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HomeMy WebLinkAboutRes 06-43 Authorizing Pattilllo, Brown, and Hill to Perform the Town of Westlake AuditTOWN OF WESTLAKE RESOLUTION NO. 06-43 A RESOLUTION OF THE BOARD OF ALDERMEN OF THE TOWN OF WESTLAKE, TEXAS, AUTHORIZING THE FIRM OF PATTILLO, BROWN, & HILL, L.L.P. OF HILLSBORO, TEXAS, TO PERFORM THE TOWN OF WESTLAKE AUDIT FOR A 3 - YEAR PERIOD WITH THE OPTION OF 2 ADDITIONAL YEARS. WHEREAS, Section 103.001 of the Local Government Code requires that a municipality shall have its records and accounts audited annually and shall have an annual financial statement prepared based on the audit; and WHEREAS, Section 103.002 of the Local Government Code requires that a municipality shall employ at its own expense a certified public accountant who is licensed in this state or a public accountant who holds a permit to practice from the Texas State Board of Public Accountancy to conduct the audit and to prepare the annual financial statements, and WHEREAS, the Board of Aldermen are committed to the financial stability of the Town of Westlake and feel it is in the best interest of the citizens to obtain the services of this firm to perform the Town's audits as set forth above; and WHEREAS, the funds to facilitate the audit will be included in the proposed FY 2006/2007 budget. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF ALDERMEN OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: The above findings are hereby found to be true and correct and are incorporated herein in the entirety. SECTION 2: The Board of Aldermen of the Town of Westlake, Texas, does hereby approve the firm of Pattillo, Brown & Hill, L.L.P. to perform the Town's audit for a 3 -year period with the option of 2 additional years and further authorizes the Town Manager to execute the FY 2006-2007 engagement letter, attached as "Exhibit A", on behalf of the Town of Westlake, Texas. SECTION 3: This Resolution shall become effective upon the date of its passage. PASSED AND APPROVED ON THIS 26th DAY OF JUNE, 2006. Scott Bradle , Mayor ATTEST: 4 J46 Dwinnell, Secretary APPROVE S RM: L. tanton La own Attorney Trent O. Petty, Tow ana tJT�►�ll PATTILLO, BROWN & HILL, L.L.P. CERTIFIED PUBLIC ACCOUNTANTS ! BUSINESS CONSULTANTS June 19, 2006 Debbie Piper, Finance Director Town of Westlake 2650 JT Otti.nger Road Westlake, Texas 76262 Ladies and Gentlemen: We are pleased to confirm our understanding of the services we are to provide the Town of Westlake for the year ended September 30, 2006. We will audit the financial statements of the governmental activities, the business -type activities, the 4A, 4B and Lonestar discretely presented component units, each major fund, and the aggregate remaining fund information, which collectively comprise the entity's basic financial statements, of the Town of Westlake as of and for the year ended September 30, 2006. The following supplementary information accompanying the basic financial statements is required by generally accepted accounting principles that will be subjected to certain limited procedures, but will not be audited: 1. Management's Discussion and Analysis. 2. Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — General Fund. Audit Objective The objective of our audit is the expression of an opinion as to whether your financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles and to report on the fairness of the additional information referred to in the first paragraph when considered in relation to the financial statements taken as a whole. Our audit will be conducted in accordance with U.S. generally accepted auditing standards and the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and will include tests of the accounting records of the Town of Westlake and ether procedures we consider necessary to enable us to express such an opinion. if our opinion on the financial statements is other than unqualified, we will fully 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 an opinion, we may decline to express an opinion or to issue a report as a result of this engagement. 401 WEST HIGHWAY 5 ■ V O. BOX 20725 i WACO, TX 76702-0725 ■ (254) 772.490111 FAX (254) 77211920 ■ www.phhcpa.c01n AFFILIATE OFFICHS: BROWNSVILLE, TX (956) 544-7778 r HILLSBORO, TX (254) 582-2583 TEMPLE, TX (254) 791-3460 0 ALBUQUERQUE, NM (505) 266-5904 Page 2 We will also provide a report (that does not include an opinion) on internal control related to the financial statements and compliance with laws, regulations, and the provisions of contracts or grant agreements, noncompliance with which could have a material effect on the financial statements as required by Government Auditing Standards. This report will include a statement that the report is intended solely for the information and use of the audit committee, management, and specific Iegislative or regulatory bodies and is not intended to be and should not be used by anyone other than these specified parties. Management Responsibilities Management is responsible for establishing and maintaining effective internal controls and compliance with laws, regulations, contracts and agreements. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of the controls. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorizations and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. As part of the audit, we will prepare a draft of your financial statements and related notes. In accordance with Government Auditing Standards, you will be required to review and approve those financial statements prior to their issuance and have a responsibility to be in a position in fact and appearance to make an informed judgment on those financial statements. You are also responsible for all management decisions and functions; for designating an individual with suitable skill, knowledge, or experience to oversee our financial statement preparation services and any other nonattest services we provide; and for evaluating the adequacy and results of those services and accepting responsibility for them. Management is responsible for making all financial records and related information available to us. We understand that you will provide us with such information required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application. and will advise you in the preparation of your financial statements, but the responsibility for the financial statements remains with you. As part of our engagement, we may propose standard, adjusting, or correcting journal entries to your financial statements. You are responsible for reviewing the entries and understanding