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HomeMy WebLinkAbout1995-044 Agrmt-Coopers&LybrandCoo3ers &Ly3rand Coopers & Lybrand L.L.P. a professional services firm 400 Country Club Road Suite 300 Post Office Box 1600 Eugene, Oregon 97440-1600 telephone (503) 485-1600 facsimile general (503) 334-4385 tax (503) 334-4386 April 20, 1995 Ms. Jill Turner Director of Finance City of Ashland 20 East Main Street Ashland, Oregon 97520 This letter of arrangement between the City of Ashland (including Ashland Parks and Recreation Commission) and Coopers & Lybrand L.L.P. sets forth the nature and scope of the services we will provide, the City's required involvement and assistance in support of our services, the related fee arrangements and other terms and conditions designed to ensure that our professional services are performed to achieve the mutually agreed upon objectives of the City. SUMMARY OF SERVICES We will audit the general purpose financial statements of the City of Ashland as of and for the year ended June 30, 1995, in accordance with generally accepted auditing standards and the standards for financial audits contained in Government Auditin.q Standards, issued by the Comptroller General of the United States, the Single Audit Act of 1984, and the provisions of Office of Management and Budget (OMB) Circular A-128, Audits of State and Local Governments. The objective of an audit is the expression of our opinion concerning whether the financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of the Proprietary and Similar Trust Funds of the City in conformity with generally accepted accounting principles. We expect to deliver our report on or about November 30,/j,~ 1995. If you intend to publish or otherw,se reproduce the aforement,oned and make reference to our Firm name, you agree to provide us with printer's proofs or masters for our review before printing. You also agree to provide us with a copy of the final reproduced material and to obtain our written consent before it is distributed. We also will read the other information included in the Comprehensive Annual Financial Report (CAFR) in which the financial statements are presented and consider whether such information, including the manner of its presentation, is materially consistent with information appearing in the financial statements. However, we will not provide an opinion on the Introductory or Statistical sections of the CAFR. Coopers & Lybrand L.L.P., a registered limited liability partnership, is a member firm of Coopers & Lybrand (International). Ms. Jill Turner, City of Ashland April 20, 1995 Page 2 Director of Finance The engagement will be led by: Don R. Doerr, partner, who will be responsible for assuring the overall quality value, and timeliness of our services to you; Wendy Dame, manager, who will be responsible for managing the delivery of our services to you; and · Lance Brant, senior associate, who will be field in-charge accountant. This team will have access to a full range of specialists to assist as necessary. LIMITATIONS OF THE AUDITING PROCESS Our audit will include procedures designed to provide reasonable assurance of detecting errors and irregularities that are material to the financial statements. As you are aware, however, there are inherent limitations in the auditing process. For example, audits are based on the concept of selective testing of the data being examined and are, therefore, subject to the limitation that errors and irregularities, if they exist, may not be detected. Also, because of the characteristics of irregularities, including attempts at concealment through collusion and forgery, a properly designed and executed audit may not detect a material irregularity. Similarly, in performing our audit we will be aware of the possibility that illegal acts may have occurred. However, it should be recognized that our audit provides no assurance that illegal acts generally 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. We will inform you with respect to material errors and irregularities, or illegal acts that come to our attention during the course of our audit. You recognize your responsibility for reporting illegal acts in accordance with Government Auditin.q Standards. COMPLIANCE WITH LAWS AND REGULATIONS Compliance with laws, regulations, contracts, and grants applicable to the City is the responsibility of the City's management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of the City's compliance with certain provisions of laws, regulations, contracts, and grants. However, except for major federal financial assistance programs, our objective is not to provide an opinion on overall compliance with such provisions. Ms. Jill Turner, City of Ashland April 20, 1995 Page 3 Director of Finance As required by Government Auditin.q Standards, we will prepare a separate written report on our tests of compliance with applicable laws and regulations. This report will contain a statement of positive assurance on those items which were tested for compliance, negative assurance on those items not tested, and a description of all material instances of noncompliance. RESPONSIBILITIES AS TO INTERNAL CONTROLS As a part of our audit, we will consider the City's internal control structure. as required by generally accepted auditing standards and Government Auditin.cl Standards. These standards require us to obtain an understanding of the control structure and assess risk as a basis for determining the nature, timing, and extent of auditing procedures necessary for expressing our opinion on the financial statements. You