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HomeMy WebLinkAboutR-82-0305RESOLUTION NO. 8 2 `3-0 5 A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE A CONTRACT, SUBJECT TO THE CITY ATTORNEY'S APPROVAL AS TO FORM AND CORRECTNESS, WITH THE FIRM OF THOMPKINS AND WASHINGTON, CERTIFIED PUBLIC ACCOUNTANTS, FOR PRO- FESSIONAL ACCOUNTING SERVICES, TO OBTAIN AN INDEPEND- ENT FINANCIAL AND COMPLIANCE AUDIT OF THE CITY OF MIAMI'S COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS AS OF SEPTEMBER 30, 1981; ALLOCATING FUNDS THEREFOR IN AN AMOUNT NOT TO EXCEED $20,000 FROM COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS. WHEREAS, the City of Miami is a recipient of the U.S. Depart - went of Housing and Urban Development (HUD) Community Development Block Grant Funds (CDBG); and WHEREAS, HUD requires that each recipient of CDBG funds provide for an audit of said funds every two years; and WHEREAS, the City's Department of Community Development, based on the amount of said funds and complexity of the ser- vices provided from the use of said funds, has upgraded this audit requirement to an annual basis; and WHEREAS, the firm of Thompkins and Washington, Certified Public Accountants, as reflected in their proposal dated Janu- ary 11, 1982 attached hereto and made a part hereof, have expres- sed a desire to perform the required services for the City; NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Section 1. The City Manager is hereby authorized to execute a contract, subject to the City Attorney's approval as to form and correctness, with the firm of Thompkins and Washington, Certified Public Accountants, for professional accounting services, to obtain an independent financial and com- pliance audit of the City of Miami's Community Development Block Grant Funds as of September 30, 1981, with funds therefor hereby allocated in an amount not to exceed $20,000 from Community Development Block Grant Funds. PASSED AND ADOPTED this 1st day of April , 1982. Maurice A. Fer M A Y 0 R C H G ONGIE, CITY CLERK CITY COMMISSION MEETING OF A P R 1 1982 Mum AnuAft a f� PREPARED AND APPROVED BY: 009 A;L.*4a 5?. A4e ROBERT F. CLARK DEPUTY CITY ATTORNEY APPROVED AS TO FORM AND CORRECTNESS: 4E0—F. KNOX, JR. TORNEY I -2- 82-305 I CITY OF MIAM1, FLORIDA INTER -OFFICE MEMORANDUM TO Howard V. Gary City Manager FROM Carlos E. Garcia Director of Finan DATE January 21, 1982 SUBJECT Agenda Item for Approval REFERENCES ENCLOSURES It is recommended that the City Commission authorize the City Manager to enter into a contract with Thompkins & Washington, Certi- fied Public Accountants, to conduct an inde- pendent financial and compliance audit of the City's Community Development Block Grant funds for an amount not to exceed $20,000. FILE Under the provisions of the U. S. Department of Housing and Urban Development (HUD) regulations, an independent audit of Community Development Block Grant (CDBG) funds is to be conducted by the recipient (City of Miami) every two years. However, due to the significant sums of money which are received and administered by the City of Miami and due to the complex nature of the services provided by said funds, the Department of Community Development has instituted the policy of providing for an independent audit on an annual basis. This audit is conducted in accordance with generally accepted auditing standards and the provisions of the Department of Housing and Urban Development Audit Guide and Standards for Community Development Block Grant Recipients. The primary purpose of the examination is to express an opinion on whether the status of funds of the City of Miami, Florida, as of September 30, 1981, under the CDBG program and the source of funds and program costs for the periods May 16, 1975 through September 30, 1981, CDBG Grant Nos. B-75-MC-12-0013 through B-81-MC-12-0013, inclusively, are in conformity with generally accepted account- ing principles, the specific terms of the grant agreements and the provisions of Federal Management Circular 74-4. In past years, the City's independent auditors, Peat, Marwick, Mitchell & Co.(PIMM&Co) has conducted this audit under the provisions of their contract for an additional fee. However, due to time constraints, P.M.M.&Co., has recommended the firm of Thompkins & Washington, Certified Public Accountants, to conduct the audit. This firm is currently involved in a joint -venture with P.M.M.& Co., to conduct the City's overall annual audit for FY 80-81, and therefore, has already obtained a thorough understanding of the City's financial system. A resolution authorizing the agreement and the expenditure of funds is attached. CG:CB: hb cc: George F. Knox, Jr., City Attorney R. Rosencrantz, A,C.M. 82-305 al- FIRM'S NAME THOMPKINS & WASHINGTON STREET ADDRESS 520 N.W. 165th STREET ROAD, SUITE 1204 CITY, STATE AND ZIP CODE NORTH MIAMI BEACH, FLORIDA 33169 TELEPHONE NUMBER (305) 947-1638 CONTACT RONALD THOMPKINS, MANAGING PARTNER • ism ' 82-305 TABLE OF CONTENTS Page LETTER OF TRANSMITTAL ................................. 