HomeMy Public PortalAbout100_032_Mauldin & Jenkins Proposal pages 19 to end AULDIN ry
City of Tybee Island,Georgia
IIENKINS Proposal to Serve
4. Preliminary draft of all reports will be submitted to the City prior to their release. The City will
review and approve the release of all draft reports.
Any other reports required shall be submitted to City Tybee Island, Georgia upon request or as required
by federal,state,or local programmatic audit requirements.
A written management letter containing matters not required to be included in the auditor's report on
compliance and on internal control over financial reporting will be prepared and presented to the City at
the conclusion of each audit. We will offer recommendations for appropriate corrective action for each
item contained in the management letter as well as the internal control over compliance report.
One final thought is the acknowledgement and communication surrounding Statement of Auditing
Standards (SAS) No. 114, The Auditor's Communication with Those Charged with Governance
(supersedes SAS No. 61, Communication with Audit Committees). We will provide, as required,
communications to management on each of the following:
1. Our responsibility, as your auditors, under auditing standards generally accepted in the
United States of America.
2. Accounting policies.
3. Management's judgments and accounting estimates.
4. Financial statement disclosures.
5. Related accounting matters.
6. Significant difficulties encountered in performing the audit.
7. Audit adjustments.
8. Disagreements with management.
9. Representations from management.
10. Management consultation with other accountants.
11. Significant issues discussed with management.
12. Other information in documents containing audited financial statements.
13. Independence.
This report will be provided in association with our management recommendations.
Audit Methodoloav and the General Audit Work Plan to Accomplish the Scone
Mauldin & Jenkins believes that we are uniquely qualified to perform the audit of the City. In a time in
which very significant changes continue to be implemented in the City's financial reporting model, it is
imperative for the City's auditors to understand the City's financial reporting environment and processes.
The team proposed to serve you is made up of individuals who have significant experience in auditing
local governments of various sizes in the Southeast.
Our audit of the financial statements will be conducted in accordance with auditing standards generally
accepted in the United States of America and will conform to the standards as set forth in the following:
• "Generally Accepted Auditing Standards" developed by the American Institute of Certified
Public Accountants(AICPA).
• "Government Auditing Standards"issued by the Comptroller General of the United States.
• "Audits of State and Local Government Units" prepared by the State and Local Government
Committee and published by the AICPA.
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City of Tybee Island,Georgia •
& ENKINS Proposal to Serve 4,
Our audit will include such tests of the accounting records and such other auditing procedures as we
consider necessary in the circumstances,which include,but are not limited to,those procedures necessary
to test compliance and to disclose non-compliance with specified laws,regulations,and contracts.
We will use Firm manuals specifically designed for governments to develop audit programs tailored to
the City which incorporate the requirements set forth above. We anticipate that these procedures will
enable us to express our professional opinion that the financial statements of the City present fairly, in all
material respects, the financial position and results of operations of the various opinion units in
conformity with accounting principles generally accepted in the United States of America. If conditions
are discovered which lead to the belief that material errors, defalcations, or other irregularities exist which
might prohibit us from expressing an unqualified opinion or if any other circumstances are encountered
that require extended services,we will promptly advise the City. No extended services will be performed
unless they are authorized in contractual agreement or in an amendment to the agreement.
Upon notification of obtaining the audit contract with the City we would provide to the City a timetable
for the audit process,a detailed audit plan,and a list of all schedules to be prepared by the City. Adequate
supervision and lead time will be provided by the auditor with respect to assistance needed by the City
staff.
Sanlplin2 Techniques and the Extent to Which Statistical Sampling is to be Used
in the En 'a'enlent
Our approach to auditing relies heavily on the use of audit sampling as provided in Statement on Auditing
Standards No. 39, "Audit Sampling" as amended by SAS No. 111. We would plan to utilize audit
sampling whenever a decision is made to apply a specific audit procedure to a representative sample of
items within the account balance or class of transactions with the objective being reaching a conclusion
about the entire balance or class.
We anticipate using audit sampling on the following types of audit tests:
1. Substantive tests of details of balance sheet account balances.
2. Substantive tests of details of transactions.
3. Tests of controls
4. Tests of compliance with laws and regulations
Our use of audit sampling will be based on the guidance in SAS 39 and SAS 1 l I and the AICPA Audit
and Accounting Guide-Audit Sampling.
