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HomeMy WebLinkAbout120-81 RESOLUTION• .1 1 RESOLUTION NO. ARO -7/ • • • A RESOLUTION AUTHORIZING THE MAYOR AND CITY. CLERK TO EXECUTE A CONTRACT WITH RUSSELL BROWN AND COMPANY FOR AN AUDIT OF THE CITY'S GENERAL FUND FOR THE YEARS 1981 THROUGH 1984 AND FOR AN AUDIT OF THE CITY'S WATER AND SEWER FUND AND SANITATION FUND FOR FISCAL YEARS 1981-1982 THROUGH 1984-1985. BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CITY OF FAYETTEVILLE, ARKANSAS: That the Mayor and City Clerk are hereby authorized and directed to execute a contract with Russell Brown and Company for an audit of the City's General Fund, Water and Sewer Fund, and Sanitation Fund for the fiscal years 1981 through 1985. A copy of the contract authorized for execution hereby is attached hereto marked Exhibit "A" and made a part hereof. PASSED AND APPROVED this / day of r 4g4„/ 1981. ATTEST: fca CITY CLERK APPROVED: MAYOR / AUDIT CONTRACT CITY OF FAYETTEVILLE, ARKANSAS A. NAME OF CONTRACTING PARTIES CLIA This agreement entered into this �f day ofciharEm$47R, 1981 the City of Fayetteville, State of Arkansas, hereafter referred to City, and Russell Brown_and_.Company, Certified>,Public Accountantj_,. ereferredPto---as`the auditor. The parties hereto agree as follows: B. AUDIT SCHEDULE C. iq r, Y.' u 7a.0 between as the hereafter' 1. The Auditor shall conduct an examination of the records, accounts, and procedures of the City for the years 1981-1985 (General 12-31-81 through 84; Water and Sewer and Sanitation 7-31-82 through 85) 2. Either party may terminate the agreement by giving written notice to the other party not later than ninety days before the beginning of the fiscal year for which the next audit is to be performed. SCOPE OF AUDIT 1. The examination shall include all funds of the City excluding Community Development. 2. The Auditor shall express an unqualified opinion on the financial statements of all funds. If unable to express an unqualified opinion, the Auditor shall state the reasons for qualification or disclaimer of opinion. 3. The desired list of statements and schedules to be included in the audit report is shown by Attachment A. 4. Three weeks after each year end, the City will have closed and balanced all accounts. 5. The City shall also supply additional financial and statistical information, not subject to examination by the Auditor, but necessary to substantially conform to the principles and standards of public financial reporting prescribed by the National Committee on Governmental Accounting. 6. The City shall provide space deemed adequate by the Auditor to efficiently conduct the examination. 7. A "Management Letter" directed to the Board of Directors reflecting determinations subsequent to review of procedures and controls is required. Where appropriate, recommendations for system im- provements are to be included, and the Auditor may be requested to provide assistance to implement recommendations and follow-up. �._ The Auditor will be required to meet with the City Manager and Board of Directors to explain the audit report and management letter and answer questions that may arise. 8. A report on internal control and compliance in accordance with the audit guide and standards of revenue sharing and anti - recession fiscal assistance recipients is required. D. AUDITING STANDARDS The examination shall be made in accordance with generally accepted auditing standards as adopted by the membership of the American Institute of Certified Public Accountants (AICPA) in the statement of Auditing Standards No. 1, "Codification of Auditing Standards and Procedures." The examination shall also be made in compliance with the laws of Arkansas and the requirements of the United States Department of the Treasury's Office of Revenue Sharing as they pertain to the Revenue Sharing and Anti -recession Fiscal Assistance Program. E. AUDITING PROCEDURES 1. The examination shall be made in accordance with generally accepted governmental auditing procedures as prescribed by the National Committee on Governmental Accounting in Governmental Accounting, Auditing and Financial Reporting and by the AICPA in the Industry Audit Guide -Audits of State and Local Governmental Units. 2. The Auditor shall review the audit program with the City identifying the records to be audited and procedures to be followed. The City may require the Auditor to include in the audit additional records and procedures which are generally accepted as defined in provision E.1. above. F. COMPENSATION AND TERMS OF PAYMENT 1. The City shall pay the Auditor according to billing rates shown in Attachment B for services rendered. The total payment to the Auditor shall not exceed the maximum not to exceed cost given in Attachment B for the four year period. 