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HomeMy WebLinkAboutRes 06-07 WA 3 year Contract with Stovall Grandey and Allen LLP TOWN OF WESTLAKE RESOLUTION NO. 06-07 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE WESTLAKE ACADEMY APPROVING A 3-YEAR CONTRACT WITH STOVALL, GRANDEY & ALLEN, L.L.P. TO PERFORM THE ACADEMY'S ANNUAL FINANCIAL AUDIT. WHEREAS, Section 44.008 of the Education Code requires that all school districts, including charter schools, must have their fiscal accounts audited annually at their own expense by a certified public accountant holding a permit from the Texas State Board of Public Accountancy; and WHEREAS, the Head of School, and the Finance Director of the Town of Westlake, have considered various accounting firms for the task and have recommended that the Board of Directors appoint the firm of Stovall, Grandey & Allen, L.L.P. to perform the Westlake Academy's annual financial audit for each of the next three years; NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF TRUSTEES OF WESTLAKE ACADEMY: SECTION 1: That the Board of Directors does hereby approve the engagement of the accounting services firm of Stovall, Grandey & Allen, L.L.P. to perform the Westlake Academy's annual financial audit for the next three years. SECTION 2: That this Resolution shall become effective upon the date of its passage. PASSED AND APPROVED ON THIS 26th DAY OF JUNE,2006. ATTEST: Scott Bradley an Dwinnell, Secretary Barbara Brizuela, Head of School APPROVE TO 01 L. Stanton o , cade Attorney a June 15,2006 Board of Trustees Westlake Academy 2650 JT Ottnger Road Westlake,TX 76262 I�„r�'�:1'nrrli,"l isan We are pleased to confirm our understanding of the services we are to provide Westlake Academy for the year ended August 31, 2006. We will audit the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented - component units, each major fund, and the aggregate remaining fund information, which collectively comprise the basic financial statements of Westlake Academy as of and for the year ended August 31, 2006. The document we submit to you will include the following supplementary information required by generally accepted accounting principles that will be subjected to certain limited procedures,but will not be audited: • Management's discussion and analysis • Budgetary comparison schedules 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 accounting principles generally accepted in the United States of America 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 auditing standards generally accepted in the United States of America 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 Westlake Academy and other 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. 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 or grant agreements, noncompliance with which could have a material effect on the financial statements as required by Government Auditing Standards. This report is intended for the information of the Academy's trustees, the audit committee, the administration, and the Texas Education Agency, and is not intended to be used and should not be used by anyone other than these specified parties. Management Responsibilities Management is responsible for establishing and maintaining internal control and for 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, 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. CERTiftfD PUBLIC AE' .:.'..i'i`':'HTS & BUSINJ S.S ADVISORS June 15,2006 Page 2 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. Also 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. Further, you are required to designate a qualified management-level individual to be responsible and accountable for overseeing our services. 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. You are responsible for the design and implementation of programs and controls to prevent and detect fraud,and for informing us about all known or suspected fraud affecting the government involving(a)management, (b)employees who have significant roles in internal control, and (c) others where the fraud 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 affecting the government received in communications from employees, former employees, regulators, or others. In addition, you are responsible for identifying and ensuring that the entity complies with applicable laws and regulations. The Academy will be responsible for ensuring that the audit report is received by the Texas Education Agency within 150 days of the close of the fiscal year. The Academy is further responsible for ensuring that other appropriate governmental agencies receive copies of the audit report according to instructions in the Texas Education Agency Financial Accountability System Resource Guide. 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 of 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 are free of material misstatement, whether from errors, fraudulent financial reporting, misappropriation of assets, or violations of laws or 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 designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements. However, we will inform you of any material errors that come to our attention, and we will inform you of any fraudulent financial reporting or misappropriation of assets that comes to our attention. We will also inform you of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. Our responsibility as auditor 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 auditor. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities 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, At the conclusion of our audit, we will also require certain written representations from you about June 15,2006 Page 3 the financial statements and related matters including compliance with state and local laws and regulations and compliance with the requirements governing the federal financial assistance programs administered by the Academy. Our audit will also include the performance of certain audit procedures for the purpose of reviewing the accuracy of fiscal information provided by the Academy through the Public Education Information Management System PEIMS as required by Section 44.008(b)of the Texas Education Code. Identifying and ensuring that Westlake Academy complies with laws, regulations, contracts, and agreements is the responsibility of management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of Westlake Academy's compliance with applicable laws and regulations and the provisions of 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. Audit Procedures—Internal Controls In planning and performing our audit, 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 Westlake Academy's financial statements. We will obtain an understanding of the design of the relevant controls and whether they have been placed in operation, and we will assess control risk. Tests of controls may be performed to test 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 to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards. An audit is not designed to provide assurance on internal control or to identify reportable conditions. However,we will inform the governing body or audit committee of any matters involving internal control and its operation that we consider to be reportable conditions under standards 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 the internal control that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. We will also inform you of any non-reportable conditions or other matters involving internal control,if any,as required by Government Auditing Standards. Audit Administration,Fees,and Other We understand that your employees will prepare all cash or other confirmations we request and will locate any invoices selected by us for testing. The audit documentation for this engagement is the property of Stovall, Grandey & Allen, LLP and constitutes confidential information. However,pursuant to authority given by law or regulation, we may be requested to make certain audit documentation available to representatives of the cognizant audit agency (or its designee), a federal agency providing direct or indirect funding, or the U.S. General Accounting Office for purposes of a quality review of the audit, to resolve audit findings, or to carry out oversight responsibilities. We will notify you of any such request.If requested,access to such audit documentation will be provided under the supervision of Stovall,Grandey & Allen, LLP 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 to others, including other governmental agencies. We will begin our audit on a mutually agreed upon date and present our final report to the Academy Board at the December board meeting. acuic IJ,Z-VUU Page 4 Our fees for services are based upon our expectation that the audit must be in accordance with Government Auditing Standards and not in accordance with Government Audit Standards, the Single Audit Act Amendments of 1996 and OMB A-133,Audits of States, Local Governments and Non-Profit Organizations. If we determine, at a later date, that the audit procedures and reports must comply with all standards mentioned in the previous sentence our engagement letter will be amended to document your additional responsibilities, the additional procedures we will perform and the additional statements and compliance reports that must be prepared to comply with the Single Audit Act Amendments of 1996 and OMB A-133,Audits of States, Local Governments and Non-Profit Organizations. Our fee for the audit in accordance with Government Auditing Standards, will be at our standard hourly rates plus out-of-pocket costs(such as report reproduction,typing,postage, travel,copies,telephone,etc.)except that we agree that our gross fee, including expenses, will not exceed $11,000. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. 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. Government Auditing Standards require that we provide you with a copy of our most recent quality control review report. Our 2004 peer review report was previously included with our proposal to Westlake Academy, We appreciate the opportunity to be of service to Westlake Academy 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, STOVALL,GRANDEY&ALLEN,LLP David G. Stovall RESPONSE: This letter correctly sets forth the understanding of Westlake Academy. i By: -� Title: J� A