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HomeMy WebLinkAboutAgenda - 05-17-2005-5iORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: May 17, 2005 Action Agenda , Item No.,~- I SUBJECT: Audit Contract for the June 30, 2005 Fiscal Year DEPARTMENT: Finance PUBLIC HEARING: (Y/N) No ATTACHMENT(S): Contract and Engagement Letter INFORMATION CONTACT: Ken Chavious, ext 2453 TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 336-227-2031 PURPOSE: To consider awarding a contract to Cherry, Bekaert & Holland, Certified Public Accountants, for the provision of audit services far the fiscal year ending June 30, 2005, BACKGROUND: "The Local Government Budget and Fiscal Control Act" requires all units of government in the State to undergo an annual audit, During the spring of 2001, County staff pursued the most recent request for proposal (RFP) process for financial audit services.. Staff recommended, and the Board approved, the proposal submitted by Cherry, Bekaert & Holland, Certified Public Accounts, The RFP stated that the County would contract with the successful firm far a period of three to five years. The 2004 audit marked the fourth year of working with this firm. Staff has been very pleased with the work performed an the audits for the past four fiscal years. The auditors performed their work in a professional and timely manner and worked extremely well with staff in the completion of the audit and production of the Comprehensive Annual Financial Report (CAFR). In addition, a significant amount of service and advice has been provided outside of the audit process over the years. The overall audit casts paid by the County for the past four years have been very competitive, The cost proposed for the 2005 audit remains competitive and comparable to governments similar in size to the County, Cherry, Bekaert & Holland has proposed a contract for the 2005 audit that reflects a 5% increase over the previous year, This increase is mainly the result of additional audit work required in the area of compliance auditing or the "single audit" related to Federal and State grants, Staff desires to continue the relationship with Cherry, Bekaert & Holland for the 2005 fiscal year audit and re-evaluate the contract next spring with the possibility of pursuing a request for proposal process. FINANCIAL IMPAGT: The fee proposed for the 2005 audit is $71,000, Funds to cover the audit costs will be included in the 2005-2006 Central Services budget, RECOMMENDATION(S): The Manager recommends that the Baard approve the contract with Cherry, Bekaert & Holland for 2005 audit services, and authorize the Chair to sign it. Cherry, lielc~e;r>t ~ llollo,~d, L.L.P. The Firm of Choice. www.cbh.com 2626 Glenwood Avenue -Suite 300 Raleigh, North Carolina 27606 phone 919762.1040 fax 919 783 0976 April 8, 2005 Mr. Kenneth T Chavious, Finance Director Orange County 208 South Cameron Street Hillsborough, North Carolina 27278 Dear Ken: This letter of arrangement between Orange County, North Carolina "the entity' and Cherry, Bekaert & Holland, L.L.P. sets forth the nature and scope of the services we will provide, the entity's required involvement and assistance in support of our services, the related fee arrangements and other terms and conditions designed to assure that our professional services are performed to achieve the mutually agreed upon objectives of the entity. SUMMARY OF SERVICES We will audit the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information, which collectively comprise the basic financial statements of the entity as of and for the year ended .tune 30, 2005.. We will also audit the schedules of property taxes receivable for the Town's of Hillsborough, Chapel Hill, and Carrboro as of June 30, 2005, and the related schedules of 2004 tax levy and collections for the years then ended. Our audits will be conducted in accordance with auditing standards generally accepted in the United States of America; GovernmentAuditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; the provisions of OMB Circular A-133; and the State Single Audit Implementation Act, and will include test of accounting records, a determination of major programs in accordance with Circular A-133, the State Single Audit Implementation Act, and other procedures as deemed necessary to enable us to express such an opinion and to render the required reports.. The objective of an audit is the expression of our opinion concerning whether the basic financial statements are fairly presented, in all material respects, in conformitywith accounting principles generally accepted in the United States of America. In connection with our audit, we will report on the fairness of presentation of the schedules of federal and state financial assistance in relation to the financial statements taken as a whole.. We will also perform tests of compliance as required by GovernmentAuditing Standards, the provisions ofOMB CircralarA-133, and the Audit Manual for Governmental Auditors in North Carolina, and issue our reports thereon. If any of our opinions resulting from the procedures described above are other than unqualified, we will fully discrass the reasons with you in advance. The reports on internal control and compliance will each include a statement that the report is intended solely for the information and use of the audit committee, management, speciic legislative or regulatory bodies, federal and State awarding agencies, and if applicable, pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. ~AKER