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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: -P--L q - là.*.L o",., á,- 8-åDlLe ----llTå+i':x-ø :-*.joorr.ruu,.-,riåÉ o^,., ¿^ ¡-¿rr, ----4#¡l"tf¡$S 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. 6øP LL? Fraxity": ã]EITBEE : GLOBAL ALLINICE Oftil0€PENtEfll ftñMs December 1,2014