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HomeMy WebLinkAboutRes 22-32 Awarding the Bid and Approving the Firm of Brookswatson & Co., PLLCTOWN OF WESTLAKE RESOLUTION NO.22-32 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS, AWARDING THE BID AND APPROVING THE FIRM OF BROOKSWATSON & CO., PLLC TO PERFORM INDEPENDENT AUDITING SERVICES FOR A 3-YEAR PERIOD WITH THE OPTION OF 2 ADDITIONAL YEARS AND AUTHORIZING THE FINANCE DIRECTOR TO EXECUTE THE FY 2022 AND SUBSEQUENT YEARS' ENGAGEMENT LETTERS ON BEHALF OF THE TOWN OF WESTLAKE. 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 Town Council is committed to the financial stability of the Town of Westlake and feels it is in the best interest of the citizens to award the bid after a proposal analysis was completed and obtain the services of this firm to perform the Town's audits as set forth above; and, WHEREAS the funds to facilitate the audits will be included in the proposed FY 2022- 2023 municipal budget and the subsequent year's budgets as necessary. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: That all matters stated in the Recitals hereinabove are found to be true and correct and are incorporated herein by reference as if copied in their entirety. SECTION 2: That the Town Council of the Town of Westlake does hereby award the recommended bid for auditing services and approves the firm of BrooksWatson & Co., PLLC to perform the Westlake independent audits for FY2022-24, with a possible 2-year extension option, attached hereto as Exhibit "A"; and further authorizes the Director of Finance to execute this agreement via engagement letter for FY2022, and noted subsequent years' letters, on behalf of the Town of Westlake, Texas. SECTION 3: If any portion of this Resolution shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions hereof and the Council hereby determines that it would have adopted this Resolution without the invalid provision. SECTION 4: That this Resolution shall become effective from and after its date of passage. Resolution 22-32 Page 1 of 2 PASSED AND APPROVED ON THIS 21st DAY OF NNE 2022. ATTEST: Mary L. Sean Kilbride, Mayor Secretary . Amanda DeGan, Town Manager 10 v/v FORM: Attorney Resolution 22-32 Page 2 of 2 BROOKSWATSON & CO., PLLC Certified Public Accountants Proposal for Professional ME- ervices Town of Westlake, TX Address Houston Office: 1495o Heathrow Forest Pkwy Ste 530 1 Houston. Texas 77032 Fort Worth Office: 777 Main St. Suite 600 Fort Worth, Texas 76102 Tel. 281.907.8788 main 281.907.gi88 direct Email / Web • LBreedlovega BrooksWatsonCPA.com www.Broo ksWatsonC PA.com Letter of Transmittal Town of Westlake, Texas 1500 Solana Blvd, Bldg. 7, Ste 7200 Westlake, TX 76262 Dear Town of Westlake, On behalf of BrooksWatson & Co., PLLC, we are pleased to have the opportunity to submit the following proposal and provide professional auditing services to the Town. 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 Town'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. BrooksWatson & Co., 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 entities similar to the Town of Westlake, Texas. We believe that we are the right choice to be the Town's auditor for the following reasons; • Timeline - Our firm focuses solely on performing 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. Executive Summary BrooksWatson and Company, PLLC is headquartered in Houston, Texas and was founded by Certified Public Accountants that are dedicated to performing governmental audits. The partners of BrooksWatson & Co., PLLC have performed approximately 500 audit engagements of approximately 150 different governmental entities, including 75 different cities. Specializing in governmental and not -for -profit auditing, We understand the unique environment and regulatory challenges governments face. We strive for excellence in our methods and operating principles and have built our client relationships on the foundation of quality results. WHY WE ARE DIFFERENT Our firm was created With the belief that our clients deserve exceptional auditing services While still being cost effective. We feel a "traditional" engagement team utilizing inexperienced staff auditors is outdated and ineffective. Unlike most firms, We seek to eliminate the inexperience of the middle man and connect the Town With our highest level of expertise in an effort to gain efficiency and increase quality in every engagement. Our partners insist on being involved in every aspect of your audit. CUSTOMER SERVICE Our goal With every audit is to provide exceptional customer service through accessibility, efficiency, quality and knowledge of our clients on a personal level. At BrooksWatson & Co., PLLC we believe that establishing and maintaining positive Long-term relationships is essential to a successful audit and strive to achieve this in every engagement. We understand that no two governments are the same. With an appreciation