HomeMy WebLinkAboutANDERSON WHITNEY - CONTRACT - RFP - P953 AUDIT SERVICES MPOPROFESSIONAL SERVICES AGREEMENT
THIS AGREEMENT is made and entered into this.�L3er day of r-r�.>e , 2004
by and between THE NORTH FRONT RANGE TRANSPORTATION AND AIR QUALITY
PLANNING COUNCIL (the "MPO") and ANDERSON & WHITNEY, P.C. ("Professional").
In consideration of the mutual covenants and obligations herein expressed, it is agreed by
and between the parties hereto as follows:
1. Scope of Services. Professional agrees to provide services in accordance with the
scope of services attached hereto as Exhibit A and incorporated herein by this reference (the
"Scope of Services").
2. Time. The services to be performed pursuant to this Agreement shall be initiated
as specified on the Scope of Services. Time is of the essence. Any extensions of any time limit
must be agreed upon in writing by the parties hereto.
3. Contract Period, This Agreement shall commence on December 1, 2004, and
shall continue in full force and effect until May 31, 2005 for the initial term of the agreement and
May 31st for each year that the agreement is renewed, unless terminated sooner as herein provided.
Any extensions of the time limit set forth above must be agreed upon in writing by the parties hereto. In
addition, at the option of the MPO, the Agreement may be extended for additional one year periods not to
exceed four (4) additional one year periods with fees and costs not to exceed those set forth in Exhibit B,
incorporated herein by this reference. Written notice of renewal shall be provided to the Professional and
mailed no later than ninety (90) days prior to contract end.
4. Default. Each and every term and condition hereof shall be deemed to be a
material element of this Agreement. In the event either party should fail or refuse to perform
according to the terms of this agreement, such party may be declared in default, and this
Agreement may be tenninated.
5. Early Tennination by MPO. Notwithstanding the time periods contained herein,
the MPO may terminate this Agreement at any time for the MPO's convenience or because of the
failure of Professional to fulfill the contract obligations. The MPO shall terminate by providing
at least fifteen (15) days prior written notice of termination by delivering to Professional a notice
of termination specifying the nature, extent, and effective date of the termination. Upon receipt
of the notice, Professional shall immediately discontinue all services affected (unless the notice
directs otherwise) and deliver to the MPO all data, drawings, specifications, reports, estimates,
summaries„ and other information and materials accumulated in performing this contract,
whether completed or in process. If the termination is for convenience, the MPO shall make an
equitable adjustment in the contract price but shall allow no anticipated profit on unperformed
services. if the termination is for failure of Professional to fulfill the contract obligations, the
MPO may complete the work and Professional shall be liable for any additional cost incurred by
the MPO. If, after termination for failure to fulfill contract obligations, it is determined that
Professional was not in default, the rights and obligations of the parties shall be the same as if the
termination had been issued for the convenience of the MPO.
6. Op opt3 rtunity to Cure. In the case of a breach or default, the MPO may, in its sole
discretion, allow Professional a period of time in which to cure the defect. In such case, the
notice of termination shall state the time period in which cure is permitted and other appropriate
Page 1
d. Our firm has made a commitment to be up-to-date with the use of *paperless" audit
software in the engagements. We facilitate this with notebook Computers with several
software applications on -site during the audit. We use these in conjunction with the
client's system to the fullest extent possible to save our time and your time.
C,
For example, some clients prefer to give us account analyses on disk or by e-mail,
and we can efficiently add our audit procedures.
Out overall goal in "paperless" audit software is to work with clients to take
advantage of the technology available from their systems and ours to produce a more
efficient Process.
f, Analytical procedures are first used in the planning of an engagement whereby
unaudited financial information is reviewed to identify significant changes for further
review. The most extensive analytical procedure planned for the audit is the
comparison of current year account balances to the prior year account balances. Any
significant variation among these, factors is reviewed with MPO st4 and further
evidence is examined to document the propriety of the change.
We believe in going beyond these basic procedures to analyze trends and
relationships between years more significantly. This is a very cost-effective use of
audit resources and often results in trends and analyses that are also useful to the
client. Potential applications of analytical review include:
,0 Percent return on investments.
* Payroll costs per employee
4, &r ctstte per v.-;-j+m vatits qf
+ Program revenues per units of service.
f The review and testing of internal controls is of added importance in the MPO audit.
