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HomeMy WebLinkAbout39-16 RESOLUTIONW
I 13 West Mountain
Street Fayetteville,
AR 72701
(479) s7s-8323
Resolution: 39-16
File Number: 2016-0011
GRANT THORNTON LLP:
A RESOLUTION TO APPROVE A CONTRACT WITH GRANT THORNTON LLP IN THE AMOLINT
OF $97,500.00 TO PROVIDE INDEPENDENTAUDIT 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 a contract with Grant
Thornton LLP in the amount of $97,500.00 to provide independent audit services to the City of Fayetteville.
A copy of the engagement letter for services is attached to this Resolution and made a part hereof.
PASSED and APPROVED on 2/2/2016
Attest:
sondra E smith, ",, .,"ffiT;lyp*
---C-" 'ìl:2
Èt'i rnv¿rr'v\LL-L:' =.--",'øÏ*-åiFS'
Page I
2/3/16
Printed on
.@ City of Fayetteville, Arkansas
Text File
File Number:2016-0011
1 13 West Mountain Streel
Fayetiev¡lle, AR 72701
(47e) 575-8323
Agenda Ðate;21212016
ln Control: City Council Meeting
Agenda Number: A. 9
GRANT THORNTON LLP:
Version: 1 Status: Passed
File Type: Resolution
A RESOLUTION TO APPROVE A CONTRACT WITH GRANT THORNTON LLP IN THE
AMOT]NT OF $97,500.00 TO PROVIDE INDEPENDENT AUDIT SERVICES TO THE CITY OF
FAYETTEVILLE
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE,
ARKANSAS:
Section l: That the City Council of the City of Fayetteville, Arkansas hereby approves a contract with
Grant Thornton LLP in the amount of $97,500.00 to provide independent audit services to the City of
Fayetteville. A copy of the engagement letter for services is attached to this Resolution and made a part
hereof.
City of Fayetteville, Arkansas Page 1 Pilnted on 2/3/2016
Marsha Hertweck
City of Fayetteville Staff Review Form
2016-001L
@
212/20t6
City Council Meeting Date - Agenda ltem Only
N/A for Non-Agenda ltem
1./4/2076 Accounting & Audit /
Finance & lnternal Services Department
Subm¡tted By Submitted Date
Action Recommendation:
Division / Department
Approval of the fourth year of a five year contract with Grant Thornton LLP for annual audit services for the 20 j-5
financial audit.
Budget lmpact:
vanous
Account Number Fund
Project Number
Budgeted ltem? Yes
Yes
No
Project Title
Current Budget S
Funds Obligated
Current Balance
97,500.00
Does ¡tem have a cost?
Budget Adjustment Attached?
Item Cost
Budget Adjustment
Remaining Budget $'
v20140710
Previous Ordinance or Resolution #
Original Contract Number:
Comments:
ctïY or
City Council Agenda Memo
To: Mayor Lioneld Jordan and the Fayetteville City Council
Thru:
From:
Paul Becker, Finance Director
Marsha Herfweck, Accounting Director K
Date: January 4,2016
Subject: Annual Audit
Recommendation
Approval of the fourth year of a five year contract with Grant Thomton for annual audit
services forthe 2015 audit.
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 fìnancial audits.
Grant Thomton was selected by the City following the applicable rules and regulations
concerning the procurement of auditing services for a five year contract beginning with
the 2012 audit. Under this contract Grant Thomton will provide an annual audit ãf tne
City's financial statements and a review of the City's intemal control system as required
by state law. In addition to the financial audit, Grant Thornton will issue a report on
internal control and compliance requirements for major federal award prog.ãms as
required by the Single Audit Act. The single audit is the primary mechanism used by
federal agencies to ensure accountability for federal awards to non-federal entities.
Finally, Grant Thornton will also provide technical assistance to the City in producing the
Comprehensive Annual Financial Report (CAFR). The CAFR includès the Cìty,s
financial statements as well as statistical information required by the City's bond
covenants.
Budget Impact
The cost of the 2015 audit is $97,500. The original contract amount was 590,000 but the
audit costs have been increased by $7,500 due to the complexity of the implementation of
GASB 68, which changes the way the City records and discloses its pension liabilities.
The audit has been budgeted in General Fund and various other funds in the 2016 budget.
Mailing Address:
113 W Mountain Street
Fayetteville, AR727OI
wrvw.f ayettevi lle-a r.gov
ffi GrantThornton
December 1,4,201,5
Mr. l,ioneldJordan
Mayor
City of Fayetteville, Ârkansas
113 \ù7est Mountain Sreet
Fayetteville, Arkansas 7 27 07
Dear Mr. Jordan:
This letter (the "Engagement Letter') documents our mutual understanding of û,:re arrangements for the
selices described herein.
