The URL can be used to link to this page

Home My WebLink AboutRachlin, Cohen & Holtz # 1 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ l ~ ~ ~ ~ ~ ~ l l l I I I I I l I I I I ~ ~ ORIGINAL PRO P 0 S A L , __-i:----.... \ I / '/f" ~ V ( *V G ~ 2007 it~. \ "-/ ~.. .. .r'lo, . "II \\.. _ .T Request for Proposal for ~ Professional Auditing Services oSUNNY clSLES U BEACH "1t:lI~'illliiml~ ~ (~~'I;lf:tll.i.1!1tl'II':.J.II:.J.li:1iIlir"Ulr:1ii":fm1i1rm[em.I:l.~1!!P 8_.e. e- - 8 ao -.... '1&JIIiriiiT:w:iffi~ftitmfl1 ~ ~lh"~ell\.""lIIe."~l,;l'\;lIII!::J m. 1iiffi"I:l f,.1IISl!l!I:l~'4\."'lelfll:llI!J l:rn'Iiilllm:1IilliP.iClell\.1J<lllel B;e1:l.I:lIIIl:J m. ~:.JI'[:J'.":~ IiDll fA. m!II!m ~51'l'":)"IIII:l.lt:1lramt1r:T:\ m. Specific Audit Approach m. 1r;r;mIi~~_lili~~~rn1.~W'f;IiI~~r:.JI.~"1 'iI!L Ii1:ClellliIeUIIl<ll:\ Ib UiW'I'l:1:.J,11ifmm - ~ ISl m U ~ ~ U1 ml 1m) iii ~ ~:t~I'~ bl:G'1\71~ ~rn:! ~:,)III:,)III~.r~i ~:t~lln:C!B l-'"if.Ti"[OF.mI~:,)111:,)1\.~ir:rll ~:J:t~1'].:41!J 111J.,..'iII~h[ti:;JI~ ~:t~II].:~ ~t:.Jt:II\{q:l-~III.~ll\t:l.t')Il.\l'~""III.~~1 ~F.Ti'r.11{OJiTi !HIoll !--J t!iL:J:t ~ II] .:4[j l--r.l ir:r.111~:lTel !:l-'i-"i [oj I r.11~..{lj""..{,j'l:lF.Ti'r. ....{.j.J!) ~:t~II].:C!B lil'1:,tr.1I:mii~r.i(:,)1I1:,)1\~ W_:J:t~I'].:~ 1~[.]Ic.ef;1I~~'J.:.IJ~~in;~1 Rachl-Inwhen Rachlin Cohen & Holtz LLP '&Holtz Proposal for Independent Auditing Services Accountants . Advisors Accountants when &Holtz Advisors May 4, 2007 Jane A. Hines, CMC City Clerk City of Sunny Isles Beach 18070 Collins Avenue Sunny Isles Beach, Florida 33160 The independent certified public accounting firm of Rachlin Cohen & Holtz LLP (Rachlin) is pleased to submit this response to the Request for Proposal to provide auditing services to the City of Sunny Isles Beach (the City). As outlined in our proposal, we will conduct an audit of the financial statements of the City for the fiscal years ending September 30, 2007, 2008 and 2009, with an option for two (2) succeeding fiscal years. For more than 38 years, Rachlin has provided professional services to governmental entities. In the past year alone, the Firm has performed more than 40 audits of governmental entities. The partners and professionals in our Governmental Services Group have outstanding credentials and devote most of their time to working with local government entities. We are well versed in the complexities of this accounting sector and fully understand the economic and political environment in which these entities operate. For this proposed engagement, Rachlin has assembled an audit team whose skills and experience match the requirements of the City. The proposed engagement's audit partner, G. Jerry Chiocca, has been involved in audits of governmental entities for more than 35 years. All decisions that affect the planning, execution and completion of the proposed audit will be made by him. In addition, Rachlin offers to the City a commitment to ongoing and open communications. We pledge to listen to your concerns and anticipate your needs. And, we commit to be available to answer questions, discuss audit issues and resolve problems throughout the year as they arise and complete the engagement within the time frame outlined in the request for proposal. We welcome the opportunity to answer any questions and to provide further information regarding our services and experience. Thank you for your consideration. Sincerely, Rli:zlU~~ G. Jerry Chiocca, Partner Authorized to represent and bind the firm (305) 377-4228 Extension 1020 jchiocca@rachlin.com " Rachlin Cohen & Holtz LLP One Southeast Third Avenue. Tenth Floor. Miami, Florida 33131 . Phone 305.377.4228 . Fax 305.377.8331 . www.rachlin.com An Independent Member of Baker Tilly International MIAMI. FORT LAUDERDALE WEST PALM BEACH oSUNNY clSLES u BEACH 1. GENERAL REQUIREMENTS Established in 1955, Rachlin Cohen & Holtz LLP is a partnership including professional associations registered in the state of Florida. Through exceptional service and a long track record of successful outcomes, Rachlin has established itself as one of Florida's leading certified public accounting and advisory firms. With offices in Miami, Fort Lauderdale and West Palm Beach, Rachlin is a firm with 25 partners, more than 140 professional staff and additional support staff. Rachlin is ranked in the top 100 certified public accounting firms among 44,000 firms nationwide and is one of the largest independent accounting and advisory firms in the Southeast. Rachlin is a member of Baker Tilly International, one of the world's top 10 accountancy and business services networks. This affiliation positions Rachlin to serve clients domestically and internationally. Rachlin distinguishes itself by combining responsive, personal contact with sophisticated professional resources. Our clients range from individuals, family- owned businesses and not-for-profit organizations to municipalities and publicly held corporations. As an industry leader with a major concentration in the public sector, Rachlin has provided professional services to governmental entities for more than 38 years. More than 90 percent of the governmental clients we currently serve have engaged our firm to perform audit services. This focus allows us to provide the highest level of professional service to our governmental clients. The firm's staff have been working with governmental clients throughout their careers in public accounting. The partners, managers and supervisors of the firm are actively involved with recognized standard-setting organizations at the national level with the Government Finance Officers Association (GFOA); at the state level with the Florida GFOA and Florida Association of Special Districts; and at the local level with the League of Cities. Qualifications, experience and commitment to service are key factors in selecting a professional service organization. Rachlin has built a reputation and its practice on the basis of responsive, quality service to its clients. We take great pride in our ability to provide clients with an uncommon breadth of expertise and depth of resources to meet the needs of today's competitive and complex marketplace. Accounting and Auditing Services These 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. At Rachlin, our philosophy and practice is to blend technical, practical and business approaches when conducting each engagement. Advisory Services These services include analyzing business problems, evaluating the scope of specific situations, and developing solutions and alternative procedures. These endeavors 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 personnel. Our aim is to provide clients with "know-how." That is why we use experienced personnel who have the knowledge and experience to serve clients in a wide range of functional areas, including accounting systems, computer systems, financial controls, organizational structure and personnel. R hi- when Rachlin Cohen & Holtz LLP ac In&f:foltz Proposal for Independent Auditing Services Accountants . Advisors Page - 1 ~ t t t t t ~ t t t t t t t t t t t csSUNNY clSLES u BEACH RELATED SERVICES FOR GOVERNMENTAL ENTITIES GFOA Certificate of Achievement Program We have assisted many of our clients who participate in the GFOA Certificate of Achievement for Excellence in Financial Reporting Program. This program is recognized as the highest award in governmental financial reporting. The Certificate of Achievement has been awarded on ill! of the financial statements for participating clients. Federal and Florida Single Audits Rachlin has extensive experience in performing Federal and Florida single audits. 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. Bond Financing Having participated in financial programs for more than 100 bond issues with aggregate financing in excess of $621,000,000, our staff have been integrally involved in all phases of bond financing programs. Performance Auditing We are experienced in conducting performance, efficiency and program audits for local governments. We use industry practice guides and programs that we specifically tailor to each engagement. These programs are designed to identify problems and develop performance measures and strategic plans. Information System Capabilities Our Information Technology (IT) assurance services were developed in response to an increased risk environment. Rachlin 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: Network security architecture; LAN/WAN topology; policies and procedures; internal and external assessments utilizing port scanning; and review exposure to auto-cyber based attacks, viruses, worms, Trojan horses and DOS attacks . IT compliance assessments: Software licensing; hardware inventory; computer usage; systems documentation; and storage, access and use of corporate data and resources . Business continuity planning evaluations: Back- up process; disaster recovery planning and business continuity plan testing Ra hl-Inwhen Rachlin Cohen & Holtz LLP C '&Holtz Proposal for Independent Auditing Services Accountants . Advisors Page - 2 . . t t oSUNNY clSLES u BEACH Electronic Workpapers Electronic workpapers continue to improve productivity by allowing each member of the audit team to work in a collaborative environment. To achieve this, we establish a wireless network when working on the client's premises. Periodically, contact is made with one of the offices and the files in the field are synchronized with an office file server. These servers are backed up daily to ensure against data loss. Once synchronized with the central file server, other members of the audit team can view the file, which facilitates ongoing review with the field team. . t t . Professional Development Every year, the firm provides a minimum of 40 hours (five days) 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 Section 5. The firm is also committed to providing professional development programs to the entire South Florida community involved in the governmental sector. For the last 12 years, we have presented an annual Governmental Symposium, which focuses on current developments in governmental affairs, including accounting, legal and operational topics. 2. INDEPENDENCE Rachlin 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). The only professional relationships involving the City of Sunny Isles Beach for the past five years have been the annual audit of the City's financial statements. 3. LICENSE TO PRACTICE IN THE STATE OF FLORIDA Rachlin 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 key professional staff members are licensed to practice in the state of Florida. The firm is registered annually with the Florida Department of Business and Professional Regulation - Board of Accountancy. ~-;1ftn~B ~f!Yi) ~ ~'(;j Partners Principals Managers Supervisors Seniors Staff Accountants Operations "(.ii~'L. 25 13 18 15 19 38 75 f!!E 4 1 3 3 4 9 2 fE Rachl-I n when Rachlin Cohen & Holtz LLP '&Holtz Proposal for Independent Auditing Services Accountants . Advisors Page - 3 o SUNNY clSLES u BEACH 4. FIRM QUALIFICATIONS AND EXPERIENCE Rachlin is comprised of 25 partners and a professional staff of more than 140 support personnel. The audit partner, Jerry Chiocca, will be assisted by an audit supervisor, senior and two staff auditors 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. This engagement will be primarily staffed from Rachlin's Miami office, but the resources of all Rachlin offices and personnel will be made available to the City of Sunny Isles Beach, making the knowledge and experience of all partners and professionals part of our service. R. hi- wh ac In&Ho1t.i Accountants . Advisors Appendix A includes a copy of our most recent Peer Review Report, which included a review of specific governmental engagements. There has been no disciplinary action taken nor pending against the firm or any of the professional staff during the past three (3) years by state or federal regulatory bodies or professional organizations. 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. Rachlin Cohen & Holtz LLP Proposal for Independent Auditing Services Page - 4 csSUNNY clSLES U BEACH 5. PARTNERS, SUPERVISORY AND STAFF QUALIFICATIONS, AND EXPERIENCE TEAM STRUCTURE ~'I..J:>t:1 ~ ~ar.:.rr.l7 III tIll Q'llloj'I'Il'~ ~a~r.m ~].m'It:F ~t'II:J~ ~ ~omm~ ' Since all of Rachlin's governmental audit staff are qualified to perform financial audits of municipalities and other governmental agencies, the firm can assure the quality of the staff over the engagement term. Ra hl-nwhen Rachlin Cohen & Holtz LLP C I '&Holtz Proposal for Independent Auditing Services Accountants . Advisors Page - 5 o SUNNY clSLES u BEACH The experience of the key personnel assigned to the engagement is critical to providing you with an effective and efficient audit. 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 must be familiar with the complexities of governmental accounting, auditing and financial reporting, including GASB 34, 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. All key individuals assigned to this engagement are licensed to practice as a Certified Public Accountant in the State of Florida. The following is a brief description of each individual's experience in governmental audits. Resumes on each key individual that will be assigned to this engagement team are included in this section of the proposal. A three year summary of CPE credits related to government sector activities and other CPE is presented. In addition, our commit- ment to active participation in local governmental organ- izations is included in the resumes. The resumes also include each individuals educational background and other pertinent information. G. Jerry Chiocca, CPA Engagement Partner Jerry Chiocca has more than 35 years of experience in public accounting, serving a wide array of clients in the governmental sector. Mr. Chiocca will manage all services provided to the City and will ensure that professional services are delivered timely and efficiently. Mr. Chiocca will facilitate the communications between the audit engagement team and the City's management. Rachlin~o1ti Accountants . Advisors Michael D. Futterman, CPA Concurring Audit Partner Michael Futterman is a partner in the Governmental Services Group. Mr. Futterman has more than 17 years experience in the governmental sector. As the concurring audit partner, he will be responsible for the successful completion of the engagement and will be available to member of the engagement team and management of the City as a high-level technical resource. Duane Mathis, CPA Audit Supervisor As audit supervisor, Mr. Mathis will be coordinating the day to day operations of the audit team. Each will be primarily responsible for a significant area of the audit, but will be knowledgeable of all audit segments. With this team approach, the City is assured of having an experienced and knowledgeable professional on-site during the entire audit process. Management and Statting The efforts of these key individuals are critical to the success of the engagement, and the firm will also commit the full participation of the senior management team to accomplish the objectives of the engagement. The estimated participation of assigned staff is shown in the graph below. Supervisor 30% Staff 23% Senior 27% Rachlin Cohen & Holtz LLP proposal for Independent Auditing Services Page - 6 csSUNNV clSLES u BEACH The following is a brief description of each accounting position classification. A.PARTNERS Partners have the primary responsibility for assuring that the firm's commitments to the client are carried out to the client's satisfaction. PARTNERS Essential Functions . Is responsible for firm-wide audit practice . Allocates firm's resources to meet client's needs . Assumes overall responsibility for audit . Discusses important aspects of audit with client . Resolves any audit issues with client . Reviews the audit documentation to ensure the audit is carried out with due professional care . Reviews financial statements/CAFR, auditors' reports and management letter comments and discusses them with client . Signs audit reports and management letters . Meets with management on an as-needed basis B. SUPERVISOR The supervisor is the liaison between the partners, the client and the professional staff. Essential Functions . Supervises staff and reviews workpapers prepared by staff to ensure that they are prepared in accordance with generally accepted professional and firm standards . Performs audit procedures as assigned by the partner . Resolves accounting and auditing problems as they arise . Studies and evaluates the client's internal controls . Reviews with partner significant findings or questions involving accounting principles or statement presentation . Writes comments for management letter . Reviews financial statements, notes, schedules and management letters for later discussion between the partner and the client . Communicates the engagement's progress, problems, resolutions and other concerns to the client . Assists in preparing financial statements Rachlin~~ Rachlin Cohen & Holtz LLP proposal for Independent Auditing Services Page - 7 Accountants . Advisors oSUNNY clSLES U BEACH C. SENIOR The senior coordinates various phases of the engagement and directs one or more assistants. PARTNERS . I SUPERVISOR SENIOR Essential Functions . Performs more complex audit procedures under the direction of the supervisor or partner . Reviews audit documentation for accuracy and completeness . Directs and instructs assistants, where applicable, in work to be performed and in audit documentation review . Determines the extent of sampling required in the audit . Performs various procedures called for in the audit programs D. STAFF AUDITOR The staff auditor performs a wide variety of diversified assignments under the direction of supeNisory professionals. PARTNERS SUPERVISOR SENIOR STAFF AUDITOR Essential Functions . Performs less complex audit procedures as assigned by the supervisor or senior . Performs tests of transactions and accounts . Prepares and indexes audit documentation . Tests client accounting and analysis schedules . Proposes audit adjustments for review by the supervisor . Assists in preparing confirmation requests of mailing . Informs the supervisor of audit issues . Assists in proofing financial statements/CAFR Ra hi- when Rachlin Cohen & Holtz LLP C In&?lfoltz Proposal for Independent Auditing Services Accountants . Advisors Page - 8 l ~ ~ ~ ~ ~ ~ ~ ~ G. Jerry Chiocca G. Jerry Chiocca brings over 35 years of experience providing services to government, not-for-profit, public sector and commercial clients. As partner-in-charge of the public sector team within the firm's Assurance division, he is responsible for establishing and monitoring quality control. He also conducts in-house continuing professional education seminars regarding governmental and not-for-profit accounting issues. Mr. Chiocca has been involved in thousands of engagements over the course of his career. In addition, he has performed more than 300 peer reviews for a number of CPA firms in Florida, New York, New Jersey, North Carolina and California. Twelve years ago, Mr. Chiocca established an annual Governmental Symposium, a seminar for government and municipal professionals throughout South Florida. Through his leadership, the symposium provides valuable accounting information and technical discussions that benefit area agencies and organizations. G. Jerry Chiocca, CPA Partner P':" ";'\-::'I"l"=ll -- ....,.