HomeMy Public PortalAboutMauldin Jenkins Letter of Engagement 7-24-19.pdf81AULDIN
L ENKINS
July 24, 20.19
Honorable Mayor and Members of the
City Commission
City. of Tybee. Island, Georgia
P.O. Box 2749
Tybee Island.., Georgia 31328.
Attn: Angela Hudson, Finance Director and
Shawn Gillen,.City Manager
We are pleased to confirm aur understanding of the services we are to provide the. City of Tybee Island, Georgia
.(the "City") for the year ended June 30, 2019: We .will audit .the financial statements of the governmental
activities, the business -type activities, each major fund, and the aggregate remaining fund information, including
the related notes .to the financial statements; which collectively comprise the basic financial statements, of the
City as of and for. the year then ended. These statements will include the budgetary comparison information for
the General Fund. Accounting.standards.generally accepted in the United.States of America. provide. for certain
required supplementary information ('RSI"), such as. management's discussion and analysis ("MD&A"), to
supplement the City's basic financial statements. Such information; although not a part of the: basic financial
statements, is required by -the Governmental Accounting Standards Board.who considers it to bean essential part.
of financial reporting for .placing the basic financial statements in an .appropriate operational, econornic, :or
historical context. As part.:of our engagement, we will apply certain limited procedures to the City's RSI in
accordance.with.bud. iting standards generally accepted in the United States of America. These [united procedures
will consist of inquiries of management regarding the methods of.preparing the information and camparing .the
information for consistency with management's responses to our inquiries, the: basic financial statements, and
other knowledge we obtained during our audit of the ba.sicfinancial statements. We will not express an opinion
or:proviile:any assurance on the information because the limited procedures .do not. provide us with sufficient
evidence to express an opinion or provide any assurance. The following RSI is required by U.S. generally. accepted
accounting principles and will be subjected to certain limited procedures, but will not be a.udited.:
I. Management's Discussion and Analysis (MD&A).
2. Schedule of. Changes in the City's Net Pension Liability and. Related. Ratios..
3. Schedule of City Contributions —.Pension Plan.
We have also been engaged to .report on supplementary information other than RSI. that. accompanies.the City's
financial statements.. Wewill subject thefol lowing supplementary information to the auditing procedures applied
in our audit of the financial statements and certain: additional procedures, including comparing and reconciling.
such information directly to.the underlying accounting and.other. records used to prepare the financial statements.
6001 CHATHAM COMMERCE DRIVE, SUITE 250 • POST OFFICE.BOX ]6 • SAVANNAH, GEORGIA 31405-.912-232-1622 • www.mjcpa.com
MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANYS
City of Tybee Island, Georgia —:2019 Engagem.ent.Letter
July 24,. 2019
Page 2.
orto the financial statements themselves, and other additional procedures.in accordance with auditing standards.
generally accepted. in the United States of America and will provide an opinion on it in relation to the .fi.nancia.l.
statements as a whole:
1. Schedule of expenditures of federal awa.rds..
2: Schedule of Projects Constructed with Special. Purpose Local Option Sales Tax Proceeds.
3. Combining.an4 individual fund statements.
Audit Objectives
The obJective. of our audit is the expression of opinions as to whether your basic financial statements are fairly
presented,,.in all material respects,.in conformity with U.S. generally accepted accounting principles and to report.
on the fairness of the supole menta ry information referred to in the second paragraph when considered in relation
to the financial statements as a. whole. The.objective.also includes reporting on —
Internalcontrol over financial reporting and compliance with the provisions of laws, regulations, contracts
and award agreements, noncompliance with which .could have a material effect on. the financial.
statements in accordance with .Government.AuditingStandards.
Internal control over compliance related to major programs and. an opinion (or disclaimer of opinion) :on
.compliance with federal statutes; regulations, and the terms and conditions of federal awards that could
have a .direct and material effect on each major program in accordance with the Single Audit Act
Amendments. of 1.996 and Title 2 U.S. Code of Federal Regulations (CFR) Part: 200, Uniform Administrative
Requirements, Cost.Principles, and Audit Requirements for Federal Awards .(Uniform Guidance).
