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HomeMy WebLinkAbout2007-009 - Service Agreement with McGladrey & PullenE . '~ BILL N0.2007-09 ORDINANCE N0.2007-09 AN ORDINANCE AUTHORIZING THE CITY OF RIVERSIDE TO ENTER INTO A SERVICE AGREEMENT WITH, AND PAY CERTAIN FUNDS TO, MCGLADREY & PULLEN, CERTIFIED PUBLIC ACCOUNTANTS WHEREAS, McGladrey & Pullen is a firm providing professional auditing ("Services"), to the City; and WHEREAS, McGladrey & Pullen desires to provide such Services and requires funding to provide services to the City for auditing services; and WHEREAS, the City finds that the provisions of the Services is a public purpose and the City has the capability and desire to retain Service Provider for the provisions of such Services to the City. NOW, THEREFORE, BE IT ORDAINED, by the Board of Aldermen of Riverside, Missouri, as follows: Section 1. The City finds that the provisions of the Services contributes to the welfare of the City as well as the economic and social potential of the City and its residents, that the Services are important to the welfare of the City and that the provisions of the funds to assist in the providing such Services are for a public purpose. Section 2. The City of Riverside shall pay to McGladrey & Pullen, in substantially the form attached as Exhibit A, which is hereby approved. Section 3. The Mayor, City Administrator and City Clerk are authorized and directed to execute the Service Agreement with such changes as such officer shall approve, execution of such document being conclusive proof of such approval. The Mayor, City Administrator and City Clerk are each authorized and directed to perform all the acts and execute any other documents necessary or desirable to effectuate the intent of this Ordinance. Section 4. The sections, paragraphs, clauses and phrases of the Ordinance are severable and if any portion of the Ordinance is declared unlawful by the valid judgment, decree or injunction order of a court of competent jurisdiction, such ruling should not affect any of the remaining phases, clauses, sentences, paragraphs and sections of the Ordinance and all provisions of the Ordinance not specifically declared to be unlawful shall remain in full force and effect. Section 5. This Ordinance shall take effect immediately. Passed this ~ day of February, 2007. L~~ yor Kathleen L. Rose A E C' Clerk McGladrey& Pullen Certified Public Accountants McGladrey S Pullen, LLP 4601 Main St., Ste. 400, Kansas City, MO 64112-2543 0 816.753.0030 F 816.753.3299 www.mcgladrey.cam January 30, 2007 To the Mayor and Board of Aldermen City of Riverside, Missouri City Hall 2950 N.W. Vivion Road Riverside, Missouri 64150 Attention: Donna Resz, Finance Officer This letter is to explain our understanding of the arrangements for the services we are to perform for the City of Riverside, Missouri for the year ending June 30, 2007. We ask that you either confirm or amend this understanding. We will perform an audit of City of Riverside, Missouri's governmental activities, each major fund, and aggregate remaining fund information as of and for the year ending June 30, 2007 which collectively comprise the basic financial statements. We understand that these financial statements will be prepared in accordance with accounting principles generally accepted in the United States of America. The objective of an audit of financial statements is to express an opinion on those statements. We will also perform the audit of the City of Riverside, Missouri as of June 30, 2007 so as to satisfy the audit requirements imposed by the Single Audit Act and the U.S. Office of Management and Budget (OMB) Circular No. A- 133. We will conduct the audit in accordance with auditing standards generally accepted in the United States of America and "Government Auditing Standards" issued by the Comptroller General of the United States; and the provisions of the Single Audit Act, OMB Circular A-133 and OMB's Compliance Supplement. Those standarcs, circulars, supplements or guides require that we plan and perform the audit to obtain reasonable rather than absolute, assurance about whether the financial statements are free of material misstatement whether caused by error, fraudulent financial reporting, or misappropriation of assets. Accordingly, a material misstatement, whether caused by error, fraudulent financial reporting, or misappropriation of assets, may remain undetected. An audit includes examining, on a test basis, evidence supporting the amounts and discbsures in the financial statements. As a result, an audit is not designed to detect errors or fraud that are immaterial to the financial statements. An audit also includes assessing the accounting principles used and signifx;ant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit will provide a reasonable basis for our reports. Our acceptance of this engagement is subject to our satisfactorily completing communication with and review of the working papers of your previous auditors. We will notify you promptly if we become aware of anything during that communication or review which results in our not being able to continue this engagement. McGladrey & Pullen, llP is a member firm of RSM International - anaffiliation of separate and independent legal entities. In addition to our report on the City's financial statements, we will also issue the following reports or types of reports: A report on the fairness of the presentation of the City's schedule of expenditures of federal awards for the year ending June 30, 2007. Reports on intemal control related to the financial statements and major programs. These