1 A PROFILE OF THOMPKINS & WAS11INGTON .................... 3 OUR QUALIFICATIONS AND EXPERIENCE ..................... 5 OUR AUDIT PLAN ........................................ 13 OUR POLICY REGARDING INTERNAL CONTROL AND MANAGEMENT REPORTS............................................ 16 PROFESSIONALFEES ..................................... 17 rr82-305 Thompkins Et Washington Certified Public Accountants 520 N W 185th Street Roed 1551 Forum Race Suitt 204 Suite 5000 North Mami Beech, FL 33189 West Palm Beach FL 33401 (305) 944.2469 (305) 689.8863 r Broward: (305) 920.1466 Broward. (305) 523.2433 January 11, 1982 Mr. Carlos E. Garcia, 17PA Acting Director of Finance 3500 Pan American Drive Miami, Florida 33133 We are pleased to have received your letter of request for a proposal to provide auditing services to the City of Miami, Office of Community Development (the "City") and wish to express our appreciation to Nancy J. Bahn for taking time from her busy schedule to meet with us during our recent visit to your Community Development offices. We are convinced that our firm has outstanding qualifications to examine the City's financial statements and perform other services that may be required for the fiscal year ending September 30, 1981. We fully understand the nature of the work to be performed and thus will conduct an audit examination of the financial statements in accordance with generally accepted auditing standards and the provisions of the Department of Housing and Urban Development's Audit Guide and Standards for Community Development Block Grant Recipients, and therefore would include such tests of the accounting records and such other auditing procedures as we consider necessary. The primary purpose of the examination will be to express an opinion on whether the status of funds of the City of Miami, Florida as of September 30, 1981 under the Community Development Block Grant program and the source of funds and programs costs for the periods May 16, 1975 through September 30, 1981 applicable to program years 1975 (CDBG No. B-75-A1C-12-0013) through 1981 (CDBG No. B-81-MC-12-0013), inclusively, are in conformity with generally 1 accepted accounting principles, the specific financial terms of the grant agreements and the financial provisions of Federal Management Circular (F11C) 74-4. In our continuing pursuit of professional excellence, we have risen to the challenges of the accounting profession and, accordingly, have implemented advanced auditing concepts, approaches and techniques. These innovations are included in our unified audit approach and are designed to deal with the increasing complexities of financial systems, to reduce and control the rising costs of performing audits, and to maintain quality auditing standards. This unique approach is composed of advanced auditing concepts and techniques and integrates the many facets of audit planning, identification of special audit risks, study and evaluation of internal accounting controls, testing of transactions and audit sampling. 82—.305 0 6 11 11 Iq n 11 I 11 f� n 11 In connection with our joint -venture services to the City in previous years, we have alreadv obtained a thorough understanding of the organization, the system and procedures which provide internal accounting controls and its people and the interaction between them (including those related to the FAh1IS System). We will raise questions and develop constructive suggestions relating to various aspects of operations. It is our objective that such suggestions will improve and strengthen the overall management process at the City. We sincerely appreciate the opportunity to present this proposal to you and would be pleased to meet with you to answer any questions. We hope this proposal conveys our enthusiastic desire to receive instructions from you to serve as your independent accountants, since we are convinced that we can offer the highest quality service and because we would be proud to include the City among our many distinguished clients. Fours very truly, �l THOMPKINS & WASIUNGTON - 2 - *.82-305 A PROFILE OF THOMPKINS do WASHINGTON OUR FIR&I The THOMPKINS & WASIIINGTON (T&``') organization, a minority firm, brings together over forty years of collective experience in public accounting. The partners and manager of the firm, all former managerial/supervisory employees of "Big Eight" international accounting firms, are dedicated to providing excellent professional services. The firm's dedication to outstanding service has been recognized by several of the ' international accounting firms and the local -,-state and national business communities. This is evidenced by the fact that the firm has previously, joint -ventured with several international firms in performing audit engagements and has been continually sought after as a joint -venture partner by such firms for other substantial audit engagements. Our working relationship with these firms and the Florida Consortium of CPA Firms enables T&W to provide the City with the local attentiveness using a network of nation- wide resources. THOMPKINS & WASHINGTON has many satisfied clients. The value of an accounting firm to its clients is determined not only by its size and breadth of experience, but also by the desire, capability and the availability of its personnel and the philosophy with which it serves the needs of its clients. Due to our performance of high quality professional services, we are rapidly expanding our client base within the following departments and industries: Departments Industries Auditing Attorneys Government Accounting Banking Health Care Taxation: Colleges Hotel Non -Profit Organizations Commercial Insurance Individuals Construction Non -Profit 1j Corporations Day Care Centers Organizations Partnerships Engineering Real Estate Management Advisory Services Finance Retail Transportation In addition to the firm's current services to the industries and clients of THOMPKINS & WASHINGTON, members of the firm have gained significant non-profit and fund accounting experience - while associated with the international firms. Our total experience includes services to the following non-profit or governmental clients: Arthur Vining Davis Foundation �y Belafonte Tacolcy Center, Inc. City of Hallandale, Florida City of Miami, Florida City of Riviera Beach, Florida Clerk of the Courts of Broward County, Florida Community Mental Health Center of Pelm Beach County Council for International Visitors, Inc. Dade County Aviation Del.artment - P. - oi►82-305 Dade County Department of Housing and Urban Development Dade County School Board Florida International University Florida kevs Communitv College Glass Bottle Blowers Association-Emplovers Retiree Trust International Oceanographic Foundation James E. Scott Community Association, Inc. Legal Services of Greater Miami, Inc. Metropolitan Dade County, Florida Miami -Dade Community College Monroe County School Board National Children's Cardiac Hospital, Inc. Nova University Opportunity Industrialization Center of Dade County, Inc. Rotary Club of Miami :Louth Florida Employment be Training Consortium United Black Merchants Association of Florida, Inc. University of Miami Urban League of Greater Miami, Inc. In addition to performing overall audit examinations for our clients, we have also conducted numerous financial and compliance audits of various federally -funded programs (HUD, Health and Human Services, CETA, etc.) administered by state and local governments and non-profit organizations. We maintain offices in Miami and West Palm Beach, Florida and are members of the American Institute of Certified Public Accountants,. the National Association of Minority CPA Firms and the Florida Institute of Certified Public Accountants. The City officials can be assured that our commitment of resources and manpower will be such that we will be able to respond on relatively short notice to perform professional services on a prompt and timely basis throughout the year. 4 - P.82-305 V. 0 IOUR QUALIFICATIONS AND EXPERIENCE PERSONNEL Recruitment and Training It has always been the policy and philosophy of TIIOMPMS & WASHINGTON to hire personnel based solely on their level of education, competence, character, professional and moral integrity and work experience, rather than on the basis of race, color, creed, nationality or sex. We recognize the critical importance ot' personnel recruitment and continued professional development of our personnel. Accordingly, we carefully screen candidates for their academic achievement, work experience, career orientation, business aptitude, over-all attitude, special interests and other characteristics that are essential in responding to the needs of a highly diversified clientele. Staff assignments are designed to bring each client the necessary level of expertise and the highest quality of service available while allowing for a diversity of experience and planned on-the-job training. Each individual receives a broad base. of experience by serving clients with different needs and by handling many types of accounting, consulting, auditing and taxation assignments. Our approach provides specialized individual attention as well as the technical and administrative depth we consider essential to deliver consistent, quality service. Our continuing education program is designed to keep our partners and staff up-to-date on technical and business developments and to prepare them for the challenges and increasing responsibilities they will assume. Our educational program includes in-house training courses conducted by either THOMPHINS & WASHINGTON personnel or other accounting firms. We also stress and encourage our staff to attend monthly seminars sponsored by the Gold Coast Chapter of the Florida Institute of Certified Public Accountants. It is our policy that continuing education should never end, as even the most experienced members of the firm are continuously studying ways of advancing their profession and serving clients more effectively. Quality Control At THOMPIGNS & WASHINGTON, we maintain strict control over the quality of all client services to ensure that our