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HomeMy WebLinkAbout64-23 RESOLUTION113 West Mountain Street Fayetteville, AR 72701 (479)575-8323 Resolution: 64-23 File Number: 2023-329 FORVIS, LLP: A RESOLUTION TO APPROVE A ONE YEAR CONTRACT WITH FORVIS, LLP FOR AUDITING SERVICES FOR THE 2023 AUDIT IN THE AMOUNT OF $131,093.00, WITH AN OPTION TO RENEW FOR UP TO FOUR ADDITIONAL ONE YEAR TERMS BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section I: That the City Council of the City of Fayetteville, Arkansas hereby approves a one-year contract with Forvis, LLP for auditing services for the 2023 audit in the amount of $131,093.00, with an option to renew for up to four additional one year terms. PASSED and APPROVED on March 7, 2023 Poge I Attest: CITY OF W41iFAYETTEVILLE ARKANSAS MEETING OF MARCH 7, 2023 TO: Mayor Jordan and City Council THRU: Paul Becker, Chief Financial Officer FROM: Kristin Cavette, Acct Mgr- Payroll and Pension DATE: SUBJECT: FORVIS, LLP Contract CITY COUNCIL MEMO 2023-329 RECOMMENDATION: Approval of the first year of a five year contract with FORVIS, LLP for annual audit services for the City's 2023 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. FORVIS, LLP was selected by the City, following the applicable rules and regulations concerning the procurement of auditing services in RFP 22-09, for a five-year contact beginning with the 2023 audit. Under the contract, FORVIS 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, FORVIS 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, FORVIS will also provide technical assistance to the City in producing the Annual Comprehensive Financial Report (ACFR). The ACFR includes the City's financial statements as well as statistical information. DISCUSSION: Staff is recommending approval of the contract with FORVIS, LLP for the first year of auditing services for the 2023 annual audit. The first year of the contract with FORVIS has maximum fees of $131,093. The audit firm selection had not been completed prior to the 2023 budget process. BUDGET/STAFF IMPACT: The cost of the 2023 audit is $131,093. The audit has been budgeted in the various funds of the City for the 2023 budget. ATTACHMENTS: Staff Review Form for Audit Services - 1.13.23, City of Fayetteville Contract 12.31.2022 updated Mailing address: 113 W. Mountain Street www.fayetteville-ar.gov Fayetteville, AR 72701 City of Fayetteville, Arkansas 113 West Mountain Street Fayetteville, AR 72701 (479) 575-8323 - Legislation Text File #: 2023-329 FORVIS, LLP Contract A RESOLUTION TO APPROVE A ONE YEAR CONTRACT WITH FORVIS, LLP FOR AUDITING SERVICES FOR THE 2023 AUDIT IN THE AMOUNT OF $131,093.00, WITH AN OPTION TO RENEW FOR UP TO FOUR ADDITIONAL ONE YEAR TERMS 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 one-year contract with Forvis, LLP for auditing services for the 2023 audit in the amount of $131,093.00, with an option to renew for up to four additional one year terms. Page 1 Kristin Cavette Submitted By City of Fayetteville Staff Review Form 2023-329 Item ID 1/31/2023 City Council Meeting Date - Agenda Item Only N/A for Non -Agenda Item 1/17/2023 ACCOUNTING & AUDIT (131) Submitted Date Division / Department Action Recommendation: Approval of the first year of a five year contract with FORVIS, LLP for annual audit services beginning in 2023 for the City's 2022 financial audit. various Account Number Project Number Budgeted Item? Yes Does item have a direct cost? Yes Is a Budget Adjustment attached? No Budget Impact: Fund Project Title Total Amended Budget $ - Expenses (Actual+Encum) $ - Available Budget Item Cost Budget Adjustment Remaining Budget V20221130 Purchase Order Number: Previous Ordinance or Resolution # Change Order Number: Approval Date: Original Contract Number: Comments: FORWS 809 S. 52nd Street, Suite A / Rogers, AR 72758 P 479.845.0270 / F 479.845.0840 forvis.com January 9, 2023 City Council Lioneld Jordan, Mayor Paul Becker, Chief Financial Officer CITY OF FAYETTEVILLE, ARKANSAS 113 W. Mountain Street Fayetteville, AR 72701 We appreciate your selection of FORVIS, LLP as your service provider and are pleased to confirm the arrangements of our engagement in this contract. Within the requirements of our professional standards and any duties owed to the public, regulatory, or other authorities, our goal is to provide you an Unmatched Client Experience. In addition to the terms set forth in this contract, including the detailed Scope of Services, our engagement is governed by the following, incorporated fully by this reference: • Terms and Conditions Addendum Summary Scope of Services As described in the attached Scope of Services, our services will include the following: CITY OF FAYETTEVILLE, ARKANSAS • Audit Services for the year ended December 31, 2022 • Attestation Examination Services for the year ended December 31, 2022 You agree to assume full responsibility for the substantive outcomes of the contracted services and for any other services we may provide, including any findings that may result. You also acknowledge these services are adequate for your purposes, and you will establish and monitor the performance of these services to ensure they meet management's objectives. All decisions involving management responsibilities related to these services will be made by you, and you accept full responsibility for such decisions. We understand you have designated a management -level individual(s) to be responsible and accountable for overseeing the performance of nonattest services, and you