for the unique challenges our governmental clients face, we approach every audit with an individual view and tailor our procedures to meet your specific needs. Table of Contents LICENSE TO PRACTICE 11 FIRM QUALIFICATIONS AND EXPERIENCE 12 QUALITY CONTROL AND PEER REVIEW 19 PARTNER AND STAFF BACKGROUND 21 SIMILAR ENGAGEMENTS AND REFERENCES 29 SPECIFIC AUDIT APPROACH 32 TOWN AUDIT TIMELINE 41 ACADMEY AUDIT TIMELINE 42 APPENDIX 43 Proposal for Professional Auditing services / 12 About Us BrooksWatson & Co., 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 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 BrooksWatson & Co, 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 Town directly to our partners. Proposal for Professional Auditing Services / 14 We will review the Town'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 Town's internal controls over grant compliance and the financial statements. We will develop a risk based audit program and determine if the Town is meeting all compliance and financial requirements associated with their federal grants. Once complete, we will assist the Town with the submission of their single audit reporting package to the Federal Audit Clearinghouse or other required authoritative body. We will provide the Town with a bound single audit report which will include our findings, schedule of expenditures of federal awards, and Auditor's opinion over the OMB Uniform Guidance, Governmental Auditing Standards. CLIENT 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. 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. Proposal for Professional Auditing Services / 16 CONTINUING PROFESSIONAL EDUCATION BrooksWatson & Co., PLLC is registered and approved to provide continuing professional education by the Texas State Board of Public Accountancy ("TSBPA"). This approval and monitoring process assures that we adhere to the standards set by the board for providing high -quality continuing professional education for Texas CPA's. Through providing accredited TSBPA courses to both our employees and clients that wish to participate, this lays the foundation for an environment that is ripe for high quality governmental accounting and audits. We compliment our internal CPE trainings with external trainings offered through Checkpoint Learning by Thomson Reuters, and other supplemental courses, as deemed appropriate. This allows us to provide a robust and well-rounded continuing education curriculum to our professionals. Each of our professionals are in compliance With the CPE requirements of the AICPA, Texas State Board of Public Accountancy and Generally Accepted Government Auditing Standards (Yellow Book), Which requires each professional receives a minimum of 4o hours of continuing education credits annually with at least 24 hours of governmental specific training biennially through the firm's CPE program. In most cases, our professionals continuing education credits covering governmental accounting and auditing exceed the thresholds set by Generally Accepted Government Auditing Standards as we are continually monitoring and focusing our CPE curriculum to fit with those areas we encounter the most. Our CPE records are open to our clients for review and will be made available upon request. Proposal for Professionat Auditing Services / 18 What We Do SrooksWatson & Co., PLLC offers a wide range of Audit, Consulting & Accounting services throughout Texas and the Gulf Coast region. We feel that our technical expertise is matched only by our dedication to customer service. We would love the opportunity to meet with you personally and discuss how our firm can meet your specific needs. All -WIT • • , 1 ACC011INTING Financial Statement Audits Planning Internal Control Evaluation Knoti:!edge-based audit methodology to Planning involves developing the Understanding of the Organization's e i ciently and effectively perform financial overall audit strategy for the internal controls roll include the control statement audits In accordance with expected activities. organization, environment risk assessment. information auditing standards generally accepted in and staffing of the audit. and communication systems. control the United States of America (GAAS). activities. and monitoring controls. Fieldwork and Substantive Tasting Understanding risk is integral to quality fsetd work and property applying substantive tests. This testing commonly consists of procedures including: confirmations with outside parties, analytical procedures. physical observation and reviews of underlying evidence. COMPILATION Financial Statement Review Procedures performed :would primarily consist of inquiry and analytical procedures in addition to the preparation of the financial statements. [CONSULTING Internal Control Reviews VUe can offer a more specialized. in-depth internal control and fraud revie:Y, :which assesses the operating effectiveness of specific controls and