HomeMy WebLinkAboutR-96-0805J-96-1191
10/30/96
RESOLUTION NO.
A RESOLUTION, WITH ATTACHMENT, AUTHORIZING THE
CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES
AGREEMENT WITH KPMG PEAT MARWICK, IN
SUBSTANTIALLY THE ATTACHED FORM, FOR THE
PROVISION OF EXTERNAL AUDITING SERVICES FOR THE
CITY OF MIAMI FOR THE FISCAL YEARS 1996, 1997,
AND 1998, THE TERMS AND CONDITIONS OF WHICH ARE
SET FORTH IN THE ATTACHED AGREEMENT; ALLOCATING
FUNDS THEREFOR III AN AMOUNT NOT TO EXCEED
$350,000 FOR THE FIRST YEAR FROM ACCOUNT NOS.
001000.260201.6330.28013 IN THE AMOUNT OF
$270,000, 799302.452223.6330.28059 IN THE
AMOUNT OF $75,000, AND 420003.350110.6330.28052
IN THE AMOUNT OF $4,500.
WHEREAS, the administration recommends approval of a
Professional Services Agreement with KPMG Peat Marwick for the
provision of external auditing services for the City of Miami,
the terms and conditions of which are set forth in the attached
Agreement;
NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY
OF MIAMI, FLORIDA:
Section 1. The recitals and findings contained in the
Preamble to this Resolution are hereby adopted by reference
thereto and incorporated herein as if fully set forth in this
Section.
Section 2. The City Manager is hereby authorized to
execute a Professional Services Agreement, in substantially the
attached form, between the City of Miami and KPMG Peat Marwick,
for the provision of external auditing services for the City of
ATTACNMlE', 7CHUM ED
CITY COMMISSION
MfEETING OF
0 6 T ;? 0 1996
Resolution No.
96-8®5
Miami for the fiscal years 1996, 1997, and 1998, the terms and
conditions of which are set forth in the attached agreement, with
lfunds therefor hereby allocated from Account Nos.
001000.260201.6330.28013 in the amount of $270,000,
799302.452223.6330.28059 in the amount of $75,000, and
420003.350110.6330.28052 in the amount of $4,500.
Section 3. This Resolution shall become effective
immediately upon its adoption.
PASSED AND ADOPTED this 30th day of Oct bber, 1996.
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1 J R . , MAYOR
ATTEST:
WALTER J . - MAN, CITY CLERK
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PROFESSIONAL SERVICES AGREEMENT
This Agreement entered into as of the __ day of November, 1996, by and between the City
Miami, a municipal corporation of the State of Florida, (hereinafter referred to as "the CITY")
KPMG Peat Marwick LLP, Certified Public Accountants (hereinafter referred to as "KPMG
Auditor").
RECITAL:
WHEREAS, the City Commission, by Resolution No. authorized the C
Manager to select, negotiate and execute an agreement with a certified public accounting firm
provide independent audits and. other services as required by the City Charter and Florida statut
and
WHEREAS, KPMG has been selected to be the lead independent auditor;
NOW, THEREFORE, in consideration of the promises and the mutual covenants
obligations herein contained, and subject to the terms and conditions hereinafter stated, the part
1 hereto understand and agree as follows:
I. TERM: The term of this Agreement shall be for three (3) years encompassing the CIT
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fiscal years ending September 30, 1996, September 30, 1997 and September 30, 1998. The CIT
by resolution of the City Commission and at it's sole discretion, may renew this Agreement
two (2) additional terms of one year by written notice to KPMG of its election to extend at le
90 days prior to the expiration of the then current term. The terms and conditions of such rene
shall be subject to approval by the City Commission.
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II. SCOPE OF SERVICES: The services to be performed are outlined in Exhibit I to this
Agreement in KPMG's engagement letter to the CITY, which will be updated on a yearly basis
by mutual agreement, and in section Il A-N, including the issuance of an "interim" management
letter.
A. Other Engagement Matteis
The following are entities within the CITY reporting entity, which have their own
arrangements for independent audits.
- Miami Sports & Exhibition Authority (Special Revenue Fund);
- M.S.E.A. Special Obligation Refilnding Bonds (Debt Service Fund);
- Miami Sports & Exhibition Authority (M.S.E.A.) (Capital Projects Fund);
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- Downtown Development Authority (Special Revenue Fund); i
- Off Street Parking (Enterprise Fund);
- Gusman Center and the Olympia Building (Enterprise Fund);
- GESE Trust (Pension Trust Fund);
- FIPO Trust (Pension Trust Fund).
The audits of the financial statements of the above listed entities are not included
in the scope of this engagement. As these entities are included in the general purpose
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financial statements, KPMG will rely on the audits performed for these entities by their
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independent auditors and make reference to such reliance in the KPMG report. It is the
responsibility of CITY management and these component units to ensure timely issuance
of the related audit reports in order to achieve the timetable discussed elsewhere herein.
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B. Review and prepare separate bond compliance reports for the Special Obligation,
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Revenue, and Non Ad Valorem Bonds issued by the CITY.
C. Provide consents for the use of opinions on the General Purpose Financial Statements
for inclusions in Preliminary and Official Statements in connection with all bond,
notes, and loan issues.
D. Perform the annual audit in accordance with the Florida Statutes for the S.E.
Overtown/Parkwest Redevelopment Trust and other such trust accounts.
E. Provide and issue agreed -upon letter reports in connection with forthcoming bond and
loan issues.
F. Provide actuarial services to the CITY for Self -Insurance and Insurance Trust Fund.
G. Evaluate the CITY's self-insurance program and make recommendations of needed
IBNR reserves. The self-insurance coverageis to be reviewed shall include: all
general liability, public officials liability, police professional liability, automobile
liability and workers' compensation. KPMG will prepare a report relying on claim
tabulations, exposure and other information provided by the CITY's Risk Management
Office. f
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H. Perform and report on certain agreed -upon procedures and/or rebate calculations on
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selected bond, notes and loan issues.
