HomeMy WebLinkAbout216-05 RESOLUTION• •
RESOLUTION NO. 216-05
A RESOLUTION APPROVING THE ANNUAL CONTRACT
RENEWAL WITH BAIRD, KURTZ & DOBSON (BKD), LLP, IN
THE AMOUNT OF $59,000.00 TO PROVIDE INDEPENDENT
AUDIT SERVICES TO THE CITY OF FAYETTEVILLE.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1. That the City Council of the City of Fayetteville, Arkansas
hereby approves the annual contract renewal with Baird, Kurtz & Dobson (BKD),
LLP, in the amount of $59,000.00 to provide independent audit services to the
City of Fayetteville. A copy of the engagement letter for services marked Exhibit
"A" is attached hereto, and made a part hereof.
PASSED and APPROVED this 15th day of November, 2005.
ATTEST
By:
DRA SMITH, City Clerk
APPROVED:
By:
I LI#
DAN COODY, Mayor
•
•
October 12, 2005
Audit Committee and City Council
Honorable Dan Coody, Mayor
Mr. Stephen Davis, Finance and Internal Services
Ms. Marsha Farthing, Accounting Manager
City of Fayetteville, Arkansas
113 West Mountain
Fayetteville, Arkansas 72701
Director
pFCFrvrn
OCT 9 P 2005
ACC1v. uENT.
We are pleased to confirm the arrangements of our engagement and the nature of the services we
will provide to the City of Fayetteville, Arkansas.
ENGAGEMENT OBJECTIVES
We will audit the financial statements of the City of Fayetteville, Arkansas as of and for the year
ended December 31, 2005, in accordance withauditing standards generally accepted in the
United States of America, the standards applicable to financial audits contained in Government
Auditing Standards issued by the Comptroller General of the United States and U.S. Office of
Management and Budget (OMB) Circular A-133, Audits of States, Local Governments and
Nonprofit Organizations.
The objectives of our audit are:
✓ Expression of an opinion on the conformity of your financial statements, in all material
respects, with accounting principles generally accepted in the United States of America.
✓ Issuance of a report on your compliance based on the audit of your financial statements.
✓ Issuance of a report on your internal control over financial reporting based on the audit of your
financial statements.
1 Expression of an opinion on your compliance, in all material respects, with the types of
compliance requirements described in the U. S. Office of Management and Budget Circular A-
133 Compliance Supplement that are applicable to each of your major federal award programs.
5000 Rogers Avenue. Swe 700
Fon Smth, AR 72903-2079
479 452.1040 Fax 479 452-5542
bkd.com
400 W. capita Avenue. Suite 2500
P.O. Box 3667
lmlo Rock. AR 72203-3667
501 372-1040 Fax 501 372-1250
Beyond Your Numbers
200 E. 11th Avenue
P O. Box 8306
Pine BU8, AR 71611.8306
870 534-9172 Fax 870 534-2146
A note
4m. noMITY --.J mit
•
-2-
Audit Committee and City Council
Honorable Dan Coody, Mayor
Mr. Stephen Davis, Finance and Internal Services Director
Ms. Marsha Farthing, Accounting Manager
City of Fayetteville, Arkansas
•
October 12, 2005
✓ Issuance of a report on your internal control over compliance based on the audit of your
compliance with the types of compliance requirements that are applicable to each of your major
federal award programs.
✓ Issuance of a report on your schedule of expenditures of federal awards.
We will also examine the written assertion about the compliance with certain state acts made by
the management of City of Fayetteville, Arkansas as of and for the year ended December 31,
2005, in accordance with attestation standards established by the American Institute of Certified
Public Accountants.
The objective of our examination is the expression of an opinion on the conformity of the subject
matter of the assertion in all material respects, with the applicable criteria against which it is
measured. Our report is intended solely for the information and use of the governing body,
management and the State of Arkansas and is not intended to be and should not be used by
anyone other than these specified parties.
OUR RESPONSIBILITIES
Auditing standards generally accepted in the United States of America, Government Auditing
Standards and OMB Circular A-133 require that we plan and perform:
✓ The audit of the financial statements to obtain reasonable rather than absolute assurance about
whether the financial statements are free of material misstatement, whether caused by error or
fraud.
The audit of compliance with the types of compliance requirements described in the OMB
Circular A-133 Compliance Supplement applicable to each major federal award program to
obtain reasonable rather than absolute assurance about whether noncompliance having a direct
and material effect on a major federal award program occurred.
Accordingly, a material misstatement or noncompliance having a direct and material effect may
remain undetected.
Our audit of the financial statements is designed to detect misstatements and noncompliance that, in
our judgment, could have a material effect on the financial statements taken as a whole.
Consequently, our audit will not necessarily detect errors or fraud resulting in an immaterial
misstatement of the financial statements.
• 3_ •
Audit Committee and City Council
Honorable Dan Coody, Mayor
Mr. Stephen Davis, Finance and Internal Services Director
Ms. Marsha Farthing, Accounting Manager
City of Fayetteville, Arkansas
October 12, 2005
Likewise, our audit of' compliance with the types of compliance requirements applicable to each
major federal award program is designed to detect noncompliance having a direct and material
effect on a major program. Consequently, our audit will not necessarily detect noncompliance
having an indirect and material or an immaterial effect on any program.
