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HomeMy WebLinkAboutAgr 2015-08-11 (Marcello and Company)MARCELLO & COMPANY CERTIFIED PUBLIC ACCOUNTANTS Post Office Box 60127 / Sacramento, California 95860 / 916.979.9079 June 30, 2015 Town Hall - Tiburon Attention: Ms. Heidi Bigall, ASD 1505 Tiburon Boulevard Tiburon, California 94920 RE: 2015 Audit Engagement Letter We are pleased to confirm our understanding of the services we are to provide the Town of Tiburon for the year ended June 30, 2015. We will audit the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information, which collectively comprise the basic financial statements of the Town of Tiburon as of and for the year ended June 30, 2015. Accounting standards generally accepted in the United States provide for certain required supplementary information (RSI), such as management's discussion and analysis (MD&A), to accompany the Town of Tiburon's basic financial statements. As part of our engagement, we will apply certain limited procedures to the Town of Tiburon's RSI. These limited procedures will consist principally of inquiries of management regarding the methods of measurement and presentation, which management is responsible for affirming to us in its representation letter. Unless we encounter problems with the presentation of the RSI or with procedures relating to it, we will disclaim an opinion on it. The following RSI is required by generally accepted accounting principles and will be subjected to certain limited procedures, but will not be audited: 1. Management's Discussion and Analysis 2. Budget to Actual Comparisons — Major Funds 3. Schedule of Funding Progress — Defined Benefit Pension Plans Supplementary information other than RSI also accompanies the Town of Tiburon's basic financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the basic financial statements and will provide an opinion on it in relation to the basic financial statements: 1. Non -Major Governmental Funds — Combining Balance Sheets 2. Non -Major Governmental Funds — Combining Statements of Revenue, Expenditures, and Change in Fund Balances The following other information and financial statement note disclosures accompanying the financial statements will not be subjected to the auditing procedures applied in our audit of the financial statements, and our auditor's report will not provide an opinion or any assurance on that other information. 1. Schedule of Funding Progress - Other Post Employment Benefit Plan (OPEB) Audit Objective The objective of our audit is the expression of an opinion as to whether your basic financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles and to report on the fairness of the additional information referred to in the first paragraph when considered in relation to the basic financial statements taken as a whole. Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America and will include tests of the accounting records and other procedures we consider necessary to enable us to express such opinion. If our opinion on the financial statements is other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed an opinion, we may decline to express an opinion or to issue a report as a result of this engagement. - 1 - Management Responsibilities Management is responsible for the basic financial statements and all accompanying information as well as all representations contained therein. You are also responsible for making all management decisions and performing all management functions; for designating an individual with suitable skill, knowledge, or experience to oversee our assistance with the preparation of your financial statements and related notes and any other nonattest services we provide; and for evaluating the adequacy and results of those services and accepting responsibility for them. Management is responsible for establishing and maintaining effective internal controls, including monitoring ongoing activities; for the selection and application of accounting principles; and for 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 Town of Tiburon, in conformity with U.S. generally accepted accounting principles. Management is also responsible for making all financial records and related information available to us 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 financial statements taken as a whole. You are 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 or illegal acts affecting the government involving: (1) Management, (2) Employees who have significant roles in internal control, and, (3) Others where the fraud or illegal acts could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the government received in communications from employees, former employees, regulators, or others. In addition, you are responsible for identifying and ensuring that the entity complies with applicable laws and regulations. With regard to using the auditor's report, you understand that you must obtain our prior written consent to reproduce or use our report in bond offering official statements or such other documents. With regard to the electronic dissemination of audited financial statements, including financial statements published electronically on your website, you understand that electronic sites are a means to distribute information and, therefore, we are not required to read the information contained in these sites or to consider the consistency of other information in the electronic site with the original document. Audit Procedures - General An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the 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 misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the entity or to acts by management or employees acting on behalf of the entity. 