HomeMy WebLinkAboutC2009-272 - 7/9/2009 - NACOLLIER, JOHNSON &~ WOODS, P.C.
555 N~ Caxa~cahua, Su~tc 1000
~c~~}~u~ h~i~ti, ~`exas ~847~-0052
V4'~i~4V ~~W°C~7.CUn1
~uiy ~, ~0~9
r. Angel ,, l~scobar
City l~ianager
City of Corpus Christi
P. ~. fox X7'1
Corpus Christi, Texas ?84~~~~~7
Dear r. ~scabar;
we are pleased to confirm our understanding ofthe services we are to provide far the City of
Carpus Christi ~Ci~y} far the year ended July 1, ~oo~. ~Ve wii~ audit the financial statements ofthe
governmental activities, the business~type activities, the aggregate discretel~- presented eon~ponent
amts, each n~a~ar fund, ar~d aggregate remaining fund information, which co~~ectively comprise the
basic financial statements, ofthe City o Corpus Christi as ofand far the year ended July 3I, 2a09.
Accounting standards generally accepted in the United States provide for certain required
supplementary information ~I~Z}, such as rnanagen~ent's discussion and analysis ~1~~]A}, to
accompa~ay the City's basic f~nanclal statements. As part of our engagement, we will apply certain
lirr~ited procedures to the City's I~SI. These limited procedures will consist principally of inquiries of
management regarding the rr~ethods of measurement and presentation, which management is
responsible for affirming to us in its representation letter. Unless we encounter prablerr~ with the
presentation of the l or with procedures relating to it, we will disclaim an opinion on it. The
following RBI is required by generally accepted accounting principles and will be subjected to
certain limited procedures, but will not be audited:
1, ll~anagernent's 1'~iscussion and Analysis
Z. E.ployn~ent l~etlren~ent l~3enefits - Analyses of k'und~r~ progress
upplen~entary inforrraation other than ~ also accompanies the City's basic financial
statements. a will subject the following supplementary information to the auditing procedures
applied in our audit of the basic financial statements and will pra~ride an opinion an it in relation to
the basic financial statements:
1. Combining and individual fund staterr~ents.
~. Budgetary Corrrparisan Schedules.
~ r~~~,~+~} ~ ~~~t~ Used in ~peratian of Crovernmental Funds.
~449,~'~~ enditures of Federal Awards.
~71~91~9
~a~l~er, Johnson woods
Mr. Angel R. Escobar
July aa9
Page ~
The document will also include introductory and statistical information that will not be
subjected to the auditing procedures applied in our audit of the basic f~nar~cial statements, and for
which our auditor' ~ report will disclaim an opinion.
Audit ~b~ectlves
~'he ob j ective of our audit is the expression of an opinion as to whether your basic financial
statements era fairly presented, in all material respects, in conformity with I.I.Q. generally accepted
accounting principles and to report on the fairness of the additional information referred to ap the
first paragraph when considered ~n relation to the basic finar~clal statements taken as a whole. ~'he
objective also includes reporting on:
internal control related to the financial statements and cornp~iance with the provisions of
applicable laws, regulations, contracts, agreements and grants, noncompliance with which could
have a material effect on the frr~ancial statements in accordance with overrzn~err~ ~lu~r~rrr
S'tar~dards.
Internal central related to major programs and an opinion for disclaimer of opinion} on
compliance with lags, regulations, and the provisions afcontracts or grant agreen~e~ats that could
have a direct and material effect op each major program in accordance with the dingle Audit Act
Amendments of 1 ~9G and ~1VIB ~ircuiar A- l 3 , ~4~drts o ~~at~s, ~oca~ averrrn~e~~s, a~r~a~o~~
Proa~ Drarriza~io~s.
the reports on internal central and compliance will each include a statement that the report is
intended far the information and use of the honorable Mayor and Members of the pity auncil,
management, federal awarding agencies and pass-through entities and is not intended to be and
should not be used by anyone other than these specified parties.
fur audit will be conducted in accordance with generally accepted auditing standards
established by the Auditing standards Board united Mates}; the standards far financial audits
captained in overr~r~~~~ A~di~i~r S~ar~dar~c~s, issued by the omptrollex general of the Upited
Mates; the dingle Audit Act Arnendrnepts of ~ 9~; and the provisions af~MB ~irtular A- 13, and
will include tests of accounting retards, a determination of major progratn~s} ip accordance with
FMB circular A-] , and other procedures we consider necessary to enable us to express such
opinions and to render the required reports. If our opinions an the financial statements or the dingle
Audit compliance opinions art other than unqualified, w willfully discuss the reasons with you in
advance. If, far any reason, we are ~rnable to complete the audit or are unable to farm or have pat
formed apinionsx we nay decline to express opinions or to issue a report as a result of this
engagement.
