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93-267 Resolution No. 93-267 RESOLUTION ACCEPTING THE PROPOSAL OF MCGLADREY & PU L LEN BE IT RESOLVED BY THE CITY COUNCIL OF THE CIT OF ManagerY be and is ILLINOIS, that Robert 0. Malm, Interim hereby authorized and directed to accept the proposal on behalf of the City of Elgin of McGladrey &of Pullen fir financial statement audit services, a copy attached hereto and made a part hereof by reference. s/ George VanDeVoorde George VanDeVoorde, Mayor Presented: October 13, 1993 Adopted: October 13, 1993 Omnibus Vote: Yeas 7 Nays 0 Attest: s/ Dolonna Mecum Dolonna Mecum, City Clerk i 0 McGLADREY&PULLEN Certified Public Accountants and Consultants September 14, 1993 City Council City of Elgin 150 Dexter Court Elgin, Illinois 60120 This letter is to explain our understanding of the arrangements for the services we are to perform for the City of Elgin for the year ending December 31, 1993. We ask that you either confirm or amend that understanding. We will perform an audit of the City's general purpose financial statements as of December 31, 1993. We understand that the financial statements will be prepared in accordance with generally accepted accounting principles. We will also perform the audit of the City as of December 31, 1993 so as to satisfy the audit requirements imposed by the Single Audit Act of 1984 and the U.S. Office of Management and Budget (OMB) Circular No. A-128. We will conduct the audit in accordance with generally accepted auditing standards; generally accepted government auditing standards for financial and compliance audits as set out in Government Auditing Standards issued by the Comptroller General of the United States; and the provisions of the Single Audit Act of 1984, OMB Circular A-128 and OMB's Compliance Supplement titled Uniform Requirements for Grants to State and Local Governments. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant 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. We will also perform an audit of the City's Dundee Tax Allocation Tax Incremental Financing District Fund and South Grove Special Tax Allocation Tax Incremental Financing District Fund as of December 31, 1993. We will conduct these audits in accordance with generally accepted auditing standards. 20280 Governors Highway, Suite 301, Olympia Fields, Illinois 60461 (708) 481-8100 FAX (708) 481-9365 Internationally Dunwoody Robson McGladrey & Pullen r , City Council City of Elgin September 14, 1993 Page Two In addition to our report on the City's financial statements, we will also issue the following reports or types of reports: A supplementary report on the fairness of the presentation of the City's schedule of federal financial assistance for the year ended December 31, 1993. Reports on compliance with statutory,regulatory and contractual matters that meet the requirements of the Government Auditing Standards, the Single Audit Act of 1984, and OMB Circular A-128. Reports on the City's internal control structure and controls used in administering federal programs that meet the requirements of the Government Auditing Standards, the Single Audit Act of 1984 and OMB Circular A-128. Reports on the financial statements of the City's Tax Incremental Financing District Funds and compliance with laws, regulations, contracts and grants applicable to the funds including subsection (q) of Section 11-74.4-3 of the State of Illinois Public Act 85-1142. The federal and state financial assistance programs that the City participates in and that are to be included as part of the single audit compliance examination are those listed below: Program CFDA No. U.S. Department of Housing and Urban Development: Community Development Block Grant (Entitlement Program) 14.218 Rental Housing Rehabilitation 14.230 Fair Housing 14.400 U.S. Department of Transportation passed through State of Illinois Department of Transportation Highway Planning and Construction Program 20.205 U.S. Department of Transportation Federal Aviation Administration Agreement No. DTFA 14-91-C-R1269 N/A City Council City of Elgin September 14, 1993 Page Three Our reports on internal accounting and administrative control will include any reportable conditions and material structural or operational weaknesses in the system of which we become aware. Our reports on compliance matters will include any errors, irregularities or illegal acts; violations of compliance obligations and other responsibilities imposed by state and federal statutes and regulations and assumed by contracts; and any state or federal grant, entitlement or loan program questioned costs of which we become aware. The audit is subject to the inherent risk that material errors, irregularities, or illegal acts, including fraud or defalcations, if they exist, will not be detected. It is also subject to the inherent risk that violations of compliance