TI LLY INTEIWATIONAL As part of our engagement, we will prepare the financial statements and note disclosures from individual fund trial balances that you will provide. However, management is responsible forthe financial statements and note disclosures. In your representation to us, you will be asked to acknowledge our role in this regard, and your review, approval, and responsibility forthe financial statements and note disclosures. Further, you are responsible for designating a qualified management-level individual to be responsible and accountable for overseeing these services.. Any additional services that you may request, and that we agree to provide, will be the subject of separate written arrangements. Should the entity wish to include or incorporate by reference these financial statements and our report thereon into any official statement or any other document related to the offering of debt securities at some future date, we would consider our consent to the inclusion of our report into another such document at that time. However, we are required by auditing standards generally accepted in the United States of America to perform certain procedures before we can give our permission as to the inclusion of our report into another such document. You agree that you will not include or incorporate by reference these financial statements and our report thereon into any other document without our prior written consent. I will be responsible for assuring the overall quality, value, and timeliness of our services to you, and will lead the engagement. YOUR EXPECT'A710NS As part of our planning process, we will discuss with you your expectations of Cherry, Bekaert & Holland, L.L.P., changes that occurred during the year, yourviews on risks facing you, any relationship issues with Cherry, Bekaert & Holland, L.L.P., and specific engagement arrangements and timing. Our service plan, which includes our audit plan, is designed to provide a foundation for an effective, efficient, and quality- focused approach to accomplish the engagement objectives and to meet or exceed your expectations.. Our service plan will be reviewed with you periodically and will serve as a benchmark against which you will be able to measure our performance. TERMS AND CONDITIONS SUPPORTING FEE As a result of our planning process, the entity and Cherry, Bekaert & Holland, L.L.P. have agreed to a fee, subject to the following conditions. To facilitate meeting our mutual objectives, the entitywill provide in a timely manner audit schedules and supporting information, including timely communication of all significant accounting and financial reporting matters, as well as working space and clerical assistance as mutually agreed upon and as is normal and reasonable in the circumstances. When and if for any reason the entity is unable to provide such schedules, information and assistance, Cherry, Bekaert & Holland, L.L. P, and the entitywill mutually revise the fee to reflect additional services, if any, required of us to achieve these objectives. In providing our services, we will consult with the entity with respect to matters of accounting, financial reporting, or othersignificant business issues. Accordingly, time necessary to effect a reasonable amount of such consultation is reflected in our fee. However, should a matter require research, consultation, or audit work beyond that amount, Cherry, Bekaert & Holland, L.L P and the entity will agree to an appropriate revision in services and fee. Except for any changes in fees, which may result from the circumstances described above, our fees will be limited to those set forth below FEE Financial Audit -Our fees for these services will be based upon our customary billing practices at the time of the engagement,. Bills for services will be rendered as work progresses and are due within 15 days from invoice date. A service charge will be added to past due accounts equal to 1 t /2% per month (18% annual rate) on the previous month's balance Tess payments received during the month, with a minimum charge of $2.00 per month. The fee for our audit as described in this letterwill not exceed $71,000. This fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit.. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. Any modification to the fee shall be in writing and signed by both parties. You agree to pay all costs of collection (including reasonable attorneys' fees) that we may incur in connection v~ith the collection of unpaid invoices. The fees are based on auditing standards effective as of the date of this engagement letter.. If new auditing standards are issued and are effective for the period under audit described in this engagement letter that require additional audit procedures that were not known at the date of this engagement letter, we will estimate the impact of any new such standard on the nature, timing and extent of our planned audit procedures and will communicate with you concerning the scope of the additional procedures and the estimated fees. LIMITATIONS OF THE AUDITING PROCESS Our audit will include procedures designed to obtain reasonable assurance of detecting misstatements due to errors or fraud that are material to the financial statements. Absolute assurance is not attainable because of the nature of audit evidence and the characteristics of fraud. For example, audits performed in accordance with GAAS are based on the concept of selective testing of the data being examined and are, therefore, subject to the limitation