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HomeMy WebLinkAbout21- Audit Agreed Upon Procedures - Anderson Zurmuehlen - Audit Contract for FY21Page 11019 E MAIN ST• SUITE 201• BOZEMAN, MONTANA 59715 TEL: 406.556.6160• FAX:406.586.8719• WEB:www.azworld.comANDERSON ZURMUEHLEN & CO., P.C. • CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS MEMBER: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS September 26, 2021 City Manager, Honorable Mayor and City Commissioners City of Bozeman Bozeman, Montana We are pleased to confirm our understanding of the terms of our engagement and the nature and limitations of the services we are to provide for the City of Bozeman. You will agree to the procedures described in the attachment to this letter and will acknowledge that the procedures to be performed are appropriate for the intended purpose of the engagement, which is to assist in determining whether the City of Bozeman has complied with the financial related statutes and administrative rules relating to the local build ing code enforcement program. We understand the engagement is required in accordance with Administrative Rule (ARM) 24.301.208 and is considered a separate engagement from the City’s audit required under the provision of Section 2-7-503, MCA.Our engagement to apply agreed-upon procedures will be conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants (AICPA)and the standards applicable to attestation engagements contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we obtain your written agreement to the procedures to be applied and your acknowledgment that those procedures are appropriate for the intended purpose of the engagement, as described in this letter. The agreement and acknowledgment are contained within this letter. A refusal to provide such agreement and acknowledgment will result in our withdrawal from the engagement. We make no representation that the procedures we will perform are appropriate for the intended purpose of the engagement or for any other purpose. Because the agreed-upon procedures listed in the attached schedule do not constitute an examination or review, we will not express an opinion or conclusion on the compliance of the financial related statutes and administrative rules relating to the local building code enforcement program.In addition, we have no obligation to perform any procedures beyond those listed in the attached schedule. We plan to begin our procedures on approximately October 1, 2021 and, unless unforeseeable problems are encountered, the engagement should be completed by December 31, 2021. We will issue a written report upon completion of our engagement that lists the procedures performed and our findings. Our report will be addressed to the City of Bozeman.If we encounter restrictions in performing our procedures, we will discuss the matter with you. If we determine the restrictions are appropriate we will disclose the restrictions in our report. Our report will contain a paragraph indicating that had we performed additional procedures, other matters might have come to our attention that would have been reported to you. DocuSign Envelope ID: B4E8661D-B339-48FD-857E-0888E54D71EE ANDERSON ZURMUEHLEN & CO., P.C CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS Page 2 There may exist circumstances that, in our professional judgment, will require we withdraw from the engagement. Such circumstances include the following: You refuse to provide written agreement to the procedures and acknowledge that they are appropriate for the intended purpose of the engagement. You fail to provide requested written representations, or we conclude that there is sufficient doubt about the competence, integrity, ethical values, or diligence of those providing the written representations, or we conclude that the written representations provided are otherwise not reliable. We determine that the description of the procedures performed or the corresponding findings are misleading in the circumstances of the engagement. We determine that restrictions on the performance of procedures are not appropriate. An agreed-upon procedures engagement is not designed to detect instances of fraud or noncompliance with laws or regulations; however, we will communicate to you any known and suspected fraud and noncompliance with laws or regulations affecting the compliance of the financial related statutes and administrative rules relating to the local building code enforcement program that come to our attention.In addition, if, in connection with this engagement, matters come to our attention that contradict the compliance of the financial related statutes and administrative rules relating to the local building code enforcement program, we will communicate such matters to you. You agree to the procedures to be performed and acknowledge that they are appropriate for the intended purpose of the engagement. You are responsible for complying with the financial related statutes and administrative rules relating to the local building code enforcement program.In addition, you are responsible for providing us with (1) access to all information of which you are aware that is relevant to the performance of the agreed-upon