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HomeMy WebLinkAbout1999-313 RESOLUTION NO. 99-313 APPROVAL OF AGREEMENT BETWEEN THE CITY OF STILLWATER AND LARSEN, ALLEN, WEISHAIR & CO. FOR 1999 AUDITING SERVICES BE IT RESOLVED by the City Council of Stillwater, Minnesota, that the Agreement between the City of Stillwater and Larson, Allen, Weishair & Co., for auditing services for the year 1999 for the City, at a cost of approximately $16,000 is hereby approved, and the appropriate city staff is authorized to sign said Agreement. Adopted by Council this 2nd day of November, 1999. ATTEST: ~u-klj~ Morli eldon, City Clerk ' LarsenAllen Weishair & Co., LLP ACHIEVE THE DE.SIRED EFFECT 800 ~Iinnesoca World Trade Cencer 30 Easc Sevench Screec Sr. Paul. ~I=" 55101-4910 651/228-6300 Fax 651/228-6355 October 8, 1999 www.larsonallen.com To the Honorable Mayor and Members of the City Council City of Stillwater 216 N Fourth Street Stillwater MN 55082 We are pleased to confirm our understanding of the services we are to provide City of Stillwater for the year ended December 31, 1999. We will audit the general purpose financial statements of City of Stillwater as of and for the year ended December 31,1999. Audit Objectives The objective of our audit is the expression of an opinion as to whether your general purpose financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles and to report on the fairness of the additional information referred to in the first paragraph when considered in relation to the general purpose financial statements taken as a whole. Our audit will be conducted in accordance with generally accepted auditing standards and the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and will include tests of the accounting records of City of Stillwater and other procedures we consider necessary to enable us to express such an opinion. If our opinion on the general purpose financial statements is other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed an opinion, we may decline to express an opinion or to issue a report as a result of this engagement. We will also provide reports (that do not include opinions) on internal control related to the financial statements and compliance with laws, regulations, and the provisions or grant agreements, noncompliance with which could have a material effect on the financial statements as required by Government Auditing Standards. Management Responsibilities Management is responsible for establishing and maintaining internal control and for compliance with laws, regulations, contracts, and agreements. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of the controls. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorizations and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles. Businc'i'i Con\UILII1{S Ct.:rrifit:J PllhliL" .\I..'("oununc') City of Stillwater October 8, 1999 Page 2 Management is responsible for making all financial records and related information available to us. We understand that you will provide us with such 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. That responsibility includes the establishment and maintenance of adequate records and effective internal control over financial reporting, the selection and application of accounting principles, and the safeguarding of assets. Audit Procedures-General 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. We will 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 or fraud. Because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions, there is a risk that a material misstatement may exist and not be detected by us. In addition, an audit is not designed to detect errors, fraud, or other illegal acts that are immaterial to the general purpose financial statements. However, we will inform you of any material errors and any fraud that comes to our attention. We will also inform you of any other illegal acts that come to our attention, unless clearly inconsequential. 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. 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. We will request written representations 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 require certain written representations from you about the financial statements and related matters. Identifying and ensuring that City of Stillwater complies with laws, regulations, contracts, and agreements is the responsibility of management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we will perform tests of City of Stillwater's compliance with applicable laws and regulations and the provisions of contracts and agreements. However, the objective of our audit will not be to provide an opinion on overall compliance and we will not express such an opinion. An audit of the general purpose financial statements performed in accordance with generally accepted auditing standards is not designed to determine whether the computer systems of City of Stillwater are year 2000 compliant, or to provide any assurance on whether the City as addressed all of the affected systems on a timely basis. Further, we have no responsibility with regard to the systems of vendors, service providers, or any other third parties. These are responsibilities of the City's management. However, we may choose to communicate matters that come to our attention relating to the Year 2000 Issue. City of Stillwater October 8, 1999 Page 3 Additionally, sufficient audit evidence generally does not exist to support a City's supplementary information disclosures with respect to the Year 2000 issue in accordance with GASB Technical Bulletin 99-1, Disclosures about Year 2000 Issues. Therefore, our auditor's report will include an explanatory paragraph stating that such information has not been audited. If the City elects not to include the disclosures required by TB 99-1, we will state in an explanatory paragraph that the disclosures have been omitted. Audit Procedures-Internal Controls In planning and performing our audit, we will consider the internal control sufficient to plan the audit in order to determine the nature, timing, and extent of our auditing procedures for the purpose of expressing our opi.nion on City of Stillwat~r's general purpose financial statements. We will obtain an understanding of the design of the relevant controls and whether they have been placed in operation, and we will assess control risk. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the general purpose financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the general purpose financial statements. (Tests of controls are required only if control risk is assessed below the maximum level.) Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed. An audit is not designed to provide assurance on internal control or to identify reportable conditions. However, we will inform the governing body or audit committee of any matters involving internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements. Audit Administration, Fees, and Other We understand that your employees will prepare all cash or other confirmations we request and will locate any invoices selected by us for testing. The workpapers for this engagement are the property of Larson, Allen, Weishair & Co., LLP and constitute confidential information. However, we may be requested to make certain workpapers available to the Office of the State Auditor pursuant to authority given to it by law or regulation. If requested, access to such workpapers will be provided under the supervision of Larson, Allen, Weishair & Co., LLP personnel. Furthermore, upon request, we may provide photocopies of selected workpapers to the Office of the State Auditor. The Office of the State Auditor may intend, or decide, to distribute the photocopies or information contained therein to others, including other governmental agencies. City of Stillwater October 8, 1999 Page 4 Our fee for these services will be $15,550 plus out-of-pocket costs (such as postage, travel, copies, telephone, etc.) Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional fees are necessary, we will discuss it with you and arrive at a mutually agreeable new fee amount. Government Auditing Standards require that we provide you with a copy of our most recent quality control review report. Our November 1998 peer review report accompanies this letter. We appreciate the opportunity to be of service to City of Stillwater and believe this letter accurately summarizes the significant terms of our engagement. If you have a~1Y 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, ~~~ Thomas P. Koop, CPA Principal 218/825-2903 TPKJpsm Enclosures RESPONSE: ::'5 d~rstanding of City of Stillwater. Title: /YfcJ<YIj Date: /I / ~ / q 7 I I H :'-Cll ENTS\24 924\99El.DOC ~), CROWE CHIZEK To the Principals LARSON, ALLEN, WEISHAIR & CO., LLP We have reviewed the system of quality control for the accounting and auditing practice of LARSON, ALLEN, WEISHAIR & CO., LLP (the Firm) in effect for the year ended March 31, 1998. A system of quality control encompasses the Firm's organizational structure and the policies adopted and procedures established to provide it with reasonable assurance of complying with professional standards. The elements of quality control are described in the Statements on Quality Control Standards issued by the American Institute of Certified Public Accountants (the AICPA). The design of the system, and compliance with it, are the responsibilities of the Firm. In addition, the Firm has agreed to comply with the membership require- ments of the SEC Practice Section of the AICP A Division for CPA Firms (the Section). Our responsibility is to express an opinion on the design of the system, and the Firm's compliance with that system and the Section's membership requirements based on our review. Our review was conducted in accordance with standards established by the Peer Review Committee of the Section. In performing our review, we obtained an understanding of the system of quality control for the Firm's accounting and auditing practice. In addition, we tested compliance with the Firm's quality control policies and procedures and with the membership requirements of the Section to the extent we considered appropriate. These tests covered the application of the Firm's policies and procedures on selected engage- ments. Because our review was based on selective tests, it would not necessarily disclose all weaknesses in the system of quality control or all instances of lack of compliance with it or with the membership require- ments of the Section. As is customary in a peer review, we are issuing a letter under this date that sets forth comments relating to certain policies and procedures or compliance with them. These matters were not considered to be of sufficient significance to affect the opinion expressed in this report. Because there are inherent limitations in the effectiveness of any system of quality control, depanures from the system may occur and not be detected. Also, projection of any evaluation of a system of quality control to future periods is subject to the risk that the system of quality control may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the system of quality control for the accounting and auditing practice of LARSON, ALLEN, WEISHAIR & CO., LLP in effect for the year ended March 31,1998, has been designed to meet the require- ments of the quality control standards for an accounting and auditing practice established by the AICP A, and was complied with during the year then ended to provide the Firm with reasonable assurance of com- plying with professional standards. Also, in our opinion, the Firm has complied with the membership re- quirements of the Section in all material respects. c ~ C4t -IC-I-f'-<-LP Cr0""re, Ch.izek .md C:~r.)Fa.r.y U.P South Bend, Indiana October 2, 1998 CROWE. CHIZEK Al'iD COMPANY LLP 330 EAST !EFFERSON BOULEVARD POST OFFICE BOX 7 SOUTH BPin, INDIANA ~66~~ ~19:3:.399~ FAX: 19.~36.~69: I ~'':..-A '? ,., ,,-:",:,t--=- "I ..:"........~I t.'rt '~,... ~I