Extent of the Use of EDP Software in the Engagement
The Management Advisory Services (MAS) department of Mauldin & Jenkins includes certain
individuals who have had substantial training in the accounting, auditing, and use of electronic data
processing (EDP) Systems. To compliment these highly trained individuals, all members of the audit
staff have also had significant training in computer auditing techniques. Mauldin & Jenkins uses a very
detailed and structured approach in using computer auditing techniques, which has been extremely
successful for us in our past engagements.
At the start of the engagement during our planning phase, we will assess the computer systems used by
the City and determine whether computer aided auditing techniques could be used. This approach would
potentially consist of downloading trial balances, detail journals, and selected transaction files into our
Mauldin&Jenkins CPA's,LLC 20
&JAULDIN
ENKINS City of Tybee Island,Georgia *,
Proposal to Serve
Our audit will include such tests of the accounting records and such other auditing procedures as we
consider necessary in the circumstances,which include,but are not limited to,those procedures necessary
to test compliance and to disclose non-compliance with specified laws,regulations,and contracts.
We will use Firm manuals specifically designed for governments to develop audit programs tailored to
the City which incorporate the requirements set forth above. We anticipate that these procedures will
enable us to express our professional opinion that the financial statements of the City present fairly, in all
material respects, the financial position and results of operations of the various opinion units in
conformity with accounting principles generally accepted in the United States of America. If conditions
are discovered which lead to the belief that material errors,defalcations,or other irregularities exist which
might prohibit us from expressing an unqualified opinion or if any other circumstances are encountered
that require extended services,we will promptly advise the City. No extended services will be performed
unless they are authorized in contractual agreement or in an amendment to the agreement.
Upon notification of obtaining the audit contract with the City we would provide to the City a timetable
for the audit process,a detailed audit plan, and a list of all schedules to be prepared by the City. Adequate
supervision and lead time will be provided by the auditor with respect to assistance needed by the City
staff.
Samplink Techniques and the Extent to Which Statistical Samplink Alto be Used
in the Engagement
Our approach to auditing relies heavily on the use of audit sampling as provided in Statement on Auditing
Standards No. 39, "Audit Sampling" as amended by SAS No. 111. We would plan to utilize audit
sampling whenever a decision is made to apply a specific audit procedure to a representative sample of
items within the account balance or class of transactions with the objective being reaching a conclusion
about the entire balance or class.
We anticipate using audit sampling on the following types of audit tests:
1. Substantive tests of details of balance sheet account balances.
2. Substantive tests of details of transactions.
3. Tests of controls
4. Tests of compliance with laws and regulations
Our use of audit sampling will be based on the guidance in SAS 39 and SAS 111 and the AICPA Audit
and Accounting Guide-Audit Sampling.
Extent of the Use of EDP Software in the En2aRement
The Management Advisory Services (MAS) department of Mauldin & Jenkins includes certain
individuals who have had substantial training in the accounting, auditing, and use of electronic data
processing (EDP) Systems. To compliment these highly trained individuals, all members of the audit
staff have also had significant training in computer auditing techniques. Mauldin & Jenkins uses a very
detailed and structured approach in using computer auditing techniques, which has been extremely
successful for us in our past engagements.
At the start of the engagement during our planning phase, we will assess the computer systems used by
the City and determine whether computer aided auditing techniques could be used. This approach would
potentially consist of downloading trial balances, detail journals, and selected transaction files into our
Mauldin&Jenkins CPA's,LLC 20
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& ENKINS Cite of Tybee Island,Georg,
Proposal to Serve
software through IDEA. This may decrease time spent in initial file setup, trial balance setup, and data
integrity testing.
The trial balance downloaded will then be used to agree to the ultimate draft of the City's financial
statements ensuring that all adjustments and balances are brought forward into the financial statements
and providing a clean audit trail for review and support of the City's financial statements.
ripe and Extent of Analytical Procedures to be Used in the Enka, erent
Analytical procedures can be applied to almost every financial statement amount and are often less costly
to apply than tests of details. It is therefore an efficient audit strategy to employ analytical procedures to
the maximum extent possible, and vary the required extent of substantive tests of details inversely with
the degree of assurance already obtained.