procedures on the subject matter, (2) additional information that we may request for the purpose of performing the agreed-upon procedures,and (3) unrestricted access to persons within the City of Bozeman from whom we determine it necessary to obtain evidence relating to performing those procedures. We will also prepare the financial statements and related notes,the GASB 34 conversion entries, the Schedule of Expenditures of Federal Awards, and Data Collection Form of the City of Bozeman for the financial statement audit engagement (a separate engagement) in conformity with U.S. generally accepted accounting principles based on information provided by you. We will perform the services in accordance with applicable professional standards. We, in our sole professional judgment, reserve the right to refuse to perform any procedure or take any action that could be construed as assuming management responsibilities. At the conclusion of our engagement, we will require certain written representations in the form of a representation letter from management that, among other things, will confirm management’s responsibility for complying with the financial related statutes and administrative rules relating to the local building code enforcement program. DocuSign Envelope ID: B4E8661D-B339-48FD-857E-0888E54D71EE ANDERSON ZURMUEHLEN & CO., P.C CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS Page 3 Jessica Van Voast, Shareholder is the engagement partner and is responsible for supervising the engagement and signing the report or authorizing another individual to sign it. Our fees for these services are included in the fee for the audit for the year ended June 30, 2021, which are detailed in a separate engagement letter.The fee estimate is based on (1) anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the engagement; (2) there are no unanticipated changes to the scope of our work; and (3) the accounting records are maintained in a reasonable manner, with appropriate supporting documentation provided as requested. If we encounter any problems that require significant additional effort, we will contact you to discuss the impact on our estimated fees. All other provisions of this letter will survive any fee adjustment. This fee estimate may be subject to adjustments based on unanticipated changes in the scope of our work. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. The parties to this engagement agree that any dispute that may arise regarding the meaning, performance or enforcement of this engagement (except actions by us to enforce payment of our professional invoices), will, prior to resorting to litigation, be submitted to mediation, once a written request to mediate has been given by either party.Any mediation initiated as a result of this engagement shall be administered within the county of Lewis and Clark, Montana. Any ensuing litigation shall be conducted within said county, according to Montana law.The results of any such mediation shall be binding only upon agreement of each party to be bound. The costs of any mediation proceeding shall be shared equally by the parties. In the event Anderson ZurMuehlen is required to respond to a subpoena, summons, court order, or other legal process for the production of documents and/or testimony relative to information we obtained and/or prepared during the course of this engagement, you agree to compensate the Firm at its hourly rates for the time it expends in connection with such response, and to reimburse us for all out-of-pocket expenses incurred. Any claim arising out of this engagement, except actions by Anderson ZurMuehlen to enforce payment of its professional invoices, must be asserted within three years from the completion of the engagement, notwithstanding any statutory provision to the contrary. If either party elects to terminate our services for nonpayment, or for any other reason provided for in this letter, our engagement will be deemed to have been completed upon written notification of termination, even if we have not completed our report. You will be obligated to compensate us for all time expended, and to reimburse us for all out-of-pocket costs, through the date of termination. In connection with this engagement, we may communicate with you or others via email transmission, and by signing this letter you authorize us to do so. As emails can be intercepted and read, disclosed, or otherwise used or communicated by an unintended third party, or may not be delivered to each of the parties to whom they are directed and only to such parties, we cannot guarantee or warrant that emails from us will be properly delivered and read only by the addressee. DocuSign Envelope ID: B4E8661D-B339-48FD-857E-0888E54D71EE ANDERSON ZURMUEHLEN & CO., P.C CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS Page 4 You agree that we shall have no liability for any loss or damage resulting from the use of email transmissions. If requested,we’ll provide a secure portal for the transmission of confidential information. Our Firm’s record retention policy follows guidelines provided by the American Institute of Certified Public Accountants. Original client documents and files are returned to you for