2. If unusual circumstances are encountered making it necessary for the Auditor to do added work, the auditor shall immediately report such conditions to the responsible City officials and both parties may negotiate such additional compensation as appears justified. 3. Periodic progress billings may be sumbitted as work progresses, but not more often than monthly and not more than 75% of the estimated cost of audit services will be..paid during the audit period. The remaining 25% will be paid after total contract fulfillment. G. AUDIT REPORT The Auditor shall provide. 70. copies of the audit report which should be printed on regular letter size (IIZ" x 11") paper, using bothsides of the page whenever possible. The Auditor shall also provide a master copy suitable for reproduction by the City. The audit report must be completed and the final reports prepared not later than 60 days after the closing of the books. The City prefers to have the reports one week before the deadline. H. INTEREST OF AUDITOR Auditor covenants that it or any of its members presently has no interest and shall not acquire any interest, direct or indirect, financial or otherwise, that would conflict in any manner or degree with performance of services hereunder. Auditor certifies that no one who has or will have any financial interest under this agreement is an officer or employee of city. I. NONASSIGNABILITY Both parties recognize that this contract iscne for personal services and cannot be transferredassigned, or sublet by either party without prior written consent of the other. J. WORKMEN'S COMPENSATION By executing this agreement, auditing firm certifies that it is aware of the provisions of Ark. Stat. Ann. § 81-1305, which requires every employer to pay or provide compensation for an employee's disability or death from injury arising out of or in the course of employment and certifies that it will comply with such provisions before commencing the performance of the work of this agreement. K. COMPLETENESS OF AGREEMENT This document contains all the terms and conditions of this agreement, and any alterations or variations of the terms of this agreement shall be invalid unless made in writing and signed by the parties. There are no other understandings, representations, or agreements, written or oral, not incorporated herein. L. AUDIT WORKPAPERS A copy of the audit workpapers will be presented to the City at the completion of the audit which will become the property of the City when final payment is made. • TEVII.LE, ARKANSAS • .; Mayor aCity Clerk Partner Schedule A .. SCOPE OF AUDIT WORK TO BE PERFORMED Audit FYE 12=31 ACCOUNTANT'S REPORT SECTION A - COMBINED STATEMENTS - OVERVIEW ALL FUNDS A-1 Combined Balance Sheet - A11 Fund Types and Accounts Groups A-2 Combined Statement of Revenues and Expenditures - All Fund Types SECTION B - GENERAL FUND B-1 Balance Sheet B-2 Statement of Revenues, Expenditures and Changes in Fund Balance B-3 Statement of Revenues B-4 Statement of Expenditures By Type B-5 Statement of Expenditures SECTION C - SPECIAL REVENUE FUNDS C-1 Combining Balance Sheet C-2 Combining Statement of Revenues, Expenditures and Changes in Fund Balance PUBLIC WORKS FUND C-3 Statement of Revenues, Expenditures and Changes in Fund Balance C-4 Statement of Revenues C-5 Statement of Expenditures By Type C-6 Statement of Expenditures REVENUE SHARING C-7 Statement of Revenues, Expenditures and Changes in Fund Balance C-8 Departmental Expenditures CITY ADVERTISING AND PROMOTION FUND C-9 Statement of Revenues, Expenditures and Changes in Fund Balance OFF STREET PARKING FUND C-10 Statement of Revenues, Expenditures and Changes in Fund Balance INDUSTRIAL PARK FUND C-11 Statement of Revenues, Expenditures and Changes in Fund Balance SECTION D - SPECIAL ASSESSMENT FUNDS D-1 Combining Balance Sheet D-2 Combining Statement of Revenues, Expenditures and Changes -in Fund Balance A-1 • SECTION E - DEBT SERVICE FUNDS E-1 Combining Balance Sheet E-2 Combining Statement of Revenues, Expenses and Changes in Funds to to be Provided SECTION F - CAPITAL IMPROVEMENT FUNDS F-1 Combining Balance Sheet F-2 Combining Statement of Revenues, Expenditures and Changes in Fund Balance SECTION G - ENTERPRISE FUNDS G-1 Combining Balance Sheet G-2 Combining Statement of Revenues, Expenditures and Changes in Fund Balance - AIRPORT FUND G-3 Statement of Revenues, Expenditures and Changes in Fund Balance G-4 Statement of Revenues G-5 Statement of Operating Expenses G-6 Statement of Changes in Fund Equity G-7 Statement of Changes in Financial Position CONTINUING EDUCATION FUND G-8 Statement of Revenues, Expenditures and Changes in Fund Balance G-9 Statement of Changes in Fund Balance SECTION H - PENSION FUNDS H-1 Combining Balance Sheet H-2 Combining Statement of Revenues, Expenses and Changes in Fund Balance SECTION I - AGENCY FUNDS I-1 Combining Balance Sheet I-2 Combining Statement of Revenues, Expenditures and Changes in Fund Balance SECTION J - GENERAL FIXED ASSET GROUP J-1 Statement of Changes in Property, Plant and Equipment - All General Government Funds SECTION K - NOTES TO FINANCIAL STATEMENTS SUPPLEMENTAL INFORMATION K-1 Summary of Interfund Balances - All Government Funds K-2 Enterprise Funds - Summary of Bonded Indebtedness A-2 Audit FYE 7-31 SCOPE OF AUDIT WORK TO BE PERFORMED ACCOUNTANTS' REPORT SECTION A - COMBINED STATEMENTS OVERVIEW ALL WATER & SEWER FUNDS A-1 Balance Sheet A-2 Statement of Revenues and Expenses A-3 Statement of Changes in Fund Equity A-4 Statement of Changes in Cash Operating Funds A-5 Statement of Changes .in Reserve Fund Assets A-6 Notes to Financial Statements SECTION B - ADDITIONAL INFORMATION B-1 Statement of Operating Expenses B-2 Statement of Changes in Fixed Assets B-3 Schedule of Bonds Outstanding A-4 • • • Audit FYE 7-31 SCOPE OF AUDIT WORK TO BE PERFORMED ACCOUNTANTS' REPORT SECTION A - COMBINED STATEMENTS OVERVIEW ALL SAIIITATION FUNDS A-1 Balance Sheet A-2 Statement of Revenues and Expenses A-3 Statement of Changes in Fund Balance A-4 Statement of Changes in Cash Operating Funds A-5 Statement of Changes in Revenue Bond and Depreciation Fund Assets A-6 Notes to Financial Statements SECTION B - ADDITIONAL INFORMATION B-1 Statement of Operating Expenses B-2 Statement of Changes in Property, Plant and Equipment • A-5 SECTION K - Cont. K-3 Debt Service Funds - Summary of Bonded Indebtedness K-4 General Fund - Summary of Budget Changes K-5 Public Works Fund - Summary of Budget Changes SECTION L - ACCOUNTANTS'. REPORT ON CITY'S COMPLIANCE WITH STATE ACTS 832 AND 332 SECTION L - SPECIAL REPORTS - REVENUE SHARING FUND L-1 Accountants' Report L-2 Balance Sheet L-3 Statement of Revenues, Expenditures and Changes in Fund Balance L-4 Statement of Departmental Expenditures L-5 Notes to Financial Statements SUPPLEMENTARY DATA L-6 Summary of Changes to Data Submitted to Bureau of Census - RS9 L-7 Summary of Changes to Data Submitted to Bureau of Census - F21A L-8 Accountants' Report on Compliance • OFFICES IN LITTLE ROCK FORT SMITH FAYETTEVILLE SPRINGDALE RUSSELL BROWN 8 COMPANY CERTIFIED PUBLIC ACCOUNTANTS ONE McILROY PLAZA SUITE 503 P. O. BOX 1187 FAYETTEVILLE, ARKANSAS 72701 (5011443.3426 December 16, 1981 Mr. John Todd, Mayor City of Fayetteville P. 0. Drawer.F Fayetteville, Arkansas 72702 Dear Mr. Todd: 0909icebtA- lb.. ;1-- ..SL `v.\ VI: ow.ri i D ASSOCIATES IN MAJOR U. 5. CITIES, CANADA, MEXICO AND EUROPE This letter is to confirm the understanding between the City of Fayetteville and this firm concerning the examination of the City's financial statements for the year ending December 31, 1981. Our examination will be made in accordance with generally accepted auditing standards and, accordingly, will include such tests of the accounting records and such other audit procedures as we consider necessary to enable us to express an opinion on the fairness of your financial statements. It will not include a detailed examination of all transactions nor will we necessarily discover defalcations, irregularities, or illegal acts'should any exist:- We will, however, inform you of any findings that appear unusual or abnormal to us. Our examination will include a review of your system of internal accounting control to the extent we consider necessary to evaluate the system and other procedures and reviews as detailed in the Audit Contract dated December 16, 1981 between the City of Fayetteville and this firm. If at any time during the engagement any matters come to our attention that would cause a material extension of our services, we will consult with you as to the effect on our fee. If the foregoing is in accordance with your understanding, please sign the copy of this letter in the space provided and return it to us. ACCEPTE 7B,i /ad �� fMayor Title Dec. 28, 1981 Date Sincerely, RUSS LL BROWN & COMPANY Partner );66/8/ Date • Offices in Little Rock Fort Smith Fayetteville Springdale Jonesboro