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Home My WebLink AboutMarcum Rachlin ORIGINAL PRO P 0 S A L Proposal for Professional Audit Services for The City of Sunny Isles Beach RFP # 10-06-01 July 1 3, 2010 ECEIVED JUL 1 2- 2010 ,- ~lO"'6& Cll)' 01 SUMY IIIeI Beach ON1ee 01 the CI CIl,(\( MARCUM RACHLIN ACCOUNTANTS... ADVISORS A Division of Marcum LLP Susan L. Friend, CPA 450 East Las Glas Boulevard I Ninth Floor I Fort Lauderdale, FL 33301 Phone 954.525. J 040 I susan.friend@marcumrachlin.com marcumrachlin.com / ~ ~ -~ Table of Contents Transmittal Letter 1, General Requirements 2, Independence 3, License to Practice in Florida 4, Firm Qualifications and Experience 5, Partner, Supervisory and Staff Qualifications and Experience 6, Prior Engagements with the City of Sunny Isles Beach 7, Similar Engagements with Other Government Entities 8, Audit Approach 9, Identification of Anticipated Potential Audit Problems APPENDIX A - Dollar Cost Bid APPENDIX B - Peer Review Reports APPENDIX C - Profiles of Engagement Team APPENDIX D - Licenses APPENDIX E - Sworn Statement Pursuant to Section 287.133(3){a) Florida Statutes on Public Entity Crimes APPENDIX F - Non-Collusion Affidavit APPENDIX G - Sample Management Letters APPENDIX H - Addendums 1 2 3 3 4 5 6 7 13 MARCUM MarcumRachlin Proposal for Professional Audit Services RACH LI N ACCOUNTANTS. ADVISORS A DiVISion of Marcum LLP SlWiNWfi, 1. GENERAL REQUIREMENTS FIRM PROFILE MarcumRachlin, a division of Marcum LLp, is one of the largest independent public accounting and advisory services firms in the nation. Ranked 17th among the "Top 100 Firms" by Accounting Today, MarcumRachlin offers the resources of more than 950 professionals, including 120 partners, in 15 offices throughout Florida, New York, New Jersey, Massachusets, Connecticut, Pennsylvania and Grand Cayman. The Firm maintains permanent offices in Florida in Fort Lauderdale, West Palm Beach, Miami and Orlando. Since its founding in 1955, MarcumRachlin (previously known as Rachlin LLP) has been a regional leader, delivering the personal attention of a small firm matched with the global resources and experience of a larger firm. It is ranked among the leading firms in the Southeast. In 2009, the Firm extended its reach into the Northeast through a strategic merger with New York-based Marcum & Kliegman LLP (now known as Marcum LLP). The two firms, with a combined history of 112 years, each possess an outstanding reputation in their respective regions. In addition to accounting, audit and tax, MarcumRachlin's professional services include mergers and acquisition planning, family office services, forensic accounting and litigation support. The Firm has developed several niche practice areas including services for the government, public and not-for-profit sectors; alternative investment partnerships; sales and use tax recovery services; targeted professional services for hedge funds; SEC-registrants; and bankruptcies and receiverships. The Firm has been performing audits of governmental entities for almost 40 years. The Firm also provides nontraditional services to clients through its separate marketing and graphic design division. In 2008, MarcumRachlin (then known as Rachlin) was selected as one of Inside Public Accounting's "Top 100 Accounting Firms." In 2007, the Firm's Managing Partner, Lawrence Blum, was honored by ~ - >--~ the South Florida Business Journal as one of the year's "Ultimate CEOs," and the Rachlin Foundation was named among the top 15 givers to South Florida charities. Marcum is a member of the Marcum Group, the gateway to a group of organizations that provide a variety of professional services including accounting and advisory, technology solutions, recruiting, wealth management and marketing and design. These organizations include MarcumRosenfarb LLC; MarcumRachlin, a division of Marcum LLP; Marcum Technology LLP; MarcumBucanan Associates LLC; Marcum Search LLC; and Marcum Financial Services LLC. OUR SPECTRUM OF SERVICES INCLUDE: Assurance Services Assurance services primarily involve the audit of financial statements and the issuance of an opinion on the fairness of the presentation of financial position and results of operations of an entity. Our philosophy and practice is to blend technical, practical and business approaches when conducting each engagement. Advisory Services The Firm's Advisory services encompass the analysis of business problems, the evaluation of the scope of specific situations, as well as the development of solutions and alternative procedures. The purpose of this comprehensive endeavor is to assist clients in solving their management problems. The scope of an advisory engagement is determined in large measure by the client, and depends partially on the extent of involvement of the client's own personnel. The Firm aims to provide clients with "know-how" by using personnel who have the knowledge and experience to serve clients in a wide range of functional areas such as accounting systems, computer systems, financial controls and organizational structure as well as business valuations and forensic audits. MARCUM MarcumRachlin R A C H L I N Proposal for Professional Audit Services ACCOUNTANTS. ADVISORS A Division of Marcum LLP Page - 1 Tax Services The term tax services is sometimes understood to mean tax return preparation for private companies and individuals; however, all organizations, including government entities, must understand and comply with various provisions of the Internal Revenue Code. Our service team has the knowledge and experience to meet our clients' tax needs. Information System Capabilities Our Information Technology (IT) assurance services were developed in response to an increased risk environment. The Firm uses the Control Objectives for Information and Related Technologies (COBIT) framework on all information systems audits. We also provide a wide range of IT advisory services, including: · System vulnerability studies · IT compliance assessments · Business continuity planning evaluations QUALITY CONTROL SYSTEM The quality of the Firm's professional practice is of utmost importance to the Firm, to clients and to the users of our reports. We provide services that conform to professional standards and consider the integrity of individuals in determining our professional relationships. To ensure that the Firm's performance is in conformity with our stated standards and those issued by the American Institute of Certified Public Accountants (AICPA), our quality control system encompasses the following: Professional Development Every year, the Firm provides a minimum of 40 hours of continuing professional education (CPE) in-house to all professional staff. These seminars include sessions in governmental accounting, auditing and financial reporting, including Yellow book, single audit and other accounting and auditing issues. In / ~ - ~ -~ addition to the in-house training, our partners and professional staff attend various outside seminars. The number of hours of specialized training received in the last three years by supervisory personnel assigned to the audit engagement in governmental accounting and auditing, including information technology auditing, is indicated in each respective resume included in this proposal in Appendix C. The Firm is also committed to providing professional development programs to the entire South Florida community involved in the governmental sector. For the last 15 years, we have presented an annual Governmental Symposium, which focuses on current developments in governmental affairs, including accounting, legal and operational topics. We encourage our clients and non-clients to attend these two days of CPE. 2. INDEPENDENCE MarcumRachlin's policy is that all professional personnel be familiar with and adhere to the independence, integrity, and objectivity rules, regulations, interpretations, and rulings of the American Institute of Certified Public Accountants (AICPA), the various state boards of accountancy and state CPA societies, relevant statutes, and applicable regulatory agencies. In addition, all professionals- from partner to staff auditor - are required to sign affidavits attesting to their independence each year. MarcumRachlin's quality control document contains detailed policies related to maintaining independence. These policies are the most stringent policies adopted by the AICPA and the various state boards of accountancy. Engagement team members are required to consider any possible situations where independence may be impaired during the acceptance or continuance process and if any arise during the performance engagement. The Firm is independent of the City of Sunny Isles Beach as defined by the American Institute of Certified Public Accountants (AICPA), Generally Accepted Auditing Standards and the U.S. General Accounting Office (Government Auditing Standards - 2003 Edition). MARCUM MarcumRachlin R A C H L I N Proposal for Professional Audit Services ACCOUNTANTS '" ADVISO~S A Division of Marcum LLP Page - 2 - The Firm for the past five years has provided professional audit services to the City of Sunny Isles Beach. We do not consider these services to affect our independence with the City. There have been no other professional relationships with the City in the past five years.The Firm, during the period of agreement with the City, shall provide written notice of any professional relationships entered into during the period that might constitute a conflict of interest. 3. LICENSE TO PRACTICE IN FLORIDA Marcum LLP, of which MarcumRachlin is a division, is a licensed certified public accounting firm. The Firm is a member of the AICPA and the Florida Institute of Certified Public Accountants (FICPA). All professional staff, upon successful completion of the CPA exam, become members of both organizations. All assigned key professional staff members are licensed to practice in accordance with Florida regulations. The Firm is registered annually with the Florida Department of Business and Professional Regulations - Board of Accountancy. 4. FIRM QUALIFICATIONS AND EXPERIENCE MarcumRachlin, the Florida division of Marcum LLP, has offices in Fort. Laudedale, Miami, West Palm Beach and Orlando with 30 partners and a professional staff of more than 200, including support staff. -~ MarcumRachlin Total Governmental _Staff_ Partners 30 4 Senior Managers 14 1 Managers 12 3 Supervisors 11 3 Seniors 21 11 Staff Accountants 50 22 Operations 67 2 LlT~16 -~ The audit partner, Susan L. Friend will be assisted by another partner, Michael D. Futterman, a manager, - / ... - ~ -~ senior and two staff accountants from the Firm's Fort Lauderdale and Miami offices who will be assigned to this engagement on a full-time basis. We do not anticipate any personnel being assigned to this engagement on a part-time basis. As an industry leader with a major concentration in the public sector, the Firm has provided professional services to governmental entities for more than 40 years. The Firm has an extensive audit practice in the governmental arena performing audits of approximately 40 cities, towns, villages, and special districts, most of which require Federal and State Single Audits. This focus allows us to provide the highest level of professional service to our governmental clients. The Firm's staff has extensive experience in preparing governmental financial statements and assisting clients with implementation of new GASB Standards. As discussed in detail in Section 1, General Requirements, our spectrum of services include; Assurance Services, Advisory Services, Tax & Business Services and Information System Capabilities. The Firm participates in an external quality review program requiring an on-site independent examination of our Accounting and Auditing practice. The Firm has consistently received an unqualified opinion on the quality of the Firm's audit practice. This is the highest level of achievement and recognition in the peer review program. The latest peer review reports for Marcum & Kliegman LLP (now Marcum LLP), and Rachlin LLP (now MarcumRachlin, a division of Marcum LLP) are included in Appendix B. The Firm's governmental engagements were included in its latest review. There are no pending actions as a result of any federal or state desk reviews or field reviews to the Firm's audits or its auditors of governmental entities during the past three (3) years. There has been no disciplinary action taken nor pending against the Firm or any of the professional staff during the past three (3) years with the State Board of Accountancy or the Auditor General. MARCUM MarcumRachlin R A C H L I N Proposal for Professional Audit Services ACCOUNTANTS.6. ADVISORS A Division of Marcum LLP Page - 3 - / ~ -~ 5. PARTNERS, SUPERVISORY, AND STAFF QUALIFICATIONS AND EXPERIENCE TEAM STRUCTURE The experience of the personnel assigned to the engagement is critical to providing you with an effective and efficient audit. Their prior experience will be invaluable to the engagement. These are the professionals who will be on the job on a day-to- day basis; they need to be experienced in auditing governmental entities. These professionals are familiar with the complexities of governmental accounting, auditing and financial reporting, including all GASB pronouncements, the Federal and Florida Single Audit Acts, OMB Circular A-133, fund operations, State laws and Rules of the Auditor General. The individuals listed will be assigned to the engagement. The partners and the audit manager assigned to this engagement are licensed to practice in the State of Florida. Copies of the CPA license for all individual CPA's assigned to the audit and for the Firm are included in Appendix D. Each of these individuals have maintained the required CPE in governmental accounting and have attended an Ethics course for CPA's in Florida. Resumes on each partner and manager that will be assigned to this engagement team are included in Appendix C. Our commitment to active participation in local governmental organizations is included in the resumes. The resumes also include each individual's educational background and other pertinent information. Since all of MarcumRachlin's governmental audit staff are qualified to perform financial audits of municipalities and other government agencies, the Firm can assure the quality of staff over the engagement term. The Firm strives to balance skill-set requirements with continuity on engagements. As staff develop, we encourage them to take increased responsibility on engagements that they have been previously assigned. If there are any changes to key personnel for reasons other than those specified in the request for proposal, written permission and approval will be requested from the City. MARCUM MarcumRachlin R A C H L I N Proposal for Professional Audit Services ACCOUNTANTS... ADVISORS A Division of Marcum LLP Page - 4 / ~ ~-~ 6. PRIOR ENGAGEMENTS WITH THE CITY OF SUNNY ISLES BEACH. The Firm provided professional auditing services to the City in the past five years. All work was performed from the Firm's Miami and Fort Lauderdale offices. Scope Date Engagement I Total Principal of Work Partner Hours Client Contact Financial Audit 9/30/09 J. Chiocca 435 Douglas Haag and Single Audit Minai Shah 305-792-1775 Financial Audit 9/30/08 J. Chiocca 385 Douglas Haag and Single Audit 305-792-1775 Financial Audit 9/30/07 J. Chiocca 397 Douglas Haag 305-792-1775 Financial Audit 9/30/06 J. Chiocca 325 Jean Watson 305-792-1775 Financial Audit 9/30/05 J. Chiocca 330 Jean Watson 305-792-1775 MARCUM MarcumRachlin R A C H L I N Proposal for Professional Audit Services ACCOUNTANTS... ADVISORS A Division of Marcum LLP Page - 5 - - / ~ - ~ -~ 7. SIMILAR ENGAGEMENTS WITH OTHER GOVERNMENT ENTITIES The following are five audit engagements performed by the Firm's Miami and Fort Lauderdale offices in the last five years that are similar to the City's requirements. City of Florida City Financial, 9/30/96 Mr, Mark Ben-Asher, Single and Finance Director Pension to (305) 242-8109 Audits present Village of Tequesta Financial, 9/30/05 Ms, Jody Forsythe, Single and Director of Finance Pension to (561) 575-6200 Audits present Town of Surfside 9/30/01' Ms. Martin