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HomeMy WebLinkAboutRes 2016-08-217 BrooksCardiel Audit Services (2) CITY OF ANNA, TEXAS RESOLUTION A RESOLUTION OF THE CITY OF ANNA, TEXAS AUTHORIZING THE CITY MANAGER TO ENTER INTO AN AGREEMENT FOR AUDIT SERVICES WHEREAS, Section 7.18 of the Anna Home Rule Charter (the "Charter") states no more than 5 consecutive annual audits may be completed by the same firm; and WHEREAS, the annual audits for FY 2011 through FY2015 have been completed by the same firm; and WHEREAS, the City of Anna, Texas (the "City") has issued a new request for proposals (RFP) for financial audit services; and WHEREAS, City staff, after reviewing the proposals submitted in response to the RFP, believes that an agreement with BrooksCardiel, PLLC would provide the best value to the City; NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ANNA, TEXAS THAT: Section 1. Recitals Incorporated. The recitals set forth above are incorporated herein for all purposes as if set forth in full. Section 2. Authorization The Council hereby authorizes the City Manager to negotiate and execute a professional services agreement with BrooksCardiel, PLLC for audit services in accordance with the proposal from BrooksCardiel, PLLC attached hereto as Exhibit 1. The City Manager is further authorized to execute all documents and to take all other actions necessary to finalize, act under, and enforce the agreement. PASSED AND APPROVED by the City Council of the City of Anna, Texas on this 9th day of August, 2016. ATTEST: APPROVED. ` City Secretary Carrie L. Smitha`' Mike Crist s� PAGE 1 OF 1 Exhibit 1 I City of Anna, Texas E (I I I� I X I ( f i i E 1 ( i i Presented by ( BrooksCardiel,PLLC i 1095 Evergreen Circle, Suite 200 The Woodlands,TX 77380 I Telephone: 281-907-8788 Contact: Michael Brooks, CPA t ; MBrooks@BrooksCardiel.com U( e A i t / -,BROOKS(('-'-"1 1+ 1 M :+„L �- — —--__Certified Public Accountants 06,30.2.016 i Table of Contents I Letterof Transmittal....................................................................................................................3 i Licenseto Practice........................................................................................................................5 Statementof Independence ........................................................................................................6 FirmQualifications and Experience..........................................................................................7 QualityControl and Peer Review............................................................................................12 SimilarEngagements and References.....................................................................................14 Partnerand Staff Background.................................................................................................. 15 Additional Services Rendered.................................................................................................. 18 Specific Audit Approach................................. ............ 19 CostBid........................................................................................................................................26 2 i BROOKS(( -,A1]RJ1 ,0 r I �-A Certified Public Accountants 06,301016 Letter ojffrans . .r a I City of Anna, Texas 111 N. Powell Parkway Anna,TX 75409 I Dear City of Anna, On behalf of BrooksCardiel,PLLC,we are pleased to have the opportunity to submit the following proposal and provide professional auditing services to the City. As you will find, we are committed to exceeding our client's expectations and have prepared the following proposal to outline our experience and services to be provided. If selected to be the City's independent auditor for the years noted we will perform the work stated in the following proposal with those services conforming in all aspects to the requirements stated therein. BrooksCardiel,PLLC was created with the belief that audit services can be provided in a more efficient and cost effective manner by limiting the firm's staff to include only experienced professionals while leveraging the most recent technology. Our partners have extensive experience auditing governments of all sizes with a particular focus on cities similar to the City of Anna,Texas. i We believe that we are the right choice to be the City's auditor for the following reasons; ® Timeline—Our firm focuses solely on perforznuzg audits and is not burdened with a tax season, which can often cause delays in the issuance of audit reports. Once we establish a timeframe for your audit, report delivery, and presentation, we honor our commitment. Our firm believes in working the hours necessary to serve our clients and meet the audit schedule as further detailed in this proposal. ® Experience-The partners of BrooksCardiel,PLLC have performed approximately 400 audit engagements of approximately 100 different governmental entities. Our current clientele includes over 30 Cities in Texas. We understand the challenges i E 3 BROOKS'x-- ' - _-- --Certified Public Accountants 0G.30.2016 governmental entities face and developed our audit approach around these challenges. • Quality ® When you engage BrooksCardiel, PLLC, you know that experienced professionals are performing every step of the engagement and that you will have easy access to a decision maker within the firm at all times. No interns or recent college graduates will be performing your audit. o Customer Service o Our customer service based audit approach has allowed us to form long lasting relationships with our clients that often extend well beyond the term of our initial engagement. Unlike larger firms, we pride ourselves on the j ability to provide a personal and unique audit experience unmatched by our peers. The City will have direct access to our highest level of expertise throughout the term of the relationship;before, during, and after the audit is complete. Our total cost for the audit of the City for the year ended September 30, 2015 is $17,025. Please see cost bid section of this proposal (pg. 26)for more detail. Should you require a single audit, we will charge a flat rate of$2,500 for the audit of one major program, Tl-tis proposal is a firm and irrevocable offer ending 120 days subsequent to the date specified for opening the proposals. If you have any questions regarding this proposal please contact Michael Brooks at MBrooks@BrooksCardiel.com. Sincerely, r�/ c Michael Brooks, CPA i Audit Partner BrooksCardiel,PLLC 1095 Evergreen Circle, Suite 200 The Woodlands, TX 77380 (281)907-8788 j f 4 i I i I i r A ll 4 pp - ___. Certified Public Accountants06.3U1.' 