Scope ofservices
Grant Thornton LLP ("Grant Thornton') will audit the Frnancial statements of the govetnmental activities, the
business-rype activities, the aggregate discretely presented component units, each majot fund, and the aggregate
rernaining fund information, which collectively comptise the City's basic financial statements ("hnancial
starements') of the City of Fayetteville, ,Í\rkansas (collectively, the "City'), as of and for the yeat ended
Decernber 31,201'5.
Our financial sraremenr auclit will be conducted in accordance with auditing standards generally accepted in the
United States of America ("LJS GAr{S') established by the American Institute of Cenìfied Public Accountants
('ÀICPA') and the srand;irds for Ílnancial audits of the U.S. Government ,tccountabilty Offtce's ('Gr\O')
Goucrnment Audìtin¿ SîanciaxL¡ ('G¡,G.A.S') issued by the Comptroller General of the United States. An audit
involves performing proccdures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedurcs selected depend on the auditor's judgment, including the assessment of the risks
of material misstatement o[ the financial statements, whether due to fraud or error. ,tn audit also includes
evaluating the appropriatcness of the accounting poücies used and the reasonableness of significant accountìng
estìmâtes made by manaEement, as u'ell as evaluating the overall Frnancial statement presentation.
In assessing the risks oI rnateria] misstatement, an auditor considers internal coutrol relevant to the City's
preparation and fak presentation of tìre financial statements in order to design audit proceclures that are
appropriate in the ci¡cumstance. GÂGrA.S further requires us to perform tests of the Cify's colnpliance with
larvs, regulations, contrâcts, and grant agreements, in. which noncompliance could hzve z direct and material
effecr on the determinatjon of hnancial statement amounts. However, a Fnanital statement audit is not designed
to provide assurânce on compliance or internal control over financiai reporting or to identifr immaterial
instances of noncompliâIìcc or intenral control dehcicncies.
\l'hen conducting an auclit, the auditor is required to obtain reasonable âssurance about whether the financial
stâtements are free from material misstatement, whcther due to fraud or error, to enable the auditor to exPress
GrantThornton LLP
U.S. member frrm of Grant TÏornton lnternational Ltd
Grant Thornton LLP
7717 Main Skeet, Suhe 1800
Dallas, ïX 752014667
T 214.561.2300
F 2r4.56L2370
GrantThornton.com
linkd.inlGrantThorntonUS
tw¡tter.com/GrantThorntonUS
RECEIVI--}
DEC I ? 20i5
CIry OF FAYETTEVILLE
MAYOR'S OFFICE
ffi CrrntThornton
an opinion on whether the fmancial statements are presented fairly,in all materiaL respects, in accordance with
accounting princþles generally accepted in the United States of America. Although not absolute assurance,
reasonable âssurance is, nevertheless, a high level of assurance. However, an audit is not a guarântee of the
âccuracy of the f,rnancial statements. Even though the audit is propedy planned and petformed in accordance
with professional standards, an unavoidable risk exists that some matedal misstatements or noncomplìance
with laws, regulations, contracts, and grant agreements may not be detected due to the i¡herent limitations oF
an audit, together with the inherent limitations of intemal control. Also, an audit is not designed to detect er¡ors
or fraud that is immaterìal to the financial statements.
It should be noted that because the determination of abuse is subjective, we have no responsibility to desþ
the audit to provide teasonable assutânce of detecting abuse. Abuse is distinct from fraud and noncompliance.
Abuse involves behavior that is dehcient or improper when compared with behavior that a prudent person
would consider reasonable and necessary business pracdce given the facts and circumstances.
Pursuant to the Single -A,uclit .¿\ct Amendments of 1996 and Title 2 U.S. Code of Federal Regularions ('CFR')
Paft 200, Utfonn Adnini¡lratiue Reqøiremenß, Cwt Principle¡ and Aadit Requiremenfi þr Fed¿ral Awards ("Uniform
Guidance"), we will also audit the Ciry's compliance with the types of compliance requirements described in
the OMB Conplianæ Sapplemenl that could have a di¡ect and matedal effect on each of its major federal progtams
for the year ended Decenrbet 37,2015. !7e will conduct our compliance audit in accordance u¡ith US GAAS,
GAGAS, and the Uniform Guidance. Those standards and the Uniform Guidance require the auditor to plan
and perform the compLiance audit to obtain reasonable assurance about whether noncompliance with the types
of compl-iance requfuements that could have a direct and material effect on each major federal program
occurrêd, to enable the auditor to express ân opinion on the City's compliance with these requirements in all
materiâl respects. A complíance audit includes deterrnining major progtams, examining, on â test basis, evidence
about the City's compliance with those requirements, and performing such other procedures as we considered
necessaryin the circumstances, including performing tests of internal cont¡ol to evaluate t}re effectiveness of
the desþ and operation of contols considered relevant to pteventing, or detecting and cotrecting, material
noncompliance with tequirernents applicable to major progrâms. '{.bsolute assurance is not attainable because
the compliance audit is conducted on a test basis and compliance with the specific progtam requitements is
subject to the inherent limitations of intemal control over compliance, which mây not prevent or detect
intentional or unintentional noncompliance. Accordingly, material noncompliance may remain undetected.