that material misstatements due to errors or fraud, if they exist, may not be detected. Also, an audit is not designed to detect matters that are immaterial to the financial statements. In addition, an audit conducted in accordance with GAAS does not include procedures specifically designed to detect illegal acts having an indirect effect (e g., violations of fraud and abuse statutes that result in fines or penalties being imposed on the entity) on the financial statements. As required by the Single Audit Act Amendments of 1996 and OMB Circular A-133, and the State Single Audit Implementation Act our audit will include tests of transactions related to major federal and State award programs for compliance with applicable laws and regulations and the provisions of contracts and grant agreements. Because an audit is designed to provide reasonable, but not absolute assurance and because we will not perform a detailed examination of all transactions, there is a risk that material errors, fraud, other illegal acts, or noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect immaterial errors, fraud, or other illegal acts or illegal acts that do not have a direct effect on the basic financial statements or to major programs. It should be recognized that our audit generally provides no assurance that illegal acts will be detected, and only reasonable assurance that illegal acts having a direct and material effect on the determination of financial statement amounts will be detected. However, we will inform you with respect to material errors and fraud, or illegal acts that come to our attention during the course of our audit. We will include such matters in the reports as required for a Single Audit. If, for any reason, we are unable to complete the audit, or are unable to form or have not formed an opinion on the basic financial statements, we may decline to express an opinion or decline to issue a report as a result of the engagement. RESPONSIBILITIES AS TO INTERNAL CONTROLS As a part of our audit, we will consider the entity's internal control structure, as required by auditing standards generally accepted in the United States of America and Government Auditing Standards, sufficient to plan the audit and to determine the nature, timing, and extent of auditing procedures necessary for expressing our opinion concerning the basic financial statements, You recognize that the basic financial statements and the establishment and maintenance of an effective internal control overfinancial reporting are the responsibility of management. You also recognize that management is responsible for identifying and ensuring that the entity complies with the laws and regulations applicable to its activities. Appropriate supervisory review procedures are necessary to provide reasonable assurance that adopted policies and prescribed procedures are adhered to and to identify errors, fraud, or illegal acts. P.n audit is not designed to provide assurance on intemal control.. As part of our consideration of the entity's internal control structure, however, we will inform you of reportable conditions and other matters that come to our attention that represent significant deficiencies in the design or operation of the intemal control structure, if any, as required by OMB Circular A-133 and the State Single Audit Implementation Act. As required by OMB CircularA-133 and the State Single Audit Implementation Act, we will perform tests of controls to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements, applicable to each major federal and State award program. However, our tests will be less in scope than would be necessary to render an opinion on thdse controls and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to OMB Circular A-133 and the State Single Audit Implementation Act. You are also 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 entity involving (a) management, (b) employees who have significant roles in internal control, and (c) others where the fraud could have a material effect on the financial statements. You are also responsible for informing us of your knowledge of any allegations of fraud or suspected fraud affecting the company received in communications from employees, former employees, regulators, or others, RESPONSIBILITIES AS TO COMPLIANCE Our audit will be conducted in accordance with the standards referred to in the section Summary of Services. As part of obtaining reasonable assurance aboutwhetherthe basicfinancial statements are free of material misstatement, we will perform tests of the entity's compliance with applicable laws and regulations and the provisions of contracts and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to GovemmentAuditing Standards. OMB Circular A-133 and the State Single Audit Implementation Act requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with applicable laws and regulations and the provisions of contracts and grant agreements applicable to major programs. Our procedures will consist of the applicable procedures described in the OMB Circular A-133 Compliance Supplement and the Audit Manual for Governmental Auditors in North Carolina for the types of compliance requirements that could have a direct and material effect of each of the entity's major programs. The purpose of those procedures will be to express an opinion on the entity's compliance with requirements applicable to major programs in our report on compliance issued pursuant to OMB CircularA-133 and the State Single Audit Implementation