recognize that the financial statements and the establishment and maintenance of an internal control structure are the responsibility of management. Appropriate supervisory review procedures are necessary to provide reasonable assurance that adopted policies and prescribed procedures are adhered to and to identify errors and irregularities or illegal acts. As part of our consideration of the City's internal control structure, we will inform you of matters that come to our attention that represent significant deficiencies in the design or operation of the internal control structure. As required by Government Auditin~ Standards, we will prepare a separate written report on our understanding of the City's internal control structure and the assessment of control risk made as part of the financial statement audit. Our report will include (1) the scope of our work in obtaining an understanding of the internal control structure and in assessing control risk; (2) the City's significant internal control structure policies and procedures, including the controls established to ensure compliance with laws and regulations that have a material impact on the general purpose financial statements, and; (3) the reportable conditions, including the identification of material weaknesses, identified as a result of our work in understanding and assessing control risk. We are prepared at your request to perform a more in-depth assessment of the City's internal control structure, and report our findings and recommendations. If you prefer, we stand ready to conduct an examination engagement to provide assurance on the effectiveness of your internal control structure. In that circumstance, we would assist management in making an initial assessment of internal control effectiveness, and then conduct an evaluation of that assessment for the purpose of issuing an attestation report. We would use effectiveness criteria set forth in Internal Control Inte.qrated Framework, authored by Coopers & Lybrand L.L.P. and issued by the Committee of Sponsoring Organizations of the Treadway Commission, or other acceptable criteria Ms. Jill Turner, City of Ashland April 20, 1995 Page 4 Director of Finance that may be available. We would be pleased to discuss fees for these services, which depend on their scope. ADDITIONAL RESPONSIBILITIES AND REPORTING UNDER A-128 As required by OMB Circular A-128, we will consider and test the City's internal control structure policies and procedures used in administering federal financial assistance programs. Based on this consideration and these tests, we will assess risk and determine the nature, timing, and extent of tests of compliance with requirements that, if not complied with, could have a material effect on a major federal financial assistance program. Also, in connection with our audit of the financial statements or our consideration of the internal control structure over federal financial assistance programs, if we select a transaction for testing that is applicable to a nonmajor program, we will also test it generally for compliance with laws and regulations. In accordance with OMB Circular A-128, we will prepare the following separate written reports: Report on Supplementary Schedule of Federal Financial Assistance Report on the Internal Control Structure Used in Administering Federal Financial Assistance Programs Report on Compliance with the General Requirements Applicable to Federal Financial Assistance Programs Report on Compliance with Specific Requirements Applicable to Nonmajor Federal Financial Assistance Program Transactions REPRESENTATION FROM MANAGEMENT At the conclusion of the engagement, the City's management will provide to us a representation letter that, among other things, will confirm management's responsibility for the preparation of the financial statements in conformity with generally accepted accounting principles, the availability of financial records and related data, the completeness and availability of all minutes of the City meetings and committee meetings, management's responsibility for the entity's compliance with laws and regulations, the identification and disclosure to the auditor of all laws and regulations that have a direct and material effect on the determination of financial statement amounts and, to the best of their knowledge and belief, the absence of irregularities involving management or those employees who have significant roles in the control Ms. Jill Turner, City of Ashland April 20, 1995 Page 5 Director of Finance structure. Additionally, representations will be requested as to the financial reporting entity's financial statements to be audited; the inclusion of all component units, and the disclosure of all joint ventures and other related organizations; the proper classification of funds and account groups; the proper approval of reserves or designations of fund equities; compliance with laws and regulations, including budget laws or ordinances; compliance with any tax or debt limits, including any related debt covenants; representations relative to GASB-required supplementary information; and identification of all federal assistance programs, if applicable, and compliance with all related grant requirements. COMMUNICATIONS As part of this engagement we will ensure that certain additional matters are communicated to the appropriate members of management and the City council. Such matters include (1) the initial selection of and changes in significant accounting policies and their application; (2) the process used by management in formulating particularly sensitive