HomeMy WebLinkAboutAttachment CAttachment "C"
City of Miami, Florida
444 SW 2nd Avenue
Miami, FL 33130
Attention: The Honorable Mayor and City Commission
This letter is to explain our understanding of the arrangements for the services we are to perform for the City of Miami, Florida
(the "City") for the fiscal year ending September 30, 2007. We ask that you either confirm or amend this understanding.
We will perform an audit of the City's govemmental activities, each major fund, and the aggregate remaining fund
information as of and for the years ending September 30, 2007 through September 30, 2009, which collectively comprise the
basic financial statements.
We understand that these financial statements will be prepared in accordance with accounting principles generally
accepted in the United States of America. The objective of an audit of financial statements is to express an opinion on
those statements.
We will also perform the audit of the City as of and for the years ended September 30, 2007 through September 30, 2009, so
as to satisfy the audit requirements imposed by the Single Audit Act and the U.S. Office of Management and Budget
(OMB) Circular No. A-133 and the Florida Single Audit Act, should they become necessary during the contract period.
Our acceptance of this engagement is subject to our satisfactorily completing communication with your previous auditors.
We will notify you promptly if we become aware of anything during that communication or review which results in our not
being able to continue this engagement.
We will conduct the audit in accordance with auditing standards generally accepted in the United States of America and
"Government Auditing Standards" issued by the Comptroller General of the United States, and the provisions of the Single
Audit Act, OMB Circular A-133 and OMB's Compliance Supplement. Those standards, circulars, supplements or guides
require that we plan and perform the audit to obtain reasonable rather than absolute, assurance about whether the financial
statements are free of material misstatement whether caused by error, fraudulent financial reporting, or misappropriation of
assets. Accordingly, a material misstatement, whether caused by error, fraudulent financial reporting, or misappropriation
of assets, may remain undetected. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. As a result, an audit is not designed to detect errors or fraud that are immaterial to
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audit will provide a
reasonable basis for our reports.
In addition to our reports on the City's financial statements noted above, we will also issue the following reports or types of
reports:
A report on the faimess of the presentation of the City's Schedule of Expenditures of Federal Awards and State
Financial Assistance for the years ending September 30, 2007 through September 30, 2009, if applicable during
the contract period.
Reports on intemal control related to the financial statements and major programs. These reports will describe the
scope of testing of intemal control and the results of our tests of intemal controls.
Reports on compliance with laws, regulations, and the provision of contracts or grant agreements. We will report
on any noncompliance, which could have a material effect on the financial statements and any noncompliance,
which could have a direct and material effect on each major program.
A schedule of findings and questioned costs.
A Management Letter in Accordance with the Rules of the Auditor General of the State of Florida.
A report on the financial condition of the City, in accordance with the rules of the Auditor General.
The funds that you have told us are maintained by the City and that are to be included as part of our audit are listed in the
City's 2006 financial statements. During the contract period, the City may choose to add or reduce the number of funds to
facilitate for its operation.
Our reports on intemal control will include any significant deficiencies and material weaknesses in the system of which we
become aware as a result of obtaining an understanding of intemal control and performing tests of intemal control consistent
with requirements of the standards and circular identified above. Our reports on compliance will address material errors,
fraud; violations of compliance requirements, and other responsibilities imposed by state and federal statutes and regulations
and assumed by contracts; and any state or federal grant, entitlement of loan program questioned costs of which we
become aware, consistent with requirements of the standards and circulars identified above.
If circumstances arise relating to the conditions of your records, the availability of sufficient, competent evidential matter, or
indications of a significant risk of material misstatement of the financial statements because of error, fraudulent financial
reporting, misappropriation of assets, or noncompliance which in our professional judgment prevent us from completing the
audit or forming an opinion, we retain the unilateral right to take any course of action permitted by professional standards,
including declining to express an opinion or issue a report, or withdrawal from the engagement.
As you know, management is responsible for 1) the preparation of City's financial statements and the schedule of federal
awards and state financial assistance, 2) establishing and maintaining effective intemal control over financial reporting and
safeguarding assets and internal control over compliance, including monitoring ongoing activities, and for informing us of all
significant deficiencies in the design or operation of such controls of which it has knowledge, 3) property recording
transactions in the records, 4) identifying and ensuring that the City complies with the laws and regulations applicable to its
activities, and for informing us about all known material violations of such laws or regulations, 5) the design and
implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected
fraud affecting the entity involving management, employees who have significant roles in intemal control and others where
the fraud could have a material effect on the financial statements, 6) informing us of its knowledge of any allegations of
fraud or suspected fraud affecting the entity received in communications from employees, regulators, or others, 7) making
all financial records and related information available to us, 8) for adjusting the financial statements to correct material
misstatements, 9) following up and taking corrective action on audit findings, including the preparation of a summary
schedule of prior audit findings, and a corrective action plan, and 10) report distribution including submitting the reporting
packages. At the conclusion of our audit, we will request certain written representations from management about the
financial statements and matters related thereto. We will also require that you affirm to us that the effects of any
uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented
are immaterial, both individually and in the aggregate, to the opinion units of the financial statements.
