HomeMy WebLinkAbout23-19 RESOLUTION113 West Mountain Street
Fayetteville, AR 72701
(479) 575-8323
Resolution: 23-19
File Number: 2019-0035
BKD, LLP:
A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN AN ENGAGEMENT LETTER WITH
BKD, LLP AND PAY AN AMOUNT NOT TO EXCEED $103,650.00 FOR AUDITING SERVICES
FOR THE 2018 AUDIT
WHEREAS, on December 5, 2017, the City Council passed Resolution No. 254-17 which authorized a
one-year contract with four annual automatic renewals with BKD, LLP for auditing services; and
WHEREAS, BKD, LLP has presented an engagement letter describing the services to be provided in
the second year of this contract that requires Mayor Jordan's signature.
NOW, THEREFORE, 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 Mayor Jordan to sign the
engagement letter attached to this Resolution confirming the terms of the City's continued engagement
of BKD, LLP and further authorizes a payment in an amount not to exceed $103,650.00 for auditing
services for the 2018 audit.
PASSED and APPROVED on 2/5/2019
- r;. City of Fayetteville, Arkansas
Text File
- File Number: 2019-0035
Agenda Date: 2/5/2019 Version: 1
In Control: City Council Meeting
Agenda Number: A. 4
BKD, LLP:
113 West Mountain Street
Fayetteville, AR 72701
(479) 575-8323
Status: Passed
File Type: Resolution
A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN AN ENGAGEMENT LETTER WITH
BKD, LLP AND PAY AN AMOUNT NOT TO EXCEED $103,650.00 FOR AUDITING SERVICES
FOR THE 2018 AUDIT
WHEREAS, on December 5, 2017, the City Council passed Resolution No. 254-17 which authorized a
one-year contract with four annual automatic renewals with BKD, LLP for auditing services; and
WHEREAS, BKD, LLP has presented an engagement letter describing the services to be provided in the
second year of this contract that requires Mayor Jordan's signature.
NOW, THEREFORE, 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 Mayor Jordan to sign the engagement
letter attached to this Resolution confirming the terms of the City's continued engagement of BKD, LLP and
further authorizes a payment in an amount not to exceed $103,650.00 for auditing services for the 2018 audit.
City of Fayetteville, Arkansas Page 1 Printed on 2/7/2019
City of Fayetteville Staff Review Form
2019-0035
Legistar File ID
2/5/2019
City Council Meeting Date - Agenda Item Only
N/A for Non -Agenda Item
Marsha Hertweck 1/11/2019 ACCOUNTING & AUDIT (131)
Submitted By Submitted Date Division / Department
Action Recommendation:
Approval of the second year of a five year contract with BKD,LLP for annual audit services for the City's 2018
financial audit.
Budget Impact:
various
Account Number
Project Number
Budgeted Item? Yes Current Budget
Funds Obligated
Current Balance
Does item have a cost? Yes Item Cost
Budget Adjustment Attached? Budget Adjustment
Purchase Order Number:
Change Order Number:
Original Contract Number:
Comments:
Remaining Budget
Fund
Project Title
$ 103,650.00
$ 103,290.00
V209803.
Previous Ordinance or Resolution #
Approval Date:
CITY OF
_ FAYETTEVILLE
ARKANSAS
MEETING OF FEBRUARY 5, 2019
TO: Mayor and City Council
FROM: Marsha Hertweck, Accounting Director
DATE: Jbnuary 11, 2019
SUBJECT: BKD, LLP contract
CITY COUNCIL MEMO
RECOMMENDATION:
Approval of the second year of a five. year contract with BKD,LLP for annual audit services for
the City's 2018 financial audit.
BACKGROUND:
The City is required by Arkansas statutes to have an annual financial audit by either Legislative
Audit or a Certified Public Accounting firm licensed in Arkansas. Because of the requirements of
the City's bond indentures, the City has utilized the services of a private CPA firm to perform
these mandated financial audits.
BKD,LLP 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 2017 audit. Under
the 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, BKD will issue a report on
compliance for the City's major federal awards programs and on internal controls over
compliance as required by the Uniform Guidance. The Uniform Guidance program is the
primary mechanism used by federal agencies to ensure accountability for federal awards to
non-federal entities.
Finally, BKD will also provide 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.
DISCUSSION:
Staff is recommending approval of the contract with BKD,LLP for auditing services for the 2018
annual audit. The second year of the contract with BKD has maximum fees of $103,650.
Mailing Address:
113 W. Mountain Street www.fayetteville-ar.gov
Fayetteville, AR 72701
BUDGET/STAFF IMPACT:
The cost of the 2018 audit is 103,290. The audit has been budgeted in the various funds of the
City in the 2019 budget.
Attachments:
Staff Review form
City Council Memo
Original Contract
BK0,P 809 S 52nd Strout, Suitr,. A// RO Rnx IR93 // Rngnre, AR 77.757.189.3
CPAs & Advisors 0 4/9.845.02%0 // fax 419.845.0840 // bkd.com
�lI
December 21, 2018
City Council
Lioneld Jordan, Mayor
Paul Becker, Chief Financial Officer
City of Fayetteville, Arkansas
113 W. Mountain Street
Fayetteville, AR 72701
We are pleased to confirm, the arrangements of our engagement and the nature of the services we
will provide to City of Fayetteville, Arkansas (the City).
ENGAGEMENT OBJECTWES AND SCOPE
We will audit the basic financial statements of the City as of and for the year ended December 31,
2018, and the related notes to the financial statements.
Our audit will be conducted with the objectives of.
✓ Expressing an opinion on the financial statements.
✓ Issuing a report on your compliance based on the audit of your financial statements.
✓ Issuing a report on your internal control over financial reporting based on the audit of your
financial statements.
✓ Expressing 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 (OMB)
Compliance Supplement that are applicable to each of your major federal award programs.
✓ Issuing 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.
✓ Issuing a report on your schedule of expenditures of federal awards.
Praxity':
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CJUEP ALLITII I Or
�4UEPC!I IIEni FIAIAS
City Council
Lioneld Jordan, Mayor
Paul Becker, Chief Financial Officer
City of Fayetteville, Arkansas
Page 2
OUR RESPONSIBILITIES
We will conduct our audit in accordance with auditing standards generally accepted in the United
States of America (GRAS), the standards applicable to financial audits contained in Government
Auditing Standards issued by the Comptroller General of the United States and Title 2 U.S. Code
of Federal Regulations (CFR) Part 200, Unifonn Administrative Requirements, Cost Principles,
and Audit Requirements for Federal Awards (Uniform Guidance). Those standards 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 flee of material misstatement, whether caused by fiaud or
error.
✓ The audit of compliance with the types of compliance requirements described in the OMB
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.
An audit involves perfortning procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
stateinenls, whether due to error or fraud. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
Because of the inherent limitations of an audit, together with the inherent limitations of internal
control, an unavoidable risk that some material misstatements or noncompliance having a direct
and material effect may not be detected exists, even though the audit is properly planned and
performed in accordance with GARS.
In making our risk assessments, we consider internal control relevant to the entity's preparation
and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. However, we will communicate to you in writing
concerning any significant deficiencies or material weaknesses in internal control relevant to the
audit of the financial statements that we have identified during the audit. Also, in the future,
procedures could become inadequate because of changes in conditions or deterioration in design
or operation. Two or more people may also circumvent controls, or management may override
the system.
City Council
Lioneld Jordan, Mayor
Paul Becker, Chief Financial Officer
City of Fayetteville, Arkansas
Page 3
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 terns and fees of such an engagement would be documented in a separate letter to be
signed by you and BKD.
David Coleman, Partner is responsible for supervising the engagement and authorizing the
signing of the report or reports.