reports will describe the scope of testing of intemal control and the results of our tests of intemal controls. Reports on compliance with laws, regulations, and the provision of contracts or grant agreements. We will report on any noncompliance which could have a material effect on the financial statements and any noncompliance which could have a direct and material effect on each major program. A schedule of findings and questioned costs. The funds that you have told us are maintained by the City and that are to be included as part of our audit are listed in the 2006 Comprehensive Annual Financial Report. The federal financial assistance programs that you have told us that the City participates in and that are to be included as part of the single audit are the U.S. Department of Transportation. Our reports on intemal control will include any reportable conditions and material weaknesses in the system of which we become aware as a result of. obtaining an understanding of intemal control and performing tests of intemal control consistent with requirements of the standards and circular identified above. Our reports on compliance will address material errors, fraud; violations of compliance requirements, and other responsibilities imposed by state and federal statutes and regulations and assumed by contracts; and any state or federal grant, entitlement of loan program questioned costs of which we become aware, consistent with requirements of the standards and circulars identified above. If circumstances arise relating to the conditions of your rewrds, the availability of sufficient, competent evidential matter, or indications of a significant risk of material misstatement of the financial statements because of error, fraudulent financial reporting, misappropriation ofassets, or noncompliance which in our professional judgment prevent us from completing the audit or forming an opinion, we retain the unilateral right to take any course of action permitted by professional standards, including declining to express an opinion or issue a report, or withdrawal from the engagement. As you know, management is responsible for 1) the preparation of City of Riverside, Missouri's financial statements and the schedule of federal awards, 2) establishing and maintaining effective intemal control over financial reporting and safeguarcJing assets and intemal control over compliance, including monitoring ongoing activities, and for informing us of all significant deficiencies in the design or operation of such controls of which it has knowledge, 3) properly recording transactions in the records, 4) identifying and ensuring that City of Riverside, Missouri complies with the laws and regulations applicable to its activities, and for informing us about all known material violations of such laws or regulations, 5) the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud affecting the entity involving management, employees who have significant roles in intemal control and others where the fraud could have a material effect on the financial statements, 6) infonming us of its knowledge of any allegations of fraud or suspected fraud affecting the entity received in communications from employees, regulators, or others, 7) making all financial records and related information available to us, and 8) for adjusting the financial statements to correct material misstatements and 9) following up and taking corrective action on audit findings, including the preparation of a summary schedule of prior audit findings, and a corrective action plan, and 10) report distribution including submitting the reporting package. At the conclusion of our audit, we v~all request certain written representations from management about the financial statements and matters related thereto. We will also require that management affirm to us that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, Moth individually and in the aggregate, to the opinion units of the financial statements. The City Council is responsible for informing us of its views about the risks of fraud within the entity, and its knowledge of any fraud or suspected fraud affecting the entity. We will also determine that certain matters related to the conduct of the audit are communicated to the City Council including 1) fraud involving senior management and fraud (whether caused by senior management or other employees) that causes a material misstatement of the financial statements, 2) illegal acts that come to our attention (unless they are clearly inconsequential), 3) disagreements with management and other serious difficulties encountered in performing the audit, and 4) various matters related to the entity's accounting policies and financial statements. City of Riverside, Missouri hereby indemnifies McGladrey & Pullen, LLP and its partners, principals, and employees and holds them harmless from all claims, liabilities, losses, and costs arising in circumstances where there has been a knowing misrepresentation by a member of City of Riverside, Missouri's management, regardless of whether such person was acting in City of Riverside, Missouri's interest. This indemnification will survive termination of this letter. You have informed us that you intend to prepare a comprehensive annual financial report (CAFR) and submit it for evaluation by the Govemment Finance Officers Association's Certificate of Achievement for Excellence in Financial Reporting Program. Our parflcipation in the preparation of the CAFR is to consist of technical assistance. The working papers for this engagement are the property of McGladrey & Pullen, LLP. However, you