An audit also includes obtaining an understanding of internal control sufficient to plan the audit
and to determine the nature, timing and extent of audit procedures to be performed. An audit is
not designed to provide assurance on internal control over financial reporting or on internal
control over compliance or to identify reportable conditions. However, we will communicate to
you any matter that comes to our attention that we consider a reportable condition. Because of
the limits in any internal control structure, errors, fraud, illegal acts or instances of
noncompliance may occur and not be detected. 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
If, for any reason, we are unable to complete our audit of the financial statements or our audit of
compliance with the types of compliance requirements applicable to each major federal award
program or are unable to form or have not formed an opinion, we may decline to express an
opinion or decline to issue a report as a result of this 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
To facilitate our audit, management is responsible for making all financial records
documentation and other financial and compliance related information available to us At the
conclusion of our engagement, management will provide to us a letter acknowledging certain
responsibilities outlined in this engagement letter and confirming:
• The availability of this information
• Certain representations made during the audits 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
• _4_ •
Audit Committee and City Council
Honorable Dan Coody, Mayor
Mr. Stephen Davis, Finance and Internal Services Director
Ms. Marsha Farthing, Accounting Manager
City of Fayetteville, Arkansas
October 12, 2005
Management is responsible for fair presentation of the financial statements in accordance with
accounting principles generally accepted in the United States of America, for adjusting the
financial statements to correct material misstatements and for identifying and ensuring
compliance with the laws, regulations, contracts and grants applicable to your activities including
your federal award programs. Management is also responsible for establishing and maintaining
effective internal control over financial reporting and compliance and setting the proper tone;
creating and maintaining a culture of honesty and high ethical standards, and establishing
appropriate controls to prevent, deter and detect fraud, illegal acts and instances of
noncompliance.
The results of our tests of compliance and internal control over financial reporting performed in
connection with our audit of the financial statements may not fully meet the reasonable needs of
report users. Management is responsible for obtaining audits, examinations, agreed-upon
procedures or other engagements that satisfy relevant legal, regulatory or contractual
requirements or fully meet other reasonable user needs.
OTHER SERVICES
We may perform other services for you not covered by this engagement letter. You agree to
assume full responsibility for the substantive outcomes of those services, 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.
ENGAGEMENT FEES
Our fees will be based on time expended plus charges for travel, long-distance telephone, copies,
etc. and will not exceed S59,000. We will issue progress billings during the course of our
engagement and our statements are due when received. A finance charge equal to the federal
discount rate plus 5% per year will be charged on all outstanding balances over thirty days old.
• C •
Audit Committee and City Council
Honorable Dan Coody, Mayor
Mr. Stephen Davis, Finance and Internal Services Director
Ms. Marsha Farthing, Accounting Manager
City of Fayetteville, Arkansas
October 12, 2005
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 increase if our duties or responsibilities are increased by rule making of any
regulatory body or new accounting or auditing standards. We will consult with you in the event
any regulations or standards are issued that may impact our fees.
Our invoices arc due within thirty days. If our invoices for this or any other engagement you
may have with BKD are not paid when due, 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.
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.
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
• -6- •
Audit Committee and City Council
Honorable Dan Coody, Mayor
Mr. Stephen Davis, Finance and Internal Services Director
Ms. Marsha Farthing, Accounting Manager
City of Fayetteville, Arkansas
October 12, 2005
You agree that we will, at our discretion or upon your request, deliver financial statements or
similar documents to you electronically via floppy disk, CD-ROM, e-mail or other mechanism.
You recognize and accept the risk involved, particularly in e-mail 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.
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 arc 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, such as the World Wide Web. You recognize that we have no responsibility as
auditors to review information contained in electronic sites.
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.
• 7 •
Audit Committee and City Council
Honorable Dan Coody, Mayor
Mr. Stephen Davis, Finance and Internal Services Director
Ms. Marsha Farthing, Accounting Manager
City of Fayetteville, Arkansas
October 12, 2005
If the above arrangements are acceptable to you, please sign the enclosed copy of this letter and
return it to us.
BKD, LLP
The services and arrangements described in this letter are in accordance with our understanding
and are acceptable to us.
CITY OF FA ETTEVILL , ARKANSAS
BY
TITLE
DATE
Marsha Farthing, Acctg Manager
Submitted By
•
City of Fayetteville
Staff Review Form
City Council Agenda Items
or
Contracts
/VoJ 15/ Zoos
City Council Meeting Date
Accounting and Audit
Division
Action Required:
•
FISD
//7/5 /05
a/�
4zrzd/KJ4 rtz-
6 AO/0364 LL p
Department
Approval of the fourth year engagement or a five year contract with BKD, LLP in the amount of $59,000 for the 2005
annual financial audit.
