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1996-017 Audit Agreement with Haas, Diaz• RESOLUTION No..17-96 A RESOLUTION OF THE VILLAGE COUNCIL OF THE VILLAGE OF NORTH PALM BEACH, FLORIDA, AUTHORIZING AND DIRECTING THE MAYOR AND VILLAGE CLERK TO ENTER INTO AN AGREEMENT WITH HAAS, DIAZ & CO. ATTACHED AS EXHIBIT "A", WHICH AGREEMENT PROVIDES FOR AN AUDIT OF THE VILLAGE'S GENERAL PURPOSE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1996; AND, PROVIDING FOR AN EFFECTIVE DATE. BE IT RESOLVED BY THE VILLAGE COUNCIL OF NORTH PALM BEACH, FLORIDA: • Section 1. The Village Council of the Village of North Palm Beach, Florida, does hereby approve the Agreement with Haas, Diaz & Co. attached as Exhibit "A", which agreement provides for an audit of the Village's General Purpose Financial Statements for the fiscal year ending September 30, 1996. Section 2. The Mayor and Village Clerk are hereby authorized and directed to execute the Agreement with Haas, Diaz & Co. set forth in Exhibit "A" for and on behalf of the Village of North Palm Beach. Section 3. This Resolution shall take effect immediately upon its adoption. • • • 1996. PASSED AND ADOPTED THIS 14th DAY OF March (Village Seal) ATTF~~. ILLAGE CLERK ~- /~J~-mss ~,. MAYOR • •~ Iliin.~: I~i~cZ ~- C.ir. 1iitli,J 1'ubL.:4~~~-ininnn AGREEMENT BETWEEN THE VILLAGE OF NORTH PALM BEACH, FLORIDA and HAAS, DIAZ & CO. PROVIDING FOR AN AUDIT OF THE VILLAGE'S GENERAL PURPOSE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1996 This is an agreement between: THE VILLAGE OF NORTH PALM BEACH, FLORIDA, its • successors and assigns, hereinafter referred to as "VILLAGE", through its VILLAGE COUNCIL, AND The partnership of Haas, Diaz & Co., Certified Public Accountants doing business or authorized to do business in the State of Florida, hereinafter referred to as "AUDITOR". GENERAL In order to establish the background, context and frame of reference for this Agreement and to generally express the objectives and intentions of the respective parties herein, the following statements, representations and explanations are predicates for the undertakings and commitments included with the provisions which follow and shall be construed as essential elements of the mutual considerations upon which this Agreement is based. 1.1 Florida Statutes Chapter 11.45 provides that if by July 1 in any fiscal year a local government entity has not been notified that a financial audit for the fiscal year will be performed by the Auditor General, each municipality with either revenues or expenditures of more than $100,000 shall require that an annual financial audit of its accounts and records be completed, within 12 months after the end of its respective fiscal year, by an independent certified public accountant retained by it and paid from its public funds. • lidil IS._h~,d~~i,~ IA,.~~I tiiiit. _'11U, liiw 1 I!i71 i~:in1.; 51 I.n: lJU:I I; I i '~. 1.2 The Village's revenues and expenditures for the fiscal year ending September 30, 1996, • will exceed $100,000. 1.3 In anticipation that the Auditor General will not perform a financial audit for the fiscal year ending September 30, 1996, the Village Council hereby appoints the Auditor to conduct an audit of the Village's general-purpose financial statements in accordance with generally accepted auditing standards. The audit will include tests of the accounting records and other procedures considered necessary to express an unqualified opinion that the financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles. If the auditor's opinion is other than unqualified, the auditors will fully discuss the reasons with us in advance. If for any reason, the auditors are not able to complete the audit, a report will not be issued as a result of this engagement. AUDIT PERIOD 2.1 Audit Period -This agreement shall commence on the date that this instrument is fully executed by both parties. The terms of this agreement shall be for the fiscal year ending September 30, 1996. This contract shall be renewed annually to include the audit of the financial reports for the fiscal year ending September 30, 1997, and September 30, 1998, as hereinafter specified. Either party to this Agreement may give notice of intent to renew at least ninety (90) days prior to expiration of the initial term or ninety (90) days prior to • expiration of the first renewal term. The party who received notice shall have a period of forty-five (45) days in which to either accept or reject the offer to renew. If the offer to renew is accepted, then the contract shall be extended for a one (1) year period. If the offer to renew is rejected by the other party, then this contract shall expire at the end of such fiscal year unless this agreement is otherwise terminated in accordance with Section 8.1 of this agreement. SCOPE OF THE AUDIT 3.1 The audit will cover the general purpose financial statements of the Village of North Palm Beach as of and for the year ending September 30, 1996. The general-purpose financial statements will be a part of the Comprehensive Annual Financial Report (CAFR), which is the final document that will be submitted to the Village. The CAFR will include the following additional information: 1. Combining, individual fund and account group statements. 