System Schedule of County Contributions —
Pension Plan.
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Orange County - 2018 Engagement Letter
April 26, 2018
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4. Register of Deeds' Supplemental Pension Fund Schedule of County's Proportionate Share
of the Net Pension Liability,
5. Register of Deeds' Supplemental Pension Fund Schedule of County Contributions—Pension
Plan.
6. Other Post-Employment Benefits Schedule of Changes in the Net OPEB Liability and
Related Ratios.
7. Other Post-Employment Benefits Schedule of County Contributions.
8. Other Post-Employment Benefits Schedule of OPEB Investment Returns
9. Law Enforcement Officers' Special Separation Allowance Schedule of Changes in the Total
Pension Liability and Related Ratios.
We have also been engaged to report on supplementary information other than RSI that
accompanies the 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 opinion on it in relation to
the financial statements as a whole:
1. Schedule of expenditures of federal and state awards.
2. Combining and individual fund statements.
3. Supplemental ad valorem tax schedules.
The following other information accompanying the financial statements will not be subjected to
the auditing procedures applied in our audit of the financial statements, we have no responsibility
for determining whether such other information is properly stated,and our auditor's report will not
provide an opinion or any assurance on that other information:
1. Introductory section
2. Statistical section
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 as a whole. The
objective also includes reporting on -
• Internal control over financial reporting and compliance with the provisions of laws,
regulations, contracts and award agreements, noncompliance with which could have a
material effect on the financial statements in accordance with Government Auditing
Standards.
• Internal control over compliance related to major programs and an opinion (or disclaimer
of opinion) on compliance with federal statutes, regulations, and the terms and conditions
of federal awards that could have a direct and material effect on each major program in
Orange County-2018 Engagement Letter
April 26, 2018
Page 3
accordance with the Single Audit Act Amendments of 1996 and Title 2 U.S. Code of
Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards(Uniform Guidance) as well as the
State Single Audit Implementation Act,
The Government Auditing Standards report on internal control over financial reporting and on
compliance and other matters will include a paragraph that states (1)that the purpose of the report
is solely to describe the scope of testing of internal control and compliance and the results of that
testing, and not to provide an opinion on the effectiveness of the entity's internal control or on
compliance, and (2) that the report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the entity's internal control and compliance. The
Uniform Guidance report on internal control over compliance will include a paragraph that states
that the purpose of the report on internal control over compliance is solely to describe the scope of
testing of internal control over compliance and the results of that testing based on the requirements
of the Uniform Guidance. Both reports will state that the report is not suitable for any other
purpose.
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; the provisions of the Uniform Guidance; and the State Single Audit Implementation Act,
and will include tests of accounting records, a determination of major program(s) in accordance
with the Uniform Guidance and the State Single Audit Implementation Act, and other procedures
we consider necessary to enable us to express such opinions. We will issue written reports upon
completion of our Single Audit. Our reports will be addressed to the Members of the Board of
Commissioners for Orange County, North Carolina. We will make reference to other auditor's
report on the Orange County ABC Board in our report on your financial statements. We cannot
provide assurance that unmodified opinions will be expressed. Circumstances may arise in which
it is necessary for us to modify our opinions or add emphasis-of-matter or other-matter paragraphs.
If our opinions on the financial statements or the Single Audit compliance opinions are other than
unmodified, 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 reports, or may withdraw from this engagement.
Management Responsibilities
Management is responsible for the financial statements, schedule of expenditures of federal
awards, and all accompanying information as well as all representations contained therein.
Management is responsible for (1) designing, implementing, and maintaining effective internal
controls, including internal controls over federal awards, and for evaluating and monitoring
ongoing activities,to help ensure that appropriate goals and objectives are met; (2) following laws
and regulations; (3) ensuring that there is reasonable assurance that government programs are
administered in compliance with compliance requirements; and(4) ensuring that management and
financial information is reliable and properly reported. Management is also responsible for
implementing systems designed to achieve compliance with applicable laws, regulations,
contracts, and grant agreements. You are also responsible for the selection and application of
accounting principles; for the preparation and fair presentation of the financial statements,
Orange County - 2018 Engagement Letter
April 26, 2018
Page 4
schedule of expenditures of federal awards, and all accompanying information in conformity with
U.S. generally accepted accounting principles; and for compliance with applicable laws and
regulations (including federal statutes) and the provisions of contracts and grant agreements
(including award agreements). Your responsibilities also include identifying significant contractor
relationships in which the contractor has responsibility for program compliance and for the
accuracy and completeness of that information.