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I. KPMG and its joint -venture firms shall assist in the preparation of required reports if
and when submitted by the CITY to attain a Certificate of Achievement for Excellence
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in Financial Reporting. +
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J. KPMG and its joint -venture firms agree to schedule their audit work to perform a
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substantial portion prior to year-end for fiscal years after 1996. KPMG and its joint-
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venture firms will use their reasonable best efforts, subject to the requirements of
applicable professional standards, to complete the field examination of the annual audit
by December 31, and to date its report no later than January 31 for each year of the life
of this Agreement after fiscal 1996 .
K. It is understood the work papers for the audit engagements are the property of KPMG
and its joint -venture firms and constitute confidential information. However, pursuant
to Government Auditing Standards, the auditors are required to make certain work
papers available to federal and state regulatory agencies upon request for their reviews
of audit quality and use by their auditors. Access to the requested work papers will be
provided to the regulators under supervision of the auditor's personnel
For a period of three (3) years after completion of any work provided herein, KPMG
shall make its work papers, records and other evidence and documents relating to such
work available to its successor and the City, including its designees. The City and its
representatives shall be entitled, at any time during such three (3) year period, to
inspect such documents and to reproduce same, at its expense, for which provisions
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will be made at the time the need for reproduction arises. It is also understood that this
agreement is subject to the provisions dealing with public records requirements of the
Florida Statutes.
L. KPMG and its joint -venture firms agree to communicate with and provide its findings
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to the City Manager and designee(s), the Audit Advisory Committee and the City
Commission, at a minimum on a quarterly basis, in writing or by formal presentation.
During the first three months of this Agreement, KPMG will provide a monthly verbal
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report to the City Commission on the status of 1996 audit.
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M. KPMG shall review the system of internal accounting control and internal
administrative control to the extent required by Generally Accepted Auditing
Standards and requirements of the Single Audit act.
N. KPMG shall fulfill requirements of Section 10.550 of the Rules of the Auditor
General, for Local Governmental Entity Audits including:
I . Assist in the preparation of the Comprehensive Annual Financial Report.
2. Issuance of Annual Management Letter to inform the City of any weaknesses
in the system of internal control as uncovered by their examination, and to
make known their recommendations which, if implemented, would, in
KPMG's opinion, increase efficiency, improve management and improve
internal control
3. Agree with the State of Florida Comptroller's Report to the Comprehensive
Annual Financial Report.
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4. Preparation of Single Audit Report and other necessary Federal and State f
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Reports.
III. COMPENSATION: '
The CITY shall pay KPMG, as compensation for the fiscal year 1996 services
required pursuant to Exhibit I and Section II, Items A-N, except E, F, G, and H, a
fee not to exceed $350,000 of which $75,000 will be allocated to the Single Audit
and State Grant in Aide Audit requirement. Said compensation for fiscal year 1996
shall be paid as follows:
- November 15, 1996
$100,000
- December 15, 1996
$115,000
- January 15, 1997
$100,000
- Delivery of all reports
35 000
Total
$350,000
The KPMG joint -venture firms will participate up to 50% of these fees on a shared
realization basis and KPMG is responsible for compensating such firms.
The CITY shall have the right to retain ten (10) percent of the final billing, which
shall be paid to KPMG upon receipt and acceptance of the final reports. The CITY
shall have the right to review and audit the time records and related records of the
Auditors pertaining to any such billing.
Fees for the September 30, 1997 and 1998 audit are anticipated to be $325,000,
subject to substantial implementation of the comments made in the KPMG
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management letter to the City for the prior fiscal year.
IV. ADDITIONAL SERVICES:
KPMG and its joint -venture firms, upon receipt of a written request from the City
Manager or his designee, shall perform such additional services as may reasonably
be required, including, but not limited to, special revenue audits, agreed upon
procedure audits, special EDP reviews, reviews of Official Statements for offerings
of securities by the CITY, as well as meetings with underwriters and attorneys in
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connection with offerings of securities and other consultative services, as
requested.
A. Additionally, the CITY agrees to pay to KPMG the following fees for other
i services as follows:
1. Compensation to KPMG and its joint -venture firms for extra services
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performed pursuant to Section III of this Agreement shall be based as a
fixed agreed -upon amount negotiated at the time the services are requested.
Rates for audit staff classification for additional work, plus reasonable out-
of-pocket expenses are as follows for fiscal 1996:
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Partner $160/per hour
Manager $120/per hour
Senior $100/per hour
{ Staff $ 75/per hour
2. The CITY shall pay KPMG, as compensation for services required pursuant
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to Section 11, Paragraph E and P, for actuarial services to the CITY, a fee
not to exceed $18,000 plus an additional $1,500 for approved travel and
exit interview expenses.
3. Pursuant to Section 111, the CITY will pay KPMG up to $90,000 for time
expended regarding expanded assessment of internal control, assessment of
controls relating to new management information system, preparation for
and attendance at status meetings with City Manager, Audit Advisory s
Board and/or City Commission, expanded scope to fulfill auditing
standards relating to fraud detection and additional time which may be
required due to limited access to prior auditor workpapers. All additional
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services will be documented by engagement letter to be approved by the
City Manager and the Auditor prior to incurring such costs.
B. KPMG agrees that it will joint -venture with the minority -owned firms of
Sharpton, Brunson & Company, P.A.; Sanson, Kline and Jacomino & Co.;
Watson & Company, P.A.; and Aida Briele & Associates, P.A. whereby
s outlined in Section II, A-N, except
such firms will earn 50% of the fee
items E, F, G and H on a shared realization basis.
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C. KPMG shall be reimbursed for non -local travel, per diem and related
expenses other than expenses incurred in connection with services rendered
under Section II, A-N, excluding items E, F, G and H. All expenses
relating to travel shall be approved in advance by the CITY. If so
authorized, reimbursement shall be limited to amounts allowable under
Chapter 112.061 of Florida Statues.
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D. It is hereby understood by and. between the CITY and KPMG and its joint -
venture firms that any payment made in accordance with this Agreement
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I, shall be made only if KPMG and its joint -venture firms are not in material
default of this Agreement. If KPMG and/or its joint -venture firms are in
material default, the CITY shall in no way be obligated and shall not pay to f
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KPMG and its joint -venture firms any sum whatsoever.