Sherwood, Financial to Financial Director Audit present (305) 993-1099 Town of Bay Harbor Islands Financial, 9/30/04 Mr. Alan Short, Single, and Finance Director Pension to (305) 866-6241 Audits present Town of Lantana Financial 9/30/96 Mr, Stephen Kaplan, and Single to Finance Director (561) 540-5035 Audits present ADDITIONAL REFERENCES ARE AVAILABLE UPON REQUEST Michael D. Futterman 500 Susan L. Friend 400 Michael D. Futterman 400 Michael D, Futterman 375 Susan L. Friend 370 We provide technical assistance to many of our clients who participate in the GFOA Certificate of Achievement for Excellence in Financial Reporting program to ensure that the CAFR meets all of the requirements of the program. Substantially all of our clients participate in the program and the Certificate of Achievement has been awarded on all of the financial statements submitted. MARCUM MarcumRachlin R A C H L I N Proposal for Professional Audit Services ACCOUNTANTS'" ADVISORS A DIVision of Marcum LLP Page - 6 - 8. AUDIT APPROACH Scope of Services Based on our understanding of the expectations and requirements of the City as set forth in the request for proposal, the following is a summary of the scope of our work. All work will be completed in the timeframe specified in the request for proposal. Audit of the City's Financial Statements The Firm will perform an audit of the basic financial statements of the City for the fiscal year ending September 30, 2010, 2011 and 2012, with the City's option of auditing its financial statements for each of the two subsequent fiscal years. The objective of the audit is the expression of an opinion that the financial statements are fairly presented, in all material respects, and in conformity with accounting principles generally accepted in the United States. The Firm will issue the following in accordance with Government Auditing Standards: · Report on the fair presentation of the basic financial statements as a whole in conformity with accounting principles generally accepted in the United States. · Report on internal control over financial reporting and on compliance with laws and regulations and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards. · Management letter in accordance with the Rules of the Auditor General. If required, the Firm will perform a single audit in accordance with generally accepted auditing standards, Government Auditing Standards, the Single Audit Act -~ -~ the provisions of OMB Circular A-133, Audits of State and Local Governments, and the Rules of the Auditor General of the State of Florida. The following additional reports will be issued if a single audit is required: · Report on the Schedule of Expenditures of Federal Awards and State Financial Assistance Projects. · Report on compliance and internal control over compliance applicable to each major federal awards program and state financial assistance project. · Schedule of findings and questioned costs, if applicable. Certain limited procedures will be applied to the required supplementary information and management's discussion and analysis. We will provide technical assistance to ensure the City's Comprehensive Annual Financial Report meets all the requirements of the GFOA's Certificate of Achievement for Excellence in Financial Reporting. We will review the financial report of the City filed with the Department of Banking and Finance, State of Florida, pursuant to Section 218.32, Florida Statutes to verify that it is in agreement with the respective financial statements. As part of our audit, financial condition assessment procedures will be used to assist in the detection of a deteriorating financial condition as established under Florida Statutes 218.503. If required. upon the issuance of debt by the City, the Firm will issue a "consent and citation of expertise" as the auditor and any necessary comfort letters. We will also assist the City in complying with changes in any reporting requirement to remain in conformity with generally accepted accounting principals. MARCUM MarcumRachlin Proposal for Professional Audit Services RACH LI N ACCOUNTANTS. AOV'SORS Page _ 7 A DIVISion of Marcum LLP Required Standards The Firm's audit will be performed in accordance with the following requirements, as applicable: · Statements on Auditing Standards issued by the AICPA · Government Auditing Standards, issued by the Comptroller General of the United States · Codification of Governmental Accounting and Financial Reporting Standards, as promulgated by the Governmental Accounting Standards Board · Audit and Accounting Guide, State and Local Governments, published by the American Institute of Certified Public Accountants (AI CPA) · Statements and interpretations issued by the Financial Accounting Standards Board · Florida Statutes, Chapter 189 and 11.45 · Florida Statutes, Section 218.39 · Rules of the Auditor General, State of Florida, Chapter 10.550 · State of Florida Department of Financial Services · OMB Circular No. A-133, Office of Management and Budget, Audits of the States, Local Governments and Non-Profit Organizations issued by the United States · United States Single Audit Act of 1996, as amended · Florida Single Audit Act, (Section 215.97, Florida Statutes) and Chapter 270-1, Rules of the Executive Office of the Governor · All other applicable provisions of rules, regulations, statutes or orders which may pertain to the engagement ~ -, -~ Monitoring and Communication The Firm will report the following information to the City Council. · The auditor's responsibility under generally accepted auditing standards and Government Auditing Standards · Significant accounting policies · Management's judgments and accounting estimates · Significant audit adjustments · Other information in documents containing audited financial statements · Disagreements with management · Management consultation with other accountants · Major issues discussed with management prior to retention · Difficulties encountered in performing the audit Should the audit team become aware of fraud, irregularities or illegal acts, they will make an immediate written report to the Assistant City Manager-Finance Director, City Manager and City Commission MARCUM MarcumRachlin R A C H L I N Proposal for Professional Audit Services ACCOUNTANTS'" ADVISORS A Division of Marcum LLP Page - 8 ~ ~ --~ SPECIFIC AUDIT APPROACH The audit will be conducted in four phases, as shown below. These phases are discussed in more detail on the following pages. ------ob~i~.an I 'I' Understanding ofthe . City's Operations --- - I Develop Audit Plan and Strategies -- ~eSSing I ._ Review ~~ Phase 1/ Execution of the Audit Plan ~ ~- . - j Test Compliance with Laws, Rules, Regulations, and Contracts ~ Phase III Evaluation of Audit Results - , Review the City's I Financial Statements ~ --- Preliminary Discussion with Management I of Audit Findings ~- - I I Exit Conference I I ' I ~~~ L _ ~'-~u' ~ I presenta~i~n ~o the I L City co.mmission . - - MARCUM MarcumRachlin R A C H L I N Proposal for Professional Audit Services ACCOUNTANTS... ADVISORS A Division of Marcum LLP Page - 9 / ~ - ~ -~ SEGMENTATION AND TIMELlNES The following is a summary of the proposed hours for the City's financial statement audit. Partners Manager Seniors Staff Total' Strategic Planning 12 30 25 10 77 Execution of the Audit Plan 10 30 50 70 160 Evaluate Audit Results 10 10 10 30 Reporting 28 20 10 5 63 60 90 95 85 330 - - The timeline for completing each phase of the audit is as follows: Strategic Planning: Detailed Audit Plan to be provided to City Interim Work Execution of the Audit Plan (Fieldwork) Evaluate Audit Results Reporting: Draft By July 31 st By August 31 st November - December By December 31 st Report Issuance By January 15th By January 30th MARCUM MarcumRachlin R A C H L I N Proposal for Professional Audit Services ACCOUNTANTS.. ADVISORS A Division of Marcum LLP Page - 10 Phase I: Strategic Planning A thorough understanding of the City and its operating environment is essential for developing an efficient, cost-effective audit plan. During this phase, the engagement partner and key supervisory personnel will meet with the appropriate personnel to update an understanding of operations. You will also have the opportunity to express your expectations regarding the services that we will provide. This effort will be coordinated so that there will be minimal disruption to your staff. During this phase we will perform the following activities: · Review the current regulatory and statutory compliance requirements within which the City operates. This will include a review of applicable federal and state regulations; ordinances, bond covenants, contracts, and other agreements; meeting minutes of the City Commission. · Review major sources of information such as budgets, organization charts, procedures manuals, financial systems and management information systems. · Determine the most practical and effective way to apply computer-aided audit tools to convert and analyze data and generate reports. · Review internal control systems, including determining an audit risk assessment. · Consider the methods used to process accounting information that influence the design of the internal control system. This includes understanding the design of relevant policies, procedures, and records and whether they have been placed in operation. · Design audit programs to ensure that they incorporate financial statement assertions, specific audit objectives and appropriate audit procedures to achieve the specified objectives. · Identify and resolve accounting, auditing and reporting matters. · Prepare detailed audit plans, including a list of schedules to be prepared by City personnel. ~~ ,. - - -~ Risk-Based Audit Technologies The Firm employs a risk-based approach early in the audit process. This approach considers how the overall risk identified in the general risk analysis affects specific account balances. We consider, in part: · Relative significance of the account to the financial statements as a whole · Volume of transactions · Susceptibility of the account to fraud · Accounts that have traditionally required significant adjustments · Account with complex calculations, judgment, and accounting issues that have a high assessed level of inherent risk Based on these considerations, we assess the inherent risk and control risk to determine the overall audit risk. Once this assessment is completed, the audit procedures to be used are determined. By redirecting our efforts through a risk-based approach, audits are significantly enhanced, which provide greater value to our clients. The Firm will use several approaches to conduct the audit engagement of the City. These approaches include traditional audit techniques and strategies, and an evaluation of the systems utilized by the City. Specific Fraud Investigative Techniques Statement of Auditing Standards No. 99 imposes on auditors the additional responsibility to "plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements due to fraud." By redirecting our efforts through a risk-based approach and additional fraud inquiry techniques, audits are significantly enhanced. Phase II: Execution of Audit Plan The audit team will complete a major portion of transaction testing and audit requirements during this phase. The procedures performed during this period will enable us to identify any matters that may impact MARCUM MarcumRachlin R A C H L I N Proposal for Professional Audit Services ACCOUNTANTS" ADVISORS A Division of Marcum LLP Page - 11 the completion of our audit work or require the attention of management. Tasks to be performed in Phase II include, but are not limited to: · Apply analytical procedures to assist in planning the nature, timing and extent of auditing procedures used to obtain evidential matter for specific account balances or transaction classes. · Perform substantive account balance and transaction tests. Statistical samples will be drawn from major transaction systems, including cash disbursements, cash receipts, accounts payable, and payroll. The size of the samples will be determined after the review of the internal contro system. There are three types of tests that involve audit sampling: Account Balance Tests Substantive tests of account balances are performed on year-end balances. Certain accounts justify a 100 percent examination, such as confirming a bank balance, which does not involve sampling at all. Transaction and Control Tests Substantive transaction and control tests are often combined to use one sample to achieve more than one audit objective. We would also test the controls to verify that the transactions were properly authorized in accordance with the City's procedures. Compliance Tests Compliance tests with laws and regulations are included with the tests of transactions and controls. Additional samples are sometimes necessary to test specific laws and regulations. Sample sizes for compliance testing are determined based on the number of transactions and the significance of the requirement. The audit team will report on a bi-weekly basis to the City the status of any potential adjustments / ~ ~ so the City may have adequate time to investigate, gather information and respond, if necessary. Information Technology Audit Techniques In accordance with SAS No. 94, we are required to gain an understanding of the procedures, both automated and manual, by which transactions are initiated, recorded, processed and reported, from their occurrence to their inclusion in the financial statements. During the planning stage of our audit, we evaluate the effect information technology (IT) will have in performing our audit procedures. This evaluation includes obtaining an understanding (generally through observations and inquiries of IT personnel) of the client's internal controls and identifying those controls that are automated. When key internal controls are automated, we use our IT specialist to perform a detailed review of those automated controls. Our IT specialist will then communicate to the audit engagement team as to whether such controls are working as prescribed by management. With this information, the audit engagement team determines the extent of their audit procedures. In client situations where there is significant accounting data processed electronically, we use a state-of-the-art software program to extract and summarize computerized financial data files. Some of the uses of this program are: · Retrieving aged receivables information · Extracting credit balances in accounts receivable reports · Extracting sample items from reports for testing · Merging files for the purposes of extracting information that meets predetermined criteria · Sorting information This program provides an efficient way for us to extract and test computerized accounting information, enabling us to audit through the computer, rather than around the computer. MARCUM MarcumRachlin R A C H L I N Proposal for Professional Audit Services ACCOUNTANTS. ADVISORS A DiviSion of Marcum LLP Page - 12 Phase III: Evaluation of Audit Results This phase includes a review of all audit documentation by the partners to ensure that testing and documentation support the conclusions reached. This phase also includes preliminary discussions with management of the audit findings. Phase W: Reporting In this phase of the audit, the engagement team will complete the tasks related to the closing of year-end balances and financial reporting. This -will include final testing in areas including compliance, balance sheet accounts, revenues and expenditures. All required reports will be delivered to the City in accordance with the dates specified in the request for proposal. The audit partner will be available to attend the City Council meeting to present the audit report. MANAGEMENT LETTER The Firm will prepare a management letter for the City to identify systemic deficiencies observed. The letter also may offer recommendations for changes in accounting and other procedures in order to improve operations of the City. As each potential management letter point is identified in the audit process, the engagement team will document the condition, our recommendation, and the benefits of the recommended action. All potential comments will be reviewed with key staff members before issuance. The Firm's policy is to prepare this report as a vehicle for suggesting improvements to enhance efficiency, management effectiveness, and the degree of internal control. Appendix G includes three recent management letters issued by MarcumRachlin in connection with government audits. QUALITY CONTROL The Firm has an extensive quality control system. All engagements are reviewed by the Audit partner and the Ouality Control partner prior to the issuance of the financial statements. On an annual basis the -~ - --~ ~..,~ firm performs an inspection of the system of quality control to ensure compliance with Firm and professional standards. The Firm also participates in an external quality review program requiring an on-site independent examination of our accounting and auditing practices. The Firm has consistently received an unqualified opinion on the quality of the Firm's audit practice. The latest peer review reports are included in Appendix B. The Firm's governmental engagements were included in the latest review. 9. IDENTIFICATION OF ANTICIPATED POTENTIAL AUDIT PROBLEMS The Firm does not anticipate any potential audit problems. Our service team understands the industry issues relevant to the City. The combination of our Firm's resources, level of partner involvement and experienced team members provides an excellent service team of professionals capable of servicing the City's needs. Regular communication will be ongoing with the City's personnel, allowing for timely knowledge of the City's matters as they arise. When we learn of matters the City may not be aware of, we will be active in conveying relevant information. We are very much aware of audit requirements and accounting requirements affecting the City's audits. As with other issues that may arise, we will work with the City throughout the year to achieve appropriate resolution. GASB Standards required to be implemented during the life of the contract are No. 51, Accounting and Financial Reporting for Intangible Assets; No. 53, Accounting and Financial Reporting for Derivative Instruments; and No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. These standards mayor may not have an impact on the City's financial statements. MARCUM MarcumRachlin C Proposal for Professional Audit Services RA H LI N ACCOUNTANTS..... ADVISORS A Division of Marcum LLP Page -13 ~ - - -~ 1. a. MarcumRachlin, a division of Marcum, LLP b. Susan L. Friend, the individual signing the proposal, is entitled to represent the firm, empowered to submit the bid, and authorized to sign a contract with the City of Sunny Isles Beach. c. Total all inclusive price (exclusive of services described in Part 2) for the financial statement audit. FINANCIAL AUDIT 2010 $37,000 2011 $38,100 2012 $39,250 For prices pertaining to additional services, see Part 2 on the following pages. 2. Rates by Partner, Specialist, Supervisory and Staff level and hours anticipated for each are included on the following pages. 3. Rates for Additional Professional Services 2010 2011 2012 Partner $ 170 $ 175 $ 180 Manager $ 136 $ 140 $ 144 Supervisor $ 110 $ 113 $ 117 Senior $ 95 $ 98 $ 101 Staff $ 65 $ 67 $ 69 4. Manner of Payment The City will be billed on a monthly basis as work progresses. Payments are due within 30 days from the invoice date. MARCUM MarcumRachlin R A C H L I N Proposal for Professional Audit Services ACCOUNTANTS. ADVISORS A Division of Marcum LLP PART 1 SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE SEPTEMBER 30,2010 - 2012 FINANCIAL STATEMENTS: SUPPORTING SCHEDULE FOR AUDIT SERVICES PROPOSED HOURS HOURLY RATES PROPOSED TOTAL Partners 60 $170 $10,200 Managers 90 $136 $12,240 Supervisorv Staff 95 $ 95 $ 9,035 Staff 85 $ 65 $ 5,525 Other (specify) Subtotal 330 $37,000 Other Expenses (specif r): Total AU-Inclusive Price for Audit Services * , Year 1 $37,000 Year 2 $38,100 Year 3 $39,250 Grand Total Price for Audit Services (3 Years) $ 114,350 One hundred fourteen thousand three hundred fifty dollars Grand Total Price for Audit Services (3 Years) Written NOTE: lfthe proposed hourly rates used to calculate the total all-inclusive price for any contract year are different from contract year 1 rates, provide an index for those years or provide rates for each staff level and each contract year for which there is a change. * Increases in 2011 and 2012 are 3% per year. SCHEDULE OF PROPOSAL PRICES PART 2 SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OFTHE2010 FINANCIAL STATEMENTS: COMB~NGSCHEDULE-ALLSERVICES Consent/Comfort Letters Schedule Total Price 2A $ 6,000 2B $ 6,000 2C $ 3,000 * ** $ 15,000 Nature of Service to be Provided Florida Sin Ie Audit Federal Sin Ie Audit EDP Auditin Services TOTAL Fifteen Thousand Dollars Total Amount Written Each service described in this RFP - Special Considerations and Services should be supported by an individual schedule in the format provided on Part 1 of the Schedule of Proposal Prices. * Included in fee for Financial Statement Audit ** Work will debt performed in connection with the sale of debt securities be billed at our hourly rates, not to exceed $3,000 per issue. Note: For 2011 and 2012, fees will increase by 3% per year. PAURT2A - Florida Single Audit SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR TIlE AUDIT OF THE SEPTEMBER 30,2010 - 2012 FINANCIAL STATEMENTS: SUPPORTING SCHEDULE FOR AUDIT SERVICES PROPOSED HOURS HOURLY RATES PROPOSED TOTAL Partners 5 $170 $ 850 Managers 10 $136 $1,360 Supervisory Staff 20 $ 95 $1,900 Staff 29 $ 65 $1,890 Other (specify) Subtotal 64 $6,000 Other Expenses (specif r): - - - Total AU-Inclusive Price for Audit Services * , Year 1 $6,000 Year 2 $6,180 Year 3 $6,365 Grand Total Price for Audit Services (3 Years) $ 18,545 Eighteen Thousand Five Hundred Forty Five Dollars Grand Total Price for Audit Services (3 Years) Written NOTE: If the proposed hourly rates used to calculate the total aU-inclusive price for any contract year are different from contract year I rates, provide an index for those years or provide rates for each staff level and each contract year for which there is a change. * Increases in 2011 and 2012 are 3% per year. PART2B - Federal Single Audit SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR TIlE AUDIT OF THE SEPTEMBER 30,2010 - 2012 FINANCIAL STATEMENTS: SUPPORTING SCHEDULE FOR AUDIT SERVICES PROPOSED HOURS HOURLY RATES PROPOSED TOTAL Partners 5 $170 $ 850 Managers 10 $136 $1,360 Supervisory Staff 20 $ 95 $1,900 Staff 29 $ 65 $1,890 Other (specify) Subtotal 64 $6,000 Other Expenses (specify): Total AU-Inclusive Price for Audit Services * , Year 1 $6,000 Year 2 $6,180 Year 3 $6,365 Grand Total Price for Audit Services (3 Years) $ 18,545 Eighteen Thousand Five Hundred Forty Five Dollars Grand Total Price for Audit Services (3 Years) Written NOTE: If the proposed hourly rates used to calculate the total all-inclusive price for any contract year are different from contract year 1 rates, provide an index for those years or provide rates for each staff level and each contract year for which there is a change. * Increases in 2011 and 2012 are 3% per year. PART 2C - EDP Audit SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR TlJE AUDIT OF THE SEPTEMBER 30,2010 - 2012 FINANCIAL STATEMENTS: SUPPORTING SCHEDULE FOR AUDIT SERVICES PROPOSED HOURS HOURLY RATES PROPOSED TOTAL Partners 3 $170 $ 510 Managers 22 $114 $2,490 Supervisory Staff Staff Other (specify) Subtotal 25 $ 61 $3,000 Other Expenses (specift): Total All-Inclusive Price for Audit Services * , Year 1 3,000 Year 2 3,090 Year 3 3,180 Grand Total Price for Audit Services (3 Years) $ 9,270 Nine Thousand Two Hundred Seventy Dollars Grand Total Price for Audit Services (3 Years) Written NOTE: If the proposed hourly rates used to calculate the total all-inclusive price for any contract year are different from contract year I rates, provide an index for those years or provide rates for each staff level and each contract year for which there is a change. * Increases in 2011 and 2012 are 3% per year. ~ AMPER, POLITZINER & MATTIA, P.c. CERTIFIED PUBLIC ACCOUNTANTS and CONSULTANTS RRlDGEW /I. TER. NEW JERSEY (908) 218.5002 2015 LINCOLN HIGHWAY POBOX 9RR EDISON. "J OXX 18-0<)88 NEW YORK. NEW YORK (2)6~2-1600 HACKENSACK. NEW JERSEY (201) 678-1400 PRINCETON. NEW JERSEY /6091897.0200 PHONE: 1732) 287-1000 FA;>;;: 1732) 287-3200 WWW AM PER. COM WALL. NEW JERSEY (732\ 919-1400 WHITE PLAINS. NEW YORK (914) 946-9650 To the Partners of Rachlin LLP (flk/a Rachlin Cohen & Holtz LLP) And the Center for Public Company Audit Firms Peer Review Committee We have reviewed the system of quality control for the accounting and auditing practice of Rachlin LLP (f1k/a Rachlin Cohen & Holtz LLP) (the firm) applicable to non-SEC issuers in effect for the year cnded April 30,2007. The finn's accounting and auditing practice applicable to SEe issuers was not reviewed by us since the Public Company Accounting Oversight Board (PCAOB) is responsible for inspecting that portion of the firm's accounting and auditing practice in accordance with PCAOB requirements. A system of quality comrol encompasses the finn' s organizational structure and {he policies adopted and procedures established to provide it with reasonable assurance of complying with professional standards. The elements of quality control are described in the Statements on Quality Control Standards issued by the American Institute of Certified Public Accountants (the AICP A). The design of the system, and compliance with it, are the responsibilities of the film. Our responsibility is to express an opinion on the design of the system, and the firm's compliance with that system based on our reVIew. Our review was conducted in accordance with standards established by the Peer Review Committee of the Center for Public Company Audit Finns and included procedures to plan and perform the review that are summarized in the attached description of the peer review process. Our review would not necessarily clisclose ::Ill weaknesses in the system of quality control or all instances of lack of compliance with it since it was based on selective tests. Because there are inherent limitations in the effectiveness of any system of quality control, departures from the system may occur and not be detected. Also, projection of any evaluation of a system of quality control to future periods is subject to the risk that the system of quality control may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the system of quality control for the accounting and auditing practice applicable to the non-SEC issuers of Rachlin LLP (flk/a Rachlin Cohen & Holtz LLP) in effect for the year ended ApJil 30,2007, has been designed to meet the reqUirements ot the quality control standards tor an accountmg and auditing practice established by the AICPA. and was complied with dUling the year ended to provide the firm with reasonable assurance of complying with applicable professional standards. ~ J..'~II....rolc"''','''''b~',,' B^KER TILLY INTERNATIONAL .... -2- As is customary in a peer review, we have issued a letter under this date that sets forth comments relating to certain policies and procedures or compliance with them. The matters described in the letter were not considered to be of sufficient significance to affect the opinion expressed in this repOlt. tir(~~~~/!c Amper, Politziner & Mattia, P.e. Edison, New Jersey August 30, 2007 Attachment to the Peer Review Report of Rachlin LLP (flkla Rachlin Cohen & Holtz LLP) Description of the Peer Review Process Overview Finns enrolled in the AICPA Center for Public Company Audit Finns (the Center) Peer Review Program have their system of quality control periodically reviewed by independent peers. These reviews are system and compliance oriented with the objectives of evaluating whether: The reviewed firm's system of quality control for its accounting and audItmg praclIce applicable to non-SEC issuers has been designed to meet the requirements of the Quality Control Standards established by the AICP A. The reviewed finn's quality control policies and procedures applicable to non-SEC issuers were being complied with to provide the firm with reasonable assurance of complying with professionll J stllnnllrns. A peer review is based on selective tests and directed at assessing whether the design of and compliance with the firm's system of quality control for its accounting and auditing practice applicable to non-SEC issuers provides the firm with reasonable, not absolute, assurance of complying with professional standards. Consequently a peer review on the firm's system of quality control is not intended to, and does not, provide assurance with respect to any individual engagement conducted by the firm or that none of the financial statements audited by the firm should be restated. The Center's Peer Review Committee (PRC) establishes and maintains peer review standards. Al regular meetings and through report evaluation task forces, the PRC considers each peer review, evaluates the reviewer's competence and performance, and examines every report, letter of commenLS, and accompanying response from the reviewed firm that states its corrective action plan before the peer review is finalized. The Center's staff plays a key role in overseeing the performance of peer reviews working closely with the peer review teams and the PRe. Once the PRC accepts the peer review reports, letters of comments, and reviewed firms' responses, these documents are maintained in a file available to the public. In some situations. the public file also includes a signed undertaking by the firm agreeing to specific follow-up action requested by the PRC. Finns that perfOlm audits or playa substantial role in the audit of one or more SEe issuers, as defined by the Public Company Accounting Oversight Board (PCAOB), are required to be registered with and have their accounting and auditing practice applicable to SEC issuers inspected by the PCAOB. Thereforc, we did not rcvicw the film's accounting and auditing practice appJicab!c to SEe issucrs. Planning the Review for the Firm's Accounting and Auditing Practice Applicable to Non-SEe Issuers To plan the review of Rachlin LLP (flk/a Rachlin Cohen & Holtz LLP), we obtained an understanding of (1) the nature and extent of the finn's accounting and auditing practice, and (2) the design of the finn's system of quality control sufficient to assess the inherent and control risks implicit in its practice. Inherent risks were assessed by obtaining an understanding of the finn's practice, such as the industries of its clients and other factors of complexity in serving those clients, and the organization of the firm's personnel into practice units. Control risks were assessed by obtaining an understanding of the design of the finn's system of quality control, including its audit methodology. and monitoring procedures. Assessing control risk is the process of evaluating the effecti veness of the reviewed firm's system of quality control in preventing the performance of engagements that do not comply with professional standards. Performing the Review for the Firm's Accounting and Auditing Practice Applicable to Non-SEe Issuers Based on our assessment of the combined level of inherent and control risks, we identified practice units and seleetcd cngagcments within thosc units to test for compliance with the film's system of quality control. The engagements selected for review included engagements performed under the Government Auditing Standards, and audits of Employee Benefit Plans. The engagements selected for review represemed a cross-section of the finn's accounting and auditing pral:Lice with emphasis un higher-risk engagements. The engagement reviews included examining working paper files and reports and interviewing engagement personnel. The scope of the peer review also included examining selected administrative and personnel files to determine compliance with the firm's policies and procedures for the elements of quality control pertaining to independence, integrity, and objectivity; personnel management; and acceptance and continuance of clients and engagements. Prior to concluding the review, we reassessed the adequacy of scope and conducted a meeting with firm management to discuss our findings and recommendations. .., ~ AMPER, POLITZINER & MADIA, P.c. CERTIFIED PUBLIC ACCOUNTANTS and CONSULTANTS NEW YORK. NEW YORK (212) 682.1600 2015 LINCOLN HIGHWAY P.O. BOX 9llB EDISON. 11:1 08811\.()<}Rll BRIDGEWATER, NEW JERSEY (908) 218-5002 PHONE: /732) 287-1000 FA-X: (732) 287-3200 HACKENSACK.NEWJERSEY (20 I) 678-\400 PRINCETON. NEW JERSEY (609) 897.0200 WWW.AMPER.COM WALL. NEW JERSEY m2) 919.1400 WHITE PLAINS. NFW YORK (914)946-9650 To the Partners of Rachlin LLP (f/kla Rachlin Cohen & Holtz LLP) And the Center for Public Company Audit Finns Peer Review Committee We have reviewed the system of quality control for the accounting and auditing practice of Rachlin LLP (f/k/a Rachlin Cohen & Holtz LLP) (the finn) applicable to non-SEC issuers in effect for the year ended April 30, 2007, and have issued our report thereon dated August 30, 2007. The matters described below were not considered [0 be of sufficient significance to affect the opinion expressed in that report, which should be read in conjunction with this letter. Engagement Performance Comment - The finn's audit programs outline steps for performing and documenting audit procedures perfonned and consultation held with others. However, our review disclosed several instances where the finn's working papers did not include complete documentation. Through discussion with engagement personnel, we were able to satisfy ourselves that the performance of these procedures and consultation had been appropriately done. Recommendation - We recommend that the firm emphasize the requirements regarding audit documentation :md written memorandum for consultation on technical issues. ~, ~ u-/i~/ f! r. Amper, Politziner & Mattia, P.c. Edison, New Jersey August 30, 2007 ~fl\fI{lf"tl,{lHI...r":lr"". BAKER TILLY INHRNArJONAL BROWN, &. EDWARDS COMP.ANY;L.L.R. Certified Public Accountants To the Partners of Marcum & Kliegman, LLP and the Center for Public Company Audit Firms Peer Review Committee We have reviewed the system of quality control for the accounting and auditing practice' of Marcum & Kliegman, LLP.(the firm) applicable to non-SEC issuers in effect for the year ended August 31,2008. The firm's accotulting and auditing practice applicable. to SEC issuers was not reviewed by us since the Public Company Accounting Oversight Board (PCAOB) is responsible for inspecting that portion of the firm's accounting and auditing practice .in accordance with PCAOB requirements. A system of quality control encompasses the finn's organizational structure and the policies adopted and procedures established to provide it with reasonable assurance of complying with professional standards. The elements of quality control are described in the Statements on Quality Control Standards issued by the American Institute of Certified Public Accountants (the AlCP A). The design of the system, and compliance with it, are the responsibilities of the finn. Our responsibility is to express an opinion on the design of the system, and the firm's compliance with that system based on our review, Our review was conducted in accordance with standards established by the Peer Review Committee of the" Center for Public Company Audit Finns and included procedures to plan and perform the review that are summarized in the attached description of the peer review process. Our review would not necessarily disclose all wealmesses in the system of quality control or all instances of lack of compliance with it since it was based on selective tests. Because there are inherent limitations in the effectiveness of any system of quality control, departures from the system may oc~ur and not be detected. Also, projection of any evaluation of a system of quality control to future periods is subject to the risk that the system of quality control may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the system of quality control for the accounting and auditing practice applicable to the non-SEC issuers of Marcum & Kliegman, LLP in effect for the year ended August 31, 2008, has been designed to meet the requirements of the quality control standards for an accounting and auditing practice established by the AlCP A, and was complied with during the year then ended to provide the firm with reasonable assurance of complying with applicable professional standards. ~/~4~~~o(,q CERTIFIED PUBLIC ACCOUNTANTS Roanoke, Virginia December 18, 2008 Providing Professional Business Advisory & Consulting Services 319 McClanahan Street. S.W.' P.O. Box 12388' Roanoke, VA 24025-2388' 540-345-0936' Fax: 540-342-6181' www.BEcpas.com Attachment to the Peer Review Report of Marcum & Kliegman, LLP Description ofthe Peer Review Process Overview Finns enrolled in the AICP A Center for Public Company Audit Finns (the Center) Peer Review Program have their system of quality control periodically reviewed by independent peers. These reviews are system and compliance oriented with the objectives of evaluating whether: The reviewed firm's ~ystem of quality control for its accounting and auditing practice applicable to non-SEC issuers has been designed to meet the requirements of the Quality Control Standards established by the AICP A. The reviewed finn's quality control policies and procedures applicable to non-SEC issuers were being complied with to provide the firm with reasonable assurance of complying with professional standards. A peer review is based on selective tests and directed at assessing whether the design of and compliance with the firm's system of quality control for its accounting and auditing practice applicable to non-SEC issuers provides the firm with reasonable, not absolute, assurance of complying with professional standards, Consequently, a peer review on the firm's system of quality control is not intended to, and does not, provide assurance with respect to any individual engagement conducted by the firm or that none of the financial statements audited by the firm should be restated. The Center's Peer Review Committee (pRe) establishes and maintains peer review standards. At regular meetings and through report evaluation task forces, the PRC considers each peer review, evaluates the reviewer's competence and performance, and examines every report, letter of comments, and accompanying response from the reviewed firm that states its corrective action plan before the peer review is finalized. The Center's staff plays a key role in overseeing the performance of peer reviews working closely with the peer review teams and the PRC, Once the PRC accepts the peer review reports, letters of comments, and reviewed firm's responses, these documents are maintained in a file available to the public. In some situations, the, public file also includes a signed undertaking by the finn agreeing to specific follow-up action requested by the PRC. Firms that perform audits or playa substantial role in the audit of one or more SEC issuers, as defined by the Public Company Accounting Oversight Board (PCAOB), are required to be registered with and have their accounting and auditing practice applicable to SEe issuers inspected by the PCAOB. Therefore, we did not review the firm's accounting and auditing practice appiicable to SEC issuers. Planning the Review for the Firm's Accounting and Auditing Practice Applicable to Non-SEe Issuers To plan the review of Marcum & Kliegman, LLP, we obtained an understanding of (1) the nature and extent of the finn's accounting and auditing practice, and (2) the design of the' firm's system of quality control sufficient to assess the inherent and control risks implicit in its practice. Inherent risks were assessed by obtaining an understanding of the firm's practice, such as the industries of its clients and other factors of complexity in serving those clients, and the organization of the finn's personnel into practice units. .Control risks were assessed by obtaining an understanding of the design of the finn's system of quality control, including its audit methodology, and monitoring procedures. Assessing control risk is the process of evaluating the effectiveness o~ the reviewed firm's system of quality control in preventing the performance of engagements that do not comply with professional standards. Performing the Review for'the Firm's Accounting and Auditing Practice Applicable to Non-SEe Issuers Based on our assessment of the combined level of inherent and control risks, we identified practice units and selected engagements within those units to test for compliance with the firm's system of quality control. The engagements selected for review included audits of Employee Benefit Plans. The engagements selected for review represented a cross-section Of the firm's accounting and auditing practice with emphasis on higher-risk engagements. The engagement reviews included examining working paper files and reports and interviewing engagement personnel. The scope of the peer review also included examining selected administrative and personnel files to detennine compliance with tbe firm's policies and procedures for the elements of quality control pertaining to independence, integrity, and objectivity; personnel management; and acceptance and continuance of clients and engagements. Prior to concluding the review, we reassessed the adequacy of scope and conducted a meeting with firm management to discuss our findings and recommendations. - Susan L. Friend Susan Friend is a partner in MarcumRachlin's Assurance division. She has more than 20 years experience in the governmental and not-for- profit arena with a concentration in accounting, auditing,and management advisory services. Over the course of her career, Ms. Friend's involvement with governmental entities has been extensive. She has served as the partner-in-charge of governmental audit engagements for counties, cities, towns, villages, special districts, and school districts, and has performed reviews of proposed annual budgets for governmental entities. In addition. Ms. Friend has provided guidance to governmental entities in implementing new GASB standards. Ms. Friend has been responsible for the quality review of workpapers and financial statements for governmental and not-for-profit clients. In addition, she has developed and presented courses on a variety of governmental accounting topics for staff to meet annual continuing and professional education requirements. Ms. Friend also is the author of a comprehensive audit program for governmental audit engagements. She serves on the board of directors of the Firm's Assurance division where she leads the internal financial reporting committee. Professional & Civic Affiliations American Institute of Certified Public Accountants (AICPA) Florida Institute of Certified Public Accountants (FICPA) New York State Society of Certified Public Accountants Government Finance Officers Association (GFOA) GFOA Committee on Accounting, Auditing, and Financial Reporting (CAAFR), Advisor GFOA Special Review Committee, Certificate of Achievement for Excellence in Financial Reporting Florida GFOA & South Florida GFOA Greater Fort Lauderdale Chamber of Commerce, Trustee Member River Walk Trust, Member American Women's Society of CPAs Miami-Dade County & Broward County League of Cities Rachlin Foundation, Board Member Susan L. Friend, CPA Partner PROFILE AREAS OF EXPERTISE Financial Audits Federal Single Audits Florida Single Audits Budget Analysis & Reviews Peer Reviews Operational & Performance Reviews Advisory Services Articles, Seminars & Presentations FGFOA School of Governmental Finance, Fraud Training Institute of Internal Auditors, Panelist Internal CPE Training: Governmental Accounting & Governmental Auditing Standards Risk-Based Approach to Governmental Audits Awards & Recognition 2006 Key Partner Award, South Florida Business Journal, Accounting-Audit Winner CPE (past two years) Governmental Other (Accounting, Auditing, Technical and Behavioral) KEY CLIENTS Local Governments County Governments Special Districts Governmental Pension Plans Utility Services School Districts Not-far-Profit Organizations 174 EDUCATION Bachelor of Science. Accounting. Fairleigh Dickinson University Total 75 249 MARCUM RACH LI N ACCOUNTANTS.. ADVISORS A Division of Marcum llP 450 East Las alas Boulevard, Ninth Floor. Fort Lauderdale. Florida 33301 Phone 954.525.1040 . susan.friend@marcumrachlin.com . marcumrachlin.com CPA Licensed by the States of New York and Florida ~ -~ ~ SUSAN L. FRIEND, CPA Years Position Government Experience on Job on Job Broward County 5 Engagement Partner * City of Boca Raton 3 Engagement Partner * City of Homestead 1 Quality Control Review Partner City of Lake Worth 1 Engagement Partner City of Miami 3 Engagement Partner * City of Miramar 1 Quality Control Review Partner * City of North Miami 1 Quality Control Review Partner * City of Sunny Isles Beach 1 Quality Control Review Partner * Town of Lantana 3 Engagement Partner * Town of Lauderdale by the Sea 1 Quality Control Review Partner * Village of Golf 1 Quality Control Review Partner * Villaae of Teauesta 1 Qualitv Control Review Partner Villaae of Wellinaton 1 Enaaaement Partner Florida Inland Naviaation District 2 Enaaaement Partner * City of Boca Raton General Employees' Pension Plan 1 Engagement Partner * City of Boca Raton Police and Firefighters' Retirement System 1 Engagement Partner * Current Client MARCUM MarcumRachlin R A C H L I N Proposal for Professional Audit Services ACCOUNTANTS" ADVISORS A Division of Marcum LLP Michael D. Futterman Michael Futterman is a partner in the Firm's Assurance division. He focuses much of his work in the local government, not-for-profit and employee benefit plan sectors. With more than 20 years of professional experience, Mr. Futterman provides guidance on accounting and financial reporting matters as well as operational and administrative efficiency matters. In addition, he conducts peer reviews for small and mid-size accounting firms. Mr. Futterman is responsible for quality control review of all ERISA audit engagements. Additionally, he performs quality control reviews of engagements for governmental entities, governmental pension plans, and not-for-profit organizations. Within the Firm, Mr. Futterman is actively involved in training and compliance initiatives. He is responsible for developing internal training programs for the governmental, not-for-profit, and ERISA assurance staff, as well compliance with continuing professional education requirements. Mr. Futterman serves on the Assurance division's board of directors and is chairman of its accounting & auditing technology committee. He also serves on the practice standards & continuing professional education committee. Professional & Civic Affiliations American Institute of Certified Public Accountants (AI CPA) Florida Institute of Certified Public Accountants (FICPA) Florida Government Finance Officers Association (FGFOA) Government Finance Officers Association (GFOA) GFOA Special Review Committee Miami-Dade, Broward & Palm Beach Counties Leagues of Cities Florida Public Pension Trustees Association Florida Association of Special Districts AICPA Employee Benefit Plan Audit Quality Center, Designated Audit Partner Dade Schools Athletic Foundation, Treasurer Articles, Seminars & Presentations "Risk-Based Approach to Governmental Audits," Internal Training Governmental Accounting (GASB) and Government Auditing Standards, "Internal Training" "Federal and Florida Single Audit Acts," Internal Training "ERISA Pension Plans," Internal Training "The New Risk Assessment Standards," Internal Training "ERISA Employee Benefit Plan Audits," Rachlin News, Fall 2006 ''Auditing 401 (k) Plans," Presentation to Potential Clients in conjunction with Merrill Lynch "GASB Statement No. 34," Presentation to University of Miami Students "Preparing a Comprehensive Annual Financial Report," FICPA Training CPE (past three years) Governmental Other (Accounting, Auditing, Technical and Behavioral) 180 75 255 Total MARCUM RACH LI N ACCOUNTANTS.. ADVISORS A Division of Marcum lLP One Southeast Third Avenue, Tenth Floor. Miami. Florida 33131 Phone 305.377.4228 . michael.futterman@marcumrachlin,com . marcumrachlin.com Michael D. Futterman, CPA Partner PROFILE AREAS OF EXPERTISE Financial Audits Federal Single Audits Florida Single Audits Employee Benefit Plan Audits Operations or Performance Reviews Agreed-Upon Procedures Attestation Services Advisory Services Peer Reviews KEY CLIENTS Local Governments Special Districts Governmental Pension Plans ERISA Pension Plans Not-for-Profit Organizations EDUCATION Bachelor of Business Administration, Florida Atlantic University CPA Ucensed by the States of New York and Florida SlWiN ~ ._~ MICHAEL D. FUTTERMAN, CPA Years Position Government Experience on Job on Job Broward County Aviation Department 5 Engagement Partner City of Aventura 3 Quality Control Review Partner * City of Florida City 5 Engagement Partner City of Hialeah 6 Quality Control Review Partner * City of Homestead 3 Quality Control Review Partner City of Marathon 5 Engagement Partner City of Miami 2 Quality Control Review Partner City of Miami Springs 7 Quality Control Review Partner * City of Miramar 8 Quality Control Review Partner City of North Bay Village 7 Quality Control Review Partner * City of North Miami 10 Engagement Partner City of North Miami Beach 7 Quality Control Review Partner City of Oakland Park 3 Quality Control Review Partner City of Pembroke Pines 9 Engagement Partner City of South Miami 6 Quality Control Review Partner * City of Sunny Isles Beach 5 Quality Control Review Partner * City of Sunrise 1 Quality Control Review Partner City of Tamarac 3 Quality Control Review Partner City of Hialeah Gardens 1 Engagement Partner * Miami Shores Village 8 Quality Control Review Partner * Miami-Dade Water & Sewer Authority 1 Quality Control Review Partner * Town of Bay Harbor Islands 2 Engagement Partner * Town of Bal Harbour Village 5 Quality Control Review Partner * Town of Lauderdale-By-The-Sea 6 Quality Control Review Partner * Town of South Palm Beach 3 Quality Control Review Partner * Village of Golf 7 Quality Control Review Partner * Village of Key Biscayne 12 Engagement Partner * Village of Palmetto Bay 5 Quality Control Review Partner Village of Pinecrest 5 Quality Control Review Partner * Village of Tequesta 2 Quality Control Review Partner * Current Client MARCUM MarcumRachlin R A C H L I N Proposal for Professional Audit Services ACCOUNTANTS. ADVISORS A Division of Marcum LLP PROFILE Andrew S. Fierman Andrew Fierman is a manager within MarcumRachlin's Assurance division. In this role, Mr. Fierman supervises staff and reviews work papers to ensure that they are prepared in accordance with generally accepted professional as well as firm standards. He also evaluates his clients' internal controls and prepares and reviews financial statements. Mr, Fierman lends his experience to a variety of clients, including not-far-profit entities, local governments and several pension plans. Specifically, his advice and expertise were integral components of more than 10 municipal audits. Andrew S. Fierman, CPA Manager Professional & Civic Affiliations American Institute of Certified Public Accountants (AI CPA) Florida Institute of Certified Public Accountants (FICPA) South Florida Government Finance Officers Association, Associate Member GFOA Special Review Committee PROFILE AREAS OF EXPERTISE Financial Audits Federal Single Audits Florida Single Audits Employee Benefit Plans Articles, Seminars & Presentationa Internal CPE Training. Instructor CPE (past three years) Governmental 140 Other (Accounting. Auditing, Technical and Behavioral) 65 Total 205 KEY CLIENTS Local Governments Not-far-Profit Organizations Governmental Pension Plans ERISA Pension Plans EDUCATION Master of Business Administration, Florida International University Bachelor of Science, Accounting, University of Florida MARCUM RACH LI N ACCOUNTANTS" ADVISORS A Division of Marcum LLP One Southeast Third Avenue. Tenth Floor. Miami, Florida 33131 Phone 305.377.4228 . andrew.fierman@marcumrachlin.com . marcumrachlin.com / ~ -~ ANDREW S. FIERMAN, CPA Years Position Government Experience on Job on Job Broward County Water Department 2 Manager City of Doral 1 Staff City of Hialeah 3 Supervisor City of Hialeah Gardens 1 Supervisor City of Lake Worth 1 Manager City of Marathon 1 Staff * City of Miramar 1 Supervisor * City of North Miami 6 Supervisor/Manager City of North Miami Beach 5 Supervisor City of Pembroke Pines 1 Senior * Indian Creek Village 1 Staff Town of Cutler Bay 1 Supervisor * Town of Lauderdale by the Sea 3 Senior/Manager * Town of Surfside 2 Manager * Village of Golf 1 Senior * Village of Key Biscayne 2 Manager * Village of Miami Shores 1 Manager * Village of Palmetto Bay 3 Supervisor/ Manager Village of Pinecrest 3 Supervisor * Current Client MARCUM MarcumRachlin R A C H L I N Proposal for Professional Audit Services ACCOUNTANTS. ADVISORS A Division of Marcum LLP Sean M. Chari :1 Sean Chari is a Senior Manager in the Firm's Assurance division. He leads the division's internal audit practice including IT audit and related consulting-based services, He also provides IT external audit services in support of other assurance activities. Over the past 16 years Mr, Chari has worked with Fortune 500 organizations, mid-sized organizations and local governments providing operational, audit (including Sarbanes-Oxley and SAS 70), compliance management and management consulting services. His range of experience provides him the insight to define, develop and implement scalable, business-valued, cost-efficient solutions that effectively leverage information technology. Mr, Chari, who is fluent in Spanish, is focused on enabling internal audit departments to effectively provide the services needed to meet the new and growing demands as management continues to turn to internal audit to provide guidance and tools to improve how the three pillars (people, process and technology) of an organization work together, Sean M. Chari Senior Manager PROFILE Professional & Civic Affiliations Institute of Internal Auditors (IIA) Information Systems Audit and Control Association (ISACA) AREAS OF EXPERTISE IT Audit Compliance Management Business Process Improvement End to End Financial Operations Analysis ERP / Financial Application Reviews Articles & Presentations "Continuous Controls Monitoring," ISACA (Houston, TX), August 2006 "Internal Audit: The Next Chapter" MarcumRachlin News, 2010 "Business Process Improvement: An Investment in the Bottom Line" KEY CLIENTS Consumer Goods Companies Pharmaceutical Companies Life Sciences Companies Financial Services Companies Awards Finalist, South Florida Business Journal Up & Comer of the Year, 2007 EDUCATION Bachelor of Arts, Management Information Systems & Finance St. Louis University ACCREDITATIONS & DESIGNATIONS ITIL v3 Foundations Certification MARCUM RACH LI N ACCOUNTANTS.. ADVISORS A Division of Marcum LLP One Southeast Third Avenue, Tenth Floor' Miami, Florida 33131 Phone 305.377.4228 . sean.chari@marcumrachlin.com . marcumrachlin.com STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION BOARD OF ACCOUNTANCY 240 NW 76TH DRIVE, SUITE A GAINESVILLE FL 32607 (352) 333-2500 MARCUM LLP 10 MELVILLE PARK ROAD MELVILLE NY 11747 Congratulations! With this license you become one of the nearly one million Floridians licensed by the Department of Business and Professional Regulation. Our professionals and businesses range from architects to yacht brokers, from boxers to barbeque restaurants, and they keep Florida's economy strong. Our mission at the Department is: License Efficiently, Regulate Fairly. We constantly strive to serve you better so that you can serve your customers. Thank you for doing business in Florida, and congratulations on your new Iicensel DETACH HERE AC# 418 8688 81 A TE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL BOARD. OF ACCOUNTANCY : . LICENSE NBR' 473.FS. FRIEND,. . SUSAN LORI 600WESTHLAS OLAS BOULEVARD APT '2104 .. . FORT LAUDERDALE FL 33312 CHARLIE CRIST GOVERNOR DISPLAY AS REQUIRED BY LAW - .-----.....--.1 REGULATION SEQ# L081.21.900397 I ! i ! i I CHARLES W. DRAGO SECRETARY ACt li 188 8.~fi>::::':',t'~~"; '. " . 'sTA1EPF FLOR.lDA \'"'~\ ...,.;:.::;.;:~{~., ',;'.~:;~;;:;;~,;:~'t..: -~ ':'.... '. _,=:::,;, ,,::.'::<-:'" .-:.'(-'.;........<;..,":;.. ..: . :";". :i ~C..f >;g,;X;;,'& <~,~;;f:.:Rl1~.~~ ~.F:.BUSINE~S>:AJID. PROFESSIONAL ~~":;>~;~f .. .~~<ijj~~:~~~!!t\~::~\j~r;?:~~i~~~(.<:;~f\i')~~{~~.~~~~' oj' ~:' - )39~ ":'q~~~,,~CCQ,~~Cy 'ICE:~S?\:NJiR ',':'; "...~~~..,:.'.. ..~.......t.. ..~..,...'... """," - .~:.,... ',....... ',.''''' \,", ".~.",: 12' 29.:.2_00a 0's'oYa8905''': ACOO'218io".\.::~':'.;r.f.;:{>, ", > The\'CERTtF.:cEP:::PUBLIC:'j.tcOmftANT:. " )." ",;;,\\; 'Nalned:'-below!:1:~hL:rCENSED:~~:" :.j:'..,:... ~~ '! 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STATE OF FLORI~A: . .' . 7..,',.';, . . riEP!\RTME~-:O~~~~S~~~Cb~~~_~l3N~~r~r,~~t~~~r~~4~;E~~~;:~~~~';:r:~:'.: LICENSE,NBR 12 21 2009 0..98..0..9:7491 AC39267 The CERTIFIED PUBLIC :A:CCbUNTANT" :';~~';~'"7':'f;;;;~i ~\ ~~<i1~S;' .{~!- Named below IS2LICENSED.:~/ ;/(?:~:!;:-'i",.';.,;?;:.:.~~/'~;~W~':' Und~r: tJ;1e ,prov~sfohs of."Chaptar,;47?::RS~'.: j.-~~?~\r;~~;;;" Exp~ratJ.on date: DEC 31, 2011'r; 'rif..y!:' ,;,~:"-;1;G\.;A.-...l;;"\';:"'''4~~1''' !~k~~~~~S FL 33~~:':~tl;~,;:~t;;'";f;f CHARLIE CRIST GOVERNOR ',.' '~'.. '. :~:~';';::: ' . +~'::!;:?CHARI;~~ iLIEM'Yi~~I:6~ ~~~. "--:INTERIM SECRETARY:.',I':,-'?::: j'~;'. T.;~({:)'" :~';.'_~'?, _..';2~~;~f;i:;;7:.'5.j,g" . _ ~.".c~,,:,-:;~_ . .:.~i.-~ "':'~~_?"'_'" F-":!:'- ~;:. ~,~ ,~:. .~;;-.,. . DISPLAY AS RSQUIRED BY LAW~, ,.,,<: ;, , ..... SWORN STATEMENT PURSUANT TO SECTION 287.133(3)(a) FLORIDA STATUTES, ON PUBLIC ENTITY CRIMES THIS FORM MUST BE SIGNED AND SWORN TO IN THE PRESENCE OF A NOTARY PUBLIC OR OTHER OFFICIAL AUTHORIZED TO ADMINISTER OATHS. 1. This sworn statement is submitted to City of Sunny Isles Beach, Florida by Susan L. Friend fur MarcumRachlin, a division of Marcum LLP whose business address is 450 E. Las alas Blvd., Ninth Floor Fort Lauderdale, FL 33301 and (if applicable) its Federal Employer Identification Number (FEIN) 11-1986323 (If the entity had no FEIN, include the Social Security Number of the individual signing this sworn statement: 2. I understand that a "public entity crime" as defined in Paragraph 287 .133(l)(g), Florida Statutes, means a violation of any state or federal law by a person with respect to and directly related to the transaction of business with any public entity or with an agency or political subdivision of any other state or ofthe United States, including, but not limited to, any bid or contract for goods or services to be provided to any public entity or an agency or political subdivision of any other state or of the United States and involving antitrust, fraud, theft, bribery, collusion, racketeering, conspiracy, or material misrepresentation. 3. I understand that "convicted" or "conviction" as defined in Paragraph 287.133(l)(b), Florida Statutes means a finding of guilt or a conviction of a public entity crime, with or without an adjudication of guilt, in any federal or state trial court of record relating to charges brought by indictment or information after July 1, 1989, as a result ofajury verdict, nonjury trial, or entry of a plea of guilty or nolo contenders. 4. I understand that an "affiliate" as defined in Paragraph 287.133(l)(a), Florida Statutes, means: a. A predecessor or successor of a person convicted of a public entity crime; or b. An entity under the control of any natural person who is active in the management of the entity and who has been convicted of a public entity come. The term "affiliate" includes those officers, directors, executives, partners, shareholders, employees, members, and agents who are active in the management of an affiliate. The ownership by one person of shares constituting a controlling interest in another person, or a pooling of equipment or income among persons when not for fair market value under an arm's length agreement, shall be a prima facie case that one person controls another person. A person who knowingly enters into ajoint venture with a person who has been convicted ofa public entity crime in Florida during the preceding 36 months shall be considered an affiliate. - 5. I understand that a "person" as defined in Paragraph 287.133(1)(e), Florida Statutes, means any natural person or entity organized under the laws of any state or of the United States with the legal power to enter into a binding contract and which bids or applies to bid on contracts for the provision of goods or services let by a public entity, or which otherwise transacts or applies to transact business with a public entity. The term "person" includes those officers, directors, executives, partners, shareholders, employees, members, and agents who are active in management of any entity. 6. Based on information and belief, the statement which I have marked below is true in a relation to the entity submitting this sworn statement. (Please indicate which one (1) of the following three (3) statements is applicable.) ~ (1) Neither the entity submitting this sworn statement, nor any of its officers, directors, executives, partners, shareholders, employees, members, or agents who are active in the management of the entity, or any affiliate of the entity has been charged with and convicted of a public entity crime within the past 36 months. _(2) The entity submitting this sworn statement, or one or more of its officers, directors, executives, partners, shareholders, employees, members, or agents who are active in the management of the entity, or any affiliate of the entity has been charged with and convicted of a public entity crime within the past 36 months. _(3) The entity submitting this sworn statement, or one or more of its officers, directors, executives, partners, shareholders, employees, members, or agents who are active in the management of the entity, or agents who are active in management of the entity, or any affiliate of the entity has been charged with and convicted ofa public entity crime within the past 36 months. However, there has been a subsequent proceeding before a Hearing Officer ofthe State of Florida, Division of Administrative Hearings and the Final Order by the Hearing Officer determined that it was not in the public interest to place the entity submitting this sworn statement on the convicted vendor list. (Attached is a copy of the final order.) I UNDERSTAND THAT THE SUBMISSION OF THIS FORM TO THE CONTRACTING OFFICER FOR THE PUBLIC ENTITY IDENTIFIED IN PARAGRAPH 1 (ONE) ABOVE IS FOR THE PUBLIC ENTITY ONLY AND, THAT THIS FORM IS VALID THROUGH DECEMBER 31 OF THE CALENDAR YEAR IN WHICH IT IS FILED AND FOR THE PERIOD OF THE CONTRACT ENTERED INTO, WHICHEVER PERIOD IS LONGER. I ALSO UNDERSTAND THAT I AM REQUIRED TO INFORM THE PUBLIC ENTITY PRIOR TO ENTERING INTO A CONTRACT IN EXCESS OF THE THRESHOLD AMOUNT PROVIDED IN SECTION 287.017, FLORIDA STATUTES FOR THE CATEGORY TWO OF ANY CHANGE IN THE INFORMATION CONTAINED IN THIS FORM.g ~CVNo!. y~ SIGNATURE OF AFFIANT Susan L. Friend (printed or Typed Legal Name of Affiant) .... STATE OF FLORIDA ) )ss. COUNTY OF MIAMI-DADE) The foregoing Form was acknowledged before me this 7th day of July , 2010, by Susan L. Friend as Partner of MarcumRachlin, a division of Marcum LLP , a New York corporation, on behalf of said corporation and limited partnership. He/She personally appeared before me and is personally known to me. { NOTARY SEAL } "'~~~~":~~"" BARBARA EDMUNDS g+o~",~ Commission II DD 641398 ~* *E Mv Commission Expires 02-18-2011 0;..,. "'.:- ~f:'l Of: r-,.~$ Bonded Through "'"'' """ Florida Notary Association. Inc. Notary: ,6~ e~LJ Print Name ,;:3,tlIV!3;'9/2A e'!:>/YIt-LV b S Notary Public, State of Florida My Commission Expires: 0'1-.v r / ,5lc>// , - ~ NON-COLLUSION AFFIDAVIT STATE OF FLORIDA COUNTY OF MIAMI-DADE The undersigned being first duly sworn as provided by law, deposes, and says: 1.1. This Affidavit is made with the knowledge and intent that it is to be filed with the City of Sunny Isles Beach City Commission and that it will be relied upon by said City, in any consideration which may give to and any action it may take with respect to this proposal. 1.2. The undersigned is authorized to make this Affidavit on behalf of, MarcumRachlin, a division of Marcu~ LL~__.