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RESOLUTION No.7 '1
Series of 1998
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASPEN, COLORADO,
APPROVING.A PROFESSIONAL SERVICE AGREEMENT BETWEEN THE CITY
OF ASPEN AND MCMAHAN AND ASSOCIATES, P.C. TO AUDIT THE CITY'S
ANNUAL FINANCIAL STATEMENTS; AND AUTHORIZING THE CITY
MANAGER TO EXECUTE SAID AGREEMENT ON BEHALF OF THE CITY OF
ASPEN, COLORADO.
WHEREAS, there has been submitted to the City Council a professional service
agreement between the City of Aspen and McMahan and Associates, P.C. to audit the
City's annual financial statements, a true and accurate copy of which is attached hereto as
Exhibit "A";
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NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
ASPEN, COLORADO:
That the City Council of the City of Aspen hereby approves that professional
services agreement between the City of Aspen, and McMahan and Associates, P.C. to
audit the City's annual financial statements for the year ended December 31,1998,1999,
2000, a copy of which is annexed hereto and incorporated herein, and does hereby
authorize the City Manager of the City of Aspen to. execute said agreement on behalf of
the City of Aspen.
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INTRODUCED, READ AND ADOPTED by the City Council of the City of
Aspen on the /3 dayof~ ,1998.
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I, Kathryn S. Koch, duly appointed and acting City Clerk do certifY that the
foregoing is a true and accurate copy of that resolution adopted by the City Council of the
City of Aspen, Colorado, at a meeting held on the day hereinabove stated.
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10-08-1998 09:32RM FROM MCMRHRN
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McMAHAN AND ASSOCIATES,
Certified Public Accountants and Consultants
P.C.
SUITe 222/A.VON Ce:~A
100 WEsT SEAVER CREEl( BL'IO.
P.o, BOX 5850 AVON. CO 81 $20
~l..EP"fONE: (970) e4s~e.eoo
r.t.C$tMIL..E; '~70) 84s-oes t
E.-MAlL: MCMA.HA\'tl@SNI,MET .
October 6, 1998
City of Aspen, City Counsel
C;/O Ms, Tabatha Miller, Finance Director
130 South Galena Street
Aspen, Colorado 81611
We are pleased to confirm our understanding of the services we are to provide the City Of Aspen (the
'City") including the AspenlPitkin Housing Authority for the years elided December 31. 1998. 1999 and
2000. We will audit the general purpose financial statements Of the City as Of and for the years ended
December 31,1998,1999 and 2000. The objective of our audit will be the expression of an opinion as to
whether the 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 !he general purpose finanCial statements
taken as a whole. The objective also includes reporting on the C~y's:
Internal control related to the financial statements and compliance with laws, regulations, and the
provisions of contracts or grant agreements, noncompliance with which could have a material
effect on the financial statements in accordance with Government Auditing Standards.
Interrial control related to major programs and an opinion on whelher!he City has complied with
laws, regulations, and the provisions of contracts or grant agreements that could have a direct and
material effect on each major program in accordance with the Single Audit Act Amendments Of
1996 and OMB Circular A.133, Audits of States, Local Governments, and Non-ProfIt
Organizations.
The reports on internal control and compliance will each include a statement that the report is intended for
the information of the audit committee, management, specific legislative or regulatory bodies, federal
awarding agencies, and if applicable, pass-through entities.
Our audit will be conducted In accordance with generally accepted standards; the standards for financial
audits contained in Government Auditing Standards, issued by the Comptroller General of the Un~ed
States; the Single Audit Act Amendments of 1996; and the provisions of OMS Circular A-133, and will
include tests of the accounting records Of the City, a determination of major programs in accordance with
Circular A-133, and other procedures we. consider necessary to enable us to express an opinion. If our
opinion on the general purpose financial swtements or the Single Aud~ compliance opinion is other than
unqualified, we will fully discuss !he 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 en9agement
Performing s@!Vic@s tor local governments througMut ColoradO
D, Je<ry McMahan, C.P.A.