Also, a compliance audit is not designed to detect noncompliance, whether intentional ot unintentional, that is
immaterial. Our compliance audit does not provide a legal determination of the Ciry's compliance rvith those
requirements.
Upon the completion of tire foregoing financial statement and compLiance audits and subject to their ñndings,
v¡e will tender our reports on the City's f,rnancial stâtements and on the Ciry's compliance wit} the requirements
refe¡red to above that are appJicable to each of its major federal programs and rvill communicate our hndings
in accordance with US GAAS, GAGÁ,S, and the Uniform Guidance. Our report on the City's comptiance will
include our findings on internal control over compliance; however, no opinion will be exptessed on internal
conuol over compliance.
,A,s required by GA,G,A.S, we will also render a report that includes our findings on the City's intenral conttol
ovet hnancial reporting and compliance with laws, regulations, contracts, and gtant âgteements, and other
matters based on out financial statement audit. Sucll report will be considered integral to the basic financial
Grant Thomton LLP
U.S. member fm of Grant Tlornlon lnternational Ltd
ffi CrrntThornton
statements and wìll be referred to in our report thereon. However, providing an opinion on internal control
over fìnancial reporring or on compliance with those provisions is not an objective of our ftnancial statement
audit, and accordingly, wc will not express such an opinion.
Required supplementarv information
,tccounting princþles generally accepted in the United States of ,\merica tequire that the management's
discussion and analysis and the Requiæd Supplemental Information the pension plan be presented to
supplement the basic hnancial statements. Such information, although not a requìred patt o[ the basic financial
statements, is required by the Govetnmental A.ccounting Standards Boatd ("GÀSB') who considers it to be an
essential part of financial repotting for placing the basic financial statements in an appropriate operational,
economic, or histotical context. This required supplementary information is the responsibiJìty of management.
We will apply certain lirnited procedutes to the required supplementary information in accordance with US
GAÂS. These limited procedures consist of inquiries of management about the methods of preparing the
information and compadng the information for consistency with management's responses to our inquiries, the
basic financial statements, and other knowledge v¡e obtain during our audit of the basic financial statements.
We will not express an opinion or provide any assurance on the infotmation because the Li¡nited procedures
will not provide us with sufFtcient evidence to express an opinion or provide any assurance.
Other information
Management is responsible for providing us with other informatjon that will be included in an annual report ot
sirnilar document containing audited fìnancial statements and our auditor's report thereon, including the
in¡r'oductory and statistical sections presented to fulfill the requirements of the Government Finance Officers'
Association Comprehensive Â.nnual Financial Report ('CAFR'). Management shouid provide the information
prior to the release of our auditor's report. Our responsibility for such information does not extend beyond the
financial information identjfied in our report. We do not perform any procedures to corroborate the other
infonnation contained in these documents. Professional standards require us to read the other information and
consider whether the other ìnformation, or the manner of its presentation, is materially inconsistent with
information appearing in the financial statements. !7e will bring to management's attention any information
that we believe is a matedal misstatement of fact.
Responsibilities of those charged with govetnance
Effective two-way communication with the City Council and .Audit Committee (referted to as "those charged
with governance") assists us in obtaining information relevant to the audit and also assists those charged with
govemance in fulfrlling their responsibiìity to oversee the fìnancial reporting process. Those charged v¡ith
governance play ar important role in the City's internal control over frnancial reporring by settrng a posirive
tone at the top and challenging the City's activities in the írnancial arena. Accordingly, it is important for those
charged rvith governance to communicate to us matters they believe are relevant to our engagement. As
indicated below, mânagement also has a responsibility to communicate cettain matters to tirose charged with
governance and to Grant Thornton.
In conneclion v¡ith our errgagement, professional standards require us to corrulrunicate certain matters that
come to ou( âttention to those charged with governance, such as the following:
o fraud involving senior management and ftaud that causes a material misstatement
o i.llegal acts, unless clearly inconsequential
Grant Thornton LLP
U.S, member fìrm ot Grant Thomton lnternalional Ltd
O
a
a
a
a
ffi CnntThornton
violattons of conüacts or grânt agreements and abuse that causes a material misstatement
noncompliance u¡ith the provisions of a major federal financial assistance Program
failure to report fraud, illegal acts, violations of contracts or gfant agfeements, or abuse to specihed external
parties when required by law or regulation. IWe may also be required to rePoft such matters directJy to the
external parry.
significant deFrciencies and material weaknesses in internal cont{ol over hnancial reporting and federal
financial assistance
disagreements with management and other serious drfficulties encountefed
qualitative aspects of signihcant accounting practices, including accounting policies, estimates, and
disclosures
audit adiustments and uncorrected misstatements, including missing disclosures.