The; Government Auditing Standards report on internal control over financial reporting and on compliance and
other matters will include a paragraph .that states 1) that the purpose of the report is solelyto describe the scope
of testing -of internal.contro.l and .compliance and the results of that testing, and not to provide an opinion on the
effectiveness of the:entity's internal control or on compliance, and.2) that the report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering: the: entity's: internal control and
compliance. The Uniform Guidance: report on intemaI control over compliance will include a paragraph that states
that the purpose of the report. on internal control over.compliance is solely to describe the scope of testing of
internal control over compliance and the results of .that testing based on the requirements of the Uniform
Guidance: Both reports will state that the report is not suitable for any other purpose.
Dur audit will be conducted: in accordance with auditing standards: generally accepted in the United States of
America; 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 1995; and the provisions of the
Uniform Guidance, and will include tests. of accounting records, a determination of major :program(s) in
accordance.with the Uniform .Guidance; and.other procedures we consider necessary to enable us to express:such
opinions: We.wili issue written reports upon completion of ou.r:5ingle.Audit. Our reports will be addressed to the
Members of the. City Council for the City of Tybee Island, Georgia. We -cannot provide .assurance .that unmodified
opinions will be expressed. Circumstances:may arise in which it necessary for us to modify auropinions. or add.
emphasis=of-matter or other -matter paragraphs. If our opinions an the financial statements or the Single Audit
compliance: opinions are. other than .unmodified; we will discuss the reasons with. you in advance. If, for any
reason, we are unable to. complete the auditor are unable to form or have not formed opinions, we may decline
to express opinions or to issue reports, or may withdraw from this engagement..
AULDIN
ENKTNS
City ofTpbee Island -2019 Engagement.Letter
July 24, 2419
Page. 3
Management Responsibilities
Management` is responsible for the financial. statements, schedule. of expenditures of federal awards, and all
accompanying information as well as allrepresentations contained therein.
Management is. responsible for: 1) designing, implementing, establishing and maintaining effective internal
controls relevant to the .preparation and fair presentation of financial statements that are free from material
misstatement. whetherdlue to fraud or error, including internal.controIs over federal awards, and for evaluating.
and monitoring.ongoing activities, to help ensure that appropriate goals and.objectives are met; 2) following laws
`and. regulations; 3} ensuring .that there. is.reasonableassurance that governmentprograms are administered in
.compliance with compliance requirements; and 4) ens.uring.that management and financial.information is.reliable
and properly reported. Management is also responsible for implementing :systems: designed to achieve
compliance with applicabl.e.laws, regulations, contracts, and grant agreements. You are. also responsible for the
selection and application of accounting principles; for thepreparation and fair presentation of the financial
statements, schedule of expenditures: of federal awards, and all accompanying information in conformity with
U.S. generally accepted accounting :principles; and for compliance with applicable laws and regulations (Including
federal .statutes) and the provisions of contracts and grant. agreements [including %award. agreements]. Your
responsibilities also include identifying significant contractor relationships in which the contractor has
responsibility for prograOn compliance and for the accuracy and completeness of that information.
Management is also responsible for making all financial records and related information available to us and for
the accuracy and completeness of that information. You are also responsible for providing us with: 1.). access to
all information. of which you are awarethat is relevant to the preparation and fair presentation of the financial
statements, 2) access to.personnel, accounts,.boo ks,. records, supporting documentation, and. other information
as needed.to perform an audit under the Uniform Gu€dance, "3) additional information that we may request for
the purpose of the audit, and 4). unrestricted. access to persons within the government from whom we determine
€t necessary to obtain audit evidence.
Your responsibilities.include adjusting the financial statements.to correct material misstatements and confirming
to us in the:management.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.forthe .design and 'implementation of programs and controls to prevent a nd. detect fraud, and
for informing us about all..known. or suspected fraud affecting .the government. involving: 1). management, .2)
employees wiho.have significant roles in internal control, and. 3) others where the fraud could have a material
effect an the financial statements. Your responsibilities include informing us of your knowledge of anyallegatians
of fraud or.s.uspected fraud affecting the government receivedin communications from employees, former
employees, grantors; regulators,.or others. In addition, you are responsible for identifying and ensuring that the
government complies With applicabie laws, regulations, contracts,.agreerrients,.and grants. Management is also
responsible for taking timely and appropriate steps to remedy fraud and noncompliance with provisions:af laws,
regulations,con tracts; and grant agreements, ora.buse that we report. Additionally, as required by the Uniform
Guidance, it is management'.s responsibility to evaluate and monitor noncompliance with federal statutes,
regulations, and the terms and:conditions.offederal awards, take prompt action when instances of noncompliance
are identified including noncompliance identified in audit:flndings; promptly follow up and take corrective action
on reported audit.findings;.and to prepare a summary schedule of prior audit findings and a separate corrective
ALT]LD W
EAKINS
City of Tybee: Island - 2Q19,Engagement Letter
July 24, 2019
Page 4
action plan. The summary schedule of prior audit findings should be available for our review subsequent to the:
start of fieldwork.