The elements of analytical procedures we plan to consider are as follows:
1. Identify the factors on which a given accounting result should depend;
2. Determine the approximate relationship between the accounting result and those
underlying factors;
3. Predict what the current results should be if that relationship continued;
4. Compare the actual current result to the prediction;
5. Investigate and corroborate significant variances between the actual result and the
prediction; and
6. Reach a conclusion as to the reasonableness of the reported result.
Types of analytical procedures employed will include:
1. Reviewing changes from prior years for reasonableness.
2. Scanning accounts for items larger or smaller than expected when compared to budgets
or forecasts.
3. Reviewing and comparing logical relationships between years (e.g., payroll taxes and
benefits to wages, etc.). Comparisons between years can be made more effective when
logical relationships between elements of the financial statements that would be expected
to conform to the predictable pattern are used to develop trends. This is primarily
accomplished through the use of ratios.
4. Analyzing and comparing nonfinancial information, such as number of taxable
properties,geographical area, number of employees,etc.
All analytical procedures performed as substantive tests are documented on each applicable audit
program.
Approach to be Taken to Gain and Document an Understandin' of the City's
Internal Control
For purposes of an audit of the financial statements and statutory, regulatory and contractual compliance,
the City's control structure consists of the following five(5)elements as they relate to the City's ability to
conduct operations and use resources in accordance with management's authorization and consistent with
laws, regulations, contracts and policies, and to record, process, summarize, and report financial data
consistent with assertions embodied in the financial statements: the control environment; risk assessment,
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& ENKINS City of Ti bee Island,Georg
Proposal to Serve
control activities, information and communication processes/systems, and monitoring. The internal
control structure and its policies and procedures are an important source of information about the types
and risks of potential material misstatements that could occur in the financial statements and violations of
statutory, regulatory and contractual requirements. This information is essential for effective audit
planning and in designing effective and efficient audit tests.
In our understanding of the City's internal control structure we will obtain knowledge about:
1. Ilow internal control structure policies,procedures and records are designed;
2. Whether internal control structure policies, procedures and records have been placed in
operation, i.e.,whether the City is using them;
3. Whether internal control structure policies, procedures and records are designed
effectively, i.e., whether they are likely to prevent or detect material misstatements or
compliance violations on a timely basis; and
4. Whether internal control structure policies, procedures and records are operating
effectively.
Auditing standards generally accepted in the United States of America require the auditor to document
our understandings of the internal control structure elements. The form and extent of documentation is
flexible. Generally, the more complex an entity's internal control structure and the more extensive the
procedures performed to obtain the understanding, the more extensive our documentation should be. In
addition to memos we plan to use specific designed forms and questionnaires to document our
understanding of the internal control structure. Recent changes in auditing standards, known as the risk
assessment standards, denote that the auditor is not required to test internal control so as to rely on them
to reduce other test work, but do not allow for only inquiry procedures related to internal control. We are
required, and will perform, other procedures, such as walkthroughs and observation, related to controls
over significant financial statement and audit assertions.
Approach to be Taken in Determining Laws and Regulations that will be Subject
to Audit Test Work
Our approach to be taken to determine the laws and regulations that will be subject to audit test work will
include procedures designed to identify requirements found in legal or legislative data, administrative
regulations, and documents associated with grant and contract arrangements. The following procedures
and policies will be applied depending on the nature and materiality of the laws and regulations:
1. During the planning phase, the type of audit to be performed, as it relates to compliance
matters,will be communicated to all personnel assigned to the engagement.
2. Obtain a list of all federal award programs from which the client received and expended
funds and identify, using the risk-based approach,the major programs and any nonmajor
programs that are to be treated as major programs, if a program-specific audit, identify
the award program to be audited.
3• Identify applicable state and local statutory and regulatory requirements and contractual
requirements.
4. Plan and document the audit procedures to be performed relative to applicable state and
local statutory and regulatory requirements and contractual requirements.
5. Perform and document federal, state, and local statutory, regulatory and contractual
compliance audit procedures as deemed to be applicable and appropriate during the
planning stage of the engagement.
6. Make specific inquiries of management concerning the following matters:
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1/JAULDIN
ENKINS City of Tybee Island,Georgia `'
Proposal to Serve i
a. The City's compliance with Iaws and regulations.
b. The City's policies relative to the prevention of statutory, regulatory and contractual
violations.
c. The use of directives issued by the City and periodic representations obtained by the
City from officials and other management personnel at appropriate levels of authority
concerning compliance with laws and regulations.