work meets not only the auditing standards of the profession, but also our own standards of professional excellence. We conduct our services to clients as a team, with each member expected to work in cooperation with the others toward our objective of providing independent, competent and constructive client services. The team is headed by an engagement partner who is ultimately responsible for all services to that client and who ensures that our services meet our firm's standards of professional excellence. The engagement team is supported by an extensive consultative support network composed of another TIIOMPKINS lie WASHINGTON partner who serves as the consulting partner and is responsible for providing or arranging for consultation and for reviewing - 5 - 82-305 and concurring with the financial statement presentations and reports. The manager an(: senior are primarily responsible for organizing, supervising and successfully completing the audit examination. They are involved in detecting and solving client problems; reviewing and scrutinizing the work performed by subordinate staff members; and maintaining a high level of quality control on a daily basis. Within the public accounting profession, we have endorsed the new quality control "peer review" program that was established by the American Institute of Certified Public Accountants. Furthermore, Mr. Ronald Thompkins, engagement partner, is a member of the Peer Review Committee of the Gold Coast Chapter of the Florida Institute of Certified Public Accountants. This program is an important part of the profession's system of self -regulation. Managem ent Team We have an experienced, competent and highly qualified professional management team to coordinate and supervise our services to the City. Each member of this team has a thorough knowledge, excellent experience and background particularly suited to the operations of the City. They have a complete and in-depth understanding of the accounting methods and procedures used in governmental accounting. Coordination of all work by THOMPKINS & WASMNGTON for the City will be the responsibility of Mr. Ronald Thompkins, managing partner of the firm and engagement partner for this assignment; Mr. William Washington, consulting partner; Mr. James L. Wilcox, manager -in -charge; and Ms. Charlayne Thompkins, in -charge accountant. Mr. Thompkins, as a former manager of a large international public accounting firm and managing partner of T&W, gained extensive experience in serving federal, state and local governments over the past (9) Fears of his career in public accounting. In prior years, he '! was the senior -in -charge of the University of Miami audit examination; and manager -in - charge of the Arthur Vining Davis Foundation audit examination. Currently, he is serving in a partner capacity in connection with our current joint -venture services to the City of Nliami, the engagement partner for the Urban League of Greater Miami, Inc; James E. Scott Community Association, Inc.; Legal Services of Greater Miami, Inc.; and Belafonte Tacolcy Center, Inc. audit engagements. Mr. Thompkins has provided management advisory services to the Opportunity Industrialization Center of Dade County, Inc. and has also served as an engagement partner on numerous joint -venture assignments with large international public accounting firms. These joint -venture assignments were primarily related to auditing local governmental entities. As consulting partner on this engagement, Mr. Washington has the responsibility to keep informed on ali &;oportant aspects of the engagement and to be familiar with the key t financial and administrative personnel of the City. He is also responsible for reviewing the financial reports and consulting with the engagement partner on all difficult accounting, auditing and reporting problems. Such involvement assures the City that a who is familiar with the engagement and has the authority to make professional partner decisions on the basis of his substantial experience and judgement will always be available regardless of other client matters, vacation, or other responsibilities which might require the absence of the engagement partner. In prior years, !11r. Washington was a supervisor in a large international public accounting firm and gained considerable knowledge of fund accounting over the past (9) years of his career in Recounting. 