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HomeMy WebLinkAboutAgenda - 12/11/2008 - 4gORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: December 11, 2008 1 Action Agenda Item No. SUBJECT: Amendment of Audit Contract DEPARTMENT: Finance PUBLIC HEARING: (Y/N) No ATTACHMENT(S): Contract INFORMATION CONTACT: Gary Humphreys, 245-2453 PURPOSE: To amend the contract with McGladrey and Pullen extending the date for completion of the county audit and compensating for additional services to be performed. BACKGROUND: The Local Government Commission requires the County's audit contract be amended if the audit of the financial statements is not completed in time for the statements to be submitted to the State by the last day of November. This year that date has been extended by the State to December 10th but staff is concerned the statements will not be completed in time to meet the deadline. This year's audit has been delayed for a variety of reasons. • Additional work had to be done by county staff to facilitate preparation of the financial statements of the Triangle Sportsplex. • Staff review of transactions in prior years necessitated corrections that require us to restate beginning balances of this year's financial statements. This requires a higher level of review by the auditors which is outside the scope of the current contract. As such, the auditors are requesting additional compensation not to exceed $5,000 related to a more extensive review associated with a restatement. • The second phase of the audit process started later than last year due to a request by the auditing firm for the county staff to have completed all closing entries before the auditors began their review. The audit and statements are expected to be complete before December 15th but in order to avoid having to re-extend the contract the contract date has been set at December 31st. FINANCIAL IMPACT: Additional audit fees not to exceed $5,000 are requested in order to expand the scope of services to include a more extensive review associated with the restatements. a RECOMMENDATION(S): The Manager recommends the Board approve the amendment of the audit contract for FY 2008-09 with McGladrey and Pullen extending the date for completion of the county audit and compensating for additional services to be performed and authorizing the Chair to sign on behalf of the Board. LGC-205 (Rev. 1/1/2008) CONTRACT TO AUDIT ACCOUNTS File in Triplicate. of Orange County, North Carolina Govemmental Unit On this 11`h day of December , 2008 McGladrev and Pullen LLP Auditor . PO Box 2470, Greensboro, NC 27402-2470 ,hereinafter referred to as the Auditor Mailing Address and the Commissioners . of .. Orange Counter ,hereinafter referred to as the Governmental Unit, agree as follows: Governing Board Govemmental Unit 1. The Auditor shall audit all statements and disclosures required by generally accepted accounting principles and additional required legal statements and disclosures of all funds and/or divisions of the Governmental Unit for the period beginning ,July 1, 2007 ,and ending June 30 , 2008 . 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 will be rendered in relation to (as applicable) the governmental activities, the business-type activities, the aggregate discretely presented component units, each major governmental and enterprise fund, and the aggregate remaining fund information (nonmajor 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 generally accepted auditing standazds. The Auditor shall perform the audit in accordance with Government Auditing standazds 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. This audit and all associated workpapers 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 LGC. If the audit and/or workpapers aze found in this review to be substandazd, the results of the review may be forwarded to the North Cazolina State Board of CPA Examiners. 3. This contract contemplates an unqualified opinion being rendered. If financial statements are not prepazed in accordance with generally accepted accounting principles (GAAP), or the statements fail to include all disclosures required by GAAP, explain that departure from GAAP in the space below: 4. This contract contemplates an unqualified opinion being rendered. 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. The audit will have no scope limitations except: 5. If this audit engagement is subject to the standards for audit as defined in Government Auditing Standards, July 2007 revisions, issued by the Comptroller General of the United States, then the Auditor warrants by accepting this engagement that he has met the requirements for a peer review and continuing education as specified in Government Auditine standazds. The Auditor agrees to provide a copy of their most recent peer review report to the Governmental Unit and the Secretary of the Local Government Commission rior to the execution of the audit contract. (See Item 21.) 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 by December 31, 2008 7. It is agreed that generally accepted auditing standazds 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 "significant deficiencies and material weaknesses" in AU 325 of the AICPA Professional standazds. The Auditor shall file a copy of that report with the Secretary of the Local Government Commission . 8. All local government and public authority contracts for annual or special audits, bookkeeping or other assistance necessary to prepaze the Unit's records for audit, financial statement prepazation, any finance-related investigations, or any other audit-related work in the State of North Cazolina require the approval of the Secretary of the Local Government Commission. Secretary of the Local Government Commission. (This also includes an~proeress billings.) services rendered under these contracts shall not be paid by the Governmental Unit until the invoice has been approved by the Invoices for [G.S. 159-34 and 115C-447] All invoices should be submitted in triplicate to the Secretary of the Local Government Commission. The original and one copy will be returned to the Auditor. Approval is not required on contracts and invoices for system improvements and similaz services of anon-auditing nature. 