Internal control review is also very important because of the MPO's growing
activities and potential growth.
The first consideration is of the MPO's internal control environment This includes
analysis of such factors as management's philosophy and operating style,
practices. The control environment reflects the ovet-all attitude, awareness, and
The second phase of the internal control structure is the accounting system. This
includes analysis of how transactions arc initiated, processed and ultimately recorded
in the general Wger. All significant cycles of transactions am reviewed through
interviews with employees, inspection of documents used, and walk-throughs of
transactions through the entire system. The results of this review is documented
through checklists, flowcharts, and narratives.
Exhibit A - Page 5
A final phase of control evaluation is the identification of the policies and procedures
management has established to provide reasonable assurance that financial records
are accurate and assets are safeguarded. The existence and effoctivenew of controls
is a very important factor in designing audit tests to uncover material financial
misstatements.
g. Them are marry contracts, laws and regulations for which the MPO's auditor is
responsible for testing compliance with. Most of these are financial in nature. The
auditor does not have detection responsibility for general taws and regulations, such
as civil rights statutes or environmental regulations.
Our approach to this testing is to review the primary contracts, laws, and regulations
applicable to the MPO, and determine which could directly affect the financial
statements if noncompliance occurred. We then test these provisions in proportion to
the likelihood and impact of noncompliance. The major potential source for laws
affecting intergovernmental entities is the Colorado Revised Statutes. Remaining
sources of laws and regulations include the MPO's policies, (e.g. purchasing and
investment regulations), the provisions of federal grants, and others, such as arbitrage
and continuing disclosure.
h, 'ibis section will discuss the approach to be taken in drawing audit samples for tests
of compliance. Control/compliance tests will be primarily performed in the arms of
purchasing, disbursements and payroll Purchasing transactions will be selected from
the range of check numbers issued during the year. Those checks selected will be
tested in detail for purchase approval, receipt of goods„ approval of invoice,
purchasing policies, and compliance with contracts, if applicable.
Payroll transactions will be selected frown the range of payroll checks or direct deposit
advices issued during the year. These will be tested for accuracy, pay rates, contract
or timesheet, approval, payroll deductions, and legal requirements (W-4,1-9, etc.).
Some types of laws, regulations, and contracts can be tested without selecting
additional audit samples. For exarnple, tite purchasing policies of the MPO will be
tested in conjunction with the test of controls over expenditures. Compliance with
grants and contracts can best be determined in the audit by reviewing these
documents to determine if any provisions would apply to transactions of the period.
of Antleioated Potential Audit
We are not aware of any anticipated audit problems regarding the 2004 audit of the MPO. Of
course, there are always unexpected circumstances, different kinds of transactions, and changes
in accounting standards that come up during the performance of an audit.
Our method of dealing with these factors is to identify them as soon as possible and to
immediately communicate with MPO officials to determine what efforts will be necessary to
work through the situation. Typically, extra efforts are required of both the audit frrrtr and the
MPO staff.
The professional attitude of the MPO staff, as well as our considerable audit experience,
has given us an excellent track record in resolving unanticipated difticultics.
Fxhibit A - Page 0
MNA"JAVET WO
FOR ADDITIONAL SERVICES
Maximum
All -Inclusive
Nature of Service to be Provided Total Price
2004 Audit of North Front Range MPO
S SAW
2005 Audit of North Front Range MPO
3,800
2006 Audit of North Front Range MPO
6,100
2007 Audit of North Front Range MPO
6,400
2008 Audit of North Front Range MPO
6,700
. . . ....... . -------
----- -
Standard
Quoted
Hourly
Hourly
Hours
Rates
Rates
Total
Shareholder
10
$ 175
$130
$1,300
Manager
30
Its
80
2,400
!r!7g4 WAuditor
_., 32
75
55
j_t760
Subtotal
N/A
L _N/A
$ 5,460
140
Total all-inclusive maximum price for 2004 audit $ 5in ,
Exhibit B Page 1
"M �
Standard
Quoted
Hourly
Hourly
Rates
Rates
Shareholders
S175
$130
Manager
Its
80
supervisory Staff
75
ss
Staff`
60
50
Other (specify)
Out of pocket expenses:
Meals and lodging (amount per person per S 8 (lunch)
day)
Transportation (cents -per -mile) 37.50
Other (specify) —
Exhibit B Page -7
EXHIBIT C - Federal Patent and Rights in Data
37 C.F.R. Part 401,49 C.F.R. Parts 18 and 19
The FTA patent clause is substantially Similar to the text of 49 C.F.R. Part 19, Appendix A, § 5,
but the rights in data clause reflects PTA objectives, For patent rights, FTA is governed by
Federal law and regulation. For data rights, the text on copyrights is insufficient to meet PTA's
purposes for awarding research grants. This model clause, with larger rights, as a standard, is
proposed with the understanding that this standard could be modified to PTA's needs.
