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R-91-1639 - 8/8/1991ATTEST: RS08081C LAND, City Secretary RESOLUTION NO. /6394 WHEREAS, it is necessary for the City of Round Rock to conduct an annual audit, and WHEREAS, the accounting firm of Pena Swayze & Co., has submitted a proposal to provide said audit, and, WHEREAS, the City Council wishes to approve the Pena Swayze & Co. proposal, 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 8th day of August, 1991. 7." MIKE ROBINSON, Mayor City of Round Rock, Texas PEIrTA SWAYZE & CO. r CERTIFIED PUBLIC ACCOUNTANTS Honorable Mike Robinson, Mayor Mr. Robert L. Bennett, City Manager Mr. David Kautz, Finance Director City of Round Rock Round Rock, Texas Gentlemen: We are pleased to have the opportunity to serve the City of Round Rock as independent auditors for the year ending September 30, 1991. The purpose of this letter is to confirm our understanding of the scope of our audit. We will audit the City's general purpose financial statements as of and for the year ending September 30, 1991. 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 internal control. July 25, 1991 Report on compliance with laws and regulations. Our audit will be a Single Audit made in accordance with generally accepted auditing standarris; the standards for financial audits contained in Goverr>Iment auditing Sta,zdar issued by the Comptroller General of the United States; the Single Audit Act of 1984; and the provisions of OMB Circular A- 128, Audits of State and Local Governments, and will inc1ur3a 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 statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles and to report on the City's compliance with laws and regulations and its internal controls as required for a Single Audit. If our opinion is other than unqualified, we will fully discuss the reasons with you in advance. MEMBER AMERICAN INSTITUTE AND TEXAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS P.O BOX 250 ROUND ROCK, TEXAS 78680 5121255 -2165 City of Round Rock Page 2 July 25, 1991 Our procedures will include tests of documentary evidence supporting the transactions in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by corresporxlence with selected individuals, creditors and financial institutions. We will request written representa- tions from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will also request certain written representations from you about the financial statements and related matters. An audit includes examining, on a test basis, evidence supporting the amounts and dicrlosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. Also, we will plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. As required by the Single Audit Act of 1984, our audit will include tests of transactions related to federal acaistance programs for compliance with applicable laws and regulations. However, because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions, there is a risk that material errors, irregularities, or illegal acts, including fraud or defalcations, may exist and not be detected by us. We will advise you however, of any matters of that nature that come to our attention, and will include such matters in the reports required for a Single Audit. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors. We understand that you will provide us with the basic information required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, but the responsibility for the financial statements remains with you. This responsibility includes the made of adequate records and related internal control structure policies and procedures, the selection and application of accounting principles, and the safeguarding of asets. Our audit is not specifically designed and cannot be relied on to disclose reportable conditions, that is, significant deficiencies in the design or operation of the internal control structure. However, during the audit, if we become aware of such reportable conditions or ways that we believe management practices can be improved, we will communicate them to you in a separate letter. r PENA SWAYZE & CO. CERTIFIED PUBLIC ACCOUNTANTS City of Round Rock Page 3 July 25, 1991 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. CERTIFIED PUBLIC ACCOUNTANTS PROPOSED AUDIT SCHEDULE PHASE OF WORK TIMLNNG I. Interim field work Mid September II. Confizmstions Mid September III. Year -end field work Late October IV. Revise 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 sulnnitting 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 mss, we will report then to you with reccmmendations 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. PENA SWAYZE & CO. City of Round Rock Page 4 July 25, 1991 Our fees are based on the time our personnel require to complete the engagement plus direct expenzes. Individual hourly rates vary in accordance with the degree of responsibility and skill of those assigned to the audit. Our estimated fee for this examination is $26,250 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 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. We appreciate the opportunity to be of service to the City and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. 