2. Statistical section. With the exception of the statistical section, the additional information included in the CAFR will be subjected to the auditing procedures applied in the audit of the general purpose financial statements. • It is understood that the management of the Village is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related • costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition and 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. In planning and performing the audit for the year ending September 30, 1996, the auditor will consider the internal control structure in order to determine auditing procedures for the purpose of expressing our opinion on the Village's general-purpose financial statements and not to provide assurance on the internal control structure. The auditor will obtain an understanding of the design of the relevant policies and procedures and whether they have been placed in operation, and they will assess control risk. Tests of controls may be performed to test the effectiveness of certain policies and procedures that the auditor considers relevant to preventing and detecting errors and irregularities 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.) Tests, if performed, will be less in scope than would be necessary to render an opinion on the internal control structure policies and procedures and, accordingly, no opinion will be expressed. • The auditor will inform the Council of any matters involving the internal control structure and its operation that are considered to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to their attention relating to significant deficiencies in the design or operation of the internal control structure that, in their judgment, would 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. Compliance with laws, regulations, contracts, and grant agreements applicable to the Village is the responsibility of the Village's management. As part of obtaining reasonable assurance about whether the general-purpose financial statements are free of material misstatement, the auditor will perform tests of the Village's compliance with certain provisions of laws, regulations, contacts, and grants. However, the objective of the audit will not be to provide an opinion on overall compliance with such provisions, and the auditor will not express such an opinion. The auditing 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. The auditors will request written representations from the Village attorney • as part of the engagement, and at the conclusion of the audit, will also request certain written representations from management about the financial statements and related • matters. 3.2 Audit Standards -Unless higher standards are set forth elsewhere in this Agreement, the audit shall be conducted in accordance with (a) generally accepted auditing standards as promulgated by the American Institute of Certified Public Accountants (AICPA) including the AICPA's Industry Audit Guide, Audits of State and Lnrai Governmental Units, (b) Government Auditjpg Standards (excluding the review of economy and efficiency of operations and program results) issued by the Comptroller General of the United States, (c) Chapter 11.45, Florida Statutes and Rules of the Auditor General, State of Florida, Chapter 10.550 and, (d) OMB Circular A-128 (the Single Audit Act of 1984), if apolicable. 3.3 Reports -The Village management recognizes that they are responsible for the fair presentation of the Village's CAFR. The Auditor shall assist in the preparation of the Village's CAFR and provide advice and consultation on the application of statements and rules of the Governmental Accounting Standards Board, NCGA, the Auditor General of the State of Florida, Government Finance Officers Association (GFOA) as applicable to the certificate of Achievement for Excellence in Financial Reporting and other authoritative bodies in the preparation of the CAFR and, unless unusual conditions not now foreseen make it impracticable to do so, shall render an opinion on the fairness with which the general-purpose financial statements present the financial position of the Village at September 30, 1996, and the results of operations and cash flows of its proprietary fund for the year then ending in accordance with generally accepted • accounting principles and an "in relation to" opinion on the combining and individual funds