~~._-- AREAS OF EXPERTISE Professional & Civic Affiliations American Institute of Certified Public Accountants (AICPA) Florida Institute of Certified Public Accountants (FICPA) FICPA Committee on State and Local Government FICPA Committee on Peer Review, Former Chairman Government Finance Officers of America (GFOA) South Florida GFOA GFOA Special Review Committee Dade, Broward & Palm Beach County League of Cities Miami Shores Chamber of Commerce North Miami Beach Chamber of Commerce Municipal Audits Not-for-Profit Audits Financial Audits Municipal Operational Reviews Municipal Finance Water & Waste Water Audits Special District Audits Federal & Florida State Single Audits Utility Rate Regulated Issues KEY CLIENTS CPE (past thl'ee yei1l's) Governmental 110 Other (Accounting, Auditing, Technical and Behavioral) 94 Local Governments Municipalities Not-tor-Profit Organizations Real Estate Manufacturers Wholesale and Retail Companies Construction Contractors ~ ~ ~ ~ ~ ~ . Total 204 EDUCATION Rachlin~~ Bachelor of Arts St. Thomas University Accountants. Advisors One Southeast Third Avenue, Tenth Floor. Miami. Florida 33131 Phone 305,377.4228' Fax 305.377.8331 . jchiocca@rachlin.com . www.rachlin.com Rachlin Cohen & Holtz LLP M[AMI . FORT LAUDERDALE . WEST PALM BEACH Page - 9 oSUNNY clSLES u BEACH G. JERRY CHIOCCA, CPA Years Position Government Experience on Job on Job Broward County City of Aventura City of Doral City of Florida City of Hialeah City of Homestead City of Lake Worth City of Marathon City of Miami City of Miami Gardens City of Miramar City of North Bay Village City of North Miami City of North Miami Beach City of Oakland Park City of Oakland Park City of Palm Beach Gardens City of Pembroke Pines City of Stuart City of Sunny Isles Beach City of Tamarac Indian Creek Village Gateway Services District 2 3 3 7 6 6 1 3 2 2 8 7 10 27 2 3 1 9 2 5 3 2 2 Engagement Partner Engagement Partner Engagement Partner Concurring Review Partner Engagement Partner Engagement Partner Engagement Partner Concurring Review Partner Engagement Partner Engagement Partner Engagement Partner Engagement Partner Concurring Review Partner Engagement Partner Engagement Partner Concurring Review Partner Concurring Review Partner Concurring Review Partner Engagement Partner Engagement Partner Engagement Partner Engagement Partner Engagement Partner Rachl-Inwhen Rachlin Cohen & Holtz LLP '&Holtz Proposal for Independent Auditing Services Accountants . Advisors Page - 10 oSUNNY clSLES u BEACH G. JERRY CHIOCCA, CPA Years Position Government Experience on Job on Job Miami-Dade Water & Sewer Authority 3 Engagement Partner Miami Shores Village 13 Engagement Partner Seacoast Utility Authority 9 Engagement Partner Town of Bal Harbour Village 5 Engagement Partner Town of Lauderdale-By-The-Sea 6 Engagement Partner Town of Palm Beach Shores 1 Concurring Review Partner Town of South Palm Beach 2 Engagement Partner Village of Golf 7 Engagement Partner Village of Key Biscayne 12 Concurring Review Partner Village of Palmetto Bay 3 Engagement Partner Village of Pinecrest 5 Engagement Partner Village of Tequesta 4 Engagement Partner Village of Wellington 1 Concurring Review Partner West Lauderdale Water Control District 20 Engagement Partner Ra hl-nwhen Rachlin Cohen & Holtz LLP C I '&Holtz Proposal for Independent Auditing Services Accountants . Advisors Page - 11 I l ~ ~ ~ Michael D. Futterman Michael Futterman is a partner within the firm's Assurance division, where he focuses much of his work in the local government. not-for-profit and employee benefit plan areas. In addition, he conducts peer reviews for small and mid-size accounting firms. He has also provided auditing and advisory services to a variety of commercial businesses, including publicly held companies. Mr. Futterman has more than 17 years of professional experience and has taken part in more than 800 engagements. He takes a proactive, value-added approach to each client, always making recommendations to help improve operational or administrative efficiencies. This approach has served him well as he has engendered his clients' trust and loyalty throughout his career. Professional & Civic Affiliations American Institute of Certified Public Accountants (AI CPA) Florida Institute of Certified Public Accountants (FICPA) Government/Not-for-Profit Expert Panel (AICPA), Past Member Government Finance Officers Association (GFOA) Florida GFOA, Technical Resource Committee South Florida Chapter of the Florida GFOA, Audit Committee GFOA Special Review Committee, Certificate of Achievement for Excellence in Financial Reporting Program Miami-Dade County League of Cities Broward League of Cities Palm Beach Municipal League Florida Public Pension Trustees Association Florida Association of Special Districts AICPA Employee Benefit Plan Audit Quality Center, Designated Partner AICPA Governmental Audit Quality Center Internal CPE Training Committee, Chairman Internal Professional Standards Committee, Chairman Dade Schools Athletic Foundation, Inc.. Treasurer CPE (pEls! tl1l'88 yeals) Governmental Other (Accounting, Auditing, Technical and Behavioral) 180 75 255 Total Rachiin~~ Accountants . Advisors One Southeast Third Avenue, Tenth Floor. Miami, Florida 33131 Phone 305.377.4228. Fax 305.377.8331 . mfutterman@rachlin.com . www.rachlin.com MIAMI . FORT LAUDERDALE . WEST PALM BEACH Michael D. Futterman, CPA Partner ~~--- :;. .1 '!' i' ] .::If.;I' AREAS OF EXPERTISE Financial Audits Federal Single Audits Florida Single Audits Employee Benefit Plans Operations or Performance Reviews Agreed-Upon Procedures Attestation Services Advisory Services KEY CLIENTS Local Governments Community Redevelopment Agencies Special Districts Governmental Pension Plans ERISA Pension Plans Not-for-Profit Organizations EDUCATION Bachelor of Business Administration Florida Atlantic University Rachlin Cohen & Holtz UP Page - 12 r csSUNNY clSLES u BEACH MICHAEL D. FUTTERMAN, CPA Years Position Government Experience on Job on Job Broward County 1 Engagement Partner City of Aventura 3 Concurring Review Partner City of Florida City 5 Engagement Partner City of Hialeah 6 Concurring Review Partner City of Homestead 3 Concurring Review Partner City of Marathon 5 Engagement Partner City of Miami 2 Concurring Review Partner City of Miami Springs 7 Concurring Review Partner City of Miramar 8 Concurring Review Partner City of North Bay Village 7 Concurring Review Partner City of North Miami 10 Engagement Partner City of North Miami Beach 7 Concurring Review Partner City of Oakland Park 2 Engagement Partner City of Oakland Park 3 Concurring Review Partner City of Pembroke Pines 9 Engagement Partner City of South Miami 6 Concurring Review Partner City of Stuart 2 Concurring Review Partner City of Sunny Isles Beach 5 Concurring Review Partner City of Tamarac 3 Concurring Review Partner City of Hialeah Gardens 1 Engagement Partner Miami Shores Village 8 Concurring Review Partner Miami-Dade Water & Sewer Authority 1 Concurring Review Partner Town of Bal Harbour Village 5 Concurring Review Partner Town of Bay Harbor Islands 2 Engagement Partner Town of Lauderdale-By-The-Sea 6 Concurring Review Partner Town of South Palm Beach 3 Concurring Review Partner Village of Golf 7 Concurring Review Partner Village of Key Biscayne 12 Engagement Partner Village of Pinecrest 5 Concurring Review Partner Village of Tequesta 2 Concurring Review Partner Rachl-Inwhen Rachlin Cohen & Holtz LLP '&Holtz Proposal for Independent Auditing Services Accountants . Advisors Page - 13 r Duane A. Mathis Duane Mathis is an audit supervisor in Rachlin's Government and Not-for-Profit group, which is within the firm's Assurance division. He has more than nine years of experience working for governmental, not-for-profit and commercial clients. He has gained a thorough understanding of government operations from his involvement in numerous local government audits. His primary responsibility includes on-site supervision of audit engagements. Within each of these engagements, Mr. Mathis directs staff and reviews workpapers prepared by staff to ensure they are in accordance with generally accepted professional and firm standards. He also resolves accounting and auditing issues as they arise. Duane A. Mathis, CPA Audit Supervisor Professional & Civic Affiliations Florida Institute of Certified Public Accountants (FICPA) American Institute of Certified Public Accountants (AICPA) Government Finance Officers Association (GFOA) GFOA Special Review Committee, Certificate of Achievement for Excellence in Financial Reporting Program National Association of Black Accountants (NABA) : ~? :;l .D [ii [H!I J AREAS OF EXPERTISE Financial Audits Federal Single Audits Florida Single Audits Employee Benefit Plans KEY CLIENTS Local Governments Governmental Agencies Governmental Pension Plans Not-for-Profit Organizations CPE (past three yeal"s) Governmental 114 Other (Accounting, Auditing, Technical and Behavioral) 32 Total 146 EDUCATION Bachelor of Science, Accounting Florida State University Rachlill~t~ Accountants . Advisors One Southeast Third Avenue, Tenth Floor. Miami, Florida 33131 Phone 305.377.4228 . Fax 305.377.8331 . dmathis@rachlin.com . www.rachlin.com MIAMI . FORT LAUDERDALE . WEST PALM BEACH Rachlin Cohen & Holtz LLP Page - 14 oSUNNY clSLES U BEACH DUANE A. MATHIS, CPA Position Government Experience on Job Village of Bal Harbour Supervisor Village of Key Biscayne Supervisor Town of South Palm Beach Supervisor Town of Davie Senior City of North Miami Senior City of Pembroke Pines Senior City of Miami Gardens Supervisor City of Lauderhill Employees Pension Plan Supervisor City of North Miami's Two Governmental Pensions Supervisor City of Hollywood Senior City of Boynton Beach Police Pension Fund Senior City of Boynton Beach Firefighters Pension Fund Senior Broward County School Board Senior Broward Center for the Performing Arts Senior Broward County Clerk of Circuits Courts Senior Town of Bay Harbour Islands Supervisor City of Miami Springs' Two Governmental Pensions Supervisor City of Dania Beach Supervisor City of Homestead Supervisor Miami-Dade Water and Sewer Department Supervisor City of Miami Supervisor City of Sunny Isles Beach Supervisor Broward County Supervisor Rachl-Inwhen Rachlin Cohen & Holtz LLP '&Holtz Proposal for Independent Auditing Services Accountants . Advisors Page - 15 Arieh S. Davidoff l~ Arieh Davidoff has been an advisor in the technology sector for more than 11 years. His areas of expertise include computer forensics, email systems and deleted email recovery, information systems auditing, and UNIX/Linux and Windows system administration. Mr. Davidoff is part of the growing computer forensics and information security practice at Rachlin. With the recent spate of high-profile cases involving computer forensics and electronic evidence, this field has increased in importance. Mr. Davidoff has worked with organizations to help them understand the electronic discovery process. He has assisted attorneys and corporations on matters which have a strong electronic evidence component, and he has worked closely with government agencies such as the U.S. Secret Service, the Securities and Exchange Commission, and the Florida Department of Financial Services. Arieh S. Davidoff Manager """.. ;. I ..71 - - .~ -. Articles, Seminars & Lectures HIPAA Information Technology Challenges HIPAA Security Regulations Introduction to Computer Forensics, Florida Bar CLE Course Identity Theft and Corporate Hacking, Lecturer Computer Forensics and Data Preservation in Bankruptcies and Receiverships, South Florida Legal Guide AREAS OF EXPERTISE Computer Forensics/Electronic Discovery Pre-Litigation Support Computer & Information Security Information Systems Auditing IT Advisory Services KEY CLIENTS Law Firms Government Agencies EDUCATION Bachelor of Arts University of Miami Rachiir;~~ Accountants. Advisors One Southeast Third Avenue, Tenth Floor' Miami, Florida 33131 Phone 305.377.4228 . Fax 305.377.8331 . adavidoff@rachlin.com . www.rachlin.com Rachlin Cohen & Holtz llP MIAMI . FORT LAUDERDALE . WEST PALM BEACH . STUART Page - 16 oSUNNY clSLES u BEACH - - .0' 6. PRIOR ENGAGEMENTS WITH THE CITY OF SUNNY ISLES BEACH We have previously audited the financial statements of the City of Sunny Isles Beach during the past five years. Mr. Chiocca was the partner-in-charge of the engagement, and the work was performed from our Miami office. The total hours varied in that time frame, since the City was still in the expansion period from its date of incorporation 7. SIMILAR ENGAGEMENTS WITH OTHER GOVERNMENTAL ENTITIES The following are five audit engagements with similar requirements to those of the City of Sunny Isles Beach that have been performed in the past five years. All are current audit clients, and all audits have a September 30 fiscal year end. ~ ~ liiiiiihTtt-:;h ~ lZ!m1n ~ ~ ~ , Rachlin Cohen & Holtz LLP City of North Miami Beach Financial, Single and 9/30/99- G. Jerry 900 Ms. Marilyn Spencer, Finance Director Pension 9/30/07 Chiocca (305) 948-2916 Audits City of North Miami Financial, Mr. Carlos Perez, Finance Director Single and 9/30/94- Michael D. 800 (305) 893-6511 Pension 9/30/06 Futterman Audits Town of Bal Harbour Financial 9/30/01- G. Jerry Mr. Alfredo Treppeda and Pension 9/30/06 Chiocca 300 (305) 866-4633 Audits Village of Key Biscayne Financial, Single and 9/30/94- Michael D. Ms. Jacqueline Menendez Pension 9/30/06 Futterman 300 (305) 365-5514 Audits City of Dania Beach Financial 9/30/03- Ms. Patricia Varney, Chief Financial Officer and Single 9/30/06 G. Jerry 600 (954) 924-3620 Audits Chiocca We assist all of our municipal clients in obtaining the GFOA Certificate of Achievement for Excellence in Financial Reporting and have been successful for all clients who have applied for the certificate. Rachl-Inwhen Rachlin Cohen & Holtz LLP '&Holtz Proposal for Independent Auditing Services Accountants . Advisors Page - 17 oSUNNY clSLES U BEACH --l::" -- = LIST OF CURRENT GOVERMENT CLIENTS as ot September 30, 2006 Broward County Florida City City of Hialeah City of Homestead City of Lake Worth City of Marathon City of Miami City of Miami Gardens City of Miramar City of North Miami City of North Miami Beach City of Sunny Isle Beach City of Indian Creek Village Miami - Dade Water & Sewer Authority Miami Shores Village Town of Bal Harbour Village Town of Lauderdale by the Sea Town of South Palm Beach Village of Golf Village of Key Biscayne Village of Palmetto Bay Village of Pinecrest Village of Tequesta Village of Wellington R hi- when Rachlin Cohen & Holtz LLP ac In&?lfoltz Proposal for Independent Auditing Services Accountants . Advisors Page - 18 oSUNNY clSLES u BEACH 8. SPECIFIC AUDIT APPROACH Rachlin will use several approaches in the audit engagement of the City. These will include traditional audit techniques and strategies and an evaluation of the systems of the City. The audit will be conducted in four phases, as shown below. These phases are discussed in more detail on the following pages. ~ ~ ~ ~ ~ ~ .. . l:!E!n[iJi.I~:}""1-"11"'1:J ~ Phase /I E tion of the dit Plan xecu Au ~.]III~ ~ ~e ~r:llJ....'"'t:I'1'11.]IJ....