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R-88-1147 - 8/11/1988WHEREAS, it is necessary for the City Council of Round Rock, Texas, to conduct an annual audit, and WHEREAS, the accounting firm of Pena Swayze & Co., has submitted a proposal regarding said audit, Now Therefore, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That the Mayor is hereby authorized and directed to execute on behalf of the City an agreement with Pena Swayze & Co., to conduct said audit, a copy of said agreement being attached hereto and incorporated herein for all purposes. RESOLVED THIS // day of August, 1988. ATTEST: NE LAND, City Secretary C28RESAUDIT RESOLUTION NO. / MIKE ROBINSON, Mayor City of Round Rock, Texas 1 PEST Er JA SWAYZE & CO. Gentlemen: CERTIFIED PUBLIC ACCOUNTANTS July 22, 1988 Hon. Mike Robinson, Mayor Mr. Robert L. Bennett, City Manager Mr. Sam Huey, Assistant City Manager /Finance Director City of Round Rock Round Rock, Texas We are pleased to have the opportunity to serve the City of Round Rock as independent auditors for the year ending September 30, 1988. The purpose of this letter is to confirm our understanding of the scope of our examination. We will perform an examination for the purpose of expressing an opinion on the fairness of the presentation of the City's general purpose financial statements for the year ending September 30, 1988. If our opinion is other than unqualified, we will fully discuss the reasons with you in advance. In addition to the general purpose financial statements, we will: - Assist in the preparation of the City's Comprehensive Annual Financial Report for submission to the Government Finance Officers Association under its voluntary program for a Certificate of Achievement for Excellence in Financial Reporting. Report on compliance with laws and regulations. Report on internal control. Our audit will be a Single Audit made in accordance with generally accepted auditing standards; the standards for financial and compliance audits contained in Standards for Audit of Governmental Organizations, Programs, Activities, and Functions, issued by the U.S. General Accounting Office; the Single Audit Act of 1984; and the provisions of OMB Circular A -128, Audits of State and Local Governments, and will include tests of the accounting records of the City and other procedures we consider necessary to enable us to express an unqualified opinion that the financial state- ments are fairly presented in conformity with generally accepted accounting principles consistently applied and to report on the City's compliance with laws and regulations and its internal accounting controls as required for a Single Audit. MEMBER AMERICAN INSTITUTE AND TEXAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS 1 250 ROUND ROCK. TEXAS 78680 512/255-2165 City of Round Rock Page 2 July 22, 1988 Although defalcations and similar irregularities may occasionally be disclosed by this type of examination, it is not designed for this purpose and should not be relied on to disclose fraud, should any exist. We will, of course, report to you anything that appears to us during our examination to be unusual or abnormal. As you know, City administrators have primary responsibility for properly recording transactions in the records, for safeguarding assets and for preparing accurate financial statements. Our basic audit function is to add reliability to those financial statements. Additionally, we will study the City's operations in order to make recommendations regarding the economy and efficiency with which you conduct your affairs. In order for our firm to complete our work in a timely manner and to maintain the level of fees we propose, our firm and the City must closely coordinate the audit work so that City staff disruption is minimized, and we receive timely City prepared reports, information and support. We feel that an efficient audit and timely report can be accomplished with the following schedule. PENH SWAYZE & CO. CERTIFIED PUBLIC ACCOUNTANTS PROPOSED AUDIT SCHEDULE PHASE OF WORK TIMING I. Interim field work Mid August II. Confirmations End of September III. Year -end field work Late October IV. Review of report draft Early December V. Printing of report Mid December VI. Report delivery Mid January The City is to furnish the necessary and customary clerical staff to assist us in preparing detail trial balances and supporting schedules. We also understand that City staff will assist us by locating and submitting to us invoices, cancelled checks and other documents and records which we request. Prior to beginning each phase of the audit process, we would utilize City staff in the preparation of certain detailed audit schedules which we would format. In order for us to complete our work efficiently within the proposed time schedule and to stay within the proposed range of audit fees, all City prepared schedules must be completed at the start of each phase. In conjunction with all phases of our examination, we will review the City's system of internal accounting controls. If we observe any material City of Round Rock Page 3 July 22, 1988 weaknesses, we will report them to you with recommendations for correcting those weaknesses. We will try to initiate ideas or observations that we believe will help achieve the objectives of the City. We will also be pleased to respond to inquiries you might have about financial or other business matters. Our fees are based on the time our personnel require to complete the engagement plus direct expenses. Individual hourly rates vary in accord- ance with the degree of responsibility and skill of those assigned to the audit. Our estimated fee for this examination is $24,000 for the general purpose financial statements. We anticipate that preparation of the comprehensive annual financial report would cost $4,000 - $6,000, inclusive of typing. We estimate our examination will take approximately 900 manhours to complete. If unforeseen complications arise during the audit making it likely that the fee will exceed this amount, we will discuss the increase before proceeding. If you intend to publish or otherwise reproduce the financial state- ments 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. If this letter defines the arrangements as you understand them, please sign and date the enclosed copy and return it to us. If not, please let us know what changes are needed. CONFIRMED BY Sincerely, 1.4, PENA SWAYZ CO. Director Mike Rob - .� Na • r i /.1.4k2 Robert Sam Huey, Assistant City Manag- /Finance Date 1- r, PENA SWAYZE Sr CO. CERTIFIED PUBLIC ACCOUNT.. DATE: August 8, 1988 • SUBJECT: Council Agenda, August 11, 1988 ITEM: 11E. Consider a resolution authorizing the Mayor to enter into a contract with Pena Swayze Company for the annual City Audit. STAFF RESOURCE PERSON: Sam Huey STAFF RECOMMENDATION: Engage the accoutning firm of Pena Swayze & Co. to audit the financial statements of fiscal 1987 -88. ECONOMIC IMPACT: The amount bid is same as last year being: Examination $24,000.00 Report Preparation $4,000.00 to $6,000.00 Total amount would be $28,000.00 to $30,000.00.