obligations and other responsibilities imposed by state and federal statutes and regulations or assumed by contracts, if they exist, will not be detected. If circumstances relating to the conditions of your records and/or the availability of sufficient competent evidential matter were to arise during the course of our work which in our professional judgment prevent us from completing the audit, we will notify you immediately. In such a situation, we retain the unilateral right to take any course of action permitted by professional standards, including withdrawal from the engagement. As you know, the financial statements are the responsibility of the City's management. Management has the primary responsibility for properly recording transactions in the records, for safeguarding assets and for preparing reliable financial statements. At the conclusion of our audit, we will request certain written representations from you about the financial statements and matters related thereto as well as certain compliance matters. You have informed us that you intend to prepare a comprehensive annual financial report (CAFR) and submit it for evaluation by the Government Finance Officers Association's Certificate of Achievement for Excellence in Financial Reporting Program. You acknowledge and grant your assent that representatives of the cognizant agency or its designee, other government audit staffs and the U.S. General Accounting 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 agency. 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. The assistance to be supplied by your personnel, including the preparation of schedules and analyses of accounts, has been discussed and coordinated with Mr. James Nowicki. The timely completion of this work will assist us in performing our work efficiently. We understand that the accounting records and schedules prepared by City personnel will be ready for audit as mutually agreed upon by Mr. Nowicki and ourselves. City Council City of Elgin September 14, 1993 Page Four Our fees are based on the time required by the individuals assigned to the engagement, plus direct expenses. Individual hourly rates vary according to the degree of responsibility involved and the skill required. 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 $50,000 plus out of pocket and travel expenses not to exceed $5,000 unless the scope of the engagement is changed, the assistance to 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. If you intend to publish or otherwise reproduce the financial statements and make reference to our Firm name, you agree to provide us with printers' proofs or masters for our review and approval before printing. You also agree to provide us with a copy of the final reproduced material for our approval before it is distributed. 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 approval. This letter constitutes the complete and exclusive statement of agreement between McGladrey & Pullen and the City of Elgin, superseding all proposals oral or written and all other communication, with respect to the terms of the engagement between the parties. If this letter defines the arrangements as you understand them, please sign and date the enclosed copy and return it to us. Thank you for this opportunity to be of assistance. We appreciate your business. Very truly yours, McGLADREY & PULLEN �,,`-- qt-,A� , VtJ-� Robert W. Thoma, C.P.A. Partner RWT:gb enc. Co ed on behalf of the City f a , 1993 El • in Agenda item No . September 16, 1993 TO: Mayor and City Council FROM: City Manager SUBJECT: Finaacia:. Statement Audit Services PURPOSE: The purpose of this memorandum is to request a one ( 1) year contract extension for audit services by McGladrey and Pullen CPA' s. BACKGROUND: McGladrey and Pullen have performed the audit and the City's financial statements for the past three years have done an admirable job. Their original contr ct called for ` performing audit services for a three (3) year stint an option to renew on an annual basis thereafter. In this first option year they exceed proposed and out f their Pocket exp nse,0 plus a not to of $5,000. Their total fee last year was $64,500 . Given the fact the City is completing a massive computer conversion of the financial system, the Finance Director has just joined the department, auditors Finance Dept. the additi nal pleased effort with the McGladrey and to "train" new auditors given the aforementioned reasons would cost additional dollars, it would be in the City' s best interest to retain McGladrey and Pullen for one more year. FINANCIAL IMPACT: Audit fees are budgtd f of $9,500 over lthe budget and represent a minimum savings previous year. RECOMMENDATION: To approve a one ( 1) year extension of McGladrey an Pullen l costnnot totex exceed $50,OOOa plus l statement $5,000 Out audit service of pocket and travel expenses. Ci ager