Paul J. Backes, C,PA
Daniel J?, Cur:lahy, CPA
Michael N. JBflkins. CPA., C.A.
David M. Cat/e. C,P,A.
Member!!:: American In:lltitut.e "I Ctl'riificJ. Pu'hhc Acc<iunta.nt~/Col(..,t.Qd(, Sc)Cidy ('If C~rHli"J Pu'hJic AcC(\ttn~anb;
Natioll(J and Calc)zado Government FinanCl:! offii.:crs A~:1l-('Icicl.li()tJC(,I()Tado Municipal Lea.~\le
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City of Aspen
Parle 2
The managemant of the City Of Aspen is responsible for establishing and maintaining internal control. In .
fulfilling this responsibility, estimates and judgments by management ere 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 managemenfs authorizations and
recorded properly to permit the preparation of general purpose financial slatements in accordance with
gl3nerally accepted accounting. principles,. and that federal award programs are managed in compliance
with applicable laws and regulations and the provisions of contracts and grant agreements.
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
opinions on the .City of Aspen's general purpose financial statements and on its compliance with
requirements applicable to major programs.
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 er:rorsand fraud that are material
to the general purpose financial statements and to prellenting and detecting misstatements resulting from
illegal acts and other noncompliance matters that have a direct and material effect on the general purpose
financial statements. Teats of controls relative to the general purpose financial statements are required
only if control risk is assessed below the maximum lellel. 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
in our report on internal control issued pursuant to Government Auditing Standards.
We will perform tests of controls, as required by OMS Circular A.133. to evaluate !he effectiveness of !he
design and operation Of controls that we consider relevant to preventing or d~g material
noncompliance with compliance requirements, applicable to each of the City's major federal award
programs. However, our tests will be less in scope than would be necessary to render an opinion on those
controls and, accordingly, no opinIon will be expressed in our report on internal control issued pursuant to
OMS Circular A-133.
An audit is not designed to provide assurance on internal control or.to identify reportable conditions.
However, we will inform the goveming 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 publk: Accountants. Reportable conditions involve matters coming to our attention
relating to significant deficiencies in the design or operation ot the internal control that, in our judgment,
could adversely affect the entity's abirlty to record, process. summarjze, and report financial data consistent
with !he assertions of management in the general purpose financial statements. We will also inform you of
any non reportable conditions or Other matters involving internal control, If any, as required by OMS Circular
A.133.
Identifying and ensuring that !he City complies with laws, regulations, contracts, and agreements, including
grant agreements, is the responsibility of management. As part of obtaining reasonable assurance about
whether the general purpose financial statements are free of material misstatemen~ we will perform tests of
the City of Aspen's compliance with applicable laws and regulations and the provisions of contracts and
agreements, including grant agreements. However,!he objective Of those procedures will not be to provide
an opinion on overall compliance, and we will not express such an opinion in our report on compliance
issued pursuant to Government Auditing Standards.
OMS Circular A.133 requires that we also plan and perform the audit to obtain reasonable assurance about
Whether the auditee has complied with applicable laws and regulations and the provisions of contracts and
grant agreements applicable to major programs. Our procedures will consist of the applicable procedures
described in the OMB Ci~ular A.133 Compliance Supplemem, The purpose of thOSll pJ'OCl!dures will be to
express an opinion on the City's compliance with requirements applicable to major programs in our report
on compliance issued pursuant to OMS Circular A.133.
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City of Aspen
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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 !he
engagement. and they may bill you for responding to the inquiry. At the conclusion of our audit, we will also
require certain written representations from you about the financial statements and related matters,
An audit includes examining, on a test basis, evidence supporting the aniounts 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. As required by the Single Audit Act Amendments Of 1996 and OMS Circular A-
133, our audit will include test of transactions related io major federal award programs for compliance with
applicable laws and regulations and the provisIons of contracts and grant agreements. 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 errors, fraud, other illegal acts. or noncomp/illnce 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 or to major programs. However, we will inform
you of any material errors and any fraud !hat comes to our attention. We will also inform you Of any other
illegal acts that come to our attention, unless clearly inconsequential. We 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.
