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HomeMy WebLinkAboutResolution - 2008-R0307 - Agreement For An Audit Of Annual Financial Statements - BKD, LLC - 08_28_2008Resolution No. 2008-RO307 August 28, 2008 Item No. 5.2 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock is hereby authorized and directed to execute . for and on behalf of the City of Lubbock an Agreement for an audit of annual financial statements by and between the City of Lubbock and BKD, LLC, of Little Rock, Arkansas, which Agreement and any associated documents are attached hereto as Exhibit A and made a part hereof for all intents and purposes. In addition thereto, the City Manager or a designated representative may execute engagement letters or other associated documents as required during the term of the Agreement. Passed by the City Council this 28th day of August , 2008. <- -OWAX- TOM MARTIN, MAYOR ATTEST: Rebe ca Garza, City Secretary APPROVED AS TO CONTENT: Andy urcham, Chief Financial Officer APPROVED AS TO FORM: Don VanM-er, Assistant'City D Dres/ B K Dau d i tCo n 08 Res August 15, 2008 Resolution No. 2008-RO307 CONTRACT This professional services contract is executed this day of 1008 by and between the City of Lubbock, Texas, herein after called "the City", and BKD, LLP. WHEREAS, the City desires to have an independent audit performed; and WHEREAS, BKD, LLP, has submitted a proposal to provide such professional services. WITNESSETH: IN CONSIDERATION of mutual promises of the parties contained here in and other good and valuable consideration, the parties agree as follows: 1. BKD, LLP shall provide the City with the necessary professional services to audit all funds including those which are covered under the provisions of the Single Audit Act. 2. The term of the contract shall run from the date of execution and shall automatically renew each year, subject to budget approval by the governing body of the City, for such terms as are required to perform the contracted professional auditing services for the fiscal year ending September 30, 2008. 3. The professional accounting services shall be provided in accordance with the terms and conditions set forth in the Proposal to Provide Services, attached hereto. The Proposal to Provide Services is hereby incorporated by reference into this Contract as if set forth word for word in its entirety. 4. BKD, LLP shall be compensated for services rendered under this contract in accordance with the terms and conditions set forth in the Proposal to Provide Services. No work shall be performed beyond the present scope of this contract without express prior approval by the governing body of the City. 5. The City or BKD, LLP shall have the right to terminate the contract upon 30 days written notice. 6. In the event of a conflict between any terms and conditions of this contract and the Exhibit, the terms and conditions of the Exhibit shall take precedence. 7. Neither party may assign any of its rights or delegate any of its obligations under this agreement, without the express written consent of the other. 8. It is agreed that the failure of any party to invoke any of the available remedies under this agreement or under law in the event of one or more breaches or defaults by any party under the agreement shall not be construed as a waiver of such provisions and conditions and shall not prevent the parties from invoking such remedies in the event of any future breach or default. 9. Each paragraph of this agreement is severable from all other paragraphs. In the event any court of competent jurisdiction determines that any paragraph or subparagraph is invalid or unenforceable for any reason, all remaining paragraphs and subparagraphs shall remain in full force and effect. 10. This agreement shall be interpreted according to and enforced under the laws of the State of Texas. 11. This agreement contains the entire agreement of both parties hereto, and no other oral or written agreement shall be binding on the parties hereto. This agreement supersedes all prior agreements, contracts and understandings of any kind between the parties relating to the subject matter hereof. This agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHERE OF, the parties hereto have executed this professional services contract on or as of the date first written above. BKD, LLP: b�, LLP BY: TITLE: _PoyANe-( DDcon/BKDauditO8Con CITY OF LUBBOCK: TOM MARTIN, MAYOR ATTEST: Rebe a Garza, City Secretary APPROVED AS TO CONTENT: Andy 6urcham, Chief Financial Officer APPROVED AS O FORM: Don Vandiver, ssistant it Atto ey "EXHIBIT An qB Resolution No. 2008-RO307 oup July 21, 2008 Members of City Council Honorable Tom Martin, Mayor Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas P.O. Box 2000 Lubbock, Texas 79457 We are pleased to confirm the arrangements of our engagement and the nature of the services we will provide to the City of Lubbock, Texas. ENGAGEMENT OBJECTIVES We will audit the basic financial statements of City of Lubbock, Texas as of and for the year ended September 30, 2008 in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States and U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments and Nonprofit Organizations. The objectives of our audit are: ✓ Expression of an opinion on the conformity of your financial statements, in