HomeMy WebLinkAbout2012-12-17 - Agendas - FinalW FAYETTEVILLE PUBLIC LIBRARY
Suzanne Clark, President
Elizabeth Jordan, Vice President
Maylon Rice, Treasurer
We inspire imagination and foster learning.
Board of Trustees
December 17, 2012 4 pm
AGENDA
Regular Meeting Ann Henry Board Room
Kim Agee, Secretary
Brenda Boudreaux
I. Call to order
II. Minutes
A. Approval of minutes
1. October 15, 2012 regular meeting — page 2-3
B. Signed minutes
1. August 20, 2012 regular meeting — page 4
2. September 17, 2012 special meeting — page 5-6
Dan Ferritor
Susan Graham
III. Reports
A. Management reports
1. Key upcoming events — page 7
2. October - November Strategic Plan progress — page 8-9
3. October - November 2012 Performance Measures — page 10
B. Financial reports
1. Balance Sheet as of November — to be distributed
2. Profit & Loss Budget vs. Actual through November — to be distributed
3. Budget to Actual as of through November — to be distributed
IV. Old business:
A. PTO and Sick Accruals — page 11-14
B. Gala Up -date
C. Resolution of Appreciation — page 15
D. Space Needs Analysis Update
V. New business
A. Cafeteria Plan (DataPath) payment card
B. 2012 Budget adjustment approval — to be distributed at meeting
C. 2013 budget approval — to be distributed at meeting
D. Audit Contract Approval — page 16
E. Engagement Letter between BKD and Fayetteville Public Library— page 17-24
F. Engagement Letter between BKD and Fayetteville Public Library Foundation — page 25-32
VI. Adjournment
FPL press
1
Fayetteville Public Library
Board of Trustees Regular Meeting
October 15, 2012, 4 pm
Minutes
Prepared by S. Daniel, Office Manager
Board members present: K. Agee, B. Boudreaux, D. Ferritor, S. Graham, and M. Rice. Board members absent: S. Clark and E. Jordan.
Staff present: D. Johnson, S. Foley, S. Palmer, S. Davis, L. Greenwood, and S. Daniel. Others: D. Craft, Springdale Morning News.
The Board of Trustees meeting was called to order at 4:01 pm by K. Agee.
II. Minutes
A. Minutes of August 20, 2012 and September 17, 2012: D. Ferritor moved to approve; B. Boudreaux
seconded. All voted AYE.
III. Reports
A. Management reports
1. Key upcoming events: The GALA on 10.19 will be an historic event for Fayetteville. FPL is hosting David
Shipler, author of Working Poor, on 10.26 and Roy Reed, author of Beware of Limbo Dancers, on 11.16.
Dave Barry will be the 2013 Roberta Fulbright author.
2. August —September Strategic Plan progress: Ozark Writers Live was a success, the Cinema Film Series is
ongoing, and FPL hosted the Fayetteville Roots Festival. Internet only cards were provided to all Owl
Creek students. Several staff members went to PUG. FPL installed a new high speed wireless
infrastructure and replaced all 65 surveillance cameras which were defective.
3. August —September Performance Measures: D. Johnson noted patron visits have remained flat while all
other measurements are climbing. A manual count determined the counters are 40% low. A solution is
being researched.
B. Financial reports
1. Balance Sheet as of September: S. Davis noted we have $3.8 million in various accounts and liabilities of
$342,000.
2. Profit & Loss Budget vs. Actual through September:
3. Budget to Actual as of 09/30/2012: Annual revenue budget is $368,000; we have collected $392,000
YTD. The majority of the additional is fines and fees. On the expense side, the total personnel budget is
$2.4 million, YTD budget is $1.8 million, and we have spent $1.67 million. The Library Materials and
Programs budget is $588,000; there is $176,000 remaining. lithe $103,000 remaining in the IT budget is
not spent, the board will be asked to re -budget it for next year. Transfers from millage appear behind
budget but roughly half of the total comes in the last 2 months of the year. In future reports, all the
revenue — including transfers — will show on the front page.
IV. Old business
A. Dunaway update: D. Johnson noted that FPL reached an amicable settlement, the details of which are sealed
and cannot be discussed. He referred questions to J. Butt, the attorney who represented the library pro-
bono. D. Ferritor moved to send a resolution expressing the board's gratitude to 1. Butt and his team. B.
Boudreaux seconded. All voted AYE.
B. Gala update: Jim and Nancy Blair are hosting a private reception at KUAF. The library is hosting a reception
on the plaza. A sit down dinner begins at 7 during which bonus features and bloopers from the film will be
shown. Among the speakers will be David Johnson and Mayor Jordan who will present a resolution to Helen
Lewis. Live and silent auctions will precede the film that starts at 8:30. Approximately 150-200 volunteers
are helping with this event. All attendees will receive a copy of the DVD as will all public libraries and history
teachers in the area. The remainder will be sold and distributed through UA Press with revenues going to the
Foundation.
C. Space planning needs assessment — cost estimate: J. Scherer has developed a proposal for a needs
assessment - the precursor to planning for expansion. Planning for a branch is an optional component of the
proposal. Scherer's firm is a respondent to the city's request for qualifications; this satisfies state advertising
requirements. The general process going forward is to form a selection committee, evaluate the city's
respondents, interview those that best meet FPL's needs, select one, and negotiate a contract. M. Rice
moved to go forward with getting the city's list of architects and planners and to spend up to $100,000 for
the needs assessment. Motion failed for lack of a second. B. Boudreaux moved to approve moving ahead
with planning for a space study and to authorize staff to take the required steps including obtaining the
2
V.
VI.
city's list of respondents to its request for qualifications for architects and space planners. M. Rice
seconded. All voted AYE.
New business
A. Arsaga's rent: In response to a question at the previous meeting, staff reviewed the contract with Arsagas.
Rent is set at $1000 per month with no end date, though 30 clays notice is required to renegotiate the terms.
No action required or taken.
B. Attendance numbers: D. Johnson noted a manual count of visitors to the library, taken at different times and
on different days, confirmed the automatic counter is consistently 40% low. Staff is looking at new
technology and will have a recommendation by the December board meeting.
C. PTO and ESL accrual and payout: S. Davis noted we are still in the process of gathering data and will have a
report for the December board meeting.
D. Recognize Arkansas Arts Council and Target grants and increase youth program funding: D. Ferritor moved
to approve the staff recommendation; M. Rice seconded. All voted aye.
E. Closed days 2013. D. Ferritor moved to accept the schedule proposed by the staff; M. Rice seconded. All
voted AYE.
Adjournment D. Ferritor moved to adjourn; B. Boudreaux seconded. All voted AYE. Meeting adjourned at
5:O5pm.
3
Fayetteville Public Library
Board of Trustees Regular Meeting
August 20, 2012, 4 pm
Minutes
Prepared by S. Daniel, Office Manager
Board members present: B. Boudreaux, S. Clark, D. Ferritor, S. Graham, E. Jordan and M. Rice. Board members absent: K. Agee.
Staff present: D. Johnson, S. Foley, L. Yandell, L. Greenwood, and S. Daniel. Others: J. Walsh of NWA Times.