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V, COMPLIANCE WITH FEDERAL STATE AND LOCAL LAWS:
Both parties shall comply with all applicable laws, ordinances, and codes of Federal, State
and Local Governments.
VI. GENERAL CONDITIONS:
A. All notices or other communications which shall or may be given pursuant
to this Agreement shall be in writing and shall be delivered by personal
service, or by registered mail addressed to the other party at the address -
indicated herein or as the same may be changed from time to time. Such
notice shall be deemed given on the day on which personally served; or, if
by mail, on the fifth day after being posted or the date of actual receipt,
whichever is earlier.
CITY KPMG
Edward Marquez Jose R. Rodriguez
City Manager Partner
City of Miami KPMG Peat Marwick LLP
3500 Pan American Drive 2 South Biscayne Boulevard, Suite 2900
Miami, Florida 33133 Miami, Florida 33131-2135 {
B. Title and Paragraph headings are for convenient reference and are not part
of this Agreement.
C. In the event of conflict between terms of this Agreement and any terms or
conditions contained in any attached documents, the terms in this
Agreement shall govern.
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D. No waiver or breach of any provision of this Agreement shall constitute a
waiver of any subsequent breach of the same or any other provision hereof,
and no waiver shall be effective unless made in writing.
E. Should any provision, paragraph, sentence, word or phrase contained in this
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i Agreement be determined by a court of competent jurisdiction to be invalid,
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} illegal or otherwise unenforceable under the laws of the State of Florida or
the City of Miami, such provision, paragraph, sentence, word or phrase
shall be deemed modified to the extent necessary in order to conform with
such laws, or if not modifiable to conform with such laws, then same shall
be deemed severable, and in either event, the remaining terms and
provisions of this Agreement shall remain umnodified and in full force and
effect.
j VII. NONDELEGABILITY
This Agreement shall not be assigned, transferred, or encumbered, in whole or in part,
without prior approval of the City Commission and written notice by the City Manager.
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VIII. AWARD OF AGREEMENT
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KPMG warrants that it has not employed or retained any person employed by the CITY to
solicit or secure this Agreement and that they have not offered to pay, been paid, or agreed
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to pay any person employed by the CITY any fee, commission, percentage, brokerage fee,
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or gift of any kind contingent upon or resulting from the award of this Agreement.
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IX. CONSTRUCTION OF AGREEMENT
This Agreement shall be construed and enforced according to the laws of the State of
Florida.
X. INDEMNIFICATION/INSURANCE
The Auditor shall indemnify and save the CITY harmless from any and all claims,
liabilities, losses and causes of action which may arise out of the gross negligence or
willful misconduct of the Auditor, its officials, agents, employees or assigns in the
fulfillment of this Agreement. The Auditor shall pay all claims and losses of any nature
whatever arising therefrom, and shall defend all suits arising therefrom, in the name of the
CITY when applicable, and shall pay all costs and judgments which may issue thereon,
except to the extent caused by the negligence of CITY officers or employees. During the
term of this Agreement, KPMG shall carry the minimum insurance described below:
(a) Workers' Compensation insurance, for all employees of KPMG required by State
Statute 440 of the State of Florida;
(b) Professional liability with a limit that demonstrates a sound business practice.
(c) Commercial auto liability insurance, covering owned, non -owned and hired
vehicles, combined single limit of $500,000 bodily injury and property damage.
Such insurance shall provide that it will not be canceled or modified without at
least thirty (30) days prior written notice to the CITY. All applicable policies shall
name the CITY as additional insured.
(d) CITY agrees that all records, documentation, and information requested in
connection with the audit will be made available, that all material information will
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be disclosed, and that the full cooperation of CITY personnel will be provided. As
required by generally accepted auditing standards, specific inquiries will be made
of management about the representations embodied in the financial statements, the
effectiveness of the internal control structure and the CITY's compliance with
certain laws and regulations, and management will provide a representation letter
about these matters. The responses to inquiries, the written representations, and the
results of audit tests comprise the evidential matter the auditors will rely upon in
forming an opinion on the financial statements. Because of the importance of
management's representations to the effective performance of the audit services,
the CITY will release KPMG and their personnel from any claims, liabilities, costs,
and expenses relating to their services under this Agreement attributable to any
misrepresentations in the representation letter referred to above.
XL CONFLICT OF INTEREST:
A. KPMG covenants that no person under its employ who presently exercises
any functions or responsibilities in connection with this Agreement has any
personal financial interest, direct or indirect with the CITY. KPMG further
covenants that, in the performance of this Agreement, no person having
such conflicting interest shall be employed. Any such interest on the part of
KPMG or it's employees, must be disclosed in writing to the CITY.
B. KPMG is aware of the conflict of interest laws of the City of Miami (City
of Miami Code Chapter 2, Article V); Dade County, Florida (Dade County
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Code Section 2- 11.1) and the State of Florida, and agrees to fully comply
with said laws in all respects.
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XII. INDEPENDENT CONTRACTOR:
KPMG and its employees and agents shall be deemed to be independent contractors, and
not agents or employees of the CITY, and shall not attain any rights or benefits under the
Civil Service or Pension Ordinances of the CITY, or any rights generally afforded
classified or unclassified employees; further they shall not be deemed entitled to the
Florida Workers' Compensation benefits as employees of the CITY.
XIII. TERMINATION OF AGREEMENT:
The CITY retains the right to terminate this Agreement at any time during each of the fiscal
years of its term or any extension thereof prior to the completion of the services required
pursuant to Paragraph 11 hereof without penalty to the CITY. In that event, notice of
termination of this Agreement shall be in writing to KPMG, who shall be paid for those
services performed prior to the date of receipt of notice of termination.
XIV. NONDISCRIMINATION:
KPMG agrees that it shall not discriminate as to race, sex, color, religion, age, marital
status, national origin or handicap in connection with its performance under this
Agreement.
XV. MINORITY PROCUREMENT COMPLIANCE:
KPMG acknowledges that it has been furnished a copy of Ordinance No. 10538, the
Minority Procurement Ordinance of the City of Miami, and agrees to comply with all
applicable substantive and procedural provisions therein, including any amendments
thereto.