systems. Compilation The role of our firm in a compilation engagement is to assist the client in taking its financial data and formatting it into a property structured set of financial statements. Agreed Upon Procedures An agreed -upon procedures engagement is one in which our firm is engaged to issLse a report of findings based on specific procedures performed on subject matter. Services Offered • ACFR preparation • Yellow Book Audits • Single Audits • Annual Financial Statement Audits • Franchise Tax Audits • HoteVMoteI Tax Audits • Fraud Examinations/ investigations • Sates Tax Allocation Audits • GAS1354 through 82 Implementation Proposal for P•-ofessional Auditing Services / zo STATEMENT OF REPRIMAND AND DISCIPLINARY ACTION BrooksWatson & Co., PLLC has never been under terms of a public or private reprimand by the Texas State Board of Public Accountancy. SEC or State Society nor have we been the object of any disciplinary action. Proposal for Professional Auditing services / 22 Representative Client Experience • City of Denison, TX City of Giddings, TX • City of Orange. TX • City of Horseshoe Bay, TX • City of Heath, TX City of Taylor, TX • Liberty County, TX City of Magnolia, TX • Lee County, TX City Of Willis, TX Educational Background and Certifications • City of Sanger, TX • City of Parker. TX • City of Shenandoah, TX • City of Trophy Club, TX • City of Westover Hills, TX • Certified Public Accountant, State of Texas • Bachelor of Business Administration, Accounting, Sam Houston State University • Meets all standards for continuing education by generally accepted government auditing standards and the Texas State Board of Public Accountancy, Professional Organizations and Affiliations • Government Finance Officers Association • GFOA Special Review Committee • American Institute of CPAs (AICPA) • Texas State Board of Public Accountancy (TSBPA) Recent Accredited CPE Presentations • "How to Use Accounting Research Manager IT Software Effectively" (August 2016) • "Auditor Communication and Interaction with Audit Clients" (September2016) • "How to Properly Review a City CAFR" (April2019) • "Formal Audit Communications with Clients" (May201g) Proposal for Professional Auditing Services / 24 Representative Client Experience • City of Denison, TX • City of Giddings, TX • City of Sanger, TX • City of Orange, TX • City of Horseshoe Bay, • City of Parker, TX • City of Heath, TX • City of Taylor, TX • City of Shenandoah, TX • Liberty County, TX . City of Magnolia, TX • City of Trophy Club, TX • Lee County, TX • City of Willis, TX • City of Westover Hills, TX Educational Background and Certifications • Certified Public Accountant, State of Texas • Bachelor of Business Administration, Accounting, magna cum lade, Western State University, CO • Meets all standards for continuing education by generally accepted government auditing standards and the Texas State Board of Public Accountancy. Professional Organizations and Affiliations • Government Finance Officers Association • American Institute of CPAs (AICPA) • Texas State Board of Public Accountancy (TSBPA) Accredited CPE presentations • "Enhancements to Audit Procedures & Reporting" (October2oiO • "Audit Software Analytics and Utilization Training" (January 201A • "Yearend Audit Procedures; Substantive Testing and Analytics" (October 201A • "Governmental Revenue Recognition (Exchange & Nonexchange)" (August 2o18) • "Audit Documentation Standards and Enhancements" (September 2018) • "In -Charge Auditor Reviewer Standards and Methods for Assuring a Quality Audit" (July 2019) Proposal for Professional Auditing Services / 26 Representative Client Experience • City of Denison, TX • City of Granite Shoals, TX • City of Piney Point Village, TX • City of Sachse, TX • City of Canton, TX • Town of Providence Village, TX • City of Heath, TX • Town of Northlake, TX • City of Shenandoah, TX • City of Bellmead, TX • City of Magnolia, TX • Town of Trophy Club, TX • Lee County, TX • City Of McGregor, TX • City of Diboll, TX Educational Background and Certifications • Bachelor of Business Administration, Accounting, Southwestern Assemblies of God University, TX • Meets all standards for continuing education by generally accepted government auditing standards and the Texas State Board of Public Accountancy. Professional Organizations and Affiliations • Government Finance Officers Association • GFOA Special Review Committee Accredited CPE Presentations • "Update on Recent GASB Accounting Pronouncements" (August2016) • "Auditor Efficiency" (September201a • "Interfund Issues and Audit Procedures" (May201g) • "Fraud: Case Studies and Fraud Considerations" (October=g) • "Evaluating the Design of Internal Controls" (July2020) Proposal for Professional Auditing Services / 28 Representative Client Experience • City of Denison, TX . City of Azle, TX • City of Sanger, TX • City of Canton, TX . City of Horseshoe Bay, TX . City of Parker, TX • City of Heath, TX • City of Giddings, TX • City of Shenandoah, TX • Lee County, TX . City of Magnolia, TX . City of Trophy Club, TX • Pilot Point, TX . City of Willis, TX . City of Westover Hills, TX Educational Background and Certifications • Certified Public Accountant, State of Texas • Bachelor of Business Administration, Accounting, Baylor University • Meets all standards for continuing education by generally accepted government auditing standards and the Texas State Board of Public Accountancy. Professional Organizations and Affiliations • Government Finance Officers Association • American Institute of CPAs (AICPA) • Texas State Board of Public Accountancy (TSBPA) Accredited CPE presentations • "CAFR Report Preparation" (August 2o18) Proposal for Professional Auditing Services / 33 AUDIT SEGMENTATION AND STAFF HOURS The following table includes the hours necessary to complete the audits for the Town, Academy, Foundation and Texas Student Housing Authority entities. Engagement Financial Audit Audit Audit Egagement Quality Financial Audits Reporting Associate Senior Manager Manager (Hours) (Hours) (Hours) (Hours) Partner Hours i ' I Risk i I Assessment f Control - 15 i 25 10 5 5 60 j Evaluation & I Planning I Control Testing and Preliminary - 60 30 20 5 2 117 I Fieldwork i I Final Field , I Work/Financial i - 170 j 110 40 i 10 5 335 Audit I i Financial y Review, Quality r i Assurance, 30 - 5 ( 30 20 10 95 I Reporting and 1 ! j Presentations Total 30 245 170 100 40 22 607 .___... ..... _—i.._._.___ 'Due to the overlapping of audit methodology and procedures over the various entities included within the proposal, the phases have been combined summarizing the total hours by segment. Proposal for Professional Auditing Services / 35 INTERNAL CONTROL EVALUATION Audit standards require that we obtain an understanding of the Town sufficient to evaluate the design of the internal controls and to determine whether they have been implemented. Our understanding of the Town'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: • Conducting interviews of selected management and staff: • Evaluating the Town's financial reporting and management policies, budget documents and process, and informational systems; • Documenting our understanding of the Town's entity Wide control environment and activity level controls: • Testing the design and implementation of selected key controls by performing a Walk-through of the selected transaction class; • Testing the operating effectiveness of selected controls Were deemed appropriate. • Evaluate the Town's IT systems for areas of potential risk and Where data management may affect financial statements and related disclosures. The results of our inherent and internal controls risk assessments Will allow us to identify and assess the risk of material misstatement within the Town to form our overall audit plan and design the extent, nature, and timing of substantive audit procedures to mitigate that risk to an acceptable level. Any control deficiencies identified during the planning internal control evaluation phase will be communicated to management immediately. FIELDWORK AND SUBSTANTIVE Based on the results of our risk assessment and i nternal control evaluation, a specific audit plan will be designed to focus expanded procedures on areas with the greatest risk of material misstatement, error, and fraud. We will use tests of details. Proposal for Professional Auditing Services / 37 STATISTICAL SAMPLING AND SAMPLE SIZES We utilize the AICPA Audit guide over audit sampling, the objective of which, is to provide a reasonable basis for the auditor to dray✓ conclusions about the population from Which the sample is selected. This guide is derived from the AICPA professional standard, SAS No. 122/AU-C section 530, Audit Sampling. A standard audit may incorporate a variety of sampling techniques including statistical, judgmental, & random selection. Statistical sampling explicitly measures the sampling risk associated With the sampling procedure by providing for a level of sampling risk (confidence factor and precision). NonstatisticaL sampling methods requires the auditor to rely on professional judgment, in combination With nonstatistical sampling guidance and knowledge underlying statistical concepts, to design and evaluate audit samples. The extent to which sampling will be used and related sample sizes will be determined based on the results of our control and risk assessments, materiality, and overall population of the audit area. Tests of controls over compliance and compliance with requirements of major federal programs are based on the guidance included in the AICPA Audit Guide Government Auditing Standards and Single Audits which is devoted to audit sampling in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) compliance audits. TECHNOLOGY AND ELECTRONIC DATA PROCESSING BrooksWatson & Co., PLLC will utilize data analytical software to complete your audit. Electronic