acknowledge and grant your assent that representatives of the cognizant or oversight agency or their designee, other government audit staffs, and the U.S. Govemment Accountability Office shall have access to the audit working papers upon their request; and that we shall maintain the working papers for a period of at least three years after the date of the report, or for a longer period if we are requested to do so by the cognizant or oversight agency. Access to requested workpapers will be provided under the supervision of McGladrey & Pullen, LLP audit personnel and at a location designated by our Firm. During the course of our engagement, we may accumulate records containing data which should be reflected in your books and records. You will determine that all such data, if necessary, will be so reflected. Accordingly, you will not expect us to maintain copies of such records in our possession. From time to time and depending upon the circumstances, we may use third-party service providers to assist us in providing professional services to you. In such ciroumstances, ft may be necessary for us to disclose confidential client inforration to them. We enter into confidentiality agreements with all third-party service providers and we are satisfied that they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others. The assistance to be supplied by organization personnel, including the preparation of schedules and analyses of accounts, has been discussed and coordinated with Donna Resz, Finance Officer.. The timely and accurate completion of this work is an essential condition to our completion of the audit and issuance of our audit report. Our fees are based on the time required by the individuals assigned to the engagement, plus direct expenses. Interim billings will be submitted as work progresses and as expenses are incurred. Billings are due upon submission. Our fee for the services described in this letter will not exceed $21,750 for the financial statement audit and $5,000 for the single audit unless the scope of the engagement is changed, the assistance which the City has agreed to furnish is not provided, or unexpected conditions are encountered, in which case we will discuss the situation with you before proceeding. All other provisions of this letter will survive any fee adjustment. Our professional standards require that we perform certain additional procedures, on current and previous years engagements, whenever a partner or professional employee leaves the firm and is subsequently employed by or associated with a client. Accordingly, City of Riverside, Missouri agrees it will compensate McGladrey 8~ Pullen, LLP for any additional costs incurred as a result of the employment of a partner or professional employee of McGladrey & Pullen, LLP. In the event we are requested or authorized by City of Riverside, Missouri or are required by government regulation, subpoena, or other legal process to produce our documents or our personnel as witnesses with respect to our engagements for City of Riverside, Missouri, City of Riverside, Missouri will, so long as we are not a party to the proceeding in which the information is sought, reimburse us for our professional time and expenses, as well as the fees and expenses of our counsel, incurred in responding to such requests. Professional standards and our Firm policies require that we perform certain additional procedures whenever our reports are included, or we are named as accountants, auditors, or "experts" in a document used in a public offering of debt securities. Our report on the financial statements is not to be included in an official statement or other document involved with the sale of debt instruments without our prior consent. Additionally, if you intend to publish or otherwise reproduce the financial statements and/or make reference to us or our audit, you agree to provide us with printer's proofs or master for our review and consent before reproduction and/or release occurs. You also agree to provide us with a copy of the final reproduced material for our consent before it is distributed or released. Our fees for any additional services that maybe required under our quality assurance system as a result of the above will be established with you at the time such services are determined to be necessary. In the event our auditor/client relationship has been terminated when the City seeks such consent, we will be under no obligation to grant such consent or approval. Any claim arising out of services rendered pursuant to this agreement shall be resolved in accordance with the laws of Missouri. It is agreed by City of Riverside, Missouri and McGladrey & Pullen, LLP or any successors in interest that no claim arising out of services rendered pursuant to this agreement by or on behalf of City of Riverside, Missouri shall be asserted more than two years after the date of the last audit report issued by McGladrey & Pullen, LLP. This letter constitutes the complete and exclusive statement of agreement between McGladrey & Pullen, LLP and City of Riverside, Missouri, superseding all proposals oral or written and all other communication, with respect to the terms of the engagement between the parties. In accordance with Government Audrfing Standards, a copy of our most recent peer review report and applicable letter of comment has been provided to you in the proposal for auditing services. If this letter defines the arrangements as you understand them, please sign and date the enclosed copy, and return it to us. We appreciate your business. McGladrey & Pullen, LLP Mia Frommeft, Partner on behalf of the