14 - - �82-305 Currently, he is the engagement partner of the City of Riviera Beach; Dade County Department of Housing and Urban Development; and consultans partner on the Urban League of Greater Miami, Inc.; Belafonte Tacolcy Center, Inc.; James E. Scott Community Association, Inc., and Legal Services of Greater Miami, Inc. audit engagements. Mr. Wilcox, as a former manager of a large international public accounting firm and as a manager at T&W, has gained extensive experience in serving state and local governments over the past (7) years of his career in public accounting. In prior years, he was a senior accountant of Nova University; Metropolitan Dade County; and the Glass Bottle Blowers Association -Employers Retiree Trust audit examinations. He also served as the manager -in -charge of the City of Hallandale; Clerk of County Courts of Broward County; Nova University; and Glass Bottle Blowers Association -Employers Retiree Trust audit examinations. Currently, he is the manager -in -charge of the City of Opa-Locka, Florida Belafonte Tacolcy Center, Inc., and James E. Scott Community Association, Inc. audit examinations. Ms. Thompkins, a former public accounts auditor with the Auditor General, of the State of Florida, has gained considerable experience in governmental and fund accounting over the past 8 years cf her accounting career including services to the City of Miami and Metropolitan Dade County in an in -charge capacity during our joint -ventures with other firms in connection with the CETA program. She is currently performing as an ir-charge accountant on the Urban League of Greater Miami, Inc.; Belafonte-Tacolcy Center, Inc.; Dade County HUD; and Metropolitan Dade County, Florida engagements. She also served as senior consultant in connection with our management advisory services to the Opportunity Industrialization Center of Dade County, Inc. The resumes for the above partners, manager and in -charge accountant assigned to this potential engagement are as follows: - 7 - I I w82-305 I a # IRONALD THOMPKINS. CPA Position Managing Partner of the firm and engagement partner Education B.A., Accounting, Howard University Professional and Business 1972 - 1980, Public accounting experience .� Experience with an international public accounting firm (resigned as an Audit Manager). 1980 - Present, Managing Partner of THOMPKINS & WASHINGTON Mr. Thompkins' public accounting experience includes governments (local, state and fede- ral), non-profit organizations, health care, practiced before the Securities and Exchange Commission, colleges and universities, public utilities, real estate, savings and loan associa- tions, banks, hotels, business acquisitions and employee benefit plans. While employed by the international public accounting firm, Mr. Thompkins was a campus recruiter, an instructor in the firm's in-house professional development programs, and was selected to serve on the firm's quality control review team. Professional and Business American Institute of Certified Public Affiliations Accountants National Association of Black Accountants (Director of Continuing Education, Greater Miami Chapter) National Association of Accountants Florida Institute of Certified Public Accountants (Board Member, Gold Coast Chapter, Chairman, Committee on relations with state and local governments; Member, Quality Control and Peer Review Committee) Who's Who in Finance and Industry Member, Municipal Finance Officers' Association 8 082-305 WILLIAM WASIHNGTON, JR., CPA Position Consulting Partner Education B.A., Accounting, University of Missouri at Kansas City Professional and Business 1972 :. 1976, Public accounting experience Experience with an international accounting firm (re- signed as an Audit Senior). 1976 - 1980, Private Industry Experience 1980 - Present, Partner of THOMPKINS & WASIIIN GTON Mr. Washington's public accounting experience includes governmental entities, banks, manufacturing and retail industries, practiced before the Securities and Exchange Commis- sion, non-profit organizations, and savings and loan associations Professional and Business American Institute of Certified Public Affiliations Accountants National Association of Black Accountants Florida Institute of Certified Public A ccountants Board Member, Big Brothers/Big Sisters Board Member, Crime Stoppers of Palm Beach County Member, Area Government Committee, Greater West Palm Beach Chamber of Com- merce Member, Municipal Finance Officers' Association - q - 82-305 Position Education Professional and Business Experience Professional and Business Affiliations JAMFS L. WILCOX, CPA M anager B.B.A., Accounting, University of Miami 19744 - 1981, Public accounting experience with an international accounting firm (re- signed as an audit manager). 1981 - Present, Manager of THOMPKINS & WASHIN GTON Mr. Wilcox's public accounting experience includes government, non-profit organizations and various other industries such as air freight, hotel, retail, real estate, educational institution and employee benefit plan. He has also practiced before the Securities and Exchange Commission. American Institute of Certified Public A ccountants Florida Institute of Certified Public Accountants o--82-305 CHARLAYNE W. THOMPIGNS (Passed 2 Of 4 Parts of the CPA Examination) Position Education Professional and Business Experience Professional and Business Affiliations i In -Charge Accountant B.B.A., Accounting, University of Miami 1973 - 1977, Public Accounts Auditor, Auditor General of the State of Florida. 1977 - 1979, Accounting Instructor, local Community College. 