01C License to Practitce The firm and all assigned key professional staff of SrooksCardiel, PLLC are properly licensed to practice in the State of Texas. i i I i 7( 7 i I i !I 5 1 B"D - _- Certified Public Accountants ' 06,30,)016 Latement o �Iw , endence The Texas State Board of Public Accountancy Rules of Professional Responsibility sec. 501.11 requires auditors to be independent in fact as well as appearance from each of their clients. BrooksCardiel maintains this independence under both Generally Accepted Auditing Standards as well as the U.S. General Accounting Office's Government Auditing Standards and has had no professional relationships with the City of Anna or its agencies within the past five years that would constitute a conflict of interest. I i I p i I 6 i Certified Public Accountants003020 16 -fl-A Florm Qualification and Experience Firm Profile BrooksCardiel, PLLC was created with the belief that audit services can be provided efficiently while still being cost effective and maintained on a personal level. It is this conviction that sets us apart from our peers. While serving clients throughout Texas, we have performed on audits for numerous governments and have experienced the unique challenges each of our clients face. With an appreciation for these distinct issues, we approach every assignment with an individual view and adapt our methods to meet the specific needs of each of our clients. When you engage BrooksCardiel, PLLC,you can be confident that experienced professionals will perform each step of the audit process, giving you and your staff direct access to our highest level of expertise.We keep overhead low and quality high by eliminating inexperienced staff and connecting the City directly to our partners. BrooksCardiel, PLLC is headquartered in the Woodlands, Texas. The City's assigned engagement team will consist of a lead partner, senior auditor, experienced audit associate and second partner,who will work both onsite,at the City's location, and at the firm headquarters for the duration of interim and final audit fieldwork. No staff auditors will be utilized on the City's engagement, P-tiblic Sector arid Governmental Exjperienc,e BrooksCardiel., PLLC has dedicated professionals knowledgeable fi1 government accounting, audit and financial reporting. With numerous years of experience in the public sector, our auditors possess the knowledge and capability to support your government's auditing and assurance needs. Our support structure, resources and training are devoted to providing governments with accurate, prompt-, and efficient audits and financial related services. In addition, BrooksCardiel is a member of 7 B ROOKS( �1. 1 11 '}1111,(_,, i "lI,,11,x:_; --- Certified Public Accountants 06.30,2016 i i AICPA's Government Audit Quality Center which provides added support to our professionals through up-to-date training and resources. j With an in depth knowledge of OMS A-133 audits, the latest GASB pronouncements, Comprehensive Annual Financial Reports and state and federal regulations we aim to provide each of our clients with the most efficient audit and long-term guidance possible. Our focus lies on exceptional customer service which we accomplish through accessibility,efficiency, quality and knowledge. Current governmental clientele include 32 cities, 24 economic development districts, 2 counties, and 13 water and special purpose districts. Syster sa bili res BrooksCardiel, PLLC has the capability to audit computerized systems and does so where necessary.BrooksCardiel will sample computerized transactions,but will focus on source documents outside of the computerized system. Single Atidit (OMB Circular A-133) All government and non-profit entities that spend more than $750,000 a year in federal funds are required by the Office of Management and Budget (OMB) to submit to an A- 133 audit. Our partners have extensive experience with(OMB) Circular A-133 and have performed yellow book and single audits for numerous governments on a variety of federal grant programs including, funds received under the American Recovery and Reinvestment Act. ARRA funds include additional compliance requirements increasing the amount of data to be reported and analyzed. We will review the City's accounting records and determine the need for a single audit meeting the criteria noted above. As part of our single audit, we will evaluate the City's internal controls over grant compliance and the financial statements.We will develop a risk based audit program and determine if the City is meeting all compliance and financial requirements associated with their federal grants. Once complete, we will assist the City with the submission of their single audit reporting package to the Federal Audit Clearinghouse or other required 8 I I F I' a� ,BROOKS ! ', it ?I )l l i'I'll - Certified Public Accountants 06 30 2016 authoritative body. We will provide the City with a bound single audit report which will include our findings, schedule of expenditures of federal awards, and Auditor's opinion under Circular A-133, Governmental Auditing Standards. C 31;ofession Il Ed 1i catiort Each of our professionals are in compliance with the CPE requirements of the AICPA, Texas State Board of Public Accotmtauncy and Generally Accepted Government Auditing Standards (Yellow Book). Each professional receives a mandatory 40 hours of continued education credits annually with at least 24 hours of governmental specific training biennially through the firm CPE program which is both internal and external.These CPE records are open to our clients for review and will be made available upon request. y- t Assistance We recognize that a well-informed client is a better