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HomeMy WebLinkAboutOTHER-2024-035-Local government commission Audit contract-Contract to Audit Accounts I LGC -205 CONTRACT TO AUDIT ACCOUNTS Rev . 11 /2023 I The Governing Board Board of County Commissioners of Primary Government Unit Orange County and Discretely Presented Component Unit (DPCU ) (if applicable) Ln/a G Primary Government Unit, together with DPCU (if applicable), hereinafter referred to as Governmental Units) I" and Auditor Name Mauldin & Jenkins , LLC Auditor Address k 4208 Six Forks Road, Suite 1000, Raleigh, North Carolina 27609 cc Hereinafter referred to as Auditor 1. for Fiscal Year Ending Date Audit Will Be Submitted to LGC 06/3 0/24 10/31 /24 Must be within four months of FYE hereby agree as follows . r 1 . The Auditor shall audit all statements and disclosures required by U . S . generally accepted auditing standards ( GAAS ) and additional required legal statements and disclosures of all funds and /or divisions of the Governmental Unit(s ) . 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 r 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 ) . The basic financial statements shall include budgetary comparison information in a budgetary comparison statement , rather than as RSI , for the General Fund and any annually budgeted Special Revenue funds . I k 2 . At a minimum , the Auditor shall conduct the audit and render the report in accordance with GAAS . The Auditor shall perform the* audit in accordance with Government Auditing Standards (GAGAS) if the Governmental Unit expended $ 100 , 000 or more in combined Federal and State financial assistance during the reporting period . The auditor shall perform a Single Audit if required by Title 2 US Code of Federal Regulations Part 200 Uniform Administration Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F ( Uniform Guidance ) or the State Single Audit Implementation Act . This audit and all associated audit i, 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 Government Commission ( LGC ) . If the audit requires a federal single audit in accordance with the Uniform Guidance (§200 . 501 ) , it is recommended that the Auditor and Governmental Unit(s ) jointly agree , in advance of the execution of this contract , which party is responsible for submission of the audit and - the accompanying data collection form to the Federal Audit Clearinghouse as required under the Uniform Guidance (§200 . 512 ) . f i Effective for audits of fiscal years beginning on or after June 30 , 2023 , the LGC will allow auditors to consider whether a unit qualifies as a State low- risk auditee based upon federal criteria in the Uniform Guidance §200 . 520 (a ) , and ( b ) through (e ) as it applies to State awards . In addition to the federal criteria in the Uniform Guidance , audits must have been submitted timely to the LGC . If in the reporting year , or in either of the two previous years , the unit reported a Financial Performance Indicator of Concern that the audit was late , then Page 1 LGC -205 CONTRACT TO AUDIT ACCOUNTS Rev. 11 /2023 the report was not submitted timely for State low- risk auditee status . Please refer to " Discussion of Single Audits in North Carolina " on the LGC's website for more information . 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 ) , 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 - §600m420 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 LGC 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. 5 . If this audit engagement is subject to the standards for audit as defined in Government Auditing Standards , 2018 revision , issued by the Comptroller General of the United States , then by accepting this engagement , the Auditor warrants that he/she has met the requirements for a peer review and continuing education as specified in Government Auditing Standards . The Auditor agrees to provide a copy of the most recent peer review report to the Governmental Unit(s ) and the Secretary of the LGC prior to the execution of an audit contract . Subsequent submissions of the report are required only upon report expiration or upon auditor' s receipt of an updated peer review report . If the audit firm received a peer review rating other than pass , the Auditor shall not contract with the Governmental Unit(s ) 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 Auditing Standards or if financial statements are not prepared in accordance with U . S . generally accepted accounting principles (GAAP ) and fail to include all disclosures required by GAAP , the Auditor shall provide an explanation as to why in an attachment to this contract or in an amendment . 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 LGC Staff within four months of fiscal year end . If it becomes necessary to amend the audit fee or the date that the audit report will be submitted to the LGC , an amended contract along with a written explanation of the change shall be submitted to the Secretary of the LGC for approval . 7 . It is agreed that GAAS include a review of the Governmental Unit' s ( Units ' ) 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/her 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 AICPA Professional Standards (Clarified) . The Auditor shall file a copy of that report with the Secretary of the LGC . For GAAS or Government Auditing Standards audits , if an auditor issues an AU - C § 260 report, commonly referred to as " Governance Letter, " LGC staff does not require the report to be submitted unless the auditor cites significant findings or issues from the audit , as defined in AU -C §260 . 