1980 - Present, In -Charge Accountant at THOMPIGNS & WASHINGTON Ms. Thompkins accounting experience includes extensive experience in non-profit organiza- tions, health care, colleges and universities, school board districts, municipal governments, HUD funded programs, and CETA programs. Associate Member, Florida Institute of Certified Public Accountants National Association of Black Accountants - 11 - 82-305 ' THOMPKI:IS & WASHINGTON REFERENCES Mr. William Erickson Mr. Burt Emmer, Partner Finance Director Alexander Grant be Co. Metropolian Dade County, Florida Ft. Lauderdale, Florida Miami, Florida (305) 579-3780 (305) 764-1235 Mr. Richard Portis Executive Director Opportunity Industrialization Center of Dade County, Florida Miami, Florida (3,05) 758-6962 Mr. Tom Chamberlain Managing Partner Price Waterhouse & Company Miami, Florida (305) 358-3682 I Mr. William D. Callahan, Partner Deloitte Haskins & Sells Miami, Florida (305) 358-4141 Mr. Patrick O'Connor Dade County Employees' Credit Union Miami, Florida (305) 579-2962 Mr. Archie Hardwick James E. Scott Community Association, Inc. Miami, Florida (305) 638-4070 Mr. John Barli Dade County Department of Housing and Urban Development Miami, Florida (305) 5475306 Mr. James Brocksmith, Partner Peat, Marwick, Mitchell be Co. Miami, Florida (305) 358-2300 Ms. Charlotte Galogly Executive Director South Florida Employment and Training Consortium Miami, Florida (305) 638-6796 Mr. T. IV. Fair, President Urban League of Greater Miami, Inc. Miami, Florida (305) 358-3237 Ms. Sharon Brown, Partner Coopers be Lybrand Miami, Florida (305) 358-6363 Mr. T. J. Cunningham Palm Beach Lakes Bank Nest Palm Beach, FL (305) 683-2900 Mr. John Powell Executive Director Legal Services of Greater !Miami, Inc. Miami, Florida (305) 693-6810 ;2 _ 82-305 f OUR AUDIT PLAN We have developed an engagement plan for servicing the City which is comprehensive in scope, integrated in its many aspects and designed to bring maximum benefit to the City. We discuss the various aspects of our engagement plan in the following subsections: * Objective and Scope - outlines the audit and related services that we will provide. * Our Approach to the Audit - summarizes.our unified, comprehensive audit system. * Audit Procedures and Schedule - which provides an overview of our audit procedures and the scheduling of various functions. OBJECTIVE AND SCOPE W-c will examine the financial statements of the City in accordance with generally accepted auditing standards as detailed in the industry audit guides of the American Institute of Certified Public Accountants and applicable statutory audit guidelines (including the specific terms of the grant agreements and the financial provisions of Federal Management Circular (FMC) 74-4), and Guidelines for Audits of Federally Assisted Programs by the General Accounting Office and Office of Management and Budget of Washington, D.C. The primary purpose of the examination will be to express an opinion on the financial statements. Such an examination is subject to the inherent risk that errors or irregulari- ties may not be detected. If conditions are discovered which lead to the belief that material errors, defalcations or other irregularities might exist, or if any other circum- stances are -encountered that would require extended services, we would promptly advise you. No extended services would, of course, be performed uriless they are authorized by 1 management. Each year, we will discuss with you the objective and scope of the examination and respond to any special interests that you may have regarding the audit. We will also render a letter to management with our recommendations for improving the City's internal accounting controls, accounting policies and procedures; the financial, a accounting and reporting system; and the organization's compliance with management's policies and those regulations promulgated by various funding sources. Our broad objective is to translate the results of our audit into recommendations that will have maximum benefit to the City. - 13 - 82-305 OUR APPROACH TO THE AUDIT In continuing pursuit of professional excellence, we have risen to the challenges of the accounting profession and, accordingly, have implemented advanced auditing concepts, approaches and techniques. These innovations are included in our unified audit approach and are designed to deal with the increasing complexities of financial systems, to reduce and control the rising costs of performing audits, and to maintain quality auditing standards. t This unique approach is composed of advanced auditing concepts and techniques and integrates the many facets of audit planning, identification of special audit risks, study and evaluation of internal accounting controls, testing of transactions and audit sampling, t , T. Some of the above features are further discussed in the subsection, Audit Schedule. While carrying out our normal auditing procedures, we will raise questions and develop suggestions for improving the system of internal accounting controls and administrative procedures. We will also make recommendations for improving the City's financial structure and strengthening the overall management process. AUDIT PROCEDURES AND SCHEDULE We will plan, schedule and coordinate our examination of the City in the most economical and efficient way; not only to meet the target report date, but to minimize the amount of time that will be required of your personnel. Essentially, we will conduct the audit in two phases: 1. We will perform an extensive preliminary survey to plan the necessary audit procedures and determine when they will actually be performed. 