The City Commission is responsible for informing us of its views about the risks of fraud within the entity, and its
knowledge of any fraud or suspected fraud affecting the entity. We will also determine that certain matters related to the
conduct of the audit are communicated to the City Commission including 1) fraud involving senior management and fraud
(whether caused by senior management or other employees) that causes a material misstatement of the financial
statements, 2) illegal acts that come to our attention (unless they are clearly inconsequential), 3) disagreements with
management and other serious difficulties encountered in performing the audit, and 4) various matters related to the
entity's accounting policies and financial statements.
You have informed us that you intend to prepare a Comprehensive Annual Financial Report (CAFR) and submit it for
evaluation by the Govemment Finance Officers Association's Certificate of Achievement for Excellence in Financial
Reporting Program. Our participation in the preparation of the CAFR is to consist of having the audit and accounting report
review performed by a person who is also a reviewer for the GFOA certificate program and have them involved in the
resolution of any accounting or reporting questions that arise during the engagement. We will also read the material
included in the Introductory and Statistical Sections.
The two overarching principles of the independence standards of the "Govemment Auditing Standards" issued by the
Comptroller General of the United States provide that management is responsible for the substantive outcomes of the
works, and therefore, has a responsibility and is able to make any informed judgment on the results of the services
described above. Accordingly, the City agrees to the following:
The office of the Finance Director will be accountable and responsible for overseeing the preparation of the
Comprehensive Annual Financial Report.
The City will establish and monitor the performance of the preparation of the Comprehensive Annual Financial
Report to ensure that they meet management's objectives.
The City will make any decisions that involve management functions related to the Comprehensive Annual
Financial Report and accepts full responsibility for such decisions.
The City will evaluate the adequacy of services performed and any findings that result.
During the course of our engagement, we may accumulate records containing data, which should be reflected in your books
and records. You will determine that all such data, if necessary, will be so reflected. Accordingly, you will not expect us to
maintain copies of such records in our possession.
From time to time and depending upon the circumstances, we may use third -party service providers to assist us in
providing professional services to you. In such circumstances, it may be necessary for us to disclose confidential client
information to them. We enter into confidentiality agreements with all third -party service providers and we are satisfied that
they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others.
Our fees are based on the time required by the individuals assigned to the engagement, plus direct expenses. Individual
hourly rates vary according to the degree of responsibility involved and the skill required. Interim billings will be submitted
as work progresses and as expenses are incurred. Billings are due upon submission. The actual fees billed in each year
will not exceed the amount noted in the Professional Services Agreement, unless unanticipated changes in the scope of our
work are required due to 1) a change in the operating size of the City, 2) a change in applicable laws, regulations or generally
accepted auditing standards as applied in the United States, and 3) new accounting or grant compliance standards are
issued that have a significant effect on the City and/or for the incomplete or untimely receipt by us of the information on the
client participation list which significantly effects our ability to perform our audit procedures on a timely and efficient basis.
In the event we are requested or authorized by the City or are required by govemment regulation, subpoena, or other legal
process to produce our documents or our personnel as witnesses with respect to our engagements for the City, the City will,
so long as we are not a party to the proceeding in which the information is sought, reimburse us for our professional time and
expenses, as well as the fees and expenses of our counsel, incurred in responding to such requests.
Professional standards and our Firm policies require that we perform certain additional procedures whenever our reports
are included, or we are named as accountants, auditors, or "experts" in a document used in a public offering of debt
securities. Our report on the financial statements is not to be included in an official statement or other document involved
with the sale of debt instruments without our prior consent. Additionally, if you intend to publish or otherwise reproduce the
financial statements and/or make reference to us or our audit, you agree to provide us with printer's proofs or master for our
review and consent before reproduction and/or release occurs. You also agree to provide us with a copy of the final
reproduced material for our consent before it is distributed or released. Our fees for any additional services that may be
required under our quality assurance system as a result of the above will be established with you at the time such services
are determined to be necessary. In the event our auditor/client relationship has been terminated when the City seeks such
consent, we will be under no obligation to grant such consent or approval.
In accordance with Government Auditing Standards, a copy of our most recent peer review report has been provided to you,
for your information.
McGladrey & Pullen, LLP