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96-805
XVI. CONTINGENCY CLAUSE:
Funding for this Agreement is contingent on the availability of funds and continued
authorization for program activities and is subject to amendment or termination by the
CITY due to lack of fiends, or authorization, reduction of funds, and/or change in
regulations.
XVII. DEFAULT PROVISION:
In the event KPMG shall fail to comply with each and every term and condition of this
Agreement or fail to perform any of the terms and conditions contained herein, then the
CITY, in addition to other remedies available by law, may, upon written notice to KPMG,
cancel and terminate this Agreement, and all payments, advances, or other compensations
paid to KPMG by the CITY while KPMG was in default, shall be forthwith returned to the
CITY.
XVIII. ENTIRE AGREEMENT:
This instrument and its attachments constitute the sole and only agreement of the parties
hereto relating to the subject matter hereof and correctly sets forth the rights, duties, and
obligations of each to the other as of its date. Any prior agreements, promises,
negotiations, or representations not expressly set forth in the Agreement are of no force or
effect.
XIX. AMENDMENTS:
No amendments to this Agreement shall be binding on either party unless in writing and
signed by both parties.
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PROFESSIONALSERVICES AGREEMENT
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� This Agreement entered into as of the `day of October, 1996, by and between the City of
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Miami, a municipal corporation of the State of Florida, (hereinafter referred to as "the CITY") and
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f KPMG Peat Marwick LLP, Certified Public Accountants (hereinafter referred to as "KPMG or
Auditor").
RECITAL:
WHEREAS, the City Commission, by Resolution No. authorized the City
Manager to select, negotiate and execute an agreement with a certified public accounting firm to
provide independent audits and other services as required by the City Charter and Florida statutes;
and
WHEREAS, KPMG has been selected to be the lead independent auditor;
NOW, THEREFORE, in consideration of the promises and the mutual covenants and
obligations herein contained, and subject to the terms and conditions hereinafter stated, the parties
hereto understand and agree as follows:
I. TERM: The term of this Agreement shall be for three (3) years encompassing the CITY's
fiscal years ending September 30, 1996, September 30, 1997 and September 30, 1998. The CITY,
by resolution of the City Commission and at it's sole discretion, may renew this Agreement for
two (2) additional terms of one year by written notice to KPMG of its election to extend at least
90 days prior to the expiration of the then current term. 6&js Xpp-,
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II.SCOPE OF SERVICES-, The services to be performed are outlined in Exhibit I to this
Agreement in KPMG's engagement letter to the CITY, which will be updated on a yearly basis
by mutual agreement, and in section II A-N, including the issuance of an "interim" management
letter.
A. Other Engagement Matters
The following are entities within the CITY reporting entity, which have their own
arrangements for independent audits.
a
- Miami Sports & Exhibition Authority (Special Revenue Fund);
- M.S.E.A. Special Obligation Refunding Bonds (Debt Service Fund);
- Miami Sports & Exhibition Authority (M.S.E.A.) (Capital Projects Fund);
- Downtown Development Authority (Special Revenue Fund);
- Off Street Parking (Enterprise Fund);
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- Gusman Center and the Olympia Building (Enterprise Fund0;
P
- GESE Trust (Pension Trust Fund);
- FIPO Trust (Pension Trust Fund).
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Therefore the audits of their financial statements are not included in the scope of
is
this engagement. As these entities are included in the general purpose financial 4
statements, KPMG will rely on the audits performed for these entities by their independent
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auditors and make reference to such reliance in the KPMG report. It is the responsibility
of CITY management and these component units to ensure timely issuance of the related
audit reports in order to achieve the timetable discussed elsewhere herein.`
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Review and prepare separate bond compliance reports for the Special Obligation,
;
Revenue, and Non Ad Valorem Bonds issued by the CITY.
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C. Provide consents for the use of opinions on the General Purpose Financial Statements
for inclusions in Preliminary and Official Statements in connection with all bond,
notes, and loan issues.
D. Perform the annual audit in accordance with the Florida Statutes for the S.E.
Overtown/Parkwest Redevelopment Trust and other such trust accounts.
E. Provide and issue agreed -upon letter reports in connection with forthcoming bond and
loan issues.
F. Provide actuarial services to the CITY for Self -Insurance and Insurance Trust Fund.
G. Evaluate the CITY's self-insurance program and make recommendations of needed
IBNR reserves. The self-insurance coverages to be reviewed shall include: all general
liability, public officials liability, police professional liability, automobile liability and
workers' compensation. KPMG will prepare a report relying on claim tabulations,
exposure and other information provided by the CITY's Risk Management Office.
H. Perform and report on certain agreed -upon procedures and/or rebate calculations on
selected bond, notes and loan issues.
1. KPMG and its joint -venture firms shall assist in the preparation of required reports if
and when submitted by the CITY to attain a Certificate of Achievement for Excellence
in Financial Reporting.
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J. KPMG and its joint -venture firms agree to schedule their audit work to perform a
substantial portion prior to year-end for fiscal years after 1996. KPMG and its joint -
venture firms will use their reasonable best efforts, subject to the requirements of
applicable professional standards, to complete the field examination of the annual audit
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by December 31, and to date its report no later than January 31 for each year of the life
of this Agreement after fiscal 1996 .
K. It is understood the work papers for the audit engagements are the property of KPMG
and its joint -venture firms and constitute confidential information. However, pursuant
to Government Auditing Standards, the auditors are required to make certain work
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papers available to federal and state regulatory agencies upon request for their reviews
of audit quality and use by their auditors. Access to the requested work papers will be
provided to the regulators under supervision of the auditor's personnel.
For a period of three (3) years after completion of any work provided herein, KPMG
shall make its work papers, records and other evidence and documents relating to such
1 work available to its successor and the City, including its designees. The City and its
representatives shall be entitled, at any time during such three (3) year period, to
inspect such documents and to reproduce same, at its expense, for which provisions
will be made at the time the need for reproduction arises. It is also understood that this
agreement is subject to the provisions dealing with public records requirements of the
Florida Statutes.
L. KPMG and its joint -venture firms agree to communicate with and provide its findings
AN D to the City Manager X designe�5) the Audit Advisory Committee and the City
Commission, at a minimum on a semi-annual basis, in writing or by formal
presentation. During the first three months of this contract, the lead auditor will
provide a monthly verbal report to the City Commission on the status of 1996 audit.