9. In consideration of the satisfactory performance of the provisions of this agreement, the Governmental Unit shall pay to the Auditor, upon approval by the Secretary of the Local Government Commission, the followin¢ 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: Year-end bookkeeping assistance - [ For audits subject to Government Auditing Standards, this is limited to bookkeeping services permitted by revised Independence Standards] None anticipated Anv services performed in addition to normal audit procedures will be chaz eg d e at standard rates Audit -County $83 300 contineent on timely completion of required PBC's An~vs will be charged at standard rates. Anv additional maior proerams above (4) four shall be billed at $4.000 each Preparation of the financial statements - $5 000 for the preparation of schedules of property taxes for the Towns of Chapel Hill Carrboro and Hillsboroueh . 10 After completing his audit, the Auditor shall submit to the Governing Board a written report of audit. This report shall include, at least, Management's Discussion and Analysis, the financial statements of the governmental unit and all of its component units and notes thereto prepared in accordance with generally accepted accounting principles, combining and supplementary information requested by the client or required for full disclosure under the law, and the Auditor's opinion on the material presented. The Auditor shall furnish the required number of copies of the report of audit to the Governing Board as soon as practical after the close of the accounting period. 11. The Auditor shall file with the Local Government Commission two copies of the report of audit, including one copy of the federal Data Collection Form, if a federal single audit is conducted. In addition, if the North Carolina Office of the State Auditor designates certain programs to be audited as major programs, a turnaround document and a representation letter addressed to the State Auditor shall be submitted to the Local Government Commission. Two copies of the report of audit should be submitted if the audit is performed only under the provisions of the State Single Audit Implementation Act or a financial audit is required to be performed in accordance with Government Auditing Standards. 'T'hree copies of the audit should be submitted for Councils of Governments. Two copies of the audit should be submitted for tax levying Municipalities. Otherwise, one copy shall be submitted. Copies of the report shall be filed with the Local Government Commission when (or prior to) submitting the invoice for the services rendered. All copies of the report submitted must be bound. The report of audit, as filed with the Secretary of the Local Government Commission, becomes a matter of public record for inspection and review in the offices of the Secretary by any interested parties. Any subsequent revisions to these reports must be sent to the Secretary of the Local Government Commission. These audited financial statements are used in the preparation of Official Statements for debt offerings (the auditors' opinion is not included), by municipal bond rating services, to fulfill secondary market disclosure requirements of the Securities and Exchange Commission, and other lawful purposes of the government, without subsequent consent of the auditor. 12. 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 Local Government Commission, this agreement may be varied or changed to include the increased time and/or compensation as may be agreed upon by the Governing Boazd and the Auditor. 13. If an approved contract needs to be varied or changed for any reason, the change must be reduced to writing, signed by both parties, preaudited if necessary, and submitted to the Secretary of the Local Government Commission for approval. effective unless approved by the Secretary of the Local Government Commission, the Governing Board. and the Auditor. No change shall be 14. 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 21 of this contract. Engagement letters containing indemnification clauses will not be approved by the Local Government Commission. 15. There are no special provisions except: the attached arrangement letter is an rote rg_al part of this contract and should be read in its entirety when reading this contract 16. A separate contract should not be made for each division to be audited or report to be submitted. A separate contract must be executed for each component unit which is a local government and for which a separate audit report is issued. 17. The contract should be executed and submitted in triplicate to the Secretary of the Local Government Commission. The mailing address is 325 North Salisbury Street, Raleigh, North Carolina 27603-1385. The physical address is 4505 Fair Meadow Lane, Suite 102, Raleigh, North Carolina 27607-6449. 18. Upon approval, the original contract will be returned to the Govefmnental Unit, a copy will be forwarded to the Auditor, and a copy retained by the Secretary of the Local Government Commission. The audit should not be started before the contract is approved. 19. There are no other agreements between the parties hereto and no other agreements relative hereto that shall be enforceable unless entered into in accordance with the procedure set out herein and approved by the Secretary of the Local Government Commission. 20. If this audit engagement is not subject to Government Auditing Standazds, then Item 5 shall be listed as a deleted provision in Item 22. An explanation must be given for deleting this provision. 21. All of the above pazagraphs aze understood and shall apply to this agreement, except the following numbered paragraphs shall be deleted:. (See Item 16.) Firm . McGladrev & Pullen LLP By John J. Gilberto (please type or print name) (Signature of authorized audit firm representative)- By Valerie Foushee , Chairperson (Please type or print name and title (Signature of Mavor/Chairperson of governing board) By (Chair of Audit Committee- please type or print name) (Signature of Audit Committee Chairperson) Approved by the Secretary of the Local Government Commission as provided in Article 3, Chapter 159 of the General Statutes or Article 31, Part 3, Chapter 115C of the General Statutes. For the Secretary, Local Government Commission Date (If unit has no audit committee, [his section should be marked "N/A.") This instrument has been preaudited in the manner required by The -Local Government Budget and Fiscal Control Act or by the School Budget and Fiscal Control Act. Garv Humphreys Governmental Unit Finance Officer (Please type or print name) (Signature) (Preaudit Certificate moat be dated.)