You are. responsible for identifying all federal awards received .and understanding and complying: with the
compliance requirements and for the preparation of the:schedule. of expenditures of federal. awards (including
notes and noncash assistance received) in confo rmity with the Uniforrim Guidance. You agree to include our report
on the schedule of expenditures. of federal awards. in any .document that contains and indicates that wehave
reported .on the schedule of .expenditures of federal awards. You also agree to include the audited financial
statements with any presentation of the schedule of expenditures. of federal awards that includes our report
thereon or make the audited financial statements. readily available to intended users of the schedule of
expenditures of federal awards no later than the date the schedule of expenditures of federal awards is issued
with .our report thereon. Yourresponsibilities include acknowledging to us in the written representation letter
that: `1) you are responsible for presentation of the schedule of expenditures of federal:awards inaccordance with
the Uniform Guidance; 2) you believe -the schedule of expenditures. of federal awards, including its form and
content, is stated fairly in accordance with the Uniform Guidance;.3)the methods of measurement or presentation
have not changed from those.used.in the prior period {or, if they have changed, the reasons.for such changes);:
and 4) you have disclosed .to us any:significant assumptions or interpretations underlying the measurement or
presentation of the schedule of expenditures of federal awards..
You are also responsible for the preparation of the other supplementary information,. which we have been
engaged to report on, in conformity with U.S. generally accepted accounting principles. You agree to include our
report on the supplementary information in any document that contains and indicates that we have reported on.
thasupplementary information. You also agree to include the audited financial' statements with any presentation
of the:suppiernentary information that includes our report thereon or make the audited financial statements
readily available to.users:.of the supplementary: information no.later than the date the supplementary information
is issued with our report thereon. Your -responsibilities include acknowledging to: us in the written. re presentation
letter that: 1) you are responsible for -presentation. of the supplementary -information in accordance with. GAAP;
2) you believe the supplementary information, including its form and content, is fairly presented in accordance
With GAAP; 3) the methods of measurement or presentation have. not changed from those used in the prior period
(or, if they have changed, the reasons for such changes); and 4). you. have disclosed to us, any significant
assumptions or interpretations underlying the measurement or presentation of the supplementary information.
Management is responsible for establishing.and. maintaining a process for tracking the status of audit findings and
recommendations. Management is also responsible. for identifying and providing report. copies. of previous
financial audits, attestation engagements, performance audits orotherstudies related to the`obiectives discussed
in the Audit Objectives. section of this letter. This responsibility Encludes relaying to us corrective actions taken to
address significant findings and recommendations resulting from those audits, attestation .engagements,
performance audits, or studies. You are also responsible for providing management's views on our current
findings, conclusions, and recommendations, aswell as your planned corrective actions, for the report, and for
the timing and format for providing -that information.
With regard to the electronic dissemination of audited financial statements, including financial .statements
published electronically on your website, you understand that electronic sites are .a means to distribute
1nforrnatiion and, therefore, we are not required toread the information contained in these sites or to consider
the consistency of other information in the electronic site with the original document.
IAULDIN
& EHi INS
City of Tybee Island - 2019 Engagement Letter
July 24; 2019
Page 5
You agree to. assume all management responsibilities relating to the financial statements, schedule of
expenditures of federal awards, related notes, and any other nonaudit:services we provide: You willbe required.
ta. acknowledge in the management representation letter our assistance with preparation of the _financial
statements, schedule of expenditures of federal awards, and. related notes and that you have reviewed and
approved the financial statements, schedule of expenditures of federal .awards, and related. notes prior to their
issuance and have..accepted responsibility for them. You agree to oversee the nonaudit services by designating
an individual, preferably from senior- management,. who possesses suitable skill, knowledge, .or experience;.
evaluate the. adequacy and results of those services;.and accept responsibility for them.