1,9tut, A, /99/ r i PES1A SWAYZE & co. CERTIFIED PUBLIC ACCOUNTANTS Sincerely, PENA SWAYZE ( x. . DATE: August 6, 1991 SUBJECT: City Council Meeting, August 8, 1991 ITEM: 9.C. Consider a resolution authorizing the Mayor to enter into an agreement with Pena Swayze & Co. for the City's annual audit. STAFF RESOURCE PERSON: David Kautz STAFF RECOMMENDATION: Retain Pena Swayze & Co. to perform the audit. The City's charter requires an annual audit of the financial records to be performed by an independent certified public accountant. Staff recommends that Pena Swayze and Co. (PS &C) be retained for this purpose. The cost will be approximately $31,250 and is included in the proposed operating budget. The fee has been between $30,000 and $32,000 for the past 5 years. Staff feels that, due to the recent computer conversion of the financial and utility billing records. Being familiar with the old computer system, PS &C would be the most efficient in auditing the conversion as well as the new system. DSP:PM:ag TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS Texas Community Development Program Post Office Box 12026 Austin, Texas 78711 - 2026 September 10, 1991 The Honorable Mike Robinson Mayor, City of Round Rock 221 East Main Street Round Rock, Texas 78664 RE: Audit Report prepared by Pena, Swayze & Company, Certified Public Accountants, for the fiscal year ended September 30, 1990 Dear Mayor Robinson: The Texas Department of Housing and Community Affairs has reviewed the audit report referenced above. The purpose of this review is to ensure that the report complies with regulatory and contractual audit requirements, including the Single Audit Act of 1984, and to determine whether funds provided were expended in accordance with applicable laws and regulations. Our records indicate that for the fiscal year ended September 30, 1990, you had no active contracts. We appreciate your timely filing of audit reports. As a result of the review, it has been determined that there are no questioned costs or administrative findings associated with the audit. Therefore, the audit report is accepted subject to any subsequent review by the United States Department of Housing and Urban Development. Your assistance in complying with regulatory and contractual audit requirements is greatly appreciated. Any correspondence or questions should be directed to Pam Moti, Audit Resolution, telephone (512) 320 -9548. Sincerely, David S. Pegues CDBG Audit Supervisor Audit Resolution cc: Ruth Cedillo, Interim Community Development Director &/ c STEPHAN L. SHEETS KEVIN HENDERSON CHARLES D. CROSSFIELD STEVEN C. COPENHAVER Pena Swayze & P.O. 0 d Rock, Texas 78680 Gentlemen: STEPHAN L SHEETS St ASSOCIATES. P.C. ATTORNEYS AT LAW 309 E. MAIN STREET ROUND ROCK, TEXAS 78664 December 16, 1991 By letter dated October 22, 1991, David Kautz, Finance Director for the City of Round Rock ( "City ") has requested that I furnish you certain information in connection with your examination of the accounts of the City as of September 30, 1991, and for the period from that date to the date of my response. I have been retained as the City Attorney to generally represent the City in legal matters. As part of my responsibilities as City Attorney, I represent the City in specific litigation matters. In such capacity I have reviewed the litigation and claims threatened or asserted against the City for which I have been retained. Subject to the foregoing and to the last paragraph of this letter, I have not been engaged to give substantial attention to, or represent the City in connection with, material loss contingencies coming within the scope of clause (a) of paragraph 5 of the Statement of Policy referred to in the last paragraph of this letter, except as follows: PENDING OR THREATENED LITIGATION I an aware of no pending or threatened litigation that must be disclosed in accordance with Statement of Financial Accounting Standards No. 5. UNASSERTED CLAIMS AND ASSESSMENTS Re: City of Round Rock Audit for Year Ending September 30, 1991. TELEPHONE (512) 255 -0877 FAX (512) 255.8966 I am aware of no unasserted possible claims or assessments that must be disclosed in accordance with Statement of Financial Accounting Standards No. 5. Pena Swayze & Company December 16, 1991 Page 2 I emphasize that any evaluation given as to the merit of a claim or defense or the likelihood of litigation is based on my present understanding of the facts of a particular case, which is subject to change virtually on a day -to -day basis. My present opinion should therefore not be taken in any way as a warranty of the actual outcome of litigation. The information set forth herein is as of the date of this letter and I disclaim any undertaking to advise you of changes which hereafter may be brought to my attention. As of September 30, 1990, the City was indebted to me for services and expenses in the amount of $15,914.83. This amount has since been paid in full. This response is limited by, and in accordance with, the ABA Statement of Policy Regarding Lawyers' Responses to Auditors' Requests for Information (December 1975); without limiting the generality of the foregoing, the limitations set forth in such Statement on the scope and use of this response (Paragraphs 2 and 7) are specifically incorporated herein by reference, and any description herein of any "loss contingencies" is qualified in its entirety by paragraph 5 of the Statement and the accompanying Commentary (which is an integral part of the Statement.) Consistent with the last sentence of paragraph 6 of the ABA Statement of Policy and pursuant to the City's request, this will confirm as correct the City's understanding as set forth in its audit inquiry letter to us that whenever, in the course of performing legal services for the City with respect to a matter recognized to involve an unasserted possible claim or assessment that may call for financial statement disclosure, I have formed a professional conclusion that the City must disclose or consider disclosure concerning such possible claim or assessment, I, as a matter of professional responsibility to the City, will so advise the City and will consult with the city concerning the question of such disclosure and the applicable requirements of Statement of Financial Accounting Standards No. 5. SLS /ks cc: David Kautz City of Round Rock 221 East Main Street Round Rock, Texas 78664 Robert L. Bennett ✓ 221 East Main Street Round Rock, Texas 78664 Since Stepha L. Sheets