I. The Board of Trustees meeting was called to order at 4:05 pm by S. Clark.
II. Special presentation: S. Clark presented an award to S. Foley for meeting the NEH grant fund-raising goal.
III. Minutes of 6.11.12: D. Ferritor moved to approve the minutes of 6.11.12; M. Rice seconded. All voted AYE.
IV. Reports
A. Management Reports
1. Key upcoming events: D. Johnson highlighted AETN Community Cinema Independent Lens with Kyle Kellams.
2. June -July strategic plan progress: D. Johnson noted the success of the summer reading program for all ages, the
Ancient Greeks Modem Lives series for adults, and Power of the Pen for veterans' groups. The space needs of the
library are being evaluated. For example, more shelving is needed in the teen library as items must be rotated in
and out of the basement. A number of librarians attended ALA. The staff kitchen has been remodeled and a
bathroom has been installed on level 1. New lobby furniture has been placed.
3. June -July performance measures: D. Johnson noted all measures continue to trend upward. Our collection is
nearing its capacity of 300,000. Card holders are increasing, as is program attendance, At some of this summer's
programs, people had to be turned away for lack of space.
4. Summer Reading Program: L. Greenwood reported a successful summer with over 4000 in the reading program.
Teen attendance was down a bit from last year when the Otwell Teen Library opened to considerable fanfare.
B. Financial Reports:
1. S. Davis noted YTD income is almost $82,000 over budget. Personnel expenses YTD are $140,000 below budget due
to staff vacancies and a roll forward of monies from 2011. Total expenses are under budget almost $283,000 -
mostly in personnel and library material costs. There is a timing difference between receiving items and being
invoiced. Detail on credit and debit card transactions is being collected ($20,000 YTD) which will enable this money
to be allocated to the proper line item. Most is fines and fees.
V. Old business
A. Dunaway update: D. Johnson noted a trial date is set for October. Jack Butt is doing the library's legal work pro bono.
B. Gala update: S. Foley distributed a draft invitation; 400 guests, including Mayor Jordan, are expected. Jim and Nancy Blair
will host a reception at KUAF sponsored by Lindt Chocolate. Attendees will enter on a red carpet, be photographed, and
receive swag bags and a DVD of the film. Friends are organizing a silent auction. Beth Mack has produced some bonus
features. The producers of 13 independent, short films are competing for a $1000 prize and inclusion in the feature film.
DVDs will be distributed to Fayetteville schools. The Foundation is purchasing event insurance and FPL is working with
Chief Tabor to ensure a safe evening. It is unknown whether President Clinton will attend.
C. Retirement plan update: D. Johnson noted the retirement plan has been amended so that new hires are automatically in
the plan at a 3% contribution. The Bank of Oklahoma conducted 2 days of retirement education for staff members.
VI. New Business
A. Draft budget: The draft base -level budget, submitted to the city in July, would use $354,000 in library reserve. However,
staff is working to reduce that number. We have asked the city for an operational transfer of $82,000 to fund the 4%
raise given to library employees. A number of options are being considered to apportion the health insurance increase,
and some grants, not presented as income in the budget, will undoubtedly be received. The city council will vote on the
budget in October; the board of trustees will vote on a final budget at its December meeting.
8. Health insurance renewal: D. Johnson noted United HealthCare has been paying more in claims than it has received in
premiums. The first premium increase presented to our insurance broker was almost 50%; Gallagher negotiated that to
less than half. FPL administration is in the process of deciding how to apportion the premium increase between staff and
library. The city is using wellness and smoking incentives, and a rebalancing of the premium ratio between employer and
employee.
C. Vista contract: The Foundation board approved a budget of $77,000 including approximately $30,000 for Vista. After
discussion, a new contract will be prepared for signature by Vista and the Fayetteville Public Library Foundation. The
Foundation will pay for Vista's services.
4 J; )
Fayetteville Public Library
Board of Trustees Regular Meeting
September 17, 2012, 4 pm
Minutes
Prepared by S. Daniel, Office Manager
Board members present: K. Agee, B. Boudreaux, S. Clark, D. Ferritor, 5. Graham, E. Jordan and M. Rice. Staff present: D. Johnson, S.
Foley, S. Palmer, L. Mandell, B. Holt, and S. Daniel. Others: J. Scherer of Meyer, Scherer & Rockcastle, J. Walsh of NWA Times and J.
Taylor Swain of the Walton Art Center.
I. The Board of Trustees meeting was called to order at 4:01 pm by S. Clark
II. Library Growth and Space Requirements: D. Johnson reviewed the master plan for the current building and noted
the 2020 projections for population, % of card holders, and circulation per capita are lower than actual trends. The
result is that the building may be under -sized and he urged a discussion of possible space needs in the face of
these changing dynamics:
a. In 2020, population will be 5000 more than the original projection.
b. In 2020, %of population with a library card is likely to reach 75,000 rather than the 42,500 projected.
c. In 2020, total circulation will approach 1.5 million instead of the 680,000 projected.
D. Johnson suggested the need for an assessment of the library's space needs. J. Scherer proposed closely defining
the scope of the project before estimating the cost of such an assessment. Involving the public, analyzing evolving
technology, defining changing public expectations, and determining the next round of innovations are all
components of a new study. MS&R could assist an internal committee with some of these tasks. Scherer is
involved in a number of projects in this area which could bring down his consulting costs. His membership in the
International Federation of Library Associations gives him insight into library trends. Staff will prepare a cost
estimate for the next board meeting.
III. Health Insurance Rate Increases — United Health Care: S. Davis noted the large rate increase (almost 50%)
proposed by United HealthCare. FPL's broker negotiated the increase to less than 25%. Plan changes agreed to by
the city of Fayetteville, including higher deductibles and out-of-pocket maximums, further reduced the increase to
14%. In addition to developing an equitable plan for sharing this increased cost with employees, FPL is planning for
the implementation of the Patient Portability and Affordable Care Act (PPACA). Davis noted the discrepancy in
healthcare premiums between FPL's 30 hour employees and 40 hour employees. The PPACA defines full-time as
employees working 30 or more hours per week — thus FPL has moved to make premiums for these two groups
more equal. Also, premiums must pass an affordability test defined as no more than 9.5% of an employee's W2
income. The rates proposed in the third option of the memo to the board accomplish these changes and is the
option recommended by staff for approval. B. Boudreaux moved to approve the third option; M. Rice seconded.
All voted AYE.
IV. Draft 2013 Budget: Staff had a lot of input identifying library needs for 2013. The budget includes $25,000 for
humanities programming using NEH funds anticipated to be granted by the Foundation as pledges materialize. It
would pull $30,000 from one of FPL's 4 investment funds, the Furniture and Equipment Fund, established to
replace furniture as it wears out. State aid, set by the Arkansas legislature, has not been announced but is
expected to be no less than in 2012. Staff will determine how Arsaga's rent was established and will have detail on
PTO and ESL payout and accrual for the next board meeting. The draft contains $70,500 for performance-based
raises and $26,000 for health insurance increases. The marketing budget has been increased to $26,400. The city
will not be setting its budget until November. No action is required by the board of trustees at this time.
V. Gala Update: Attendance has increased from 400 to 504. Additional tables will be in the children's library and
Vista will provide additional viewing in this area, By consensus, the board gave the Executive Director the
prerogative to open late, be closed the day after the event, keep sections of the library closed, etc. A letter will go
out with the ticket explaining parking, event schedule, drop off locations, and the part of the ticket cost that is tax
deductible. All board members are invited to the Lindt Chocolate reception hosted by Jim and Nancy Blair. Legacy
Blues is holding an after party, the DVD's cover has been designed by Sean Fitzgibbon, and additional viewings are
being scheduled for those who can't make the gala. AETN will show the video statewide at a time determined by
the executive director. Itis possible that NPR will take it nationwide.