all material respects, with accounting principles generally accepted in the United States of America. ✓ Issuance of a report on your compliance based on the audit of your financial statements. ✓ Issuance of a report on your internal control over financial reporting based on the audit of your financial statements. ✓ Expression of an opinion on your compliance, in all material respects, with the types of compliance requirements described in the U. S. Office of Management and Budget Circular A- 133 Compliance Supplement that are applicable to each of your major federal award programs. ✓ Issuance of a report on your internal control over compliance based on the audit of your compliance with the types of compliance requirements that are applicable to each of your major federal award programs. 400 W. Capitol Avenue, Suite 2500 200 E. 11 th Avenue 5000 Rogers Avenue, Suite 700 P.O. Box 3667 P.O. Box 8306 tY�: Fort Smith, AR 72903-2079 Little Rock, AR 72203-3667 Pine Bluff, AR71611.8306 Praxi 479.452.1040 Fax 479.452.5542 501.372.1040 Fax 501.372.1250 870.534.9172 Fax 870.534.2146 MEMBER • ' bkd.com Beyond Your Numbers ALLIANCEGLOBAL INDEPENDENTFIRMS -z- Members of City Council Honorable Tom Martin, Mayor Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas ✓ Issuance of a report on your schedule of expenditures of federal awards. OUR RESPONSIBILITIES Auditing standards generally accepted in the United States of America, Government Auditing Standards and OMB Circular A-133 require that we plan and perform: ✓ The audit of the financial statements to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. ✓ The audit of compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement applicable to each major federal award program to obtain reasonable rather than absolute assurance about whether noncompliance having a direct and material effect on a major federal award program occurred. Accordingly, a material misstatement or noncompliance having a direct and material effect may remain undetected. Our audit of the financial statements is designed to detect misstatements and noncompliance that, in our judgment, could have a material effect on the financial statements taken as a whole. Consequently, our audit will not necessarily detect errors or fraud resulting in an immaterial misstatement of the financial statements. Likewise, our audit of compliance with the types of compliance requirements applicable to each major federal award program is designed to detect noncompliance having a direct and material effect on a major program. Consequently, our audit will not necessarily detect noncompliance having an indirect and material or an immaterial effect on any program. An audit also includes obtaining an understanding of the entity and its environment, including internal controls, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing and extent of further audit procedures to be performed. An audit is not designed to provide assurance on internal control over financial reporting or on internal control over compliance or to identify material weaknesses or significant deficiencies. However, we will communicate to you any matter that comes to our attention that we consider a material weakness or significant deficiency. Because of the limits of internal control, errors, fraud, illegal acts or instances of noncompliance may occur and not be detected. Also, in the future, procedures could become inadequate because of changes in conditions or deterioration in design or operation. Two or more people may also circumvent controls, or management may override the system. We are available to perform additional procedures with regard to fraud detection and prevention at your request, subject to completion of our normal -3- Members of City Council Honorable Tom Martin, Mayor Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas engagement acceptance procedures. The actual terms and fees of such an engagement would be documented in a separate letter to be signed by you and BKD. If, for any reason, we are unable to complete our audit of the financial statements or our audit of compliance with the types of compliance requirements applicable to each major federal award program or are unable to form or have not formed an opinion, we may decline to express an opinion or decline to issue a report as a result of this engagement. If we discover conditions that may prohibit us from issuing a standard report, we will notify you as well. In such circumstances, further arrangements may be necessary to continue our engagement. YOUR RESPONSIBILITIES To facilitate our audit, management is responsible for making all financial records documentation and other financial and compliance related information available to us. At the conclusion of our engagement, management will provide to us a letter acknowledging certain responsibilities outlined in this engagement letter and confirming: • The availability of this information • Certain representations made during the audits for all periods presented • The effects of any uncorrected misstatements, if any, resulting from errors or fraud aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole Management is responsible for fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, for adjusting the financial statements to correct material