and supplementary schedules. In addition to the opinion on the general-purpose financial statements, the Auditor shall also render reports on the following matters: Report on internal control structure based on an audit of the general-purpose financial statements performed in accordance with Government Auditing Standards. Report on compliance based on an audit of the general-purpose financial statements performed in accordance with Government Auditing Standard. Report on comments to management. Report on compliance with laws and regulations related to major or nonmajor federal financial assistance programs, if applicable. Report on supplementary information schedule of federal financial assistance, if applicable. Report on internal controls (accounting and administrative) based on a study and evaluation made as a part of the examination of the general-purpose financial statements and the additional tests required by the Single Audit Act of 1984, if • applicable. 3.4 Irregularities -Should irregularities or other unforeseeable conditions for the Village be • encountered which might necessitate the extension of the auditing work beyond the scope of normal auditing procedures, the Auditor agrees to advise the Village Council in writing of the circumstances and the estimated additional audit time and fees required to resolve the condition. 3.5 Illegal Acts/Reportable Conditions - It is recognized by the Village and the Auditor that an audit conducted in accordance with generally accepted auditing standards is not specifically or primarily designed to assure the discovery of fraud, defalcations or illegal acts, or to assure the disclosure of reportable conditions, that is, significant deficiencies in the design or operation of the internal control structure. Their discovery may result, and the Auditor agrees to notify the Village Council if any such matters are discovered. It is further recognized by both parties, that the Auditor's responsibility is limited to the period covered by the audit and does not extend to matters that might arise during any later periods for which they are not engaged as Auditors. Any additional audit work requested by the Council in connection with the further investigation of such acts or conditions shall be deemed to be extra work or additional services under Article VI of this agreement. COMPLETION OF WORK 4.1 Completion Date -The Auditor shall complete all audit work and provide the CAFR to the Village by January 31, 1997. Failure to do so shall reduce the audit fee by $100 per day until so provided. An extension to the report delivery date shall be granted for the • total number of days after November 15, 1996, if any, required by the Village to deliver the required schedules to the Auditor. Schedule delivery requirements are described in paragraph 4.2 below. 4.2 Village Closing Date -The Auditor shall provide to the Village a list of the required supporting schedules by September 30, 1996. Village shall then furnish the required list of supporting schedules and trial balance to Auditor by November 15, 1996. If Auditor has furnished the Village with a list of the required supporting schedules by September 30, 1996, and the Village has not furnished such list of supporting schedules and trial balance by November 15, 1996, then Auditor shall furnish to Village by hand delivery no later than November 16, 1996, a letter stating the supporting schedules that need to be provided. Upon receipt of the required supporting schedules, Auditor shall then furnish the Village with a letter stating the date upon which the last supporting schedule was received by Auditor. Should the Village fail to provide such schedules to the Auditor on the required date, the Auditor shall be granted an extension of time equal to the number of days after November 15, 1996, that such schedules are delivered by the Village to the Auditor. 4.3 Resolution of Audit Comments - At the conclusion of the audit field work, the Auditor shall make a reasonable effort to discuss with the Village Manager and Finance Director or their designees all of the proposed comments which may appear in the audit report. If the Village Manager and Finance Director or their designees are not available to discuss the Auditor's comments, their discussion is presumed when a draft of the • proposed comments is delivered in writing to their office. The Village Manager and Finance Director shall respond to the proposed comments no later than two (2) weeks following receipt. Failure to respond shall be deemed acceptance of the draft comments • as submitted. A written statement of explanation or rebuttal concerning the Auditor's comments, including corrective action to be taken, shall be filed with the governing body of the Village and with the Auditor General within twenty (20) days of the delivery of the financial audit report. 