1 fi ir. ~Ile~ ~r ~SGa~~^
July ~, 2aa~
Page 3
I~Ianagemen~ Responsibxlitles
Management is responsible far the basic fnancial statements and all accompanying
information as well as all representations contained therein. Management is also responsible for
preparation ofthe schedule ofexpenditures of federal awards in accordance with the requirements of
FMB circular ~,1~3. As park of the audit, we will assist with preparation of your financial
statements, schedule of expenditures of federal awards, and related notes. You are responsible for
making all management decisions and performing all m~anagernent functions relating to the financial
statements, schedule of expenditures of federal awards, and related Hates and far accepting full
responsibility for such decisions You will be required to acknowledge in the management
representation letter oux assistance with preparation of the financial statements and the schedule of
expenditures of federal awards and that you have reviewed and approved the financial statements,
schedule of expenditures of federal awards, and related Hates prior to their issuance and have
accepted responsibility for them. Further, you are required to designate an individual with suitable
skill, knowledge, or experience to oversee any non-audit services we provide and for evaluating the
adequacy and results of those services and accepting responsibiZtty for them,
Management is responsible for establishing and maintaining effective internal controls,
including internal controls aver compliance, and for monitoring ongoing activities, to help ensure
that appropriate goals and objectives are met. You are also responsible for the selection and
application of accounting principles; far the fair presentation in the financial statements of the
respective financial position of the governmental activities, each major fund, and the aggregate
remaining fund information of the district and the respective changes in financial position and,
where applicable, cash flows ~ conformity with ~. ~. generally accepted accounting principles; and
for cornpliar~c with applicable laws and regulations and the provisions of contracts and grant
agreements.
Managerner~t is also responsible for making all financial records and related information
available to us and for ensuring that n~anage~nent and fnancial information is reliable ar~d properly
recorded. Your responsibilities also include, ir~cludmg ldentif~ng significant vendor relatlonsh~ s ~n
p
which the vendor has responsibility for progran, compliance and for the accuracy and completeness
of that information.Your responsibilities include adjusting the financial statements to correct
material misstatements and confirming to us in the representation letter that the effects of any
uncorrected misstatements aggregated by us during the current engagement and pertaining to the
latest period presented are immaterial, both individually and in the aggregate, to the f inuneial
statements taken as a whole.
1V[r, Angel . ~scabar
July d, Za~~
Page 4
tau are respansible far a design and implementation ofprograms and controls to prevent
and detect fraud, and far informing us about ail known yr suspected fraud or illegal acts affecting the
government involving ~ ~ ~ management, ~2} employees who have signifrcant tales in internal control,
and ~}others where the fraud or illegal acts could have a material effect an the financial statements.
Maur responsibilities include informing us of your knowledge of any allegations of fraud or
suspected fraud affecting the government received in communisations from eni to ees former
~ y
en~plo~rees, grantors, regulators, or ethers, In addition, you axe responsible for identifying and
ensuring that the entity carnplies with applicable laws, regula~ons, contracts, agreements, and grants.
IVlanagen~ent is responsible for establishing and tnaintaanjn a process for tracking the status
of audit findings and recan~endatians.lUlanagernent is also respansible for identifying far us
previous financial audits, attestation engagerr~ents,performance audits, ax other studies related to the
objeetaves discussed in the Audit objectives section of this letter. This responsibility includes
relaying to us corrective actions taken to address significant findings and xecvnlmer~dations resulting
rani those audits, attestation engagements, performance audits, or studies. Yau axe also respansible
for providing management's views on our current f ndings, conclusions, and recommendations, as
well as your planned corrective actions, far the report, grid for the tuning and format for providing
that information.