___ (Name of Corporation, Partnership, Individual, ete.), a corporation duly organized and existing under the laws of the State of Florida of which he is Partner (Sole Owner, Partner, President, ete.) 1.3. Neither the undersigned nor any person, firm, or corporation named in above Paragraph 1.2, nor anyone else to the knowledge of the undersigned, have themselves solicited or employed anyone else to solicit favorable action for this proposal by the City, also that no head of any department or employee therein, or any officer of the City of Sunny Isles Beach, Florida is directly interested therein. 1.4. This proposal is genuine and not collusive or a sham; the person, firm or corporation named above in Paragraph 1.2 has not colluded, conspired, connived or agreed directly or indirectly with any Proposer or person, firm or corporation, to put in a sham proposal, or that such person, firm or corporation, shall refrain from Proposing, and has not in any manner, directly or indirectly, sought by agreement or collusion, or communication or conference with any person, firm or corporation, to fix the prices of said proposal or proposals of any other Proposer; and all statements contained in the proposal or proposals described above are true; and further; neither the undersigned, nor the person, firm or corporation named above in Paragraph 1.2, has directly or indirectly submitted said proposal or the contents thereof, or divulged information or data relative thereto, to any association or to any member or agent thereof. Susan L. Friend AFFIANT'S NAME Partner AFFIANT'S TITLE The foregoing Affidavit was acknowledged before me this 7th day of July ,2010, by Susan L. Friend , as Partner of MarcumRachlin, a division of Marcum LLP , a New York corporation, on behalf of said corporation and limited partnership. He/She personally appeared before me and is personally known to me. { NOTORlAL SEAL } .~,~~~:I~~;~,,,, BARBARA EDMUNDS ~.~"''<. Commission # DO 641398 ~ * *E Mv Commission Expires 02-18-2011 0;.,. .~ -',~'i ifI:{'~' Bonded Through 'l'II'r::.,~~\\\"'" Florida Notary Association. Inc. Notary: ,.<3~ C:~hJ Print Name: /.SAe-6A.eA 61JmtL/V b..S Notary Public, State of Florida My Commission Expires: .:z~F /.p~// / Sample Government, FLORIDA SCHEDULE OF FINDINGS AND RESPONSES I. CURRENT YEAR COMMENTS AND RECOMMENDATIONS Significant Deficiencies 2009-01 Capital Assets Criteria The establishment and maintenance of accurate accounting records for capital assets are necessary to help assure that the entity's capital assets are not stolen, misused or subject to undue wear and tear. These records are a necessary element in an on-going governmental capital asset repair and preventative maintenance program and enhance efforts to obtain optimum insurance coverage. Condition In the 2009 fiscal year, Accounting Division personnel performed an analysis of the equipment category and determined that a prior period adjustments of approximately $35 million and $9 million to the cost and accumulated depreciation of equipment was required. Additionally, prior period adjustments were determined to be required to the accumulated depreciation for approximately $3 million and $7 million for buildings and improvements, respectively. The initial capital asset roll-forward provided did not reflect the correct additions or deletions by asset category for cost or accumulated depreciation. Our audit procedures disclosed that the capital asset roll- forward included buildings and improvement additions that did not reconcile to the expenditures of the respective funds. We also noted that the beginning balances of the accumulated depreciation on the schedule by asset category did not agree to the amounts reported in the prior year. Further, the deletions to all asset categories were not properly reflected. Cause The cause is the lack of maintaining the records properly and not reconciling the amounts in the detailed supporting schedules to the amounts recorded, Effect The potential effect was that the financial statements could have been materially misstated. Recommendation We recommend that, in the ensuing fiscal year, Accounting Division personnel should set up the new acquired capital asset system with the amounts from the audited financial statements and accurately track asset additions, deletions and calculations of depreciation. This record keeping should be kept current and reconciled monthly, 1 Sample Government, FLORIDA SCHEDULE OF FINDINGS AND RESPONSES FISCAL YEAR ENDED SEPTEMBER 30, 2009 (Continued) I. CURRENT YEAR COMMENTS AND RECOMMENDATIONS (Continued) Views of Responsible Officials and Planned Corrective Action The entity's capital assets include land, equipment and buildings with an historical cost of $2,6 billion and more than forty thousand individual records. We have determined that the tables associated with the report writer were incorrectly configured. This error caused the duplication of costs at each charge-point for those assets whose costs were split among funding sources. The condition caused an overstatement of historical cost and accumulated depreciation. An adjustment was made to reconcile the detail records with the general ledger and software which remedies this condition and incorporates many efficiencies has been acquired and is being implemented. 2009-02 Revenue Recognition Criteria All agreements that result in reimbursements should be scrutinized to ensure that revenue recognition is appropriate. Condition In the 2008 fiscal year, a receivable and a capital contribution was recorded for construction costs incurred that were to be reimbursed to the entity pursuant to an agreement with a cruise company. In the 2009 year, it was determined that these capital cost recovery charges will be paid as part of the guaranteed minimum payments based on passenger movements, and accordingly, revenue should be recognized as payments are received. As such, a prior period adjustment of approximately $5.4 million was recorded to adjust the prior year receivable improperly recorded. Cause The cause was a misunderstanding ofthe final agreement and the reimbursement process. Effect The effect was that revenue was not properly recognized, Recommendation We recommend that the entity continue to recognize revenue related to this agreement based on passenger movements and actual payments received. View of Responsible Individuals We concur that revenue will continue to be recognized based on passenger movements and actual payments received. 2 Sample Government, FLORIDA SCHEDULE OF FINDINGS AND RESPONSES FISCAL YEAR ENDED SEPTEMBER 30, 2009 (Continued) I. CURRENT YEAR COMMENTS AND RECOMMENDATIONS (Continued) Control Deficiencies 2009-03 FEMA Receivable Criteria Documentation to support the amount that is due to the entity from the Federal Emergency Management Agency (FEMA) should be maintained and monitored on a current basis to ensure that reimbursements have been requested for all eligible costs. Condition The FEMA website indicated the entity is obligated for approximately $54 million in aid. Of this amount, approximately $37 million was paid to the entity leaving approximately $17 million still available for reimbursement. There are many projects ongoing where reimbursements have not yet been received. We were unable to validate these amounts and the related potential reimbursements. Cause The schedule maintained by the Accounting Division does not provide information to determine, by project, costs incurred where reimbursements were not yet requested. Effect If reimbursements are less than anticipated, the entity's ultimate cost could be greater than expected. Recommendation We recommend that the Accounting Division closely monitor costs and reimbursements for projects in progress. Views of Responsible Officials and Planned Corrective Action FEMA reimburses costs as incurred up to the obligated amount of the Project Worksheet; those projects whose actual expenses exceeded the initial obligated amount are not reimbursed until formal closeout. We have requested final inspection of all projects that are ready to be closed but FEMA has only recently provided the personnel to close those projects. In addition, some of the permanent work associated with Hurricane Wilma has not yet been completed and many projects that have been processed by FEMA are awaiting final insurance determination. A detailed schedule, by project and by location is constantly monitored and updated. 3 Sample Government, FLORIDA SCHEDULE OF FINDINGS AND RESPONSES FISCAL YEAR ENDED SEPTEMBER 30, 2009 (Continued) I. CURRENT YEAR COMMENTS AND RECOMMENDATIONS (Continued) 2009-04 Landfill Closure Liability Criteria Pursuant to GASB Statement No. 18, Accountingfor Municipal Solid Waste Landfill Closure and Post- closure Care Costs, in determining the current period expense and liability, total estimated capacity should be based on the expected usable landfill, which is generally the constructed portion. Further, the estimated capacity should mirror the tonnage applicable to the constructed areas reported to the Environmental Protection Agency. Condition During the 2009 fiscal year, the landfill was expanded and capacity increased from 35 acres to 46 acres. However, we noted that the total estimated capacity used to calculate the current year expense and liability did not change from the prior year. Further inquiry indicated that the total estimated capacity being used to calculate the current period costs were 60 acres of land, which is the total acreage of land, a portion of which had not yet been constructed. Cause The total estimated capacity used to calculated current period expense and liability was incorrectly set at the full permitted acreage at inception, instead of at the constructed capacity. Effect The expense and liability related to the landfill was revised to use the appropriate total estimated capacity. Recommendation We suggest that the entity consider having the engineers who prepare the Financial Assurance Cost Forms for the landfill certify the capacity of the landfill as well as the cost estimates. Views of Responsible Officials and Corrective Action We concur that the total constructed portion of the landfill is the appropriate measure to use for current period costs and landfill closure liability. Staff received the final volume quantities of the landfill based on the annual survey completed by an independent engineering firm. 4 Sample Government, FLORIDA SCHEDULE OF FINDINGS AND RESPONSES FISCAL YEAR ENDED SEPTEMBER 30, 2009 (Continued) I. CURRENT YEAR COMMENTS AND RECOMMENDATIONS (Continued) 2009-05 Bank Reconciliations Criteria The prime function of a properly executed bank reconciliation is to ascertain that the books and records of the entity and the records maintained by the depository are in agreement. As such, the department responsible for the bank reconciliations should have proper documentation to support all reconciling items included on the bank reconciliation. Condition We noted that the concentration account bank reconciliation included a reconciling item of approximately $1,7 million, After inquiry of various personnel, it was determined that this reconciling item did not reflect an actual cash transaction, but rather related to bond issuance costs for the Aviation department that were improperly recorded. Cause Bond issuance costs were improperly recorded as an increase to cash rather than as another asset or deferred charge. Effect Cash was overstated for $1. 7 million and bond issuance costs were understated by the same amount. Recommendation We recommend that personnel perform a detailed review of all reconciling items to ensure that they are appropriate, Views of Responsible Officials and Corrective Action Records, Taxes and Treasury (RTT) correctly identified bond costs as a reconciling item in the bank reconciliation and notified the responsible agency, but the correcting entry was not timely. Procedures have been put in place for the Accounting Division to communicate with RTT to ensure than any reconciling items requiring an entry are identified and recorded. 2009-06 Cash Receipts Criteria Assets and related revenues should be recorded in the applicable accounting period to ensure the financial statements are fairly presented. 5 Sample Government, FLORIDA SCHEDULE OF FINDINGS AND RESPONSES FISCAL YEAR ENDED SEPTEMBER 30, 2009 (Continued) I. CURRENT YEAR COMMENTS AND RECOMMENDATIONS (Continued) Condition While performing our audit procedures on subsequent receipts, we noted that in several instances, checks received for insurance settlements were not deposited on a timely basis. We noted that a check for $1,002,637.78, dated July 2, 2009, was not deposited until October 2009. In addition, a check for $320,318, dated April 10,2009, was not deposited until October 2009. Cause These checks were for msurance settlements that had to be approved by the Board prior to being deposited. Effect Adjustingjournal entries were required to be proposed in order to accurately record the asset and revenue in the correct period. Recommendation We recommend that the Agency recelvmg such checks notify the Accounting Division so that the amounts are recorded on the books and records in the proper accounting period. Views of Responsible Officials and Planned Corrective Action Cash receipts are normally deposited within 72 hours of receipt and are recorded in the accounting records. Insurance settlements must be reviewed by the entity's Attorney and approved by the Board. Two checks for insurance claims were received just prior to the recess, but we disputed the amounts and thus the deposits were not made until a later date. The auditor suggests a better treatment would be to record the pending deposit as a receivable and we concur. In the future, at year end, the Accounting Division will communicate with Risk Management to ascertain whether there are any undeposited insurance proceeds in order to ensure that year end entries are recorded. 2009-07 End User Administration - Periodic Reviews Criteria Periodic reviews of end user accounts provides additional assurance that end user access is appropriate, reducing the risk of errors that create segregation of duties or excessive access issues. The reviews also ensure that all terminated employees and temporary user accounts are properly deactivated per policy. 6 Sample Government, FLORIDA SCHEDULE OF FINDINGS AND RESPONSES FISCAL YEAR ENDED SEPTEMBER 30, 2009 (Continued) I. CURRENT YEAR COMMENTS AND RECOMMENDATIONS (Continued) Condition While ETS has a policy and performs periodic reviews of end user accounts, the policy and procedures have not being uniformly followed throughout the entity Since the entity uses a partially decentralized IT support model, there are applications/systems that are not currently being periodically reviewed to ensure that access is appropriate. Cause While formal policy and procedures exist, they are not being adhered to by all departmental IT teams, Effect Terminated employees could have active user accounts and/or active employees could have excessive or incorrect access, Recommendation We recommend deploying ETS' policy and procedures to all departmental IT teams along with tools to enable and ensure periodic reviews are performed. Views of Responsible Officials and Corrective Action Although Network Access is promptly deactivated for terminating employees, the administration of many user applications is decentralized. We believe that the systems are secure because terminated employees cannot access the network, but it agrees that End User Administration should be further standardized in order to insure terminated employees are removed from financial applications, Enterprise Technology Systems will work with the responsible agencies to standardize end user administration processes for its financial software systems 2009-08 TaxSys End User Administration Criteria Access administration enSures that employees and other users of key applications are provided access in accordance to their roles and responsibilities via a standardized, formal process in which all access requests are reviewed and approved by authorized process/application owners prior to creation/modification. Inadequate access administration creates the risk that users have excessive access and are able to perform activities or modify data without detection. 