4.4 Oral Presentation By Auditor - No later than thirty (30) days after delivery of the audit report, the Auditor shall attend a public meeting with the Village Council to discuss any recommendations of operational improvements arising out of the conduct of the audit. WORKING PAPERS 5.1 Retention of Working Papers - For a period of six (8) years after completion of any work provided for herein, the Auditor shall make its working papers, records and other evidence and documents relating to such work available for inspection and copying by the Village and by the auditors retained by the Village who succeed the Auditor to the extent necessary to support the balances set forth in the financial statements on which the Auditor has reported. Any records determined by the General Counsel for the Village to be public records under Florida law shall be made available to the Village, successor CPA firms, and to the general public. EXTRA WORK OR ADDITIONAL SERVICES • 6.1 Extra Work -The Auditor, upon receipt of a written request from the Village shall perform such additional auditing or other professional services as may be requested. The purchase of specialized services or extra audit work shall require submission of a written proposal by the Auditor for agreement and approval by the Village. Such work shall be covered by separate purchase orders. 6.2 Compensation For Extra Work -Compensation to the Auditor for extra auditing services shall be based upon the hourly rates provided in paragraph 7.2 and shall be subject to other payment provisions of Article VII. COMPENSATION 7.1 Audit Fee -The basic fee for the services defined in Article III shall be based on the lesser of (a) the actual time required at the Auditor's standard billing rates for the level of personnel providing the service or (b) $18,810. The contract for subsequent years will contain a provision for an adjustment of the above fee in accordance with the U.S. Consumer Price Index, or 5%, whichever is less. This contract fee is based on anticipated cooperation from Village personnel and on 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 determine contract modifications before we incur the additional costs. Out-of-pocket costs, including but not limited to, printing, travel, per diem, telephone, etc. shall not be billable to the Village as a part of either • category (a) or (b) unless incurred at the specific request of the Village. The fee for the services defined in Article III has been established on the basis of the • funds to be audited. If the funds to be audited are increased or decreased during the term of this agreement of extension thereof, the parties will consider, but are not obligated to, a modification of the contract price. 7.2 Fees For Extra Work or Additional Services -The following schedule of hourly fees shall apply to all extra work or additional services and shall also serve as Auditor's standard billing rates for purposes of Section 7.1 of this agreement. Partner Manager Computer Specialist Senior Staff $125.00 per hour 80.00 per hour 70.00 per hour 55.00 per hour 40.00 per hour 7.3 Billings -The Auditor shall submit to the Village a monthly invoice for fees incurred during the preceding month attributable to the audit or special services provided. The billing shall allocate the costs to the appropriate fund applicable. 7.4 Payment Terms -The Village agrees to promptly process each monthly statement received from Auditor, and shall make its best effort to remit billings within thirty (30) days of receipt of Auditor's monthly statement. TERMINATION • 8.1 Termination of Services - It is understood and agreed that this Agreement shall be terminated with or without cause upon thirty (30) days written notice by the Village or ninety (90) days written notice by the Auditor during the term of this contract or extension thereof. Auditor shall be compensated through the date of termination based on the hours incurred at the Auditor's billing rates stated in paragraph 7.2 or the pro-rata amount of work compared to the $18,810 fee set forth in paragraph 7.1, whichever is lower. ASSIGNMENT 9.1 Assignment of Work -This Agreement, or any interest herein, shall not be assigned, transferred or otherwise encumbered, under any circumstances by Auditor. However, the Agreement shall run to the Village and to any of its successors. EXECUTION 10.1 This document shall be executed in two (2) counterparts, each of which shall be deemed an original. • IN WITNESS WHEREOF, the parties hereto have made and executed this Agreement on the • respective dates under each signature. VILLAGE A7J ST: VILLAGE OF ORTH PALM BEACH L/y%u ~ BY ~~l/~jlc-~~ ~~, hleen Kelly, Village Clerk da f , 1996 F19"TEST: ~ w Margaret J. bertso'n, irm Administrator • HAAS, DIAZ & CO. Deborah A. Diaz, Partner a- ~~ day of ~. 1996 u