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 invoive:judgmerit about :the number of transactions to be examined and the
areas to be. tested. An audit also includes evaluating theappropriatenessof accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation -of the financial:statements... 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: 1)
errors, 2) fraudulent.financial reporting, 3.j misappropriation of assets, or 4) violations :of Paws or governmental
regulations that are attributable to the.government or to acts by management.or employees acting on behalf of
the government. Because the determination of abuse Is`subjective, Government Audidng.Standards do not expect
auditors to provide reasonable assurance of detecting abuse.
Because. of the: inherent: limitations of an audit,.:combined with the inherent limitations of internal. control,. and
because we will not perform a d.etailed.examination of all transactions; there is a risk that material misstatements
or noncompliance may exist and not be.detected by us;:eventhough the audit is properly.planned and performed
in accordance with .U,S. generally accepted auditing standards and GovernmentAuditing standards. In addition,
ars audit is not designed to detect immaterial misstatements ro.r violations of laws. or governmental regulations
that. do not have a d1rect.and material effect. on the financial statements or major programs. .However, we will
inform the appropriate level of management of any material errors, any fraudulent financial. reporting or
misappropriation.of assets that come to our.attention. We will -also inform the appropriate level of management
of any violations -of laws or gove rnme nta I regulations that corse to our attention, unless clearly inconsequential,
and of any mate ria l.abuse that comes to our attention.. We will include such matters. in the reports required. for a
single Audit. Our.responsibility as auditors is limited to the period covered. by:our audit and does.not.extend to
any later periods for which we are not. engaged.as auditors.
Our.procedures Will include tests of documentaryevidence su.pporting.the.:transactions recorded in -the accounts;
and may include direct confirmation of:receivables.and certain other:assets and liabilities by correspondence with
selected individuals, funding sou rces,.cred'itors, and.financial 'institutions. We will request written representations
from your attorneys as part of the. engagement, and they may bill. you forresponding to. this inquiry.. At the
conclusion of our audit, we will require. certain written representations from you about your responsibilities for
the financial statements; schedule of expenditures of federal awards; federal award programs; compliance with
laws, regulations, contracts, and grant. agreements; and: other responsibilities required .by generally accepted
auditing standards.
Audit Procedures — Internal Control
Dur audit will include obtaining an understanding .of the government and its environment; including internal
control, sufficient.to:assess the: risks of material misstatement of the financial statements and to design the nature,
�AULAIN
8c,� ENKTNS
City of Tybee Island - 2019. Engagement Letter
1uly.24, 2019
Page 5
timing, ..and. extent of further audit procedures. 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. our tests, .if performed,.
will. be less in. scope than would be necessary to render a0 opinion on internal control and,.accord ingly, no opinion
will be expressed in our report on internal control issued:pursuant to Government Auditing Standards.
As:. required by the Uniform Guidance, we will perform tests. of controls over compliance: to evaluate the
effectiveness. of the design and operation of controls that.we.consider relevant to: preventing or detecting material
noncompliance with compliance requirements applicable to each major federal award program. However, our
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 our report on internal control issued pursuant to the Uniform Guidance..
An audit is not designed to provide assurance on jnternaI control or to identify significant deficiencies or material.
weaknesses. However, during the audit, we. will communicate to management and those charged with
governance internal control related. matters that are required. to be communicated under AICPA professional
standards, Government Auditing Standards; and the Uniform Guidance.
Audit. Procedures.— Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of material
misstatement, we will perform tests. of the City's compliance with provisions of applicable` laws; regulations,
.contracts and agreements, including grant agreements. However, the objective of those.procedures.wil.l not be
to provide.anopinion on.overall compliance -and we will. riot express such an opinion in our report on compliance
issued pursuant to Government.AuditingRandards.
The Uniform Guidance requires that we also plan and perform the audit to obtain reasonable assurance about
whether the auditee has. complied with federal statutes; regulations, and the terms and conditions of federal
awards applicable to major programs. Our procedures will consist of tests of transactions and other applicable
procedures described in the OMB Compliance Supplement for the types of compliance requirements that could
have.a direct and material effect on each of the City's major programs, The purpose of these procedures will be
to express an.opinion on the Qty's compliance. with requirements applicable to each.of its major programs in our
re port. on compliance issued pursuant to the Uniform Guidance.