have determined this individual is qualified to conduct such oversight. Engagement Fees The fee for our services will be $131,093. Included in this fee are travel costs and fees for services from other professionals, if any, as well as an administrative fee of five (5) percent to cover certain technology and administrative costs associated with our services. FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office ��) PRAXITV CITY OF FAYETTEVILLE, ARKANSAS January 9, 2023 Page 2 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 • Responding to auditor inquiries • Preparing audit confirmation and other letters • Pulling selected invoices and other documents 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 pricing for this engagement and our fee structure are based upon the expectation that our invoices will be paid promptly. Payment of our invoices is due upon receipt. Our timely completion of services and the fees thereon depends on the assistance you provide us in accumulating information and responding to our inquiries. Inaccuracies or delays in providing this information or the responses may result in additional billings, untimely filings, or inability to meet other deadlines. Assistance with New Standards Assistance and additional time as a result of the adoption of the following new standards are not included within our standard engagement fees. These fees will be based on time expended and will vary based on the level of assistance and procedures required. Governmental Accounting Standards Board Statement No. 87, Leases, is effective for fiscal years beginning after June 15, 2021. Early application is encouraged. Statement No. 87 establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right -to -use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. We can assist you with the adoption by providing services which may include, but are not limited to: Assessing your readiness by assisting with the evaluation of your: o Current controls and policies o Current internal resources and system capabilities Assisting with changes required to adopt Statement No. 87, including: o Assisting with information gathering to develop an inventory of all lease agreements, service contracts, and other arrangements that may contain right -to -use lease assets o Recommending enhancements to existing controls and policies or suggesting new controls and policies to address Statement No. 87 o Documenting any changes from your previous lease recognition and reporting methods o Drafting the required disclosures The time it will take to perform the above assistance and our additional audit procedures relating to the adoption of the Statement, and any time to assist you with the adoption, may be minimized to the extent your personnel will be available to provide timely and accurate documentation and information as requested by us. CITY OF FAYETTEVILLE, ARKANSAS January 9, 2023 Page 3 Governmental Accounting Standards Board Statement No. 96, Subscription -Based Information Technology Arrangements, is effective for fiscal years beginning after June 15, 2022. Early application is encouraged. Statement No. 96 addresses the accounting for the costs related to cloud computing agreements. Under this Statement, a government reports a subscription asset and subscription liability for agreements meeting the definition of a subscription -based information technology arrangement (SBITA) and to disclose essential information about the arrangement. We can assist you with the adoption by providing services which may include, but are not limited to: Assessing your readiness by assisting with the evaluation of your: o Current controls and policies o Current internal resources and system capabilities Assisting with changes required to adopt Statement No. 96, including: o Assisting with information gathering to develop an inventory of all SBITA agreements, service contracts, and other arrangements that may contain right -to -use IT assets o Recommending enhancements to existing controls and policies or suggesting new controls and policies to address Statement No. 96 o Documenting any changes from your previous IT subscription recognition and reporting methods o Drafting the required disclosures The time it will take to perform the above assistance and our additional audit procedures relating to the adoption of the Statement, and any time to assist you with the adoption, may be minimized to the extent your personnel will be available to provide timely and accurate documentation and information as requested by us. Contract Agreement Please sign and return this contract to indicate your acknowledgment of, and agreement with, the arrangements for our services including our respective responsibilities. FORVIS, LLP FORV Is, LLP Acknowledged and agreed to as it relates to the entire contract, including the Scope of Services and Terms andPondltlg"didendum, on behalf of CITY OF FAYETTEVILLE, ARKANSAS. DATE Paul Becker, Chief Financial Officer DATE 3^07^ i.01-3 CITY OF FAYETTEVILLE, ARKANSAS January 9, 2023 Page 4 Scope of Services — Audit Services We will audit the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information and related disclosures, which collectively comprise the basic financial statements for the following entity: CITY OF FAYETTEVILLE, ARKANSAS as of and for the year ended December 31, 2022 The audit has the following broad objectives: • Obtaining reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error • Expressing opinions on the financial statements • Issuing