We will issue a written report upon completion of our audit of the City's financial statements.
Our report will be addressed to the City Council of the City of Fayetteville, Arkansas. You are
responsible to distribute our reports to other officials who have legal oversight authority or those
responsible for acting on audit findings and recommendations, and to others authorized to
receive such reports. We cannot provide assurance that an u mnodified opinion will be
expressed. Circumstances may arise in which it is necessary for us to modify our opinion, add
an emphasis of matter or other matter paragraph(s), or withdraw from the engagement. If we
discover conditions that may prohibit us from issuing a standard report, we will notify you as
well. In such circumstances, further arrangements may be necessary to continue our
engagement.
We will also express an opinion on whether the City's combining and individual find statements
and schedules, and the schedule of expenditures of federal and state awards ("supplementary
information") are fairly stated, in all material respects, in relation to the financial statements as a
whole.
YOUR RESPONSIBILITIES
Our audit will be conducted on the basis that management acknowledge and understand that, they
have responsibility:
1. For the preparation and fair presentation of the financial statements in accordance
with accounting principles generally accepted in the United States of America;
2. For the design, implementation and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error;
3. For identifying and ensuring compliance with the laws, regulations, contracts and
grants applicable to your activities (including your federal award programs); and
City Council
Lioneld Jordan, Mayor
Paul Becker, Chief Financial Officer
City of Fayetteville, Arkansas
Page 4
4. To provide us with:
a. Access to all information of which management is aware that is relevant to the
preparation and fair presentation of the financial statements such as records,
documentation and other matters;
b. Additional information that we may request from management for the purpose
of the audit; and
c. Unrestricted access to persons within the entity from whom we determine it
necessary to obtain audit evidence.
As part of our audit process, we will request fiom management written confirmation
acknowledging certain responsibilities outlined in this engagement letter and confnyning:
® The availability of this information
• Certain representations made dining the audits for all periods presented
® The effects of any uncorrected misstateurents, if any, resulting fiom 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
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.
With regard to supplementary information:
• Management is responsible for its preparation in accordance with applicable criteria
e Management will provide certain written representations regarding the supplementary
information at the conclusion of our engagement
• Management will include our report on this supplementary information in any
document that contains this supplementary information and indicates we have
reported on the supplementary information
• Management will make the supplementary information readily available to intended
users if it is not presented with the audited financial statements
City Council
Lioneld Jordan, Mayor
Paul Becker, Chief Financial Officer
City of Fayetteville, Arkansas
Page 5
OTHER SERVICES
The City's Compliance with Certain State Acts
We will examine management's written assertion that the City complied with certain state acts
during the year ended December 31, 2018.
The objective of our examination is the expression of an opinion in a written report about
whether the responsible party's assertion is fairly stated, in all material respects, with the
applicable criteria against which it is measured or evaluated.
The criteria to be used consist of the requirements of Arkansas Act 15 of 1985 and the following
Arkansas statutes:
1. Arkansas Municipal Accounting Law of 1973, § 14-59-101 et seq.;
2. Arkansas District Courts and City Courts Accounting Law, § 16-10-201 et seq.;
3. Improvement contracts, §§ 22-9-202 — 22-9-204;
4. Budgets, purchases, and payments of claims, etc., § 14-58-201 et seq. and § 14-58-301
et seq.;
5. Investment of public finds, § 19-1-501 et seq.; and
6. Deposit of public fiords, §§ 19-8-101-19-8-107.
We will conduct our examination in accordance with attestation standards established by the
American Institute of Certified Public Accountants. Those standards require that we plan and
perfonn the examination to obtain reasonable, rather than absolute, assurance about whether the
subject matter as measured or evaluated against the criteria is flee of material misstatement.
Because of the inherent limitations of an examination engagement, together with the inherent
limitations of internal control, an unavoidable risk that some material misstatements may not be
detected exists, even though the examination is properly planned and performed in accordance
with the attestation standards.