Planned Use of Specialists
At this time, we do not plan on the use of any outside specialist. All work to be performed will be
performed by Mauldin &Jenkins partners and staff. Of course, certain staff has certain specialties, and
they will be called on as needed.
We do plan on using the results of reports provided to the City from their specialists. This would include,
when applicable,the following types of specialists:
• Actuaries of retirement plans and other benefit plans
• Engineers
♦ Health-care providers and,or third-party administrators
♦ Retirement plan administrators
♦ Fixed assets valuation professionals
♦ Bond Underwriters
♦ Attorneys consulted by the City during the year
Approach to be Taken in Drawinr Audit Samples for Purposes of Tests of
Compliance
Applicable auditing standards state that, in testing for compliance with laws and regulations,the number,
selection, and testing of transactions is based on the auditor's professional judgment. None of the
guidelines, primarily SAS No. 74, explain whether this requirement to select a representative number for
testing compliance means that audit sampling is necessary.
The two (2) possible approaches to audit sampling are nonstatistical and statistical. SAS No. 39 as
amended by SAS No. 1 1 1, Amendment to Statement on Auditing Standards No. 39, Audit Sampling
indicates that both of these approaches are capable of producing sufficient evidential matter, if properly
applied. The types of procedures that are applied are not determined by the sampling approach used.
Either approach may be used to apply whatever tests of details deemed necessary in the circumstances.
The importance of professional judgment cannot be overemphasized as it applies to the evaluation of the
adequacy of evidential matter generated by the sampling approach. Regardless of the sampling approach
selected, we will properly plan, perform, and evaluate the results of the sample. Professional judgment
must be used to relate the sample results to other evidential matter when we form a conclusion about
compliance with laws and regulations. It should be noted, however, that not all tests of compliance or
controls are transaction related. If we decide to use audit sampling, attention is focused on which
sampling approach (statistical or non-statistical) to use. Substantial information is given in the AICPA
Sampling Guide and several college and professional books on the use of various statistical sampling
approaches.
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& ENKINS City of Tybee Island,Georgi • l'3
Proposal to Serve
The basic requirements that relate to all compliance related samples, statistical and nonstatistical, are as
follows:
1. Planning. We will relate the population to the objective of the audit test; i.e., defining the
population and sampling unit.
2. Selection. We will select items that can be expected to be representative of the population.
3. Evaluation. We will project sample results to the population and consider sampling risk.
In a compliance sampling application, the population is defined as all items that constitute the account
balance or class of transactions, or the portion of the balance or class, being tested (i.e., all expenditures
of the City above a certain threshold required to be bid). The population for a substantive sample usually
is the account balance or class of transactions excluding those items selected for testing because of
individual significance. The term individually significant item encompasses two(2)types of items:
1. Individually significant dollar items.
2. Unusual items(that is, items that have audit significance by their nature).
Due to the nature of tests of controls, we ordinarily are not concerned with identifying individually
significant items when tests of controls are performed using audit sampling.
Sampling results can be projected only to the population from which the sample is drawn. The use of the
wrong population for a sampling application could mean that conclusions based on the sample are invalid
for our purpose.
The sampling units are the individual items that are subjected to tests and that represent the components
of the population. It is important to properly identify the sampling unit before the sample is selected to
produce an efficient and effective sampling application. Examples of sampling units would be individual
capital disbursements, etc. The determination of the specific sampling unit is influenced by the following
considerations:
1. The sampling unit should produce an efficient sampling plan.
2. The sampling plan must be effective to accomplish its objectives.
3. The nature of the audit procedures can determine the sampling unit to be used. SAS No. 111
requires a "representative sample". There are several commonly used methods of selecting
samples that meet the criteria of representativeness stipulated by SAS No. 111. The
following are some of those methods:
Random selection. Regardless of the method of sampling used, statistical or
nonstatistical,a random selection provides each item in the population an equal chance of
being selected. Numerous random selection methods are discussed in the AICPA
Sampling Guide, including stratified random sampling.
Systematic sampling. This method can be used with nonstatistical or statistical
sampling to give every item in the population an equal chance of being selected if a
random start is used. However, it may not produce an equal opportunity for all
combinations of sampling units to be selected unless numerous random starts arc made.
The population is divided by the number of sample items to determine the sampling
interval to use.