client. Therefore, our approach is to provide our clients with current accounting news, updates, and training over new pronouncements and relevant financial activities. When new accounting guidance is issued, we will first inform you well in advance of the effective date in order to provide enough time to plan for and accommodate any financial impact. Once adopted, we will work with you to assist in the preparation of any new financial policies and/or related journal entries. In addition we offer monthly CPE to our staff and our clients on relevant accounting topics. i Our firm is highly focused on customer service and make a point to respond to all client emails,phone calls and other inquires in an expedited manner. It would be unusual not to receive a response within the same day of the request being made, i Par�djC )atiort in ProfessimtaJ Organizations We believe that it is essential to participate in professional organizations to stay abreast of industry trends and changes. Our firm's commitment to the public sector is evidenced 9 'I I C Certified Public Accountants 06,30.2(}1 C> through our active participation/memberships in the following professional organizations: o AICPA-American Institute of Certified Public Accountants • AICPA-Government Audit Quality Center a TSCPA-Texas Society of Certified Public Accountants ® ACFE-Association of Certified Fraud Examiners ® GFOA-Government Finance Officers Association In addition,we are members of the GFOA Special Review Committee and encourage and assist local governments to go beyond the minimum requirement of generally accepted accounting principles. Certificate of Achievement for Excellence in Financial Reporting As members of the GFOA (Govertunent Finance Officers Association) Special Review Committee, we assist local governments in going beyond the minimum requirements of generally accepted accounting principles to achieve the Certificate of Achievement for Excellence in Financial Reporting.We understand the importance of this highly regarded award and will go to great lengths to work with the City to achieve this on an annual basis. The partners at BrooksCardiel, PLLC will prepare your CAFR and assist in the E preparation of the City's response to all GFOA comments, if any. The following is a sample of current BrooksCardiel audit clients who have recently submitted a CAFR to the Certificate of Achievement Program of the GFOA: © City of Azle,Texas o City of Gonzales, Texas ® City of Sachse,Texas o City of Denison,Texas ® City of Heath,Texas ® City of Lucas, Texas City of Taylor,Texas 0 City of Sansom Park,Texas f 10 I SROOKS(( Certified Public Accountants O6„X0,1016 Services Offered f Audit and assurance services include: o CAFR preparation o Hotel/Motel Tax Audits o Yellow Book Audits o Fraud Examinations/Investigations ® OMB A-133 Audits o Sales Tax Allocation Audits • Annual Financial Statement Audits o GASB 54 through 72 implementation o Franchise Tax Audits i i A i i i I 11 � 1 BROOKS(( V Certified Public Accountants 06,1310,2016 Quality (----'-ontrol and Peer Review BrooksCardiel, PLLC participates in the Texas State Board of Public Accounting's peer review program. Firms can receive a rating of pass; pass with deficiency (ies) or fail. The firm underwent peer review according to the Statement on Quality Control Standards No. 8, A Firm's System of Quality Control, effective as of January 1, 2012 in March 2013. Brool<sCardiel,PLLC received the highest rating possible under the program.The System Review Report is located on the following page for your review. 12 r i j [.xx! oIIIitliIr'c Clti k h,iII til` ?tilt, ;tai!h"li I i i i I ,larch . 01 Vo the Partners n1'13rooks, Cal-did & t'olllpan}. I'I,I.(' And the Peer Review C onlinillee nl'the Tc,,mis Sociely oI C"PAs \Ve have reviewed (he sysicn) ol, quality conlrol lin• the acenuntinl� and r,udilint'! 01' Bl'0 ,kti. C'ardicl <<' (Clonally. PLIC ((he Firm) ill cl7ccl lin (he year ended November iO. 2012. Our peer revicv\ was cortducied in accordance will) the Standards 1`61' Perlorminp and Reporting un I'm- Reviews established by the Peer Review koard of(hc American Institute ol`C'crtilie i Public r\ccaunti nK As par( ()f our peer review. we considered reviews hy repulatory enli(ics, il'qqd cable. in determining the nature mid e.xlcnt of our procedures. The lirm is responsible liar dcsiOning a syslent of (Iualil� c01111•01 ,incl complyin,o will) it to provide the lirin \\ill) rrasonahlc assurance of per1i61-111in;", 'Incl reporting, in conformity with applicable prolessiuna) standards in all materi"ll resprcts. Our responsibility is Io express an opinion on the design ol• the system of quality control and the lirm's compliance therewith hatted on Our review. 'I'hc nature. ohjec(ives. scope. limitations ol'. ,incl the procedures pCI-1i61-med in n `system Review are descrihed in the standards at «����.,ii� pi ��r a�rsiihilumu•�. As required by the standards, en!apcmcnls selected Cor reg°icyv included cnpapcmcnts perlin•med under Governmew.lrnlitil,� S7nrtclards<uxl audits ol,employce henclit plans.. In our opinion, the s�rstem ol'quality control (iu• the accountinp and auclitinp practice of l400ks. ('ardicl ('omiany. PITC. in cl•Iccl liar (he year ended hiovcmher 30. 2012. has leen suilahly dcsipncd and � complied with to provide the lirni with reasonable assurance of perliu•ming and reporting in Conlormil� wish applicable prolcssional standards in all material respect. Firms can rcceivc a rating. 01'i41SA, iacc�N u•ilir de iciem,(I- ics) or d/. Brooks. ('ardicl c, Contian�. PLLC' has receired a peer roti icvv rutin", ol• iu r.cs 1 r \ccountinp and ('onsullin�� (;roup. IJ. ) e � t °i _ .f � S.''l9sa-^r, F° fir• 1 t wsX,x a t. �." � i i BROOKS(( ,i > .► �� �,,�_:, � '� , _,{ : f --- - - - Certified Public Accountants ? 