a report on your internal control over financial reporting and compliance and other matters based on the audit of your financial statements in accordance with Government Auditing Standards • Expressing an opinion on your compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect to each of your major federal award programs in accordance with the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) • Issuing a report on your internal control over compliance in accordance with the Uniform Guidance • Issuing a report on your schedule of expenditures of federal awards You have informed us that the audited financial statements are expected to be presented along with management's Annual Comprehensive Financial Report (ACFR). Management is responsible for the other information included in the ACFR. The other information comprises the ACFR but does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements will not cover the other information, and we will not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or whether the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. We will also express an opinion on whether combining individual fund statements, and the schedules 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. We will 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. You agree to assume all management responsibilities and to oversee the nonattest services we will provide by designating an individual possessing suitable skill, knowledge, and/or experience. You acknowledge that nonattest services are not covered under Government Auditing Standards. You are responsible for: • Making all management decisions and performing all management functions • Evaluating the adequacy and results of the services performed • Accepting responsibility for the results of such services • Designing, implementing, and maintaining internal controls, including monitoring ongoing activities David Coleman, Partner is responsible for supervising the engagement and authorizing the signing of the report or reports. CITY OF FAYETTEVILLE, ARKANSAS January 9, 2023 Page 5 We will issue a written report(s) upon completion of our audit(s), addressed to the following parties: Entity Name Party Name CITY OF FAYETTEVILLE, ARKANSAS City Council 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. The following apply for the audit services described above: Our We will conduct our audit in accordance with auditing standards generally Responsibilities accepted in the United States of America (GAAS), the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States and the 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 free of material misstatement, whether caused by fraud or error The audit of compliance to obtain reasonable rather than absolute assurance about whether the entity complied with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each major federal award program We will exercise professional judgment and maintain professional skepticism throughout the audit. We will identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. We will obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. We will evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We will also conclude, based on audit evidence obtained, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time. We will identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the entity's compliance with compliance requirements subject to audit and performing such other procedures as the auditor considers necessary in the circumstances. CITY OF FAYETTEVILLE, ARKANSAS January 9, 2023 Page 6 We will obtain an understanding of the entity's internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance, regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that the auditor identified during the audit. Limitations & Reasonable assurance is a high level of assurance but is not absolute assurance Fraud and therefore is not a guarantee that an audit that is planned and conducted in accordance with GAAS will always detect a material misstatement or material noncompliance with federal award programs when it exists. Misstatements, including omissions, can arise from fraud or error and are considered material if, there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors. The risk of not detecting a material misstatement or material noncompliance resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with compliance requirements is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the entity's compliance with the requirements of the federal programs as a whole. Our understanding of internal control is not for the purpose of expressing an opinion on the effectiveness of your internal control. However, we will communicate to you in writing any significant deficiencies or material weaknesses in internal control relevant to the audit of the financial statements that we identify during the audit. We are available to perform additional procedures with regard to fraud detection and prevention at your request, subject to completion of our normal engagement acceptance procedures. The actual terms and fees of such an engagement would be documented in a separate contract to be signed by you and FORVIS. Opinion Circumstances may arise in which our report may differ from its expected form and content based on the results of our audit. Depending on the nature of these circumstances, it may be necessary for us to modify our opinion, add an emphasis -of -matter paragraph or other -matter paragraph(s) to our auditor's