data processing will be used throughout the audit to extract data from your Town's accounting software. The data will be processed with our audit software to ensure the efficiency of your audit, enhance the level of detail examined, and assist in identifying anomalies, trends or patterns. By leveraging the utilization of current technology, we are able to increase the level of insight we can provide as well as give you more peace of mind. Proposal for Professional Auditing Services / 39 COMPLETION 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 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 Council and management; • Prepare or assist in the preparation of the Town's Annual Comprehensive Financial Report; • Communicate any audit findings and issues with management and those charged with governance. COMPLIANCE WITH LAWS AND REGULATIONS AND 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 OMB Uniform Guidance and Single Audit Act, grant agreements, financing agreements, or any other compliance requirements as applicable. EXPECTATIONS FROM TOWN STAFF We will expect the Town 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. Proposal for Professional Auditing Services / 41 Proposed Town Audit Timeline Financial Statement Audits Proposed Schedule PLANNING MEETINGS Preliminary planning meetings and audit plan development. PBC Listing provided to Town. INTERIM AUDIT Interim audit fieldwork and preliminary review conference to discuss year-end audit work to be performed. INTERIM AUDIT WORK CONCLUDED AUDIT FIELD WORK DRAFT REPORTS Drafted Annual Comprehensive Financial Report and Management Letter provided to Finance. FINAL REPORTS Annual Comprehensive Financial Report and Management Letter provided to Finance. To be provided by July 2022. To be completed by August 31, 2022. Prior to end of September 2022. Mid November 2022 through December 2022, By end of January 2022. February 2022. FINAL PRESENTATION TO TOWN COUNCIL Prior to March 3& of each year. 0 mi mi RolluKI The Town reserves the right to accept the proposal considered to be the most advantageous to the Town and to reject any and all proposals and re advertise. Upon approval by the "Entities", the successful audit firm will be required to enter into a contract with the "Town entities". This contract shall remain in effect until contract expires, completion and acceptance of services or default. The Town of Westlake reserves the right to terminate the contract immediately in the event the successful firm fails to: • Meet delivery or completion schedules, or • Otherwise perform in accordance with the accepted proposal. Breach of contract or default authorizes the Town to award to another firm, purchase elsewhere and charge the full increase cost to the defaulting fret. Opening Bids: Take place at 9:00 a.m., June 13, 2022 — Town of Westlake Finance Director Room 223. V. OTHER INFORMATION House Bill 89 Form Prohibition on Contn-acts with Companies Boycotting Israel - 1. The 85 Texas Legislature approved new legislation, effective Sept. 1, 2017, which amends Texas Local Government Code Section 1. Subtitle F, Title 10, Government Code by adding Chapter 2270 which states that a governmental entity may not enter into a contract with a company for goods or services unless the contract contains a written verification from the company that it does not boycott Israel; and 1. will not boycott Israel during the term of the Contract Pursuant to Section 2270.001, Texas Government Code: "Boycott Israel" means refusing to deal with, terminating business activities with, or otherwise taking any action that is intended to penalize, inflict economic harm on, or limit commercial relations specifically with Israel, or with a person or entity doing business in Israel or in an Israeli -controlled territory, but does not include an action made for ordinary business purposes; and 2. "Company" means a for -profit sole proprietorship, organization, association, corporation, partnership, joint venture, limited partnership, limited liability partnership, or any limited liability company, including a wholly owned subsidiary, majority -owned subsidiary, parent company or affiliate of those entities or business associations that exist to make aprofit. I, (authorized official) , do hereby depose and verify the truthfulness and accuracy of the contents of the statements submitted on this certification under the provisions of Subtitle F, Title 10, Government Code Chapter 2270 and that the company named below: 1) does not boycott Israel currently; and 2) will not boycott Israel during the term of the contract; and 3) is not currently listed on the State of Texas Comptroller's Companies that Boycott Israel List located at hgps://comptroller.texas.aov/purchasing'publ ications/di vestment.php Company Name BrooksWatson & Company, PLLC Signature of Auth ed�ffcial /, Title of Authorized Official Date Michael Brooks, Audit Partner 06.08.2022