06.30.;OT6 i D- imnar Engagements i t and References Most Yetis Gov't Name Type ServedRecent CAFR Partners Principal Contact Audit Benita Bishop,CGFO Awarded City of Azle Audit 3 9/30/2015 Prepared by Mike Brooks& Finance Director Anthony Cardiel (817)444-2541 BrooksCardiel rbishop@ci.azle.tx.us Rosemarie Dennis Awarded Finance Director City of Taylor Audit 4 9/30/2015 Prepared by Mike Brooks& 512 352-5997 ) BrooksCardiel Anthony Cardiel (rosemarie.demnis@taylortx.gov Jan Messman Awarded Finance Director City of Pilot Awarded Cardiel � Point Audit 2 9/30/2015 Prepared by &Mike Brooks ( 940)686-4338 BrooksCardiel jmessmanocityofpilotpoint.org i i Liz Exum Awarded i Anthony Cardiel Finance Director City of Lucas Audit 1 09/30/2015 Prepared by &Mike Brooks (972)912-1201 BrooksCardiel lexum@lucastexas.us Awarded Remne'Waggoner Mike Brooks& Director of Finance City of Denison Audit 2 09/30/2015 Prepared by BrooksCardiel Anthony Cardiel (903)465-2720 i rwaggoner@cityofdension.com Johnna Boyd Mike Brooks& Director of Finance City of Parker Audit 4 09/30/2015 N/A Jon Watson (972)442-6811 JBoyd@parkertexas.us G i 14 i E �� it .��•,I� »1_1 ,x ,; 11111_,1D( l -- Certified Public Accountants 06.30.).01 G PartMer and Eitarff 'vackgro-iand Mike Brooks, CPA Audit Partner Mbrool<s@Brool<sCardiel.com w Mike began his career at a regional accounting firm that specializes in auditing governmental and not-for-profit entities. As part of the j management team,Mile completed or assisted in the completion of approximately 100 audits for governmental and non-profit clients. Mile later joined a leading SEC auditing firm where he specialized in public sector clients, small-cap publicly traded companies and other complex accounting issues while leading the firm's public sector practice. Educational Background 11 Certified Public Accountant, State of Texas ® BBA in Accounting, Sam Houston State University ® Certified Six Sigma Greenbelt Experience 13 Over 10 years of private sector and public accounting experience Completed or assisted with completion of approximately 200 public sector audits Completed over 50 single audits in accordance with OMB Circular A-133 Implementation of GASB 54 through 72 Professional Organizations El Government Finance Officers Association ® GFOA Special Review Committee ® American Institute of CPAs (AICPA) r i _ 15 i } i 'BROOKS((gp Certified Public Accountants 06,30.101() � Anthony Cardiel, CPA, CFE Audit Partner Acardiel@BrooksCardiel.com Anthony began his career at a regional accounting firm based in Texas that specializes in auditing governmental and not-for-profit entities. Hs experience included governmental entities with over$250 million dollars in assets and revenues, sovereign nations, and an extensive list of cities, counties, and other governmental entities. Anthony later served as CFO for a leading oil and gas information company and brokerage.In past experience he acted as operations manager for UPS as well as for the United States Army. Educational Background • Certified Public Accountant, State of Texas ® Certified Fraud Examiner, State of Texas • i BS nl Accounting, Northwest Missouri State University Experience Completed or assisted with the completion of approximately 150 public sector audits Completed over 30 single audits in accordance with OMB Circular A-133 Implementation of GASB 54 through 72 (f I Professional Organizations Government Finance Officers Association j GFOA Special Review Committee 1 Association of Certified Fraud Examiners—Houston Chapter • American Institute of CPAs (AICPA) • Texas Society of Certified Public Accountants (TSCPA) i 16 1 f BROOKS(( I ___________.__._ Certified Public Accountants 06.30.M1 G P� Louis Breedlove Audit Senior LBreedlove@13rooksCardiel.com ,r z Louis began his career at a regional accountiYlg firm that specializes in auditing governmental and not-for-profit entities. Louis also has experience auditing public sector clients, small-cap publicly traded companies as well as large Fortune 500 and international companies while employed at PriceWaterhouseCoopers. Educational Background •ound 13 BBA in Accounting, Southwestern Assemblies of God University Experience ® Over 5 years of private sector and public accounting experience5 ® Implementation of GASB 54 through 72 CPE—Yellow Book Compliant i r C 17 i ,,BROOKS(" 'ins t K-; )111th_,, 1 i Certified Public Accountants 00,30,2016 i Additional Services i Rendered Gov't Name Type Engagement Date Internal Control Engagement,Document City of Forney 09/30/2013 Processes,Recommendations for Improvement Agreed Upon Procedures,Tax Office Internal Control Evaluation and Fraud Review 09/30/2012 Liberty County Agreed Upon Procedures,Attorney's Office 09/30/2013 Internal Control Evaluation and Fraud Review City of Lancaster Agreed Upon Procedures,Municipal Court 9/30/2014 Fraud&Internal Control Review i Gonzales Economic Agreed Upon Procedures,Economic 9/30/2015 Development Corporation Development Agreement Review Project Accounting Consulting— City of Pilot Point 9/30/2015 Recommendations for CIP software and process I i' i 78 i �iBROOKS(( "'All"I"It,Y) "-- -- - - Certified Public Accountants 06,30.2 0107 Specific dit .Approach Audit Segmentation and Staff Ho-ars Experienced Reviewing Financial Audits Audit Senior Partner Associate Partner Risk Assessment and Control Evaluation&Planning 10 hours 15 hours 15 hours 5 hours Cash 10 hours 5 hours 4 hours 2 hours Receivables &Revenues 10 hours 10 hours 5 hours 2 hours Capital Assets 10 hours 10 hours 5 hours 2 hours Accounts Payable & Expenditures 10 hours 10 hours 5 hours 2 hours Long-Term Liabilities 10 hours 15 hours 5 hours 2 hours Deferred Revenue 5 hours 5 hours 2 hours 1 hour CAFR Preparation 10 hours 20 hours 10 hours 5 hours i Total Hours 237 hours j Kjiowledge Based Audit Approach BrooksCardiel uses a knowledge-based audit methodology to efficiently and effectively perform financial statement audits of governmental entities in accordance with auditing standards generally accepted in the United States of America (GAAS). This is accomplished by obtaining an understanding of the City and its environment to 1 i 19 i i IBROOKS( - Certified Public Accountants 06,30. 