safekeeping. Anderson ZurMuehlen generally retains copies of client files and documents for seven (7) years in support of the work completed. Beyond the 7-year retention period, files will be destroyed unless a written request is provided to us by you. Government Auditing Standards require that we provide you with a copy of our most recent external peer review report and any letter of comment, and any subsequent peer review reports and letters of comment received during the period of contract. Our most recent peer review report accompanies this letter. We appreciate the opportunity to assist you and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign in the space provided below and return it to us. If the need for additional procedures arises, or the procedures need to be modified, our agreement with you will need to be revised.It is customary for us to enumerate these revisions in an addendum to this letter. If additional specified parties of the report are added, we will require that they acknowledge in writing their responsibility for the sufficiency of procedures. ANDERSON ZURMUEHLEN & CO., P.C. By: Jessica Van Voast, CPA Shareholder RESPONSE: This letter correctly sets forth the understanding of City of Bozeman, Montana. By: Title: DocuSign Envelope ID: B4E8661D-B339-48FD-857E-0888E54D71EE Finance Director Page 5 AGREED-UPON PROCEDURES a)Determine that the City’s accounting records fully document the collection and expenditure of all fees and charges related to the Building Code Enforcement Program during the fiscal year.Based on the City’s accounting records, present a schedule of revenues, expenditures, and changes in fund balance of the Building Code Enforcement Fund for the fiscal year in Schedule A. b)Compare the financial information included in the “Fiscal Report” submitted to the State Building Codes Bureau to corresponding information in the City’s accounting records and verify that the information was the same. c)From selected building permit applications, compare permit fees charged to the permit fee schedule established by the City and approved by the State Building Codes Bureau, and verify that the fees were the same. d)From selected building permit applications, compare the total building permit fee paid to the amount credited to the Building Code Enforcement Program, and verify that amounts agreed and that no portion of the fee was diverted to other functions of the government. e) Examine selected expenditures and other charges made from Building Code Enforcement Program-related fees and determine that all were necessary and reasonable costs directly and specifically identifiable to the enforcement of building codes, (with the exception of indirect costs charged to the Building Code Enforcement Program –see procedures “g” and “h” below). (“Fixed charges” and prior period adjustments, if any, are itemized in Schedule B). f) Examine selected expenditures from the Building Code Enforcement Program and determine that no portion of permit fees collected were used to support fire departments, planning, zoning, or other activities, except to the extent that employees of those programs provided direct plan review, inspection or other building code enforcement services of the Building Code Enforcement Program. If so, obtain documentation from the government that supports the performance of these direct services and that documents that these costs were properly charged to the Building Code Enforcement Program for specifically allowable services. (The costs related to fire departments, planning, zoning, or other activities are reported in detail in Schedule B). g)If indirect costs were allocated to the Building Code Enforcement Program, verify that basis used to allocate costs to the Building Code Enforcement Program was the same basis used to allocate indirect costs to other proprietary funds of the City, and verify that indirect costs waived for any other proprietary fund of the City were also waived for the Building Code Enforcement Program.(Total indirect costs are itemized in Schedule B). h) If indirect costs were charged to the Building Code Enforcement Program, verify that they were limited to those costs allowed under 2 CFR Part 200. DocuSign Envelope ID: B4E8661D-B339-48FD-857E-0888E54D71EE Page 6 i)If there are transfers out of the Building Code Enforcement Program Fund, obtain detailed documentation from the City that describes the purposes and eventual uses of these transfers, and verify that these purposes and uses are in accordance with allowable expenditures, as addressed in the procedures performed above.(Transfers are itemized in Schedule B). j) Verify 0.5% of revenues from plan reviews and building permits (not including revenues from electrical, mechanical or plumbing permits) collected during the year were remitted to the State Department of Labor and Industry for the building codes education program. k) Based on the financial information presented in Schedule A, determine whether the reserve account (fund balance) exceeded the amount needed to support the Building Code Enforcement Program for 12 months. If so, verify that the City had taken steps to reduce permit fees. DocuSign Envelope ID: B4E8661D-B339-48FD-857E-0888E54D71EE