Act. REPRESENTATION FROM MANAGEMENT Management is responsible for the fair presentation of the basic financial statements in conformity with accounting principles generally accepted in the United States of America, for making all financial records and related information available to us, and for identifying and ensuring that the entity complies with the laws and regulations applicable to its activities. Management is also responsible for adjusting the financial statements to correct material misstatements. Additionally, as required by OMB Circular A-'133 and the State Single Audit Implementation Act, it is managements responsibility to follow up and take corrective action on prior audit findings and to prepare a summary schedule of prior audit findings and a corrective action plan. The summary schedule of prior audit findings and the corrective action plan should be made available to us during the course of our engagement. Management, at the conclusion of the engagement, will provide to us a representation letter that, among other things, addresses these matters and confirms certain representations made during the audit, including, to the best of their knowledge and belief, the absence of fraud involving management or those employees who have significant roles in the entity's intemal control, or others where it could have a material effect on the basic financial statements.. The representation letter will also affirm to us that management believes that the effects of any uncorrected misstatements aggregated pertaining to the current year financial statements are immaterial, both individually and in the aggregate, to the financial statements taken as a v~kiale Cherry, Bekaert & Holland, L. L.P. will rely on the entity's management providing these representations to us, both in the planning and performance of the audit, and in considering the fees that we will charge to perform the audit.. Because we will be relying on management's representations, you agree to indemnify Cherry, Bekaert & Holland, L L P ,and its partners and employees, and hold them harmless from all claims, liabilities, losses, and costs arising in circumstances where there has been a knowing misrepresentation by an officer or employee of the entity regarding fraud or suspected fraud regardless of whether such officer or employee was acting in the entitys interest. COMMUNICATIONS At the conclusion of the engagement, we will provide management, in a mutually agreeable format, our recommendations designed to help the entity make improvements in its internal control structure and operations, and other matters that may come to our attention (see "Responsibilities as to Internal Controls" above). As part of this engagement we will ensure that certain additional matters are communicated to the appropriate members of management and to the elected officials of the entity. Such matters include (1) our responsibility under auditing standards generally accepted in the United States of America; (2) the initial selection of and changes in significant accounting policies and their application; (3) our independence with respect to the entity; (4) the process used by management in formulating particularly sensitive accounting estimates and the basis for our conclusion regarding the reasonableness of those estimates; (5) audit adjustments that could, in ourjudgment, either individually or in the aggregate be significant to the financial statements or our report; (6) any disagreements with management concerning a financial accounting, reporting or auditing matter that could be significant to the financial statements; (7) ourviews about matters that were the subject of management's consultation with other accountants about auditing and accounting matters; (8) major issues that were discussed with management in connection with the retention of orar services, including, among other matters, any discussions regarding the application of accounting principles and auditing standards; and (g) serious difficulties that we encountered in dealing with management related to the performance of the audit. Government Auditing Standards require that we provide you with a copy of our most recent quality control review report. We have previously provided to you a copy of this report ACCESS TO WORKING PAPERS The working papers for the engagement are the property of Cherry, Bekaert & Holland, L.L.P. and constitute confidential information. Except as discussed below, any requests for access to our working papers will be discussed with you prior to making them available to requesting parties, The workpapers for this engagement will be retained for a minimum of three years after the date the auditors' report is issued or for any additional period requested by the entity. If we are aware that a federal and State awarding agency, pass-through entity, or auditee is contesting an audit finding, we will contact the party(ies) contesting the audit finding for guidance prior to destroying the workpapers. Our Firm, as well as all other major accounting firms, participates in a "peer review" program, covering our audit and accounting practices. This program requires that once every three years we subject our quality assurance practices to an examination by another accounting firm.. As part of the process, the other firm will review a sample of our work. It is possible that the other firm for their review may select the work we perform for you, If it is, they are bound by professional standards to keep all information confidential. If