CONTRACTS INVOLVING EXPERIMENTAL, DEVELOPMENTAL, OR RESEARCH
WORK,
A. Rights in Data.
(1) The term "subject data" means recorded information, whether or not copyrighted, that is
delivered or specified to be delivered under this Agreement. The term includes graphic or
pictorial delineation in media such as drawings or photographs-, text in specifications or related
performance or design -type documents; machine forms such as punched cards, magnetic tape, or
computer memory printouts; and information retained in computer memory. Examples include,
but are not limited to: computer software, engineering drawings and associated lists,
specifications, standards, process sheets, manuals, technical reports, catalog item identifications,
and related information. The term "subject data" does not include financial reports, cost
analyses, and similar information incidental to contract administration.
(2) The following restrictions apply to all subject data first produced in the performance of
the contract to which this Attachment has been added:
(a) Except for its own internal use, Professional nray not publish or reproduce subject data in
whole or in part, or in any manner or form, nor may Professional authorize others to do so,
without the written consent of the Federal Government, until such time as the Federal
Government may have either released or approved the release of such data to the public; this
restriction on publication, however, does not apply to any contract with an academic institution.
(b) In accordance with 49 C.F.R. 18.34 and 49 C.F,R. 19.36, the Federal Government
reserves a royalty -free, non-exclusive and irrevocable license to reproduce, publish, or otherwise
use, and to authorize others to use, for "Federal Government purposes," any subject data or
copyright described in subsections (2)(b)l and (2)(b)2 below. As used in the previous sentence.
"for Federal Government purposes,,, means use only for the direct purposes of the Federal
Government. Without the copyright owner's consent, the Federal Government may not extend
its Federal license to any other party.
1. Any subject data developed under this Agreement, whether or not a copyright has been
obtained; and
2. Any rights of copyright purchased by Professional using Federal assistance in whole or in
part provided by PTA.
Exhibit C Page I
(e) When FTA awards Federal assistance for experimental, developmental, or research work,
it is FTA's general intention to increase transportation knowledge available to the public, rather
than to restrict the benefits resulting from the work to participants in that work. Therefore,
unless FTA determines otherwise, Professional performing experimental, developmental, or
research work required by this Agreement agrees to permit FTA to make available to the public,
either FTA's license in the copyright to any subject data developed in the course of that contract,
or a copy of the subject data first produced under the contract for which a copyright has not been
obtained. If the experimental, developmental, or research work, which is the subject of the
underlying contract, is not completed for any reason whatsoever, all data developed under that
contract shall become subject data as defined in subsection (a) of this clause and shall be
delivered as the Federal Government may direct. This subsection (c), however, does not apply to
adaptations of automatic data processing equipment or programs for Professional's use whose
costs are financed in whole or in part with. Federal assistance provided by FTA for transportation
capital projects,
(d) Unless prohibited by state law, upon request by the Federal Government, the MPO and
Professional agree to indemnify, save, and hold harmless the Federal Government, its officers,
agents, and employees acting within the scope of their official duties against any liability,
including costs and expenses, resulting from any willful or intentional violation by the MPO or
Professional of proprietary rights, copyrights, or right of privacy, arising out of the publication,
translation, reproduction, delivery, use, or disposition of any data furnished under that contract.
Neither the MPO nor Professional shall be required to indemnify the Federal Government for
any such liability arising out of the wrongful act of` any employee, official, or agents of the
Federal Government.
(e) Nothing contained herein shall imply a license to the Federal Government under any
patent or be construed as affecting the scope of any license or other right otherwise granted to the
Federal Government under any patent.