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M. KPMG shall review the system of internal accounting control and internal
administrative control to the extent required by Generally Accepted Auditing
Standards and requirements of the Single Audit act.
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N. KPMG shall fulfill requirements of Section 10.550 of the Rules of the Auditor
General, for Local Governmental Entity Audits including:c
1. Assist in the preparation of the Comprehensive Annual Financial Report.
2. Issuance of Annual Management Letter to inform the City of any weaknesses
in the system of internal control as uncovered by their examination, and to
make known their recommendations which, if implemented, would, in
KPMG's opinion, increase efficiency, improve management and improve
internal control.
3. Agree the State of Florida Comptroller's Report to the Comprehensive Annual
Financial Report.
4. Preparation of Single Audit Report and other necessary Federal and State
Reports.
III. COMPENSATION:
The CITY shall pay KPMG annually, as compensation for the fiscal year 1996
services required pursuant to Exhibit I and Section II, Items A-N, except E, F, G,
and H, a fee not to exceed $350,000 of which an amount will be allocated to the
Single Audit and State Grant in Aide Audit requirement ($75,000). A
�i'�-' Sub
- November 15, 1996 $100,000
- December 15, 1996 $115,000 s'
- January 15, 1997
$100,000
- Delivery of all reports 5 0
Total $35p.p0�
The KPMG joint -venture firms will participate up to 50% of these fees on a shared
realization basis and KPMG is responsible for compensating such firms.
The CITY shall have the right to retain ten (10) percent of the final billing, which
shall be paid to KPMG upon receipt and acceptance of the final reports. The CITY
shall have the right to review and audit the time records and related records of the
Auditors pertaining to any such billing.
Fees for the September 30, 1997 and 1998 audit is anticipated to be $325,000,
subject to substantial implementation of the comments made in the KPMG
management letter to the City for the prior fiscal year.
IV. ADDITIONAL SERVICES:
KPMG and its joint -venture firms, upon receipt of a written request from the City
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Manager or his designee, shall perform such additional services as may reasonably
be required, including, but not limited to, special revenue audits, agreed upon
procedure audits, special EDP reviews, reviews of Official Statements for offerings
of securities by the CITY, as well as meetings with underwriters and attorneys in
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96- 805
services will be documented by engagement letter to be approved by the
City Manager and the auditor prior to incurring such costs.
B. KPMG agrees that it will joint -venture with the minority -owned firms of
Sharpton, Brunson & Company, P.A.; Sanson, Kline and Jacomino & Co.;
Watson & Company, P.A.; and Aida Briele & Associates, P.A. whereby
such firms will earn 50% of the fees outlined in Section II, A-N, except
items E, F, G and H on a shared realization basis.
C. KPMG shall be reimbursed for non -local travel, per diem and related
expenses other than expenses incurred in connection with services rendered
under Section II, A-N, excluding items E, F, G and H. All expenses
relating to travel shall be approved in advance by the CITY. If so
authorized, reimbursement shall be limited to amounts allowable under
Chapter 112.061 of Florida Statues.
D. It is hereby understood by and between the CITY and KPMG and its joint -
venture firms that any payment made in accordance with this Agreement
shall be made only if KPMG and its joint -venture firms are not in material
default of this Agreement. If KPMG and/or its joint -venture firms are in
material default, the CITY shall in no way be obligated and shall not pay to
KPMG and its joint -venture firms any sum whatsoever.
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connection with offerings of securities and
g other consultative services, as
requested.
A. Additionally, the CITY agrees to pay to KPMG the following fees for other
f
services as follows:
1. Compensation to KPMG and its joint -venture firms for extra services
performed pursuant to Section III of this Agreement shall be based as a
fixed agreed -upon amount negotiated at the time the services are requested.
Rates for audit staff classification for additional work, plus reasonable out-
of-pocket expenses are as follows for fiscal 1996:
Partner $160/per hour
Manager $120/per hour
Senior $100/per hour
Staff $ 75/per hour
KPMG, as compensation for services required pursuant
2. The CITY shall pay
to Section 11, Paragraph E and h, for actuarial services to the CITY a fee not
to exceed $18,000 plus an additional $1,500 for approved travel and exit
interview expenses.
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3. Pursuant to Section 11I, the CITY will pay KPMG up to $90,000 for time
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expended regarding expanded assessment of internal control, assessment of f
controls relating to new management information system, preparation for
and attendance at status meetings with City Manager, Audit Advisory x
Board and/or City Commission, expanded scope to fulfill auditing
standards relating to fraud detection and additional time which may be
required due to limited access to prior auditor workpapers. All additional
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V. COMPLIANCE WITH FEDERAL STATE AND LOCAL LAWS:
Both parties shall comply with all applicable laws, ordinances, and codes of Federal, State
and Local Governments.
VI. GENERAL CONDITIONS:
A. All notices or other communications which shall or may be given pursuant
to this Agreement shall be in writing and shall be delivered by personal
service, or by registered mail addressed to the other party at the address
indicated herein or as the same may be changed from time to time. Such
notice shall be deemed given on the day on which personally served; or, if
by mail, on the fifth day after being posted or the date of actual receipt,
whichever is earlier.
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CITY KPMG
Merrett Stierheim Josh R. Rodriguez
City Manager Partner
City of Miami KPMG Peat Marwick LLP
3500 Pan American Drive 2 South Biscayne Boulevard, Suite 2900
Miami, Florida 33133 Miami, Florida 33131-2135
B. Title and Paragraph headings are for convenient reference and are not part
of this Agreement.
C. In the event of conflict between terms of this Agreement and any terms or
conditions contained in any attached documents, the terms in this
Agreement shall govern.
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D. No waiver or breach of any provision of this Agreement shall constitute a
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waiver of any subsequent breach of the same or any other provision hereof,
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and no waiver shall be effective unless made in writing.