Management responsibilities
As ¡rqu are aware, the financial statements are the responsibiliry of management. Management is responsible
for preparing and fairly ptesentìng the financial statements in accotdance utith accounting principles genetally
accepted in the United States of America, which includes adopting sound accounting ptactices and complying
with changes in accounting principles and related guidance. Management is also responsible for:
r providing us with âccess to all information of which they ate awâre thât is relevant to the PreParation and
lair presentation of the lnancialstatements, including all financial records, documentation of internal control
over Flnâncial reporting and federal Frnancial assistance and related information, and any additional
information that we may request for audit PurPoses
o providing us with unrestrìcted âccess to persons within the City from whom we determine it necessary to
obtain audit evidence
o making us âware of any significant conrractor relationships in which the contractor has the responsibilty fot
Program compliance
. ensuring that the City identifies and complies with all federal statutes, regulations, and terms and conditions
of federal awards appìicable to its activities and for informing us of any known violations. The City should
identift and disclose to us all federal statutes, tegulations, and terms and conditions of federal awards that
have a direct and m¿terial effect on the deternination of Flnancial statement amounts of other significant
financial data.
. tâking timely and appropriate steps to remedy fraud, illegal acts, violat-ions of contracts or federai awards, or
abuse that \¡/e mây report
o designing, rmplemenung, and maintaining effectrve internaì control over financial reporting and federal
financial assistance, which inciudes adequate accounting records and procedures to safeguard the City's
assers, and for informing us of all known significant deficiencies and material weaknesses in, and significant
changes in, internal control over hnancial repotting and federal hrrancial assistance
o informing us of their views about the risk of fraud within the Ciry and thei¡ awareness of any known ot
suspected fraud and the related cotrective action proposed
o adjusting the ñnancial statements, including disclosures, to correct material misstatements and for aff,rrming
to us in a representation letter that the effects of any uncortected misstatements, including missing
GranlThomton LLP
U.S. membe¡ lirm of Grant Thornton lnternational Ltd
ffi CnntThornton
disclosures, aggregated by us during the current engâgement, including those pertaining to the iatest period
presented, are immatetial, both individually and in rhe aggreg te, to the financial statements as a whole
r establishing and maintaining a'process to address and t¡ack the status of our hndings, conclusions, and
recommendations, including providing manâgement's views on such matters as rvell as planned cortective
actions to be inciuded in the report, in a timely manner- This i¡cludes informing us of findings and
recommendations from ptevious audits, attestation engagements, or other studies that could have a material
effect on the financial statements and whether any related recommendations were implemented.
r informing us of any events occurring subsequent to the date of the financiai stâtements through the date of
our auditor's report that rnay affect the financial statements or the related disclosures'
¡ informing us of any subsequent discovery of facts that rnay have existed at the date of our auditot's report
that may have affected the Ênancial statements or the related disclosures
. taking corrective action on any reported findings or questioned costs reported to them and preparing a
summary schedule of prior audit findings and a corrective action plan, if appLicable, as required by the
Uniform Guidance
o submit¿ing the reporting package (inciuding financial statements, schedule of expenditures of federal awards,
auditor's reports and, if applicable, a surrunary schedule of pdor audit hndings and a correct-ive action plan)
along with the Data Colleclion Form to the designated federal clearinghouse and, if appropriate, to pâss-
through entities. The Data Collection Form and the reporting package must be submitted within the earüer
of 30 days after receipt of the auditor's reports or nine months after the end of the audit period, unless a
longer period is agreed to in advance by the cognizant or oversight agency for the audit.
¡ distributing the report(s), including the Frnancial statements, any supplementary information, and the
report(s) thereon, to those off,rcials and organizations requiring them.
To assist those charged ..vith governânce in fulfrlting thet responsibiliry to oversee the Frnancial reporting
process, manâgement should discuss with those charged with governance the:
o adequacy of internaL conttol over financial reporting and fedetal financìal assistance and the identiÍrcation of
any significant deficiencies or material weaknesses, including the related corrective acúon proposed
o signiÍlcant accounting policies, alternative Úeatments, and the reasons for the iniúal selection of, or change
in, significant accounting policies
. process used by manâgement in formulating particularly sensitive accounting judgments and estimates and
rvhether'the possibiJrry exists thât furure events af[ecting thesc estimates mây differ markedly flrom current
judgments
.