(f) Data developed by Professional and financed entirely without using Federal assistance
provided by the Federal Government that has been incorporated into work required by the
underlying contract to which this Attachment has been added is exempt from the requirements of
subsections (b), (c), and (d) of this clause, provided that Professional identifies that data in
writing at the time of`delivery of the contract work.
(g) Unless FTA determines otherwise, Professional agrees to include these requirements in
each subcontract for experimental, developmental, or research work financed in whole or in part
with Federal assistance provided by FTA.
(3) Unless the Federal Government later maces a contrary determination in writing,
irrespective of` Professional's status (i.e., a large business, small business, state government or
state instrumentality, local government, nonprofit organization, institution of 'higher education,
individual, etc.), the MPO and Professional agree to take the necessary actions to provide,
through FTA, those rights in that invention due the Federal Government as described in U.S.
Department of Commerce regulations, "Rights to Inventions Made by Nonprofit Organizations
J'xhibit C - Page 2
and Small Business Finns Under Government Grants, Contracts and Cooperative Agreements,"
37 C.F.R. Part 401.
(4) Professional agrees to include these requirements in each subcontract for experimental,
developmental, or research work (manced in whole or in part with Federal assistance provided
by FTA.
B. Patent Rights:
(1) If any invention, improvement, or discovery is conceived or first actually reduced to
practice in the course of or under this Agreement, and that invention, improvement, or
discovery is patentable under the laws of the United States of America or any foreign country,
Professional agrees to take actions necessary to provide immediate notice and a detailed report
to the party at a higher tier until ETA is ultimately notified.
(2) Unless the Federal Government later makes a contrary determination in writing,
irrespective of Professional's status (a large business, small business, state government or state
instrumentality, local government, nonprofit organization, institution of higher education,
individual), Professional agrees to take the necessary actions to provide, through FTA, those
rights in that invention due the Federal Government as described in U.S. Department of
Comi-nerce regulations, "Rights to Inventions Made by Nonprofit Organizations and Small
Business Finns Under Government Grants, Contracts and Cooperative Agreements," 37 C.F.R.
Part 401
(3) Professional agrees to include the requirements of this clause in each subcontract for
experimental, developmental, or research work financed in whole or in part with Federal
assistance provided by ETA.
Exhibit C - Page 3
conditions. If Professional fails to remedy to the MPO's satisfaction the breach or default or any
of the terms, covenants, or conditions of this Agreement within ten (10) days after receipt by
Professional of written notice from the MPO setting forth the nature of said breach or default, the
MPO may terminate the Agreement without any further obligation to Professional and seek
damages, may treat the Agreement as continuing and require specific performance, or may avail
itself of any other remedy at law or equity. If the MPO commences legal or equitable actions
against Professional, Professional shall be liable to the MPO for the MPO's reasonable attorney
fees and costs incurred because of the default. Any such termination for default shall not in any
way operate to preclude the MPO from also pursuing all available remedies against Professional
and its sureties for said breach or default,
7. Waiver of Remedies for any Breach. If the MPO elects to waive its remedies for
any breach by Professional of any covenant, term or condition of this Agreement, such waiver by
the MPO shall not limit the MPO's remedies for any succeeding breach of that or of any other
term, covenant, or condition of this Agreement,
8. Responsibility. Professional shall be responsible for the professional quality,
technical accuracy, timely completion and the coordination of all services rendered by the
Professional, including but not limited to designs, plans, reports, specifications, and drawings
and shall, without additional compensation, promptly remedy and correct any errors, omissions,
or other deficiencies.
9. Indemnification. Professional shall indemnify, hold barniless and defend the
MPO and its representatives, officers, employees, agents, and contractors from and against all
liabilities, penalties, costs, losses, damages, expenses, causes of action, claims, demands, or
judgments, including, without limitation, reasonable attorney fees, arising from or in any way
connected with injury to or the death of any person or physical damage to any property resulting
from any act, omission, condition, or other matter related to this Agreement.