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E. Should any provision, paragraph, sentence, word or phrase contained in this
iAgreement be determined by a court of competent jurisdiction to be invalid,
illegal or otherwise unenforceable under the laws of the State of Florida or
( the City of Miami, such provision, paragraph, sentence, word or phrase
shall be deemed modified to the extent necessary in order to conform with
such laws, or if not modifiable to conform with such laws, then same shall
be deemed severable, and in either event, the remaining terms and
y provisions of this Agreement shall remain unmodified and in full force and
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i effect.
VII. NONDELEGAEILITY
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This Agreement shall not be assigned, transferred, or encumbered, in whole or in part,
` without prior written approval of the City Manager. A1✓� �ti t S,Si OA
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VIII. AWARD OF AGREEMENT
KPMG warrants that it has not employed or retained any person employed by the CITY to
solicit or secure this Agreement and that they have not offered to pay, been paid, or agreed
to pay any person employed by the CITY any fee, commission, percentage, brokerage fee,
or gift of any kind contingent upon or resulting from the award of this Agreement.
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IX. CONSTRUCTION OF AGREEMENT
This Agreement shall be construed and enforced according to the laws of the State of
Florida.
PA
INDEMNIFICATION/INSURANCE
The Auditor shall indemnify and save the CITY harmless from any and all claims,
liabilities, losses and causes of action which may arise out of the gross negligence or
willful misconduct of the Auditor, its officials, agents, employees or assigns in the
fulfillment of this Agreement. The Auditor shall pay all claims and losses of any nature
whatever arising therefrom, and shall defend all suits arising therefrom, in the name of the
CITY when applicable, and shall pay all costs and judgments which may issue thereon,
except to the extent caused by the negligence of CITY officers or employees. During the
term of this Agreement, KPMG shall carry the minimum insurance described below:
(a) Workers' Compensation insurance, for all employees of KPMG required by State
Statute 440 of the State of Florida;
(b) Professional liability with a limit that demonstrates a sound business practice.
(c) Commercial auto liability insurance, covering owned, non -owned and hired
vehicles, combined single limit of $500,000 bodily injury and property damage.
Such insurance shall provide that it will not be canceled or modified without at
least thirty (30) days prior written notice to the CITY. All applicable policies shall
name the CITY as additional insured.
(d) CITY agrees that all records, documentation, and information requested in
connection with the audit will be made available, that all material information will .
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be disclosed, and that the full cooperation of CITY personnel will be provided. As
required by generally accepted auditing standards, specific inquiries will be made
1
of management about the representations embodied in the financial statements, the
effectiveness of the internal control structure and the CITY's compliance with
certain laws and regulations, and management will provide a representation letter
about these matters. The responses to inquiries, the written representations, and the
results of audit tests comprise the evidential matter the auditors will rely upon in
forming an opinion on the financial statements. Because of the importance of
management's representations to the effective performance of the audit services,
the CITY will release KPMG and their personnel from any claims, liabilities, costs,
and expenses relating to their services under this Agreement attributable to any
misrepresentations in the representation letter referred to above.
XI. CONFLICT OF INTEREST:
A. KPMG covenants that no person under its employ who presently exercises
any functions or responsibilities in connection with this Agreement has any
personal financial interest, direct or indirect with the CITY. KPMG further
covenants that, in the performance of this Agreement, no person having
such conflicting interest shall be employed. Any such interest on the part of
KPMG or it's employees, must be disclosed in writing to the CITY. }
B. KPMG is aware of the conflict of interest laws of the City of Miami (City
of Miami Code Chapter 2, Article V); Dade County, Florida (Dade County
Code Section 2- 11.1) and the State of Florida, and agrees to fully comply
with said laws in all respects. €'
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I XII. INDEPENDENT CONTRACTOR:
KPMG and its employees and agents shall be deemed to be independent contractors, and
not agents or employees of the CITY, and shall not attain any rights or benefits under the
Civil Service or Pension Ordinances of the CITY, or any rights generally afforded
' 4
classified or unclassified employees; further they shall not be deemed entitled to the
! Florida Workers' Compensation benefits as employees of the CITY.
XIII. TERMINATION OF AGREEMENT:
The CITY retains the right to terminate this Agreement at any time during each of the fiscal
years of its term or any extension thereof prior to the completion of the services required
pursuant to Paragraph II hereof without penalty to the CITY. In that event, notice of
termination of this Agreement shall be in writing to KPMG, who shall be paid for those
services performed prior to the date of receipt of notice of termination.
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XIV. NONDISCRIMINATION: t
KPMG agrees that it shall not discriminate as to race, sex, color, religion, age, marital
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status, national origin or handicap in connection with its performance under this
f
Agreement.
E
XV. MINORITY PROCUREMENT COMPLIANCE:
KPMG acknowledges that it has been furnished a copy of Ordinance No. 10535, the
Minority Procurement Ordinance of the City of Miami, and agrees to comply with all
applicable substantive and procedural provisions therein, including any amendments
thereto.
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XVI. CONTINGENCY CLAUSE:
Funding for this Agreement is contingent on the availability of funds and continued
authorization for program activities and is subject to amendment or termination by the
CITY due to lack of funds, or authorization, reduction of fiends, mid/or change in
regulations.
XVII. DEFAULT PROVISION:
In the event KPMG shall fail to comply with each and every term and condition of this
Agreement or fail to perform any of the terms and conditions contained herein, then the
CITY, in addition to other remedies available by law, may, upon written notice to KPMG,
cancel and terminate this Agreement, and all payments, advances, or other compensations
paid to KPMG by the CITY while KPMG was in default, shall be forthwith returned to the
CITY.
XVIII. ENTIRE AGREEMENT:
This instrument and its attachments constitute the sole and only agreement of the parties
hereto relating to the subject matter hereof and correctly sets forth the rights, duties, and
obligations of each to the other as of its date. Any prior agreements, promises,
negotiations, or representations not expressly set forth in the Agreement are of no force or
effect.
XIX. AMENDMENTS:
No amendments to this Agreement shall be binding on either party unless in writing and
signed by both parties.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed
by the respective officials thereunto duly authorized, this day and year first above written.
CITY OF MIAMI, a municipal corporation of
ATTEST: the State of Florida
BY:
MERRETT STIERHEIM, CITY MANAGER
ATTEST: KPMG PEAT MARWICK LLP
BY:
JOSE R. RODRIGUEZ, PARTNER
BY:
WALTER FOEMAN, CITY CLERK SHARPTON, BRUNSON & CO., P.A.