you object to having the work we do for you reviewed by our peer reviewer, please notify us in writing. SUBPOENAS In the event we are requested or authorized by you or required by government regulation, subpoena, or other legal process to produce our working papers or our personnel as witnesses with respect to our engagement for you, you will, so long as we are not a party to the proceeding in which the information is sought, reimburse us for our professional time and expense, as well as the fees and expenses of our counsel, incurred in responding to such a request. If any dispute, controversy or claim arises in connection with the performance or breach of this agreement, either party may, on written notice to the other party, request that the matter be mediated. Such mediation would be conducted by a mediator appointed by and pursuant to the rules of the American Arbitration Association (AAA) or such other neutral facilitator acceptable to both parties. Both parties would exert their best efforts to discuss with each other in good faith their respective positions in an attempt to finally resolve such dispute, controversy, or claim. Client and accountant both agree that any dispute over fees charged by the accountant to the client will be submitted for resolution by arbitration in accordance with the Rules for Professional Accounting and Related Services Disputes of the AAA. Any award rendered by the Arbitrator pursuant to this Agreement may be filled and entered and shall be enforceable in the Superior Court of the County in which the arbitration proceeds. In agreeing to arbitration, we both acknowledge that, in event of a dispute over fees charge by the accountant, each of us is giving up the right to have the dispute decided in a court of law before a judge orjury and instead we are accepting the use of arbitration for resolution. The prevailing party shall be entitled to an award of reasonable attorneys' fees and costs incurred in connection with the arbitration of the dispute in an amount to be determined by the arbitrator. If the foregoing is in accordance with your understanding, please sign a copy of this letter in the space provided and return it to us If you have any questions, please feel free to give me a call at 919-782-1040. Very truly yours, RRY, BEKAERT & HOLLAND, L.L.P. Eddie Burkee, CP~ Partner Enclosure RESPONSE: This letter correctly sets forth the understanding of the entity.. ey. =~ Title: i/ Date~~ 10 L.cc-3o3 (Itcv In/2ooa1 CONTRACT TO AUDIT ACCOUNTS Pile in Triplicate. of Orange Counri. North Carolina Govcmmental Unit On this 8th day ot` April, 200>, Cherry, Bekazrt & Holland, L L P, 2626 Glemvood Avenue, Suite 300. Raleigh, North Carolina 28608, hereinafter referred to as the Auditor, and the County Commissioners of Orange County, North Carolina. hereinafter referred to as the Govemmental Unit_ agree as follows: L The Auditor shall audit all statements and disclosures required by eenerally accepted accounting principles and additional required legal statements and disclosures of all funds and/or divisions of the Govemmental Unit for the period beginning July I, 2004 and ending June 30, 2005 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 bz 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 Auditine 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. This contact contemplates an :mqua[ified opinion being rendered If financial statements are not prepared in accordance with generally accepted accounting principles (GAAP), or the statements fail to inctudz all disclosures required by GAAP, explain that departure from GAAP in the space below; None 4. This cauroct contemplates on unqualified opiniav being rendered. The audit shall includz such tests of the accounting records and such other auditing procedures as are considered by [he Auditor to be necessary in the circumstances .Any limitations or restrictions in scope which would lead m a qualification slrmrld tie ju!!y explained in ar attachment m 1Gis cauract. The audit will have no scope limitations except: N/A 5. 1f 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 has met the requirements For a peer review and continuing education as specified in the Government Auditine Standards. The Auditor agrees to provide a copy of their most recent peer review report to the Govemmental Unit and the Secretary of the Local Govemment Commission rp for to the execution of the audit contract. (See Item 20 ) 6. 1t is agreed that time is of the essence in this contract All audits are to be performed and the report of audit submitted by Octobzr 31.2005. 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 conditions" in AU 325 of the AICPA Professional Standards. The ,4uditor shall file a co of that re ort with the Secreta of the Local Govemment 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 Statz of North Carolina require the approval of the Secretary of the Local Govemment Commission. Invoices for services rendered under these contracts shall not be aid b [he Govemmental Unit until the invoice has been a roved by the Secretary ol'the Local Government Commission (This also includes any nroeress billines.) All invoices should be submitted in triplicate to the Secretary of the Local Govemment Commission. The original and onz copy will be returned to the Auditor Approval is not required on contracts and invoices for system improvements and similar serviczs of anon-auditing nature 9. In considzration of the satisfactory performance of the provisions of this