Audit ~rocedures~encral
An audit includes examining, on a test basis, evidence supporting the mounts and
disclosures in the financial statements; therefore, our audit will involve ~udgn~ent about a number
of transactions to be examined and the areas to be tested. we will plan and perform the audit to
obtain reasonable rather than absolute assurance about whether the financial statements are free of
material rnistaternent, whether from ~ 1 } errors, ~2} fraudulent financial reporting, ~3}
misappropriation ofassets, or ~~} violations oflaws or governmental regulations that are attributable
to the entity ar to acts by management or ernplayees acting on behalf of the entity. Because the
determination of abuse i subjective, overr~~z~t~ A~~~~r~r S~anc~~rds da not expect auditors to
provide reasonable assurance of detecting abuse.
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
misstatements or noncompliance may exist and not be detected by us. In addition, an audit is not
designed to detect immaterial n~sstaten~ents, or violations ofl~ws or governmental regulations that
do not ha~re a direct and material effect on the basic financial statements ar n~ajar programs.
l~awever, we will infan you of any rr~aterial errors and any fraudulent financial reporting ar
n~isappropriatian of assets that came to our attention. we will also inform you of any violations of
laws ar governmental regulations that came to our attention, unless clearly inconse~uer~tial. we will
include such matters in the reports required for a dingle Audit. fur responsibility as audltar is
~irnited to the per~ad covered by our audit and does not extend to matters that might arise during any
dater periods for whic~a we are not engaged as auditors,
1V[r. Angel R. Escobar
July ~, 20a9
Page
Our procedures will include tests of documentary evidence supporting the transactions
recorded in the accounts, and nay include tests of the physical existence of inventories, and direct
confirmation of receivables and certain other assets and liabilities by correspondence with selected
ind~v~duals, creditors, and ~nanclal lnstttutlans. we will request written representations frorr~ your
attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the
conclusion of our audit, we will also require certain written representations from you about the
financial statements and related matters.
Audit ~rocedures~~nternal antrols
Our audit will include abtarning an understanding ofthe entity and its envrrontnent, including
internal control, sufficient to assess the risks of~naterial misstatement ofthe financial statements and
to design the nature, tinning, and extent of further audit procedures. Tests of controls may be
perfoned to test the effectiveness of certain controls that we consider relevant to preventing and
detecting errors and fraud that are naterial to the financial statements and to preventing and detecting
misstatements resulting from illegal acts and other noncompliance matters that have a direct and
material effect on the financial statements. Our tests, ifperformed, will be less in scope than would
be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed
in our report on internal control issued pursuant to overt~~ze~r~ ~~dr'~ir~g ~andar~ds.
As required by OMB circular ~- l ~, we wi11 perform tests of controls over compliance to
evaluate the effectiveness of the design and operation o controls that we consider relevant to
preventing or detecting material noncompliance with compliance requirements applicable to each
naa~or federal award program. however, our tests will be less in scope than would be necessary to
render an opinion on those controls and, accordingly, no opinion will be expressed in our report on
intennal control issued pursuant to OMB circular ~, l ~ 3.
An audit is not designed to provide assurance an internal control or to identify signil~cant
deficiencies. ~awever, during the audit? we will carrunicate to nnanagement and those charged
with governance internal control related nutters that are required to be communicated under
professional standards, Cover~tert~ ~4udr~r' S'~ar~a~~r~,~, and OII~B circular A--133.
Audi# Procedures-~omplia~nce
As part of obtaining reasonable assurance about whether the basic financial statements are
free of material misstatement, we will perfarrn tests of the pity's cannpliance with applicable laws
and regulations and the provisions of contracts and agreements, including grant agreements.
however, the objective ofthose procedures will not be to provide an opinion on overall compliance
and we will riot express such an opinion in our report on compliance issued pursuant to overnn~ertt
~~di~r~ S~a~dara~s.
1Vlr. Angel . l~scobar
July ~, ~Oa~
Page ~
~1V~~ circular A~133 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 prograls. Dur rocedures gill
• ~ . p
consist ofthe applicable procedures described In the ~~ C~rcu~ar~~4~~3 ~on~p~iar~ce S'u ~~r~er~~
for the types of compliance requirements that could have a direct and material effect on each of the
pity's rna~or programs. The purpose afthose procedures will be to ea~press an opinion on the ~i 's
con~pllance wlth requ~rernents applicable to n~a~or programs m our report on compliance issued
pursuant to DAB irculax A-i ~3.