report, or if necessary, decline to express an opinion or withdraw from the engagement. If we discover conditions that may prohibit us from issuing a standard report, we will notify you. In such circumstances, further arrangements may be necessary to continue our engagement. CITY OF FAYETTEVILLE, ARKANSAS January 9, 2023 Page 7 Your Management and, if applicable, those charged with governance acknowledge Responsibilities and understand their responsibility for the accuracy and completeness of all information provided and for the following: Audit Support — to provide us with: o Unrestricted access to persons within the entity or within components of the entity (including management, those charged with governance, and component auditors) from whom we determine it necessary to obtain audit evidence o Information of which you are aware that is relevant to the preparation and fair presentation of the financial statements, including access to information relevant to disclosures o Information about events occurring or facts discovered subsequent to the date of the financial statements, of which management may become aware, that may affect the financial statements o Information about any known or suspected fraud affecting the entity involving management, employees with significant role in internal control, and others where fraud could have a material effect on the financials o Identification and provision of report copies of previous audits, attestation engagements, or other studies that directly relate to the objectives of the audit, including whether related recommendations have been implemented o Additional information that we may request for the purpose of the audit Internal Control and Compliance — for the: o Design, implementation, and maintenance of internal control relevant to compliance with laws and regulations and the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error o Alignment of internal control to ensure that appropriate goals and objectives are met; that management and financial information is reliable and properly reported; and that compliance with and identification of the laws, regulations, contracts, grants, or agreements (including any federal award programs) applicable to the entity's activities is achieved o Remedy, through timely and appropriate steps, of fraud and noncompliance with provisions of laws, regulations, contracts, or other agreements reported by the auditor o Establishment and maintenance of processes to track the status and address findings and recommendations of auditors Accounting and Reporting — for the: o Maintenance of adequate records, selection and application of accounting principles, and the safeguard of assets o Adjustment of the financial statements to correct material misstatements and confirmation to us in the representation letter that the effects of any uncorrected misstatements aggregated by us are immaterial, both individually and in the aggregate, to the financial statements taken as a whole o Preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America (or other basis if indicated in the contract) o Inclusion of the auditors' report in any document containing financial statements that indicates that such financial statements have been audited by us o Distribution of audit reports to any necessary parties CITY OF FAYETTEVILLE, ARKANSAS January 9, 2023 Page 8 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. Required Accounting principles generally accepted in the United States of America provide Supplementary for certain required supplementary information ("RSI") to accompany the basic Information financial statements. We understand the following RSI will accompany the basic financial statements: 1. Management's Discussion and Analysis ("MD&A") 2. Budgetary comparison 3. Pension and Other Postemployment Benefit information Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Management is responsible for the fair presentation of the RSI. As part of our engagement, we will apply certain limited procedures to the RSI in GAAS. These limited procedures will consist of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We will not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary With regard to any supplementary information that we are engaged to report on: Information • Management is responsible for its preparation in accordance with applicable criteria • 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 Such information is: • Presented for the purpose of additional analysis of the financial statements • Not a required part of the financial statements • The responsibility of management • Subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the accounting and other records used CITY OF FAYETTEVILLE, ARKANSAS January 9, 2023 Page 9 to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with GAAS Written As part of our audit process, we will request from management and, if applicable, Confirmations those charged with governance written confirmation acknowledging certain Required responsibilities outlined in this contract and confirming: The availability of this information Certain representations made during the audit for all periods presented The effects of any uncorrected misstatements, if any, resulting from errors or fraud aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole Peer Review Government Auditing Standards require that we provide you with a copy of our Report 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, upon request. If you would like a copy, please request from your engagement executive. CITY OF FAYETTEVILLE, ARKANSAS January 9, 2023 Page 10 Attestation Examination Services We will examine the written assertion made by management that the City complied with certain acts during the year ended December 31, 2022. 