-t ~ ~ . ".. .~ ~ . . . I-.: m.:t1III1I:.:)I~ ~~'''I:j:r:~ _.J.ltilrrr.:fl.JIJ..."'1I ~1~I['hf,I ~=-~ . .. .. ~ ~ ~ ~; ~~ ~. ~:')i:.J.[I1{;.J Iill~"i:ll ~tiJ'll (L:.J ~llt;I:1:.:)III:.:)ln Rachl-nwhen Rachlin Cohen & Holtz LLP I '&Holtz Proposal for Independent Auditing Services Accountants . Advisors Page - 19 oSUNNY clSLES u BEACH AUDIT PROCESS The audit will be conducted four phases. Phase I: Strategic Planning A thorough understanding of your organization 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 our understanding of operations. You 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, state and county rules and regulations; ordinances, bond covenants, contracts, and other agreements; and 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 making 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. 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 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 control system. There are four 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. R hi- when Rachlin Cohen & Holtz LLP ac In&?l:loltz Proposal for Independent Auditing Services Accountants . Advisors Page - 20 . . . . . . ~ ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ . oSUNNY clSLES u BEACH 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. Use of EDP Software State-of-the-art audit techniques data extraction software allows us to audit through the computer, which is in addition to the basic procedures performed around the City's computer system. I . ~ . . . . . . . . . . . Phase III: Evaluate 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 IV: Completion and Delivery 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. The team will assist in preparing the financial statements and the notes to the financial statements. The draft audit report for the City will be delivered before the end of February. All reports will be reviewed with management before issuance, and the engagement partner will be available to meet with the appropriate City officials to discuss the reports and address any questions that they may have. MONITORING AND COMMUNICATION The firm's engagement team will hold progress conferences throughout the entire audit process with key finance department personnel who have oversight responsibility for financial reporting. This ensures that they are informed of the following: . 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 Rachlin's audit team become aware of fraud, irregularities or illegal acts, they will make an immediate written report to the Director of Finance, the City Manager and the City Commission, as appropriate. Rachl-Inwhen Rachlin Cohen & Holtz LLP '&Holtz Proposal for Independent Auditing Services Accountants. Advisors Page - 21 l ~ ~ ~ ~ ~ t t . o SUNNY clSLES u BEACH MANAGEMENT LETTERS Rachlin 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 the audit process. 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 the Director of Finance. Rachlin's policy is to prepare this report as a vehicle for suggesting improvements to enhance efficiency, management effectiveness and the degree of internal control. (See Appendix B for three management letters) 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. Rachlin~~ Accountants . Advisors '-'_.C"--""'- - In client situations where there is significant accounting data processed electronically, we use a program called Audit Command Language (ACL). ACL is a computer software program used to extract and summarize computerized financial data files. Here are some of the uses of ACL: . 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 ACL provides an efficient way for us to extract and test computerized accounting information. With ACL, we audit through the computer, rather than around the computer. CURRENT TECHNICAL DEVELOPMENTS The firm is committed to year-round communication with all of our clients to discuss the challenges they face, resolution of such challenges, and any issues and concerns of management. In addition, we routinely disseminate newsletters, publications and general correspondence to keep our clients informed of current developments, including GASB and FASB pronouncements. We also conduct our annual Governmental Symposium, which consists of two days of lectures and updates on current developments in governmental accounting and auditing standards, which we invite your staff to attend. Rachlin Cohen & Holtz LLP Proposal for Independent Auditing Services Page - 22 I l ~ ~ ~ . . . . ~ ~ t a """'c- o SUNNY clSLES u BEACH ~ - - ----- - HOW RACHLIN COMMUNICATES -- ---....... Internet Information Technology (IT) Audit and Control Techniques Security issues are on the rise as government entities become more dependent upon computer systems and as these systems become more accessible through Internet connections and wireless devices. Rachlin has responded to this development by integrating computer forensic specialists into the audit process. The team includes individuals skilled in evaluating system applications and physical controls. They also contribute to the effectiveness of the audit by applying computer-aided audit techniques (CAAT). The firm also uses the Control Objectives for Information and Related Technology (COBIT) Framework. Rachlin~~ Accountants . Advisors Rachlin Cohen & Holtz LLP Proposal for Independent Auditing Services Page - 23 I ~ ~ ~ ~ . . . ~ ~ . . oSUNNY clSLES u BEACH COBIT Framework [ HOW IT WORKS (~:.\ \ ~tr.'.g, ~) ". ... --.. / , ( I.,,''''''.,) \ AIlalysis ~.- Monitoring Policies & Procedures (~.~ ,,='7 .-- (.:i'::' ) --- Continuous Improvement /_. ...... ! ~,,,.. ,;.) ~I'.'.'.' - Using the COBIT framework, the firm identifies key areas of potential computer risk as part of the audit. These areas include system planning, systems development/acquisition, systems operations/maintenance (i.e., asset tracking), data management, electronic commerce, external threat protection (i.e., viruses, hackers) and software licensing. We believe this capability sets Rachlin apart from others. It also gives our clients a sense of security with respect to their IT systems. Risk-Based Audit Techniques Rachlin employs a risk assessment approach early in the audit process. We believe that with our leadership in the governmental audit area, we have developed a wide understanding of how and where things can go wrong. Most of the time, these problem areas are not in the finance department but in other departments. Therefore, a portion of the audit budget is devoted to procedures outside of the finance department. Rachlin~~ Accountants . Advisors We also consider how the overall risk identified in the general risk analysis affects specific account balances, including: . 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 . Accounts with complex calculations, judgment and accounting issues that have a high-assessed level of inherent risk Specific Fraud Investigative Techniques Statement of Auditing Standards No. 99 (SAS 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." At Rachlin, we believe that by redirecting our efforts through a risk-based approach and additional fraud inquiry techniques, we significantly enhance the audit process and provide greater value to our clients. Rachlin Cohen & Holtz LLP Proposal for Independent Auditing Services Page - 24 ~ . ~ l oSUNNY .cISLES u BEACH --rlO --. _ SCOPE OF SERVICES Based on Our understanding of the expectations and requirements of the City of Sunny Isles Beach set forth in the request for proposal, the following is a summary of the scope of our proposed hours. Additional hours have been included for the new statements of auditing standards (Nos.1 03 -111) Phase I: Strategic Planning 5 5 5 10 25 Phase II: Execution of the Audit Plan 5 15 175 100 295 Phase II': Evaluate Audit Results 5 10 5 20 Phase IV: Completion and Delivery 15 20 10 10 55 30 50 195 120 395 - - - - - Audit of the City's Financial Statements Rachlin will perform an audit of the financial, statements of the City of Sunny Isles BeaCh for the fiscal years ended September 30, 2007, 2008 and 2009 with the option of two (2) succeeding fiscal years. The objective of the audit is the expression of an opinion as to whether the financial statements are fairly presented, in all material respects, and in conformity with accounting principles generally accepted in the United States. . Report on internal control over financial reporting on compliance 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. Rachlin 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. Rachlin~~ Rachlin Cohen & Holtz LLP Proposal for Independent Auditing Services Page - 25 Accountants . Advisors 15 SUNNY clSLES u BEACH ~ ~ . Rachlin will perform a single audit, if applicable, in accordance with generally accepted auditing standards, Government Auditing Standards, the Single Audit Act Amendments of 1996, 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 and state program. Additionally, at the exit conference, we will communicate: . Our responsibility under generally accepted auditing standards . Significant accounting policies . Management 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 Required Standards The firm's audit will be performed in accordance with the following requirements, as applicable: . Government Auditing Standards, published by the Comptroller General of the United States . Codification of Governmental Accounting and Financial Reporting Standards, as promulgated by the Governmental Accounting Standards Board Rachlin~~ Accountants . Advisors . - --q;;- -- . Audit and Accounting Guide, State and Local Governmental Units, published by the American Institute of Certified Public Accountants (AICPA) . Statements on Auditing Standards, issued by the AICPA . Statements and interpretations issued by the Financial Accounting Standards Board . Florida Statutes Section 11.45 . Rules of the Auditor General, State of Florida, Chapter 10.550 . State of Florida Department of Financial Services . 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 . OMB Circular No. A-133, Office of Management and Budget, Washington, D.C., and any other applicable circular issued . All other applicable provisions of rules, regulations, statutes or orders which may pertain to the engagement 9. IDENTIFICATION OF ANTICIPATED POTENTIAL AUDIT PROBLEMS Rachlin does not anticipate any potential audit problems while performing independent auditing services for the City. If any problems should arise, they will be immediately brought to the attention of the management of the City. The City will need to engage an actuary to compute the amount of post-employment benefits (GASB 45) prior to the implementation year. Rachlin Cohen & Holtz LLP Proposal for Independent Auditing Services Page - 26 --~.,-- ,-- csSUNNY Z'ISLES u BEACH 10. REPORT FORMATS See following pages. Rach'in~~ AccountantS . Advisors Rachlin Cohen & Holtz LLP proposal for Independent Auditing Services Page - 27 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Honorable Mayor, City Commission and City Manager City of Sunny Isles Beach, Florida We have audited the accompanying financial statements of the governmental activities, the business-type activities, and each major fund of City of Sunny Isles Beach, Florida, as of and for the fiscal year ended September 30, 2006, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall tinancial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities and each major fund of the City of Sunny Isles Beach, Florida, as of September 30, 2006 and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States. In accordance with Government Auditing Standards, we have also issued our report dated January 19, 2007 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that rep0l1 is to describe the scope of our testing of internal control over linancial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That rep0l1 is an integral part of an audit performed in accordance with G()\'ernment Auditing Standards and should be considered in assessing the results of our audit. -1- Honorable Mayor, City Commission and City Manager City of Sunny Isles Beach, Florida Page Two Management's Discussion and Analysis and the Required Supplementary Information on pages 3 to 8 and 33 to 35, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Miami, Florida January 19, 2007 - 'L Report of Independent Certitied Public Accountants on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Basic Financial Statements Performed in Accordance with Government Auditin~ Standards Honorable Mayor, City Commission and City Manager City of Sunny Isles Beach, Florida We have audited the financial statements of the governmental activities, the business-type activities and each major fund, of the City of Sunny Isles Beach, Florida (the City), as of and for the year ended September 30, 2006 which collectively comprise the City's basic financial statements and have issued our report thereon dated January 19, 2007. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards. issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Sunny Isles Beach, Florida's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the basic financial statements and not to provide assurance on the internal control over financial repOlting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. Compliance and Other Matters As part of obtaining reasonable assurance about whether City of Sunny Isles Beach, Florida's basic financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Co\'ernment Auditing Standards. -3- Honorable Mayor, City Commission and City Manager City of Sunny Isles Beach, Florida Page Two We noted certain matters that we reported to management in the accompanying schedule of findings and responses. This report is intended solely for the information and use of the Mayor, City Commission, management, and regulatory agencies, and is not intended to be and should not be used by anyone other than these specified parties. Miami, Florida January 19,2007 -4- . ~ ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ ~ J ~ ~ l ~ ~ l ~ l ~ l l I l l I I I I I Management Letter in Accordance with the Rules of the Auditor General of the State of Florida Honorable Mayor, City Commission and City Manager City of Sunny Isles Beach, Florida We have audited the basic financial statements of the governmental activities, the business-type activities and each major fund of the City of Sunny Isles Beach, Florida (the City) as of and for the year ended September 30, 2006, which collecti vely comprise the City's basic financial statements, and have issued our report thereon dated January 19,2007. We conducted our audit in accordance with United States generally accepted auditing standards, and Covernment Auditing Standards issued by the Comptroller General of the United States. We have issued our Report of Independent Certified Public Accountants on Internal Control over Financial Reporting and on Compliance and Other Matters. Disclosures in this report, which is dated January 19,2007, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with the provisions of Chapter 10.550, Rules of the Auditor General, which govern the conduct of local governmental entity audits performed in the State of Florida and require that certain items be addressed in this letter. The Rules of the Auditor General (Section I 0.554( I )(h) I.) require that we address in the management letter, if not already addressed in the auditor's report on compliance and internal controls or schedule of findings and questioned costs, whether or not recommendations made in the preceding annual financial report have been followed. The recommendations made in the preceding annual financial audit report have not been corrected and can be found in the schedule of findings and responses. As required by the Rules of the Auditor Genera] (Section 10.554(1)(h)2.), the scope of our audit included a review of the provisions of Section 218.415., Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the City of Sunny Isles Beach complied with Section 218.415, Florida Statutes. The Rules of the Auditor General (Section 10.554(1)(h)3.) require that we address in the management letter any findings and recommendations to improve financial management, accounting procedures, and internal controls. Our audit disclosed two matters that were repeated from prior year and are in the schedule of findings and responses. The