2004-013 Grau Agrmt for Internal Auditing of FY 2002-03RESOLUTION 13-2004
A RESOLUTION OF THE VILLAGE COUNCIL OF THE VILLAGE OF NORTH PALM
BEACH, FLORIDA, AUTHORIZING THE MAYOR AND VILLAGE CLERK TO ENTER INTO
AN AGREEMENT WITH GRAD & COMPANY, P.A., CERTIFIED PUBLIC ACCOUNTANTS,
ATTACHED AS EXHIBIT "A", WHICH AGREEMENT IS FOR THE PURPOSE OF THE
VILLAGE SECURING INTERNAL AUDITING SERVICES FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 2003; 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 Grau & Company, P.A., certified public accountants, attached as
Exhibit "A", which agreement is for the purpose of the Village securing internal auditing
services for the fiscal year ending September 30, 2003.
Section 2. The Mayor and Village Clerk are hereby authorized and directed to execute the
agreement 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.
PASSED AND ADOPTED THIS 12th DAY OF FEBRUARY, 2004.
(ViiL
ATT
~1 Grau&Company, PA.
~, certified pubic ~ccnu~itnnts
February 3, 2004
The Honorable Mayor David B. Norris
Village Council
The Village of North Palm Beach
Village Hall, 501 U.S. Highway 1
North Palm Beach, Florida 33408
Dear Mayor Norris:
2700 North Military Trail • Suite 350
Boca Raton, Florida 33431
(561) 994-9299 • (800) 299-4728
Fax (561) 994-5823
w=av~~v.gra~a.cc~,~
We are pleased to confirm our understanding of the nature and limitations of the services we are to provide for
The Village of North Palm Beach (Village).
We will apply the agreed-upon procedures which the Village has specified, listed in the attached schedule, of
Agreed Upon Procedures Payroll Cycle for the year ended September 30, 2003. This engagement is solely to
assist the Village in determining compliance with internal procedures on the payroll. Our engagement to apply
agreed-upon procedures will be conducted in accordance with attestation standards established by the
American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the
responsibility of those parties specified in the report. Consequently, we make no representation regarding the
sufficiency of the procedures described in the attached schedule either for the purpose for which this report
has been requested or for any other purpose. If, for any reason, we are unable to complete the procedures,
we will describe any restrictions on the performance of the procedures in our report, or will not issue a report
as a result of this engagement.
Because the agreed-upon procedures listed in the attached schedule do not constitute an examination, we will
not express an opinion on compliance with internal procedures on payroll. In addition, we have no obligation
to perform any procedures beyond those listed in the attached schedule.
We will submit a report listing the procedures performed and ourfindings. This report is intended solelyforthe
use of the Village and should not be used by those who did not agree to the procedures and take responsibility
for the sufficiency of the procedures for their purposes. Our report will contain a paragraph indicating that had
we performed additional procedures, other matters might have come to our attention that would have been
reported to you.
We plan to begin our procedures on approximately one week after the engagement letter is signed and,
unless unforeseeable problems are encountered, the engagement should be completed within three to four
months after we begin the work. At the conclusion of our engagement, we will require a representation letter
from management that, among other things, will confirm management's responsibility for the presentation of
the compliance with internal procedures on payroll in accordance with the Village's reauirements_
We estimate that our fees for these services will be $32,000. The fee estimate is based on anticipated
cooperation from your personnel and the assumption that unexpected circumstances will not be encountered
during the engagement. 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. Our invoices for these fees will be rendered each
month as work progresses and are payable on presentation.
The Village of North Palm Beach
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We appreciate the opportunity to assist you 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. If the need for additional services
arises, our agreement with you will need to be revised. It is customary for us to enumerate these revisions in an
addendum to this letter.
Very truly yours,
Grau & Company, P.A.
By:
Antoni .Grau, CPA
enclosures
RESPONSE:
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By:
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engivs/2003MLLAGE OF NORTH PALM BEACH.doc
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SCHEDULE OF AGREED UPON PROCEDURES -- PAYROLL CYCLE
VILLAGE OF NORTH Pr.L'~l BEACH
FISCAL YEAR ENDING SEPTEMBER 30, 2003
All Employees
1. For each of the following departments select a sample of existing employees during FYE
September 30, 2003 as follows:
• Viilage Manager- i
• Village Clerk - 1
• Finance - i
• Public Services - 14
• Public Safety - 18
• Recreation - 3
• Library - 3
• Country Club - 11
a. Verify that a timesheet was completed for the employee selected and signed by the
employee's supervisor/ department head;
b. Agree the hours worked per the timesheet (if available at department) to the hours
manually written on the "recurring pay by employee" and the payroll register;
c. Recalculate hours worked times pay rate, to agree to amount paid to each employee;
d. Agree the employee's pay rate to their original employee record or evaluation, noting
that it was signed by the Village Manager;
e. Verify separation of duties for those authorizing and approving hours worked and those
processing payments;
f. Examine checks for endorsement and compare signature with signature on files (i.e., W-
4)
g. Obtain the accrual register for the pay period selected and recalculate the hours accrued
for each selected employee, based on their hire date and position.
h. Verify that merit increases are in accordance with "performance evaluation system."
i. Verify that used and accrued compensated absences have been properly calculated.
New Hires
2. Select a sampie ofi 7 (20% or` 36} new hired employees during FYE September 30, 2003. A
break down per department wi!! be determined once the departments! listing is provided by
client.
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• Village Manager
• Village Clerk
• Finance
• Public Services
Public Safety
• Recreation
• Library
• Country Club
a. Verify that pay-rate is in accordance with salary schedule per personnel rules and
regulations. !f above minimum verify Village R~[anager approval.
b. Verify that a timesheet was completed for the employee selected and signed by the
employee's supervisor/department head;
c. Agree the hours worked per the timesheet to the hours proof report and the payroll
register;
d. Recalculate hours worked times pay rate, to agree to amount paid to each employee;
Terminated Employees
3. Select a sample of 9 terminated employees during FYE September 30, 2003 (20% of 45). A
break down by department will be determined once the departmental listing has been
provided.
• Village Manager
• Village Clerk
• Finance
• Public Services
• Public Safety
• Recreation
• Library
• Country Club
a. Verify that salary benefits have been discontinued for terminated employees subsequent
to termination date.
b. If applicable, recalculate compensated absence pay out.
All Employees
4. Perform the following:
a. Observe the payroll distribution for a selected period.
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b. Jsing ,4udit Command Language, export into a spreadsheet payrol! data for FYE
Geptember 3Q, 2Q03 perform the follo:~~ing:
• Scrutinize the payroll registers and the payroll check registers for unusual items such as
names of former employees;
• duplicate addresses;
• unusual pay rates;
• unusual number of hours worked; and
• same social security numbers or two different people.
5 Prepare a schedule of findings and recommendations.
6 Obtain management response to findings.
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