accounting estimates and the basis for our conclusions regarding the reasonableness of those estimates; (3) audit adjustments that could, in our judgment, either individually or in the aggregate, have a significant effect on your financial reporting process; (4) any disagreements with management, whether or not satisfactorily resolved, about matters that individually or in the aggregate could be significant to the financial statements or our report; (5) our views about matters that were the subject of management's consultation with other accountants about auditing and accounting matters; (6) major issues that were discussed with management in connection with the retention of our services, including, among other matters, any discussions regarding the application of accounting principles and auditing standards; and (7) serious difficulties that we encountered in dealing with management related to the performance of the audit. As part of our ongoing process of assessing the quality of our services, you may receive questionnaires from us and/or visits from senior partners not directly involved in providing services to you. We appreciate the attention that you give to these and value your commentary. Additionally, if you have questions or concerns about our services, you may contact Stan Johnson, the Business Assurance Partner-In-Charge responsible for the engagement team serving you. TERMS AND CONDITIONS SUPPORTING FEE As a result of our planning process, the City and Coopers & Lybrand LL.P. have agreed to an approach aimed at achieving the City's objectives for an agreed upon fee, subject to the following conditions. Ms. Jill Turner, Director of Finance City of Ashland April 20, 1995 Page 6 To facilitate meeting our mutual objectives, the City will 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 City is unable to provide such schedules, information and assistance, Coopers & Lybrand L.L.P. and the City will mutually revise the fee to reflect additional services, if any, required of us to achieve these objectives. Such revisions will be set forth in the form of the attached "Amendment to Letter of Arrangement". In providing our services, we will consult with the City with respect to matters of accounting, financial reporting or other significant 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, Coopers & Lybrand L.L.P. and the City will agree to an appropriate revision in services and fee. Such revisions will also be set forth in the form of the attached "Amendment to Letter of Arrangement". 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 Our fees for the audit of the City's financial statements and performance of the Single Audit of Federal Financial Assistance Programs are as set forth in Exhibit A attached hereto. ACCESS TO WORKING PAPERS 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. 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 work we perform for you may be selected by the other firm for their review. 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. Ms. Jill Turner, City of Ashland April 20, 1995 Page 7 Director of Finance The working papers for this engagement are the property of Coopers & Lybrand L.L.P. and constitute confidential information. However, as required by applicable provisions of laws and regulations, we are required to make certain working papers available to the Environmental Protection Agency and the Secretary of State, Division of Audits of the State of Oregon upon request for their regulatory oversight purposes. Access to the requested working papers will be provided to federal and state regulatory agencies under the supervision of Coopers & Lybrand L.L.P. audit personnel and at a location designated by our firm. In addition, the work papers shall be maintained for a period of time to satisfy legal and administrative requirements. If the foregoing is consistent with your understanding, please sign one copy of this letter in the space provided and return it to us. The other copy of this letter of arrangement is for your retention. If you have any questions, please call Don Doerr at (503) 485-1600. Very truly yours, Attachment cc: Brion Almquist, City Administrator Submitted by: q3on R. Doerr, Partner A(;/cepted by: Date: lyb review by /,'1....-. on ~ AMENDMENT # TO LETTER Of ARRANGEMENT [DATE] Ms. Jill Turner Director of Finance City of Ashland 20 East Main Street Ashland, Oregon 97520 The letter of arrangement dated April 20, 1995 between Coopers & Lybrand L.L.P. and the City of Ashland, Oregon is hereby amended to reflect the following: Description of/Causes for Amendment Total this amendment $ Previous fee estimate Revised fee estimate $ Estimated Fees Impact If the foregoing is consistent with your understanding, please sign one copy of this amendment in the space provided and return it to us. The other copy of this amendment to the letter of arrangement is for your retention. If you have any questions, please call Don Doerr at (503) 485-1600. Very truly yours, Isl Coopers & Lybrand L.L.P. cc: Brion Almquist, City Administrator Submitted by: Don R. Doerr, Partner Accepted by: Date: Legal review Ioy City of Ashland, Oregon Attachment to April 20, 1995 Audit Agreement Letter Exhibit A Out of Pocket Fee Expenses 1994 Fee, including Single audit CPI* Annual Average Increase 1995 Audit Fee $23,540 $6,830 2.9% 2.9% $24,223 $7,028 Ashland Parks & Recreation Commission Out of Pocket Fee Expenses 1994 AuditFee CPI* AnnualAveragelncrease 1995 Audit Fee $3,4OO $6OO 2.9% 2.9% $3,499 $ 617 * 1994 Portland, Oregon All Urban Consumers CPI (2nd half 1993 to 2nd half 1994)