Our engagement will not include a detailed examination of every transaction and cannot be relied
on to disclose all errors, fi-aud or illegal acts that may exist. However, we will inform you of any
such matters, if material, that come to our attention.
We cannot provide assurance that an uu modified opinion will be expressed. Circumstances may
arise in which it is necessary for us to modify our opinion or withdraw fiom the engagement. If
we discover conditions which may prohibit us fiom issuing a standard examination report, we
will notify you. In such circuurstances, finther arrangements may be necessary to continue our
engagement.
City Council
Lioneld Jordan, Mayor
Paul Becker, Chief Financial Officer
City of Fayetteville, Arkansas
Page 6
To facilitate our engagement, management is responsible for providing a written assertion about
the measurement or evaluation of the subject matter against the criteria, supplying us with all
necessary information and for allowing us access to personnel to assist in performing our
services. It should be understood that management is responsible for the accuracy and
completeness of these items, for the subject matter and the written assertions) referred to above
and for selecting and determining the appropriateness of the criteria.
At the conclusion of our engagement, management will provide to us a letter confmning these
responsibilities, whether it is aware of any material misstatements in the subject matter or
assertion, and that it has disclosed all known events subsequent to the period (or point in time) of
the subject matter being reported on that would have a material effect on the subject matter or
assertion.
Management is responsible for establishing and maintaining effective internal control over
financial reporting 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 fiaud
and illegal acts. Management is also responsible for identifying and ensuring compliance with
the laws and regulations applicable to your activities and for establishing and maintaining
effective internal control over compliance.
Electronic Submission
We will also complete the auditee portion of the Form SF -SAC (Data Collection Form) through
the Federal Audit Clearinghouse. We will not make the submission on your behalf. You will
review a draft(s) of the submission prior to transmission and agree that you are solely responsible
for approving the final draft for transmission as well as for the auditee submission and
certification.
We may perform. other services for you not covered by this engagement letter. You agree to
assume full responsibility for the substantive outcomes of the services described above and for
any other services that we may provide, including any fundings that may result. You also
acknowledge that those services are adequate for your ptuposes and that you will establish and
monitor the performance of those sei vices to ensure that they meet management's objectives.
Any and all decisions involving management responsibilities 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.
City Council
Lioneld Jordan, Mayor
Paul Becker, Chief Financial Officer
City of Fayetteville, Arkansas
Page 7
ENGAGEMENT FEES
The fee for our sei vices will $103,290
Our pricing for this engagement and our fee structure are based upon the expectation that our
invoices will be paid promptly. We will issue progress billings during the course of our
engagement, and payment of our invoices is due upon receipt. Interest will be charged on any
impaid balance after 30 days at the rate of 10% per annum, or as allowed by law at the earliest
date thereafter, and highest applicable rate if less than 10%.
The following new accounting standards are effective for your fiscal year ending
December 31, 2018.
GASB Statement No. 75 — Accounting and Financial Reporting for Posteniployment
Benefits other than Pensions.
GASB Statement No. 85 — Omnibus 2017
0 GASB Statement No. 86 —Certain Debt Extinguishment Issues
The impact of these standards on your financial statements will depend on your facts and
circumstances. You should evaluate the effect of these standards well in advance of your fiscal
year to obtain any additional information necessary and effectively implement them. Our fees do
not include time to assist you with implementing these standards. Should you require assistance,
our fees will increase.
Our fees are based upon the understanding that your personnel will be available to assist us.
Assistance from your personnel is expected to include:
Preparing audit schedules to support all significant balance sheet and certain other
accounts
e Responding to auditor inquiries
• Preparing audit confirmation and other letters
® Pulling selected invoices and other docunuents from files
® Helping to resolve any differences or exceptions noted
We will provide you with a detailed list of assistance and schedules required and the date such
assistance and schedules are to be provided before the audit begins. All schedules should be
provided in electronic form unless indicated otherwise.