Haphazard selection. Under this method,nonstatistical sample items are selected in no
specific pattern without bias for or against any items in the population. This could be
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& ENKINS Proposal to Sen-e I i
done by selecting a sample of items from the paid invoices for the year if there were no
bias for or against large ones. We may use this method provided care is taken to be sure
no conscious bias is added to the selection process.
We will evaluate whether the sample selected seems representative of the population to be tested. If the
sample does not seem representative,we would reselect.
For substantive tests of details, we will, if practical, stratify any remaining population. Generally, the
remaining population should be divided into at least two subgroups that are more similar in dollar
amount. One useful approach to stratification is to base this division on the average amount of an item in
the remaining population. All items above the average amount would be one subgroup, and all items
below that amount would be the other subgroup.
For all items in the population to have a chance to be selected, we will determine that the sample
population actually includes all the items (e.g.,capital disbursements, etc.)comprising the balance. There
are many ways to determine the completeness of a sample population,including:
1. If the sample is selected from a trial balance, we can foot the trial balance and reconcile the
total to the account balance.
2. If the items are numerically sequenced, we can scan the accounting records to account for
the numerical sequence of items in the population and select the sample from that sequence.
The two (2) sampling forms presented both include a step that allows the auditor to document how the
completeness of the sample population was considered. Whenever practical, we will consider using
random selection (with a random number table or microcomputer-generated numbers) or systematic
selection. Haphazard selection may be used when the population is not numbered or when other
circumstances make use of a random-based method impractical. Using one of these random-based
methods does not make the sampling application statistical.
The evaluation of sample results has two(2)aspects. We will need to project the noncompliance. Also,
we will need to consider the sampling risk. In a statistical sample, sampling risk must still be considered
and restricted to a relatively low level but cannot be objectively measured. This is the primary conceptual
distinction between statistical and non-statistical sampling. In the two (2) non-statistical sampling
approaches presented in this section, sampling risk is assessed by considering whether the rate or amount
of exceptions identified in the sample exceed the expected rate or amount of exceptions used in designing
the sample.
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City of TS-bee Island,Georgia
& ENKINS Proposal to Serve
Additional Data
Free Continuing Education
We provide free quarterly continuing education for all of our governmental clients. Each quarter we pick
a couple of significant topics tailored to be of interest to governmental entities. In an effort to
accommodate our entire governmental client base, we offer the sessions several times per quarter at a
variety of client provided locations resulting in greater networking among our governmental clients. We
normally see approximately 100 people per quarter. We obtain the input and services of experienced
outside speakers along with providing the instruction utilizing our in-house professionals. Examples of
subjects addressed in the past few quarters include:
1) American Recovery&Reinvestment Act(ARRA)information and issues;
2) GASB updates(several sessions);
3) Internal Controls Over Revenue and Cash Receipting;
4) CAFR Preparation;
5) Collateralization of Deposits and Investments;
6) SPLOST Accounting, Reporting and Compliance;
7) Internal Controls Over Accounts Payable,Payroll and Cash Disbursements;
8) Capital Asset Accounting Processes and Controls;
9) Grant Accounting Processes and Controls;
10) American Recovery&Reinvestment Act(ARRA)Updates;
11) Policies and Procedures Manuals;
12) Segregation of Duties;
13) GASB No.51 —Intangible Assets;
14) Single Audits for Auditees;
15) GASB No. 54—Governmental Fund Balance(subject addressed twice);
16) Best Budgeting Practices,Policies and Processes;
17) Internal Revenue Service(IRS)Compliance Issues, Primarily Payroll Matters;
18) CAFR Preparation(2 Day Course which is scheduled next).