misstatements and for identifying and ensuring compliance with the laws, regulations, contracts and grants applicable to your activities including your federal award programs. Management is also responsible for establishing and maintaining effective internal control over financial reporting and compliance and setting the proper tone; creating and maintaining a culture of honesty and high ethical standards; and establishing appropriate controls to prevent, deter and detect fraud, illegal acts and instances of noncompliance. The results of our tests of compliance and internal control over financial reporting performed in connection with our audit of the financial statements may not fully meet the reasonable needs of report users. Management is responsible for obtaining audits, examinations, agreed -upon procedures or other engagements that satisfy relevant legal, regulatory or contractual requirements or fully meet other reasonable user needs. -4- Members of City Council Honorable Tom Martin, Mayor Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas OTHER SERVICES We may perform other services for you that are not covered by this engagement letter. You agree to assume full responsibility for the substantive outcomes of the services described above and for any other services that we may provide, including any findings that may result. You may also acknowledge that these services are adequate for your purposes and that you will establish and monitor the performance of these services to ensure that they meet management's objectives. Any and all decisions involving management functions related to these services will be made by you, and you accept full responsibility for such decisions. We understand that you have designated a management -level individual to be responsible and accountable for overseeing the performance of these services, and that you have determined this individual is qualified to conduct such oversight. ENGAGEMENT FEES Our fees will be based on time expended plus charges for travel, long-distance telephone, copies, etc. and will be $205,500. We will issue progress billings during the course of our engagement and our statements are due when received. Our fees are based upon the understanding that your personnel will be available to assist us. Assistance from your personnel is expected to include: • Preparing audit schedules to support all significant balance sheet and certain other accounts • Responding to auditor inquiries • Preparing confirmation and other letters • Pulling selected invoices and other documents from files • Helping to resolve any differences or exceptions noted • Preparation of the comprehensive annual financial report Our engagement fee does not include any time for post -engagement consultation with your personnel or third parties, consent letters and related procedures for the use of our reports in offering documents, inquiries from regulators or testimony or deposition regarding any subpoena. Charges for such services will be billed separately. The Auditing Standards Board of the American Institute of Certified Public Accountants, which promulgates generally accepted auditing standards, has recently issued eight new standards collectively known as the Risk Assessment Suite. The Risk Assessment Suite imposes new requirements significantly expanding information to be gathered about the entity being audited, its environment, risks it faces and how it controls those risks. The Suite also imposes new -5- Members of City Council Honorable Tom Martin, Mayor Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas requirements significantly enhancing the rigor and detail of the process of assessing and developing responses to risks of material misstatement of the particular entity's financial statements as well as documentation thereof. Our fees may also increase if our duties or responsibilities are increased by rulemaking of any regulatory body or any additional new accounting or auditing standards. We will consult with you in the event any other regulations or standards are issued that may impact our fees. If our invoices for this or any other engagement you may have with BKD are not paid within 30 days, we may suspend or terminate our services for this or any other engagement. In the event our work is suspended or terminated as a result of nonpayment, you agree we will not be responsible for any consequences to you. OTHER ENGAGEMENT MATTERS AND LIMITATIONS The workpapers and documentation retained in any form of media for this engagement are the property of BKD. BKD will be required to make working papers available to the City upon request and to respond to reasonable inquiries of successor auditors and to allow successor to review working papers relating to matters of continuing audit significance. City also acknowledges and grants assent that representatives of the cognizant or oversight agency or their designee, other government staffs and the U.S. General Accounting Office shall have access to the working papers upon their request; and that BKD shall maintain the working papers for a period of at least three years after the date of the report, or for a longer period if BKD is requested to do so by the cognizant or oversight agency. You agree that we have no legal responsibility to you in the event we provide