016 � sufficiently assess the risk of material misstatement. Audit procedures are then designed and performed in response to the risk of material misstatement. All audit procedures performed will be done so by the professionals of BrooksCardiel, PLLC who are dedicated to maintaining a presence throughout the audit process. Their goal in this is to reduce the burden on City staff while adhering to the established budget and timeline. These procedures are more fully detailed in the Audit Approach section of this proposal and will be conducted in accordance with the following standards: ® Generally Accepted Auditing Standards established by the American Institute of Certified Public Accountants. ® Financial Audit Standards established by the General Accounting Office's Government Auditing Standards. ® All provisions of the Single Audit Act and the U.S. Office of Management and Budget Circular (OMB) A-133 audits of states, local governments and not-for-profit organizations. Planning i The planning phase involves developing the overall audit strategy for the expected activities, organization, and staffing of the audit. We will plan the audit to respond to the assessment of the risk of material misstatement based on our understanding of the City, its environment, and internal controls. + + Our understanding of the City and its environment will include the following: i 0 li-tdustry, regulatory, and other external factors; o Nature of the City; i a Objectives, strategies and related risks that may cause material misstatement of the financial statements; o Measurement and review of the City's financial performance; ® Internal controls s + I 20 i r I -— ------- - Certified Public Accountants 06,30.2016 Prior to our first day of field work, we will schedule a meeting to discuss the desired timeframe, estimated report delivery, and extent of management and auditor responsibilities as it relates to the audit. Internal Cantrol Evaluation Audit standards require that we obtain an understanding of the City sufficient to evaluate the design of the internal controls and to determine whether they have been implemented. Our understanding of the City's internal controls will include the control environment, risk assessment, information and communication systems, control activities, and monitoring controls. Our risk assessment and control evaluation will include: o Conducting interviews of selected management and staff, ® Evaluating the City's financial reporting and management policies, budget documents and process, and informational systems; o Documenting our understanding of the City's entity wide control environment and activity level controls; Testing the design and iinplementation of selected key controls by performing a walk-through of the selected transaction class; o Testing the operating effectiveness of selected controls. The results of our risk assessment will allow us to identify and assess the risk of material misstatement within the City and design the extent,nature,and timuig of our substantive l audit procedures and develop our audit plan, Any control deficiencies identified during the planning phase and interim audit will be communicated to management immediately. Fieldwork --,ind Substantive Testingi Based on the results of our risk assessment and internal control evaluation, a specific audit plan will be designed to focus expanded procedures on areas with the greatest risk i of material misstatement,error, and fraud. We will use tests of details, substantive _ __ 21 BROOKS(( -- Certified Public Accountants 06.30.2016 I analytical procedures, or a combination of the two to conclude on the reasonableness of i the given transaction class or account balance. Typical substantive procedures include: ® Agreeing the financial statement elements to the underlying accounting records including year-end account balances and transaction activity occurring E throughout the year; i a Confirming cash held in bank and investment accounts, accounts receivable, inventory held by others, and material grants; • Perform specific analytical procedures - considering historical trends and events within the City. Statistical Saimp _in and Sample Sizes The extent to which statistical sampling will be used and related sample sizes will be determined based on the results of our risk assessments. Electi,orto Processing c Data BrooksCardiel, PLLC will utilize current teclunology to complete your audit. Electronic data processing will be used throughout the audit to extract data from your City's accounting software. The data will be processed with our audit software to ensure the efficiency of your audit. A- taly ical Procedures es Analytical procedures will be used throughout the engagement in almost every aspect of j the audit. Procedures will include comparing balances, activities and ratios to historical data, comparative entities, as well as local and regional trends. E. f At the conclusion of every audit, we will decide whether sufficient audit evidence has been accumulated to warrant the conclusion that the financial statements are fairly stated I 22 i i —� --- — Certified Public Accountants 06.302016 in accordance with generally accepted accounting principles(GAAP).Prior to issuing our audit report we will perform the following procedures: • Evaluate the sufficiency and appropriateness of audit evidence obtained; • Perform an overall analytical review; ® Evaluate and conclude on the results of audit procedures, adjustments, and unadjusted misstatements; • Provide all adjusting entries noted during the audit to the City Council and management; • Prepare or assist in the preparation of the City's Comprehensive Annual Financial Report; • Communicate any audit findings and issues with management and those charged with governance. compliance Wit�i Laws and e���1 tir�ns Approach to Compliance Testing Compliance with laws and regulations, including, but not limited to the Public Funds Investment Act, Texas State Government Code and grants received. Compliance testing will be performed as required by Circular A-133 and the Single Audit Act, grant agreements,financing agreements, or any other compliance requirements as applicable. G C Exectation s from City tarp ! i i We will expect the City to provide commonly requested schedules such as a schedule of receivables due at year end, a schedule of capital assets that includes additions and disposals, a schedule of cash accounts, a schedule of prepaid insurance and a long-term debt schedule as applicable. We will also expect assistance with the preparation of confirmations to banks, attorneys, debt