12 - . 14 . This would include issues such as difficulties encountered during the audit , significant or unusual transactions , uncorrected misstatements , matters that are difficult or contentious reviewed with those charged with governance , and other significant matters . If matters identified during the audit were required to be reported as described in AU -C §260 . 12 - . 14 and were communicated in a method other than an AU -C § 260 letter, the written documentation must be submitted . LGC -205 CONTRACT TO AUDIT ACCOUNTS Rev . 11 /2023 & 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 . Approval is also required for the Alternative Compliance Examination Engagement for auditing the Coronavirus State and Local Fiscal Recovery Funds expenditures as allowed by US Treasury . Approval is not required on audit contracts and invoices for system improvements and similar services of a non -auditing nature . 9 . Invoices for services rendered under these contracts shall not be paid by the Governmental Unit(s ) until the invoice has been approved by the Secretary of the LGC . This also includes any progress billings [G . S . 159-34 and 115C447] . All invoices for audit work shall be submitted in PDF format to the Secretary of the LGC for approval . I the invoice marked ' approved ' with approval date shall be returned to the Auditor to present to the Governmental Unit(s ) for payment . This paragraph is not applicable to contracts for audits of hospitals . 10 . In consideration of the satisfactory performance of the provisions of this contract , the Governmental Unit(s ) shall pay to the Auditor, , upon approval by the Secretary of the LGC if required , the fee , which includes any costs 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 . 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 . ltem 13 ) . Unit(s ) as ave outstanding revenue bonds the Auditor she submit to LGC Staff, 11 . If the Governmental nit( ) h /h t g II 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 LGC Staff simultaneously with the Governmental Unit' s ( Units ' ) audited financial statements any other bond compliance statements or additional reports required by the authorizing bond documents , unless otherwise specified in the bond documents . 12 . 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 financialT statements and notes of the Governmental Unit(s ) and all of its component units prepared in accordance with GAAP , (c) supplementary information requested by the Governmental Unit(s ) 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 upon completion . 13 . 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(s ) shall not be billed for the pre- issuance review . The pre - issuance review shall be performed prior to the completed audit being submitted to LGC Staff. The pre- issuance . review report shall accompany the audit report upon submission to LGC Staff. Page 3 LGC =205 CONTRACT TO AUDIT ACCOUNTS Rev. 11 /2023 14 . The Auditor shall submit the report of audit in PDF format to LGC Staff. For audits of units other than hospitals , the audit report should be submitted when (or prior to ) submitting the final 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 LGC by any interested parties . Any subsequent revisions to these reports shall be sent to the Secretary of the LGC . 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 for other lawful purposes of the Governmental Unit(s ) without requiring consent of the Auditor . If the LGC Staff determines that corrections need to be made to the Governmental Unit' s ( Units ' ) financial statements and/ or the compliance section , those corrections shall be provided within three business days of notification unless another deadline is agreed to by LGC Staff. 15 . Should circumstances disclosed by the audit call for a more detailed investigation by the Auditor than necessary under ordinary circumstances , the Auditor shall inform the Governing Board in writing of the need for such additional investigation and the additional compensation required therefore . Upon approval by the Secretary of the LGC , this contract may be modified or amended to include the increased time , compensation , or both as may be agreed upon by the Governing Board and the Auditor . 16 . If an approved contract needs to be modified or amended for any reason , the change shall be made in writing and pre-audited if the change includes a change in audit fee ( pre -audit requirement does not apply to hospitals ) . 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 to the Secretary of the LGC for approval . No change to the audit contract shall be effective unless approved by the Secretary of the LGC . 17 . A copy of the engagement letter, issued by the Auditor and signed by both the Auditor and the Governmental Unit(s ) , shall be attached to this contract , and except for fees , work, and terms not related to audit services , shall be incorporated by reference as if fully set forth herein as part of this 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 30 of this contract . Engagement letters containing indemnification clauses shall not be accepted by LGC Staff, 18 . Special provisions should be limited . Please list any special provisions in an attachment . 