such documents or information. During the course of BKD's engagement, BKD may accumulate records containing data, which should be reflected in the City's books and records. City will determine that all such data, if necessary, will be so reflected. Accordingly, City will not expect BKD to maintain copies of such records in BKD's possession. You agree to indemnify and hold harmless BKD and its personnel from any claims, liabilities, costs and expenses relating to our services under this agreement attributable to false or incomplete representations by management, except to the extent determined to have resulted from the intentional or deliberate misconduct of BKD personnel. You agree that any dispute regarding this engagement will, prior to resorting to litigation, be submitted to mediation upon written request by either party. Both parties agree to try in good faith to settle the dispute in mediation. The American Arbitration Association will administer any such mediation in accordance with its Commercial Mediation Rules. The results of the mediation proceeding shall be binding only if each of us agrees to be bound. We will share any costs of mediation proceedings equally. n Members of City Council Honorable Tom Martin, Mayor Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas No amendment, modification or alteration of the terms of this agreement shall be binding unless such amendment, modification or alteration is in writing, dated subsequent to this agreement and duly executed by BKD and the City. If any provision of this agreement is declared invalid or unenforceable, no other provision of this agreement is affected and all other provisions remain in full force and effect. This engagement letter represents the entire agreement regarding the services described herein and supersedes all prior negotiations, proposals, representations or agreements, written or oral, regarding these services. It shall be binding on heirs, successors and assigns of you and BKD. We may from time to time use third -party service providers in serving your account. We may share confidential information about you with these service providers, but remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures and safeguards to protect the confidentiality of your information. In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information. In the event that we are unable to secure an appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your confidential information with the third -party service provider. You agree that we will, at our discretion or upon your request, deliver financial statements or similar documents to you electronically via floppy disk, CD-ROM, e-mail or other mechanism. You recognize and accept the risk involved, particularly in e-mail delivery as the Internet is not necessarily a secure medium of communication as messages can be intercepted and read by those determined to do so. You agree you will not modify these documents for internal use or for distribution to third - parties. You also understand that we may on occasion send you documents marked as draft and understand that those are for your review purpose only, should not be distributed in any way and should be destroyed as soon as possible. If you intend to include these financial statements and our report in a bond or other similar offering document at some future date, you agree to seek our permission to do so at that time. You agree to provide reasonable notice to allow sufficient time for us to perform certain additional procedures. Any time you intend to publish or otherwise reproduce these financial statements and our report and make reference to our firm name in any manner in connection therewith, you agree to provide us with printers' proofs or masters of the offering document for our review and approval before printing or other reproduction. You will also provide us with a copy of the final reproduced offering document for our approval before it is distributed. Our fees for such services are in addition to those discussed elsewhere in this letter. -7- Members of City Council Honorable Tom Martin, Mayor Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas We understand that you will place these financial statements or our report thereon on an electronic site, such as the World Wide Web. You recognize that we have no responsibility as auditors to review information contained in electronic sites. BKD is a registered limited liability partnership under Missouri law. Under applicable professional standards, partners of BKD, ALP have the same responsibilities as do partners in a general accounting and consulting partnership with respect to conformance by themselves and other professionals in BKD with their professional and ethical obligations. However, unlike the partners in a general partnership, the partners in a registered limited liability partnership do not have individual civil liability, directly or indirectly, including by way of indemnification, contribution, assessment or otherwise, for any debts, obligations or liabilities of or chargeable to the registered limited liability partnership or each other, whether arising in tort, contract or otherwise. HIPAA BUSINESS ASSOCIATE AGREEMENT We agree not to use or disclose Protected Health Information of your employees (hereinafter referred to as "PHI") obtained or produced in any form of media during the course of our work, other than for purposes of (a) performing our engagement, (b) management and administration of BKD, or (c) carrying out legal responsibilities of BKD. We represent to you that we have implemented what we consider to be appropriate administrative, physical, and technical safeguards to protect the confidentiality, integrity, and availability of that PHI. With respect to your PHI, we will report to you any material security incident or use or disclosure not authorized by this agreement and, to the extent practical, assist you in mitigating any harmful effects caused by material security incidents or unauthorized uses or disclosures of which we have knowledge. We agree that any material violation of these confidentiality provisions entitles you to terminate this engagement. BKD agrees to: Upon their request, make available to the Secretary of Health and Human Services our internal practices and books and records relating to the use and disclosure of PHI for purposes of determining you compliance with the Security and Privacy Rule, subject to any applicable legal privileges. 2. To the extent we maintain information that is part of a Designated Record Set, make available information necessary for you to make an accounting of disclosures of PHI about an individual. 3. To the extent we maintain information that is part of a Designated Record Set, make available information necessary for you to respond to requests by individuals for access to PHI that is not in your possession but is considered part of a Designated Record Set. -8- Members of City Council Honorable Tom Martin, Mayor Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas 4. Upon receipt of a written request from you, incorporate any amendments or corrections to PHI contained in our workpapers in accordance with the Security and Privacy Rule to the extent such PHI is considered part of a Designated Record Set. For purposes of this agreement, the term "Security and Privacy Rule" refers to the final rules published to implement the Administrative Simplifications provisions of the Health Insurance Portability and Accountability Act of 1996, specifically 45 CFR Parts 160 and 164. The terms "Protected Health Information" and "Designated Record Set" have the same meaning as defined in the Security and Privacy Rule. At the conclusion or termination of this engagement, any PHI retained by us will be subject to the same safeguards as for active engagements. We will obtain from any agents, including subcontractors, to whom we provide PHI received from you, or created or received by us on behalf of you, an agreement to the same restrictions and conditions that apply to us with respect to such PHI. To the extent that any relevant provision of HIPAA is eliminated or held to be invalid by a court of competent jurisdiction, the corresponding portion of this agreement shall be deemed of no force and effect for any purpose. To the extent that any relevant provision of HIPAA is materially amended in a manner that changes the obligations of business associates or covered entities that are embodied in term(s) of this engagement to give effect to such revised obligations. In addition, the terms of this engagement should be construed in light of any interpretation and/or guidance on HIPAA issued by HHS from time to time If the above arrangements are acceptable to you, please sign the enclosed copy of this letter and return it to us. BKD, LLP bl'cpl 1- 1, P The services and arrangements described in this letter are in accordance with our understanding and are acceptable to us. CITY OF LUBBOCK, TEXAS BY 1�7011 TITLE TOM MARTIN, MAYOR DATE September 2, 2008 Clifto Gunderson LLP Certified Public Accountants & Consultants September 7, 2005 To the Partners of Resolution No. 2008-RO307 BKD LLP and the Center for Public Company Audit Firms Peer Review Committee We have reviewed the system of quality control for the accounting and auditing practice of BKD LLP (the firm) applicable to non -SEC issuers in effect for the year ended May 31, 2005. The firm's accounting and auditing practice applicable to SEC issuers was not reviewed by us since the Public Company Accounting Oversight Board (PCAOB) is responsible for inspecting that portion of the firm's accounting and auditing practice in accordance with PCAOB requirements. 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. Our responsibility is to express an opinion on the design of the system, and the firm's compliance with that system based on our review. Our review was conducted in accordance with standards established by the Peer Review Committee of the Center for Public Company Audit Firms and included procedures to plan and perform the review that are summarized in the attached description of the peer review process. Our review would not necessarily disclose all weaknesses in the system of quality control or all instances of lack of compliance with it since it was based on selective tests. Because there are inherent limitations in the effectiveness of any system of quality control, departures 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 applicable to the non -SEC issuers of BKD LLP in effect for the year ended May 31, 2005, has been designed to meet the requirements of the quality control standards for an accounting and auditing practice established by the AICPA, and was complied with during the year then ended to provide the firm with reasonable assurance of complying with professional standards. 