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Management is responsible for making all financial records. and related information available to us. We
undersland 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,
including the schedule of expenditures of federal awards, but the responsibility for !he financial statements
remains with you. That responsibility includes the eSlllblishment and maintenance of adequate records
and effective internal control over financial reporting and compliance, the selection and application of
accounting principles, and the safeguarding of assets. Additionally, as required by OMS Circular A-133, it
is managemenfs responsibility to follow up and take corrective action on reported audit findings and to
prepare a summary schedule of prior audit findings and a corrective action plan. The summary schedule of
prior audit findings should be available for our review upon the inception Of our field work.
We understand that your employees will prepare an cash, accounts receivable, or other confirmations we
request and w1Ulocate any invoices selected by US for testing.
At the conclusion of the engagement, it is manallemenfs responsibility to submit the reporting package
(including financial statements, schedule Of expenditures of federal awaf'ds, summary schedule of prior
audit findings, auditors' reports, and a corrective action plan) along With the Data Colleclion Form to the
designated federal c1efiringhouse and, if appropriate, to pass-through entities. The Data Collection Form
and the reporting package must be submitted willlin the eerlier of 30 days after receipt of the auditors'
reports or 13 months after the end of the audit period, unless a longer period is agreed to in advance by the
cognizant or oversight agency for audits. At the conclusion of the engagement, we w1U provide information
to management as to where the reporting packages should be submitted and !he number to submit
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The workpapers for this engagement are the property of McMahan and Associates, P.C., Certified PUblic
ACCO~'1tants and constitute confidential information. However, we may be requested to make cerlain
workpapers available to the Cognizant Agency pursuant to authority given to it by law or regulation. If
requested. access to such workpapers will be provided under the supervision of McMahan and Associates,
P.C., personnel. Furthermore, upon request, we may provide photocopies of selected workpapers to the
Cognizant Agency. The Cognizant or Grantor Agency may intend, or decide, to distribute the photocopies
or information contained therein to others, including other governmental agencies.
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10-08-1998 09:34RM FROM MCMRHRN
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City of Aspen
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The workpaper5 for this engagement will be retained for a minimum of three years alter the date the
auditors' report is issued or for any lIdditional period requested by the Cogniz8nt Agency. oVe!Sight
Agency for Audit or Pass-through entitY. 11 we are aWare that a federal awarding agency, pass-through
entity, or auditee is contesting an audit finding. we will contact !he party contesting the audit finding for
guidance prior to destroying the workpapers.
Our fees for these servIceS will be based on the actual lime spent at our standard hourly rates, plus travel
and other out-of-pocket costs such as report production, typing, postage, etc. Our slllndard hourly rates
vary according to the degree of responsibility involved and the experience level of the personnel assigned
to the audits, Our invoices for these fees will be rendered each month as work progresses and are
payable on presentation. However, we will not exceed the following amounts without your advance
approval,
City of Housing
Service to be provided Aspen Authority Total
1998 Audit $31.000 $7.500 $38.500
1999 Audit . 32,000 7,740 39,740
2000 Audit . 33,000 7,990 40,990
Issuance of Consent Letter 600 600
. Future years costs increases have been calculated baSed upon the Denver. Boulder CPI
Index, which is presently approximately 3.2%.
The audit fee quote assumes that !he City's personnel will draft the annual audit report and that we will
review the report for appropriate technical presentation. We expect to begin our audit in accordance wilh
your timetable, with reasonable notice.
We appreciate the opportunity to be Of service to !he City of Aspen 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. .
Sincerely,
W\(Vv.4, 'M.", 0,,,, " a '>Sc. c'::' ~ I f(.
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McMahan and Associates. P.C.
Certified Public Accountants and Consultants
RESPONSE.:
This letter correctly sets forth the understanding of City of Aspen
By:
Tille:
Date:
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