Pine Bluff El Dorado Stuttgart RUSSELL BROWN 8 COMPANY CERTIFIED PUBLIC ACCOUNTANTS November 5, 1981 Scott C. Linebaugh Finance Director City of Fayetteville Fayetteville, Arkansas 72701 • • Associates in Major U. S. Cities, Canada. Mexico and Europe Dear Mr. Linebaugh: We are pleased to present this proposal to provide services as independent auditors for the City of Fayetteville for the years 1981 through 1985. After reviewing the contents of the request for proposal letter, we feel that we are in a position to prepare a proposal responsive to your needs. Russell Brown & Company - A Profile Founded in December, 1923, Russell Brown & Company currently ranks among the top 10% by size of CPA firms in the United States and is the oldest and largest CPA firm based in the State of Arkansas. With a total active group of 138 professional accountants, our firm provides services to clients from offices in Little Rock, Fort Smith, Fayetteville, Jonesboro, Pine Bluff, El Dorado, Springdale, and Stuttgart, Arkansas. We provide services in the areas of auditing, income tax, estate planning, and various management advisory services The major goal of all CPA firms is to provide every client with the best service possible, with this goal in mind, our firm is committed to maintaining a staff of highly trained and experienced personnel. Russell Brown & Company's program for firmwide training and continuing education enables each professional in our firm to have a minimum of 40 hours of training each year in addition to continuous on-the-job training. Russell Brown & Company is a member of the SEC Practice Section of the AICPA Division of CPA firms. The firm has a total of 174 people divided into seven job classifications in six areas of responsibility shown in the following table: f • Scott C. Linebaugh Page 2 November 5, 1981 Area of Responsibility Managing Administrative' Technical Tax Management Services General Services Number of CPA's Holding Certi- ficates CPA Examination Completed -Experience Requirement Not Fulfilled • ME- Parapro- Manager/ Staff fessional Partner Consultant Supervisor Senior Assistant Staff 1 1 1 1 1 1 1 2 1 1 1 1 18 3 22 23 5 24 2 21 55 4 23 56 7 23 4 24 23 3 Russell Brown & Company provides auditing and/or income tax services to over 85 banks and savings and loan associations. Clerical/ Other Staff 1 35 36 Recently, the firm has served as the accountant for the Court in two large Chapter X (reorganization) proceedings in the States of Arkansas, Texas and Missouri. Our firm provides auditing services to several clients in relationto their filings the SEC and State security departments; such reports range from initial registration statements to reorganization, etc., as well as current quarterly and annual reports. Experience in Examination of Educational Institutions and Municipal Governments Within the past six years, Russell Brown & Company has had a substantial amount of experience in the auditing of education institutions and municipal governments as follows: Educational Institutions Ouachita Baptist University Arkansas Baptist College Little Rock School District Fort Smith School District Pine Bluff School District England School District Lake Village School District Eudora School District Altheimer School District Pulaski Academy Jefferson Academy Pulaski County Special School District • DA - Scott C. Linebaugh Page 3 November 5, 1981 City of Little Rock City of Fort Smith City of Pine Bluff City of Fayetteville City of Springdale City of El Dorado • Municipal Governments • City of Eudora City of DeWitt Little Rock Municipal Water Works Little'Rock Regional Airport Numerous Federal Grant Programs Personnel - The Audit Team The City of Fayetteville will be a very important client to Russell Brown & Company. We will strive to insure continuity of personnel assigned to the audit team on a recurring basis, thus reflecting our commitment to provide the highest quality of service to the City. Should changes in the audit team be required due to resignations or transfers, be assured that equally qualified personnel would be assigned to the audit to insure uninterrupted quality service to the City. Following is an outline of the key members of the audit team and their qualifications: Engagement Partner - James G. Sandlin The engagement partner has the overall responsibility of administration of the audit, including personnel assignments, review of the fieldwork, and ascertaining the audit report is in compliance with generally accepted accounting principles. Mr. Sandlin has been engagement