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 may exist and not be detected by us. In addition, an audit is not designed to detect immaterial misstatements, or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements. However, we will inform you of any material errors and any fraudulent financial reporting or misappropriation of assets that come to our attention. We will also inform you of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, funding sources, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may -2- bill you for responding to this inquiry. At the conclusion of our audit, we will require certain written representations from you about the financial statements and related matters. Audit Procedures - Internal Control Our audit will include obtaining an understanding of the entity and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. An audit is not designed to provide assurance on internal control or to identify deficiencies in internal control. However, during the audit, we will communicate to management and those charged with governance internal control related matters that are required to be communicated under AICPA professional standards. Audit Procedures - Compliance As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we may perform tests of the Town of Tiburon's compliance with applicable laws and regulations and the provisions of contracts and agreements. However, the objective of our audit will not be to provide an opinion on overall compliance and we will not express such an opinion. Engagement Administration, Fees, and Other We may from time to time, and depending on the circumstances, use third -party service providers in serving your account. We may share confidential information about you with these service providers, but remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures, and safeguards to protect the confidentiality of your personal information. In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information and we will take reasonable precautions to determine that they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others. In the event that we are unable to secure an appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your confidential information with the third -party service provider. Furthermore, we will remain responsible for the work provided by any such third -party service providers. We understand that your employees will prepare all cash or other confirmations we request and will locate any documents selected by us for testing. We expect to begin our audit in September or October 2015 and to issue our draft report 45 days later or when all issues have been resolved. Ralph Marcello is the engagement director and is responsible for supervising the engagement and signing the report or authorizing another individual to sign it. Our fee for these services will be at our standard hourly rates plus out-of-pocket costs (such as report reproduction, word processing, postage, travel, copies, telephone, etc.) except that we agree that our gross fee, including expenses is as follows: Town Audit $ 28,000 Less continuing client adjustment (3,000) Prepare and file SCO annual town report 1,200 GASB 68 implementation** 1,000 Outsourced Printing - Town reports 150 Total $ 27,350 ** GASB 68 implementation during this initial year will be charged at $150 per hour based upon actual time. We have estimated a total of $1,000 for the 4 active CaIPERS plans. If the actual time materially exceeds our estimate we will discuss with you the amount of time expended and the estimated time to complete the GASB 68 portion of the financial statements and notes. This estimate is based upon the Town obtaining their GASB 68 net pension liability amounts and note disclosures and audit opinion from CaIPERS. -3- The above fee is based upon the following prerequisites: 1. The complete and fully adjusted year-end Trial Balance should be prepared and delivered to the auditor on the first day of fieldwork. "Fully adjusted" refers to the recording of fiscal year end receivables, payables, depreciation and capital asset adjustments. 2. Upon our arrival to perform field work, all requested documents, schedules, bank statements and invoices shall be retrieved from their files and ready for us at 9am on the morning of the first day of field work. 3. Minutes of the town council meetings from June 2014 to the most recent meeting should be emailed to us as soon as possible, no later than two weeks before fieldwork starts (preferably in WORD). Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. In accordance with our firm policies, work may be suspended if your account becomes 30 days or more overdue and may not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed upon written notification of termination, even if we have not completed our report. You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket costs through the date of termination. The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. Such unexpected circumstances might include, for example, a greater than expected risk of material misstatement due to fraud. 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. Government Auditing Standards require that we provide you with a copy of our most recent external peer review report. Our 2013 peer review report is attached. Financial Statement Report and Timing • Field work is tentatively scheduled to begin in September or October 2015. • Preparation of the final bound audited financial statement reports of the Town will be the responsibility of the auditor. (10 reports) • If required, this engagement letter will serve as the Town's agreement with the Auditor to perform the Single Audit engagement. The fee for a compliance audit of federal grant award money (Single Audit) is $7,500 for one major program; additional major programs are $2,500 each. • Preparation of Management's Discussion and Analysis (MD&A) and other Required Supplementary Information (RSI) is the responsibility of the Town. • Preparation of the Town's State Controller Office annual report of financial transactions will be the responsibility of the auditor, due electronically approximately on October 20, 2015. In order to accommodate the due date, please mail us the SCO instructions and CD rom, and both printed and electronic (Excel download) copies of the unaudited June 30, 2015 Trial Balance, no later than October 1, 2015. • Preparation of the Town's State Controller Office street report will be the responsibility of the Town. We appreciate the opportunity to be of service to the Town of Tiburon and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. Very truly yours, fiC Marcello & Company, CPAs -4- RESPONSE: This letter correctly sets forth the understanding of the Town of Tiburon. By Title rJI Date -5- CaICPA Peer Review Program October 27, 2014 Ralph A Marcello, CPA Marcello & Company, CPAs P.O. Box #60127 Sacramento, CA 95860 Dear Mr. Marcello: California Society of CPAs 1800 Gateway Dr., Sty. 200 San Mateo, CA 94404 It is my pleasure to notify you that on October 21, 2014 the California Peer Review Committee accepted the report on the most recent system peer review of your firm. The due date for your next review is June 30, 2017. This is the date by which all review documents should be completed and submitted to the administering entity. As you know, the report had a peer review rating of pass. The Committee asked me to convey its congratulations to the firm. Sincerely, Linda McCrone, CPA Director, Peer Review Program cc: David Eugene Vaughn Firm Number: 72001297 Review Number 360188 CPA' Peer Review Program Administered in California by the California Society of CPAs T: (650) 522-3094 I F: (650) 522-3080 1 peerreview@calcpa.org