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: • Arkansas Municipal Accounting Law of 1973, § 14-59- 10 1 et seq.; • Arkansas District Courts and City Courts Accounting Law, § 16- 10-20 1 et seq.; • Improve contracts,§§ 22-9-202 - 22-9-204 • Budgets, purchases, and payments of claims, etc.,§ 14-58-20 1 et seq. and§ 14-58-30 1 et seq.; • Investment of public funds,§ 19- 1-501 et seq.; and • Deposit of public funds, §§ 19-8- 10 1 - 19-8- 107 The following apply for the attestation examination services described above: Our We will conduct our examination in accordance with attestation standards Responsibilities established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable rather than absolute assurance about whether the subject matter as measured or evaluated against the criteria is free of material misstatement. If we discover conditions that may prohibit us from issuing a standard report, we will notify you. In such circumstances, further arrangements may be necessary to continue our engagement. Limitations & Because of the inherent limitation of an examination engagement, together with Fraud 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, fraud, or illegal acts that may exist. However, we will inform you of any such matters, if material, that come to our attention. Report We cannot provide assurance that an unmodified opinion will be expressed. Circumstances may arise in which it is necessary for us to modify our opinion or withdraw from the engagement. If we discover conditions which may prohibit us from issuing a standard examination report, we will notify you. In such circumstances, further arrangements may be necessary to continue our engagement. Your To facilitate our engagement, management is responsible for providing a written Responsibilities 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 assertion(s) referred to above, and for selecting and determining the appropriateness of the criteria. CITY OF FAYETTEVILLE, ARKANSAS January 9, 2023 Page 11 At the conclusion of our engagement, management will provide to us a letter confirming 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 fraud 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. CITY OF FAYETTEVILLE, ARKANSAS January 9, 2023 Page 12 FORVIS, LLP Terms and Conditions Addendum GENERAL Overview. This addendum describes FORVIS LLP's standard terms and conditions ("Terms and Conditions") applicable to Our provision of services to the Client ("You"). The Terms and Conditions are a part of the contract between You and FORVIS, LLP. For the purposes of the Terms and Conditions, any reference to "Firm," "We," "Us," or "Our" is a reference to FORVIS, LLP ("FORVIS"), and any reference to "You" or "Your" is a reference to the party or parties that have engaged Us to provide services and the party or parties ultimately responsible for payment of Our fees and costs. BILLING, PAYMENT, & TERMINATION Billing and Payment Terms. We will bill You for Our professional fees and costs as outlined in Our contract. Unless otherwise provided in Our contract, payment is due upon receipt of Our billing statement. All fees, charges, and other amounts payable to FORVIS hereunder do not include any sales, use, excise, value-added, or other applicable taxes, tariffs, or duties, payment of which shall be Your sole responsibility, and do not include any applicable taxes based on FORVIS' net income or taxes arising from the employment or independent contractor relationship between FORVIS and FORVIS' personnel. We reserve the right to suspend or terminate Our work for this engagement or any other engagement for nonpayment of fees. If Our work is suspended or terminated, You agree that We will not be responsible for Your failure to meet governmental and other deadlines, for any penalties or interest that may be assessed against You resulting from Your failure to meet such deadlines, and for any other damages (including but not limited to consequential, indirect, lost profits, or punitive damages) incurred as a result of the suspension or termination of Our services. Our fees may increase if Our duties or responsibilities are increased by rulemaking of any regulatory body or any additional new accounting or auditing standards. Our engagement fees do not include any time for post -engagement consultation with Your personnel or third parties, consent letters and related procedures for the use of Our reports in offering documents, inquiries from regulators, or testimony or deposition regarding any subpoena. Charges for such services will be billed separately. Billing Records. If these services are determined to be within the scope and authority of Section 1861(v)(1)(1) of the Social Security Act, We agree to make available to the Secretary of Health and Human Services, or to the U.S. Comptroller General, or any of their duly authorized representatives, such of Our books, documents, and records that are necessary to certify the nature and extent of Our services, until the expiration of four (4) years after the furnishing of these services. This contract allows access to contracts of a similar nature between subcontractors and related organizations of the subcontractor, and to their books, documents, and records. 