¡ basis used by mânagement in determining that uncorrecced misstatements, including missing disclosures, are
irnmatedal, both indir-idually and in the aggregate, including whether any of these uncorrected misstatements
could potentially cause fuhre financial statements to be materially misstated.
We will require management's coopetation to complete our services. In addition, we will obtain, in accordance
with professional standards, certain rvritten representations from management, which we will rely upon.
Grant Thornton LLP
U.S. member firm of Gr¿nt Thornton lnlernat¡onal Ltd
ffi CnntThornton
Use of out reports
The inclusion, publication, or reproduction by the City of any of out reports in documents such as bond
offerings, regulatory filings, and Data Collection Forms containing infotmation in addition to Frnancial
staremenrs may tequire us to perform additional procedures to fulfill our professional or iegal responsibilitìes.
Accordingly, our reports should not be used for any such pu{poses without out priot permission. In addition,
to avoid unnecessary delay or misunderstanding, it is important that the City give us timely notice of its intention
to issue any such document.
The report on compliance v¡ith laws, regulations, contracts, and gtant agteements and internal control over
financiai reporting and the report on compliance and intetnal control over compliance related to majot
programs issued in accordance with the Uniform Guidance will each include a statement that describes the
purpose of the communication, which is to describe the scope of our testing of intemal control over Ftnancial
reporting, internal control o\¡er compliance, and compliance, and the result of that testing. Accordingly, these
reports are not suitable fot any other purpose.
Other services
Supplementary information
Management is responsible for sepatately preparing the schedule of expenditures of federai awarcls fot the year
ended December 31, 2075 in accordance with the Uniform Guidance and the combining and individual fund
statements and schedules in accordanee with the requirements of the Government Finance Officers'
.Association Cornprehensive Annual Financial Report ('CAFR"). Such supplementary infotmation, which will
be prcsented for purposes of additional analysis and is not a required Part of the Frnancial statements, will be
subjected to the audiring procedures apptied in the audit of the financial statements and cettain addifional
procedures. These procedures will include compadng and reconciling the supplementary information directìy
to the undedying accounting and other records used to prepate the financial stâtements or to the Frnancial
statements themselves, and other additional procedutes in accordance with US GA,\S. The purpose of our
procedures will be to form and express an opinion as to whether the supplementary information is fairly stated,
in all material respects, in relation to the financial st¿tements as a v¡hole.
In connection with our procedures, mânagement is responsible for infotming us about:
. the methods of measurement and presentation of the supplementary infotmation
r w-hether those methods have changed from the methods used in the prior period and the reasons for the
change, ifany
. âny significânt âssumptions or inteqpretations underþing the measutement or presentation of the
supplementary information.
Management will present the supplementary information with the audited hnancial statements' Management is
responsible for including our report on the supplementary information in any document thât contains the
supplementary information and that indicates we reported on it.
We will require management to provide us with certain written reptesentations related to thei¡ responsibilities
described above, þcluding whether management believes the supplementary infomation (including its form
Grant Thornton LLP
U.S, mêmber f¡m of Grant Thornton lnternat¡onal Ltd
ffi Cr.ntThornton
anci content) is fairty presented in accordance with the Uniform Guidance and CAFR and/or the applicable
criteria, as appropriate.
Othet services
./\ny other services that you request will constinrte â sepafate engagement that will be subject to ouf acceptance
procedures. Professional standards, Iaws, and regulatìons may prescribe limitations on non-audit services we
may perflorm without impairing our independence.
Fees
Standard billings
Our bilLings for the services set forth in this Engagement Lettet, which will not exceed $92,500 with additional
out-of-pocket expenses not to exceed $5,000, will be rendeted on an est.imated basis in accordance v¡ith the
enclosed Schedule of Standatd Billings and are payable within 20 days of receipt.
General purpose hnancial audit $85'000
GASB 68 implementation 7'500
Out of Pocke¡ 5;000
Billing date Fees
Janwary 31,2016 $12,500 - A-133 procedures
March 30,2016 925,000
April 15,2016
May 1,201,6
$25,000
$3s,000
If it appears tllat rhe estimated fee will be exceeded, we will bring this to your atterìtion
From time to tìme, Grant fhornton may receive certain incentives in the form of bonuses and rewards from
its corporate carcl and other vendors. Such incentives to the extent teceived will be retained by Grant Thomton
to cover hrm expenses.
Additional billings
Of course, circumstances.rnay arise that wi-ll require us to do more work. Some of the more common
ci¡curnstances include changing auditing, accounting, and repotting requirements from proFessional and
regulatory bodies; incorrect accounting applications or errors in City records; restatements; failure to funrish
accur^teand complete information to us ofl a timely basis; and unforeseen events, including legal and regulatory
changes.