VI. Adjournment: D. Ferritor moved to adjourn; M. Rice seconded. All voted AYE. Meeting adjourned at 5:35 pm.
\
5
D. Fidelity bond: S. Davis has determined that FPL takes in $250,000 in cash, checks and credit cards yet has no fidelity
bond. The State Governmental Bonding Board denied our request for coverage. However, Region's Insurance offers a
$25,000 bond with a $1000 deductible for an annual premium of $400. M. Rice moved to authorize the purchase of a
$25,000 fidelity bond from Region's Insurance; B. Boudreaux seconded. All voted AYE.
E. Use of P -Cards for Library Purchases: S. Davis described the library's procedure for the use P -Cards; no motion required.
F. Space planning needs assessment: In a series of charts, D. Johnson demonstrated the library is reaching capacity in many
areas including collection size, program attendance, meeting room use, circulation per capita, and computer access. He
suggested exploring options for expansion which could include building within FPL's existing foot print, constructing an
additional building on the grounds of the soon -to -be -closed City Hospital, or building a branch elsewhere in the city.
G. Additional board meeting: The board authorized a board meeting on September 17 at 4 pm to consider 3 items: space
needs, health insurance premium increases, and the draft budget.
VII. Executive Session: D. Ferritor moved to enter into executive session to conduct a follow-up to the Executive Director's 3 -
month performance evaluation; M. Rice seconded. All voted AYE. Executive session began at 5:30 pm. M. Rice moved to
come out of executive session and return to regular session; B. Boudreaux seconded. All voted AYE. Regular session
recommenced at 5:52 pm. No action taken.
VRI. Adjournment: B. Boudreaux moved to adjourn; M. Rice seconded. All voted AYE. Meeting adjourned at 5:53 pm.
6
FAYETTEVILLE PUBLIC LIBRARY
Key Upcoming Events — December 2012 & January 2013
Children and Teen Winter Break Events
Artsy Crafty Holiday Cheer
Friday, December 14, loam — Noon
Brian & Terri Kinder Christmas Concert
Saturday, December 15, 10:30 am
How the Grinch Stole Christmas
Hear the popular holiday story read by Sam Von Bose as the Grinch.
Saturday, December 22, 10:30 am
Family Movie Fest
Enjoy a movie with the whole family each day at 2:OOpm!
December 21, 26, 27, & 28th
Atari to xBox: Retro Gaming
Tuesday, December 18, 4 — 7:OOpm
Free Flix Before Six!
Watch the hilarious Will Ferrell in ELF!
Wednesday, December 19, 5:30 pm
Silent Library: Year in Review
Play the poplar Japanese game show — quietly, of course.
Thursday, December 27, 5:00 pm
Children's will take a programming break, December 31 — January 13`h
0 FAYETTEVILLE PUBLIC LIBRARY
Strategic Plan Progress Report
October -November 2012
Purpose: We inspire imagination and foster learning.
I. Programs & Services: We offer inspiring and relevant programs and services that engage the community's curiosity,
provide opportunities for education and self-improvement, and serve as the gateway to the library by addressing the
diverse needs and interests of our community.
a. Programs
Hosted gala premier of Up Among the Hills documentary film and 7 additional screenings.
Hosted 9th annual Gathering of the Groups featuring Pulitzer Prize winning author David Shipler.
Hosted authors Tim Ernst, Roy Reed, and Crescent Dragonwagon
v Hosted Period of Adjustment Artist Forum in partnership with TheatreSquared and 2 PBS Community
Cinema films in partnership with AETN
v. Screened The Art of Crystal Bridges documentary in partnership with Crystal Bridges and Beyond the
Holocaust in partnership with UA.
vi. Hosted grant writing class led by Foundation Center instructor (funded by Walmart Foundation).
vii. Hosted 2 genealogy classes, 2 computer classes, Banned Books movie screenings, and 3 monthly
library book clubs.
viii. Hosted special youth events including CD Halloween release party, UA Gymbacks, Wanderer Roll Out
party, creative writing classes, Homework Helpers and Smart Play, My Way parenting series.
ix. Hosted special teen events including National Gaming Day, Zombie make-up tutorial and teen
participation in the Lights of the Ozarks parade.
x. Continued storytimes 5 days a week, weekly after school workshops for elementary students and
regular monthly teen events.
b. Services
i. Collected food for CEO during Food for Fees week, participated in city's food drive, proctored 9 tests.
c. Quality
Provided 5 individual consultations for the Nonprofit Resource Center and 4 individual sessions on
checking out library eBooks.
d. Relevance
II. Collections: We will build and support collections that inspire the community with the resources they need to explore
topics of personal interest and continue to learn throughout their lives.
a. Satisfy your curiosity
i. Checked collection against National Book Award Winners and Publisher Weekly's best of 2012.
Purchased patron requests and high demand materials from local Barnes and Noble.
Supplemented media collections with Tribeca Film Institute and ALA's America's Music series.
iv. Purchased Freegal Music, a download music service for free use by patrons.
b. Inspire learning/imagination
III. Access: We will build and expand the ease and convenience of the library experience through virtual and physical reach
to all in the community, reflecting the FPL welcoming, convening and destination culture.
a. Browsability
b. Outreach partnerships.
i. Created 60+ minor database cards for Upward Bound students.
i. Conducted outreach at Life Styles and led a tour of Life Style students at FPL.
i. Attended Family Day at Head Start center.
iv. Gave volunteer presentation to UA English Honors group.
v. Continued planning 2013 Literary Festival with UA, Public Schools and Education Foundation.
vi. Continued youth outreach to Fayettevill8 Schools, Head Start and Richardson Center.
vii. Continued Lending Hands to homebound patrons at Butterfield and Culpepper Place.
c. Virtual
d. Physical
'1. People: We create and maintain a culture of excellence by supporting and inspiring our staff, boards, and volunteers.
a. Staff
Presented at the Polaris User's Group conference in Syracuse NY.
Presented at the ArLA conference in Springdale AR. (11 librarians, 7 presentations)
IT Director chaired annual Polaris Uses Group conference in Syracuse, NY
b. Boards
i. Made nearly $2000 at Friends of FPL book sale.
c. Volunteers
Provided 1023 volunteer hours for gala, 133 volunteers attended.
V. Facility: Our consumer -friendly, sustainable facility will be safe, accessible, clean and support the requirements for
quality programs, services and collections.
a. Maintenance
i. Prepped for gala, began using Govdeals.com for FPL surplus, polished level 300 bathrooms
b. Technology
i. Upgraded ILS to latest Polaris 4.1 64-bit build and upgraded Quickbooks to Enterprise 13.0
c. Safety/Security
VI. Communication: We maximize ongoing communication to increase awareness of the library and understanding of its
value and impact on the community.
a. Marketing plan
b. Public awareness campaign
i. Coordinated media coverage of gala including live coverage on KNWA news with Dan Scoff.
Voted Best Library by Citiscapes 2011-2013 and Best Library by NWAT readers
Made 18 posts on news websites or blogs regarding FPL activities or programs.
iv. Coordinated Screenvison ad for Up Among the Hills Holiday Gift at Razorback Cinema.
c. Operationalize brand
i. Placed thank you ad to gala sponsors and donors in NWAT; appeared 10/21/12.
Taped three segments for KXNW "Eye Opener" morning show promoting children's programming,
Friends book sale, and author visits from Crescent Dragonwagon and Roy Reed.
