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Ordinance No. 5,494ffeammi ORDINANCE NO. 5494 AN ORDINANCE AND DIRECTING EXECUTE AND THE CITY CLERK TO ATTEST TO AGREEMENTS GERACE, AND McQUEEN, M AUDITING AND PROVIDING O BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTO N, TEXAS: Section s That City Council hereby authorizes payment of $105,000.00 for the 1909 annual audit to Oerace, Andreas and McQueen, P.C. for their professional services as the City's auditor. AeR cc EMMETT 0. HUTT , Mayor A, LEEK P. 11 L, City Clerk f:(ANDALL B. STRONG, C ,Pj Attorney GERACE, ANDREWS & MCQUEEN, P.C. CERTIFIED PUBLIC ACCOUNTANTS • MEMBER P.O. BOX 481 AMERICAN INSTITUTE OF 2505 MARKET CERTIFIED PUBLIC ACCOUNTANTS BAYTOWN. TEXAS 77522 -0481 February 26, 1990 (713) 422.8183 FAX 17131 422 -6575 City of Baytown Baytown, Texas We are pleased to confirm our understanding of the services we are to provide for the City of Baytown for the year ended September 30, 1989. We will audit the general purpose financial statements of the City of Baytown as of and for the year ended September 30, 1989. Also, we will assist you in preparing the following additional information that will be subject to the auditing procedures applied in our audit of the general purpose financial statements: 1. Auditor's Report on Schedule of Federal Financial Assistance and Schedule of Pension Plan Supplemental Information - Ten Year Trend 2. Schedule of Federal Financial Assistance 3. Schedule of Pension Plan Supplementary Information - Ten Year Trend 4. Auditor's Report on Internal Controls 5. Auditor's Report on Compliance with Laws and Regulations Our audit will be a Single Audit made in accordance with generally accepted auditing standards; the standards for financial audits contained in Government Auditing Standards, 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 include tests of the accounting records of the City of Baytown 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 of Baytown'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. p °O � �HL"J!' City of Baytown February 26, 1990 Page 2 0 Our procedures will include tests of documentary evidence supporting the transactions recorded 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 correspondence with selected individuals, creditors, and financial institutions. 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 disclosures 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 assistance 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 an 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 remain with you. This responsibility includes the maintenance of adequate records and related internal control structure policies and procedures, the selection and application of accounting principles, and the safeguarding of assets. We understand that your employees will type all cash or other confirmations we request and will locate any invoices selected by us for testing. 0 City of Baytown February 26, 1990 Page 3 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. Our fees for these services will be based on the actual time spent at our standard hourly rates,' plus travel and other out -of- pocket costs such as report production, typing, postage, etc. Out standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. Based on our preliminary estimates, the fee for 1989 should approximate $105,000. This estimate is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. We appreciate the opportunity to be service to the City of Baytown 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. Very truly yours, ames G. Gerace for the firm RESPONSE. This letter correctly sets forth the understanding of the City of Bayto n. By. Titles 0 Dates GERACE, ANDREWS & McQUEEN, P.C. CERTIFIED PUBLIC ACCOUNTANTS . MEMBER P.O. BOX 481 AMERICAN INSTITUTE OF O 2505 MARKET CERTIFIED PUBLIC ACCOUNTANTS February 26, 1990 BAYTOWN, TEXAS 77522-0481 17131 422 -8183 FAX (713) 422.6575 City of Baytown Baytown, Texas We are pleased to confirm our understanding of the services we are to provide for the City of Baytown for the six months ended March 31, 1989. We will audit the general purpose financial statements of General Fund and Water Fund as of and for the six months ended March 31, 1989. our audit will be made in accordance with generally accepted auditing standards and will included tests of the accounting records of General Fund and Water Fund 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. If our opinion is other than unqualified, we will fully discuss the reasons with you in advance. our procedures will include tests of documentary evidence supporting the transactions recorded 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 correspondence with selected individuals, creditors, and financial institutions. 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 disclosures 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. 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 0 City of Baytown February 26, 1990 Page 2 • come to our attention. 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 maintenance of adequate records and related internal control structure policies and procedures, the selection and application of accounting principles, and the safeguarding of assets. 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. We understand that your employees will type all cash or other confirmations we request and will locate any invoices selected by us for testing. Our fees for these services will be based on the actual time spent at our standard hourly rates, plus travel and other out - of- pocket costs such as report production, typing, postage, etc. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. Fees for the six months audit will be included in the monthly invoices that are for the annual audit of the same period. 0 City of Baytown February 26, 1990 Page 2 We appreciate the opportunity to be of service to the City of Baytown 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. Very truly yours, J mes G. Gerace for the firm RESPONSE: This letter correctly sets forth the understanding of the City of Baytown. By O Title: Date: