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Item N07Meeting Date: June 10, 2015 Division: County Attorney Bulk Item: Yes X No Department: County Attorney Staff Contact /Phone #: Cynthia L. Hall x 3174 AGENDA ITEM WORDING: Approval for the County Administrator and the County Attorney's Office to negotiate an amended agreement with the independent external auditing firm of Cherry Bekaert LLP, exercising the option to extend the current Audit Contract by an additional two (2) years; also, authorization for the County Administrator to execute the amended agreement provided the fees in paragraph (4) of the agreement remains unchanged, and otherwise the amended agreement will be returned to the BOCC for approval. ITEM BACKGROUND: The Audit Contract between Monroe County and Cherry Bekaert, LLP (Auditors) called for auditing services for fiscal years ending September 30, 2012, 2013 and 2014, with the option to extend the agreement for two (2) additional years with the concurrence of the BOCC and annual availability of appropriation. The County's auditor selection committee (required by F.S. 218.391) met on May 19, 2015, and unanimously voted to recommend approval for the County Administrator and the County Attorney's Office to negotiate with the Auditors to extend the current agreement for an additional two (2) years. Furthermore, if the flat fee in paragraph (4) is unchanged, the County Administrator requests authority to execute the amended agreement; if the fees are changed the amended agreement will go to the BOCC for approval. PREVIOUS RELEVANT BOCC ACTION: The BOCC approved and authorized the Audit Contract on July 18, 2012. At the BOCC meeting on December 11, 2013 the Board approved the First Amendment to the Audit Contract. CONTRACT/AGREEMENT CHANGES: Amendment exercising option to extend current agreement for two (2) additional years, per paragraph 3 of the Audit Contract dated July 18, 2012. ma!'= - � TOTAL COST: Fixed fee for annual audit: $286,000 INDIRECT COST: BUDGETED: Yes Extra work if required: $60/hr to $240/hr, depending on employee performing work DIFFERENTIAL OF LOCAL PREFERENCE: 99AZIMUMME REVENUE PRODUCING: Yes — No X AMOUNT PER MONTH Year APPROVED BY: County Atty OMB/Purchasing Risk Management DOCUMENTATION: Included X Not Required Revised 7/09 ' monroe w_3,Ey w era-s urrice - uriginai COUNTY OF MONROE, FLORIDA AUDIT CONTRACT This CONTRACT is made and entered into this lfftAday of gaw . 2012, by and between the Board of County Commissioners of Monroe County cmaner "COUNTY' Florida, and CHERRY, BEKAERT & HOLLAND, L.L.P. (hereinafter "AUDITOR'), a Certified Public Accountant limited partnership licensed to do business in the State of Florida. WHEREAS, the Monroe County, Florida Audit Selection Committee, in accordance with Section 218.391, Florida Statutes, has followed the statutory procedures, including public notice, and ranked the AUDITOR as the top firm and deemed it most qualified to provide professional auditing services; and WHEREAS, terms satisfactory to both parties have been negotiated pursuant to said statute; now therefore In consideration of the mutual promises and covenants below, the parties agree: 1. SCOPE OF SERVICES. AUDITOR shall provide a financial audit of the COUNTY financial records and a financial audit report as required by Florida Statutes 218.391. Such audit shall be subject to the limitations and responsibilities identified in Attachment A to this contract. In addition, such audit shall be conducted in accordance with U.S. generally accepted auditing standards as promulgated by the American Institute of Certified Public Accountants (AICPA) Industry Audit Guide, Audits for State and Local Government Units, AICPA standards and procedures, the Florida Single Audit Act, OMB Circular A-133, and, excluding review of economy and efficiency of operations and program results, standards and procedures set forth in Government Auditing Standards issued by the Comptroller General of the United States. The AUDITOR will also conduct the audit in accordance with any other applicable federal, state and local regulations or professional guidance not specifically listed previously as well as any additional requirements that may be adopted by these organizations in the future. This audit includes the financial records concerning the operations of the COUNTY as a whole, each Constitutional Officer, and any dependent district reported as part of the primary government (blended component unit). Audits of financial statements of discrete component units, either currently in existence or established subsequently to the beginning date of this Agreement, are excluded from this Agreement. It is possible that additional "funds" or blended component units will be established by the COUNTY during the term of this Agreement. The compensation stated in this Agreement will include the audit procedures related to such additional funds or component units unless it is agreed by the COUNTY and AUDITOR that they significantly and materially impact the audit. I.I. AUDITOR shall provide the work plan and services as described in detail in the Request for Qualifications, attached hereto and incorporated herein. The AUDITOR, prior to commencing any fiscal year audit, will provide a detailed audit plan, related fee (to equal the total amount of the Agreement as noted in Section 4), and proposed Page 1 of 15 time line for each of the COUNTY entities to be audited. The time -related obligations shall be conditioned upon AUDITOR's receipt of necessary COUNTY and Constitutional Officer data (including confirmation requests and consultant's reports) in useable form, access to knowledgeable COUNTY and Constitutional Officer personnel, and other timely cooperation by COUNTY and the Constitutional Officers. AUDITOR shall conduct an exit interview with each of the Constitutional Officers and dependent district executive officers prior to the issuance of final reports. 1.2 The audit fieldwork, including any analytical review, shall be completed on -site in the offices of the County, each Constitutional Officer and the dependent distrim 13 The financial audit reports applicable to each of the entities described in paragraph 1, as required by F.S. 218.391 and Section 10.550 of the Rules of the Auditor General, shall include the following: 13.1. Auditor's Report on Examination of Financial Statements. This report shall include but not be limited to: (a) A statement of the scope of the audit; and (b) Explanatory comments (if any) concerning exceptions by AUDITOR as to application of either U.S. generally accepted auditing standards, U.S. generally accepted accounting principles or the consistency of application of such principles. 13.2. Financial Statements. Financial presentations shall include government wide and fund level financial statements, including accompanying footnotes and schedules, derived from the accounting records presented in conformity with the fund type, fund and/or group classifications as required for compliance with Section 10.550 of the Auditor General and U.S. generally accepted accounting principles for governments. Financial statements will be prepared for the County as a whole, and for each constitutional officer and dependent district. 133. Auditor's Letter of Comments and Recommendations. A letter shall be provided to COUNTY containing various comments and recommendations by the AUDITOR based upon review of the COUNTY's system of operations, internal controls and other findings and requirements by the Florida Auditor General. Similar letters shall be submitted to each of the County Constitutional Officers and dependent district. 1.3.4. Other Reports. Reports shall include reports required by Government Auditing Standards; and Federal and State Agencies. If applicable, reports issued pursuant to the Federal and State of Florida Single Audit Acts shall be included. Page 2 of 15 r3 1.4 The AUDITOR will provide electronic versions of the COUNTY's financial statements including footnotes and related schedules included as part of the reporting process. AUDITOR will also provide copies of any journal entries required to convert the financial records from modified accrual or budgetary basis accounting to full accrual. 1.5 It is recognized that one of the primary purposes of the audit is to be able to provide assurances to state and federal funding agencies. If any of those agencies require an opinion in a style or format different than the AUDITOR's standard style or format, the AUDITOR shall reissue the opinion in a style or format acceptable to the funding agency. 1.6 AUDITOR shall prepare and submit to the Board of County Commissioners a letter regarding the COUNTY's compliance with the terms of its various bond issues. The AUDITOR will also prepare a separate AUDITOR's report on the examination of the basic financial statements suitable for inclusion in an official statement. The COUNTY may prepare official statements in connection with the issuance of debt securities that will contain the basic financial statements and the AUDITOR's report thereon. The AUDITOR shall be notified by the COUNTY in advance of any such securities offering and will, if requested by the fiscal advisor and/or the underwriter, issue a "consent and citation of expertise" as the AUDITOR and any necessary "comfort letters." The provision of such services will not generate additional compensation. 1.7 The AUDITOR agrees to provide tuition free access to seminars provided for either staff or staff and client use in an effort to assist the County in maintaining staff Professionalism and meeting the County states continuing professional education requirements. 1.9 Should irregularities or other unforeseeable conditions be encountered which might necessitate the extension of the auditing work beyond the scope of normal auditing Procedures, the AUDITOR agrees to advise the COUNTY in writing of the circumstances and to request an increase in the total fees be made before significant additional costs are incurred. Any request for additional time or additional fees shall be in writing and shall contain a detailed explanation of the unforeseen conditions or irregularities, and why the additional fees are necessary. Either a time extension or additional fees granted to AUDITOR is at the sole discretion of COUNTY. 1.9 AUDITOR shall take reasonable steps to bring errors to the attention of an appropriate level of COUNTY management so that management can take corrective action. Any adjustments to the books and records will be made only after review and only on direction of responsible authority. 1.10 The COUNTY will send its Comprehensive Annual Financial Report (CAFR) to the Government Finance Officers Association of the United States and Canada for review in its Certificate of Achievement for Excellence in Financial Reporting Program. Therefore, the COUNTY shall also provide additional financial and non -financial information not subject to examination by the AUDITOR, but necessary for the reporting standards of such Certificate of Achievement. It is expected that the AUDITOR will provide any special Page 3 of 15 assistance reasonably necessary to assist the COUNTY in continuing to meet the requirements of that program as part of the fixed fee compensation of this Agreement. 2. ASSISTANCE TO BE FURNISHED BY THE COUNTY It is understood and agreed that COUNTY and Constitutional Officers' staff participation in the audit will be limited to activities within the normal course of business, and any assistance with the audit by COUNTY personnel shall be limited to matters within the normal scope of the employees' work responsibility. The COUNTY will prepare and furnish to the AUDITOR certain workpapers required to support the financial information under audit, but they will be in the format designed by the COUNTY. The COUNTY will: a. Download the trial balance, including actual balances and original and final budgets, from the COUNTY'S accounting software to Excel spreadsheets. b. Prepare the financial statements and footnotes for each constitutional office, the BOCC and the CAFR. c. Prepare the Statements of Cash Flows. d. Prepare the fund -level and entity wide elimination entries. e. Produce the introductory and statistical sections and the Management's Discussion and Analysis sections of the CAFR. f. Produce the Schedules of Federal Awards and State Financial Assistance. g. Review the final CAFR and BOCC Financial Statements and maintain responsibility for the contents. 3. TERM OF ENGAGEMENT. This Agreement provides for professional auditing services for the fiscal year ending September 30, 2012, �013,and 14 with anAption to extend for two (2) additional.years with the concurrence of the Monroe County4loard of County Commissioners and annual availability of an appropriation. This agreement shall come into effect on the date first written above and remain in effect until the completion of the 2014 financial audit unless earlier terminated in accordance with paragraphs 12 and 13, below. 4. COMPENSATION AND TERMS OF PAYMENT. The COUNTY shall pay to the AUDITOR a fixed fee for the annual audit of the COUNTY's financial statements according to the following fee schedule. This fee is all-inclusive, and no Page 4 of 15 charge for travel, telephone bills, copying or any other related fees or expenses shall be billed. Payment under this agreement is contingent upon annual appropriation. FISCAL YEAR ENDED September 30, 2012 September 30, 2013 September 30, 2014 CONTRACT AMOUNT $286,000 $286,000 $286,000 The following hourly fees shall apply to extra work done for the term of this contract by AUDITOR, whether under this Agreement or for extra work requested by the Board of County Commissioners: Partner in Charge $ 240 Senior Manager $ 170 Merger $ 150 Senior Accountant $ 130 Staff Accountant $ 95 Clerical $ 60 Termination prior to the end of the agreement shall occur whenever funds cannot be obtained or cannot be continued at a level sufficient to allow for the continuation of this agreement pursuant to the terms herein. In the event that funds cannot be continued at a level sufficient to allow the continuation of this agreement pursuant to the terms specified herein, this agreement may then be terminated immediately by written notice of termination delivered in person or by mail to AUDITOR An invoice for the portion of the total amount of the Agreement in proportion to the work completed to date shall be submitted to the COUNTY on a monthly basis. The invoice will include a description of work completed for each of the COUNTY entities to be audited, the total amount of the agreement, billings to date and payments to date. The invoices shall be in a form approved by the Clerk of the Circuit Court. The maximum amount to be paid prior to fulfillment of the terms of the Agreement shall be ninety (90) percent of the total annual compensation. The retainage will be payable upon completion of each year's audits. 5. RECORDS. All working papers and reports will be retained by the AUDITOR, at the AUDITOR's expense, for a minimum of five years from the date the reports are issued, or such longer period as may be required to satisfy legal and administrative requirements. The Auditor will be required to make the working papers available, upon request, to the following parties or their designees: A. COUNTY B. Auditor General of the State of Florida Page 5of15 C. U.S. General Accounting Office D. Parties designated by the federal government, the State of Florida, or by the COUNTY as part of an audit quality review program E. Auditors of entities of which the COUNTY is a sub- recipient of great funds F. Successor auditors G. Other parties as deemed necessary by the COUNTY, subject to AUDITOR agreement H. Other parties entitled by law to access such papers 6. MODIFICATIONS S, ASSIGNMENT AND S NTRA G. Any and all modifications of the terms of this agreement shall be only amended in writing and approved by the Board of County Commissioners for Monroe County. The Contractor shall not assign or subcontract or transfer any interest in this Contract or assign any claims for money due or to become due under this Contract without first obtaining written and executed consent from COUNTY. 7. INDEPENDENT CONTRACTOR. At all times and for all purposes hereunder, the AUDITOR is an independent contractor and not an employee of the Board of County Commissioners of Monroe County. No statement contained in this agreement shall be construed as to find the AUDITOR or any of its employees, contractors, servants or agents to be the employees of the Board of County Commissioners of Monroe County, and they shall not be entitled to any of the rights, privileges or benefits of employees of Monroe County. S. COMPLIANCE WITH LAW. In carrying out its obligations under this agreement, the AUDITOR shall abide by all statutes, ordinances, rules and regulations pertaining to or regulating the provisions of this agreement, including those now in effect and hereafter adopted. Any violation of said statutes, ordinances, rules or regulations may constitute a material breach of this agreement, which would entitle the COUNTY to terminate this agreement immediately upon delivery of written notice of termination to the AUDITOR. 9. HOLD HARMLESSANDEMNIFICATION. Each party ("Indemnifying Patti') shall indemnify and hold harmless the other ("Indemnified Party'l from any and all claims, suits, actions, liabilities and reasonable defense costs, in each case solely for bodily injury to individuals and physical damage to tangible property to the extent directly and proximately caused by the acts or omissions of the Indemnifying Party while AUDITOR is engaged in the performance of services under this Agreement; provided, however, that if there is also fault on the part of the Indemnified Party, the foregoing indemnity shall be on a comparative fault basis, and provided that COUNTY's liability is limited to the statutory limitation in Florida Statutes 768.28. Page 6 of 15 J 10. ANTI DISCRIMINATION. The AUDITOR agrees that they will not discriminate against any of their employees or applicants for employment or against persons for any benefit or service because of their race, color, religion, sex, national origin, or physical or mental handicap where the handicap does not affect the ability of an individual to perform in a position of employment, and to abide by all federal and state laws regarding non-discrimination. 11. ANTI -KICKBACK. The AUDITOR warrants that no person has been employed or retained to solicit or secure this agreement upon an agreement or understanding for a commission, percentage, brokerage or contingent fee, and that no employee or officer of the COUNTY has any interest, financially or otherwise, in the said funded project. For breach or violation of this warranty, the COUNTY shall have the right to annul this agreement without liability or, in its discretion, to deduct from the agreement price or consideration, the full amount of such commission, percentage, brokerage or contingent fee. 12. ATION wITHO CAUSE This Agreement may be terminated, without cause, by either of the parties. For each fiscal year to be audited, written notice to the other party not later than May 1 of the fiscal year to be audited will constitute appropriate cancellation of the Agreement. JU 1 1 i I If the AUDITOR breaches any provision of this Agreement, the COUNTY shall notify the AUDITOR in writing within fourteen (14) days or some other time period deemed acceptable to the COUNTY to cure this breach. The COUNTY by failure to provide notice to the AUDITOR or accepting work under this Agreement does not waive or limit its authority to find the AUDITOR in breach of this agreement for subsequent breaches. After notification of breach and the Agreement has been terminated, the COUNTY shall pay the AUDITOR fair and equitable compensation for work completed prior to termination of the agreement, less any amount of damages caused by the AUDITOR's breach. If the damages are more than compensation due to the AUDITOR, the AUDITOR will remain liable after termination and the COUNTY can affirmatively collect damages. The AUDITOR may terminate the Agreement for failure of the COUNTY to fulfill its duties and obligations upon giving the COUNTY sixty (60) days prior written notice. 14. ENTIRE AGREEMENT. The COUNTY Audit Committee Request for Qualifications for Professional Auditing Services dated April 27, 2012, and AUDITOR Proposal to Provide Professional Independent Auditing Services , and this Agreement constitute the entire agreement of the parties hereto with respect to the subject matter hereof and supercedes any and all prior agreements with respect to such subject matter between the AUDITOR and COUNTY. It is understood and agreed that in the event of a Page 7 of 15 conflict between the terms of this Agreement and the terns of the above stated documents, the terms of the Agreement shall control. 15. CONSENT TO JURISDICTION. This agreement, its performance, and all disputes arising hereunder, shall be governed by the laws of the State of Florida, and both parties agree that the proper venue for any actions shall be in Monroe County. 16. ETHICS CLAUSE. AUDITOR warrants that AUDITOR has not employed, retained or otherwise had act on AUDITOR's behalf any former County officer or employee in violation of Section 2 or Ordinance No. 10-1990 or any County officer or employee in violation of Section 3 of Ordinance No. 10- 1990. For breach or violation of the provision the COUNTY may, at its discretion terminate this agreement without liability and may also, at its discretion, deduct from the agreement or otherwise recover, the full amount of any fee, commission, percentage, gift, or consideration paid to the former or present County officer or employee. 17. PUBLIC ENTITY CRIME STATEMENT A person or affiliate who has been placed on the convicted vendor list following a conviction for public entity crime may not submit a bid on an agreement to provide any goods or services to a public entity, may not submit a bid on an agreement with a public entity for the construction or repair of a public building or public work, may not submit bids on leases of real property to public entity, may not be awarded or perform work as a contractor, supplier, sub -contractor, or consultant under a agreement with any public entity, and may not transact business with any public entity in excess of the threshold amount provided in Section 287.017, for CATEGORY TWO for a period of 36 months from the date of being placed on the convicted vendor list. AUDITOR represents that AUDITOR has not been placed on the convicted vendor list. I& AUTHORITY. AUDITOR warrants that it is authorized by law to engage in the performance of the activities encompassed by the project herein described. Each of the signatories for the AUDITOR below certifies and warrants that the AUDI TOR's name in this agreement is the full name as designated in its organizing documents; that they are empowered to act and contract for the AUDITOR, and this agreement has been approved by the legal governing body of the AUDITOR. 19. LICENSES. The AUDITOR warrants that it shall have, prior to commencement of work under this agreement and at all times during said work, all required licenses whether federal, state, COUNTY or City. Page 8 of 15 20. INSURANCE. The AUDITOR agrees that it maintains in force at its own expense a liability insurance policy which will insure and indemnify the AUDITOR and the COUNTY from any suits, claims or actions brought by any person or persons and from all costs and expenses of litigation brought against the AUDITOR for such injuries to persons or damage to property occurring during the agreement or thereafter that results from performance by the AUDITOR of the obligations set forth in this agreement. At all times during the term of this agreement and for one year after acceptance of the project, the AUDITOR shall maintain on file with the COUNTY a certificate of the insurance of the carriers showing that the aforesaid insurance policy is in effect. The following coverage shall be provided: 1. Workers Compensation insurance as required by Florida Statutes. 2. Commercial General Liability Insurance with minimum limits of $500,000 per occurrence for bodily injury, personal injury and property damage. 3. Comprehensive Auto Liability Insurance with minimum limits of $300,000 combined single limit per occurrence. 4. Professional Liability Insurance which will respond to damages resulting from any claim arising out of the performance of professional services or any error or omission of the AUDITOR arising out of work governed by this agreement. Such insurance shall have the following minimum amounts of liability: $250,000 per Occurrence/$500,000 Aggregate. The policies shall provide no less than 30 days notice of cancellation, non -renewal or reduction of coverage. At all times during the term of this agreement and for one year after acceptance of the project, the AUDITOR shall maintain on file with the COUNTY a certificate of insurance showing that the aforesaid insurance coverages are in effect. 21. FORCE MAJEURE. The AUDITOR shall not be liable for any failure or delays resulting from circumstances or causes beyond its reasonable control, including, without limitation, acts or omissions due to fire or other casualty, natural disasters, war or other violence, or any law, order or requirement of any governmental agency or authority. 22. NOTICE. Any written notice to be given to either party under this agreement or related hereto shall be addressed and delivered as follows: Page 9of15 NO For AUDITOR: Edward Burke, Partner Cherry, Bekaert & Holland, L.L.P. 2626 Glenwood Avenue- Suite 300 Raleigh, NC 27608 For COUNTY: Danny L. Kolhage, Clerk 500 Whitehead Street, Ste. 101 Key West, Florida 33040 CountyAttorney and P.O. Box 1026 Key West, FL 33041-1026 IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed the day and year first above written. (SEAL) ATTEST: DANNY L. KOLHAGE, CLERK By: Deputya . ��- WITNESSES: BOARD OF COUNTY COMMISSIONERS OF MO,�, !E C , FLORIDA By: Mayor/Chairman AUDITOR: CHERRY, BEKAERT & LLAND, L.L.P. By: Partner Page 10 of 15 z. rn G J O 3 m O rrf o v ... -� V� AS •r .�.: ATTACHMENT A LIMITATIONS OF THE AUDITING PROCESS The objective of an audit is the expression of our opinion concerning whether the basic financial statements are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America. The COUNTY'S audits will include procedures designed to obtain reasonable assurance of detecting misstatements due to errors or fraud that are material to the financial statements. Absolute assurance is not attainable because of the nature of audit evidence and the characteristics of fraud. For example, audits performed in accordance with generally accepted auditing standards ("GAAS'J are based on the concept of selective testing of the data being examined and are, therefore, subject to the limitation that material misstatements due to errors or fraud, if they exist, may not be detected. Also, an audit is not designed to detect matters that are immaterial to the financial statements. In addition, an audit conducted in accordance with GAAS does not include procedures specifically designed to detect illegal acts having an indirect effect (e.g., violations of fraud and abuse statutes that result in fines or penalties being imposed on the COUNTY) on the financial statements. Further, the internal control audit is not designed to disclose deficiencies in internal control over financial reporting that, individually or in combination, are less severe than a material weakness. Projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Similarly, in performing the audit the AUDITOR will be aware of the possibility that illegal acts may have occurred. However, it is recognized that the audit provides no assurance that illegal acts generally will be detected, and only reasonable assurance that illegal acts having a direct and material effect on the determination of financial statement amounts will be detected. The AUDITOR will inform the COUNTY with respect to errors and fraud, or illegal acts that come to the AUDITOR'S attention during the course of the audit unless clearly inconsequential. The COUNTY agrees to cooperate fully with any procedures the AUDITOR deems necessary to perform with respect to these matters. As applicable, in accordance with requirements of the Single Audit Act Amendments of 1996, OMB Circular A-133 and the Florida Single Audit Act, the COUNTY'S audits will include tests of transactions related to major federal and state 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 the AUDITOR will not perform a detailed examination of all transactions, there is a risk that material errors, fraud, or illegal acts, or noncompliance may exist and not be detected by the AUDITOR. In addition, an audit is not designed to detect immaterial errors, fraud, or other illegal acts or illegal acts that do not have a direct effect on the basic financial statements or to major programs. It should be recognized that the audits generally provide no assurance that illegal acts will be detected, and only reasonable assurance that illegal acts having a direct and material effect on the determination of financial statement amounts will be detected. However, the AUDITOR will inform appropriate COUNTY representatives with respect to material errors and fraud, or illegal acts that come to the Page 11 of 15 AUDITOR'S attention during the course of the audits. The AUDITOR will include such matters in the reports as required for a Single Audit. If, for any reason, the AUDITOR is unable to complete the audits, or is unable to form or has not formed an opinion on the basic financial statements, the AUDITOR may decline to express an opinion or decline to issue a report as a result of the engagement. RESPONSIBILITIES AS TO INTERNAL CONTROLS As a part of the audits, the AUDITOR will consider the COUNTY'S internal control structure, as required by auditing standards generally accepted in the United States of America and Government Auditing Standards, sufficient to plan the audit and to determine the nature, timing, and extent of auditing procedures necessary for expressing our opinion concerning the basic financial statements. As part of the audits, the AUDITOR will obtain an understanding of the COUNTY and its environment, including internal controls, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing and extent of further audit procedures. Tests of controls may be performed to test the effectiveness of certain controls that the AUDITOR considers relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting fiom illegal acts and other noncompliance matters that have a direct and material effect on the financial statements. These tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, the AUDITOR will express no opinion in the AUDITOR'S report on internal control issued pursuant to Government Auditing Standards. The COUNTY recognizes that the basic financial statements and the establishment and maintenance of an effective internal control over financial reporting are the responsibility of management. The COUNTY also recognizes that management is responsible for identifying and ensuring that the COUNTY complies with the laws and regulations applicable to its activities. Appropriate supervisory review procedures are necessary to provide reasonable assurance that adopted policies and prescribed procedures are adhered to and to identify errors, fraud, or illegal acts. An audit is not designed to provide assurance on internal control. As required by OMB Circular A-133 and the Florida Single Audit Act and as part of the AUDITOR'S consideration of the COUNTY'S internal control structure, the AUDITOR will inform appropriate COUNTY representatives of internal control deficiencies and other matters that come to the AUDITOR'S attention. These deficiencies, if any, will be reported as either an internal control deficiency, a significant deficiency or a material weakness depending on the severity of the deficiency. As required by OMB Circular A-133 and the Florida Single Audit Act, the AUDITOR will perform tests of controls over compliance to evaluate the effectiveness of the design and operation of controls that the AUDITOR considers relevant to preventing or detecting material noncompliance with compliance requirements, applicable to each major federal and state award programs. However, 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 AUDITOR'S report on internal control issued pursuant to OMB Circular A-133 or the Florida Single Audit Act. Page 12 of 15 The COUNTY is responsible for informing the AUDITOR of its views regarding the risk of fraud at the COUNTY. The COUNTY is also responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing the AUDITOR about all known or suspected fraud affecting the COUNTY involving (a) management, (b) employees who have significant roles in internal control, and (c) others where the fraud could have a material effect on the financial statements. COUNTY management is also responsible for informing the AUDITOR of knowledge of any allegations of fraud or suspected fraud affecting the COUNTY received in communications from employees, former employees, regulators, or others. RESPONSIBILITIES AS TO COMPLIANCE The COUNTY'S audits will be conducted in accordance with the standards referred to in the Contract. As part of obtaining reasonable assurance about whether the basic financial statements are free of material misstatement, the AUDITOR will perform tests of the COUNTY'S compliance with applicable laws and regulations and the provisions of contracts and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance and the AUDITOR will not express such an opinion in the AUDITOR'S report on compliance issued pursuant to Government Auditing Standards. OMB Circular A-133 and the Florida Single Audit Act requires that the AUDITOR also plan and perform the audit to obtain reasonable assurance about whether the COUNTY has complied with applicable laws and regulations and the provisions of contracts and grant agreements applicable to major programs. The AUDITOR'S procedures will consist of the applicable procedures described in the OMB Circular A-133 Compliance Supplement and the requirements described in the Executive Office of the Governor's State Project Compliance Supplement for the types of compliance requirements that could have a direct and material effect of each of the COUNTY'S major programs. The purpose of those procedures will be to express an opinion on the COUNTY'S compliance with requirements applicable to major programs in the AUDITOR'S report on compliance issued pursuant to OMB Circular A-133 and the Florida Single Audit Act. REPRESENTATION FROM MANAGEMENT Management is responsible for the fair presentation of the basic financial statements in conformity with accounting principles generally accepted in the United States of America, for making all financial records and related information available to the AUDITOR, for ensuring that all material information is disclosed to the AUDITOR, and for identifying and ensuring that the COUNTY complies with the laws and regulations applicable to its activities and with the provisions of contracts and grant agreements. The COUNTY is also responsible for the preparation of the schedule of expenditures of federal and State awards in accordance with the requirements of OMB Circular A-133; and the Florida Single Audit Act. The COUNTY is also responsible for adjusting the financial statements to correct material misstatements, informing the AUDITOR of events that occurred subsequent to the balance sheet date until the date of the AUDITORS' report that might affect the financial statements or related disclosures and informing AUDITOR of any discovery of facts related to items that existed at the financial statement date that might affect the financial statements or related disclosures. Page 13 of 15 Additionally, as required by OMB Circular A-133 and the Florida Single Audit Act, it is management's responsibility to follow up and take corrective action on prior audit findings and to prepare a summary schedule of prior audit findings and a corrective action plan. The summary schedule of prior audit findings and the corrective action plan should be made available to the AUDITOR during the course of the engagement. Management, at the conclusion of the engagement, will provide to the AUDITOR a representation letter that, among other things, addresses these matters and confirms certain representations made during the audit, including, to the best of their knowledge and belief, the absence of fraud involving management or those employees who have significant roles in the COUNTY'S internal control, or others where it could have a material effect on the basic financial statements. The representation letter will also affirm to the AUDITOR that management believes that the effects of any uncorrected misstatements aggregated pertaining to the current year financial statements are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. The AUDITOR will rely on the COUNTY'S management providing these representations, both in the planning and performance of the audit, and in considering the fees that the AUDITOR will charge to perform the audit. ACCESS TO WORKING PAPERS The working papers for the engagement are the property of AUDITOR and constitute confidential information. Except as discussed below, any requests for access to the AUDITOR'S working papers will be discussed with COUNTY Management prior to making them available to requesting parties. The AUDITOR may be requested to make certain documentation available to regulators, governmental agencies (e.g., SEC, PCAOB, HUD, DOL, etc.) or their representatives ("Regulators') pursuant to law or regulations. If requested, access to the documentation will be provided to the Regulators. The Regulators may intend to distribute to others, including other governmental agencies, AUDITOR working papers and related documentation without AUDITOR knowledge or express permission. The COUNTY acknowledges and authorizes the AUDITOR to allow Regulators access to and copies of documentation as requested. The AUDITOR participates in a "peer review" program, covering audit and accounting practices. This program requires that once every three years the AUDITOR subject its quality assurance practices to an examination by another accounting firm. As part of the process, the other firm will review a sample of the AUDITOR'S work. It is possible that the work the AUDITOR performs for the COUNTY may be selected by the other firm for their review. If it is, they are bound by professional standards to keep all information confidential. If the COUNTY objects to having the work done by the AUDITOR subjected to peer review, the COUNTY is to notify the AUDITOR in writing. USE OF THIRD PARTY SERVICE PROVIDERS The AUDITOR may from time to time, and depending on the circumstances, use third -party service providers in serving the COUNTY. The AUDITOR may share confidential information about the COUNTY with these service providers, but shall remain committed to maintaining the confidentiality and security of the COUNTY information. Accordingly, AUDITOR shall maintain Page 14 of 15 internal policies, procedures and safeguards to protect the confidentiality of the COUNTY information. In addition, AUDITOR will secure confidentiality agreements with all service providers to maintain the confidentiality of COUNTY information and will take reasonable precautions to determine that appropriate procedures are in place to prevent the unauthorized release of COUNTY confidential information to others. In the event that AUDITOR is unable to secure an appropriate confidentiality agreement, the COUNTY will be asked to provide their consent prior to the sharing of COUNTY confidential information with the third -party service provider. Fwathermores, the AUDITOR will remain responsible for the work provided by any such third party service providers. ELECTRONIC TRANSMITTALS During the course of our audit, the COUNTY and AUDITOR may need to electronically transmit confidential information to each other, and to other entities engaged by either party. Although email is an efficient way to communicate, it is not always a secure means of communication and thus, confidentiality may be compromised. The COUNTY agrees to the use of email and other electronic methods to transmit and receive information, including confidential infonnation between the AUDITOR, the COUNTY and other third party providers utilized by either party in connection with the audit. Page 15 of 15 COUNTY OF MONROE, FLORIDA AUDIT CONTRACT FIRST AMENDMENT This is an amendment (First Amendment) to the contract dated July 18, 2012 ("Audit Contract"), by and between the Board of County Commissioners of Monroe County, Florida (hereinafter "County") and Cherry, Bekaert & Holland, L.L.P. (hereinafter "Auditor"), a Certified Public Accountant limited liability partnership licensed to do business within the State of Florida (collectively, the "Parties'l. WHEREAS, the County is required. under paragraph 2.03(4) of loan agreement WW602091 by and between Monroe County and the State of Florida, Department of Environmental Proection setting the terms and conditions for a State Revolving Fund loan in connection with the Big Coppitt wastewater system to conduct a project -specific closeout audit after the close of construction costs for the project; and WHEREAS, the Clerk of the Court wishes to engage the Auditor for the purpose of conducting the project -specific audit in addition to those duties already outlined in the Audit Contract; and WHEREAS, the Auditor will accept the additional responsibilities; and WHEREAS, it is advisable to update the Audit Contract to reflect the name change of the auditing firm from Chevy, Bekaert L.L.P. to Chevy Bekaert L.L.P.; now therefore IN CONSIDERATION of the mutual promises, benefits and covenants set forth herein, the Parties agree as follows: 1. Under Section 1, SCOPE OF SERVICES, a new paragraph 1.11 is added, as follows: 1.11 The Auditor shall perform the project -specific closeout audit of the.County's Florida Department of Environmental Protection Loan No: WW602091 from April 22, 2010 (date of inception) through loan close-out. The audit shall consist of an audit of special purpose financial statement of the loan revenues and expenditures, budget and actual, and shall be based on special purpose financial statements supplied by the Monroe County Clerk, as outlined in the engagement letter dated December 4, 2013, by and between Auditor and County. 2. Under Section 4, COMPENSATION AND TERMS OF PAYMENT, a new paragraph is added, as follows: 1 In return for the project -specific closeout audit referenced in paragraph 1.11, the Auditor shall receive a fee in the amount of one hundred twenty dollars ($120.00) per hour times the number of hours worked on the project up to a maximum of one hundred hours, or twelve thousand dollars ($12,000.00). This fee shall be inclusive of all fees and costs. Notwithstanding the terms set forth in the engagement letter dated December 4, 2013, the contractual fee will be paid in accordance with the Florida Local Government.Prompt Payment Act. 3. The name of the firm is changed from Cherry, Bekaert & Holland LLP to Cherry Bekaert LLP wherever it appears in the Audit Contract including this amendment. 4. All other terms and conditions of the Audit Contract dated July 18, 2012 remain in full force and effect. WHEREOF, the Parties hereto have caused this agreement to be executed on the year first above written. Y HEAVILIN, lark BOARD OF COUNTY COMMISSIONERS OF MONROE COI FLORIDA Deputy Jerk By: Mayor/Chairperson WITNESSES: tPot.4w4. Q • .. Print AN';c;n A w Prida6e. cjC 1'1�(�Y` l�t,Li�IGtInS TOR: By: Partner Print name: fdwA4 T. VvrkE o M 0 Cc •a _ MONROE COUNTY ATTORNEY APP VE AS TO O NTH1A L. HALL --� A sisTANT COUNTY ATTORNEY M o �+ Date 1� a 3 - -- 2 %an% Cherry ekaert- go sh December 4, 2013 Mrs. Amy Heavilin, CPA Clerk of Circuit Court and Comptroller Monroe County, Florida 500 Whitehead Street Key West, Florida 33040 Dear Mrs. Heavilln: This engagement letter between Monroe County, Florida (hereafter referred to as the 'County") and Cherry Beksert LLP (the 'Firm" or 'Cherry Bekaerr) sets forth the nature and scope of the services we will provide, the County's required Involvement and assistance in support of our services, the related fee arrangements and other Terms and Conditions, which are attached hereto and Incorporated by reference, designed to facilitate the performance of our professional services and to achieve the mutually agreed upon objectives of the County. SUMMARY OF SERVICES We will provide the foilowing services to the County: Auditservices 1. We will audit the special purpose financial statements of the loan revenues and expenditures — budget and actual - of the County's Florida Department of Environmental Protection Loan No. WW602091 from April 22, 2010 (date of Inception) through loan close-out The special purpose financial statements are the responsibility of the County's management. YOUR EXPECrAT1ONS As part of our planning process, we have discussed with you your expectations of Cherry Beksert, changes that occurred during the year, your views on risks facing- you, any relationship Issues with Cherry Bekaert, and specific engagement arrangements and timing. Our services plan, which Includes our audit plan, Is designed to provide a foundation for an effective, efficient, and quality -focused approach to accomplish the engagement objectives and meet or exceed your expectations. Our service plan witi be reviewed with you periodically and will serve as a benchmark against which you will be able to measure our performance. Any additional serAm that you may request', and that we agree to provide, will be the subject of separate written arrangements. The engagement will be led by Eddie Burke, who will be responsible for assuring the overall quality, value, and timeliness of the services provided to you. AUDIT SERVICES The objective of our audit is to report on the fairness of presentation of the special purpose financial statements and the rules and regulations of the Florida Department of Environmental Protection. The special purpose financial statements are not Intended to be a presentation in conformity with U.S. generally accepted accounting principles. nOL TILLY 2626Glenwood Avrnue,Suite 200.RaleigkNC27608-104S I r 9M782.3040 1 cbkmm �tttteu s3a�aa�a Monroe County, Florida December 4, 2013 Page 2 The reports on Internal control and compliance will each Include a paragraph that states that the purpose of the report is solely to describe (1) the scope of testing of internal control over financial reporting and compliance and the result of that Nesting and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance, and (2) that the report is an integral part of an audit performed in accordance with Government Audtlng Standards in considering internal control over financial reporting and compliance. The paragraph will also state that the report is not suitable for any other purpose. Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America; Goverrmrent AudNng Standards, issued by the Comptroller General of the United States the rules and regulations of the Florida Department of Environmental Protection; and will Include Nests of accounting records and other procedures as deemed necessary to enable us to express such opinions and to render the required reports. If any of our opinions resulting from the procedures described above are other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed opinions, we may decline to express opinions or issue a report as a result of this engagement. FEES The estimated fee contemplates only the services described In the Summary of Services section of this letter. If hilenegemen t requests additional services not fisted above, we will provide an estimate of those fees prior to commencing additional work. The following summed zes the fees for the services described above: Audit servtcce Audit of the special purpose financial statements for a fee in the amount of one hundred twenty dollars ($120.00) per hour times the number of hours worked on the project up to a maximum of one hundred hours, or twelve thousand dollars ($12,000.00). The fees will be billed periodically. Invoices are due on presentation. A service charge will be added to past due accounts equal to 1% per month (12% annually) on the previous month's balance less payments received during the month, with a minimum charge of $2.00 per month. If the foregoing is in accordance with your understanding, please sign a copy of this letter in the space provided and return it to us. If you have any questions, please call Eddie Burke at 919-782-1040. Monroe County, Florida December 46 2013 Page 3 Sincerely, CHERRY BEKAERT LLP C � '�L� 1-`? ATTACHMENT — Engagement Letter Terms and Conditions Monroe County, Florida -.0 . _ ACCEPTED BY: cn %A 0 c+ s 4 .r :�� U- f .Z' LJ J J o N MON OE COUNTY ATTORNEY RO D A T F M: C NT I A ASSIS AI�T O NT T ORNEY Date !Dolt Attachment - Page 1 Cherry Bekaert LLP Engagement Letter Terms and Conditions The following terns and conditions are an Integral part of the attached engagement letter and should be read in their entirety in conjunction with your review of the letter. LIMITATIONS OF THE AUDIT REPORT Should the County wish to include or incorporate by reference these special purpose financial statements and our report thereon into any other document at some future date, we will consider granting permission to include our report into another such document at the time of the request. However, we may be required by generally accepted auditing standards ('GAAW) to perform certain procedures before we can give our permission to include our report in another document such as an annual report, private placement, regulator filing, official statement, offering of debt securities. etc. You agree that you will not include or Incorporate by reference these special purpose finandai statements and our report thereon, or our report into arty other document without our prior written permission. In addition, to avoid unnecessary delay or misunderstandings, it is important to provide us with timely notice of your intention to Issue any such document. LIMITATIONS OF THE AUDIT PROCESS In conducting the audit, we will perform tests of the socounting records and such other procedures as we consider necessary In the circumstances to provide a reasonable basis for our opinion on the special purpose finandel statements. We also will assess the accounting principles used and significant estimates made by Management, as well as evaluate the overall financial statement presentation. Our audit will Include procedures designed to obtain reasonable assurance of detecting misstatements due to errors or fraud that are material to the financial statements. Absolute assurance is not attainable because of the nature of audit evidence and the characteristics of fraud. For example, audits performed in accordance with GAAS are based on the concept of selective testing of the data being examined and are, therefore, subject to the limitation that material misstatements due to errors or fraud, 0 they exist, may not be detected. Also, an audit is not designed to detect matters that are Immaterial to the financial statements. in addition, an audit conducted In accordance with GAAS does not include procedures spedficelly designed to detect illegal acts having an indirect effect (e.g.. violations of fraud and abuse statutes that result in fines or penalties being imposed on the County) on the special purpose financial statements. Similarly, in performing our audit we will be aware of the possibility that Illegal ads may have occurred. However, it should be recognized that our audit provides no assurance that illegal ads generally will be detected, and only reasonable assurance that illegal ads having a direct and material effect on the determination of financial statement amounts will be detected. We will inform you with respect to errors and fraud, or illegal ads that cane to our attention during the course of our audit unless dearly Inconsequential. In the event that we have to consult with the County's counsel or counsel of our loosing regarcling any illegal ads we identify, additional fees Incurred may be billed to the County. You agree to cooperate fully with any procedures we deem necessary to perform with respect to these matters. If, for any reason, we are unable to complete the audit, or are unable to form, or have not formed an opinion on the special purpose finandel statements, we may decline to express an opinion or decline to Issue a report as a result of the engagement. We will notify the appropriate party within your organization of our decision and discuss the reasons supporting our position. Attachment - Page 2 MANAGEMENT'S RESPONSIBILITIES RELATED TO THE AUDIT Management is responsible for the fair presentation of the special purpose financial statements, for making all financial records and related information available to us, for ensuring that all material information Is disclosed to us, and for identifying and ensuring that the County complies with the laws and regulations applicable to its activities and with the provisions of contracts and grant agreements. Management is also responsible for adjusting the special purpose financial statements to correct material misstatements, informing us of everts that occurred subsequent to the statement date until the date of the auditors report that might affect the special purpose financial statements or related disclosures and informing us of any discovery of facts related to items that existed at the financial statement datethat might affect the special purpose financial statements or related disclosures. Management Is responsible for informing us of its views regarding the risk of fraud at the County. Management must inform us of their knowledge of any allegations of fraud or suspected fraud affecting the County received in communications from employees, former employees, regulators, or others and for Informing us about all known or suspected fraud affecting the County involving (a) Management, (b) employees who have significant roles in internal control, and (c) others where the fraud could have a material effect on the financial statements. Management is responsible for the design and implementation of programs and controls over financial reporting and to prevent and detect fraud. Appropriate supervisory review procedures are necessary to provide reasonable assurance that adopted polities and prescribed procedures are adhered to and to Identity errors and fraud or illegal acts. Asa part of our audit, we will consider the County's internal control structure, as required by GAA% suifident to plan the audit and to determine the nature= timing, and extent of auditing procedures necessary for expressing our opinion concerning the financial. statements. An audit is not designed to provide any assurance on Internal contro[s. As part of our consideration of the County's internal control structure, we will inform you of matters that come to our attention that represent significant defidendes or material weaknesses in the design or operation of the Internal control structure. Management is responsible for establishment and maintenance of a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying to us previous audits or other engagements or studies related to the objectives used in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recrommendedons resulting from those audits or other engagements or studies. You are also responsible for providing management's views on our current findings, cenduskums and recommendations, as well as your planned corrective actions, and the timing and format related thereto. At the conclusion of the engagement, Management will provide to us a representation letter that, among other things, addresses (1) Managements responsibilities related to the audit and confirms certain representations made to us during the audit. Including. Management's acknowledgement of its responsibility for the design and ample nentation of programs and controls to prevent and detect fraud: (2) Management's responsibilities related to the monitoring of internal control over financial reporting. and (3) Management's knowledge, directly or from allegations by others, of fraud or suspected fraud affecting the County. The representation letter will also affirm to us that Management believes that the effects of any uncorrected misstatements, if any, pertaining to the financial statemennts are immaterial, both individually and in this aggregate, to the financial statements taken as a whole. The Firm will rely on Management providing these representations to us, both in the planning and performance of the audit. and in considering the fees that we will charge to perform the audit. Because we will be relying on Managements representations, you agree to indemnify the Flan, and its partners and employees, and hold them harmless from all claims, liabilities, losses, and costs arising in circumstances where there has been a known misrepresentation by an officer or employee of the County regardless of whether such officer or employee was acting in the County's interest, and even if the Firm acted negligently or Attachment - Page 3 MUMMY In NOW to uncover or detect such misrepresentation. This Indemnification will survive termination of this letter. AUDIT PROCEDURES —GENERAL An audit Includes examining, on a test basis, evidence supporting the amounts and disclosures In the special purpose Inancial statements; therefore, our audit will Involve professional judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the special purpose financial statements are free of material misstatement, whether from (1) errors. (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or govemmental regulations that are attributable to the County or to acts by management or employees acting on behalf of the County. Because the determination of abuse Is subjective, Government AudBng Standards do not expect auditors to provide reasonable assurance of detecting abuse. Because an audit is designed to provide reasonable, but not absolute assurance and because we will not perform a detailed examination of all transactions, there Is a risk that material misstatements or noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect Immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements or major programs. However, we will inform you of any material errors and fraud, or illegal ads that come to our attention during the course of our audit. We will also inform you of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. 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 fasts of documentary evidence supporting the transactions recorded In the accounts, and may Include tests of the physical existence of inverriodes and direct confirmation of receivables and certain other assets and liabilities by correspondenoe with selected Individuals, creditors and financial Institutions. We will request written rgnesentations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit we will also require certain written representations from you about the financial statements and related matters. AUDIT PROCEDURES— INTERNAL CONTROLS Our audit will Include obtaining an understanding of the County and Its environment, Including internal controls, sufficient to 888e88 the risks of material misstatement of the financial statements and to design the nature, timing and extent of further audit procedures. Tests of controls may be performed to test the effedivenass of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the special purpose financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material et%ct on the spacial Purpose Mendel Statements. Our tests. If performed, will be less In scope than would be necessary to reader an opinion on Internal control and, accordingly, no opinion will be expressed in our report on Internal control issued pursuant to Government AudNng Standards. An audit Is not designed to provide assurance on internal control or to identify significant deficiencies. 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 professional standards, and Government Auditing Standards. Attachment - Page 4 AUDIT PROCEDURES - COMPUANCE As part of obtaining reasonable assurance about whether the special purpose finandal statements are free of material misstatement, we will perform tests of the County's compliance with applicable laws and regulations and the provisions- of the Florida Department of Environmental Protection Loan No. WWeMO91. However, the objective of those procedures will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Govemment AudNng Standa-d& Communications At the conclusion of the audit engagement, we may provide Management and those charged with governance a letter stating any significant deficiencies or material weaknesses which may have been Identified by us during the audit and our recommendations designed to help the County make Improvements in Its internal control structure and operations related to the identified matters discovered In the financial statement audiL As part of this engagement we will ensure that certain additional matters are communicated to the appropriate members of the County. Such matters include (1) our responsibility under GAAS; (2) the Inillat selection of and changes In significant accounting policies and their application; (3) our Independence with respect to the County; (4) the process used by Management in formulating particularly sensitive accounting estimates and the basis for our conclusion regarding the reasonableness of those estimates; (5) audit adjustments, if any, that could, in- our judgment, either Individually or In the aggregate be significant to the financial statements or our report; (6) any disagreements with Management concerning a financial accounting, reporting or auditing matter that could be significant to the financial statements; (7) our views about matters that were the subject of Management's consultation with other accountants about auditing and accounting matters; (8) major Issues that were discussed with Management In connection with the retention of our services, including, among other matters, any discussions regarding the application of accounting principles and auditing standards; and (9) serious difficulties that we encountered in dealing with Management related to the performance of the audit. Government Auditing Standards require that we provide you with a copy of our most recent quality control review report Our most recent peer review report accompanies this letter. OTHER MATTERS Access to working papers The working papers and related documentation for the engagement are the property of time Firm and constitute confidential Information. We have a responsibility to retain the documentation for a period of time to satisfy legal or regulatory requirements for records retention. Except as discussed below, any requests for access to our working papers will be discussed with you prior to making them available to requesting parties. We may be requested to make certain documentation available to regulators, governmental agencies (e.g.. SEC. PCAOB, HUD, DOL. etc.) or their representatives ("Regulators") pursuant to law or reguladons. If requested, access to the documentation will be provided to the Regulator. The Regulators may intend to distribute to others, including other governmental agencies, our working papers and related documentation without our knowledge or express permission. You hereby acknowledge and authorize us to allow Regulators access to and copies of documentation as requested. In addition, our Flan, as well as all other major accounting firms, participates In a "peer review" program covering our audit and accounting practices as required by the American Institute of Certified Public Accountants. This program requires that once every three years we subject our quality assmrance practices to an examination by another accounting firm. As part of the process. the other firm will review a sample of our work. It is possible that the work we perform for you may be selected by the other firm for their review. If it is, they are bound by professional standards to keep all information confidential. If you object to having the work we do for you reviewed by our peer reviewer, please notify us in writing. Attachment - Page S Electronic transmittals During the course of our engagement, we may need to electronically transmit confidential Information to each other, within the Finn, and to other entitles engaged by either party. Although omen Is an el ident way to communicate, It Is not always a secure means of communication and thus, confidentiality may be compromised. You agree to the use of omen and other electronic methods to transmit and receive Information, Including confidential Information between the Firm, the County and other third party providers utilized by either party in connection with the engagement. Subpoenas In the event we are requested or authorized by you or required by government regulation, subpoena, or other legal process to produce our working papers or our personnel as witnesses with respect to our engagement for you, you will, so long as we are not a party to the proceeding In which the information is sought, reimburse us for our professional time and expense, as well as the fees and expenses of our counsel, incurred in responding to such a request at standard billing rates. Dispute resolution procedures If any dispute, controversy or claim arises in connection with the performance or breach of this agreement, either party may, on written notice to the other party, request that the matter be mediated. Such mediation would be conducted by a mediator appointed by and pursuant to the nudes of the American Arbitration Association (AAA) or such other neutral facilitator acceptable to both parties. Both parties would exert their best efforts to discuss with each other in good faith their respective positions In an attempt to finally resolve such dispute, controversy, or claim. TERMS AND CONDITIONS SUPPORTING FEE The estimated fees set forth In the atteched engagement letter are based on antidpated full cooperation from your personnel, timely delivery of requested audit schedules and supporting lnformation. timely communication of all significant accounting and financial reporting matters, the assumption that unexpected circumstances will not be encountered during the audit, as well as working specs and clerical assistance as mutually agreed upon and as is normal and reasonable In the circumstances. We stove to ensure that we have the right professionals scheduled an each engagement. As a result, sudden County requested scheduling changes or scheduling changes necessitated by the agreed information not being ready on the agreed upon dates can result In expensive downtime for our professionals. Any last minute schedule changes that result In downtime for our professionals could result In additional fees. Our estimated fee does not include assistance in bookkeeping or other accounting services not previously described. If for any reason the County is unable to provide such schedules, information and assistance, the Firm and the County will mutually revise the fee to reflect additional services, If any, required of us to achieve these objectives. The estimated fees contwnplate that the County will provide adequate documentation of Its systems and controls related to significant transaction cycles and audit areas. In providing our services, we win consult with the County with respect to matters of accounting, financial reputing or other significent business issues as permitted by professional standards. Accordingly, time necessary to effect a reasonable amount of such consultation Is reflected in our fee. However, should a matter require research, consultation or audit work beyond that amount. the Firm and the County will agree to an appropriate revision in our fee. Attachment - Page 6 The estimated fees are based an auditing and accounting standards effective as of the date of this engagement letter and known to apply to the County at this time, but do not include any time related to the application of new auditing or accounting standards that Impact the County for the first time. If new auditing or accounting standards are issued subsequent to the date of this letter and are effective for the period under audit, we will estimate the impact of any such standard on the nature, timing and extent of our planned audit procedures and will communicate with you concerning the scope of the additional procedures and the estimated fees. The County agrees to pay all costs of collection (including reasonable attorneys' fees) that the Finn may Incur In connection with the collection of unpaid invoices. In the event of nonpayment of any invoice rendered by us, we retain dw right to (a) suspend the performance of our services. (b) change the payment conditions under this engagement letter, or (c) terminate our services. If we elect to suspend our services, such services w O not be resumed until your account Is paid. H we elect to terminate our services for nonpayment, the County will be obligated to compensate us for all time expended and reimburse us for all expenses through the date of termination. This engagement letter sets forth the entire understanding between the County and the Firm regarding the services described herein and supersedes any previous proposals, correspondence, and understandings whether written or oral. Any subsequent changes to the terns of this letter. other than additional billings, will be rendered to writing and shall be executed by both partles. Should any portion of this engagement letter be ruled invalid, it is agreed that such Invalidity will not affect any of the remaining portions. eYsWARnm LLP EISN PER 2MLNKln NoWay eeeour•aaet t a®vnat• RO. am 988 rd+tact NJ 0=8 7' 73Ii891000 t 732,287.3200 System Reartew Report To the Partners of Cherry. Bakaert & Holland LLP. and the National Peer Review Committee We have reviewed the system of quality control for the ac cumin! and auditing practice of Cherry. Beham & Holland L.I.P. (the firm) applicable. to non -SEC issuers in effect far the year ended April 30, 2010. 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 CarWiad public Accountants. The firm Is responsible for designing a system of quality control and emuRiyMJg with it to provide the.finn with reasonable assurance of Performing and reporting in conformity with applicable Professional standwds In all material respacm Our responsibillity is to express an opinion on the design of the system of quality control and tine firm's eompilance therewith on our review. The nature, ape. limitations of, and the procedures petformed In 'a System Review are described in the standards aty+ww.atcaa.arrr/orsu man. As required by tine standards, engagemants selected for review included engagements perfbnvwd under 6overament Auditing Standards, audits of employee beneft plans, and an audit perknyked under FDICI& in our opinion, the system of quality control for the accounting and auditing practise of Chevy, Belmert & Holland LLP., applicable to ran -SEC issuers in effect for the year ended April 30, 20A has been suitably designed and compiled with to provide the firm with nmonable assurance of performing and reporting in coaWmity, with applicable praftisional standards in ail material respects. Rrms awn receive a rating of pars, Pons with d*dency#W or fop. Cherry, Bakaert at Holland LLP. has received a peer review rating of pass. New Yw* M** JMW , Peao syhw" ' Cayman tAwt t VWMAIWWA as adW INNOWa rs7 AICPA Pest R&Mw Program A*" M the PnrReMawCammiase October 7, 2010 Howard Joseph Kies, CPA Chary Bekaart & Holland LLP 1700 Bayberry CI Ste 300 Ste 300 Richmond, VA 23226 Dear Mr. Kies: It is my Pleasure to notiijr you that on September 16.2010 the Natiomsl Par Review Committee sccepted the feport on the most fearrt system Peet review of your firm. The due date for your mart review is October 31. 2013. This is the data by which all review documents should be C=Pletad and submitted to the administering entity.. As you know, the report bad a pear review faring of Pau. The Committee asked me to convey its congtatulatiaas to the firm. Sincerely. 14W.- M4 Robert Robweder Chair--Nodwd PRC np rc@sicps.org419 402-4502. cc: Lawrence Gray, CPA Firm Number. 10011816 Review Number: 309298 A,. kMMM10drr+- Hero4 2WtAVFmeare.DVdWKheV W•MM40 .gAMIJ4 • MOCUMO