19) GASB 60 — Service Concession Arrangements and GASB 61 — The Financial
Reporting Entity: Omnibus—An amendment of GASB Statements No 14 and No 34
20) Webcast-GASB No. 63 and No.65-Deferred Inflows and Deferred Outflows
21) Webcast-GASB No. 60-Service Concession Arrangements
22) Webcast—GASB No 61 —The Financial Reporting Entity: Omnibus
Governmental Newsletters
We produce newsletters tailored to meet the needs of governments. The newsletters have addressed a
variety of subjects and are intended to be timely in their subject matter. The newsletters are authored by
Mauldin & Jenkins partners and managers, and are not purchased from an outside agency. The
newsletters are produced and delivered periodically, and are intended to keep you informed of current
developments in the government finance environment. The following topics have been addressed in our
newsletters: (a) Deposit Collateralization, (b) Sales Tax CoIIections, (c) Single Audit and American
Recovery & Reinvestment Act (ARRA) funds, (d) FDIC's Dodd-Frank Act's Effect on Deposits, (e)
SPLOST Expenditures, (0 OMB A-133 Compliance Supplement, (g) GASB No. 54 — Fund Balance (3
separate issues), (h) Property Tax Assessments, (i) Escheat Laws on Unclaimed Property, (j)
Supplemental Social Security for Inmates,(k)Government Employee or Independent Contractor?(1)New
GASB Standards,and(m)Clarity Project—Group Audit Standards.
Mauldin&Jenkins CPA's,LLC 26
AU LDIN ° =
City of Tvbee Island,Georgia
1/JENKINS Proposal to Serve
,r
Hikh Percentage of Partner & Manager involvement
Every firm has partners. Every firm has managers. However, how they are involved in audit
engagements and the audit process varies greatly.
At Mauldin &Jenkins, we believe it is important for our partners and managers to be highly involved in
the audit process, including fieldwork. Why have experience if you don't bring it to the field? That being
said,we believe it is important to note that our proposal includes the following:
• Substantial Partner Hours as Compared to Total Hours.
• Substantial Manager Hours as Compared to Total Hours.
• Approximately 55% of all anticipated hours of service are partner and manager hours which
means we bring our experience to the field and not just the front end and back end of the
audits.
• This is a Value-Added Concept most firms do not employ.
Fees for Audit Services
Listed below is an all-inclusive maximum fee for the annual financial audit for the years ended June 30,
2013 through 2015. It is our understanding that the City does not currently require a Single Audit to be
performed. Should such services ever be required, the City and Mauldin & Jenkins would arrive at an
appropriate fee for such services. Our fees for audit services are as follows:
Year Ended June 30,2013 $ 23,000
Year Ended June 30,2014 $ 23,000
Year Ended June 30,2015 $ 23,000
Mauldin&Jenkins CPA's,LLC 27
AULDIN Ns—"„
City of Tybee Island,Georgia
& ENKINS Proposal to Serve
High Percentage of Partner c . Manager Involvement
Every firm has partners. Every firm has managers. However, how they are involved in audit
engagements and the audit process varies greatly.
At Mauldin &Jenkins, we believe it is important for our partners and managers to be highly involved in
the audit process, including fieldwork. Why have experience if you don't bring it to the field? That being
said,we believe it is important to note that our proposal includes the following:
■ Substantial Partner Hours as Compared to Total Hours.
• Substantial Manager Hours as Compared to Total Hours.
• Approximately 55% of all anticipated hours of service are partner and manager hours which
means we bring our experience to the field and not just the front end and back end of the
audits.
• This is a Value-Added Concept most firms do not employ.
Fees for Audit Services
Listed below is an all-inclusive maximum fee for the annual financial audit for the years ended June 30,
2013 through 2015. It is our understanding that the City does not currently require a Single Audit to be
performed. Should such services ever be required, the City and Mauldin & Jenkins would arrive at an
appropriate fee for such services. Our fees for audit services are as follows:
Year Ended June 30,2013 $ 23,000
Year Ended June 30,2014 $ 23,000
Year Ended June 30,2015 $ 23,000
Mauldin&Jenkins CPA's,LLC 27
81\jAULDIN
, ENKINS City of Tybee Island,Georgia •
Proposal to Serve F
Closing
We appreciate the opportunity to continue serving City of Tybee Island, Georgia. We believe Mauldin&
Jenkins is the "right" firm for the City. Our experience and knowledge in the governmental sector of
accounting is vast and ever-improving. We would be very pleased to continue sharing our experience and
understanding of governmental accounting and operations for the benefit of the City.
We would greatly appreciate you recommending us for your continued audit needs. Should you or
anyone at the City have any questions with regards to this proposal or about Mauldin & Jenkins, please
feel free to contact us.
