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HomeMy WebLinkAboutResolution - 2010-R0388 - Agreement For Annual Audit Of Financial Statements - BKD, LLP - 08/26/2010Resolution No. 2010-RO388 August 26, 2010 Item No. 5.6 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 Ag> eement for an audit of annual financial statements by and between the City of Lubbock and BKD, LLP, 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 26th day of August 2010. ATTEST: Rcbec a Garza, City Secretary APPROVED AS TO CONTENT: 11U-4-1� ----- Andy Buk6m, Chief Financial Officer APPROVED AS TO FORM: Attorney BKD audit Con IO.res 8.17.10 TOM MARTIN, MAYOR Resolution No. 2010-RO388 CONTRACT This professional services contract is executed this fie- day of N USt 2010 by and between the City of Lubbock, Texas, hereinafter 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 herein and other good and valuable consideration, the parties agree as follows: 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, 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 years ending September 30, 2010. 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 Engagement Letter 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 Exhibits, the terms and conditions of the Exhibits 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 WHEREOF, the parties hereto have executed this professional services contract on or as of the date first written above. CITY OF LUBBOCK: -7 TOM MARTIN, MAYOR ATTEST Reb ca Garza, City Secretary U) APPROVED AS TO CONTENT: Andy Burcham, Chief Financial Officer APPROVED AS TO FORM BKD, LLP BY: tuv-11, TITLE: Pazlr r BKO 14241 Dallas Parkway, Suite 1100 LLP Dallas, TX 75254-2961 CPAs & Advisors 972.702 8262 Fax 972.702.0673 www.bkd.com July 20, 2010 EXHIBIT Honorable Tom Martin, Mayor Members of City Council 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 the City of Lubbock, Texas as of and for the year ended September 30, 2010, 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. BKD experience 11 P'raxity': MEMBER, GLOBAL ALLIANCE OF INDEPENDENT FIRMS -2 - Honorable Tom Martin, Mayor Members of City Council Ms. Lee Ann Dumbauld, City Manager Mr. Andy Bureham, Chief Financial Officer City of Lubbock, Texas ✓ 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. ✓ 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 -3 - Honorable Tom Martin, Mayor Members of City Council Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas 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 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. Kevin Kemp, CPA is responsible for supervising the engagement and authorizing the signing of the report or reports. 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; -4 - Honorable Tom Martin, Mayor Members of City Council Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas 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. OTHER SERVICES We may perform other services for you not covered by this engagement letter. You agree to assume full responsibility for the substantive outcomes of those services, including any findings that may result. You also acknowledge that those services are adequate for your purposes and that you will establish and monitor the performance of those services to ensure that they meet management's objectives. Any and all decisions involving management functions related to those services will be made by you, and you accept full responsibility for such decisions. We understand that you will designate a management -level individual to be responsible and accountable for overseeing the performance of those services, and that you will 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 not exceed $220,000. Our pricing for this engagement and our fee structure is based upon the expectation that our invoices will be paid promptly. We will issue progress billings during the course of our engagement, and payment of our invoices is due upon receipt. Interest will be charged on any unpaid balance after 30 days at the rate of 10% per annum. 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. Our fee for consent letters and related procedures for the use of our reports in offering documents will be $2,000 per issuance. -5 - Honorable Tom Martin, Mayor Members of City Council Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas 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 auditors to review working papers relating to matters of continuing audit significance. In addition, we may be requested by regulatory or enforcement bodies to make certain workpapers available to them pursuant to authority granted by law or regulation. 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. The City will determine that all such data, if necessary, will be so reflected. Accordingly, the City will not expect BKD to maintain copies of such records in BKD's possession. 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. No amendment, modification, or alteration of the terms of this agreement shall be binding unless such amendments, modifications, or alterations are 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. M Honorable Tom Martin, Mayor Members of City Council Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas 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 utilize third -party service providers, e.g., domestic software processors or legal counsel, or disclose confidential information about you to third -party service providers in serving your account. We 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 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. We will, at our discretion or upon your request, deliver financial or other confidential information to you electronically via email or other mechanism. You recognize and accept the risk involved, particularly in email 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 an 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 for our review and approval before printing or other reproduction. You will also provide us with a copy of the final reproduced material for our approval before it is distributed. Our fees for such services are in addition to those discussed elsewhere in this letter. You agree to notify us if you desire to place these financial statements or our report thereon on an electronic site. You recognize that we have no responsibility as auditors to review information contained in electronic sites. Honorable Tom Martin, Mayor Members of City Council Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas Any time you intend to reference our firm name in any manner in any published materials, including on an electronic site, you agree to provide us with draft materials for our review and approval before publishing or posting such information. BKD is a registered limited liability partnership under Missouri law. Under applicable professional standards, partners of BKD, LLP 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 in a manner prohibited by HIPAA, as amended. We may use or disclose PHI 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 your PHI. With respect to your PHI, we will report to you any breach (as defined in 45 CFR 164.402), 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 breaches, material security incidents or unauthorized uses or disclosures of which we become aware. To assist you in fulfilling your responsibility to notify impacted individuals and others of a breach involving unsecured PHI (as required under 45 CFR 164.400 et seq.), in this report we will identify to you, to the extent reasonably possible: 1. Each individual whose unsecured P111 was subject to the breach. 2. Any other available information you are required to include in your notification to such individual(s) or others under 45 CFR 164.404(c). We agree that any material violation of these confidentiality provisions entitles you to terminate this engagement. -8 - Honorable Tom Martin, Mayor Members of City Council Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas BKD agrees to: 1. Upon their request, make available to the Secretary of Health and Human Services (HHS) our internal practices and books and records relating to the use and disclosure of PHI for purposes of determining your compliance with the Security and Privacy Rule, subject to any applicable legal privileges. 2. Make available information necessary for you to make an accounting of disclosures of PHI about an individual. 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. 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 PI II 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 Simplification 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, the Parties agree to negotiate in good faith appropriate amendment(s) to 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. In Honorable Tom Martin, Mayor Members of City Council Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas If the above arrangements are acceptable to you, please sign the enclosed copy of this letter and return it to us. BKD, LLP The services and arrangements described in this letter are in accordance with our understanding and are acceptable to us. CITY OF LUBBOCK, TEXAS BY TITLE •,a—r-%GG G(2�f— DATE q�>/ 3 O/ 1 0