HomeMy WebLinkAboutAgenda Report - August 17, 1994 (28)4
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CITY OF LODI
AGENDA TITLE: Audit Services
MEETING DATE: August 17, 1994
PREPARED BY: Finance Director
COUNCIL COMMUNICATION
RECOMMENDATION: By motion action, the City Council authorize the City Manager to
enter into an agreement with KPMG Peat Marwick to audit the
City's financial records for fiscal year 1993-94 ending June 30,
1993.
BACKGROUND: The agreement with KPMG Peat Marwick for audit services ended
with the audit for fiscal year ending June 30, 1993. Accordingly, the
City must enter into an agreement with Peat Marwick for the audit
of its financial records for the fiscal year ending June 30, 1994.
Prior to the next audit, City staff will prepare a Request for Proposal for audit services and
forward this request to all qualified firms for their proposal in accordance with the Single Audit
Act. At this time the City Council will determine the audit firm to be employed by the City to
conduct annual audits for the next five years.
FUNDING: Funding was approved in the 1994-95 Budget.
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THOMAS A. PETERSON
City Manager
Harold D. Flynn
Finance Director
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KFMG Peat Marwick
400 Capital MM Telephone 918 448 4700
Sacramento. CA 95814
July 14, 1994
Mr. Dixon Flynn
Finance Dire or
City of Lodi
221 W. Pine Street
Lodi, California 95241-1910
Dear Dixon:
Moto 918 554 1199
RliCE VEt)
JUL 1 n 1994
Finance Delp!.
We arc pleased to submit this engagement letter for the audit of the City of Lodi (the "City") for
the year ended June 30, 1994. We will audit the Comprehensive Annual Financial Repon of
the City, perform a Single Audit, perform the investment agreed-upon procedures report, and
complete the appropriation limit agreed-upon procedures report. This letter describes the scope
of our audits, sets fonh our agree -upon fees, and proposes a payment schedule for these fees.
KPMG Peat Marwick ("Peat Marwick") will conduct the audits in accordance with generally
accepted auditing standards with the objective of expressing an opinion as to whether the
presentation of the above -referenced financial statements, taken as a whole, conform with
generally accepted accounting principles. In conducting the audits, we will perform tests of the
accounting records and such other procedures as we rJosider necessary in the circumstances to
provide a reasonable basis for our opinion on the financial statements. We will also assess the
accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
The City agrees that all records, documentation, and information we request in connection with
our E.udit will be made available to us, that all material information will be disclosed to us, and
that we will have the full cooperation of the City's personnel. As required by generally
accepted auditing standards, we will make specific inquiries of management about the
representations embodied in the financial statements and the effectiveness of the internal control
structure, and obtain a representation letter from management about these matters. The
responses to our inquiries, the written representations, and the results of audit tests comprise
the evidential matter we will rely upon in forming an opinion on the financial statements.
It should be understood that management of the City has responsibility for the financial
statements referred to above and all representations contained therein. Management of the City
is also responsible for the adoption of sound accounting policies and the implementation of
recordkeeping and an internal control structure to maintain the reliability of the financial
statements and to provide reasonable assurance against the possibility of errors and
irregularities that are material to the financial statements.
An audit is designed to obtain reasonable assurance about whether the financial statements are
free of material misstatement. Even a material misstatement may remain undetected, however,
• •
INNIPPeat Marwick
Mr. Dixon Flynn
Finance Director
City of Lodi
July 14. 1994
Page 2
by an audit performed in accordance with generally accepted auditing standards. The City
releases and will indemnify and hold harmless Peat Marwick and its personnel from any
claims, liabilities, costs, and expenses relating to our services under this letter, except to the
extent determined to have resulted from the intentional or deliberate misconduct of Peat
Marwick personnel. Also, our maximum liability to the City arising for any other reason
relating to services rendered under this letter shall be limited to three times the amount of fees
paid to us for these services.
While we are not engaged to report on the City's internal control structure, we will furnish to
you any reconunendations about the internal control structure that we note during the audit
which appear to be of significance under the circumstances.
Based upon our discussion we agreed that our audit fee will be $31,500 for June 30, 1994.
Our fees for special or nonrecurring services during the year will be billed based upon our
billing rates for the professional involved. Circumstances encountered during the performance
of the audit that warrant additional time or expense could cause us to be unable to complete the
audit within the above estimates. We will endeavor to notify you of any such circumstances as
they are assessed. In the event Peat Marwick is requested to reproduce its working papers or
allow review of such working papers by the State Controller's Office, the General Accounting
Office or other parties, the City shall reimburse Peat Marwick at standard billing rates for its
time and expenses. Peat Marwick will also be reimbursed at standard billing rates for time and
expenses, including reasonable attorney's fees, in response to any subpoena or other legal
process to which Peat Marwick is not a party to.
Peat Marwick will invoice you periodically for services performed and expenses incurred since
the last invoice. All invoices shall be paid within 45 days after the date thereof. Any invoice
not paid within the 45 days shall bear interest from its due date at the rate of 1.0 percent per
month. In the event any invoice is not timely paid as set forth herein, then upon five days
written notice to Dixon Flynn, Peat Marwick may temtinate its performance hereunder and will
not be responsible for any loss, costs, or expense thereby resulting.
We appreciate the opportunity to be of service to you. 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,
KPMG PEAT MARWICK
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Peat Marwick
Mr. Dixon Rynn
Fmance Dbector
City of Lodi
July 14, 1994
Page 3
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The services described in the foregoing letter are in
accordance with our requirements and acceptable to us.
The City of Lodi
Signature and tide Thanes A. Peterson, City Manager
Date
AITEST:
Jennifer M. Perrin, City Clerk
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RBSOLLTTION NO. 94-97
A RESOLUTION OF TSR LODI CITY COUNCIL
AUTHORIZING THE CITY MANAGER TO +m....,a AGREEMENT
WITH KPMG PEAT MARWICK TO , r , i. ra .011. , THE ANNUAL AUDIT
FOR FISCAL YEAR 1993-94
BB IT RESOLVED, that the Lodi City Council hereby approves
entering into an agreement with KPNG Peat Marwick for the purpose of
performing an annual audit of the City's financial records for fiscal
year 1993-94; and
du..LAMA% RESOLVED, that the City Manager and City Clerk are hereby
authorised to execute said Agreement on behalf of the City.
Dated: August 17, 1994
I hereby certify that Resolution No. 94-97 was passed and adopted
by the Lodi City Council in a regular meeting held August 17, 1994 by
the following vote:
Ayes: Council Members - Pennino, Snider and Sieglock (Mayor)
Noes: Council Members - None
Absent: Council Members - Davenport and Mann
ifer Mrl Perrin
City Clerk
94-97