AULDIN
& ENKINS
CERTIFIED PUBLIC ACCOUNTANTS,LLC
Mauldin&Jenkins CPA's,LLC 28
Appendix A
Quality Control Processes
Copy of Last Peer Review Report
1 Mauldin&Jenkins CPA's,LLC
Duality Control Process
Internal Review Process
All audit and other attest engagements performed at Mauldin & Jenkins receive a high level of quality
control reviews. On an engagement such as the City, a partner or client executive would be in the field
performing the engagement for a great amount of time. We believe this allows our firm to provide a high
level of expertise and efficiency during the conduct of audit fieldwork which is a vital part to any audit
engagement. We believe this aids our being able to get the engagement done quickly without creating
additional headaches to our clients.
A manager reviews all the audit work performed, which is followed by a partner review. Once these
reviews are conducted and completed, an independent partner to the engagement will review the audit
working papers and the respective financial reports. We believe this multi-review process is important in
providing a high-level product.
External Quality Control Review
The accounting profession, through the American Institute of Certified Public Accountants, formed the
Division for CPA firms to provide a new level of self-regulatory control. The division consists of two
sections; the SEC Practice Section and the Private Companies Practice Section. Membership is voluntary
in either or both sections. There are requirements for membership in each section, which include
mandatory professional liability insurance at specified levels, mandatory continuing education for each
member of the professional staff and a tri-annual independent review of a firm's quality control system in
its practice of public accounting. Mauldin& Jenkins, LLC has been a member of both sections from the
inception of the Division for Firms.
We are proud to announce that Mauldin & Jenkins, LLC has met all of the membership requirements,
including the review process. In their tri-annual report dated October 21,2011, our reviewing firm gave a
"clean" opinion on our system of quality control for our accounting and audit practice. A copy of the
report on our most recent external quality control review is provided on the following pages. The quality
control review included a review of specific government engagements. No letter of comment was
received as a result of this review. We are quite proud to be one of the few Georgia-based firms to have
undergone this review and to have received an unqualified opinion from a large reputable national firm.
Desk Reviews or Field Reviews
Only one desk reviews or field reviews have been performed on Mauldin & Jenkins in many years. In
January 2008, as part of the Federal Department of Education's random testing of the audits of local
boards of education, a review was performed by the Federal Office of Inspector General (OIG)regarding
a Single Audit engagement of a local board of education. We are quite pleased to note the examiner
provided Mauldin&Jenkins a letter of high marks for the performance of the respective Single Audit and
this comes at a time when Federal regulators are condemning the profession for poor performance of such
Single Audits. Unofficially and orally provided,the examiner noted this Single Audit engagement to
be the best such engagement reviewed in his experience.
No Disciplinary Actions
Mauldin & Jenkins has not had any disciplinary actions taken (nor are any pending) against the firm
during the past three(3)years with State or Federal regulatory bodies or professional organizations.
Mauldin&Jenkins CPA's,LLC
Clifton
Gunderson LLP
Certified Public Ac c cxintants 3 Cunsultanl.
System Review Report
To the Partners of Mauldin&Jenkins, LLC
and the AICPA National Peer Review Committee
We have reviewed the system of quality control for the accounting and auditing practice of
Mauldin &Jenkins, LLC (the firm) applicable to non-SEC issuers in effect for the year ended
May 31, 2011. Our peer review was conducted in accordance with the Standards for Performing
and Reporting on Peer Reviews established by the Peer Review Board of the American Institute
of Certified Public Accountants. The firm is responsible for designing a system of quality control
and complying with it to provide the firm with reasonable assurance of performing and reporting
in conformity with applicable professional standards in all material respects. Our responsibility is
to express an opinion on the design of the system of quality control and the firm's compliance
therewith based on our review The nature, objectives, scope, limitations of, and the procedures
performed in a System Review are described in the standards at www.aicpa.org/prsummary.
As required by the standards, engagements selected for review included engagements performed
under the Government Auditing Standards; audits of employee benefit plans, and audits performed under
FDICIA.
In our opinion, the system of quality control for the accounting and auditing practice of Mauldin & Jenkins,
LLC applicable to non-SEC issuers in effect for the year ended May 31, 2011, has been suitably
designed and complied with to provide the firm with reasonable assurance of performing and reporting in
conformity with applicable professional standards in all material respects. Firms can receive a rating of
pass, pass with deficiency(ies) or fail. Mauldin & Jenkins, LLC has received a peer review rating of pass-
Phoenix, Arizona
October 21, 2011
Mauldin&Jenkins CPA's,LLC - - i
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