Organized author appearances for Roy Reed on KXNW and KNWA prior to his visit.
iv. Developed ad for State Championship Football game on11/29 — GO BULLDOGS!
d. Public relations
Met with KFSM/KXNW to establish monthly library spot on morning show "Eye Opener".
Met with SWEPCO about promoting "Rebate Education and Savings" to community members.
Partnered with Walton Arts Center to display Shrek cast shoes in Children's library.
iv. Partnered with Uptown Eyes to collect used prescription eyewear for the "Hope Event".
v. Held press conference with Feed Fayetteville announcing success of Food for Fees Week.
vi. Partnered with American Red Cross on Holiday Mail for Heroes card signing event.
vii. Planned partnership with Fayetteville Visitor Bureau on First Thursday events in 2013 and
establishing FPL as tour stop for group tours in 2013.
e. Website
i. Created sales campaign for Black Friday and holiday season of Up Among the Hills DVD
VII. Funding: As good stewards of the public trust, we will pursue diverse, sustainable funding.
a. Coordinated FPL's first-ever gala and film premier to celebrate the successful completion of the NEH.
b. Met (via phone) with NEH representative to coordinate final report and final fundraising efforts.
c. Worked with local agency on 2013 Foundation marketing efforts.
d. Distributed end of the year pledge payment reminders to donors.
e. Coordinated 415 quarter Roberta Fulbright Society booklet creation and distribution.
f. Coordinated art showing and reception for local artist Sharon Killian.
g. Met with two local foundations about 2013 funding.
9
IcN 08-F
M1'
w
gi
cn
a
icosiLos,Ei'l.
M
Ai: In:21
10
FAYETTEVILLE PUBLIC LIBRARY
Memo
To: Board of Trustees, Fayetteville Public Library
Through: David Johnson, Executive Director
From: Stephen Davis, Accounting & HR Manager
Date: November 25, 2012
Re: PTO and Sick Accruals
Background
During the 2011 annual audit, the Library's auditors expressed a concern over the number of Library
employees who have PTO balances of 500 hours or more. During a discussion with the Board of Trustees,
Staff was tasked to develop policy revisions for PTO and sick leave accruals with the goal of bringing
Library policies more in line with other governmental entities located within Fayetteville (City of Fayetteville,
University of Arkansas, Washington County).
Fayetteville Public Library differs from the City of Fayetteville, University of Arkansas and Washington
County in that the Library is open 68 hours weekly. This distinction impacts PTO accrual because some of
our staff is expected to work days when the other governmental entities are off work (Veterans Day, etc),
Wednesday evenings and Sunday afternoons. The Library does close Wednesday before Thanksgiving at
5 and on Easter Sunday so our PTO accrual accommodates these added times when employees could be
on duty but are not able to work due to the Library being closed.
Discussion
The primary purpose of PTO is to provide a means for employees to take time away from work to refresh
and recharge. The tables below provide an overview of the current PTO and Sick policy.
Paid Time Off Table
Years of service
PTO accrual
Group 1(40 hour)
(in working days)
PTO accrual
Group 11 (30 hour)
(in working days)
PTO accrual
Group 111 (20 hour)
(in working days)
Maximum PTO Accrual
(in hours)
Up to 3 years
26.5
13.25
10
424
After 3 years
28.5
14.25
10
456
After 5 years
31.5
15.75
10
504
After 7 years
33.5
16.75
10
536
After 10 years
36.5
18.25
10
584
1
11
Sick Leave Table
Employee
Groups
Sick accrual
rates
(in hours/month
worked)
%Sick leave paid at separation
40-100 Hours
100-300 hours
301-480 hours
Group 1
employees
4
25%
35%
50%
Group 2
employees
2
25%
35%
50%
Group 3
employees
0
0
0
0
Internal Equity
The tables preceding reveal that while Group 2 employees work 34 time, they accrue PTO and Sick Leave
at '4 the accrual rate of Group 1 employees. Group 3 employees accrue PTO only and the PTO accrual is
limited to 10 days per year.
Comparative Data
In order to place the Library's PTO (vacation) and sick policy and payouts in context with other similar
governmental entities located in Fayetteville staff reviewed vacation and sick pay policies in place by the
City of Fayetteville, University of Arkansas and Washington County. The table below summarizes the
results of the review based on a seven (7) year employee for each organization.
Annual Accruals/ Employer
Sick Pay
Annual PTO for FPL/ Vacation
(less holidays and based on a
7 year employee)
Total Sick & PTO (Vacation)
Holidays/ YR
Maximum vacation payout at
termination (7 year employee)
Maximum sick payout at
termination
Current Conditions
Fayetteville
Public City of Washington
Library Fayetteville County
48 96 96
UA
96 •
172 120 80 144 ••
220 216 176 240
88 96 96 96
536 288 144 240 •••
based on a
240 480 0 sliding scale
Up -to 50 Eligible for
hours/Year partial buy -
PTO/ Vacation buy-back during at 50% of back after 30
continued employment. the value years
• Page 2
0 0
• Capped at 960 hours each year; cannot have more than 960 hours at Jan 1
• • Capped at 240 hours; cannot have more than 240 hours at Jan 1
• • • Allows up -to a 60 day payout in case of death
12
There are two (2) major conclusions that can be drawn from this data:
Conclusion 1: The combination of annual PTO (vacation) and sick pay accrual between the
Library and the other agencies is comparable: UA allows 240 hours annually, FPL
allows 220 hours annually, City of Fayetteville allows 216 hours annually and
Washington allows 176 hours annually.
Conclusion 2: The combination of PTO and Sick payout is comparable between the City of
Fayetteville and the Library: City of Fayetteville — 768 hours; Library - 776 hours.
Both the City and Library pay on separation policies are in excess of the payouts
available from either Washington County — 144 hours or University of Arkansas —
240 vacation hours and a maximum of $7,500 of sick pay buy-back.
An additional factor to consider is that the Library paid long-term disability policy has 180 day exclusion
before the policy begins making payments to employees who suffer from either an illness or injury that
would prevent them from working. Because PTO can be used to provide a bank of hours for employees
who exhaust their sick pay, it appears that the Library's policy was constructed to provide a safety net for
employees in the event they have a long-term illness or injury that prevents them from working. The
calculated hours that would be needed to carry an employee through the 180 day period would be 26
weeks or 1,040 hours.
Options
1. The Library Board of Trustees could establish a new maximum PTO balance of 320 hours and
offer to buy-back all hours above the new maximum over a 24 month period at full value. The
reason for 320 hours is that the majority of Library employees work a number of holidays that other
governmental entity employees are off on paid holiday time.
2. The Library Board of Trustees could authorize a one-time purchase of PTO hours in excess of 320
hours for those employees who have PTO balances in excess of this threshold. The cost of
implementing this change is approximately $49,950.
3. The Library Board of Trustees could set a new maximum PTO balance, not allow any further PTO
accrual and allow employees with PTO balances in excess of 320 hours up -to 24 months to take
the excess PTO time or lose all the PTO hours above 320.
4. The Library Board of Trustees could amend the PTO buy-back from 50% of value for 50 hours
annually to 100% of value for 50 hours annually. Employees with PTO balances currently have
very little incentive to cash in PTO and take a 50% reduction in value when they could receive full
value by either taking time off or being paid for the time upon separation from service:
5. The Library Board of Trustees could authorize the transfer of a portion of existing PTO balances to
a Sick pay balance to reduce the financial exposure to the Library for those employees with PTO
balances near or above 500 hours.