2. We will perform detailed and substantive testing of the various accounts so that the financial statements and internal control report can be prepared and issued in accordance with your requirements. Preliminary survey At the earliest convenient time following our appointment as auditors, we will make an in-depth, preliminary survey of the City's C.D. Program financial and accounting operations, including meeting with management. The objectives of this review are to j become completely familiar with the City's C.D. Program system of operations, familiarize ourselves with potential problems, identify known problems, assign audit priorities and arrange for assistance by, and coordination with your accounting personnel. Commensurate with our overall objective of planning, we will develop a participation schedule and timetable for performing our examination which will minimize the disruption of your workload. _ 14 _ �82-305 Effective performance of the engagement requires that potential problem areas be identified at the earliest possible time and that analyses and tests be planned to be completed in such areas first. As part of our preliminary survey, we will determine if any special audit risks exist and their effect on our audit. Establishing the audit priori- ties in this manner does not mean that any essential auditing procedures will be omitted; it simply means that known, anticipated or potential problem areas will receive prompt attention. Detailed and substantive testing Through the use of tailored audit programs, we -will begin our detailed examination which will consist of reviewing, documenting, evaluating and testing internal accounting controls and procedures surrounding payroll, cash receipts, cash disbursements and other areas relating to financial matters and transactions. In this phase of our examination testii:g, we will select various transactions for detailed compliance testing. Our substantive testing will consist primarily of examining significant account balances and we will determine the reasons for material fluctuations in such balances between years. ' Timing of our examination Upon notification of appointment as your independent accountants, we would anticipate that the sequence and timing of our audit activity would be as follows: Activity Description Preliminary survey of operations and audit planning stage Detailed and substantive testing Presentation of Financial Statements and Findings and Recommendations (Draft) Review with City Officials the "draft" of the financial statements and findings and recommendations Issuance of financial statements and findings and recommendations :; - Dates of Activity February 15 - 24, 1982 March 1 - 31, 1982 April 20, 1982 April 30, 1982 May 10, 1982 82-305 OUR POLICY REGARDING INTERNAL CONTROL AND MANAGEMENT REPORTS Upon completion of our examination, and as an integral part of our report, we will prepare a report on all matters which come to our attention where improvements could be made with respect to internal accounting and management controls and operating and i administrative efficiency. E These matters will be discussed with City's officials directly involved to obtain their views and observations. The recommendations contained in these reports can help protect assets and provide meaningful information to guide management decisions. This approach enables us to provide recommendations 'to our clients which are practical and relevant to their operations. This report will be cleared with City's officials prior to issuance. The types of recommendations and observations we would include in our report are as follows: . Recommendations arising from current evaluation of internal accounting controls. • Recommendations made during previous examinations not implemented which continue to warrant consideration. • Exceptions to policy directives, rules and regulations. Accounting performance suggestions where we believe accounting performance could be improved. Recommendations and observations regarding administrative, managerial and operational efficiencies. Other matters which we believe should be brought to the attention of the City officials. t 1 4 ••82-305 PROFESSIONAL FEES THE FOLLOWING INFORMATION IS BEING SUBMITTED TO YOU BASED ON OUR UNDERSTANDING WE ARE THE SOLE FIRM BEING CONSIDERED FOR THIS ENGAGE- MENT. RATES BY PERSONNEL PARTNERS $75 - $80 MANAGERS 60 Lq-CHARGE ACCOUNTANTS 35 STAFF 25 We estimate the fees for this engagement should approximate $16,500 (including expenses). Should any situation arise that would materially affect this estimate, we will notify you immediately. 17 - 82-305'.