Rules of the Auditor General (Section ]0.554(1)(h)4.) require disclosure in the management letter of the following matters if not already addressed in the auditor's reports on compliance and internal controls or schedule of findings and questioned costs and are not clearly inconsequential: (I) violations of laws, -5- Honorable Mayor, City Commission and City Manager City of Sunny Isles Beach, Florida Page Two rules, regulations, and contractual provIsions that have occurred, or are likely to have occurred; (2) improper or illegal expenditures; (3) improper or inadequate accounting procedures (e. g., the omission of required disclosures from the financial statements); (4) failures to properly record financial transactions; and (5) other inaccuracies, shortages, defalcations, and instances of fraud discovered by, or that come to the attention of the auditor. Our audit found no matters that were required to be disclosed. The Rules of the Auditor General (Section 10.554(1)(h)5.) also require that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in the management letter, unless disclosed in the notes to the financial statements. The City of Sunny Isles Beach was incorporated by Ordinance 95-207 adopted by the Miami-Dade Board of County Commissioners on June 16, 1997. There were no component units related to the City. As required by the Rules of the Auditor General (Section I 0.554( I )(h)6a.), a statement must be included as to whether or not the local government entity has met one or more of the conditions described in Section 218.503( I), Florida Statutes. In connection with our audit, we determined that the City, did not meet any of the conditions described in Section 218.503( I), Florida Statutes. As required by the Rules of the Auditor General (Section 10.554(1)(h)6.b.), we determined that the annual financial report for the City of Sunny Isles Beach for the fiscal year ended September 30,2006, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, IS 111 agreement with the annual financial audit report for the fiscal year ended September 30, 2006. As required by the Rules of the Auditor General (Sections 10.554(h)6.c. and 10.556(7), we applied financial assessment procedures. It is management's responsibility to monitor the entity's financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. The assessment was done as of the fiscal year end. There were no findings that identified deteriorating financial conditions. This management letter is intended solely for the information of the Mayor, City Commission, management, and the State of Florida Office of the Auditor General, and is not intended to be and should not be used by anyone other than these specified parties. Miami, Florida January 19,2007 -6- CITY OF SUNNY ISLES BEACH, FLORIDA SCHEDULE OF FINDINGS AND RESPONSES FISCAL YEAR ENDED SEPTEMBER 30, 2006 SECTION 1- CURRENT YEAR FINDINGS AND RECOMMENDATIONS No new comments for the fiscal year ending September 30, 2006. However, see the status of prior year comments. SECTION II - STATUS OF PRIOR YEAR COMMENTS Other Matters 01-2. Proprietary Fixed Asset Depreciation Policy During the audit of the City's financial statements, we noted that the City does not have a formal written policy over accounting for and depreciating fixed assets. ReC01lll1lelldatioll We recommend that the City establish an accounting policy and procedures manual to also include a formal written policy over better accounting for and depreciating fixed assets. The City should set up procedures to follow for properly recording fixed assets and its related accumulation of depreciation. Mallagelllellt Respollse The City's new software does have the fixed assets and depreciation module which will be in full operation after we have the whole City inventoried and have a firm base that is as accurate as possible. The company, American Appraisal, who has brought the compliance process related to GASB-34 to many cities, will be working with us this summer as it relates to the inventory of the City's capital assets and infrastructure. Only after there is a good understanding of the procedures they will be installing; can there be an informative policy and procedure manual that encompasses the full procedure. Status The City has not implemented this recommendation and plans to correct action. 01.3. Fixed Assets Inventory Listi ng During our fixed asset testing, we noted that the City does not have an inventory of its fixed assets or tagging of such assets. This is mainly due to the fact that the City does not have a formalized capitalization policy in place. This makes the assets more susceptible to misappropriation or misuse. R ecolllllle Ildatioll We recommend that the City adopt a formalized capitalization policy in which the City tags all fixed assets and inventory the assets by department as these assets are received. -7- . . ~ . ~ ~ . . . . . ~ ~ ~ . ~ ~ CITY OF SUNNY ISLES BEACH, FLORIDA SCHEDULE OF FINDINGS AND RESPONSES (Continued) SECTION 11- STA TUS OF PRIOR YEAR COMMENTS (Continued) Nlanageme/lt Response Tagging all fixed assets will be palt of American Appraisals scope of work and recommending and installing an inventory system City wide. Status The City has not implemented this recommendation and plans to correct action. -8- oSUNNY clSLES u BEACH 11. PROPOSED FEES See separate envelope. Rachll-nwhen Rachlin Cohen & Holtz LLP '&Holtz Proposal for Independent Audit Services Accountants. Advisors Page - 28 Appendix A 6. Altschuler, 1Ylelvoin and Glasser LLP Certified Public Accountants Partners of 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 Cohen & Holtz LLP (firm) applicable to non-SEC issuers in _ effect for the year ended April 30, 2004. The firm's accounting 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 firm'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 If.lstitute of Certified Public Accountants (AICPA). The design of the system, and compliance with it, are the responsibilities of the firm. 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 Firms 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 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 non-SEC issuers of Rachlin Cohen & Holtz LLP in effect-for the year ended April 30, 2004 has been designed to meet the requirements of the quality control standards for an accounting and auditing practice established by the AICPA and was complied with during the year then ended to provide the firm with reasonable assurance of complying with professional standards. ~~~~L:~ Chicago, Illinois Septem ber 2, 2004 One South \Vacker Drive, Suite 800, ChicJgo, !llinois 606011-3392 312.38-:6000 Fax 312.634.3-110 ,^'ww.amgl1eLcorn l l , l ~ l ~ ~ ~ ~ l l ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . ~ ~ . ~ ~ ~ ~ ~ . . ~ ~ l I Attachment to the Peer Review Report of Rachlin Cohen & Holtz LLP Description of the Peer Review Process Overview Firms enrolled in the AICPA Center for Public Company Audit Firms (Center) Peer Review Program have their system of quality control reviewed by independent peers. These reviews are system and compliance oriented with the objective of evaluating whether: · The reviewed firm's system 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 AICPA. · The reviewed firm'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 (Committee) establishes and maintains review standards. At regular meetings and through report evaluation task forces, the Committee 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 Committee. Once the Committee accepts the peer review reports, letters of comments and reviewed firms' responses, they 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 Committee. 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 SEC issuers inspected by the PCAOB. Therefore, we did not review the firm's accounting and auditing practice applicable to SEC issuers. 2 Planning the Review for the Firm's Accounting and Auditing Practice Applicable to Non-SEC Issuers To plan the review of Rachlin Cohen & Holtz LLP, we obtained an understanding of (1) the nature and extent of the firm'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 firm's personnel into practice units. Control risks were assessed by obtaining an understanding of the design of the firm's system of quality control, including its audit methodology, and monitoring procedures. Assessing control risk is the process of evaluating the effectiveness of the reviewed firm's quality control system 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-SEC 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 quality control system. The engagements selected for review included engagements performed under Government Auditing Standards and audits of employee benefit plans. The engagements we 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 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 the scope of the review and conducted an exit conference with firm management to discuss our findings and recommendations. 3 l I ~ ~ ~ ~ t . . Appendix B l\lanagement Letter in Accordance with the Rules of the Auditor General of the State of Florida Honorable Mayor, Village Council and Village Manager Village of ABC, Florida We have audited the financial statements of the Village of ABC, Florida (the Village) as of and for the year ended September }O, 2006, and have issued our report thereon dated February 15, 2007. We conducted our audit in accordance with United States generally accepted auditing standards, and Covernment Auditing Standards, issued by the Comptroller General of the United States and OMS Circular A-I}3, Audits of States. Local Cover/lIl/ents. and Non-Pro.fit Organi:ations. We have issued our Report of Independent Cer1ilied Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters and our Report of Independent Certilied Public Accountants on Compliance with Requirements Applicable to Each Major Federal Program and on Internal Control over Compliance in Accordance with OMS Circular A-I}} and Schedule of Findings and Questioned Costs. Disclosurcs in these reports and schedule, which arc dated February 15, 2007, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with provisions of Chapter 10.550, Rules of the Auditor General, which govern the conduct of local governmental entity audits performed in thc Statc of Florida and require that certain items bc addressed in this letter. The Rules of thc Auditor Gencral (Section I 0.554( I )(h) I.) rcquire that we addrcss in the managcmcnt lettcr, if not already addressed in thc auditor's report on compliance and internal controls or schedule of findings and questioned costs, whcthcr or not recommcndations made in thc preccding annual linancial report have bcen followcd. The Village implemented the recommendations madc in the preccding annual financial audit report. As required by the Rules of the Auditor Gencral (Section 10.554( I )(h)2.), the scope of our audit included a review of the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit, we determincd that the Village complied with Section 218.415, Florida Statutes. Thc Rules of the Auditor Gcncral (Section 10.554( 1)(h)3.), require that we address in the managemcnt Icttcr any findings and recommendations to improvc financial managemcnt, accounting procedures, and internal controls. In conncction with our audit, the findings and rccommendations arc incorporated in the accompanying schedulc of findings and qucstioned costs. -1- Honorable Mayor, Village Council and Village Manager Village of ABC, Florida Page Two The Rules of the Auditor General (Section 10.554( I )(h)4.), require disclosure in the management letter of the following matters if not already addressed in the auditor's reports on compliance and internal controls or schedule of findings and questioned costs and are not clearly inconsequential: (I) violations of laws, rules, regulations, and contractual provisions that have occulTed, or are likely to have occurred; (2) improper or illegal expenditures; (3) improper or inadequate accounting procedures (e.g., the omission of required disclosures from the financials statements); (4) failures to properly record financial transactions; and (5) other inaccuracies, sh0l1ages, defalcations, and instances of fraud discovered by, or that come to the attention of the auditor. [n connection with our audit, the findings and recommendations are incorporated in the accompanying schedule of l~ndings and questioned costs. The Rules of the Auditor General (Section I 0.554( I )(h)5.), also require that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in the management letter, unless disclosed in the notes of the financial statements. The Village was incorporated by Laws of Florida 90-142. There are no component units related to the Village. As required by the Ruks of the Auditor General (Section I 0.554( I )(h)6a.), a statement must be included as to whether or not the local government entity has met one or more of the conditions described in Section 218.503( I), Florida Statutes. [n connection with our audit, we determined that the Village, did not meet any of the conditions described in Section 218.503( I), Florida Statutes. As required by the Rules of the Auditor General (Section 10.554( I )(h)6.b.), we determined that the annual financial report for the Village for the f~scal year ended September 30,2006, filed with the Florida Department of Financial Services pursuant to Section 218.32( I )(a), Florida Statutes, is in agreement with the annual f~nancial audit report for the l~scal year ended September 30, 2006. As required by the Rules of the Auditor General (Section 10.554(h)6.c. and 10.556(7)), we applied fi nancial assessment procedures. It is management's responsi bi I ity to mon itor the ent ity' s t~nanciaI condition, and our f~nancial condition assessment was based in part on representations made by management and the review of financial information provided by same. The assessment was done as of the fiscal year end. There were no findings that identified deteriorating financial conditions. This management letter is intended solely for the information of the Village Council, management, and the State of Florida Office of the Auditor General. and is not intended to be and should not be used by anyone other than these specil~ed par1ies. Miami, Florida Fehruary 15, 2007 -2- VILLAGE OF ABC, FLORIDA SCHEDULE OF FINDINGS AND <2UESTIONED COSTS Reportahle Condition 06-0J Village Credit Cards Condition When performing a test over the process of the Village personnel and their use of Village issued credit cards, we noted in various instances that there was no support attached or in adequate SUPPO[1 attached to the credit card statement identifying the business purpose of the transaction. In those instances, sign offs of responsible officials were noted on the credit card statement In addition, we noted that the Village docs not have a written credit card policy so there is no standardized adherence to Village policies and procedures. Criteria The Village has the responsibility to safeguard their assets from loss or misuse. Ca II S e Lack of adequate internal controls over credit cards stemming from lack of a written defined policy. Even with a formal policy, internal controls would havc to be in place to ensure compliance with the stated pol icies. Effect Inadequately supported transactions of expenses paid with the Village credit cards. Recommendation We recollllllcnd that the Villagc establish written policies and procedurcs for the proper safeguarding and usage of the Village credit card. Examples of what the written policy may include are as follows: adequate oversight and internal controls should include safeguarding the actual credit card; ensuring only authorized personnel havc access to the credit card; sufficient documcntation of all credit cards purchases should bc maintained in the form of invoices ~\l1d/or reccipts and in the rare instance where a receipt is lost or cannot be obtained, s sign off by a responsible Village omcial; monthly credit cards statcments should be reconciled to the receipts on hand by a person other than the individual who are authorized to usc the crcdit card and documcntation should support a valid business purposc; payments should be remitted to the credit card vendor in a timcly fashion to avoid late fees and charges. Compliance 06-02 Cash Dishu rsements Condition When performing our tests over cash disbursemcnts, we noted aile (I) instancc whcre a check for $160,000 was not signed by two authorized signatories as prescribed by the Village's Resolution. Also, we noted two (2) checks that were less thall $10,000 each hadllo signature and werc cashed by the bank. " - .)