holders, etc. 23 I Ellr, t�__J � 1�- �s -- --� — Certified Public Accountants 06,30.2016 Progress Meetings Prior to beginning fieldwork, BrooksCardiel will schedule an initial planning meeting with management to discuss the anticipated time frame, audit requests, and client involvement needed to accomplish our goal. During the fieldwork,we anticipate having additional meetings to discuss the audit progress to date, as needed. In addition,we will immediately schedule a consultation should unforeseen issues and audit findings come to our attention.Prior to the conclusion of the audit,we will provide management a copy of any draft findings and welcome client feedback before final issuance of our report and management letter. Identification of Anticivmted We do not anticipate any potential audit problems during our proposed engagement. Quality Control Procedures Every audit engagement undergoes an initial partner and second partner review process. We have structured our firm around audit quality and take great pride u1 our ability to offer our clients accurate, efficient, and timely audits. We do not employ any staff auditors. Your audit will be performed by an audit partner and a directly supervised audit senior. With this approach, we are able to minimize mistakes, address issues immediately, and give our clients access to the most experienced personnel in our firm, should they have any questions or concerns. Prior to issuance, our clients are provided with the draft financial report and letters for review. l k 24 i i i -- - —----BROOKS(� 't )NH Certified Public Accountants i Proposed Timeline Financial Statement Audits Proposed scheduling Interim Audit Work Concluded Prior to August 31 of each year. Development of an audit plan and PBC schedules Prior to September 30 of each year. Audit Field Work November/December of each year. Draft Reports and Management Letter Prior to January 31 of each year. Final Reports and Management Letter Prior to February 28 of each year. Final Presentation to City Council March Council meeting each year. Immediately following Council Submission of CAFR to the GFOA Presentation. I E I i i I i i I i p I I I 25 i F �� --- ---' Certified Public Accountants 06„30,2016 j I ° �0 f--3-1 Total Maximum Price i Name of Firm: BrooksCardiel,PLLC I i Certification that the person signing this proposal is entitled to represent the Firm and authorized to sign a contract with the City of Anna, Texas, So Certified, Name: Michael Brooks CPA Title: Partner Signature: i Total all-inclusive maximum fees for: Fiscal Year Financial Statement Audit 2016 $17,025 f 2017 $17,325 I 26 i i r , 1 - Certified Public Accountants (16. 0.:>O 16 L_JCb.ed-u)Je of PJR)fesslotw�.dt tic-_�es and ertses We understand that cost is not the only factor considered when making your auditor selection but we also understand the budgetary constraints affecting most governments i during the current economic environment. As you are aware,we see the City of Anna as an important client and one that we would like to do business with into the future. As such,we will offer unlimited technical assistance and guidance at no cost throughout the year. The fee below includes the financial statement of the City of Anna, preparation of the CAFR, &unlimited technical assistance throughout the year. r Fin,mcial Audit Experienced Audit Senior Partner Reviewing TOTAL Associate Partner Risk Assessment and Control Evaluation 10 15 15 5 45 Cash 10 5 4 2 21 Revenues&Receivables 10 10 5 2 27 j Capital Assets 10 10 5 2 27 Accourtts Payable&Expenditures 10 10 5 2 27 Long-term Liabilities,Including Pensions 10 15 5 2 32 Deferred Revenue 5 5 2 1 13 CAFR Preparation 10 20 10 5 45 Quoted hourly rates $75 $85 $125 $125 Extended fees at quoted $5,625 $7,650 $6,375 $2,625 $ 22,275 Total Hours 237 Extended Cost $ 22,275 Discount* $ (5,250) j Estimate(Total Not to Exceed Cost) $ 17,025 Discount offered as an investment in building a long-term relationship with the City I i 27 ------------- Certified Public Accountants 06.30.1010 Rates for Additional. Professional .--iervices If it should become necessary for the City to request the auditor to perform additional work as a result of the specific recommendations included in any report issued on this engagement, then such additional work shall be performed only if set forth in an additional contract between City of Anna and the firm. Any such additional work agreed to by the City and the firm shall be performed at the same rates set forth in the schedule of fees and expenses included in the sealed dollar cost fee, ji Din P-1 e Audi r We will work with you to identify any federal awards that might meet the criteria for an (OMB) Circular A-133 audit. Should you require a single audit, we will charge a flat rate of$2,500 for the audit of one major program. Manner of Payment BrooksCardiel, PLLC will bill hours of work completed during the course of the engagement and out-of-pocket expenses incurred in accordance with the firm's dollar cost fee proposal. The invoice shall provide detail, including number of hours completed per individual and billing rate. Interim billing shall cover a period of not less than a calendar month. 28 Fp/^ '"sr qJ BRoOK Ste._AS __ i S 4� .__ �L.� tea...__- Certified Public Accountants September 30,2016 City of Anna,Texas 111 N. Powell Parkway Anna,Texas,75409 The following represents our understanding of the services we will provide the City of Anna, Texas. You have requested that we audit the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Anna, Texas, as of September 30, 2016, and for the year then ended and the related notes to the financial statements, which collectively comprise the City of Anna, Texas's basic financial statements as listed in the table of contents. We are pleased to confirm our acceptance and our understanding of this audit engagement by means of this letter.Our audit will be conducted with the objective of our expressing an opinion on each opinion unit. Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, pension information, and budgetary comparison information be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational,economic, or historical context. As part of our engagement, we will apply certain limited procedures to the required supplementary information(RSI) in accordance with auditing standards generally accepted in the United States of America. These limited procedures will consist primarily of inquiries of management regarding their methods of measurement and presentation, and comparing the information for consistency with management's responses to our inquiries. We will not express an opinion or provide any form of assurance on the RSI.The following RSI is required by accounting principles generally accepted in the United States of America. This RSI will be subjected to certain limited procedures but will not be audited: 1) Management's discussion and analysis 2) Budgetary Comparison Information 3) Pension and OPEB schedules 1095 Evergreen Circle I Suite 200 1 The Woodlands,TX 77380 1 Tel:281.907.8788 1 Fay::888.875.0587 1 www.BrooksCardicl.com Supplementary information other than RSI will accompany the City of Anna, Texas's basic financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the basic financial statements and perform certain additional procedures, including comparing and reconciling the supplementary information to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and additional procedures in accordance with auditing standards generally accepted in the United States of America. We intend to provide an opinion on the following supplementary information in relation to the financial statements as a whole: 1) Individual nonmajor fund financial statements and schedules 2) Combining statements The Objective of an Audit The objective of our audit is the expression of opinions as to whether your basic financial statements are fairly presented, in all material respects, in accordance with generally accepted accounting principles and to report on the fairness of the supplementary information referred to in the second paragraph when considered in relation to the financial statements as a whole. Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America and will include tests of the accounting records and other procedures we consider necessary to enable us to express such opinions. We cannot provide assurance that unmodified opinions will be expressed. Circumstances may arise in which it is necessary for us to modify our opinions or add emphasis-of-matter or other-matter paragraphs. If our opinions on the financial statements are other than unmodified, we will discuss the 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 opinions, we may decline to express opinions or to issue a report as a result of this engagement. General Audit Procedures We will conduct our audit in accordance with auditing standards generally accepted in the United States of America (U.S. GAAS). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment,including the assessment of the risks of material misstatement of the financial statements, whether due to error, fraudulent financial reporting, misappropriation of assets, or violations of laws, governmental regulations, grant agreements, or contractual agreements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 2 Internal Control Audit Procedures Because of the inherent limitations of an audit, together with the inherent limitations of internal control, an unavoidable risk that some material misstatements may not be detected exists, even though the audit is properly planned and performed in accordance with U.S. GAAS. In making our risk assessments,we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. However, we will communicate to you in writing concerning any significant deficiencies or material weaknesses in internal control relevant to the audit of the financial statements that we have identified during the audit. Compliance with Laws and Regulations As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perforin tests of the City of Anna, Texas's compliance with the provisions of applicable laws, regulations, contracts, and agreements. However, the objective of our audit will not be to provide an opinion on overall compliance and we will not express such an opinion. Management Responsibilities Our audit will be conducted on the basis that management and those charged with governance acknowledge and understand that they have responsibility: 1. For the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; 2. For the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to error, fraudulent financial reporting, misappropriation of assets, or violations of laws, governmental regulations, grant agreements, or contractual agreements;and 3. To provide us with: i, Access to all information of which management is aware that is relevant to the preparation and fair presentation of the financial statements such as records, documentation, and other matters; ii. Additional information that we may request from management for the purpose of the audit;and iii. Unrestricted access to persons within the entity from whom we determine it necessary to obtain audit evidence. 4. For including the auditor's report in any document containing financial statements that indicates that such financial statements have been audited by the entity's auditor; 3 5. For identifying and ensuring that the entity complies with the laws and regulations applicable to its activities; and 6. For adjusting the financial statements to correct material misstatements and confirming to us in the management representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the current year period(s)under audit are immaterial,both individually and in the aggregate, to the financial statements as a whole. With regard to the supplementary information referred to above, you acknowledge and understand your responsibility: (a) for the preparation of the supplementary information in accordance with the applicable criteria; (b) to provide us with the appropriate written representations regarding supplementary information; (c) to include our report on the supplementary information in any document that contains the supplementary information and that indicates that we have reported on such supplementary information; and (d) to present the supplementary information with the audited financial