4. Termination. Either party may terminate these services in good faith at any time for any reason, including Your failure to comply with the terms of Our contract or as We determine professional standards require. Both parties must agree, in writing, to any future modifications or extensions. If services are terminated, You agree to pay FORVIS for time expended to date. In addition, You will be billed costs and fees for services from other professionals, if any, as well as an administrative fee of five (5) percent to cover certain technology and administrative costs associated with Our services. Unless terminated sooner in accordance with its terms, this engagement shall terminate upon the completion of FORVIS' services hereunder. DISPUTES & DISCLAIMERS Mediation. Any dispute arising out of or related to this engagement will, prior to resorting to litigation, be submitted for nonbinding mediation upon written request by either party. Both parties agree to try in good faith to settle the dispute in mediation. The mediator will be selected by agreement of the parties. The mediation proceeding shall be confidential. Each party will bear its own costs in the mediation, but the fees and expenses of the mediator will be shared equally. Indemnification. Unless disallowed by law or applicable professional standards, You agree to hold FORVIS harmless from any and all claims which arise from knowing misrepresentations to FORVIS, or the intentional withholding or concealment of information from FORVIS by Your management or any partner, principal, shareholder, officer, director, member, employee, agent, or assign of Yours. You also agree to indemnify FORVIS for any claims made against FORVIS by third parties, which arise from any wrongful actions of Your management or any partner, principal, shareholder, officer, director, member, employee, agent, or assign of Yours. The provisions of this paragraph shall apply regardless of the nature of the claim. Statute of Limitations. You agree that any claim or legal action arising out of or related to this contract and the services provided hereunder shall be commenced no more than two (2) years from the date of delivery of the work product to You or the termination of the services described herein (whichever is earlier), regardless of any statute of limitations prescribing a longer period of time for commencing such a claim under law. This time limitation shall apply regardless of whether FORVIS performs other or subsequent services for You. A claim is understood to be a demand for money or services, demand for mediation, or the service of suit based on a breach of this contract or the acts or omissions of FORVIS in performing the services provided herein. This provision shall not apply if enforcement is disallowed by applicable law or professional standards. Limitation of Liability. You agree that FORVIS' liability, if any, arising out of or related to this contract and the services provided hereunder, shall be limited to the amount of the fees paid by You for services rendered under this contract. This limitation shall not apply to the extent it is finally, judicially determined that the liability resulted from the intentional or willful misconduct of FORVIS or if enforcement of this provision is disallowed by applicable law or professional standards. Waiver of Certain Damages. In no event shall FORVIS or the City be liable to each other or a third party for any indirect, special, consequential, punitive, or exemplary damages, including but not limited to lost profits, loss of revenue, interruption, loss of use, damage to goodwill or reputation, regardless of whether You were advised of the possibility of such damages, regardless of whether such damages were reasonably foreseeable, and regardless of whether such damages arise under a theory of contract, tort, strict liability, or otherwise. 10. Choice of Law. You acknowledge and agree that any dispute arising out of or related to this contract shall be governed by the laws of the State of Arkansas, without regard to its conflict of laws principles. 11. WAIVER OF JURY TRIAL. THE PARTIES HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS AGREEMENT, OR ANY CLAIM, COUNTERCLAIM, OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY THE PARTIES, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. 12. Severability. In the event that any term or provision of this agreement shall be held to be invalid, void, or unenforceable, then the remainder of this agreement shall not be affected, and each such term and provision of this agreement shall be valid and enforceable to the fullest extent permitted by law. 13. Assignment. You acknowledge and agree that the terms and conditions of this contract shall be binding upon and inure to the parties' successors and assigns, subject to applicable laws and regulations. 14. Disclaimer of Legal or Investment Advice. Our services do not constitute legal or investment advice. RECORDS, WORKPAPERS, DELIVERABLES, & PROPRIETARY INFORMATION 15. Maintenance of Records. You agree to assume full responsibility for maintaining Your original data and records and that FORVIS has no responsibility to maintain this information. You agree You will not rely on FORVIS to provide hosting, electronic security, or backup services, e.g., business continuity or disaster recovery services, to You unless separately engaged to do so. You understand that Your access to data, records, and information from FORVIS' servers, i.e., FORVIS portals used to exchange information, can be terminated at any time and You will not rely on using this to host Your data and records. 