Approved as to form and correctness:
BY:
SANSON, KLINE AND JACOMINO & CO.
A. QUINN JONES, III, CITY ATTORNEY
i
BY:
RISK MANAGEMENT WATSON & COMPANY. P.A.
KPMG-MIRMI-29 ID:
AN at Marwick LLP
One Bi%;ayne Towor
Suite 2900
2 South Biscayne Boulevord
Miami, Fl_ 331,41
Octobor 24, 1996
Mr. Merret Stierheim
City Manager
City c:f Miami, FloridaI( l3'iscaync BOLIlevard Way, Suite 210
Miami, Florida 33131
Dear Mr. Steinccim;
OCT 25'96 17:09 No.031 P.13
DRAFT
Ieleplioi)o 305 35B 2300 '161efax 306 577 0544
This letter will confirm our appointment to report upon our audit of the general purpose financial
statements of the City of Miami, Florida (the "City") as of anti for the year ended September 30,
1996 and the nature and scope of the services we will provide in accordance with OMB Circuliv A-
128.
Financial Statement Audit
We will conduct our audits of the financial statements in accordance with generally accepted
auditing stfandards, the Rules of the Florida Auditor General and the standards for financial audits
contained in Governinent Auditing Standards, issued by the Comptroller Creneral of the United
Sixes. The objective of an audli. carried out in accordance, with such ,standardR is the expression of
our opinion concerning whether the financial statements, taken as to whole, are prc&anted fairly, in
all material respects, in conformity with generally accepted accounting principles,
The management of the City has responsibility for the fimmciul statements and all representations
cuntaained therein. Management also has responsibility for the adoption of sound acmunting
policies and the implementation of record keeping to maintain the reliability of the financial
ctateincnts. In conducting die audits, we will perform tests of the accounting records and such
other procedures as we consider necessary in the circumstancew to provide a reasonable basis for
our Opinion on the general purpose financial statcn'cnts. We also will assess the accounting
principles used and significant estimates nxade by management, as well as evaluate the overall
financial statement presentation,
The management of the City iy responsible for establishing and maintaining an internal control
structure. I'o fulfill this responsibility, estitates and judgments by mana.genient are required to
assess the expected benefits and related costs for internal control structure policies and procedures,
The objectives of an internal control structure are to provide management with reasonable, butnot
absolute, assurance that assets are snfeguaarded against loss froin unauthorized use or disposition,-
und that transactions are executed in accordance with management's autborization and retarded
Properly tea permit the preparation of financial statements in accordance with generally accepted
accounting principle,,. Because of inherent limitations in tuts iIII.C. al control structure:, errors or
irregularities Jntty nevertheless occur anti not be detected. Also, projection of any evaluation of tlzc
structure to future periods is subject to the risk that procedures may become inadequate because of
changes in conditions, or that the effectivenew; of the design and operation of policies and
procedures may deteriorate.
iglF,rm pl Mbeep, f ux da Uur;inrs Unit
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Klrin:kl Frroi MWW'K;k CirxnrrdPr ftnr tt-rl I Hm
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KPMG—MIAMI-29
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Peat Mar'NiCk U P
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Mr. Merret Steirlieirn
October 24, 1996
l Page 2
I D_:\
OCT 25 196
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1':10 No.031 P.14
As part of our audits, we will consider the organisation's irttenlal control structure turd assess
control risk, as required by generally accepted auditing standards for the purpose of establishing a
basis for determining the nature, tinning and extent of auditing procedures necessary for expressing
our opinions coticerning the financial statements and not to provide assurance oil the internal
control structure. Our consideration of internal controls performed as part of the fitlattcial
staterrlcrit audits contributes to the evidence supporting our opinions on the financial statements;
however, it clues not provide a basis for opining on the internal control stricture. '1'hc limited
purposos of this consideration nizty not rmec.t the needs of some usc_r,: who require additional
itit'ornitttiol] on the internal control structure.
We will pneparc a written reporton our understanding of the organiy.at.ion's internal control
Oructure and the assessment of Control risk made as part of tile, financial statement audits. Our
report. will include, (1) the scope of our work in obtaining an understanding of the internal control
structure and in assessing control risk, and (2) the reportable conditions, including the
f identification of material weaktresscs, identified as a result of our work in understanding and
assessing the control risk for the financial &tatemcnt audits.
An audit is designed to provide reasonable assurance about wtlether the finullcial Statements are
face of material rtlisslatemcnt. Our audits will include procedures, designed to provide rmwtl tble
assurance of delec ling errors and irregularities that tine rrtatcrial to the financial statements. As you
are aware, however, there ure. inhcro m limitations in tile, auditing process, For example, audits the
bused on the concept of selective testing of the data being examined and tare, therefore, suhjec:t to
the limitations thatsuch matters, if (hey exist, miry not be detected. Also, because of the
charaeterislics of irregularities, including attoilipts at corleealrnCrlt through collusion and forgery, a
properly designed and executed audit may not detect a material irregutar! ty,
Compliance with laws, regulations, contracts and grants applicable to the City is the responsibility
of the City's management. In performing our audits, we will he aware of the possibility that illegal
acts or noncompliance may have occurred, lIowcver, it should be recogni7ed that our audit
provides no Assurance that. illegal arts or nonconiptiailce generally will he detected and only
reasonable assurance that illegal act% or noncompliance having a direct and material effect on the
determination of financial statement amounts will be. detected. As part of obtaining reasonable
uswurancc about whether the financial staterncnts are. tree of material misstatement, we will perform
tests of the City's compliancc with certain provisions of laws, regulations, contract~ turd grunts.
llowever, our objective is not to provide an opinion on overall compliance with such provisions.