Audit Administration, Fees, and ~t~er
we understand that your employees will prepare all cash, accounts receivable, or other
conf~rations we request and will locate any invoices selected by us for testing.
At the conclusion afthe engagement, we will complete the appropriate sections ofand si
~ r 4 ^ ~ ' ~ V
the Data ~allectlon Form that sun~rnarizes our audit findings. we wlll provlde copes of our re orts
• .. , ... p
to the lty; however, ~t ~s management s responslblllty to submit the reporng package ~includin
. g
frnanclal statements, schedule of expenditures of federal awards, sutnrnary schedule of riot audit
. p
f indrngs, auditors reports, and a corrective action plan} along wry the Data allectlon Farm to the
designated federal clearinghouse and, if appropriate, topass-through entities. The Data allection
Form and the reporting package must be submitted within the eaxlier of ~0 days aver receipt of the
auditors' reports or nine months after the end of the audit period, unless a longer period is agreed to
in advance by the cognizant or oversight agency far audits. At the conclusion ofthe enga ement, we
. g
wlll provlde ~nforatlan to management as to where the reporting packages should be submitted and
the number to submit.
The audit documentation for this engagement is the property of collier, Johnson woods
P.~. and constitutes confidential information. ~Iowever, pursuant to authority given by lave or
regulation, we nay be requested to make certain audit documentation available to overs~ t or
grantor agencies for purposes of a quality review of the audit, to resolve audit findings, or to carry
out oversight responsibilities. we will notify you of arty such request. ~f requested, access to such
audit documentation will be provided under the supervision of olller, Johnson woods P.~.
personnel. Furthermore, upon request, we may provide copies of selected audit documentation to
oversight or grantor agencies, The oversight or grantor agencies may intend, ar decide; to distribute
the photocopies or infarrnation contained therein to others, including other gavenYmental agencies.
The orkpapers far this engagement will be retained far a rnirdn~um of eve dears after the
date the auditors' report is issued or for any additional period requested by the oversight a enc far
~ y .
audit arpass-through entity. If we are aware that a federal awarding agency, pass~through entit , or
. . Y
auditee is contesting an audit #inding, we will contact the parties contesting the audit findin fax
. g
guidance prior to destroying the audit documentation.
llrlx. Angel , l~scobar
July , X09
Page 7
F. John Shepherd is the engagement partner and is responsible for supervising the
engagement and signing the reports or authorizing another individual to sign them fur fees for
these services will be based on the actual time spent t our standard hourly rates, plus travel and
other out-of-poc~tet casts such as report production, typing, postage, etc. fur standard hourly rates
vary according to the degree of responsibility involved and the experience level of the personnel
assigned to your audit.
we estimate that our fees for the engagement cover the following tasks:
Financial Audit ofthe pity 105~~0~
Compliance Audit ~,p~~
TOTAL 140,~~0
we do not anticipate the fee to exceed $140,0~o for the above services, unless unforeseen
circumstances arise. Such circumstances will be discussed when, and if, encountered. fur invoices
for these fees will be rendered as work progresses and will be payable within 0 days ofreceipt and
wont will cease if fees are not paid. we acknowledge that no fees for the tasks outlined above that
exceed $140,004 in the aggregate are authvri~ed by this agreement, without the prior written
authorization ofthe Director ofFinanclal Services. expenses will be itemized and wi11 be limited to
reasonable and customary charges.
The City is obligated to pay such fees under this agreement as may lawfully be made from
funds budgeted anal appropriated far that purpose during the current fiscal year. Should the City fail
to budget and appropriate funds for the audit in the subsequent fiscal year this agreement shall be
terminated.
we appreciate the opportunity to be ofservice to the City ofCorpus Christi and believe this
let#er accurately sun~iarizes the significant terms of our engagement. ~f you have any questions,
please let us know. ~f you agree with the terms of our engagement a described in this letter, please
sign the enclosed copy and return it to us.
fiery truly yours,
~)~LIE, J~HNS~I~ ~ w~ODS
A Professional Corporation
a
r
F. John epherd
iVir. Angel ~. Escobar
duly , ~~09
Page ~
RP~NE:
This lever correctly sets forth the un~erstar~ding of the its of corpus Christi.
n
An l . Escobaz, City Manager
Date: ~
Armando Chapa, City Secretazy
Date:_._?~ ~Z ~ 9 y
Motion No.: vC o~~ ~T~