10, Insurance. Professional shall maintain commercial general liability insurance in
the amount of $500,000 combined single limits, and errors and omissions insurance in the
amount of $ 1,000,000,
11. Compensation. In consideration of the services to be performed pursuant to this
Agreement, the MPO agrees to pay Professional on a time and reimbursable direct cost basis
according to the following schedule:
See fee schedule included in Exhibit B, and incorporated herein by this reference,
with maximum compensation (for both Professional's time and reimbursable direct costs) not to
exceed Five Thousand Six Hundred dollars ($5,600.00) for 2004 audit. Monthly partial
payments based upon the Professional's billings and itemized statements are permissible. The
amounts of all such partial payments shall be based upon the Professional's MPO-verified
progress in completing the services to be performed pursuant to the Scope of Services and upon
approval of the Professional's direct reimbursable expenses. Final payment shall be made
following acceptance of the work by the MPO. I
12. Records and Reports. The MPO and Professional shall maintain all books,
records, and other documentation pertaining to the Scope of Services and necessary to
completely substantiate all costs incurred and billed to the MPO during the term of this
Agreement for a period of three (3) years from the date of final payment under the terms of this
Page 2
Agreement. These records shall be made available for inspection and audit to any state or federal
authority authorized to inspect such records and copies thereof shall be furnished at the expense
of Professional, if so requested.
13. Ownershipr of Work Product. Upon final payment, all designs, plans, reports,
specifications, drawings, and other services rendered by Professional shall become the sole
property of the MPO, which shall have the royalty -free, nonexclusive and irrevocable right to
reproduce, publish, or otherwise use and authorize others to use all such materials for authorized
government purposes. Other entities that may reproduce, publish, or otherwise use the designs,
plans, reports, specifications, drawings, and other services rendered by Professional include but
are not limited to the Colorado Department of Transportation ("CDOT"), the Federal
Transportation Administration ("FTA"), and the Federal Highway Administration ("FHWA").
14. MPO Representative. The MPO shall designate, prior to commencement of work,
its project representative who shall make, within the scope of his or her authority, all necessary
and proper decisions with reference to the project. All requests for contract interpretations,
change orders, and other clarification or instruction shall be directed to the MPO Representative.
15. Monthly Report. Commencing thirty (30) days after the date of execution of this
Agreement and every thirty (30) days thereafter, Professional shall provide the MPO with a
written report of the status of the work. Failure to provide any required monthly report may, at
the option of the MPO, suspend the processing of any partial payment request.
16. Independent Contractor. The services to be performed by Professional are those
of an independent contractor and not of an employee of the MPO. The MPO shall not be
responsible for withholding any portion of Professional's compensation hereunder for the
payment of FICA, Workers' Compensation, other taxes or benefits or for any other purpose.
17. Personal Services. It is understood that the MPO enters into this Agreement based
on the special abilities of Professional and that this Agreement shall be considered as an
agreement for personal services. Accordingly, Professional shall neither assign any
responsibilities nor delegate any duties, nor create any subcontracts arising under this Agreement
without the prior written consent of the MPO.
18. Conflict of Interests and Prohibited Interests, The MPO and Professional
represent that neither has any interests and shall not acquire any interests, directly or indirectly,
that would conflict in any manner or degree with the performance and services required to be
performed under this Agreement. The MPO and Professional further represent that no member
or delegate to the Congress of the United States shall be admitted to any share or part of this
Agreement or to any benefit arising therefrom. In addition no employee, officer, or agent of the
MPO shall participate in selection or in the award or administration of this Agreement if a
conflict of interest, real or apparent, would be involved. Such conflict would arise when the
employee, officer or agent; any member of his immediate family; his or her partner; or an
organization which employs, or is about to employ any of the foregoing, has a financial or other
interest in the firm selected for award, The MPO's officers, employees, or agents shall neither
solicit nor accept gratuities, favors or anything of monetary value from contractors, potential
contractors, or parties of subagreements.
19. No Waiver, The MPO's approval of drawings, designs, plans, specifications,
reports, and incidental work or materials furnished hereunder shall not in any way relieve the
Professional of responsibility for the quality or technical accuracy of the work. The MPO's
Page 3
approval or acceptance of, or payment for, any of the services shall not be construed to operate as
a waiver of any fights or benefits provided to the MPO under this Agreement.
20. No Government Obligation to Third Parties. The MPO and Professional
acknowledge and agree that, notwithstanding any concurrence by the federal government in or
approval of the solicitation or award of the underlying contract, absent the express written
consent by the federal government, the federal government is not a party to this Agreement and
shall not be subject to any obligations or liabilities to the MPO, Professional, or any other party
(whether or not a party to this Agreement) pertaining to any matter resulting from this
Agreement.