Our timely completion of the audit depends on your (Imely and accurate schedule and analyses
preparation and on the availability of your personnel to provide other assistance. If there are
inaccuracies or delays in preparing this material, or if we experience other assistance difficulties
that add a significant amount of time to our work, our fees will increase.
City Council
Lioneld Jordan, Mayor
Paul Becker, Chief Financial Officer
City of Fayetteville, Arkansas
Page 8
Our engagement fee does not include any time for post -engagement consultation with your
personnel or third parties, consent letters and related procedtues for the use of our reports in
offering documents, inquiries from regulators or testimony or deposition regarding any
subpoena. Charges for such services will be billed separately.
Our fees may also increase if our duties or responsibilities are increased by rulemaking of any
regulatory body or any additional new accounting or auditing standards.
If our invoices for this or any other engagement you may have with BKD are not paid within 30
days, we may suspend or terminate our services for this or any other engagement. In the event
our work is suspended or terminated as a result of nonpayment, you agree we will not be
responsible for any consequences to you.
OTHER ENGAGEMENT MATTERS AND LINUTATIONS
BKD is not acting as your municipal advisor under Section 15B of the Securities Exchange Act
of 1934, as amended. As such, BKD is not recommending any action to you and does not owe
you a fiduciary duty with respect to any information or communications regarding municipal
financial products or the issuance of municipal securities. You should discuss such information
or communications with any and all internal or external advisors and experts you deem
approl)date before acting on any suchinformation or material provided by BKD.
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.
City Council
Lioneld Jordan, Mayor
Paul Becker, Chief Financial Officer
City of Fayetteville, Arkansas
Page 9
Either of us may terminate these services at any time. Both of us must agree, in writing, to any
future modifications or extensions. If services are terminated, you agree to pay us for time
expended to date. In addition, you will be billed travel costs and fees for services from other
professionals, if any, as well as an administrative fee of 4% to cover items such as copies,
postage and other delivery charges, supplies, technology -related costs such as computer
processing, software licensing, research and library databases and similar expense items.
If any provision of this agreement is declared invalid or unenforceable, no other provision of this
agreement is affected and all other provisions remain in full force and effect.
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.
We may from time to time utilize third -party service providers, e.g., domestic software
processors or legal counsel, or disclose confidential information about you to third -party service
providers in serving your account. We remain committed to maintaining the confidentiality and
security of your information. Accordingly, we maintain internal policies, procedures and
safeguards to protect the confidentiality of your information. In addition, we will secure
confidentiality agreements with all service providers to maintain the confidentiality of your
information. In the event we are unable to secure an appropriate confidentiality agreement, you
will be asked to provide your consent prior to the sharing of your confidential information with
the third -party service provider.
We will, at our discretion or upon your request, deliver financial or other confidential
information to you electronically via email or other mechanism. You recognize and accept the
risk involved, particularly in email delivery as the internet is not necessarily a secure medium of
communication as messages can be intercepted and read by those determined to do so.
You agree you will not modify these documents for internal use or for distribution to third
parties. You also understand that we may on occasion send you documents marked as draft and
understand that those are for your review purpose only, should not be distributed in any way and
should be destroyed as soon as possible.
The entity may wish to include our report on these financial statements in an exempt offering
document. The entity agrees that the aforementioned auditor's report, or reference to our firm,
will not be included in any such offering document without notifying us. Any agreement to
perform work in connection with an exempt offering document, including providing agreement
for the use of the auditor's report in the exempt offering document, will be a separate
engagement.
City Council
Lioneld Jordan, Mayor
Paul Becker, Chief Financial Officer
City of Fayetteville, Arkansas
Page 10
Any exempt offering document issued by the entity with which we are not involved will clearly
indicate that we are not involved by including a disclosure such as, "BKD, LLP, our independent
auditor, has not been engaged to perform and has not performed, since the date of its report
included herein, any procedures on the financial statements addressed in that report. BKD, LLP,
also has not performed any procedures relating to this offering document."