16. FORVIS Workpapers. Our workpapers and documentation retained in any form of media for this engagement are the property of FORVIS. We can be compelled to provide information under legal process. In addition, We may be requested by regulatory or enforcement bodies (including any State Board) to make certain workpapers available to them CITY OF FAYETTEVILLE, ARKANSAS January 9, 2023 Page 13 pursuant to authority granted by law or regulation. Unless We are prohibited from doing so by law or regulation, FORVIS will inform You of any such legal process or request. You agree We have no legal responsibility to You in the event We determine We are obligated to provide such documents or information. 17. Subpoenas or Other Legal Process. In the event FORVIS is required to respond to any such subpoena, court order, or any government regulatory inquiry or other legal process relating to You or Your management for the production of documents and/or testimony relative to information We obtained or prepared incident to this or any other engagement in a matter in which FORVIS is not a party, You shall compensate FORVIS for all time We expend in connection with such response at normal and customary hourly rates and to reimburse Us for all out-of-pocket expenses incurred in regard to such response. 18. Use of Deliverables and Drafts. You agree You will not modify any deliverables or drafts prepared by Us 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. Our report on any financial statements must be associated only with the financial statements that were the subject of Our engagement. You may make copies of Our report, but only if the entire financial statements (exactly as attached to Our report, including related footnotes) and any supplementary information, as appropriate, are reproduced and distributed with Our report. You agree not to reproduce or associate Our report with any other financial statements, or portions thereof, that are not the subject of Our engagement. 19. Proprietary Information. You acknowledge that proprietary information, documents, materials, management techniques, and other intellectual property are a material source of the services We perform and were developed prior to Our association with You. Any new forms, software, documents, or intellectual property We develop during this engagement for Your use shall belong to Us, and You shall have the limited right to use them solely within Your business. All reports, templates, manuals, forms, checklists, questionnaires, letters, agreements, and other documents which We make available to You are confidential and proprietary to Us. Neither You, nor any of Your agents, will copy, electronically store, reproduce, or make any such documents available to anyone other than Your personnel. This provision will apply to all materials whether in digital, "hard copy" format, or other medium. REGULATORY 20. U.S. Securities and Exchange Commission ("SEC") and other Regulatory Bodies. Where We are providing services either for (a) an entity that is registered with the SEC, (b) an affiliate of such registrant, or (c) an entity or affiliate that is subject to rules, regulations, or standards beyond those of the American Institute of Certified Public Accountants ("AICPA"), any term of this contract that would be prohibited by or impair Our independence under applicable law or regulation shall not apply to the extent necessary only to avoid such prohibition or impairment. 21. Offering Document. You may wish to include Our report(s) on financial statements in an exempt offering document. You agree that any report, including any 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. Any exempt offering document issued by You with which We are not involved will clearly indicate that We are not involved by including a disclosure such as, "FORVIS, 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. FORVIS, LLP also has not performed any procedures relating to this offering document." 22. FORVIS Not a Municipal Advisor. FORVIS is not acting as Your municipal advisor under Section 15B of the Securities Exchange Act of 1934, as amended. As such, FORVIS 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 matters with internal or external advisors and experts You deem appropriate before acting on any such information or material provided by FORVIS. 23. FORVIS Not a Fiduciary. In providing Our attest services, We are required by law and our professional standards to maintain our independence from You. We take this mandate very seriously and thus guard against impermissible relationships which may impair the very independence which You and the users of Our report require. As such, You should not place upon Us special confidence that in the performance of Our attest services We will act solely in Your interest. Therefore, You acknowledge and agree We are not in a fiduciary relationship with You and We have no fiduciary responsibilities to You in the performance of Our services described herein. TECHNOLOGY 24. Electronic Sites. You agree to notify Us if You desire to place Our report(s), including any reports on Your financial statements, 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 to review information contained in electronic sites. 