21, Notices. All notices provided under this Agreement shall be effective when
mailed, postage prepaid and sent to the following addresses:
Professional,• MPO: With Copy to:
Anderson & Whitney, P.C. THE NFRT & AQPC City of Fort Collins
Attn: Alan Holmberg, CPA Attn: Gayle Foos Purchasing
5801 W. 11"' Street 235 Mathews St. PO Box 580
GLe Fort Collins, CO 80524 Ft Collins, CO 80522
22. Incorporation of FTA Terms. This Agreement includes certain Standard Terms
and Conditions required by the federal Department of Transportation ("DOT") and other federal
and state authorities, whether or not expressly set forth in this Agreement. All contractual
provisions required by DOT, as set forth in FTA Circular 4220.11), dated April 15, 1996, are
hereby incorporated by reference. Anything to the contrary herein notwithstanding, all FTA
mandated terms shall be deemed to control in the event of a conflict with other provisions
contained in this Agreement. Professional shall not perform any act, fail to perform any act, or
refuse to comply with any the MPO requests which would cause the MPO to be in violation of
the FTA terms and conditions.
23. Grant Assurances and Federal Requirements. This Agreement involves the
expenditure of federal funds, which requires the MPO and Professional at all times during the
execution of this Agreement to adhere to and comply with all applicable federal laws and
regulations, as they currently exist and may hereafter be amended, which are incorporated
herein by this reference as terms and conditions of this Agreement. A non -exhaustive list of
federal laws and regulations that may be applicable is included below. By signing this
Agreement, Professional avers that it is his or her responsibility to be aware of the requirements
that may be imposed by the following federal laws and regulations, and others not listed, that he
or she is aware of any such requirements, and that he or she will comply with all applicable laws
and regulations.
a. Laws and regulations prohibiting false claims and statements from being
made to the federal government, 31 U.S,C,A § 3801, et seq., 49 C.F.R. Part 31, and 18
U.S.C.A. § 1001;
b. Federal privacy law, 5 U.S.C.A. § 552;
c. Nondiscrimination and equal employment opportunity laws in accordance
with Title VI of the Civil Rights Act, 42 U.S.C.A. § 2000d; § 303 of the Age
Discrimination Act of 1975, 42 U.S.C.A. § 6102; § 202 of the Americans with
Page 4
Disabilities Act of 1990, 42 U.S.C.A, § 12132 ("ADA"); and Federal transit law, 49
U.S.C.A. § 5332,
d, Mandatory standards and policies relating to energy efficiency that are
contained in the state energy conservation plan issued in compliance with the Energy
Policy and Conservation Act, 42 U.S.C.A. § 6201.
24. Bindinp. Effect. This Agreement, together with the exhibits hereto, constitutes the
entire agreement between the parties and shall be binding upon said parties, their officers,
employees, agents and assigns and shall inure to the benefit of the respective survivors, heirs,
personal representatives, successors and assigns of said parties.
25. Governing Law. The laws of the State of Colorado shall govern the construction,
interpretation, execution and enforcement of this Agreement.
26. Sever4AIity. In the event any provision of this Agreement shall be held invalid or
unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision of this Agreement,
27. Sp
ecial provisions. Special provisions or conditions relating to federal patent law
and rights in data that are applicable to this Agreement are set forth in Exhibit C, attached hereto
and incorporated herein by this reference.
THE NORTH FRONT RANGE TRANSPORTATION
AND
AIR QUALITY PLANNING COtNCIL (MPO)
Cliff Da sonNecutiv Director
PROUSSIONAL:
Anderson & Whitney, P.C.
Certified Public Accountants
By:
Title. -s
STATE OF COLOR -ADO
) ss.
COUNTY OF
The foregoing; instrument was subscribed, sworn to arld acknowledged b�for me this day
of 2004, by
My commission expires:
(kS E A L)
0'
Notary Pu4c is U
Page 5
EXHIBIT A - Scope of Services
Professional will audit the basic financial statements of the MPO as of December 31, 2004 and
for the year then ending. Also, the document the MPO receives from the Professional will
include required supplementary information and additional information that will be subjected to
the auditing procedures applied in the audit of the financial statements as applicable.