Management is also responsible for making all financial records and related information available
to us and for the accuracy and completeness of that information. You are also responsible for
providing us with (1) access to all information of which you are aware that is relevant to the
preparation and fair presentation of the financial statements, (2) access to personnel, accounts,
books, records, supporting documentation, and other information as needed to perform an audit
under the Uniforrn Guidance, (3) additional information that we may request for the purpose of
the audit, and (4) unrestricted access to persons within the government from whom we determine
it necessary to obtain audit evidence. You are also responsible for coordinating our access to
information relevant to the preparation and fair presentation of the financial statements of
component units which may include discussions with component unit management and their
auditors.
Your responsibilities include adjusting the financial statements to correct material misstatements
and confirming to us in the management 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 affecting the government
involving (1) management, (2) employees who have significant roles in internal control, and (3)
others where the fraud 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 government complies with applicable laws, regulations, contracts, agreements, and grants.
Management is also responsible for taking timely and appropriate steps to remedy fraud and
noncompliance with provisions of laws,regulations, contracts,and grant agreements, or abuse that
we report. Additionally, as required by the Uniform Guidance, it is management's responsibility
to evaluate and monitor noncompliance with federal statutes, regulations, and the terms and
conditions of federal awards; take prompt action when instances of noncompliance are identified
including noncompliance identified in audit findings; promptly follow up and take corrective
action on reported audit findings; and to prepare a summary schedule of prior audit findings and a
separate corrective action plan. The summary schedule of prior audit findings should be available
for our review subsequent to the start of fieldwork.
You are responsible for identifying all federal and state awards received and understanding and
complying with the compliance requirements and for the preparation of the schedule of
expenditures of federal and state awards (including notes and noncash assistance received) in
conformity with the Uniform Guidance and the State Single Audit Implementation Act. You agree
Orange County - 2018 Engagement Letter
April 26, 2018
Page 5
to include our report on the schedule of expenditures of federal and state awards in any document
that contains and indicates that we have reported on the schedule of expenditures of federal and
state awards. You also agree to include the audited financial statements with any presentation of
the schedule of expenditures of federal and state awards that includes our report thereon or make
the audited financial statements readily available to intended users of the schedule of expenditures
of federal and state awards no later than the date the schedule of expenditures of federal and state
awards is issued with our report thereon. Your responsibilities include acknowledging to us in the
written representation letter that (1) you are responsible for presentation of the schedule of
expenditures of federal and state awards in accordance with the Uniform Guidance and the State
Single Audit Implementation Act; (2)you believe the schedule of expenditures of federal and state
awards, including its form and content, is stated fairly in accordance with the Uniform Guidance
and State Single Audit Implementation Act; (3)the methods of measurement or presentation have
not changed from those used in the prior period (or, if they have changed, the reasons for such
changes): and (4) you have disclosed to us any significant assumptions or interpretations
underlying the measurement or presentation of the schedule of expenditures of federal and state
awards.
You are also responsible for the preparation of the other supplementary information, which we
have been engaged to report on, 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 agi;ee 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. Your responsibilities include acknowledging to us in the written representation
letter that(1)you are responsible for presentation of the supplementary information in accordance
with GAAP; (2) you believe the supplementary information, including its form and content, is
fairly presented in accordance with GAAP; (3) the methods of measurement or presentation have
not changed from those used in the prior period (or, if they have changed, the reasons for such
changes): and (4) you have disclosed to us any significant assumptions or interpretations
underlying the measurement or presentation of the supplementary information.
Management is responsible for establishing and maintaining a process for tracking the status of
audit findings and recommendations. Management is also responsible for identifying and
providing report copies of 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
statements 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.
Orange County - 2018 Engagement Letter
April 26, 2018
Page 6
You agree to assume all management responsibilities relating to the financial statements, schedule
of expenditures of federal and state awards, related notes, and any other nonaudit services we
provide. You will be required to acknowledge in the management representation letter our
assistance with preparation of the financial statements, schedule of expenditures of federal and
state awards, and related notes 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. You agree to oversee the nonaudit services by designating
an individual, preferably from senior management, who possesses suitable skill, knowledge, or
experience; evaluate the adequacy and results of those services; and accept responsibility for them.
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. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the financial
statements. 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 government or to acts by management or
employees acting on behalf of the government. Because the determination of abuse is subjective,
Government Auditing Standards do not expect auditors to provide reasonable assurance of
detecting abuse.
Because of the inherent limitations of an audit, combined with the inherent limitations of internal
control, and because we will not perform a detailed examination of all transactions, there is a risk
that material misstatements or noncompliance may exist and not be detected by us, even though
the audit is properly planned and performed in accordance with U.S. generally accepted auditing
standards and Government Auditing Standards. 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
the appropriate level of management of any material errors, any fraudulent financial reporting or
misappropriation of assets that come to our attention. We will also inform the appropriate level of
management 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 any 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 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 require certain written representations from you about your responsibilities for the
financial statements; schedule of expenditures of federal awards; federal award programs;
Orange County - 2018 Engagement Letter
April 26, 2018
Page 7
compliance with laws, regulations, contracts, and grant agreements; and other responsibilities
required by generally accepted auditing standards.