59,000.00
Cost of this request
1010-0500-00
Account Number
Project Number
Budgeted Item
y<
59,000.00
Category / Project Budget
Funds Used to Date
59,000.00
Remaining Balance
Budget Adjustment Attached
Program Category / Project Name
Program / Project Category Name
Fund Name
Departmt:nt Director
641— io":ie 5
City Altorn Date
Hance and Internal Service Director
Cwt
Mayor
f1 C1fi
II D to
(0/27/
Date
Previous Ordinance or Resolution #
Original Contract Date:
Original Contract Number:
Comments:
•
•
FAYETTEVItLE
THE CITY OF FAYETTEVILLE. ARKANSAS
DEPARTMENTAL CORRESPONDENCE
•
To: Mayor Dan Coody and the Fayetteville City Council
Thru: Stephen Davis, Finance and Internal Services Direct
From: Marsha Farthing, Accounting Manager
Date: November 1, 2005
Subject: Annual Audit
Recommendation
Staff recommends approval of the fourth year audit engagement with BKD,LLP.
Background
In August 2002 the City Council passed Resolution 124-02 approving a five year contract
with Baird, Kurtz & Dobson (BKD), LLP, to provide independent audit services for the
City. It is time to approve the engagement letter for services in connection with the audit
for the year ending December 31, 2005.
Discussion
The City is required, under Arkansas statutes and applicable bond issues, to have an
annual financial audit conducted by either Legislative Audit or a Certified Public
Accounting firm licensed in Arkansas. Because of the requirements of bond indentures,
the City has for the past thirty plus years utilized the services of a private CPA firm to
perform these mandated financial audits.
BKD was selected by the City following the applicable rules and regulations concerning
the procurement of auditing services. The City entered into a five-year agreement in
August 2002. Under this contract BKD will provide an annual audit of the City's
financial statements and a review of the City's internal control system as required by state
law. In addition to the financial audit BKD also issues a report on internal control and
compliance requirements for major federal award programs as required by the Single
Audit Act. The single audit is the primary mcchanism used by federal agencies to ensure
accountability for federal awards to non-federal entities.
Finally, BKD also provides technical assistance to the City in producing the
Comprehensive Annual Financial Report (CAFR). The CAFR includes the City's
• •
financial statements as well as statistical information required by the City's bond
covenants.
Budget Impact
The cost of the 2005 audit by contract is S59,000. The audit has been budgeted in General
Fund but the costs will be allocated to the various funds of the City.
• •
RESOLUTION NO.
A RESOLUTION APPROVING THE ANNUAL CONTRACT
RENEWAL WITH BAIRD, KURTZ & DOBSON (BKD), LLP, IN
THE AMOUNT OF $59,000.00 TO PROVIDE INDEPENDENT
AUDIT SERVICES TO THE CITY OF FAYETTEVILLE.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1. That the City Council of the City of Fayetteville, Arkansas
hereby approves the annual contract renewal with Baird, Kurtz & Dobson (BKD),
LLP, in the amount of $59,000.00 to provide independent audit services. ttieCity of Fayetteville. A copy of the engagement letter for services marded xhil3it
"A" is attached hereto, and made a part hereof.
PASSED and APPROVED this 15th day of Novctihber, , 2005.
APPROVED:
ATTIEST:
By:
\)AI,:p.ODY, Mayor
sS N R/SMj4wl ity Clerk
Mayor: Department Director: Purchasing Manager:
Finance & Internal Services Director: Budget Manager: IT Manager:
Dispatch Manager Utilities Manager: Other:
0 CO v m u, v w
IF ffir
0m
Requester:
Marsha Farthing
City:
Little Rock
Address:
400 West Capitol Ave. Suite 2500
'v
4
Nm
Ol
City Of Fayetteville
(Not Purchase Order)
Shipping/Handling
Annual Audit Services
1 Description
0
C
d
J
Vendor Name:
BKD,LLP .:.
Lot
(Unit of Issue
>
XI
CO
6
6
c
0
0
0
N
N
O
O
O
M
O
O
O
N
O
O
O
$0.00
M
O
O
O
4.
0
O
O
M
O
O
O
M
0
O
O
N
O
O
O
N
O
O
O
N
a
0
O
O
O
O
(Extended Cost
O
O
8
0
0
8
0
Account Numbers
Requester's employee #
823
Zip Code:
72203
Fob Point:
Ship to cdde:
201
IProjecUSubproject #
N
co
co
m
X
re
0
a
O
N.
O
<
N
I
2
o
-I
O
m
K ;
2 W.
I
Z
TI
b
C
a
g
2M
H
Z
..
0
0.
O
s�
<
O
R
Y
t
(Quotes Attached
Yes: No:
Expected Delivery Dale:
a
b_
!Fixed Asset #
Clarice Pearman - Res. 216-05 _ Page 1
From: Clarice Pearman
To: Farthing, Marsha
Date: 11/21/05 4:52PM
Subject: Res. 216-05
Marsha,
Attached is a copy of the resolution passed by City Council, November 15, 2005 regarding BKD. I will
forward via interoffice mail to you one of two original agreements. I will also forward via interoffice mail
your original purchase requisition to Internal Audit.
Thanks.
Clarice
CC: Bell, Peggy; Deaton, Vicki