19 . A separate contract should not be made for each division to be audited or report to be submitted . 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 primary 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 . 20 . The contract shall be executed , pre -audited ( pre -audit requirement does not apply to hospitals ) , and physically signed by all parties including Governmental Unit(s ) and the Auditor, then submitted in PDF format to the Secretary of the LGC . 21 . 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 approved . 22 . Retention of Client Records : Auditors are subject to the NC State Board of CPA Examiners ' Retention of Client Records Rule 21 NCAC 08N . 0305 as it relates to the provision of audit and other attest services , as well as non -attest services . Clients and former clients should be familiar with the . requirements of this rule prior to requesting the return of records . Page 4 LGC =205 CONTRACT TO AUDIT ACCOUNTS Rev . 11 /2023 23 . This contract may be terminated at any time by mutual consent and agreement of the Governmental Unit(s ) and the Auditor, provided that (a ) the consent to terminate is in writing and signed by both parties , ( b ) the parties have agreed on ' the fee amount which shall be paid to the Auditor ( if applicable ) , and ( c) no termination shall be effective until approved in writing by the Secretary of the LGC . 24 . The Governmental Unit' s ( Units ' ) failure or forbearance to enforce , or waiver of, any right or an event of breach or default on one occasion or instance shall not constitute the waiver of such right , breach or default on any subsequent occasion or instance . 25 . 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 ., 26 . &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 . 27 . Applicable to audits with fiscal year ends of June 30 , 2020 and later. For all non -attest services , the Auditor shall adhere to the independence rules of the AICPA Professional Code of Conduct and Government 'Auditing Standards, 2018 Revision (as applicable ) . 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 . If the Auditor cannot reduce the threats to an acceptable level , the Auditor cannot complete the audit . If the Auditor is able to reduce the threats to an acceptable level , the documentation of this determination , including the safeguards applied , must be included in the audit workpapers . All non -attest service (s ) being performed by the Auditor that are necessary to perform the audit must be identified and included in this contract . The Governmental Unit shall designate an individual with the suitable skills , knowledge , and /or experience ( SKE ) necessary to oversee the services and accept responsibility for the results , of the services performed . If the Auditor is able to identify an individual with the appropriate SKE , s/he must document and include in the audit workpapers how he/she reached that conclusion . If the Auditor determines that an individual with the appropriate SKE cannot be identified , the Auditor cannot perform both the non -attest service (s ) and the audit . See " Fees for Audit Services" page of this contract to disclose the person identified as having the appropriate SKE for the Governmental Unit . 28 . Applicable to audits with fiscal year ends of June 30 , 2021 and later. The auditor shall present the audited financial statements including any compliance reports to the government unit' s governing body or audit committee in an official meeting in open session as soon as the audited financial statements are available but not later than 45 days after the submission of the audit report to the Secretary . The auditor' s presentation to the government unit' s governing body or audit committee shall include : a ) the description of each finding , including all material weaknesses and significant deficiencies , as found by the auditor , and any other issues related to the internal controls or fiscal health of the government unit as disclosed in the management letter, the Single Audit or Yellow Book reports , or any other communications from the auditor regarding internal controls as required by current auditing standards set by the Accounting Standards Board or its successor ; b ) the status of the prior year audit findings ; c ) the values of Financial Performance Indicators based on information presented in the audited financial statements ; and d ) notification to the governing body that the governing body shall develop a " Response to the Auditor' s Findings , Recommendations , and Fiscal Matters , " if required under 20 NCAC 03 . 0508 . 29 . Information based on the audited financial statements shall be submitted to the Secretary for the purpose of identifying Financial Performance Indicators and Financial Performance Indicators of Concern . See 20 NCAC 03 . 0502 ( c ) ( 6 ) . Page 5 UGC-2o5 CONTRACT TO AUDIT ACCOUNTS Rev . 11 /2023 30 . All of the above paragraphs are understood and shall apply to this contract, except the following numbered paragraphs shall be deleted (See Item 17 for clarification ) . 31 . The process for submitting contracts , audit reports and invoices is subject to change . Auditors and units should use the submission process and instructions in effect at the time of submission . Refer to the N . C . Department of State Treasurer website at https : //www . netreasurer. com/state-and - local - government-finance -division /locakgovernme nt-commission/submitting -your-audit 32 . All communications regarding audit contract requests for modification or official approvals will be sent to the email addresses provided on the signature pages that follow . 