The objective of the audit is the expression of an opinion as to whether the financial statements
are fairly presented, in all material respects, in conformity with accounting principles generally
accepted in the United States, and to report on the fairness of the additional information when
considered in relation to the basic financial statements taken as a whole. The objective also
includes reporting on the Schedule of Expenditures of Federal Awards and the MPO's
compliance with laws and regulations and its internal control as required for a single audit.
The audit will be made in accordance with auditing standards generally accepted in the United
States; the standards for financial audits contained in Government Auditing Standards, issued
by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; and
the provisions of OMB Circular A-133, Audits of States, Local Governments, and Non -Profit
Organizations, As such, the audit will include tests of the accounting records, a determination
of major program(s) in accordance with Circular A-133, and other procedures considered
necessary to enable the Professional to express an opinion on the financial statements and to
render the required reports. If the opinion is other than unqualified, the Professional will discuss
the reasons with management in advance.
The audit procedures will include tests of documentary evidence supporting the transactions
recorded in the accounts, tests of physical existence of assets, and direct confirmation with
selected customers, creditors, legal counsel and banks. Whenever possible, MPO personnel
will be used, as well as their schedules, reports and correspondence. At the conclusion of the
audit, the Professional will request certain written representations from the MPO about the
financial statements and related matters.
The audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the basic financial statements; therefore, the audit will involve judgment about the number of
transactions to be examined and the areas to be tested. The audit will be planned and
performed to obtain reasonable rather than absolute assurance about whether the basic
financial statements are free of material misstatement, whether caused by errors, fraudulent
financial reporting, misappropriation of assets, or violations of laws or governmental regulations
that are attributed to the entity or to acts by management or employees acting on behalf of the
entity. As required by the Single Audit Act Amendments of 1996 and OMB Circular A-1 33, the
audit will include tests of transactions related to major federal award programs for compliance
with applicable laws and regulations and the provisions of contracts and grant agreements.
Because an audit is designed to provide reasonable, but not absolute, assurance and because
a detailed examination of all transactions will not be performed, there is an understanding that
there is a risk that material misstatements may exist and not be detected. However, the
Professional will inform the MPO of any material errors and any fraudulent financial reporting or
misappropriation of assets that comes to their attention, unless clearly inconsequential. Any
such matters will be included in the reports required for a single audit.
As required by OMB Circular A-133, tests of controls will be performed to evaluate the
effectiveness of the design and operation of controls that are considered relevant to preventing
or detecting material noncompliance with compliance requirements applicable to each major
federal award program. However, the tests will be less in scope than would be necessary to
render an opinion on those controls and, accordingly, no opinion will be expressed in the report
on internal control issued pursuant to Government Auditing Standards and OMB CircularA-133,
Exhibit A - Page I
The audit is not designed to provide assurance on internal control or to identify reportable
conditions. However, the Professional will inform the governing body or audit committee of any
matters involving internal control and its operation that are considered to be reportable
conditions under standards established by the American Institute of Certified Public
Accountants. Professional will also inform the MPO of any nonreportable conditions or other
matters involving internal control, if any, as required by OMB Circular A-1 33,
The audit will be conducted in accordance with the standards referred to above. As part of
obtaining reasonable assurance about whether the financial statements are free of material
misstatement, the Professional will perform tests of the MPO's compliance with applicable laws
and regulations and the provisions of contracts and agreements, including grant agreements.
However, the objective of these procedures will not be to provide an opinion on overall
compliance and no such opinion will be expressed in the report on compliance,
OMB Circular A-133 requires that the audit be planned and perforrned to obtain reasonable
assurance about whether the auditee has complied with applicable laws and regulations and the
provisions of contracts and grant agreements applicable to major programs. The procedures
will consist of the applicable procedures described in OMB Circular A-133 Compliance
Supplement for the types of compliance requirements that could have a direct and material
effect on each of the MPO's major programs. The purpose of the procedures will be to express
an opinion on the MPO's compliance with requirements applicable to major programs in the
report on compliance issued pursuant to OMB Circular A- 133,
Management Responsibilities: The MPO management will provide the basic information
required for the audit and are responsible for the accuracy and completeness of that
information. The Professional will advise the MPO about appropriate accounting principles and
their application and will assist in the preparation of the MPO's basic financial statements,
including the schedule of expenditures of federal awards, but the responsibility for the basic
financial statements remains with the MPO. This responsibility includes the establishment and
maintenance of adequate records and effective internal control over financial reporting and
compliance, and 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 the auditor in the management representation letter that the
effects of any uncorrected misstatements aggregated by the auditor during the engagement and
pertaining to the latest period presented are immaterial, both individually and in the aggregate,
to the financial statements taken as a whole. Additionally, as required by OMB Circular A-1 33, it
is management's responsibility to follow up and take corrective action on reported audit findings
and to prepare a summary schedule of prior audit findings and a corrective action plan.