7 I I Sample Government, FLORIDA SCHEDULE OF FINDINGS AND RESPONSES FISCAL YEAR ENDED SEPTEMBER 30, 2009 (Continued) I. CURRENT YEAR COMMENTS AND RECOMMENDATIONS (Continued) Condition Key segregation of duties scenarios were identified to ensure that the data that is generated via TaxSys is reliable and accurate to enable reliance on the application controls versus manual controls. Based upon data provided by the TaxSys IT administrator and TaxSys support, we identified the access types and then compared the accesses. Accordingly, the results indicated that there were cases of excessive access and segregation of duties issues. We noted that certain end users have the ability to assess fees, perform the bill preparation and tax collection, creating a segregation of duties issue. Cause The cause of the issue is due to incorrect access assignments. Effect Segregation of duties Issues could create unauthorized transactions or activities to occur without detection, Recommendation We recommend developing and reviewing a segregation of duties matrix and procedures to ensure that end user access is in compliance to the matrix. Views of Responsible Officials and Corrective Action The TaxSys application was newly implemented in August 2009, with users and user roles developed and implemented by the vendor. An internal audit review of the system began in JanuarylFebruary 2010, and additional system administration functionality was put in place by the vendor at that time. Since then, a full user role review has taken place and roles have been redefined in conjunction with internal and external audit requests. In addition, Records Taxes and Treasury has implemented a TaxSys user change request policy and periodic access review of users and role assignments. The final process and user role changes will be completed by June 2010. The Division is also working with Enterprise Technology Services (ETS) Division to implement an online workflow-driven user access request process, which will be similar to that of the ETS User Access Request Form, 2009-09 TaxSys Wachovia Lockbox Criteria The lockbox provides a standardized approach to obtain bank data without risk of modification or errors as it is generated by the bank automatically. Ensuring that the file is protected and un-modified at all times prior to being uploaded into TaxSys guarantees that the data is accurate, per Wachovia, and correctly represents the bank balance and activities (transactions) over that time period. 8 Sample Government, FLORIDA SCHEDULE OF FINDINGS AND RESPONSES FISCAL YEAR ENDED SEPTEMBER 30, 2009 (Continued) I. CURRENT YEAR COMMENTS AND RECOMMENDATIONS (Continued) Condition The lockbox data, prior to being uploaded into TaxSys is stored in an unencrypted and unsecured network file directory. This creates the potential for unauthorized changes to be made to the file. Cause The cause of the Issue IS the lack of encryption and/or security controls to prevent unauthorized modifications. Effect The risk that the data uploaded into TaxSys is not complete or accurate. Recommendation We recommend that the Entity implement additional controls to ensure that the file cannot be modified while stored on the network directory. Views of Responsible Officials and Corrective Action Records Taxes and Treasury (RTT) Division completes scheduled lockbox file transfers from the bank each day. The lockbox files are transferred in encrypted format from the bank and stored on a division- maintained server in both encrypted and decrypted formats. TaxSys end users browse to this location each day to upload the files into the TaxSys application for posting. The share where these lockbox files reside is only available to four individuals and three system administrators in RTT, and is not available through the Active Directory network infrastructure. The four individuals are those involved with the lockbox import process, or backup staff. The TaxSys application does not have the capability to store and/or encrypt/decrypt files. RTT has approached the vendor with requests to support encryption, but there is no capability to decrypt data as part of the upload and posting process. In order to compensate for this issue, RTT management has instituted procedures which require verification of data input and output by responsible individuals in several sections within the agency. Other Matters 2009-10 Self-Insurance Fund Criteria Internal service funds have a cost-reimbursement objective. A significant surplus or deficit in an internal service fund could indicate that participating funds are not properly reporting the costs of the goods or 9 Sample Government, FLORIDA SCHEDULE OF FINDINGS AND RESPONSES FISCAL YEAR ENDED SEPTEMBER 30, 2009 (Continued) I. CURRENT YEAR COMMENTS AND RECOMMENDATIONS (Continued) services they receive from the internal service fund. Thus, a long-term, significant surplus could be evidence that the user funds are being overcharged. Condition We noted that revenues exceeded expenses in the self-insurance fund by approximately $6 million if 2009, resulting in ending net assets of $23 million, as compared to $17 million in the prior year. Cause Revenues exceeded expenses in the fund for several years and charges to other funds have not been adjusted. Effect Based on the substantial level of unrestricted net assets in this fund, it appears that other funds may be overcharged for their contribution for insurance costs. Recommendation We recommend that personnel review the activity In the self-insurance fund and determine the appropriate level of funding required from other funds. Views of Responsible Officials and Corrective Action We concur that the unrestricted balance in this account has increased in recent years. The Accounting Division will review the activity in the account and make recommendations concerning the appropriate level of funding. 2009-11 Retained Percentages Criteria Retained percentages, which represent amounts withheld from contractors for completed work pending satisfactory approval of their phase of a construction project, should be classified as an expenditure and recorded on the books as a retainage payable simultaneously with the payment to the contractor. Condition As part of our audit procedures, we obtained a schedule supporting the retained percentages reflected on the books and records as of the fiscal year end. Our review of this schedule disclosed that there are numerous amounts which have been outstanding in excess of one year, that have had no activity, 10 Sample Government, FLORIDA SCHEDULE OF FINDINGS AND RESPONSES FISCAL YEAR ENDED SEPTEMBER 30, 2009 (Continued) I. CURRENT YEAR COMMENTS AND RECOMMENDATIONS (Continued) Cause The Purchasing and Accounting Divisions may not be reducing or eliminating old retained percentages that have been satisfied. Effect Retained percentages liability accounts may be overstated. Recommendation We suggest that personnel determine the status of the projects related to these outstanding amounts, and the validity of the amounts recorded. Views of Responsible Officials and Corrective Action As a result of measures adopted by Purchasing in FY2007 and refined in 2008, retained percentages more accurately reflect the correct vendor balances, however inactive projects reflected $973,000 at the end of fiscal year 2009. Accounting and Purchasing have actively worked to resolve these balances, which have been reduced to approximately $400,000, $120,000 of which is in litigation. Purchasing and Accounting will work with the remaining agency to resolve its balances. 11 Sample Government, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) SECTION II - FINANCIAL STATEMENT FINDINGS Significant Deficiencies 09-01 Financial Records Criteria Prudent policies include a formal closing process with supervisory Finance Department personnel being responsible for the review of transactions and balances recorded. Accounting tasks such as monthly reconciliations, cross-checks, and reviews playa key role in proving the accuracy of accounting data and financial information that comprise interim and year-end financial statements, Condition Our audit procedures included the performance of extensive procedures on the amounts recorded as assets, liabilities, revenues, expenditures/expenses and fund balances/net assets among the various funds of the City. Our findings are as follows, . Numerous adjustments were required to properly reflect the balances of the capital assets of the governmental activities, the Utility Fund and the Cultural Arts Fund. . Significant adjustments were required in the governmental activities and the Utility Fund to properly reflect the transactions related to the new capital lease entered into by the City during the 2009 fiscal year. . There were an excessive amount of adjusting entries prepared by the City's accounting staff to correct various account balances after the trial balances for the City's funds were provided to the auditors. Cause Regarding the capital assets, an outside consultant updates and maintains a complete capital asset listing for the City. After the start of the audit for the current year, the City was still having the consultant modify and make corrections to the listing based on the City's review of the information which was why many of the adjustments occurred after the start of the audit. The new capital lease transaction was a complex transaction and as such, required a thorough understanding of the agreement entered into to ensure the transaction was properly recorded. Additionally, general ledger accounts were not reviewed to determine and record the required adjustments prior to producing the final trial balances. 1 Sample Government, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) SECTION II - FINANCIAL STATEMENT FINDINGS (Continued) Effect The potential effect was that without the above noted adjustments, the City's financial statements could have been materially misstated. Recommendation We recommend that each accountant responsible for an area perform an in-depth review of balance sheet, revenue and expenditure/expense accounts and determine and record the required adjustments prior to producing the final trial balances. Any reconciling differences should be corrected before the books are closed at year end. This process should reduce the adjusting journal entries required after the trial balances are provided to the auditors. View of Responsible Officials and Planned Corrective Actions We concur with this comment. The City received the fixed asset schedule from the consultant after the trial balances were produced. This resulted in numerous adjustments. The City is no longer using a third party consultant to maintain and adjust its fixed asset records. The City hired a Fixed Asset Accountant who is responsible for reconciling and updating fixed asset records. Departments report their fixed asset activity to the Fixed Asset Accountant on a bi-weekly basis to ensure all related accounts are reconciled in a timely manner. In addition to the fixed asset entries, other correcting entries were made to the account balances. A more thorough review process will be implemented at year end to ensure that all account balances are supported and agree to their associated transactions prior to producing the final trial balances. 09-02 Capitalized Interest Criteria Capital assets are initially recorded at their historical cost. The cost of a capital asset, for this purpose, should include "any ancillary charges necessary to place the asset in its intended location and condition for use". When an enterprise fund uses debt to finance construction of a capital asset, one of these capitalizable ancillary charges is the interest expense incurred during construction. The interest capitalization period ends when an asset is substantially complete and ready for use. Condition We noted that, for certain projects in the Utility Fund, interest continued to be capitalized although the related asset was complete and put into service, We further noted that, in the prior year, the incorrect amount of interest was capitalized on projects funded by the 2007 debt issue. These errors resulted in a prior period adjustment of approximately $2.4 million. 2 Sample Government, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) SECTION II - FINANCIAL STATEMENT FINDINGS (Continued) Cause These errors were a result of a misunderstanding ofthe criteria pertaining to interest capitalization. Effect The effect was that capital assets in the Utility Fund were overstated by approximately $2.4 million, Recommendation We recommend that Finance Department personnel monitor the status of all projects to ensure that interest capitalization ceases when a project is substantially complete and ready for use. View of Responsible Officials and Planned Corrective Actions We concur with this comment. To ensure that capitalized interest is calculated correctly, a policy will be prepared outlining the criteria for capitalizing interest and the steps required in the actual calculation. Also, the Fixed Asset Accountant will be responsible for providing timely and accurate schedules of capital improvement projects that are complete and ready to be placed in service. SECTION III - FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS None. SECTION IV - STATE FINANCIAL ASSISTANCE FINDINGS AND QUESTIONED COSTS None. 3 Sample Government, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS-FEDERAL A WARDS AND STATE FINANCIAL ASSISTANCE PROJECTS SECTION II - FINANCIAL STATEMENT FINDINGS Significant Deficiency 2007-01 Prior Period Adjustments Criteria Revenues in the governmental funds are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter (60 days) to pay liabilities of the current period. As such, certain State shared revenues, received within 60 days of the fiscal year end that are applicable to the fiscal year under audit, should be recorded as a receivable and a revenue. The government-wide and proprietary fund financial statements are prepared using the accrual basis of accounting. Under this method of accounting, expenses are recorded when a liability is incurred, regardless of the timing of cash flows. Condition Our audit procedures included the performance of procedures on the amounts recorded as assets, liabilities, revenues, expenditures/expense and fund balances/net assets amongst the various funds and governmental activities of the City. As a result of our audit procedures, the following prior period adjustments were recorded: . The improper period recognition of certain revenues received through the State for the fiscal year ended September 30, 2006 resulted in prior period adjustments of $1.266 million in the General Fund and $345,204 in the Transportation Fund. In both instances, fund balance previously reported was increased. . An incorrect calculation of revenue allocations from the General Fund to the Five Year Capital Improvement Fund and the Right of Way Beautification Fund resulted in prior period adjustments as follows - General Fund - decrease in the previously reported fund balance of $529,808; Five Year Capital Improvement Fund - increase in the previously reported fund balance of $218,488; Right of Way Beautification Fund - increase in the previously reported fund balance of$311 ,320, . The incurred but not reported claims (lag) for health claims was not reflected as a liability as of September 30,2006, This correction resulted in a prior period adjustment in the Internal Service Fund for Self-Insurance Programs totaling $1.454 million, a reduction of the net assets previously reported. . The liabilities for compensatory time and FICA on the compensated absences were not recorded as of September 30, 2006. This correction resulted in a prior period adjustment in the Governmental Activities of $1.11 7 million, a reduction to net assets previously reported. . The accretion on the capital appreciation bonds was not properly recorded as of September 30, 2006, This resulted in a prior period adjustment of $5.509 million in the Governmental Activities, a reduction to net assets previously reported. Sample Government, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS-FEDERAL A WARDS AND STATE FINANCIAL ASSISTANCE PROJECTS (Continued) SECTION II - FINANCIAL STATEMENT FINDINGS (Continued) Effect The potential effect was, that without the above noted corrections, the City's financial statements could have been materially misstated. Cause The Financial Services Department believed that these transactions were properly recorded. Recommendation The City should implement procedures to ensure that, at the end of the fiscal year, all receivables and related revenues, and all liabilities and related expenditures/expenses are properly recorded, Views of Responsible Officials and Planned Corrective Action The Financial Services Department believed that all transactions had been properly recorded in prior fiscal years with the issuance of the City's prior audited financial statements. Based upon detailed research and discussion, the City ultimately recorded the prior period adjustments for inclusion into the financial records to accurately reflect the City's financial position. The City, as part of its year end process, has implemented procedures to ensure that the appropriate transactions relating to all receivables and related revenues, and all liabilities and related expenditures/expenses are property recorded. Other Matters 2007-02 Contributions from Outside Parties Criteria Contributions received by the City from outside parties to partially fund capital projects should be recorded as revenues. Applicable costs incurred should be recorded as expenditures. Condition The City recorded an amount received from a developer to fund a portion of a City capital project as an escrow deposit, rather than as a revenue. Disbursements made for project costs were charged to the escrow deposit account, rather than being recorded as an expenditure. Capital asset additions are captured based on the review of items charged to the 6000 expenditure code. Since these costs did not flow though the expenditures, the capital asset related to this project was not recorded. This transaction resulted in an adjustment to record the expenditure and revenue of $3.4 million in the Five Year Capital Improvement Fund, and adjustment to the governmental activities capital assets for the same amount. I 2 Sample Government, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS-FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE PROJECTS (Continued) SECTION II - FINANCIAL STATEMENT FINDINGS (Continued) Effect Revenues and expenditures in the Five Year Capital Improvement Fund, as well as the governmental activities capital assets were understated. Cause It has been the City's practice to record donations of this type as escrow deposits, rather than recording the transaction as a revenue, and recording an expenditure when funds are disbursed. The primary reason is that these items were not budgeted. Recommendation We recommend that the City, in the future, record transactions of this nature as revenues and expenditures within the respective fund. Further, if the items are not included in the original adopted budget, the budget of the respective fund should be amended. Views of Responsible Officials and Planned Corrective Action The City has revised its practice to provide that any donations or contributions from developers or outside parties will be recognized as revenue and a corresponding expenditure/expense in the respective fund. This will also ensure that the capital asset additions are recorded in the fixed asset system. This will be accomplished either as part of the annual development of the approved budget or through the quarterly budget amendment process, 2007-03 Information Technology Policies and Controls Criteria Information technology policies and procedures, including the data backup process, provide the framework for the City's security over electronic data. The lack of such policies and procedures can result in not identifying errors and irregularities on a timely basis, as well as the loss of data, Conditions . There is not a system in place for monitoring unauthorized software installed on individual desktops. . The City does not currently maintain a log to track licensed software installed on individual desktops. 3 Sample Government, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS-FEDERAL A WARDS AND STATE FINANCIAL ASSISTANCE PROJECTS (Continued) SECTION II - FINANCIAL STATEMENT FINDINGS (Continued) . Backup and restoration functions for the Windows-based server environment are entirely automated by Tivoli Storage Manager (TSM) which also decides which tapes should be sent offsite. These decisions are made based on profiles within TSM, however, these profiles were configured by consultants several years ago and are not fully documented by the Information Technology staff. There is also no written backup policy or detail regarding the tape rotation scheme. . Formal procedures and policies do not exist that mandate the review and correction of daily backup anomalies for the Windows-based server environment. As such, backup errors may not be corrected in a timely manner, which may reduce the effectiveness of the backup system. . The City has an agreement with SunGard to provide hardware support for the iSeries computer. Once the City declares an emergency, iSeries operations can be moved to any of SunGard's hot- sites throughout the country. The iSeries disaster recovery plan is generally tested every year, but was not tested during this past year. Effect The lack of proper controls and procedures could have a negative impact on the City's electronic information. Cause The cause is systematic in nature. Recommendations . The unauthorized installation of software may pose a risk to the City's network and information security. The City should consider implementing a system for detecting and/or preventing the installation of unauthorized software by individual users. . The City should implement a system of policies and procedures for maintaining software license compliance for desktop computers. A system could be as simple as a log of software purchased and software installed. The record of software purchased and installed should be updated at least yearly and any discrepancies corrected. . Although TSM's is excellent for managing large and complex server environments, if the backup configuration is not formally documented, it will not be possible to determine if backups are functioning properly. The City should document, in detail, the configuration of the software and hardware used to backup Windows-based servers. This documentation should be sufficient to enable the City to recreate the configuration in the event of a disaster as well as verify that the backup system is functioning according to policy. 4 Sample Government, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS-FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE PROJECTS (Continued) SECTION 11- FINANCIAL STATEMENT FINDINGS (Continued) . The City should create written policies and procedures for the backup and restoration of Windows-based servers. The procedures should be sufficient to enable other employees within the City's Network Systems group to perform backup and restoration duties in the event that the primary backup technician is unavailable. Backup errors reported by TSM may indicate serious problems with the integrity of daily backups. The City should investigate and fix backup errors immediately. This includes regularly repeated errors caused by locked files. . The City should make accommodations to ensure that the iSeries disaster recovery plan is tested every year. Views of Responsible Officials and Planned Corrective Action City policy and procedures dictate that all software on City computers be installed by the Information Technology staff. The Information Technology staff currently maintain a complete file of all software licenses purchased. The Information Technology staff will develop and maintain a list of software that they install on individual City computers. The Information Technology staff will be implementing procedures to find software installed on City computers not in compliance with City policy, although it is recognized that due to the three-level antivirus and anti-malware software, it is unlikely that such software installation poses a risk to the network and/or information security. The City has written procedures for back-ups of both the Windows-based server environment and the iSeries environment. Employees primarily responsible for completing the backup process, as well as the other Information Technology employees who occasionally complete the process, continue to follow these procedures. Formal policies and procedures will be formalized to include current procedures and will address mitigation of backup errors reported by the backup software. The configuration of the individual servers is well documented and provide the ability to reconstruct the servers, including the restoration of all data from the off-site backup tapes. The configuration of the software and hardware used in the backup process will be included in these policies and procedures. The full testing of the iSeries disaster recovery plan, which includes employees traveling to a SunGard hot site and recovering the City data, ensures that the procedure is understood by the City employees and that the data is recoverable. The employees responsible for performing this process have been trained in this process and have participated in the testing in prior years. No significant changes were made in the City's hardware or software that would affect the disaster recovery process during the year, so disaster recovery remained fully available throughout the year. The City will implement a program to ensure the iSeries disaster recovery plan is tested annually, SECTION 111- FEDERAL AWARDS FINDINGS None SECTION IV - STATE FINANCIAL ASSISTANCE PROJECTS FINDINGS None 5 Addendum NO.3 CITY OF SUNNY ISLES BEACH Professional Audit Services CITY RFP NO.1 0-06-01 To All Bidders: Bidders for the above-referenced project shall take note of the following changes, additions, deletions, clarifications, etc. to the Plans and Specifications, which in accordance with the Contract Documents shall become a part of and have precedence over anything shown or described otherwise. >- Please note the following deletions/additions to the RFP Specifications, This addendum must be signed and included in your firm's response: 1.5. PROPOSAL REQUIREMENTS A. General Requirements Submission of Proposals Proposals shall be as thorough and detailed as possible so that the City may properly evaluate the capabilities of respective firms to provide the required services. All submittals by Proposers shall contain no more than fifteen (15) pages specifically addressing the following issues. */\11 other required document::ltion (except for the Public Entity Crime :md Non Collusive l\ffid::l'lits) 'I/iII not be considered ::l p::lrt of the fifteen (15) p::lges. ~H -,=,,%;;?:;'f::R.,.~~~"'l~g:.F':~H,::);:<,,:,,~."1"~,:;::~~~ffi'WA%f",:r:;:::~-"''?:?t~~";t'~~Jii1'''''<II~ "" ~~~~qf a. *ReqUlrea documentation',. requested'! such as" quality control revlews~ resumes, samplemanaQenientletters, Public Entitv Crime Affidavit, the Non-colhisive Affidavit,'arid'the Schedule of Professional Fees will not be considered'a's'parfof the fifteen,paoes1 All Proposals shall be submitted in the form required and shall include all requested documentation and a completed Public Entity Crime Form along with a completed Non-Collusive Affidavit. ~ a. Any Proposer wishing to provide the Services described in Sections 1.1 through 1.4 above must submit one (1) original and four (4) additional complete copies that include, at a minimum, the following documentation: i. Title Paae Title page showing the request for proposals subject; the firm's name; the name, address and telephone number of the contact person; and the date of the proposal. ii. Table of Contents iii. Transmittal Letter A signed letter of transmittal briefly stating the proposer's understanding of the work to be done, the commitment to perform the work within the time period, a statement why the firm believes itself to be best qualified to perform the engagement. iv. Detailed Proposal The detailed proposal should follow the order set forth in Section 1.5(C) below of this RFP. *Deletions are strioken. and additions are marked in ffiqi1ilahf~tflj3'h"'d)un(jsrrme'Cl1 :Y When submitting in response to this RFP, you are required to submit your documents unbound. A binder or paper clip at the top of the documents or along the sides will suffice. Receipt Confirmation: Company Name: MarcumRachlin, a division of Marcum LLP Representative's NamelTitle: Susan L. Friend, Partner Signature and Date: kCUlJ / Y ~4UL 7/7/:20/0 . END OF SECTION Addendum No.2 CITY OF SUNNY ISLES BEACH Professional Audit Services CITY RFQ NO.1 0-06-01 To All Bidders: Bidders for the above-referenced project shall take note of the following changes, additions, deletions, clarifications, etc. to the Plans and Specifications, which in accordance with the Contract Documents shall become a part of and have precedence over anything shown or described otherwise. >- Audit Fees: · Financial Audit and CAFR Preparation: Fiscal Year 2006/2007 2007/2008 2008/2009 . Sinqle Audit: Fiscal Year 2006/2007 2007/2008 2008/2009 Fee Amount $41 ,250 $42,488 $43,763 State $6,500 $6,500 $7,000 Federal $6,500 $6,500 $7,000 END OF SECTION Addendum No, 1 CITY OF SUNNY ISLES BEACH Professional Audit Services CITY RFQ NO. 10-06-01 To All Bidders: Bidders for the above-referenced project shall take note of the following changes, additions, deletions, clarifications, etc. to the Plans and Specifications, which in accordance with the Contract Documents shall become a part of and have precedence over anything shown or described otherwise. >- Thursdav, June 17, 2010 - Pre-Submittal Conference Summary Minutes END OF SECTION City of Sunny Isles Beach 18070 Collins Avenue Sunny Isles Beach, Florida 33160 Pre-RFP Submittal Conference Summary Minutes Thursday, June 17,2010 at 10:00 a.m. RFP No. 10-06-01, Professional Audit Services City Clerk Jane A. Hines called the meeting to order and introduced Assistant City Manager- Finance, MinaI Shah. Assistant City Manager MinaI Shah stated that the City is looking for a firm that has experience in government accounting. She specified that the agreement for this RFP is for three years (Fiscal Years 2009/2010, 2010/2011 and 2011/2012) with two (2) optional one (1) year renewals for Fiscal Years 2012/2013 and 2013/2014. The City's general fund budget is of about $30 million with a stormwater fund of about $1 million. The City's financial statements and budgets are available on the City's website: www.sibfl.net The deadline for submission of Request for Proposals documents is Tuesday, July 13, 2010 at 10:00 a.m., at which time those sealed responses will be publicly opened. QUESTIONS AND COMMENTS FROM PROSPECTIVE BIDDERS 1. Are there any American Recovery Reinvestment Act ("ARRA") funds included in the city's budget? Yes. A grant of $456,000 was awarded to the City for a project that is near it's completion. However, we have not received any reimbursements yet. 2. Does the City have any GOB funds? It was completed in fiscal year 2008/2009. 3. Has the City issued or anticipate issuing of any bonds? Yes. For fiscal year 2009/2010 the City issued a $15 million revenue bond. In addition, the City is looking to borrow monies for stormwater in the amount of $3.5 million with a possible line of credit for $1 million. 4. Have the findings from previous years been addressed? The Finance Department is in the process of addressing them. 5. Will it be possible to review the audit fees for the past three (3) years? Yes, they will be made available as an addendum and published on www.demandstar.com 6. When have the prior audits been issued? Work starts in November. A draft report is made available by January and a final, completed report is issued in February. The Pre-Submittal Conference was concluded at 10: 10 a.m.