At Grant Thornton, vre pride ourseh,es on our ability to provide outstanding service and meet our clienls'
deadlines. To help accomplish this goal, we work hard to have the right ptofessionals available. This involves
complex scheduling models to balance the needs of our clients and the utilization of our people, particularly
Grant Thofnton LLP
U.S. member firm of Grant Thornton lnternational Ltd
ffi CnntThornton
during peak periods of the year. Last minute client reguested scheduling changes tesult in costly dov,'ntirne due
to our inability to make altemate affangements for our professional staff.
We will coordinate a convenient time fot Grant Thornton to begin uiork. If, aftet scheduling our work, you do
not provide proper notice, rvhich we consider to be one week, of your inability to meet the agreed-upon dates
for any reason, or do not provide us with sufficient information required to complete the wotk in a timely
rnanner, additional bülings u¡ill be rendeted fot any downtime of out ptofessional staff.
Adoption of new accounting standards
Professional and regulatory bodies frequently issue new accounting standards and guidance. Sometimes,
standards are issued and become effective in the same period, providing a limited implementation phase and
preventing us from including the impact in our estimated fees. In such ci¡cumstances, vze will discuss with you
the additional audit procedures and telated fees, inciuding mârters such as the retrospective application of
accounting changes and changes in classihcation.
G.A,SB Starement No.6s,ActvuntingandfnanÈal rEor-fingforpention¡- an amendment of GASB Sialemenl No. 27,wlll
signihcantly impact the accounting for the pension plan liability. The estimated fees only include the impact of
No. 68 on our audit procedures. The effective date for govemmental entities to adopt this standard is for fiscal
periods beginning after June 1'5, 2014.
Other costs
Except with respect to a dispute or litigation betu¡een Grant Thomton and the City, our costs and time spent
in legal and regulatory matters or proceedings arising ftom our engagement, such as subpoenas, testimony, or
consultation involving private litigation, arbitration, industry, of government regulatory inquiries, whether made
at the Ciry's request or by subpoena, will be billed to the Ciry separately'
Professional standards impose additional responsibilities regatding the reporting of illegal acts that have or may
have occurred. To ñrlfilt our responsibijities, u/e mây need to consult with City counsel or counsel of our
choosing about any illegal acts that we become arvare of. Additional fees, including legal fees, wìll be billed to
the Ciry. The City agrees to ensure full cooperation with any procedures that v/e may deem necessary to
perform.
Right to terminate services for nonpayment
In the event of nonpayment, we retain the right to (a) suspend the performance of our services, þ) change the
payment conditions under this Engagement Letter, or (c) terminâte our services. If rve elect to suspend our
services, such services v¡ill not be resumed until your account is paid as agreed. Altematively, if u¡e elect to
terminate our services fot uonpayment, the Ciry wilt be obligated to comPensâte us for all time expended and
.
to reimburse us fot all exPenses thtough the date of termination.
Other matters
Relationship to Grant Thornton Intetnational Ltd
Grant Thomton is the U.S. member firm of Grant'fhomton International Ltd ('GTIL"), an organization of
independently owned ancl managed accounting and consulting frrms. References to GTIL âre to Gtant
Thornton Intemational Ltd. GTIL and the member hrms are not a wotldv¡ide partnership' Services are
Grant Thornton LLP
LJ.S. member firm of Grant ïhornton lnternaliof,al Ltd
ffi CnntThornton
delivered independently by the member fums. These flrms are nor members of one international partnership
or otherwise legal partners v¡ith each other intematronâly, nor is any one Fum responsible for the services or
activities of any other ítm.
Use of third-party sewice providers and affiliates
Grant Thomton may use third-parfy service providers, such as independent contractors, specialists, or vendots,
to assist in providing our professionaì services. We may also use GTIL member firms, othcr affiliates, or other
accounting frrms. Such entjties may be located within or outside the United States.
Grant Thornton also mav use the technology and resources of the following entities to assist us as follows:
o GT US Shared Services Center India Private Limited, an afiliate of Grant Thornton located in Bangalore,
lndia - assists us in providing our professional services
c Capital Conltrmation, Inc. - electronic bank confirmaúon services
You hereby consent and authorize us to disclose City informaúon to the above named entities'
Peer review report
GTC.GAS requires that we provide you with â copy of our most recent triennial qualiry control review rePort'
Âccordingly, our May 31,2014 Peer Review Report accompanies the Engagement Letter.
Privacy
Grant Thornton is committed to protecting personal information. We wi-ll maintain such information in
conädence in accordance..vitìr professional standards and governing laws. Therefote, any personal information
provided to us by the City will be kept confidentiai ¿ncl not disclosed to ^rry third parry unless expressly
permitted by the Ciry or tequired by law, reguiation, legal process, or professional standards. The City is
responsible for obtaining, pursuant to law or regulation, consents ftom parties that ptovided the City with their
personal informa¿ìon, which v¡ill be obtained, used, aud disclosed by Grant Thornton for its required pu¡poses.