the nature of any proposed entries and the impact they have on the financial statements. That responsibility includes the establishment and maintenance of adequate records and effective internal control over financial reporting, the selection and application of accounting principles, and the safeguarding of assets. Management is responsible for adjusting the financial statements to correct material misstatements and for confirming to us in the representation letter that the effects of any uncorrected misstatements 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. Page 3 You are responsible for the design and implementation of programs pr and detect fraud, and for informing us about all known and controls to prevent or suspected fraud or illegal acts affecting the government involving (1) management, (2) employees who have significant roles in internal control, and (3) others where the fraud or illegal acts could have a material effect on the financial statements. You are also responsible for informing us of your knowledge of any allegations of fraud or suspected fraud or illegal acts affecting the government received in communications from ernplo ees forme employees, regulators, or others. In addition, you are responsible for identi Y r Eying and ensuring that the entity complies with applicable laws and regulations and for taking timely and appropriate steps to remedy any fraud, illegal acts, or violations of contracts or grant agreements that we may report. Audit Procedures --General An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number o transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements misstatement, whether from (s)oerrors, are free of material (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of lawso r governmental regulations that are attributable to the entity or to acts by management or employees acting on behalf of the entity. Because an audit is designed to provide reasonable, but not absolute, assurance and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us_ In addition, an audit is not design e immaterial misstatements, or violations of laws or governmental regulations that da nothavea dd to etect and material effect on the financial statements, However, we will inform You of an erect that come to our attention, and we will inform y Y y material errors misappropriation of assets that come to our attention. We will also infom� ud I u ent financial reporting or laws or governmental regulations that come to our attention, unless clearly inconsequential. you of any violations of Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors. Our procedures will include tests of documentary evidence supporting the trapsaCtIOnS recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and Iiabilities by correspondence with selected individuals, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. p conclusion of our audit, we will also require certain written representations from you about he financial statements and related matters. Page 4 Audit Procedures—Internal Control In planning and performing our audits, we will consider the internal control sufficient to plan the audit in order to determine the nature, timing, and extent of our auditing procedures for the Purpose of expressing our opinion on the Town of Westlake's financial statements. We will obtain an understanding of the design of the relevant controls and whether been placed in operation, and we will assess control risk. Tests of controls may be Performed to est the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements. Tests of controls are required only if control risk is assessed below the maximum level. Our tests, if performed, will be less in scope than would be necessary #o opinion on internal control and, accordingly,�' render an no opinion will be expressed in our report on internal control issued pursuant o Government Auditing Standards. An audit is not designed to provide assurance on internal control or to identify conditions. However, we will inform the governing body or audit committee of any matters involving reportable internal control and its operation that we consider to be reportable conditions under standard established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of internal control that, in our judgment, could adversely affect the entity's ability to record, rocesse summarize, and report financial data consistent with the assertions of management in the financial statements. Audit Administration, Fees, and Other We understand that your employees will prepare all cash or other confirmations we request and will locate any documents selected by us for testing. The audit documentation for this engagement is the property of Pattillo, Brown & Hill, L.L.P. and constitutes confidential information. However, pursuant to authority given by law or re lation we may be requested to make certain audit documentation available to a fderaI agency direct or indirect funding, or the U.S. Government Accountability Office for purposes Y providing review' of the audit, to resolve audit findings, or to carry out oversight responsibilities. We will roti Pm'p of a quality You of any such request. If requested, access to such audit dofy cumentation will be provided under the supervision of Pattillo, Brown & Hill, L.L.P. personnel. Furthermore, upon request, we may provide copies of selected audit documentation to the aforementioned parties. These parties may intend or decide, to distribute the copies or information contained therein o others, including other governmental agencies g Page 5 Our fee for these services will be at our standard hourly rates plus out-of-pocket costs (such as report reproduction, word processing, postage, travel, copies, telephone, etc.) except that we agree that our gross fee, including expenses will not exceed $23,500. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. In accordance with our firm policies, work may be suspended if your account becomes overdue and may not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed upon written notification of termination, even if we have not completed our report. You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket costs through the date of termination. The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. We appreciate the opportunity to be of service to Town of Westlake and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. Very truly yours, PATTILLO, BROWN & HILL, LLP. 444 Greg Shropshire, CPA GDS/bl RESPONSE: This letter correctly sets forth the understanding of the Town of Westlake. By: Title: Date: �_- C