Other Services
We will also assist in preparing the financial statements; schedule of .expenditures of federal awards, and related
notes of the City in conformity with U.S. generally accepted accounting. principles and the Uriiform Guidance based
oin information provided by you. Theseno.naudit services do. not constitute an audit u.nderGovernment Auditing :
Standords:and such services will not be conducted in accordance with Government Auditing Standards. We will
perform these.services in accordance with applicable professional. standards. The other services. are limited to
the .financial statements, schedule of expenditures. of federal awards, and related notes services previously
defined. We, in .our sole professional judgement, reserve the. rightto refuse to perform any procedure or take
any action that could be.construed a.s.assuming. management responsibilities.
Audit Administration; Fees, and Other
We understa nd. that your employees will prepare alf cash or other confirmations we: request and will locate any
documents seiected by us for testing.
XENKrNS
ULDiN
City:pf Tybee island - 2019 Engagement Letter
July 24; 2019
Page 7
At:the conclusion of the engagement, we will complete the appropriate sections of the Data Collection Form that
summarizes our audit findings. It is management's responsibility toelectronically submit the reporting package
(Including financial statements,. schedule of .expenditures of federal awards, summary schedule of prior audit
findings, auditors' reports, and. corrective action plan) along with the: Data Collection Form to the federal audit
clearinghouse. We will coordinate with you. the electronic.. submission and certification. The Data Collection Form
and .the repo rting.package..must be submitted .within the earlier of 30 calendar days after receipt of the auditors'
reports or nine months.after the end of the audit period...
We will provide copies of our reports to the City of Tybee Island, Georgia; however; management is responsible
for distribution of the reports and financial statements. Unless restricted. by .law or regulation, or .containing
privileged and confidential information, :copies of our reports are to be made available for public inspection..
The audit documentation for this engagement is the property of Mauldin & Jenkins and constitutes confidential
info. rmatio.n. However, pursuant to authority given bylaw or regulation,. we may be req ueste.d:to make certain
audit documentation available to a federal agency providing director indirect funding, or the U.S. Government
Accountability Office for purposes..`of a quality review of the audit, to resolve audit findings, or to carry out
oversight responsibilities. We wi11 notify you of any such request. If requested, access to such audit documentation
will be provided under the. supervision of Mauldin & Jenkins 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.
The audit documentation forthis engagement.will be retained for a minimum of five years afterth.e report release
date orfor any.additional period requested. by a:regulatory body.. If we are aware th.at.a federal awarding agency,
passthrough entity; or auditee is contesting an auditfinding, we Will contact the party( les) contesting the audit
finding.for guidance prior to destroying,the audit documentation.
We expect to begin our audit in November 2019 and to issue. our reports. no later than December 3.1, 2019. Trey
Scott. is the engagement:director and is responsible for supervising the engagement and signing the reportsor
authorizing another individual to sign them, Our fee for these.services will be $26,000 for the year ended June 30'
2019. An additional fee of $31504 T $4,000.will be charged for the Single :Audit in accordance with the Uniform
Guidance as the City has expended in excess of $750;000 in federal funding during the fiscal.year. ender! lune 30,
2019: Our hourly rates vary. according to the degree :of responsibility involved and the experience. level of:the
personnel assigned to your audit. Our invoices for these fees will be rendered as work progresses and are payable
upon .presentation; The above. fees are .based an anticipated cooperation .from your personnel (including
complete: and timely receipt by us' the Information on the respective client participation listings to be prepared
annually) and the assumption that unexpected circumstances (including scope changes) will not be encountered
during the audit. If significant additional time is.necessa.ry, we will discuss it with management and arrive at a
new fee estimate before we incur the additional costs.
As a result of our prior or future services to you; we. might be. requested or required to provide information or
documents to you.or..a third party in a.legaI, administrative, arbitration, or similar proceeding in which we are not
A party. If this occurs, our efforts in complying with such requests will be deemed billable.tojrou. as a.separate
engagement. We..shalI he entitled to compensation for .our time and reasonable reimbursement for our:expenses
(including legal fees) in complying with the request. for all requests, We will observe the confidentiality
requirements of :our profession and will notify you promptly of the request.
AULDIN
la NKINS
City of Tybee Island - 2019 Engagement Letter
July 24; -2019
Page 8
We appreciate the opporturiity to be of service to the. City of Tybee Island, Georgia 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 asdescribed in this letter, please sign the enclosed copy and return
it to. us.
Sincerely,
MALI LDI N .&. J E NKINSJLC
TreY5cott
RESPONSE:
David. Irwin
This letter c r ly rth the understanding of the City of Tybee Island, Georgia.
By:
Title.—Clity Manager
AULDIN
ENKIN5