Documentation
The documentation for this engagement is the ptoperty of Grant Thomton and constitutes confidential
information. rffe have a responsibility to retain the documentation for a period of time sufficient to satis$t any
applicable legal or regtlatory requirements for records retention.
Pursuant to law or regulation, we mây be requested to make certain documentation available to reguiators,
governmenral agencies, or.their representaúves ("Regulators'). If requested, access to the documentation will
be provided to the Regulators under our superwision. '\)Ve may aiso provide copies o[ selected documentation,
which tire Regulators may distribute to other governm.ental agencies or third parties. You hereby acknowledge
we will allov¡ and authorize us to allow the Regulators âccess to, and copies of, the documentation in this
lrralìnef .
Electronic communications
During the course of our engagement, we may need to electronically transmit conhdential infortnation to each
other and to third-parry service providcrs or other entitìes engaged by either Grant Thornton or the City.
Electronic methods include telephones, cell phones, e-mail, and fax. These technologres ptovide a fast and
convenient way to communicate- Horvever, all forms of electronic communication have inherent security
Grant Thornton LLP
U.S. member firm of Grant lhoroton lnternational Ltd
ffi CnntThornton
weaknesses, and the risk of compromised conûdentiality cannot be eliminated' The City agrees to the use ol
electronic methods to transmit and receive infotmation, including confidential information.
Standatds of petfotmance
We will perform our services in conformiry with the terms exPressly set forth in this Engagement letter,
including all applicable professional standards. Accordingly, our services shall be evaluated solely on our
substantial conformance with such terms and standards. Any claim of nonconforrnance must be cleady and
convincingly shown.
With respect to the sewices and this Engagement Lerrer, in no event shall the liabiJity of Grant Thornton and
it, pr"r"nt, future, and former partners, principals, directors, employees, agents, and contractors for any claim,
inJuding but not limited to Grant Thornton's own neglþnce, exceed the fees it receives for the portion of the
work girring rise to such liability. This limitation shall .not apply to the extent that it is finaily detetmined that
"rry
.l^i*r, losses, or damages are the result of Gtant Thornton's gross negligence or u¡illful misconduct' In
addition, Grant Thornton shall not be liable for any special, consequential, incidenal, ot exemplary damages
or loss (nor any lost prohts, interesg taxes, penalties, loss of savings, or lost business oPPoffunity) even if Grant
Thornron was advised in advance of such potential damages. This paragraph and the pa:agaph directly below
shall apply ro any rype of claim asserted, including contract, starute, tort, or strict liabilify, whether by the City'
Grant Thomton, or others'
Further, the City shall, upon receipt of written notice, indemnify and hold harmless Grant lfhornton and its
pfesent, furufe, and forme, pattners, principals, ditectors, employees, agents' and contractors from and against
,ny liabiJity and damages (inclucling punitive damages), fees, expenses, losses, demands, and costs (including
defense costs) associated with any claim arising ltom or relating to the City's knowing misrepresentations ot
false or incomplete information provided to Grant thomton. In the event of any controversy or claim agtinst
Grant Thomton arising from or related to the services described herein, Grant Thomton shall be entitled to
detend itself from such contoversy or claim and to parúcipate in any settlement, administrative, or juclicial
proceedings.