Annual Financial Impact of PTO and Sick Pay Banks
The financial impact on FPL of a PTO payout involves three (3) distinct financial areas: the initial impact will
be on the operating budget in the month the PTO bank is paid out; the second impact occurs at year-end
when FPL computes the current value of the PTO bank and develops a journal entry that records the
difference between the total values of earned PTO at December 31, 2012 compared to the total value of
PTO at December 31, 2011; and, the third impact is on making the cash payment. Following is an example
to illustrate the journal entry
® Page 3
13
Employee A earns $15.00/hour, has a PTO bank of 150 hours, leaves employment in July and receives
payment for the PTO hours. On December 31, 2011 Employee A eamed $14.50/hour and had a PTO
bank of 120 hours.
This illustration addresses the impact on the operating budget and Balance Sheet liabilities. On
December 31, 2011 FPL recorded a PTO liability of $1,740.00. In July FPL paid the employee $2,250.00.
This $2,250.00 is charged to the current budget. On December 31, 2012 FPL develops a joumal entry to
record the current (2012 liability) for PTO which in the case of Employee A would reduce PTO expenses by
$1,740.00, the amount accrued at December 31, 2011.
This illustration addresses the impact on cash. Employee A leaves employment with FPL and receives
a check for $2,250.00. Cash is reduced to make this payment.
Recommendation
It is Staffs recommendation that the Fayetteville Public Library Board of Trustees:
1. Increase monthly PTO and Sick pay accrual for Group 2 (30 hour) employees to Y. of the accruals
of Group 1 employees:
2. Implement a new maximum PTO Balance of 320 hours and allow employees to choose between:
a. Taking 24 months to use the PTO hours above 320 with no additional PTO accrual until the
PTO balance is below 320;
b. Transferring the PTO hours above 320 to their sick pay bank; or,
c. Cashing out the excess hours at full value. Some employees may have the option to add
the payout above 320 hours to their retirement plan as a one-time contribution and minimize
the income tax consequences they will encounter.
3. Change the PTO buy-back policy from 50% to 100% value for the 50 hours that can be purchased
back on an annual basis; and
4. Adopt a policy that requires all Group 1 and Group 2 employees to take a full work week (Group 1
— 40 hours and Group 2 — 30 hours) off on an annual basis.
• Page 4
14
RESOLUTION OF APPRECIATION
,✓HEREAS, the firm of Davis, Clark, Butt, Carithers & Taylor, PLC dedicated an exceptionally large
number of hours and expertise representing the Fayetteville Public Library in its legal action related to
the Dunaway estate; and
WHEREAS, Jack Butt, Will Clark, and Brenda Reynolds were the lead team representing the
Fayetteville Public Library in its legal action related to the Dunaway estate; and
WHEREAS, Jack Butt and Will Clark provided valuable advice to those involved with the trial; and
WHEREAS, Jack Butt provided timely, articulate updates to the Board of Trustees of the
Fayetteville Public Library, the Board of Directors of the Fayetteville Public Library Foundation, and
the Executive Director of the Fayetteville Public Library; and
WHEREAS, Jack Butt and Will Clark made all of these efforts without any remuneration; and
WHEREAS, Jack Butt, Will Clark and Brenda Reynolds' diligence, hard work, and integrity resulted
in a favorable outcome for Fayetteville Public Library and the taxpayers of Fayetteville;
NOW, THEREFORE, BE IT RESOLVED, that the trustees of the Fayetteville Public Library
'oard meeting in regular session this 17`" day of December, 2012 at Fayetteville, Arkansas express
their individual and collective gratitude and respect for Jack Butt and the entire firm of Davis, Clark,
Butt, Carithers & Taylor, PLC and
BE IT FURTHER RESOLVED, that this action shall be entered into the permanent records of
the Fayetteville Public Library and that this resolution shall serve as evidence that the Fayetteville
Public Library Board of Trustees, Executive Director, and Library Staff hereby express their sincere
appreciation to Davis, Clark, Butt, Carithers & Taylor, PLC and the lead team of Jack Butt, Will Clark,
and Brenda Reynolds.
Suzanne Clark, President David Johnson, Executive Director
Fayetteville Public Library Board of Trustees Executive Director, Fayetteville Public Library
FAYETTEVILLE PUBLIC LIBRARY
15
FAYETTEVII.r.F PUBLIC LIBRARY
Memo
To: Board of Trustees, Fayetteville Public Library
Through: David Johnson, Executive Director
From: Stephen Davis, Accounting & HR Manager
Date: December 10, 2012
Re: Audit Contract Approval
Background
Fayetteville Public Library (FPL) financial statements are audited by independent auditors on an
annual basis and then included in the City of Fayetteville annual financial report. FPL and the
City of Fayetteville have been audited by BKD for the past 10 years. During 2012 the City of
Fayetteville went through a professional services selection process for auditing services for 2012-
2016 and selected Grant Thornton.
At the conclusion of the City process FPL was advised to enter our own audit service
procurement process for 2012-2016.
Analysis
FPL assembled a selection committee comprised of Maylon Rice, Tony Uth, Vicki Deaton,
Denise Wax and Sharon Daniel. FPL developed a RFP, advertised and received qualified
responses from the following firms: BKD, LLP; Grant Thomton, LLP; Przybysz Associates; Beall
Barclay & Company, PLC; and, EGP, PLLC.
After review of the responses, the selection committee selected BKD for audit services for FPL.
BKD proposed fees for the 2012 audit of FPL are $17,900.
It is expected that the Foundation will also engage BKD for their audit. BKD is expected to on-
site to begin field work the week of February 11, 2013.
Recommendation
FPL staff recommends the Board of Trustees accept the recommendation of the Independent
Audit Selection Committee and authorize the Executive Director to sign the agreement and
engagement letter with BKD, LLP for the 2012 audit.
16
ecu.
;PAs & Advisors
400 W. Capitol Avenue, Suite 2500
P.0. Dox 3667
Little Rock, AR 72203-3667
501.372.1040 Fax 501.372.1250 www.bkd.coo,
December 6, 2012
Board of Trustees
Mr. David Johnson, Executive Director
Fayetteville Public Library
401 W. Mountain Street
Fayetteville, Arkansas 72701
We are pleased to confirm the arrangements of our engagement and the nature of the services we
will provide to the Fayetteville Public Library.
ENGAGEMENT OBJECTIVES AND SCOPE
We will audit the basic financial statements of the Fayetteville Public Library as of and for the
year ended December 31, 2012, and the related notes to the basic financial statements.
Our audit will be conducted with the objective of expressing an opinion on the financial
statements.
OUR RESPONSIBILITIES
We will conduct our audit in accordance with auditing standards generally accepted in the United
States of America (GAAS). Those standards 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 fraud or error. An audit involves performing
procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error.
An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating
the overall presentation of the financial statements.
Because of the inherent limitations of an audit, together with the inherent limitations of internal
control, an unavoidable risk that some material misstatements may not be detected exists, even
though the audit is properly planned and performed in accordance with GAAS.
17
experience BKD
rax:$Y
MEMBER •°
GLOBAL ALLIANCE OF
INDEPENDENT 41005
-2 -
Board of Trustees
Mr. David Johnson, Executive Director
Fayetteville Public Library
In making our risk assessments, we consider internal control relevant to the entity's preparation
and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. However, we will communicate to you in writing
concerning any significant deficiencies or material weaknesses in internal control relevant to the
audit of the financial statements that we have identified during the audit. Also, in the future,
procedures could become inadequate because of changes in conditions or deterioration in design
or operation. Two or more people may also circumvent controls, or management may override
the system.