We plan to obtain and place reliance on the report of other auditors for the Orange County ABC
Board, a discretely presented component unit of the County, assuming that our communications
with the other auditors and review of their audit report and the financial statements of the Orange
County ABC Board provide sufficient and appropriate audit evidence on which to base our overall
opinion on the aggregate discretely presented component units.
Audit Procedures—Internal Control
Our audit will include obtaining an understanding of the government 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 noncompliance
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 the Uniform Guidance and the State Single Audit Implementation Act, 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 noncompliance 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 the Uniform
Guidance and the State Single Audit Implementation Act.
An audit is not designed to provide assurance on internal control or to identify significant
deficiencies or material weaknesses. 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, Government Auditing Standards, and
the Uniform Guidance.
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,North Carolina's compliance with
provisions of applicable laws, regulations, contracts and agreements, including grant agreements.
However,the objective of those procedures will not be to provide an opinion on overall compliance
and we will not express such an opinion in our report on compliance issued pursuant to
Government Auditing Standards.
The Uniform Guidance and the State Single Audit Implementation Act requires that we also plan
and perform the audit to obtain reasonable assurance about whether the auditee has complied with
federal statutes, regulations, and the terms and conditions of federal and state awards applicable to
major programs. Our procedures will consist of tests of transactions and other applicable
Orange County - 2018 Engagement Letter
April 26, 2018
Page 8
procedures described in the OMB Compliance Supplement and the Audit Manual for Governmental
Auditors in North Carolina, issued by the Local Government Commission, 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 the Uniform Guidance and the State Single Audit Implementation
Act.
Other Services
We will also assist in preparing the financial statements, schedule of expenditures of federal and
state awards, and related notes of the County in conformity with U.S. generally accepted
accounting principles and the Uniform Guidance based on information provided by you. These
nonaudit services do not constitute an audit under Government Auditing Standards and such
services will not be conducted in accordance with Government Auditing Standards. We will
perform these services in accordance with applicable professional standards. The other services
are limited to the financial statements, schedule of expenditures of federal and state awards, and
related notes services previously defined. We,in our sole professional judgement,reserve the right
to refuse to perform any procedure or take any action that could be construed as assuming
management responsibilities.
Audit Administration, Fees, and Other
We understand that your employees will prepare all cash or other confirmations we request and
will locate any documents selected by us for testing.
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
electronically 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. The Data Collection Form
and the reporting package must be submitted within the earlier of 30 calendar days after receipt of
the auditors' reports or nine months after the end of the audit period.
We will provide copies of our reports'to Orange County, North Carolina; however, management
is responsible for distribution of the reports and 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.
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April 26, 2018
Page 9
The audit documentation for this engagement is the property of Mauldin&Jenkins 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 Mauldin & Jenkins 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 report release date or for any additional period requested by a regulatory body. If we are aware
that a federal 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.
We expect to begin our audit on approximately September 10, 2018 and to issue our reports no
later than October 31, 2018. Joel M. Black is the engagement partner and is responsible for
supervising the engagement and signing the reports or authorizing another individual to sign them.
Our fee for these services will be $95,500 for the year ended June 30, 2018. Our hourly rates vary
according to the degree of responsibility involved and the experience level of the personnel
assigned to your audit. Our invoices for these fees will be rendered as work progresses and are
payable upon presentation. The above fees are based on anticipated cooperation from your
personnel (including complete and timely receipt by us of the information on the respective client
participation listings to be prepared annually) and the assumption that unexpected circumstances
(including scope changes) will not be encountered during the audit. If significant additional time
is necessary, we will discuss it with management and arrive at a new fee estimate before we incur
the additional costs.
As a result of our prior or future services to you, we might be requested or required to provide
information or documents to you or a third party in a legal, administrative, arbitration, or similar
proceeding in which we are not a party. If this occurs, our efforts in complying with such requests
will be deemed billable to you as a separate engagement. We shall be entitled to compensation for
our time and reasonable reimbursement for our expenses (including legal fees) in complying with
the request. For all requests we will observe the confidentiality requirements of our profession
and will notify you promptly of the request.
Orange County - 2018 Engagement Letter
April 26, 2018
Page 10
We appreciate the opportunity to be of service to Orange County, North Carolina and 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.
Sincerely,
MAULDIN &JENKINS, LLC
Joel M. Black
RESPONSE:
This letter 1 the understanding of Orange County,North Carolina,
By:
Title: C Ryl Cma V �