partner assigned to audits of the City of Fayetteville. In addition, he has considerable experience in various capacities in the examination of other education institutions and municipal governments. Mr. Sandlin joined the firm in 1965 after graduating from the University of Arkansas. He is a CPA, a member of the American Institute of CPA's and various other professional and civic groups. Engagement Audit Manager/Supervisor - Don G. Anderson It is the responsibility of the audit manager to assist the engagement partner in his areas of responsibility, to plan and coordinate the audit field work, and provide a comprehensive review of the audit workpapers and report. Mr. Anderson has been assigned to audits of the City of Fayetteville. In addition, Mr. Anderson has considerable experience in various capacities in the audits of other education institutions and municipal governments. Mr. Anderson graduated from the University of Arkansas and joined the .firm in 1969. He is a CPA, a member of the American Institute of CPA's and numerous other professional and civic groups. The above personnel reside in Fayetteville, if deemed necessary they can get additional help and expertise from the other Russell Brown & Company offices. • • • Scott C. Linebaugh Page 4 November 5, 1981 • Proposed Time and. Method of Doing Audit We will plan to perform preliminary audit work for approximately two to three weeks during the month preceeding closing. The. maximum time and completion date for each audit will be sixty days from the time your books are closed. During the conduct of an examination, Russell Brown & Company utilizes the following proven audit techniques: A. Systems evaluation is a comprehensive approach covering engagement planning, performance of interim and final audit tests, and engagement review. This technique stresses the importance of understanding client operations, accounting systems, and internal controls to tailor an audit program to specific operations, thus focusing on the areas of critical importance and ensuring an efficient and comprehensive examination. B. Audit programs and questionnaires are developed based on our evaluation of the internal control system for financial operations and activities. These programs will be specifically designed to fit the circumstances of the City and will provide the basis for examination of significant account transactions and balances. This practice improves our efficiency and thus minimized the time required to complete our examination. C. We will use client personnel to prepare data for.audit use to the maximum extent possible. In this way, audit fees are minimized. We will also carefully plan and coordinate the examination so that there is minimal disruption of normal activities. D. We will issue letters to the City Council and management which contain our observations, comments and suggestions regarding internal controls, operating and accounting procedures, and other matters worthy of attention. The primary purpose of management letters is to assist City Council members and management in fulfilling their responsibilities for safeguarding assets and establishing and maintaining reliable financial records. We will meet with the City Council and management to discuss the audit report and management letter. Fee Proposal Our fees would be billed at standard rates as shown on the attached "Exhibit A". Should the total fee run less than the maximum not to exceed clause we would bill the lesser amount. In conclusion, let us express our appreciation to you for the opportunity to present this proposal. Yours very truly, RUSSELL BROWN & COMPANY James G. Sandlin, Partner • • • • 41 • SCHEDULE B RUSSELL BROWN & COMPANY CITY OF FAYETTEVILLE FEE PROPOSAL • ESTIMATED PRICE MAXIMUM NOT TO EXCEED YEAR ENDING AUDIT #MAN HOURS COST COST 12-31-81 General 900 hrs. $25,000 $ 25,000 7-31-82 W&S and Sanit. Funds 550 hrs. 15,000 15,000 12-31-82 General 900 hrs. * * 7-31-83 W&S and Sanit. Funds 550 hrs. * * 12-31-83 General 900 hrs. * * 7-31-84 W&S and Sanit. Funds 550 hrs. * * 12-31-84 General 900 hrs. * * 7-31-85 W&S and Sanit. Funds 550 hrs. * * BILLING RATES 1981-82 1982-83 1983-84 1984-85 Partner $65.00 * Manager 45.00 * Supervisor 40.00 * Senior 30.00 Staff 23.00 * * * * * * * * * * *Same as 1981 adjusted for each years increase or decrease in CPl.not to exceed 10% increase per year. It is also agreed that if circumstances enable us to perform the audit in less man hours than shown above that Russell Brown will only bill the City for the hours worked times the billing rate.