We are available to perform additional procedures with regard to fraud detection and prevention
at your request, subject to completion of our normal engagement acceptance procedures. The
actual terms and fees of such an engagement would be documented in a separate letter to be
signed by you and BKD.
Andy Richards, Partner is responsible for supervising the engagement and authorizing the
signing of the report or reports.
We will issue a written report upon completion of our audit of the Fayetteville Public Library's
financial statements. Our report will be addressed to the board of trustees of the Fayetteville
Public Library. We cannot provide assurance that an unmodified opinion will be expressed.
Circumstances may arise in which it is necessary for us to modify our opinion, add an emphasis
of matter or other matter paragraph(s), or withdraw from the engagement. If we discover
conditions that may prohibit us from issuing a standard report, we will notify you as well. In
such circumstances, further arrangements may be necessary to continue our engagement.
YOUR RESPONSIBILITIES
Our audit will be conducted on the basis that management and, where appropriate, those charged
with governance acknowledge and understand that they have responsibility:
a. for the preparation and fair presentation of the financial statements in accordance with
accounting principles generally accepted in the United States of America;
b. for the design, implementation and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; and
18
-3 -
Board of Trustees
Mr. David Johnson, Executive Director
Fayetteville Public Library
c. to provide us with
i. access to all information of which management is aware that is relevant to the
preparation and fair presentation of the financial statements such as records,
documentation and other matters;
additional information that we may request from management for the purpose
of the audit; and
iii. unrestricted access to persons within the entity from whom we determine it
necessary to obtain audit evidence.
As part of our audit process, we will request from management and, where appropriate, those
charged with governance, written confirmation acknowledging certain responsibilities outlined in
this engagement letter and confirming:
• The availability of this information
• Certain representations made during the audit for all periods presented
• The effects of any uncorrected misstatements, if any, resulting from errors or fraud
aggregated by us during the current engagement and pertaining to the latest period
presented are immaterial, both individually and in the aggregate, to the financial
statements taken as a whole
OTHER SERVICES
We will provide you with the following nonattest services:
• Preparing a draft of the financial statements and related notes
In addition, we may perform other services for you not covered by this engagement letter. You
agree to assume full responsibility for the substantive outcomes of the services described above
and for any other services that we may provide, including any findings that may result. You also
acknowledge that those services are adequate for your purposes and that you will establish and
monitor the performance of those services to ensure that they meet management's objectives.
Any and all decisions involving management functions related to those services will be made by
you, and you accept full responsibility for such decisions. We understand that you will designate
a management -level individual to be responsible and accountable for overseeing the performance
of those services, and that you will have determined this individual is qualified to conduct such
oversight.
19
-4 -
Board of Trustees
Mr. David Johnson, Executive Director
Fayetteville Public Library
ENGAGEMENT FEES
Our fees will be based on time expended including additional time for implementation of new
accounting standards discussed below. In addition, you will be billed travel costs and fees for
services from other professionals, if any, as well as an administrative fee of 3% to cover items
such as copies, postage and other delivery charges, supplies, technology -related costs such as
computer processing, software licensing, research and library databases and similar expense
items. The fee for our services will not exceed $17,900.
Our pricing for this engagement and our fee structure are based upon the expectation that our
invoices will be paid promptly. We will issue progress billings during the course of our
engagement, and payment of our invoices is due upon receipt. Interest will be charged on any
unpaid balance after 30 days at the rate of 10% per annum.
The following new accounting standards are effective for your fiscal year ending December 31,
2012. The impact of these standards on your financial statements will depend on your facts and
circumstances. You should evaluate the effect of these standards well in advance of your fiscal
year to obtain any additional information necessary and effectively implement them. The new
standards and their effective dates are as follows:
Years beginning after June 15, 2011
GASB Statement No. 64, Derivative Instruments — Application of Hedge
Accounting Termination Provisions — An Amendment of GASB Statement No. 53
(Issued June 2011)
Years beginning after December 15, 2011
• GASB Statement No. 60, Accounting and Financial Reporting for Service
Concessions Arrangements (Issued November 2010
• GASB Statement No. 62, Codification of Accounting and Financial Reporting
Guidance contained in Pre -November 30, 1989 FASB and AICPA Pronouncements
(Issued December 2012)
• GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources,
Deferred Inflows of Resources, and Net Position (Issued June 2011)
Our engagement fee does not include any time for post -engagement consultation with your
personnel or third parties, consent letters and related procedures for the use of our reports in
offering documents, inquiries from regulators or testimony or deposition regarding any
subpoena. Charges for such services will be billed separately.
20
-5 -
Board of Trustees
Mr. David Johnson, Executive Director
Fayetteville Public Library
Our fees may also increase if our duties or responsibilities are increased by rulemaking of any
regulatory body or any additional new accounting or auditing standards. We will consult with
you in the event any other regulations or standards are issued that may impact our fees.
If our invoices for this or any other engagement you may have with BKD are not paid within 30
days, we may suspend or terminate our services for this or any other engagement. In the event
our work is suspended or terminated as a result of nonpayment, you agree we will not be
responsible for any consequences to you.
OTHER ENGAGEMENT MATTERS AND LIMITATIONS
Our workpapers and documentation retained in any form of media for this engagement are the
property of BKD. We can be compelled to provide information under legal process. In addition,
we may be requested by regulatory or enforcement bodies to make certain workpapers available
to them pursuant to authority granted by law or regulation. You agree that we have no legal
responsibility to you in the event we provide such documents or information.
You agree to indemnify and hold harmless BKD and its personnel from any claims, liabilities,
costs and expenses relating to our services under this agreement attributable to false or
incomplete representations by management, except to the extent determined to have resulted
from the intentional or deliberate misconduct of BKD personnel.
You agree that any dispute regarding this engagement will, prior to resorting to litigation, be
submitted to mediation upon written request by either party. Both parties agree to try in good
faith to settle the dispute in mediation. The American Arbitration Association will administer
any such mediation in accordance with its Commercial Mediation Rules. The results of the
mediation proceeding shall be binding only if each of us agrees to be bound. We will share any
costs of mediation proceedings equally.
Either of us may terminate these services at any time. Both of us must agree, in writing, to any
future modifications or extensions. If services are terminated, you agree to pay us for time
expended to date. In addition, you will be billed travel costs and fees for services from other
professionals, if any, as well as an administrative fee of 3% to cover items such as copies,
postage and other delivery charges, supplies, technology -related costs such as computer
processing, software licensing, research and library databases and similar expense items.
If any provision of this agreement is declared invalid or unenforceable, no other provision of this
agreement is affected and all other provisions remain in full force and effect.
21
-6 -
Board of Trustees
Mr. David Johnson, Executive Director
Fayetteville Public Library
We may from time to time utilize third -party service providers, e.g., domestic software
processors or legal counsel, or disclose confidential information about you to third -party service
providers in serving your account. We remain committed to maintaining the confidentiality and
security of your information. Accordingly, we maintain internal policies, procedures and
safeguards to protect the confidentiality of your information. In addition, we will secure
confidentiality agreements with all service providers to maintain the confidentiality of your
information. In the event we are unable to secure an appropriate confidentiality agreement, you
will be asked to provide your consent prior to the sharing of your confidential information with
the third -party service provider.
We will, at our discretion or upon your request, deliver financial or other confidential
information to you electronically via email or other mechanism. You recognize and accept the
risk involved, particularly in email delivery as the Internet is not necessarily a secure medium of
communication as messages can be intercepted and read by those determined to do so.