statements, or if the supplementary information will not be presented with the audited financial statements, to make the audited financial statements readily available to the intended users of the supplementary information no later than the date of issuance by you of the supplementary information and our report thereon. As part of our audit process, we will request from management and those charged with governance,written confirmation concerning representations made to us in connection with the audit. With respect to any nonattest services we perform, the City of Anna, Texas's management is responsible for(a)making all management decisions and performing all management functions; (b) assigning a competent individual to oversee the services; (c) evaluating the adequacy of the services performed; (d) evaluating and accepting responsibility for the results of the services performed;and(e)establishing and maintaining internal controls,including monitoring ongoing activities. Reporting We will issue a written report upon completion of our audit of the City of Anna, Texas's basic financial statements. Our report will be addressed to the governing body of the City of Anna, Texas.We cannot provide assurance that unmodified opinions will be expressed. Circumstances may arise in which it is necessary for us to modify our opinions, add an emphasis-of-matter or other-matter paragraph(s), or withdraw from the engagement. Other We understand that your employees will prepare all confirmations we request and will locate any documents or support for any other transactions we select for testing. 4 If you intend to publish or otherwise reproduce the financial statements and make reference to our firm, you agree to provide us with printers' proofs or masters for our review and approval before printing.You also agree to provide us with a copy of the final reproduced material for our approval before it is distributed. Provisions of Engagement Administration,Timing and Fees During the course of the engagement,we may communicate with you or your personnel via fax or e-mail, and you should be aware that communication in those mediums contains a risk of misdirected or intercepted communications. The timing of our audit will be scheduled for performance and completion as follows: Begin Complete October Document internal control and preliminary tests Observe physical inventories (if necessary) n/a October Mail confirmations Perform year-end audit procedures January,2017 February,2017 Issue audit report Mike Brooks is the engagement partner for the audit services specified in this letter. His responsibilities include supervising BrooksCardiel, PLLC's services performed as part of this engagement and signing or authorizing another qualified firm representative to sign the audit report. Our fees are based on the amount of time required at various levels of responsibility,plus actual out-of-pocket expenses. Invoices will be rendered monthly and are payable upon presentation. We estimate that our fee for the audit will be $17,025. We will notify you immediately of any circumstances we encounter that could significantly affect this initial fee estimate. Whenever possible, we will attempt to use City of Anna, Texas's personnel to assist in the preparation of schedules and analyses of accounts. This effort could substantially reduce our time requirements and facilitate the timely conclusion of the audit. 5 Other Matters During the course of the audit we may observe opportunities for economy in, or improved controls over,your operations.We will bring such matters to the attention of the appropriate level of management,either orally or in writing. We agree to retain our audit documentation or work papers for a period of at least five years from the date of our report. At the conclusion of our audit engagement, we will communicate to those charged with governance the following significant findings from the audit: • Our view about the qualitative aspects of the entity's significant accounting practices; • Significant difficulties,if any,encountered during the audit; • Uncorrected misstatements, other than those we believe are trivial,if any; • Disagreements with management,if any; • Other findings or issues, if any, arising from the audit that are, in our professional judgment, significant and relevant to those charged with governance regarding their oversight of the financial reporting process; • Material, corrected misstatements that were brought to the attention of management as a result of our audit procedures; • Representations we requested from management; • Management's consultations with other accountants,if any;and • Significant issues, if any, arising from the audit that were discussed, or the subject of correspondence, with management. The audit documentation for this engagement is the property of BrooksCardiel, PLLC and constitutes confidential information. However, we may be requested to make certain audit documentation available to certain regulators and federal agencies and the U.S. Government Accountability Office pursuant to authority given to it by law or regulation,or to peer reviewers. If requested, access to such audit documentation will be provided under the supervision of BrooksCardiel,PLLC's personnel.Furthermore,upon request,we may provide copies of selected audit documentation to these agencies and regulators. The regulators and agencies may intend, or decide, to distribute the copies of information contained therein to others, including other governmental agencies. Please sign and return the attached copy of this letter to indicate your acknowledgment of, and agreement with, the arrangements for our audit of the financial statements including our respective responsibilities. We appreciate the opportunity to be your financial statement auditors and look forward to working with you and your staff. 6 Respectfully, BrooksCardiel,PLLC 1095 Evergreen Circle I Ste 200 The Woodlands,TX 77380 RESPONSE: This letter correctly sets forth our understanding. City of Anila,Texas Acla-iowledged and agreed on behalf of the City of Anila, Texas by: Management , Name: Title: Date: n Mayor or City C unc' Member Name: % ._ Title: Date: b c 7