You agree to notify us if you desire to place these financial statements or our report thereon
along with other information, such as a report by management or those charged with governance
on operations, financial summaries or highlights, financial ratios, etc., on an electronic site. You
recognize that we have no responsibility as auditors to review information contained in
electronic sites.
Any time you intend to reference our firm name in any manner in any published materials,
including on an electronic site, you agree to provide us with draft materials for our review and
approval before publishing or posting such information.
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 thea professional and ethical obligations. However, unlike the
partners in a general partnership, the partners hi 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.
IiIPAA BUSINESS ASSOCIATE AGREEMENT
We agree not to use or disclose Protected Health Information of your employees (hereinafter
referred to as "PHP') obtained or produced in any form of media during the course of our work in
a manner prohibited by HIPAA, as amended. We may use or disclose PHI for purposes of
(a) performing our engagement, (b) management and administration of BKD, or (c) carrying out
legal responsibilities of BKD. We will not fiuther disclose infarmation except as permitted or
required by this contract or as required by law. When using or disclosing PHI in relation to this
engagement, we will lirnit disclosures as required by HIPAA. We will not use PHI in any
marketing activities in a manner that would violate HIPAA. We represent to you that we have
implemented what we consider to be appropriate administrative, physical and technical
safeguards to protect the confidentiality, integrity and availability of your PHI as required for us
as a business associate to comply with HIPAA.
City Council
Lioneld Jordan, Mayor
Paul Becker, Chief Financial Officer
City of Fayetteville, Arkansas
Page 11
With respect to your PHI, we will report to you any breach (as defined in 45 CFR 164.402),
material security incident or use or disclosure not authorized by this agreement and, to the extent
practical, assist you in mitigating any harmful effects caused by breaches, material security
incidents or unauthorized uses or disclosures of which we become aware. To assist you in
fulfilling your responsibility to notify impacted individuals and others of a breach involving
unsecured PHI (as required under 45 CFR 164.400 et seq.), in this report we will identify to you,
to the extent reasonably possible:
1. Each individual whose unsecured PHI was subject to the breach.
2. Any other available information you are required to include in your notification to
such individual(s) or others under 45 CFR 164.404(c).
We agree that any material violation of these confidentiality provisions by us entitles you to
terminate this engagement. Similarly, if we become aware of a violation of HIPAA by you that
cannot be or is not timely cured, we may be obligated to terminate this engagement.
BKD agrees to:
1. Upon their request, make available to the Secretary of Health and Human Services
(HHS) our internal practices and books and records relating to the use and disclosure
of PHI for purposes of determining your compliance with the Security and Privacy
Rule, subject to any applicable legal privileges.
2. Make available information necessary for you to make an accounting of disclosures
of PHI about an individual.
3. To the extent we maintain information that is part of a Designated Record Set, make
available information necessary for you to respond to requests by individuals for
access to PHI that is not in your possession but is considered part of a Designated
Record Set.
4. Upon receipt of a written request from you, incorporate any amendments or
corrections to PHI contained in our workpapers in accordance with the Security and
Privacy Rule to the extent such PHI is considered part of a Designated Record Set.
For purposes of this agreement, the term "Security and Privacy Rule" refers to the final rules
published to implement the Administrative Simplification provisions of the Health Insurance
Portability and Accountability Act of 1996, specifically 45 CFR Parts 160 and 164. The terms
"Protected Health Information" and "Designated Record Set" have the same meaning as defined
in the Security and Privacy Rule.
City Council
Lioneld Jordan, Mayor
Paul Becker, Chief Financial Officer
City of Fayetteville, Arkansas
Page 12
At the conclusion or termination of this engagement, any PHI retained by us will be subject to
the same safeguards as for active engagements.