- VILLAGE OF ABC, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continueu) The three checks noted above were to vendors of the Village and did not appear to be of an emergency nature. Criteria To comply with the Village's Resolution requiring two (2) signatures on each check issued for more than $10,000 and prudent business practice would dictate that at least one signature on checks issued for less than $10,000. Effect Although disbursements were determined to be business related expenses, the Village should ensure that it has the controls in place to safeguard assets from loss or misuse. Recommendation We recommend that a person independent of the bank reconciliation should review all checks prior to mai ling to ensure checks contai n the authorized signatory(ies), as requ ired by the Vi lIage' s resolution and prudent business practice. Governmental Accounting Standards Board Statement No. 45 - Accounting and Financial Reporting by Employersfor Post-Employment Bellefits Other thall Pensiolls As part of the total compensation offered to attract and retain the services of qualified employees, many statc and local governmcntal cmployers, in addition to pensions, provide othcr post-employmcnt benefits (OPEB). OPEB includes post-employment healthcare, as well as other forms of post-employment benefits when provided separately from a pension plan. The Governmental Accounting Standards Board has issued Statement No. 45 which establishes standards for the mcasuremcnt, recognition, and display of OPEB expenses/expenditures and related liabilities (assets), note disclosures, and if applicable, required supplementary information (RSI) in the financial reports of state and local governmental employers. Post-cmployment benelits (OPES) are part of an exchange of salaries and bcnefits for employee services rendered, and arc taken after the employee's services have ended. from an accrual account i ng perspective, the cost of OPEB should bc associated with the periods in which the exchange occurs, rather than with the periods, often many years later, when benefits are paid or provided. Howcver, in current practice, most OPES plans are financed on a pay-as-you-go basis, and financial statements generally do not report linancial cffects of OPEB until the promised benefits are paid. As a result, current financial reporting generally fails to recognize the cost of the benefits in periods when the related scrvices are received by the employer, provide information about the actuarial accrued liabilities for promised benefits associated with past services and whether and to what extent those benelits have been funded and provide information useful in assessing potential demands on the employer's future cash flows. This Statement improves the relevance and usefulness of financial reporting by (a) requiring systematic, accrual basis measurement and recognition of OPEB expense over a period that approximates employees' years of service and (b) providing information about actuarial accrued liabilities associated with OPEB and whether and to what extent progress is being made in funding the plan. -4- VILLAGE OF ABC, FLORIDA SCHEDULE ()~ FINDINGS AND QUESTIONED COSTS (Conlinued) OPEB expenditures for governmental funds should be recognized on the modified accrual basis. The amount recognized should be equal to the amount contributed to the plan or expected to be liquidatcd with expcndable available resources. Essentially, there is no change from current practice for governmental funds. However, for government-wide financial statements, the accmal basis must be used. The accrual method wi II rcqu ire the calculations to be made using actuarial computations and wi II resu It in the recognition of a present value liability which mcasures the value of OPEB benefits earned by cmployees during thcir tenure with the government and likely to be paid upon retiremcnt. This calculation will result in substantial amounts, due to the current cost of such benefits and their escalating costs. It should also be emphasizcd that thel'e is no requirement to fund these bencfits with current rcsources. The Statement mercly requires the reporting of the value of thc benefit primarily in the government-wide financial statements. The computations can be cxtremely complcx and the use of an actuary will invariably be required. An alternative measurement mcthod exists for a sole employcr in a plan with fewcr than one hundred total plan mcmbers (including employees in activc scrvice, terminated employces who havc accumulated benefits but are not yct receiving them, and retirees and bencficiaries currently recciving bcnefits) has the option to apply a simplified alternative ml'aslIreml'ntlllcthot! instead of obtaining actuarial valuations. This alternative method includes the same broad measurement steps as an actuarial valuation (projecting futurc cash outlays for benefits, discounting projected benefits to present value, and allocating thc prcsent value of benefits to periods using an actuarial cost method). However, it permits simplification of ccrtain assumptions to make the mcthod potentially usable by nonspccialists. Thc Statement would permit prospective implementation, that is, employers would be permitted to set the beginning net OPEB obligation at zero as of the beginning of the initial year. Implcmentation would occur in three phases based on the government's total annual revenues in the first fiscal year ending after June 15, 1999. The definitions and cutoff points for that purpose otherwise would be the same as in GASB's Statemcnt No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments. For the District, this Statement is effective for the fiscal year ended September 30, 2009. Rccom mcueill/iou The contents of this statement are highly complex and will rcquire significant lead time to implcment on thc respectivc implemcntation date. We would suggest that the Town obtain a thorough understanding of the requircments and initiate planning for implementation in a prudent manncr. -5- Management Letter in Accordance with the Rules of the Auditor General of the State of Florida Honorable Mayor, City Commission and City Manager City of ABC, Florida We have audited the basic financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of ABC, Florida (the City) as of and for the year ended September 30,2005, which collectively comprise the City's basic financial statements, and have issued our report thereon dated April 13,2006. We did not audit the financial statements of the Firefighters' and Police Officers' Retirement Trust and the General Employees' and Sanitation Employees' Retirement Trust and Other Managed Trusts, which represent 92% and 83%, respectively, of the assets and revenues of the aggregate remaining fund information. Those financial statements were audited by other auditors whose repO[1S thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for the aggregate remaining fund information is based on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in CrJl'emlllent Auditing Standards, issued by the Comptroller General of the United States and OM B Circular A-133, Audits of States, Loca/ CrJl'emlllents, WId Non-Prrdit Organbllions. We have issued our Report of Independent Certilied Public Accountants on Internal Control over Financial Reporting and on Compliance and Other Matters and our Report on Compliance and Internal Control over Compliance Applicable to Each Major Federal Awards Program and State Financial Assistance Projects and Schedule of Findings and Questioned Costs. Disclosures in these reports and schedule, which are dated April 13, 2006, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with the provisions of Chapter 10.550, Rules of the Auditor General, which govern the conduct of local governmental entity audits performed in the State of Florida and require that certain items be addressed in this letter. In connection with our audit of the basic financial statements of the City for the year ended September 30, 2005, we report the following in accordance with Chapter] 0.550 Rules of the Auditor General, Loca/ CrJl'crnlllcnt Entity Audits, which requires that this report specifically address but not be limited to the matters outlined in Rule I 0.554( I )(h): I. Corrective actions have been taken to address significant findings and recommendations made in the preceding annual financial audit, except as reported in the accompanying SUlllmary Schedule of Prior Audit Findings. -6- Honorable Mayor, City Commission and City Manager City of ABC, Florida Page 2 2. The City was in compliance with Section 218.415, Florida Statutes, regarding the investment of public funds. 3. Recommendations to improve the City's present financial management and accounting procedures accompany this report in the schedule of findings and questioned costs. 4. During the course of our audit, other than matters that are clearly inconsequential, considering both quantitative and qualitative factors, nothing came to our attention that caused us to believe that the City: a. Was in violation of any laws, rules or regulations and contractual provisions or abuses that have occurred, or were likely to have occurred, or were discovered within the scope of the audit, except as reported in the schedule of findings and questioned costs. b. Made any improper or illegal expenditures that were discovered within the scope of the audit that may materially affect the financial statements. c. Had deliciencies in internal control that are reportable conditions including but not limited to: (I) Improper or inadequate accounting procedures, except as reported in the schedule of fi ndi ngs and quest ioned costs (2) Failures to properly record financial transactions, except as reported in the schedule of findings and questioned costs. (3) Other inaccuracies, shortages, defalcat ions, and instances of fraud discovered by, or that came to the attention of the auditor. S. The name and ofticial title and legal authority for the primary government (the City) and each component unit of the reporting entity as defined in publications cited in Rule 10.553 are disclosed in the notes to the financial statements. 6. a. The City, during fiscal year 2005, did not meet any of the specific conditions described In Florida Statutes 218.503( I). b. The annual financial report for the year ended September 30, 2005 has been filed with the Department of Financial Services pursuant to Section 218.32( I )(a), Florida Statutes and is in agreement with the audited financial statements for the fiscal year ended September 30, 2005. c. During the course of our audit, we applied financial condition assessment procedures pursuant to Rule 10.556(7). It is management's responsibility to monitor the City's financial condition, and our financial conclition assessment, which was performed as of the City's fiscal year end, was based on representations macle by management and the review of financial information provided by the City. There were no findings that identified deteriorating financial conditions. -7- ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . . . . . ~ . . . . . Honorable Mayor, City Commission and City Manager City of ABC, Florida Page 3 This report is intended solely for the information and use of the Mayor, City Commission, management, and the Auditor General of the State of Florida and is not intended to be and should not be used by anyone other than these speci fied parties. Miami, Florida April 13,2006 -8- Crrv OF ABC, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS Reportable Conditions 05-01 Financial Records and Closing Process Criteria Prudent policies include a formal closing process with supervisory Finance Department personnel being responsible for the review and evaluation of transactions and balances recorded. Condition Our audit procedures included the performance of extensive procedures on the amounts recorded as assets, liabilities, revenues, expenditures and fund balances amongst the various funds of the City. Our findings are as follow: . We noted that for several balance sheet accounts, including due from other governments and deferred revenues, a detailed analysis of the components of the accounts was not maintained on a current basis. . We noted that the balances retlected on the books within cel1ain funds for accrued payroll liabilities and accounts payable were not in agreement with supporting documentation and/or subsidiary schedules. . We noted that the General Fund, Public Services Tax Fund and the Debt Service Funds fund balances retlected on the trial balances were not in agreement with the fund balances retlected in the prior year's financial statement. We noted that these governmental funds, which are maintained on the modified accrual basis of accounting, included amounts that pertained to the government-wide statements which are on the full accrual basis of accounting. . An excessive amount of journal entries were required to be proposed by the auditor to ensure that the financial statements of the City were fairly stated. Substantially all of these entries were to correct bookkeeping errors, or to make accruals and other adjustments that should have been made by the Finance Department prior to providing the auditors with final trial balances. . Governmental funds measure and report activities using the current financial resources measurement focus and the modified accrual basis of accounting. As a result, the data reported in the governmental fund financial statements must be converted to the economic resources measurement focus and the accrual basis of accounting before the data can be reported in the governmental activities in the government-wide financial statements. Formal journal entries to convel1 the data were not prepared by City personnel. As a result, in order to verify the amounts retlected in the City's government-wide statements, we prepared a conversion worksheet, and the related adjustments. A comparison of amounts calculated by Finance Department staff and our audited amounts disclosed large discrepancies in numerous account balances and net asset restrictions Effect The lack of a formal closing process, which includes the thorough revIew of account balances by supervisory Finance Department personnel, can result in material misstatements in the financial statements. The current method of preparing the financial statements is prone to error. Calise The cause of the conditions is the lack of a formal closing process which incorporates a thorough review by supervisory Finance Department personnel. -9- CITY OF A BC, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) R eCOfllflle IIdatioll We believe that a review and evaluation of transactions recorded at year end should be performed to ensure the validity of amounts recorded, as well as reduce audit time. We recommend that a detailed general ledger account analysis be performed on a monthly basis and reviewed by supervisory Finance Depart ment staff to ensure accurate recordi ng of transact ions. Procedures should be implemented to ensure that City departments submit information on a timely basis to the Finance Depar1ment to ensure proper recording of transactions. We also suggest that the Finance Depar1ment perform an analytical review of account balances with the prior year balances prior to closing the books and records to facilitate determining if adjustments are required. The Finance Department should evaluate the current process utilized to prepare the City's financial statements. The process could be simplified by preparing a conversion worksheet and formal adjustments to determine the amounts to be reported as governmental activities. The City should consider developing formal year end closing procedures. These procedures should include timetables outlining appropriate due dates and instructions for schedules that should be prepared. The closing procedures should be documented in a formal checklist that indicates the individual responsible for the task, when it is due to be completed and when it is accomplished. The procedures should also assign a supervisory Finance Depar1ment individual to review the schedules. 05-()2 Grallt Accoulltillg alld Reimbursemellts Criteria Grant accounting provides that since expenditures are the prime factor for determining eligibility. revenue should be recognized when the expenditure is incurred. If revenues are received in excess of grant expenditures, those revenues should be deferred. In order to maximize cash tlow, and enhance investment income, claim forms for reimbursement should be filed on a timely basis. The various City departments responsible for filing for grant reimbursements should submit claim forms to the Finance Depa[1ment on a timely basis to ensure that the receivables are properly recorded on the books and records. Co 11 d i t i 0 11 . We noted that, in numerous instances, claim forms for reimbursements of costs incurred were not filed on a timely basis. We noted that for certain projects, reimbursements for costs incurred in the 2004 and 2005 fiscal years, were not requested until 2006. In most instances, the Finance Department was not provided with information from the depar1ments requesting the reimbursements until March 2006, at which time journal entries were proposed to record the related receivables. · We noted that receivables were not recorded when eligible grant expenditures were incurred in excess of funding received by the City. Receivables for FEMA, the Urbanized Area Security Initiatives (UASI), and Urban Search and Rescue (USAR) grants were not calculated and recorded on the hooks and records. We also noted that for grants where the funding received exceeded expenditures incurred, deferred revenues were not recorded. · We noted payments received by the City for the UASI grants, as well as payments made to Miami Dade County. a subrecipient of the granl, were not properly rellected on the books and records. We noted that these transactions were recorded in a balance sheet account. rather than heing rellected as reV~llue and an exp~llcliture. -10- CITY OF ABC, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect By not filing claims for reimbursement on a timely basis, cash flow and investment income is not being maximized. The failure to properly record grant revenue can result in inaccurate financial statements. Cause Proper controls are not in place to ensure that grant revenues are properly recorded. Additionally, the various City departments fail to prepare claim forms for reimbursement on a timely basis, and do not remit the information to the Finance Department to ensure receivables are properly rdlected. Recol1ll1lel1datioll It is recommended that procedures be implemented to ensure that all claims for reimbursement are filed on a timely basis. All expenditures incurred for reimbursable grants should be monitored to ensure that claims are filed. As soon as a request for reimbursement is made, the information should be remjtted to the Finance Department to ensure proper recording on the books and records. All grant funds should be reviewed to ensure that the proper receivables/deferrals are recorded in accordance with promulgated practices. Supervisory Finance Department staff should perform a review of the City's books and records to ensure that all transactions have been properly recorded. 05-03 EIlCUl1lbral1ces Criteria Encumbrances represent commitments for purchases that have not yet taken place, or in the case of capital projects, balances of contracts not completed. Encumbrances are reflected in the financial statements as a reservation of fund balance. As such, it is important to ensure that the amounts retlected are valid commitments of the City and are in agreement with detailed subsidiary reports. Co 11 ditio 11 · We were provided with an open purchase order report which detailed all open purchase orders by fund, account code and vendor. We noted that the totals by fund were not in agreement with the balances reflected on the final trial balances provided to us. . We noted that numerous items recorded as encumbrances were also accrued as liabilities. A schedule was provided to us by Finance Depa[1ment personnel to adjust these items, however, that schedule was not accurate in that it also included amounts that were ill fact accrued, but were not recorded as encumbrances. Additionally, our test procedures identified other instances where amounts which were accrued and encumbered, were not included in the adjustment schedule provided to us. · We noted one instance where a large purchase order was recorded as an encumbrance, yet the purchase order had been previously canceled. Effect The improper recording of encumhrances results in the unreserved andundesignated fund balance within the governmental funds being incorrectly misstated. -I 1- CITY OF ABC, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The cause of the conditions is a lack of review of open purchase orders to determine validity as well as the lack of a ti mel y reconciliation of the amounts retlected on the books and records to subsidiary records. Recomme/ldatio/l We recommend that the open purchase order report be reviewed to determine validity of amounts recorded. The report should be reconciled to the amounts reflected on the books and records, and prior to closing the fiscal year, any required adjustments should be recorded. Procedures should be implemented to ensure that once an item is accrued or paid, the cncumbrance is properly liquidated. Other Matters os-os Cash Receipts Criteria All checks and other forms of payments received by the City should be deposited within 72 hours of receipt. These procedures will assist with the prevention of fraud and other defalcations. Conditio/l We noted that, in several instances, checks received by the Capital Improvement Department wcre not deposited on a timely basis. We noted that checks received in late July and the middle of August of fiscal year 2005 were not deposited until October 2005. These items were reflected as receivables rather than cash. Effect The failure to deposit funds on a timely basis exposes the City to the risk of loss. Cause The respective City departments that received the payments held the checks and failed to remit them to the Finance Department for deposit on a timely basis. R ecommendatio/l The City must implement a procedure to ensure that all checks received are remitted to the Finance Department and deposited timely. The recommended time frame is within 72 hours. OS-06 Project Management Consultants Criteria Construction projects should include all applicable costs. All invoices for project consultants should be reviewed to verify that amounts being charged are in accordance with executed contracts. -12- CITY OF ABC, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Colltillued) Co 11 ditio 11 · We noted that billings from the project management consultants did not identify a specific project that they were billing for. Consequently, these costs are not included as part of the City's cost of construction. . We noted that the billings from the project management consultants incorporate an overhead rate that varies based on whether the consultants are working out of the field office or the home office. Discussions with City personnel indicated that that some of the consultants maintain an office at the City which would cause the rate to be the field rate, rather than the higher home office rate. Effect The effect is that, without the proper review and authorization of billings submitted by project management consultants, the City is potentially being charged incorrect rates. Capital assets of the City will ultimately be misstated if all construction costs are not properly accounted for. Calise The cause of thc conditions is a lad of proper review and authorization, as well as billings that are not sufficiently detailed. R ecol1ll1le Ildati Oil We believe that procedures should be implemented to ensure that the correct overhead rate is charged to the City. Furthermore, billings from the consultants should specifically identify projects so that costs incurred can be properly included as part of construction costs. 04-/2 Successioll Plallning The heads of every operational group are eligible for retirement or will be in the near future. Although the mainframe will be superseded by Windows-based servcrs, thc mainframe and applications must be maintained for the length of the City's financial document rctention policy. Both of the knowledgeable mainframe operators are eligible for retirement. Management has not addressed succession planning. R ecol1ll1lendation Due to the City's lengthy hiring process, the retirement of one or more operational heads could have a negative impact on the operations of thc Information Technology Department. It is extremely important that successors within each group be designated and fully trained. If adequate personnel are unavailable, they must be hired. Statlls [TD is working with the Department of Employee Relations in order to develop a template for Succession Planning that will be used to address the immcdiate issued facing the IT Depal1ment. and which can also be used for all departments city-widc. -I ~- CITY OF ABC, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Calise Unknown. R ecommelldatioll We recommend the City comply with Federal requirements related to this program and obtain written approval for the above noted transaction from the grantor. -14- ~ ~ ~ t ~ . t t t t t t t . ~ ~ Management Letter in Accordance with the Rules of the Auditor General of the State of Florida Honorable Mayor, City Council and City Manager City of ABC, Florida We have audited the basic financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of ABC, Florida (the City) as of and for the year ended September 30,2006, which collectively comprise the City's basic financial statements, and have issued our report thereon dated March 2, 2007. We did not audit the financial statements of the ABC Community Redevelopment Agency special revenue and capital projects funds which represent less than I % and ] % respectively, of the assets and revenues of the aggregate remaining fund information. Those financial statements were audited by other independent auditors whose repOfts thereon have been furnished to us, and our opinion on the financial statements, insofar as it relates to the amounts included for the ABC Community Redevelopment Agency special revenue and capital projects funds, is based solely on the repOfts of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States; the standards applicable to financial audits contained in COl'emment Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits (~l States, Local CUl'emments, and Non-Profit Organi:ations; and Chapter 10.550, Rules of the Auditor General. We have issued our RepOft of Independent Certified Public Accountants on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements, Report of Independent Certified Public Accountants on Compliance and Internal Control over Compliance Applicable to each Major Federal Awards Program and State Financial Assistance Project, and the Schedule of Findings and Questioned Costs. Disclosures in those reports and schedule, which are dated March 2, 2007, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with the provisions of Chapter 10.550, Rules of the Auditor General, which govern the conduct of local governmental entity audits performed in the State of Florida and require that certain items be addressed in this letter. The Rules of the Auditor General (Section I 0.554( I )(h) I.) require that we address in the management letter, if not already addressed in the auditor's report on compliance and internal controls or schedule of findings and questioned costs, whether or not recommendations made in the preceding annual financial repoft have been followed. The recommendations made in the preceding annual financial audit report have been addressed. As required by the Rules of the Auditor General (Section 10.554(1)(h)2.), the scope of our audit included a review of the provisions of Section 218.415., Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the City of ABC complied with Section 218.415, Florida Statutes. -15- t t t t ~ t t t t t Honorable Mayor, City Council and City Manager City of ABC, Florida Page Two The Rules of the Auditor General (Section 10.554(1)(h)3.) require that we address in the management letter any findings and recommendations to improve financial management, accounting procedures, and internal controls. In connection with our audit, there is one matter reported in the schedule of findings and questioned costs. The Rules of the Auditor General (Section 10.554(1)(h)4.) require disclosure in the management letter of the following matters if not already addressed in the auditor's reports on compliance and internal controls or schedule of findings and questioned costs and are not clearly inconsequential: (I) violations of laws, rules, regulations, and contractual provisions that have occurred, or are likely to have occurred; (2) improper or illegal expenditures; (3) improper or inadequate accounting procedures (e. g., the omission of required disclosures from the financial statements); (4) failures to properly record financial transactions; and (5) other inaccuracies, shortages, defalcations, and instances of fraud discovered by, or that come to the attention of the auditor. Our audit found one matter that is required to be disclosed and is presented in the accompanying schedule of findings and questioned costs. The Rules of the Auditor General (Section 10.554(1)(h)5.) also require that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in the management letter, unless disclosed in the notes to the financial statements. The City of ABC was created by Chapter 293] 8, Laws of Florida, 1953. The ABC Community Redevelopment Agency, the City's blended component unit, was created by the City of ABC and Miami-Dade County on June 7, 2005 in accordance with Chapter 163, Florida Statutes. As required by the Rules of the Auditor General (Section I 0.554( I )(h)6a.), a statement must be included as to whether or not the local government entity has met one or more of the conditions described in Section 218.503( I), Florida Statutes. In connection with our audit, we determined that the City, did not meet any of the conditions described in Section 218.503( I), Florida Statutes. As required by the Rules of the Auditor General (Section 10.554(1)(h)6.b.), we determined that the annual financial report for the City of ABC for the fiscal year ended September 30, 2006, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the f~scal year ended September 30, 2006. As required by the Rules of the Auditor General (Sections 10.554(h)6.c. and 10.556(7), we applied financial condition assessment procedures. It is management's responsibility to monitor the entity's financial condition, and our t~nancial. condition assessment was based in part on representations made by management and the review of financial information provided by same. The assessment was done as of the fiscal year end. There were no findings that identified deteriorating financial conditions. This report is intended solely for the information and use of the Mayor, City Council, management and the Auditor General of the State of Florida and is not intended to be and should not be used by anyone other than these specified parties. Miami, Florida March 2, 2007 -16- CITY OF ABC, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION 11- FINANCIAL STATEMENT FINDINGS Noncompliance 06-1 Competitive Bidding Procedures Criteria The City is required to purchase services, supplies, and equipment exceeding $7,500 through competitive award procedures as prescribed by the City's policies. Condition We noted during our bid testing of five (5) purchase orders that the City did not renew a contract with one of its vendor's who provides services to the City. The contract had expired September 30,2005 and the City continued to receive and pay for services throughout the year and did not renew the contract or follow the competitive bid procedures as prescribed by the City's policies or obtain authorization from Council to renew the contract for another year. l:-ifec t In addition to not complying with established City policies, when the City does not request proposals from eligible companies, the City runs the risk of overpaying for a service. Recommendation We recommend that the City follow its existing policies and ensure that all contracts that have expired go through the bidding process or if a special situation is approved by City Council. SECTION 111- FEDERAL A WARD FINDINGS AND QUESTIONED COSTS None. SECTION IV - STATE FINANCIAL ASSISTANCE AND QUESTIONED COSTS Noncompliance 06-2 Eligibility CSFA 52.90] State Housing Initiatives Partnership (SHIP) State of Florida Housing Finance Agency Criteria The City is required to ensure that individuals who the City grants or loans SHIP funds meet certain specific eligibility requirements that the SHIP provides for in the grant agreement with the City. -17- CITY OF ABC, FLORIDA SCHEDULE Of FINDINGS AND QUESTIONED COSTS (Colltinueu) Condition We noted during our compliance testing of the eligibility requirements that the City could not provide support for five of the nine transactions selected for testing. This represents $85,480 of the $140,927 selected for testi ng. Questioned Costs The questioned costs amount to $85,480. This represents the total amount of the five (5) transactions for which we could not verify that the individuals met the eligibility requirement. Calise It appears that the City is not properly maintaining a file documenting compliance with eligibility requirements for all individuals receiving SHIP funds. Effect This could result in providing funds to an individual who is not eligible and could put the City in jeopardy of losing funds provided by the SHIP program. Recommendation We recommend that the City prepare a tile for each recipient and include in each file the appropriate support for each applicable eligibility requirement and maintain the files in a place that the City can easily locate. -18- ~ ~ . . . ~ ~ Appendix C May 4, 2007 ~ = Honorable Mayor and City Commissioners City of Sunny Isles Beach 18070 Collins Avenue Sunny isles Beach, FL 33160 We are pleased to confirm our understanding of the services we are to provide the City of Sunny Isles Beach for the years ended September 30, 2007, 2008 and 2009 with an additional 2 year option. We will audit the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information, which collectively comprise the entity's basic financial statements, of the City of Sunny Isles Beach as of and for the years ended September 30, 2007, 2008 and 2009. Accounting standards generally accepted in the United States provide for certain required supplementary information (RSI), such as management's discussion and analysis (MD&A), to accompany the City of Sunny Isles Beach's basic financial statements. As part of our engagement, we will apply certain limited procedures to the City's RSI. These limited procedures will consist principally of inquiries of management regarding the methods of measurement and presentation, which management is responsible for affirming to us in its representation letter. Unless we encounter problems with the presentation of the RSI or with procedures relating to it, we will disclaim an opinion on it. The following RSI is required by generally accepted accounting principles and will be subjected to certain limited procedures, but will not be audited: . . . , ~ = 1. Management's Discussion and Analysis. 2. Schedule of Funding Progress. 3. Schedule of Employer Contributions. Supplementary information other than RSI, such as combining and individual fund financial statements, also accompanies the City of Sunny Isle Beach's basic financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the basic financial statements and will provide and opinion on it in relation to the basic financial statements: 1. Schedule of Expenditures of Federal Awards. 2. Schedule of Expenditures of State Financial Assistance. 3. Combining Fund Financial Statements. The following additional information accompanying the basic financial statements will not be subjected to the auditing procedures applied in our audit of the financial statements, and for which our auditor's report will disclaim an opinion. I. Introductory Section. 2. Statistical Section. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ t ~ ~ ~ ~ t ~ t t ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ t ~ ~ ~ ~ t ~ ~ ~ Honorable Mayor and City Commissioners City of Sunny Isles Beach May 4, 2007 Page 2 Audit Objectives The objective of our audit is the expression of opinions as to whether your financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles and to report on the fairness of the additional information referred to in the first paragraph when considered in relation to the financial statements taken as a whole. The objective also includes reporting on- . Internal control related to the financial statements and compliance with laws, regulations, contracts, agreements, and grants, noncompliance with which could have a material effect on the financial statements in accordance with Government Auditing Standards. . Internal control related to major programs and an opinion (or disclaimer of opinion) on compliance with laws, regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 1996 and OMS Circular A-I33, Audits of States, Local Governments, and Non-Profit Organizations and the Florida Single Audit Act and Chapter 10.550, Rules of the Auditor General of the State of Florida. The reports on internal control and compliance will each include a statement that the report is intended for the information and use of the commission, management, specific legislative or regulatory bodies, federal awarding agencies, and if applicable, pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Our audit will be conducted in accordance with U.S. generally accepted auditing standards; the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; and the provisions of OMB Circular A- 133, the Florida Single Audit Act and Chapter 10.550, Rules of the Auditor General of the State of Florida, and will include tests of accounting records, a determination of major program(s) in accordance with Circular A-I33, and the Florida Single Audit Act, and other procedures we consider necessary to enable us to express such an opinion and to render the required reports. If our opinions on the financial statements or the Single Audit compliance opinions is other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed opinions, we may decline to express opinions or to issue a report as a result of this engagement. Management Responsibilities Management is responsible for establishing and maintammg internal controls, including monitoring ongoing activities; for the selection and application of accounting principles; for the fair presentation in the financial statements 'of the respective financial position of the governmental activities, the business- type activities, , each major fund, and the aggregate remaining fund information of the City of Sunny Isles Beach and the respective changes in financial position and, where applicable, cash flows in conformity with U.S. generally accepted accounting principles; and for federal award program compliance with Honorable Mayor and City Commissioners City of Sunny Isles Beach May 4, 2007 Page 3 applicable laws and regulations and the provisions of contracts and grant agreements. Management is responsible for the basic financial statements and all accompanying information as well as representations contained therein. You are responsible for management decisions and functions. As part of the audit, we will assist with the preparation of the draft of your financial statements, schedule of expenditures of federal awards and state financial assistance, and related notes. In accordance with Government Auditing Standards, you will be required to review and approve those financial statements prior to their issuance and have a responsibility to be in a position in fact and appearance to make an informed judgment on those financial statements. Further, you are required to designate a qualified management-level individual to be responsible and accountable for overseeing our services. Management is responsible for making all financial records and related information available to us, including any significant vendor relationships in which the vendor has the responsibility for program compliance and for the accuracy and completeness of that information. Management's responsibilities include adjusting the financial statements to correct material misstatements and for confirming to us in the representation letter that the effects of any uncorrected misstatement aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud or illegal acts affecting the government involving (1) management, (2) employees who have significant roles in internal control, and (3) others where the fraud or illegal acts could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud or illegal acts affecting the government received in communications from employees, former employees, grantors, regulators, or others. In addition, you are responsible for identifying and ensuring that the entity complies with applicable laws, regulations, contracts, agreements, and grants. Additionally, as required by OMB Circular A-133 and Chapter 10.550 rules of the Auditor General, it is management's responsibility to follow up and take corrective action on reported audit findings and to prepare a summary schedule of prior audit findings and a corrective action plan. ~ ~ ~ ~ ~ ~ ~ ~ ~ Management is responsible for establishment and maintenance of a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying for us previous audits or other engagements or studies related to the objectives discussed in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits or other engagements or studies. You are also responsible for providing management's views on our current findings, conclusions, and recommendations, as well as your planned corrective actions, and the timing and format related hereto. Honorable Mayor and City Commissioners City of Sunny Isles Beach May 4, 2007 Page 4 Audit Procedures-General ~ ~ ~ . ~ . . ~ . ~ . . . ~ . ~ . . . . t . . . . . . . An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether from (I) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the entity or to acts by management or employees acting on behalf of the entity. Because an audit is designed to provide reasonable, but not absolute assurance and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements or noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements or major programs. However, we will inform you of any material errors and any fraudulent financial reporting or misappropriation of assets that comes to our attention. We will also inform you of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. We will include such matters in the reports required for a Single Audit. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will also require certain written representations from you about the financial statements and related matters. Audit Procedures-Internal Controls Our audit will include obtaining an understanding of the entity and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements. Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards. As required by OMB Circular A-133 and Chapter 10.550 Rules of the Auditor General, we will perform tests of controls over compliance to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements ~ ~ ~ ~ . t ~ t Honorable Mayor and City Commissioners City of Sunny Isles Beach May 4, 2007 Page 5 applicable to each major federal award program. However, our tests will be less in scope than would be necessary to render an opinion on those controls and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to OMB Circular A-133 and Chapter 10.550 Rules of the Auditor General. An audit is not designed to provide assurance on internal control or to identify significant deficiencies. However, during the audit, we will communicate to management and those charged with governance internal control related matters that are required to be communicated under professional standards, Government Auditing Standards, OMB Circular A-133, and Chapter 10.550 Rules of the Auditor General. Audit Procedures-Compliance As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of City of Sunny Isles Beach's compliance with applicable laws and regulations and the provisions of contracts and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards. OMB Circular A-133 and Chapter 10.550 Rules of the Auditor General require that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with applicable laws and regulations and the provisions of contracts and grant agreements applicable to major programs. Our procedures will consist of test of transactions and other applicable procedures described in the OMB Circular A-i33 Compliance Supplement for the types of compliance requirements that could have a direct and material effect on each of the City of Sunny Isles Beach's major programs. The purpose of those procedures will be to express an opinion on the City of Sunny Isles Beach's compliance with requirements applicable to each of its major programs in our report on compliance issued pursuant to OMB Circular A-133 and the Florida Single Audit Act. Audit Administration, Fees, and Other We may from time to time, and depending on the circumstances, use third-party service providers in serving your account. We may share confidential information about you with these service providers, but remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures, and safeguards to protect the confidentiality of your personal information In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information and we will take reasonable precautions to determine that they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others. In the event that we are unable to secure an appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your confidential information with the third-party service provider. Furthermore, we will remain responsible for the work provided by any such third-party service providers. We understand that your employees will prepare all cash, accounts recei vable, or other confirmations we request and will locate any documents selected by us for testing. . . . t . . . . . . . . . ~ . . . . . . . ~ . . Honorable Mayor and City Commissioners City of Sunny Isles Beach May 4, 2007 Page 6 At the conclusion of the engagement, we will complete the appropriate sections of and sign the Data Collection Form that summarizes our audit findings. We will provide our reports to the City of Sunny Isles Beach; however, it is management's responsibility to submit the reporting package (including financial statements, schedule of expenditures of federal awards, summary schedule of prior audit findings, auditors' reports, and a corrective action plan) along with the Data Collection Form to the designated federal clearinghouse and, if appropriate, to pass-through entities. The Data Collection Form and the reporting package must be submitted within the earlier of 30 days after receipt of the auditors' reports or nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audits. At the conclusion of the engagement, we will provide information to management as to where the reporting packages should be submitted and the number to submit. The audit documentation for this engagement is the property of Rachlin Cohen & Holtz LLP and constitutes confidential information. However, pursuant to authority given by law or regulation, we may be requested to make certain audit documentation available to the City of Sunny Isles Beach or its designee, a federal agency providing direct or indirect funding, or the U.S. Government Accountability Office for purposes of a quality review of the audit, to resolve audit findings, or to carry out oversight responsibilities. We will notify you of any such request. If requested, access to such audit documentation will be provided under the supervision of Rachlin Cohen & Holtz LLP personnel. Furthermore, upon request, we may provide copies of selected audit documentation to the aforementioned parties. These parties may intend, or decide, to distribute the copies or information contained therein to others, including other governmental agencies. The audit documentation for this engagement will be retained for a minimum of five years after the report release or for any additional period requested by the the City of Sunny Isles Beach. If we are aware that a federal awarding agency, pass-through entity, or auditee is contesting an audit finding, we will contact the party(ies) contesting the audit finding for guidance prior to destroying the audit documentation. We estimate that our fees for this engagement will be $ (excluding Federal or Florida Single Audit Act requirements - see below). Our hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to the audit. The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If additional time is required because of unexpected circumstances or for changes in the requirements of the Governmental Accounting Standards Board or our professional auditing standards or changes in the funds structure of the City, we will discuss these circumstances with you and arrive at a new fee estimate before we incur the additional costs. . In addition, if the City is required to undergo an audit in accordance with the Federal Single Audit Act and OMB Circular A-133, Audits of States, Local Governments, and Not-for-Profit Organizations Receiving Federal Awards during any year of this contract, the additional fee will be $ for the year ended September 30, 2007; $ for the year ended September 30, 2008 and $_ for the year ended September 30,2009. This fee is dependent on the number of federal programs that have to be tested as a major program in accordance with the requirements of the Federal Single Audit Act and OMB Honorable Mayor and City Commissioners City of Sunny Isles Beach May 4, 2007 Page 7 Circular A-133. If there is more than one (I) program to be tested as a major program, as determined under the requirements of OMB Circular A-I33, we will discuss the additional fees with you. In addition, if the City is subject to the Florida Single Audit Act, the additional fee will be $ for the year ended September 30, 2007; $ for the year ended September 30, 2008 and $_ for the year ended September 30, 2009 This fee is dependent on the number of state programs that have to be tested as a major program in accordance with the requirements of the Florida Single Audit Act. If there is more than one (1) program to be tested as a major program, as determined under the requirements of the Florida Single Audit Act, we will discuss the additional fees with you. Our invoices for these fees will be rendered as the work progresses, and are payable on presentation. In accordance with our firm policies, should any invoices remain unpaid for more than thirty days, we reserve the right to defer providing any additional services until all