Management is responsible for establishing and maintaining internal control and for compliance
with the provisions of contracts, agreements, and grants. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected benefits and
related cost 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, and that federal award
programs are managed in compliance with applicable laws and regulations and the provisions of
contracts and grant agreements.
Exhibit A - Page 2
ISPecifie Audit Apg-roach
Following is a proposed work plan, including audit methodology and the various sources
of information needed:
ACTIVITY Timm
Entrance conference; audit planning
Interim fieldwork to primarily review and evaluate the internal control
structure, and perform tests of controls with the intent of being able to rely
on those controls.
Mailing of bank account confirmations and other confirmations.
Final fieldwork to audit each of the funds of the MPO as well as the
general areas of cash and investments, accounts payable, receivables, and
advances. Information needed will include working trial balances and
budget comparisons for each fund as well as copies of selected account
analyses prepared by the MPO's finance staff. Audit work includes
comparison of activity to prior year as well as tracing large transactions to
supporting documentation, Unusual transactions or activity new to the
MPO will be discussed with management and the contract, agreement,
etc., reviewed for proper accounting
Review of Board minutes for indication of grants, contracts, or agreements
not noted in the audit of fund files. Observation of records and inquiry of
management of any commitments, contingencies, and subsequent events.
Written conununication with your Attorney for information on litigation,
claims, and unasserted claims.
Review the first draft of the financial statements and footnotes. Conduct
exit conference.
Early December
March
Make final presentation of report and management letter to the MPO
Council. A ril
Exhibit A - Page 3
Following is additional requested information on the details of our audit approach:
a. Our approach to understanding your major segments is to first obtain an
understanding of the accounting system and internal controls. T'his may include
review of MPO procedures or accounting manuals, interviews with key personnel,
and walk-throughs of key transactions cycles.
Audit test work over cash typically includes confirmation of balances and tests of
bank reconciliations. Receivables are tested through review of subsequent receipts
and grant billings. Fixed asset depreciation schedules are reviewed, and additions
tested.
Accounts payable are audited through tests of subsequent disbursements and review
of payroll, payroll tax and accrued vacation accruals. Deferred revenue is considered
for any grant receipts received which have not been earned. Advances from members
will be reviewed.
Grant revenue is tested through review of reimbursement requests and possibly
confirmation. Program revenues are compared to prior periods.
Expenditures are tested through disbursement testing and analytical review.
b. A detailed time budget by staff level and proposed segment is as follows:
Shareholder
Manager
In -Charge
Planning
1
6
4
Client Conferences
2
3
--
Internal Control Review
--
--
4
Audit test work
I
Is
20
Research and Supervision
I
I
--
Workpaper Review
2
2
--
Review Financial Statements and.MDA
2
2
4
Management Letter
I
I
--
Total
10
---- 30
32
c. Audit sampling is anticipated to be used in the audit, particularly in transaction
testing over payroll and purchasing/disbursements. We do not rely on sampling
exclusively, as we consider it important to test large or unusual transactions or
balances on a 1009/6 basis, not a sample basis. Our firm's approach to sampling is
usually that of "judgmental** sampling as opposed to "statistical" sampling.
One arc a that absolutely requires additional audit samples is the Single Audit
procedures over federal programs. Adequate samples must be selected in the major
program for the auditor to report on internal controls and give an opinion on
compliance with laws and regulations. We use sample sizes of 25-30 expenditures
per major program, as long as controls are reasonable and there have not been
significant exceptions in previous years. We would propose to select these
transactions systematically from the population of all expenditures subject to full or
partial federal reimbursement. Special cam would be taken to ensure that a wide
range of transactions was selected including payroll, benefits, capital outlay,
payments to vendors, and payments to program participants, if any.
Exhibit A - ['age 4