agreement. [he Govermnental Unit shall pay to the Auditor, upon approval by the Szeretary of the Local Oovernmznt Commission, the followine tee which includes any cos[ thz Auditor may incur from work paper or peer reviews or any other quality assurance program required by third parties (Federal and Statz grantor and oversieht agencizs or other organizations) as required under the Federal and State Single Audit Acts: Audit - 561,000 11 Report Preparation - 510,000 10. After completing his audit; the Auditor shall submit to the Goveming Board a written report of audit. This report shall include, at leas[, 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 1'or full disclosure under the law, and the auditor's opinion on the material presented The Auditor shall furnish the required number of copies of the report of audit to the Goveming Board as soon as practical after the close of the accounting period. 1 I The Auditor shall file with the Local Government Commission two copies of the report of audit, including one copy of the federal Da[n Collection Form, if a federal single audit is conducted. Two copies of the report of audit should be submitted if an audit is required to be performed only under the requirements of [he State Single Audit Implementation Act or a financial audit is required to be pert"ormed in accordance with Govemment Auditine Stondards. Otherwise, one copy shall be submitted.. Copies of thz report shall be filed with the Local Government Commission when (or prior to) submitting the invoice for the services rendered. All copies of the repott submitted must be bound. The report of audit, as filed with the Secretary of the Local Govemment 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 [he Secretary of the Local Govemment Commission. These audited financial statements are used in the preparation of Official Statements for debt offerings, by municipal bond rating services, and to fulfill secondary market disclosure requirements of the Securities and Exchange Commission. 13. Should circumstances disclosed by the audit call for a more detailed investigation by the Auditor than necessary under ordinary circumsmnces, the Auditor shall inform the Goveming Board in writing of the need for such additional investigation and the additional compensation required therefore. Upon approval by the Secretary of the Local Government Commission, this agreement may be varied or changed [o 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 chance must be reduced to writing, signed by both pre-audited if necessary, and submitted to the Secretary of the L-ocal Government Commission for approval.. No chance 14. Whenever the Auditor uses an engagement letter with the client, Item 15 may be completed by referencing the engagement letter and attaching a copy of the engagement letter to the contract to incorporate the engagement letter into the contract In 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 31 of this contract. Engagement letters containing indemnification clauses will not be approved by the Local Government Commission. I5 There are no special provisions except: See attached engagement letter. 16. A separate contract should not be made Tar 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 trinlieate to the Secretary of the Local Government Commission, 3?5 North Salisbury Street; Raleieh. Noah Carolina?7603-1385. I S 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 Govemment Commission. The audit should not be started before the contract is anoroved. 19 There are no other agreements between the parties hereto and no other aereements 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 Govemment Commission 20 If this audit engagement is not subject to Government Auditine Standards then Item 5 shall be listed as a deleted provision in Item 21 An explanation must be eiven for deleting this provision t All of the above paragraphs are understood and shall apply to this agreement, except the following numberzd paragraphs shall be deleted: (See item 14) N/A Z?,. \Vill the audited financial statements be prepared in nccordnnce with GASB Statement No. J47 X_ YES _NO If the audited fine ncial statements are prepared in accordance with GASB Statement No. .3~1 the re(8rences in Item t to the combining, individual fund, and account group statements shall mean the basic financial statements, management's discussion and analysis, and required supplementary statements ns defined in GASB Statement No. 34..Au[liting procedures applicable to other supplementary schedules are not changed by the implementation of CASE Statement No- 34. By Che Bekaert 3 Holland. L.L.P (Please type or print name) -~~\ (Signature of authorized audit firm representative) ^S~ ~5 Approved by the Secretary of the Local Govemment Commission as provided in Article 3.. Chapter 159 of the General Statutes or Article 31, Part 3, Chapter IlSC of the General Statutes. For the Secretary, Loca( Government Commission (Signature) Date By ~(Plcase type or print name and title 1/ (Signature o/f Mavor or Chaimerson oF'goveming board) Dale t~ V By (Chairperson oL4udit Comminec (Please type or print / name) V (Signature.pf Audit Committee Chairperson) Date // (lf'uni[ does not have an audit committee, this section should be marked "N/A ") This inswmcnt has been pre-audited in the manner required by The Local Govemment Budeet and Fiscal Control Act or by the School BudpCf and Fiscal Contrul Act By V/ (Please type or print name) (Signature) Date 12 (Pre-audit Certificate must be dated.)