We will obtain from any agents, including subcontractors, to whom we provide PHI received
from you, or created or received by us on behalf of you, an agreement to the same restrictions
and conditions that apply to us with respect to such PHI.
To the extent that any relevant provision of HIPAA is eliminated or held to be invalid by a court
of coinpetentjtrrisdiction, the corresponding portion of this agreement shall be deemed of no
force and effect for any purpose. To the extent that any relevant provision of HIPAA is
materially amended in a manner that changes the obligations of business associates or covered
entities that are embodied in term(s) of this engagement, the Parties agree to negotiate in good
faith appropriate amendment(s) to this engagement to give effect to such revised obligations. In
addition, the terms of this engagement should be construed in light of any interpretation and/or
guidance on HIPAA issued by HHS from time to time.
Government Auditing Standards require that we provide you with a copy of our most recent
external peer review report and any letter of comment, and any subsequent peer review reports
and letters of comment received during the period of the contract. Our most recent peer review
report accompanies this letter.
Please sign and return the attached copy of this letter to indicate your acknowledgement of, and
agreement with, the arrangements for our audit of the financial statements including our
respective responsibilities. If the signed copy you return to us is in electronic form, you agree
that such copy shall be legally heated as a "duplicate original' of this agreement.
BKD, LLP
to on behalf of
CITY YET LE, SAS
BY .I
DATE _ ` p u! l `"1
BY i
Paul Becker, Chief Financial Officer
DATE 2-- l 1 - '.O k
PIkN
8550 United Plaza Blvd., Ste. 1001 — Baton Rouge, LA 70809
225-922-4600 Phone — 225-922-4611 Fax — pncpa.ronj
Postlelhwaite & Nettervilte Postlethwaite & Netterville and Associates, L.L.C.
Report on the Finn's System of Quality Control
To the Partners of
BKD, LLP
and the National Peer Review Committee
We have reviewed the system of quality control for the accounting and auditing practice of BKD, LLP (the firm)
applicable to engagements not subject to PCAOB iuspection in effect for the year ended May 31, 2017, Our peer
review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established
by the Peer Review Board of the American Institute of Certified Public Accountants (Standards).
A summary of the nature, objectives, scope, limitations of, and the procedures performed in a System Review as
described in the Standards may be found at www.aicna.org4 rstuumary, The shmu nary also includes an explanation
of how engagements identified as not performed or reported in conformity with applicable professional standards, if
any, are evaluated by a peer reviewer to determine a peer review rating.
Firm's Responsibility
The Pum is responsible for designing a system of quality control and cohmplyiug with it to provide the firm with
reasonable assurance of performing and reporting in conformity with applicable professional standards in all material
respects. The firm is also responsible fol- evaluating actions to protnptly remediate engagements deemed as not
performed or reported in conformity with professional standards, when appropriate, and for remediating weaknesses
in its system of quality control, if any.
Peer Reviewer's Responsibility
Our responsibility is to express an opinion on the design of the system of quality control and the firm's compliance
therewillh based on our review.
Required Selections and Considerations
Faigagements selected for review included engagements performed under Government Auditing Standar is, including
compliance audits tinder Single Audit Act, audits of employee benefit plans, audits perfornhed under FDICIA, an
audit of carrying broker-dealers, and examinations of service organizations [SOC 1 and SOC 2 engagements].
As pati of our peer review, we considered reviews by regulatory entities as communicated to the firm, if applicable,
h) detervriuing the nature and extent of our procedures,
Opinion
In our opinion, the system of quality control for the accounting and auditing practice of BKD, LLP applicable to
cagagenmemts not subject to PCAOB inspection in effect for the year ended May 31, 2017, has been suitably designed
and complied with to provide the lirrh wish reasonable assurance of performing and reporting in conformity with
applicable professional standards in all material respects. Finns can receive a rating of pass, pass with
diqf-iCfen y(ies) or, fail. BKD, LLP has received a peer review rating; of pass.
Baton Rouge, Louisiana
October 6, 2017