25. Electronic Signatures and Counterparts. This contract and other documents to be delivered pursuant to this contract may be executed in one or more counterparts, each of which will be deemed to be an original copy and all of which, when taken together, will be deemed to constitute one and the same agreement or document, and will be effective when counterparts have been signed by each of the parties and delivered to the other parties. Each party agrees that the electronic signatures, whether digital or encrypted, of the parties included in this contract are intended to authenticate this writing and to have the same force and effect as manual signatures. Delivery of a copy of this contract or any other document contemplated hereby, bearing an original manual or CITY OF FAYETTEVILLE, ARKANSAS January 9, 2023 Page 14 electronic signature by facsimile transmission (including a facsimile delivered via the internet), by electronic mail in "portable document format" (".pdf') or similar format intended to preserve the original graphic and pictorial appearance of a document, or through the use of electronic signature software, will have the same effect as physical delivery of the paper document bearing an original signature. 26. Electronic Data Communication and Storage. In the interest of facilitating Our services to You, We may send data over the internet, temporarily store electronic data via computer software applications hosted remotely on the internet, or utilize cloud -based storage. Your confidential electronic data may be transmitted or stored using these methods. In using these data communication and storage methods, We employ measures designed to maintain data security. We use reasonable efforts to keep such communications and electronic data secure in accordance with Our obligations under applicable laws, regulations, and professional standards. You recognize and accept that We have no control over the unauthorized interception or breach of any communications or electronic data once it has been transmitted or if it has been subject to unauthorized access while stored, notwithstanding all reasonable security measures employed by Us. You consent to Our use of these electronic devices and applications during this engagement. OTHER MATTERS 27. Cooperation. You agree to cooperate with FORVIS in the performance of FORVIS' services to You, including the provision to FORVIS of reasonable facilities and timely access to Your data, information, and personnel. You shall be responsible for the performance of Your employees and agents. 28. Third -Party Service Providers. FORVIS may from time to time utilize third -party service providers, including but not limited to domestic software processors or legal counsel, or disclose confidential information about You to third -party service providers in serving Your account. FORVIS maintains, however, internal policies, procedures, and safeguards to protect the confidentiality and security of Your information. In addition, FORVIS will secure confidentiality agreements with all service providers to maintain the confidentiality of Your information. If We are unable to secure an appropriate confidentiality agreement, You will be asked to consent prior to FORVIS sharing Your confidential information with the third - party service provider. 29. Independent Contractor. When providing services to You, We will be functioning as an independent contractor; and in no event will We or any of Our employees be an officer of You, nor will Our relationship be that of joint venturers, partners, employer and employee, principal and agent, or any similar relationship giving rise to a fiduciary duty to You. Decisions regarding management of Your business remain the responsibility of Your personnel at all times. Neither You nor FORVIS shall act or represent itself, directly or by implication, as an agent of the other or in any manner assume or create any obligation on behalf of, or in the name of, the other. CITY OF FAYETTEVILLE, ARKANSAS January 9, 2023 Page 15 30. Use of FORVIS Name. Any time You intend to reference FORVIS' firm name in any manner in any published materials, including on an electronic site, You agree to provide Us with draft materials for review and approval before publishing or posting such information. 31. Praxity. FORVIS is an independent accounting firm allowed to use the name "Praxity" in relation to its practice. FORVIS is not connected, however, by ownership with any other firm using the name "Praxity." FORVIS will be solely responsible for all work carried out on Your behalf. In deciding to engage FORVIS, You acknowledge that We have not represented to You that any other firm using the name "Praxity" will in any way be responsible for Our work. 32. Entire Agreement. The contract, including this Terms and Conditions Addendum and any other attachments or addenda, encompasses the entire agreement between You and FORVIS and supersedes all previous understandings and agreements between the parties, whether oral or written. Any modification to the terms of this contract must be made in writing and signed by both You and FORVIS. 33. Force Majeure. We shall not be held responsible for any failure to fulfill Our obligations if such failure was caused by circumstances beyond Our control, including, without limitation, fire or other casualty, act of God, act of terrorism, strike or labor dispute, war or other violence, explosion, flood or other natural catastrophe, epidemic or pandemic, or any law, order, or requirement of any governmental agency or authority affecting either party, including without limitation orders incident to any such epidemic or pandemic, lockdown orders, stay-at-home orders, and curfews.