If because of a change in the Ciry's status or due to any other reason, any provision in this Engagernent letter
would be prohibited by laws, regulations, or published interpretations by govemmental bodies, commissions'
state boards of accountancy, or otherregulatory agencies, such provision shall, to thzt extent, be of no further
force and effect, and the Engagement Letter shall consist of the remaining portions'
Dispute resolution
4.1, çenoorrersy or claím arising out of or telaúng to the services, related fees, ot this Engagement Letter shall
first be submitted to mediaúon. A mediator will be selected by agteement of the parties, ot if the parties cannot
^gree, ^ mediator acceptable to all parties witl be appointed by the American Arbitration ,{ssociation
çì¡rg',¡. The mediatior, *iI pro...d in accordance with the customary practice of mediation' In the unlìkely
evenr rhât any dispute or claim cannot be resolved by mediation, we both recognize that the matter will probably
involve complex business or accounting issues that would be decided most equitably to us both by a judge
hearing the evidence rvithout a jury. Accordirgly, to the extent no$/ or hereafter permitted by applicabie law,
the CiÇ and Grant Thomton agree ro waive any right to a trial by jury in any action, proceeding, or counterclaim
arising out of or telating to our services or this Engagement Letter'
Grant Thorrilon LLP
U,S, member firm ol Grant lhornton lntern¿t¡onal Ltd
ffi Cr.ntThornton
If the above jury tnahvaiver is determined to be prohibited by applicable iaw, then the parties agtee that the
dispute or claim shall be settled by binding arbitration. The arbitration proceeding shall take place in the city in
which the Grant Thomton office providing the relevant services is located, unless the parties mutually agree to
a different location. The proceeding shall be govetned by the provisions of the Federal Arbitration Act ('FAA')
and v¡i1l proceed in accordance with the then current Ârbitration Rules for Ptofessional Accounting and Related
Disputes of the A,{,t, except that pre-headng discovery must be specifically authorized by the arbitrator. The
arbitrator will be selected from A,{r\, JAMS, the Centet for Public Resources, or any other internationally or
nationally-recognized organization murually agreed upon by the patties. Potential arbiuator names r¡'ill be
exchanged within 15 days of the patties' agreement to settle the dispute or claim by binding arbittation, and
arbitration will thereafter proceed expeditiously. The arbitraúon wi-ll be conducted before a single arbitrator,
experienced in accounting and auditing mattefs. The arbitrator shall have no authority to award non-monetary
or equitable relief and u¡ill not have the right to award punitive damages. The award of the arbitrat.ion shall be
in r.vriting and shall be accompanied by a well-reasoned opinion. The award issued by the arbittator may be
confrrmed in a judgment bv any federal or state court of competent jurisdiction. Each parry shall be responsible
for thei¡ own cosrs associared with the arbitratron, except that the costs of the arbiLrator shall be equally drvided
by the parties. The arbitration proceeding and all information disclosed durrng the arbit¡ation shall be
maintained as confidentiai, except as mây be required for disclosute to professional or regulatory bodies or in
a related conf,rdential arbitration. In no event shall a demand fot arbitration be made after the date when
inst-itution of legal or equitable proceedings based on such claim would be barred under the applicable stâtute
of limitations.
Àuthorization
This Engagement Letrer sets forth the entire understanding between the City and Grant Thomton regarding
the serwices described herein and supersedes any previous proposais, correspondence, and understandings,
whether written or oral. If :ìny portion of this Engagement Letter is held invalid, it is agreed that such invalidirf
shall not affect any of the remaining portions.
Please confirm your acceptance of this Engagement Letteï by signing below ¿nd teturning one copy to us in
the enclosed self-addressed envelope. In addition, please provide the signed copies of the Engagement Letter
to the Ciry's Finance Director, Paul Becker, in otder for management to acknowledge the terms hetein.
Sincerely,
GR,\NTTHORNTON LT-P
Dan Barrón
Partner
cc: Paul Becket, Finance Director
Enc: }r4.ay 31.,201.4Peer Review Report
Grant Thornton LLP
U,S. member fìrm of Gr¿nl Thornton lnternational Ltd
11
ffi CnntThornton
Agreed and accepted by:
12
Attest by:
Managementts acknowledgment of the Engagement Lettet by:
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Date:2-- g - 2¡otÇ
Paul Becker, Finance Drrector
Grant Thornton LLP
U.S. member lirm ot Grant fhornion lnter¡at¡onal Ltd
CITY OF FA
BKN
GPAS & Advisors
910 E. St. Louis SÍeet, Suite 200// P.O. Box 1190// Springfield, MO ó5801-1190
Ç +t Z.ess.ezOt t / fax 4i7.865.1682 lt bkd.comrtr
System Review Report
Tothe Parhers of
Grant Thomton LLP
and the National Peer Review Committee
of the American lnstitute of Cerfified
Public Accountants Peer Review Board
\îe have reviewed the system of quality control for the accounting and auditing practice of Grant
Thomton LLP (the firm) applicable to engagements not subject to PCAOB permanent inspection in effect
for the year ended May 3 1, 20 14. Our peer review was conducted in accordance with the Standards for
Perfomring and Reporting on Peer Reviews established by the Peer Review Board of the American
Institute of Certified Public Account¿nts. As a part of our peer review, we considered reviews by
regulatory entities, if applicable, in determining the nature and extent of our procedures. The firm is
responsible for designing a system of quality control and complying with it to provide the firm with
reasonable rlssurance 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 flrm'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
wrwv. aicpa. orgy'prsumm ary.
As required by the standardg engagements selected for review included engagements performed under
Government Auditîng Standards, audits of employee benefit plans, audits performed under FDICIA,
audits of carrying broker-dealers and examinations of service organizations [Service Organizations
Control (SOC) I engagements.l
In our opinion, the system of quality control for the accounting and auditing practice of Grant Thomton
LLP applicable to engagements not subject to PCAOB permanent inspection in effect for the year ended
May 31, 20l4,has been suitably designed and complied with to provide the frm 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 dertciency(ies) or fail. Grant Thomton LLP has
received a peer review rating of pass.
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December 1,2014