10001 Innovation Urine, Suite 201 Milwaulee, Wisconsin 53226 tel: 414.476.1880 fax:414.476.7286 www.cliftoncpa.com Utt.C-,� in 1 -, eta tc, ;litd %\,;ishingto ,. DC LUA.1itnternationa Attachment to the Peer Review Report of BKD LLP Description of the Peer Review Process Overview Firms enrolled in the AICPA Center for Public Company Audit Firms (the Center) Peer Review Program have their system of quality control periodically reviewed by independent peers. These reviews are system and compliance oriented with the objective of evaluating whether: The reviewed firm's system of quality control for its accounting and auditing practice applicable to non -SEC issuers has been designed to meet the requirements of the Quality Control Standards established by the AICPA. The reviewed firm's quality control policies and procedures applicable to non -SEC issuers were being complied with to provide the firm with reasonable assurance of complying with professional standards. A peer review is based on selective tests and directed at assessing whether the design of and compliance with the firm's system of quality control for its accounting and auditing practice applicable to non -SEC issuers provides the firm with reasonable, not absolute, assurance of complying with professional standards. Consequently a peer review on the firm's system of quality control is not intended to, and does not, provide assurance with respect to any individual engagement conducted by the firm or that none of the financial statements audited by the firm should be restated. The Center's Peer Review Committee (PRC) establishes and maintains peer review standards. At regular meetings and through report evaluation task forces, the PRC considers each peer review, evaluates the reviewer's competence and performance, and examines every report, letter of comments, and accompanying response from the reviewed firm that states its corrective action plan before the peer review is finalized. The Center's staff plays a key role in overseeing the performance of peer reviews working closely with the peer review teams and the PRC. Once the PRC accepts the peer review reports, letters of comments, and reviewed firms' responses, they are maintained in a file available to the public. In some situations, the public file also includes a signed undertaking by the firm agreeing to specific follow-up action requested by the PRC. Firms that perform audits or play a substantial role in the audit of one or more SEC issuers, as defined by the Public Company Accounting Oversight Board (PCAOB), are required to be registered with and have their accounting and auditing practice applicable to SEC issuers inspected by the PCAOB. Therefore, we did not review the firm's accounting and auditing practice applicable to SEC issuers. Planning the Review for the Firm's Accounting and Auditing Practice Applicable to Non - SEC Issuers To plan the review of BKD LLP, we obtained an understanding of (1) the nature and extent of the firm's accounting and auditing practice, and (2) the design of the firm's system of quality control sufficient to assess the inherent and control risks implicit in its practice. Inherent risks were assessed by obtaining an understanding of the firm's practice, such as the industries of its clients and other factors of complexity in serving those clients, and the organization of the firm's personnel into practice units. Control risks were assessed by obtaining an understanding of the design of the firm's system of quality control, including its audit methodology, and monitoring procedures. Assessing control risk is the process of evaluating the effectiveness of the reviewed firm's system of quality control in preventing the performance of engagements that do not comply with professional standards. Performing the Review of the Firm's Accounting and Auditing Practice Applicable to Non - SEC Issuers Based on our assessment of the combined level of inherent and control risks, we identified practice units and selected engagements within those units to test for compliance with the firm's system of quality control. The engagements selected for review included engagements performed under the Government Auditing Standards, audits performed under FDICIA, a multi - office audit, and audits of Employee Benefit Plans. The engagements selected for review represented a cross-section of the firm's accounting and auditing practice with emphasis on higher -risk engagements. The engagement reviews included examining working paper files and reports and interviewing engagement personnel. The scope of the peer review also included examining selected administrative and personnel files to determine compliance with the firm's policies and procedures for the elements of quality control pertaining to independence, integrity, and objectivity; personnel management; and acceptance and continuance of clients and engagements. Prior to concluding the review, we reassessed the adequacy of scope and conducted a meeting with firm management to discuss our findings and recommendations.