You agree you will not modify these documents for internal use or for distribution to third
parties. You also understand that we may on occasion send you documents marked as draft and
understand that those are for your review purpose only, should not be distributed in any way and
should be destroyed as soon as possible.
This engagement letter represents the entire agreement regarding the services described herein
and supersedes all prior negotiations, proposals, representations or agreements, written or oral,
regarding these services. It shall be binding on heirs, successors and assigns of you and BKD.
If you intend to include these financial statements and our report in an offering document at
some future date, you agree to seek our permission to do so at that time. You agree to provide
reasonable notice to allow sufficient time for us to perform certain additional procedures. Any
time you intend to publish or otherwise reproduce these financial statements and our report and
make reference to our firm name in any manner in connection therewith, you agree to provide us
with printers' proofs or masters for our review and approval before printing or other
reproduction. You will also provide us with a copy of the final reproduced material for our
approval before it is distributed. Our fees for such services are in addition to those discussed
elsewhere in this letter.
You agree to notify us if you desire to place these financial statements or our report thereon on
an electronic site. You recognize that we have no responsibility as auditors to review
information contained in electronic sites.
Any time you intend to reference our firm name in any manner in any published materials,
including on an electronic site, you agree to provide us with draft materials for our review and
approval before publishing or posting such information.
22
-7 -
Board of Trustees
Mr. David Johnson, Executive Director
Fayetteville Public Library
BKD is a registered limited liability partnership under Missouri law. Under applicable
professional standards, partners of BKD, LLP have the same responsibilities as do partners in a
general accounting and consulting partnership with respect to conformance by themselves and
other professionals in BKD with their professional and ethical obligations. However, unlike the
partners in a general partnership, the partners in a registered limited liability partnership do not
have individual civil liability, directly or indirectly, including by way of indemnification,
contribution, assessment or otherwise, for any debts, obligations or liabilities of or chargeable to
the registered limited liability partnership or each other, whether arising in tort, contract or
otherwise.
Please sign and return the attached copy of this letter to indicate your acknowledgement of, and
agreement with, the arrangements for our audit of the financial statements including our
respective responsibilities. If the signed copy you return to us is in electronic form, you agree
that such copy shall be legally treated as a "duplicate original" of this agreement.
BKD, LLP
�iG..l7, GGA
Acknowledged and agreed to on behalf of
FAYETTEVILLE PUBLIC LIBRARY
BY
(Name & Title - Member of Those
Charged with Governance)
DATE
BY
David Johnson, Executive Director
DATE
23
Clifton
Gunderson LLP
Certified Public Accountants & Consultants
System Review Report
To the Partners of BKD, LLP
and the AICPA National Peer Review Committee
We have reviewed the system of quality control for the accounting and auditing practice of BKD,
LLP (the Firm) applicable to non -SEC issuers in effect for the year ended May 31, 2011. Our
peer review was conducted in accordance with the Standards for Performing and Reporting on
Peer Reviews established by the Peer Review Board of the American Institute of Certified
Public Accountants. The Firm is responsible for designing a system of quality control and
complying with it to provide the Firm with reasonable assurance of performing and reporting in
conformity with applicable professional standards in all material respects. Our responsibility is to
express an opinion on the design of the system of quality control and the Firm's compliance
therewith based on our review. The nature, objectives, scope, limitations of, and the procedures
performed in a System Review are described in the standards at www.aicpa.org/prsummary.
As required by the standards, engagements selected for review included engagements
performed under the Government Auditing Standards; audits of employee benefit plans, audits
of carrying broker dealers and audits performed under FDICIA.
In our opinion, the system of quality control for the accounting and auditing practice applicable
to non -SEC issuers of BKD, LLP in effect for the year ended May 31, 2011, has been suitably
designed and complied with to provide the Firm with reasonable assurance of performing and
reporting in conformity with applicable professional standards in all material respects. Firms can
receive a rating of pass, pass with deficiency(ies) or fail. BKD, LLP has received a peer review
rating of pass.
August 17, 2011
10700 Re.rennb Dr, Suite 200
Mihtmkee, l0inmuln 53226
eel: 414.476.1880
fax 414.476.7286
www.cliftoncpa.com
SLA
24
HLB
international
BKDLLP
;PAs & Advisors
400 W. Capitol Avenue, Suite 2500
7O. Box 3667
Little Rock, AR 72203-3667
501,372.1040 Fax 501.372.1250 www.bkd.coo,
December 7, 2012
Board of Directors
David Johnson, Executive Director
of Fayetteville Public Library
Fayetteville Public Library Foundation
401 W. Mountain Street
Fayetteville, Arkansas 72701
We are pleased to confirm the arrangements of our engagement and the nature of the services we
will provide to the Fayetteville Public Library Foundation.
ENGAGEMENT OBJECTIVES AND SCOPE
We will audit the basic financial statements of the Fayetteville Public Library Foundation as of
and for the year ended December 31, 2012, and the related notes to the basic financial
statements.
Our audit will be conducted with the objective of expressing an opinion on the financial
statements.
OUR RESPONSIBILITIES
We will conduct our audit in accordance with auditing standards generally accepted in the United
States of America (GAAS). Those standards 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 fraud or error. An audit involves performing
procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error.
An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating
the overall presentation of the financial statements.
Because of the inherent limitations of an audit, together with the inherent limitations of internal
control, an unavoidable risk that some material misstatements may not be detected exists, even
though the audit is properly planned and performed in accordance with GAAS.
25
experience BKD
f raxit ,
MEMBER =°
GLOBAL 41.6100CE OF
105070110011 FIRMS
-2 -
Board of Directors
David Johnson, Executive Director
of Fayetteville Public Library
Fayetteville Public Library Foundation
In making our risk assessments, we consider internal control relevant to the entity's preparation
and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. However, we will communicate to you in writing
concerning any significant deficiencies or material weaknesses in internal control relevant to the
audit of the financial statements that we have identified during the audit. Also, in the future,
procedures could become inadequate because of changes in conditions or deterioration in design
or operation. Two or more people may also circumvent controls, or management may override
the system.
We are available to perform additional procedures with regard to fraud detection and prevention
at your request, subject to completion of our normal engagement acceptance procedures. The
actual terms and fees of such an engagement would be documented in a separate letter to be
signed by you and BKD.
Andy Richards, Partner is responsible for supervising the engagement and authorizing the
signing of the report or reports.
We will issue a written report upon completion of our audit of the Fayetteville Public Library
Foundation's financial statements. Our report will be addressed to the board of directors of the
Fayetteville Public Library Foundation. We cannot provide assurance that an unmodified
opinion will be expressed. Circumstances may arise in which it is necessary for us to modify our
opinion, add an emphasis of matter or other matter paragraph(s), or withdraw from the
engagement. If we discover conditions that may prohibit us from issuing a standard report, we
will notify you as well. In such circumstances, further arrangements may be necessary to
continue our engagement.
YOUR RESPONSIBILITIES
Our audit will be conducted on the basis that management and, where appropriate, those charged
with governance acknowledge and understand that they have responsibility:
a. for the preparation and fair presentation of the financial statements in accordance with
accounting principles generally accepted in the United States of America;
b. for the design, implementation and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; and
26
-3 -
Board of Directors
David Johnson, Executive Director
of Fayetteville Public Library
Fayetteville Public Library Foundation
c. to provide us with
i. access to all information of which management is aware that is relevant to the
preparation and fair presentation of the financial statements such as records,
documentation and other matters;
ii. additional information that we may request from management for the purpose
of the audit; and
iii. unrestricted access to persons within the entity from whom we determine it
necessary to obtain audit evidence.