33 . Modifications to the language and terms contained in this contract form ( LGC -205 ) are not allowed . Page 6 LGC =205 CONTRACT TO AUDIT ACCOUNTS Rev . 11 /2023 FEES FOR AUDIT SERVICES 1 . For all non -attest services , the Auditor shall adhere to the independence rules of the AICPA Professional Code of Conduct (as applicable ) and Government Auditing Standards, 2018 Revision . Refer to Item 27 of this contract for specific requirements . The following information must be provided by the Auditor ; contracts presented to the LGC without this information will be not be approved . Financial statements were prepared by : pAuditor ❑ Governmental Unit ❑ Third Party If applicable : Individual at Governmental Unit designated to have the suitable skills , knowledge , and /or experience . (SKE ) necessary to oversee the non -attest services and accept responsibility for the results of these services : Name . Title and Unit / Company: Email Address. Gary Donaldson I JCF0, Orange County lgdonaldson@orangecountync . gov OR Not Applicable ❑ (Identification of SKE Individual on the LGC-205 Contract is not applicable for GAAS-only audits or audits with FYEs prior to June 30, 2020.) 2 . Fees may not be included in this contract for work performed on Annual Financial Information Reports (AFIRs ) , Form 990s , or other services not associated with audit fees and costs . Such fees may be included in the engagement letter but may not be included in this contract or in any invoices requiring approval of the LGC . See Items 8 and 13 for details on other allowable and excluded fees . 3 . The audit fee information included in the table below for both the Primary Government Fees and the DPCU Fees ( if applicable ) should be reported as a specific dollar amount of audit fees for the year under this contract . If any language other than an amount is included here , the contract will be returned to the audit form for correction . 4 . Prior to the submission of the completed audited financial report and applicable compliance reports subject to this contract , or to an amendment to this contract ( if required ) the Auditor may submit interim invoices for approval for services rendered under this contract to the Secretary of the LGC , not to exceed 75 % of the billings for the unit's last annual audit that was submitted to the Secretary of the LGC . All invoices for services rendered in an audit engagement as defined in 20 NCAC . 0503 shall be submitted to the Commission for approval before any payment is made . Payment before approval is a violation of law. (This paragraph not applicable to contracts and invoices associated with audits of hospitals ) . Primary Government Unit Orange County Audit Fee (financial and compliance if applicable ) $ 120 , 000 . 00 i Fee per Major Program ( if not included above ) Is Additional Fees .Not Included Above ( if applicable) . j Financial Statement Preparation (inci . notes and RSI ) $ All Other Non -Attest Services $ TOTAL AMOUNT NOT TO EXCEED $ 120 , 000 I Discretely Presented Component Unit n/a Audit Fee (financial and compliance if applicable ) $ Fee per Major Program (if not included above ) $ Additional Fees Not Included Above ( if applicable ) . Financial Statement Preparation ( Ind . notes and RSI ) $ All Other Non -Attest Services $ TOTAL AMOUNT NOT TO EXCEED $ Page 7 UGC =205 CONTRACT TO AUDIT ACCOUNTS Rev . 11 /2023 SIGNATURE PAGE AUDIT FIRM Audit Firm * Mauldin & Jenkins , LLC Authorized Firm Representative (typed or printed ) * Signature'` _ Timothy M . Lyons Date * Email Address * 04/22/24 tlyons@iujcpa. com mjcpa. com GOVERNMENTAL UNIT Governmental Unit* Orange County Date Governing Board Approved Audit Contract* ( Enter date in box to right) Mayor/Chairperson (typed or printed ))* Signa e* Vl�u C 2 kUC Date E Addr s* 69.1 ( I Roc Chair of Audit Committee (typed or printed , or " NA" ) Signature Date Email Address GOVERNMENTAL UNIT — PRE -AUDIT CERTIFICATE Required by G . S . 159-28 (a1 ) or G . S . 115C441 ( a1 ) . Not applicable to hospital contracts . This instrument has been pre-audited in the manner required by The Local Government Budget and Fiscal Control Act or by the School Budget and Fiscal Control Act. Sum Obligated by This Transaction : $ 120 000 Primary Governmental Unit Finance Officer* (typed or printed Signature* Date of Pre-Audit Certificate* Email Address* Page 8 L.GC =205 CONTRACT TO AUDIT ACCOUNTS Rev. 11 /2023 SIGNATURE PAGE — DPCU ( complete only if applicable ) DISCRETELY PRESENTED COMPONENT UNIT DPCU n/a Date DPCU Governing Board Approved Audit Contract* ( Enter date in box to right) DPCU Chairperson (typed or printed ) * Signature* Date * Email Address * Chair of Audit Committee (typed or printed , or " NA" ) Signature Date Email Address i DPCU — PRE -AUDIT CERTIFICATE Required by G . S . 159 -28 (a1 ) or G . S . 115C .441 (a1 ) . Not applicable to hospital contracts . c This instrument has been pre-audited in the manner required by The Local Government Budget and Fiscal Control Act of by the School Budget and Fiscal Control Act. Sum Obligated by this Transaction : $ DPCU Finance Officer (typed or printed ) * Signature * i Date of Pre-Audit Certificate * Email Address * j Remember to print this form , and obtain all required signatures prior to submission . PRINT Page 9