outstanding invoices are paid. A late payment charge of I % per month will be added to all unpaid balances after thirty days. You agree that we are not responsible for the impact on the City of any delay that results from such non-payment by you. I I I I I I l l ~ l ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ We acknowledge your right to terminate our services at any time, and you acknowledge our right to resign at any time (including instances where in our judgment, our independence has been impaired or we can no longer rely on the integrity of management), subject in either case to our right to payment for charges incurred to the date of termination or resignation. [t is our goal to maintain a constructive and positive relationship with you. If for any reason you are dissatisfied with the quality or costs of our services, please let us know so we can discuss and, hopefully, rectify the problem. Should we be unable to amicably resolve any such dispute, we believe a prompt and fair resolution, without the time and expense of formal court proceedings, would be in our mutual interests. To this end, we both agree that any controversy (including fee disputes and malpractice claims) we may have shall be submitted to binding arbitration to be conducted in Florida before the American Arbitration Association (AAA) in accordance with the Commercial Arbitration Rules of the AAA. We both waive any right to bring a court action, or to have a jury trial, and agree that the party prevailing in any arbitration shall be entitled to recover from the non-prevailing party its reasonable attorney's fees and costs, including fees and costs which might be incurred in litigation related to the arbitration. In accordance with our firm's policy, the terms of this engagement letter are subject to approval by our internal Client Acceptance Committee. Government Auditing Standards require that we provide you with a copy of our most recent external peer review report and any letter of comment, and any subsequent peer review reports and letters of comment received during the period of the contract. Our most recent peer review report has been provided to you. Honorable Mayor and City Commissioners City of Sunny Isles Beach May 4, 2007 Page 8 This contract is renewable at the option of the City. We appreciate the opportunity to be of continued service to the City of Sunny Isles Beach and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. Sincerely, G. Jerry Chiocca, CPA Partner RESPONSE: This letter correctly sets forth the understanding of the City of Sunny Isles Beach By: Title: Date: 1':\07\11680 Single Audit Engagemcnt Lcttcr ~ . ~ . Appendix D I ~ I l l l ~ ~ ~ ~ ~ ~ ~ . . . . . . . . ~ ~ ~ ~ t t . . ACORD... CERTIFICATE OF LIABILITY INSURANCE I DATE IMM/llDIYYYY) 03/02107 PRODUCER THlS CERTIFICATE IS ISSUED AS A MATIER OF INFORMATION USllnsurance Svcs of FL-CL ONLY AND CONFERS NO RIGHTS UPON THE CERTIFlCATE 200 West Cypress Creek Road #500 HOLDER. THlS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POUCIES BELOW. Fort Lauderdale, FL 33309 954607-4000 INSURERS AFFORDING COVERAGE NAIC# INSURED INSIIRERA: Valley Forge Insurance Company 9999 Rachlin Cohen & Holtz LLP INSIIRERB: Twin City Fire Insurance Company 29459 AUn: Hilda Gilpin; 1 S.E. 3rd Ave., INSURERC: 10th Floor INSURER 0: Miami, FL 33131 INSURER E: Cllent#. 121025 RACHLCOH COVERAGES WE POLICIES OF INSURANCE USTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POUCY PERIOD INDICATED. NOl'NlTHSTANOING ANY REQUIREMENT. TERM OR CONDITION OF ANY CONTRACT OR ornER DOCUMENT WITH RESPECT TO WHICH rnlS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN. THE INSURANCE AFFORDEO BY THE POL1CIES OESCRIBEO HEREIN IS SUBJECT TO AlL THE TERMS. EXCLUSIONS AND CONomONS OF SUCH POLICIES. AGGREGATE llMITS SHOWN tAAY HAVE SEEN REOUCED 6V PAlO CLAIMS. l.m" ;tSR TYPE OF IIISURANCE POUCY NUMBER PJ>.P..s~~~~J.W Pg~~,~~~~N UMITS A ~IERA~ UAIlIUTY 81079451074 OS/01/0Ei 05/01/07 EACH OCCURRENCE 5500 000 X. 3'MERClAl. GENERAl. UAlIIUTY g~~~J9 REIilEO 5300 000 - CUlMSMAllE [XJ OCCUR MED EXP (Any ono ~l 510.000 PERSONAl &AOV I~RY 5500 000 - - GEHEAAJ. AGGREGATE $1 000 000 ~AG~n~:: ^"n,PER PROCUCTS-COMP~PAGG 51 000 000 POUCY JECT lOC A ~OMOOI!.E LlABIUTY 81079451074 OS/01J06 05/01/07 COMBINED SINGlE UI.lJT ANt ...UTO (En acdc!onl) 5500,000 f0- e-- AU. O\'lNEC AUTOS 8001LYl1lJUR'l' (Po< pc<W<l) $ e-- SOiE;DULEO AUTOS ~ HIRED AUTOS OODIL Y IItlURV (Pet lIClCidonll $ ~ IION.QWNEO A\/TOS f- PROPERTY OAlAAGE $ (Per D<Xi<l<:nl1 ~GE LlADIUTY AUTOOHty. EAACCICENT S ANt A\/TO OTHER Tl1AIl EAACC S AUTO ONLY; AGO $ A fJE5SlUMOREllA LIABilITY 81079451074 05/01/06 05/01/07 EAC/i cecu RRENCE 55 000.000 X OCCUR D ClAIMS /,tADE AGGREGATE 55000000 s :;::j DEDUCTIBLE $ X RETENTION S 10000 s B WORKERS COMPENSATION AND 21WEEV1273 01/01f07 01/01/08 X IT~J.T~~I IO~ EMPLOYERS' LtABIUTY E.L EACH ACCIDENT $500 000 AH'f PROPRlETORIP AATNERlEXEC\JT1VE OFFlCER/!.tEl.Ulffi EXCttJOE01 E-1.. 0 IS EASE; . EA EMPLOYEE s500,OOO ~~rc:~~~gNS bollM ILl.. 0 IS EASE . POLICY UMIT 5500,000 OlliER DESCRIPTION OF OPERATIOrlS/lOCI\TIONS IVEH1C!.ES I EXCLUSIONS ADDEO BY ENDORSEMENT I SPECIALPROVlSIOIlS "Supplemental Name .. Rachlin Cohen & Holtz LLP RCH Mangement Co., LLC R<lchlin Wealth Management, LLC (See Attached Doscriptions) CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ADOVE DESCRIBED POUCIES BE CANce~ DEFORE THE EXPlAATION OATETHER.EOF. THE.ISSUING IIlSURER\V1~ ENDEAVOR TO loW!. .....1fi- DAYS WRITTEN HonCE TO THE CERTIFICATE HOl.DER HAMED TO THE !.EFT. OUT FAILURE TO 00 SO SHAl.l IMPOSE NO OBLlCM\nON OR UAIlIUTY OF ANY KlIlO UPOlllllE IHSURER,ITS AGENTS OR REPRESEIlTATlVES. AUTHOR~DRePReSEHTA~ ~ vJ-1~ ACORD 2S (2001fOB) 1 of 3 #S607773/M607758 MTCER (j) ACORD CORPORATION 1988 I I l l ~ ~ ~ ~ . IMPORTANT If the certificate holder is an ADDITIONAL INSURED, the policy(ies} must be endorsed. A statement on this certificate does not confer rights to the certificate holder In lieu of such endorsement{s). If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain pollcles may require an endorsement. A statement on this certificate does not confer rights to the certificate holder In lieu of such endorsement(s). DISCLAIMER t . The Certificate of Insurance on the reverse side of this form does not constitute a contract between the issuing Insurer(s), authorized representative or producer, and the certificate hotder, nor does it affirmatively or negalively amend, extend or alter the coverage afforded by the policies listed thereon. ACORD 25-S (2001/08) 2 of 3 #S607773/M60775B DESCRIPTIONS (Continued from Page 1) AMS 25.3 (2001/OS) 3 of3 #S60777~607758 LEMME Insurantc: BrDk~rs lInd CorlSullllnIs VERIFICATION OF INSURANCE ISSUED TO: Parties of Interest We, the undersigned Insurance Brokers, hereby verify that Interstate Rre & Casually Company has issued the following described insurance .which is in force as of the date thereof- PROFESSIONAL LIABILITY INSURANCE NAME OF INSURED: Rachlin Cohen & Holtz, L.L.P and others as more fully described in the Policy. POLICY NUMBER: ACL"1000051 PERIOD OF INSURANCE: 12:01 a.m. March 1,2006 to 12:01 a.m. June 1, 2007 SUM INSURED: $5,000,000 Annual aggregate for each policy period Including costs, charges and expenses excess of the applicable retention as stated in the policy. SUBJECT TO ALL TERMS, CONDITIONS AND LIMITATIONS OF THE POLlCY This document is furnished to you as a matter of information only and is not insurance coverage. Only the formal policy and applicable endorsements offer a comprehensive review of the coverage in place. The issuance of this document does not make the person or organization to wham it is issued an additional Insured, nor does it modify in any manner the contract of insurance between the Insured and 1he Insurer. Any amendment, change or extension of such contract can only be effected by specific endorsement attached thereto. Issued at Chicago, Illinois Lemme Insurance Group, Inc. Per: ~\!t-& ~~ Date: April 4, 2006 Vice President ll!mmc Insurontl: Group, 10[,13701 AlgoClQuln Road I Sulle 81DI Railing MCildow$IIL 60008 ITd 847 38S 6800 [Fa~ 847 3SS 68011 wwwJcmmC!.com Appendix E APPENDIX E PROPOSER GUARANTEES aQd W ~IES and STANDARD TERMS & CONDITIONS 1. The proposer certifies it can and will provide and make available, as a minimum. all services set forth in Section II. Nature of Services Required. 2. Proposer warrants that it is willing and able to obtain an errors and omissions insurance policy providing a minimum of $1 million of coverage for the willful or negligent acts. or omissions of any officers, employees or agents thereof. 3. Proposer warrants that it will not delegate or subcontract its responsibilities under an agreement without the prior written permission of the City of Sunny Isles Beach. 4. Proposer warrants that all information provided by it in connection with this proposal is true and accurate. Signature of Official: <:? h ~.-: ~(/ Name (typed): G. Jerry Chiocca Title: Partner Firm: Rachlin Cohen & Holtz LLP Date: May 4, 2007 4/3/2007 City of Sunny Isles Beach: Request for Proposal - Audit Services 29 Appendix F Appendix G Appendix Q SWORN STATEMENT PURSUANT TO SECTION 287.133(3)(8) FLORIDA 5T A TUTES. ON PUBLIC ENTITY CRIMES THIS FORM MUST BE SIGNED AND SWORN TO IN THE PRESENCE OF A NOTARY PUBLIC OR OTHER OFFICIAL AlITHORlZED TO ADMINISTER OATHS. \. This sworn statement is submitted to City of Sunny Isles Beach by G. Jerry Chiocca for Rachlin Cohen & Holtz LLP whose business address is One Southeast Third A venue, Tenth Floor Miami, Florida 3313 I and (if applicable) its Federal Employer Identification Number (FEIN) is 65-0544505 (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(1)(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 of the 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. I 33(I)(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 I, 1989. as a result of a jury verdict, nonjury trial, or entry of a plea of guilty or nolo contenders. 4. I understand that an "affiliate" as defined in Paragraph 287 . I 33(I)(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 o\\-TIership 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 a joint venture with a person who has been convicted of a public entity crime in Florida during the preceding 36 months shall be considered an affiliate. S. 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. tA~~~"~ State of Florida County of Miami-Dade Sworn to and~subscribed before ~ this 4th day of ~cvL"~~~ G. Jerry Chiocca (Printed or Typed Legal Name of Affiant) May , 2007 by Teresa Cochran Notary's Name Printed. Stamped or Typed Notary Seal: Personally Known: X or Produced Identification O~l 't\. Teresa Cochran : ~ . My Commission 0023853-4 ~-) 0, ",I Expire5 November 28, 2007 4/312007 City of Sunny Isles Beach: Request for Proposal - Audit Services Identification Produced 4/3/2007 - City of Sunny Isles Beach: Request for Proposal- Audit Services Appendix H Aooendix. H NON-COLLUSIVE AFFIDAVIT State of Florida ) County of Miami-Dad~ G. Jerry Chiocca being first duly sworn. deposes and says that: (1) He. is the (owner,lpartner, !Officer, Representative or Agent) of the Bidder that has submitted the attached Bid; (2) He/she is fully infonned respecting the preparation and contents of the attached Bid and of all pertinent circumstances respecting such Bid; (3) Such Bid is genuine and is not a collusive or sham Bid; (4) Neither the said bidder nor any of its officers. partners. owners. agents. representatives. employees or parties in interest. including this affiant. have in any way colluded. conspired. connived or agreed. directly or indirectly. with any other Bidder. finn. or person to submit a collusive or sham Bid in connection with the Work for which the attached Bid has been submitted: or to refrain from bidding in connection with such Work; or have in any manner. directly or indirectly. sought by agreement or collusion. or communication. or conference with any Bidder, firm. or person to fix. the price or prices in the attached Bid or of any other Bidder. or to fix any overhead. profit. or cost elements of the Bid price or the Bid price of any other Bidder. or to secure through any collusion. conspiracy. connivance. or unlawful agreement any advantage against the City of Sunny Isles Beach. or any person interested in the proposed Work; (5) The price or prices quoted in the attached Bid are fair and proper and are not tainted by any collusion. conspiracy. connivance. or unlawful agreement on the part of the Bidder or any other of its agents. representatives. owners. employees or parties in interest. including this Affiant. f. ~ ~....--,; G. Jerry Chioeca (/SIGlf~nJR& F AFFIANT (Printed or Typed Legal Name of Affiant) State of Florida County of Miami-Dade Sworn to and s?Cfibed before me this 4th day of ~ (0 lfl /~~ May , 2007 by Teresa Cochran Notary's Name Printed. Stamped or Typed Notary Seal: Personally Known: X or Produced Identification - J'~Hj\. Teresa Cochran \, ~ . My Commission 00238534 0'..../ Expires November 28, 2007 Identification Produced 4/312007 City of Sunny Isles Beach: Request for Proposal - Audit Services CITY OF SUNNY ISLES BEACH. FLORIDA DOLLAR COST PROPOSAL ECEIV MAY 04 2007 Clty 01 Sunny laIe. B8&d1 OtfIC8 olltle Cl Clerk I.a. Rachlin Cohen & Holtz LLP b. This certifies that G. Jerry Chiocca is entitled to represent Rachlin Cohen & Holtz LLP, empowered to submit the proposal and authorized to sign a contract with the City of Sunny Isles Beach. c. The total all-inclusive maximum price for the Comprehensive Annual Financial Report is $41,250 for 2007, $44,150 for 2008 and $47,250 for 2009. In addition, if a Federal or State Single Audit is required, an additional $6,500 for each will be added to base amount shown above. d. There will be no out-of pocket costs charged to the City of Sunny Isles Beach. 2. Rates by Partner, Supervisory and Staff level times hours anticipated by each. See Appendix F. I-lours Rates Paltner 30 $350 $ 10,500 Supervisor 50 190 9,500 Senior 195 170 33,150 S ta ff 120 105 12,600 - 395 65,750 Less Discount 24,500 $41,250 3. Rates for additional services Partner $ 350 Manager $ 210 Supervisor $ 190 Senior $ 170 Staff $ 105 Additional services that may be requested by the City of Sunny Isles Beach will be mutually agreed to and will be based on the hourly rates enumerated in "3" above. rJ.~ C~ G~rry Ofiiocc , Partner Rachlin Cohen & Holtz LLP APPENDIX F SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF TIlE FY 2007 FINANCIAL STATEMENTS Staff 195 120 Standard Hourly ~ Total $350 $10,500 $190 $~500 $170 $33,150 $105 ~..!},600 $ - $ $65,750 Supervisors ~ 30 50 Partners Seniors Other (specify): Subtotal 395 Total for services Described in Section II of the RFP (Detail on subsequent pages) Out-of-pocket expenses: $ $ Meals and lodging Transportation $ Other (specify): Less Discount $24,500 $41,250* Total not-to-exceed price for FY 2007 audit Note: The rate quoted should n2t be presented as a general percentage of the standard hourly rate or as a gross deduction from the total all-inclusive maximum price. *Does not include Federal or State Single Audit - see dollar cost proposal for amount. 4/3/2007 City of Sunny [sles Beach: Request for Proposal - Audit Services 31 APPENDIX F SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE FY 2008 FINANCIAL STATEMENTS Supervisors 50 Standard Hourly Rates Total $360 !.!.0,800 $200 $10,000 $180 $3 I ,500 $110 $15,400 $ - $ $67,700 Hours Partners 30 Seniors 175 Staff 140 Other (specify): Subtotal 395 Total for services Described in Section II of the RFP (Detail on subsequent pages) Out-of-pocket expenses: Meals and lodging Transportation Other (specify): Less Discount $23,550 Total not-to-exceed price for FY 2008 audit $44,150* Note: The rate quoted should !lQ! be presented as a general percentage of the standard hourly rate or as a gross deduction from the total all-inclusive maximum price. *Does not include Federal or State Single Audit - see dollar cost proposal for amount. 4/3/2007 City of Sunny Isles Beach: Request for Proposal - Audit Services 32 Aooendix F SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE Ayorr OF THE FY 2009 FINANCIAL STATEMENTS Supervisors 50 Standard Hourly Rates Total $365 B-0,950 $205 $10,250 $190 $33,250 $120 g6,800 $ - $ $71,250 ~ Partners 30 Seniors 175 Staff 140 Other (specify): Subtotal 395 Total for services Described in Section II of the RFP (Detail on subsequent pages) Out-of-pocket expenses: Meals and lodging Transportation Other (specify): Less Discount $24,000 Total not-to-exceed price for FY 2009 audit $47,250* Note: The rate quoted should I!Q1 be presented as a general percentage of the standard hourly rate or as a gross deduction from the total all-inclusive maximum price. The cost of audits for subsequent years or services beyond 2009 will be negotiated each year or as needed. *Does not include Federal or State Single Audit - see dollar cost proposal for amount. 4/312007 City of Sunny Isles Beach: Request for Proposal- Audit Services