As part of our audit process, we will request from management and, where appropriate, those
charged with governance, written confirmation acknowledging certain responsibilities outlined in
this engagement Letter and confirming:
® The availability of this information
® Certain representations made during the audit for all periods presented
• The effects of any uncorrected misstatements, if any, resulting from errors or fraud
aggregated by us during the current engagement and pertaining to the latest period
presented are immaterial, both individually and in the aggregate, to the financial
statements taken as a whole
OTHER SERVICES
We will provide you with the following nonattest services:
® Preparing a draft of the financial statements and related notes
® Preparing the federal Form 990, Return of Organization Exempt From Income Tax
In addition, we may perform other services for you not covered by this engagement letter. You
agree to assume full responsibility for the substantive outcomes of the services described above
and for any other services that we may provide, including any findings that may result. You also
acknowledge that those services are adequate for your purposes and that you will establish and
monitor the performance of those services to ensure that they meet management's objectives.
Any and all decisions involving management functions related to those services will be made by
you, and you accept full responsibility for such decisions. We understand that you will designate
a management -level individual to be responsible and accountable for overseeing the performance
of those services, and that you will have determined this individual is qualified to conduct such
oversight.
27
-4 -
Board of Directors
David Johnson, Executive Director
of Fayetteville Public Library
Fayetteville Public Library Foundation
ENGAGEMENT FEES
Our fees will be based on time expended including additional time for implementation of new
accounting standards discussed below. In addition, you will be billed travel costs and fees for
services from other professionals, if any, as well as an administrative fee of 3% to cover items
such as copies, postage and other delivery charges, supplies, technology -related costs such as
computer processing, software licensing, research and library databases and similar expense
items. Our fees will not exceed $12,700 for the audit services and $900 for the preparation of
federal Form 990.
Our pricing for this engagement and our fee structure are based upon the expectation that our
invoices will be paid promptly. We will issue progress billings during the course of our
engagement, and payment of our invoices is due upon receipt. Interest will be charged on any
unpaid balance after 30 days at the rate of 10% per annum.
The following new accounting standards are effective for your fiscal year ending December 31,
2012. The impact of these standards on your financial statements will depend on your facts and
circumstances. You should evaluate the effect of these standards well in advance of your fiscal
year to obtain any additional information necessary and effectively implement them. The new
standards and their effective dates are as follows:
Years beginning after June 15, 2011
• GASB Statement No. 64, Derivative Instruments — Application of Hedge
Accounting Termination Provisions — An Amendment of GASB Statement No. 53
(Issued June 2011)
Years beginning after December 15, 2011
• GASB Statement No. 60, Accounting and Financial Reporting for Service
Concessions Arrangements (Issued November 2010
• GASB Statement No. 62, Codification of Accounting and Financial Reporting
Guidance contained in Pre -November 30, 1989 FASB and AICPA Pronouncements
(Issued December 2012)
• GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources,
Deferred Inflows of Resources, and Net Position (Issued June 2011)
28
-5 -
Board of Directors
David Johnson, Executive Director
of Fayetteville Public Library
Fayetteville Public Library Foundation
Our engagement fee does not include any time for post -engagement consultation with your
personnel or third parties, consent letters and related procedures for the use of our reports in
offering documents, inquiries from regulators or testimony or deposition regarding any
subpoena. Charges for such services will be billed separately.
Our fees may also increase if our duties or responsibilities are increased by rulemaking of any
regulatory body or any additional new accounting or auditing standards. We will consult with
you in the event any other regulations or standards are issued that may impact our fees.
If our invoices for this or any other engagement you may have with BKD are not paid within 30
days, we may suspend or terminate our services for this or any other engagement. In the event
our work is suspended or terininated as a result of nonpayment, you agree we will not be
responsible for any consequences to you.
OTHER ENGAGEMENT MATTERS AND LIMITATIONS
Our workpapers and documentation retained in any form of media for this engagement are the
property of BKD. We can be compelled to provide information under legal process. In addition,
we may be requested by regulatory or enforcement bodies to make certain workpapers available
to them pursuant to authority granted by law or regulation. You agree that we have no legal
responsibility to you in the event we provide such documents or information.
You agree to indemnify and hold harmless BKD and its personnel from any claims, liabilities,
costs and expenses relating to our services under this agreement attributable to false or
incomplete representations by management, except to the extent determined to have resulted
from the intentional or deliberate misconduct of BKD personnel.
You agree that any dispute regarding this engagement will, prior to resorting to litigation, be
submitted to mediation upon written request by either party. Both parties agree to try in good
faith to settle the dispute in mediation. The American Arbitration Association will administer
any such mediation in accordance with its Commercial Mediation Rules. The results of the
mediation proceeding shall be binding only if each of us agrees to be bound. We will share any
costs of mediation proceedings equally.
Either of us may terminate these services at any time. Both of us must agree, in writing, to any
future modifications or extensions. If services are terminated, you agree to pay us for time
expended to date. In addition, you will be billed travel costs and fees for services from other
professionals, if any, as well as an administrative fee of 3% to cover items such as copies,
postage and other delivery charges, supplies, technology -related costs such as computer
processing, software licensing, research and library databases and similar expense items.
29
-6 -
Board of Directors
David Johnson, Executive Director
of Fayetteville Public Library
Fayetteville Public Library Foundation
If any provision of this agreement is declared invalid or unenforceable, no other provision of this
agreement is affected and all other provisions remain in full force and effect.
We may from time to time utilize third -party service providers, e.g., domestic software
processors or legal counsel, or disclose confidential information about you to third -party service
providers in serving your account. We remain committed to maintaining the confidentiality and
security of your information. Accordingly, we maintain internal policies, procedures and
safeguards to protect the confidentiality of your information. In addition, we will secure
confidentiality agreements with all service providers to maintain the confidentiality of your
information. In the event we are unable to secure an appropriate confidentiality agreement, you
will be asked to provide your consent prior to the sharing of your confidential information with
the third -party service provider.
We will, at our discretion or upon your request, deliver financial or other confidential
information to you electronically via email or other mechanism. You recognize and accept the
risk involved, particularly in email delivery as the Internet is not necessarily a secure medium of
communication as messages can be intercepted and read by those determined to do so.
You agree you will not modify these documents for internal use or for distribution to third
parties. You also understand that we may on occasion send you documents marked as draft and
understand that those are for your review purpose only, should not be distributed in any way and
should be destroyed as soon as possible.
This engagement letter represents the entire agreement regarding the services described herein
and supersedes all prior negotiations, proposals, representations or agreements, written or oral,
regarding these services. It shall be binding on heirs, successors and assigns of you and BKD.
If you intend to include these financial statements and our report in an offering document at
some future date, you agree to seek our permission to do so at that time. You agree to provide
reasonable notice to allow sufficient time for us to perform certain additional procedures. Any
time you intend to publish or otherwise reproduce these financial statements and our report and
make reference to our firm name in any manner in connection therewith, you agree to provide us
with printers' proofs or masters for our review and approval before printing or other
reproduction. You will also provide us with a copy of the final reproduced material for our
approval before it is distributed. Our fees for such services are in addition to those discussed
elsewhere in this letter.
You agree to notify us if you desire to place these financial statements or our report thereon on
an electronic site. You recognize that we have no responsibility as auditors to review
information contained in electronic sites.
30