We will prepare a written report on the results of our tests of cornphartce with applicable laws and
regulations.
in surninary, under these standards, we will issue reports addressed to the Mayor, and City
Carnmission for the year ended September 30, 1996 its follows:
• A report on the general purpose financial statements of the City, as a whole;
• A report On the internal control structure based on an audit of the general purpose financial
statements performed in accordance with Government Auditing Standards,
• A report on cornptinrlce based on an audit of general purpose financial statements performed
in accordance with Govemmcent Aadiling Sloarlardr; and
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KPMG-MIRMI-29FW ID;
Not Marwick i t.r
Mr, Merret Stoirheini
October 24, 1996
Page 3
OMB Circular A-128
OCT 25'96
17:11 No.031 P.15
We will also perform auditing procedures on the City's federal financial assistance/awards
programs in accordance with the Provisions of OMB Circular A-128, Audits of State and I.x cal
Governments. OMB Circular A-128 include~ specific audit requirements, mainly in the areas of
the internal control structure and compliance with laws and regulations, that exceed those required
by Government Auditing Standarslc.
As part of our auditing procedures performed in accordance with the provisions of OMB Circular
A-128, we will perform tests of controls to evtiluatc the effectiveness of the design and operation
of internal contra] policies and procedures that we consider relevant to preventing or detecting
material noncompliance with Jaws and regulations applicable, to each of the organization's major
programs and repon the results to you. The tests of internal control.q perf'orniecl in accordance with
OMD Circular A-128 are less ill scope than would he necessary to render an opinion on the internal
control structure. The limited purpose of these tests may not meet the needs of some users of audit
reports who require additional infon,iartion on the internal control structure.
Compliance with laws, regulations, contracts and grants that govern tinwicial assistance/awards
programs is the responsibility of management. We will perform the tests of the City's compliance
with certain spoc;ific provisions of laws, regulations, contracts nand grants we determine to be
necessary batted on OMB's Contlyflance Supplement for Audits of State and Local Governments
(Compliance Supplement) and report whether in our opinion the organization complied, iri all
n-katerial respects, with the laws and regulations applicable to its major federal financial
assistunce/awards programs. Tha procedures outlined in the Compliance Supplement are those
Guggested by each federal agency and clo not ckvver all areas of regultrtiuns governing each
program. Program reviews by federal agencies may identify aadditional instances of
noncompliance. With regard to general requirements, our report on conipliancc will contain a
statement of positive assurance on those items that. were tested and negative assurance on those
items not tested.
In summary, in accordwice with ONIB Citeular A-129, wo will issue reports addressed to the
Mayor and City Commission for the year ended Septeanber 30, 1996 as follows:
• A report on the supplementary schedule of the City's fedora} and state f rtancial assistance
programs;
• A report on the internal control structure used in administering fodoral financial assistance
programs;
• A retort on compliance with genc;ral requirements applicable to federal financial assistance
programs;
A mport. on c nTlpliance with specific requirements applicablc to major federal financial
assistance programs;
• A report on compliance with specific requirements applicable to non -major federal financial
tssistance program transactions, if necessary; and
96— 805
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KPt1G-MIAMI-29 I1)_:
9a9W teat Marwick
Mt; Merret Stcir•he.irn
October 24, 1996
Page 4
OCT 25'96 17:11 No.031 P.16
DRAFT
• A report ern compliance with laws and regulations applic:itble to state grant mid aid
appropriations,
Other Available Assurance Services
KPMG can provide other services to provide you with additional assurance on internal eonttols
mid compliallee with laws and regulations. We would be happy to discuss additional information
about. these services.
Other Engagement Issues
The City agrees that all records, documenlaticni, and information we request in connection with our
audits will he made available to us, that all rnatcrittl information will be disclosetl to us, and that we
will have the fill( cooperation of the, City's pensonnel. As required by generally accepted uuditing
standards, Svc will make specific inquiries of tnanagcrncnt about the representations embodied in
the financial statements, the effectiveness of tic internal control structure and the City's compliance
with certain laws and mgulutiotl5, and obtain a repltsc-niltt.lon letter from rrtunagement about these
mutter~. The responses to Otil' inquiries, the written mpresentatious, and the results of audit test.~
comprise the evidential rrlatter we, will lily upon in forming an opinion on the financial stalenhen(s,
Because of the iniportai)oe, of nlanagelliont's tcpreserltations to the effective pt~l•forniattcc of our
service,, the City will mlease KPMG beat Ivlaivick I LP and its personnel from ally cltlims,
liabilities, costs, and expenses relalillg to our services under this letter attributable to any
misl>v;pmsentations in the representation ➢elder nAel-re i to above.
It is our responsibility to ensurh; that the Mayor and City Commission are infornhed of any
significant illegal acts that we become uware of during our audit. If the illegal act involves fonds
from governmental entities, it is the City's responsibility to inform the governmental entities of
these acts. If the City's inatlagement and audit committce are involved in the illegal act or do not
xport it to the appropriate: governmt t al entities on a timely basis, we, as auditors, will be
obligated to report the illegal acts to these governmental entities;.
Nor your infornation, we have attached a copy of KPMG Peal Marwick LLP's, most. recent Peer
Review Report.,
% undorstand that our reports on internal control structure as part of the financial audit and on
compliance with laws And regulations are intended for the information of the City Commission,
manah'ernent, and others within the City and funding agericiac.
It should be understood (lie work papers for the engagenicat are; the property of KPMG Peat
Marwick LLP and constitute confidential information. However, pursualit to Goverivnent
Au&fijig Standards, we fame required to make celtain work papers available to federal regulatory
agencies upon request for their reviews of audit quality and use by their auditors. Access to the
requested work papers will be provided to the megulator;s under supervision of KPN4G personnel.
Costs incurred to comply with any such requests to review our work papers will be billed ditvctly
to you.
96- 865
KN�iG-MIAMI-29 Ill_: OCT 25'96 17:12 N0 .031 P.17
Not Marwick u.N DRAF7
Mn Motet Steirhein,
4 Octoher 24, 1996
Pale .5
Our fees for the audits will be in accordance with the Prafessiottal ,"services Contract between die
City and KPMG.
We would be Pleased to discuss this letter with you at any time. For our convenience in
cOnfirlii.ing these arrangements, we enclose kt Copy Of this latter. Please sign and return it to us.
We are looking forwa►d to working with you on this engagement.
Very h•uly youm,
KPMG Peat Marwick LLP
Josd R. I7odriguer, Partner
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Authorized gignatum
'Title
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