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R2010-079 - 2010-06-14I�ESOLUTION NO. R2fl10-79 A RESOLU'TIOfV OF THE C�TY COUNCIL O� THE CITY OF PEARLAND, T�XAS, pUTH(�RIZING TF�E C�7`�` IVIANAGER OR HIS aESIGNEE TC} ENTER INTO A CONTRACT FC3R AUDIT SERVICES. BE IT RESQLVED BY THE �CITY GOUNCIL OF THE CITY OF PEARLAND, TEXAS: Sectior� 1. That engagerrent !e#ter for audit servi�es, a capy of w�ich �s attac�ed hereta as Exhibit "A" ar�d mad� a part hereof for al1 purposes, is hereby authorized and �pproved. Section 2. That the City Manager or his designee is here�y authorized to execute and the City S�cretary to attest an engagemenf letter for audit services. PASSED, APPR�V�D and AC��PTED this the 14 day ofi August, A.D., 2410. � TC�M REID MAYOR ATTEST: . : �;G�,r : = c�: ,��: � � , � - �-: r+; _>--; :x: Y S RETARY ``''` �`''� APPR�VED AS T� FORM: � �, DARRp�J M. C4K�R CITY ATTC�RNEY Exhibit "A" Resolution No. R2Q10-79 �'���.1��-�airS�l1 P.C� � ; � �i��i�D �11�L1C ACCC1l���A���S dv�ay 27, 2014 To the Honorable Mayor and Members of City Couneil Pearland, Texas We are pleased �o confrm our understandin� of the services we are to provide City of P�arland, Texas for the year ending Septeinber 30, 201 a. We will audit the financial stakements of the governmental activities, the business-Eype activities, the aggregate discre4ely presented coinponent units, each major fu�d, and the aggregate remaining fund informatian, which colleckiveby comprise the basic financial stateenents, o#'the City as of and for the year ending Septe�nber 30, 2410 that will be included in the City's Comprehensive Annual Financiai Report (CAFR}. Accounting standards generally accepted in th� United States provide for c�rtain required supple�nen�ary informatian {RSI) to accompany the City's basic �inancial statements. As part of our engagement, we will apply certain limited procedures to tl�e City's RSI. These limitec6 procedures will consist principally of i�tquiries of rnanagetnent regaeding the rnethods of tneasurerr�ent and presentakioa, which management is res�onsible for affirrning to us in its representatian letter. Unless we encounter problems with the presentation af the RSI or ��it� proGedures relaking to it, ti�e will disclaiia� an opinion on it. The following R5I is required by generally aceepted accountin� principles and will be subjected to certain limited procedures, but cvill not be audited; • Managemer�t's diseussion and arralysis. • Budge�ary schedules • Required sup�lementary pension inforinati�n Supplementary inforination other than RSI also acco�npanies the City's basic financial statements. We will subjeck the follo��ing supplementary irtformation to the auditing prt�cedures applied in our audit of the basic financial stateinents an�i will provide an opinion on it in relation to the basic financia� statements: • Individual and cornbir�ing fund statements and schedules • Sehe�ule af expenditures of federa! awards {issued separakely ira the City's Federal Single Audit Report dacument) The folfotving additiona] info� aceo�npanying the basic financial statements wvil� not be subjected to the auditing pracedures applied in our audit of the `nancial statemends, and for �vhich our auditor's r�port will disclair� an opinion. • In�roductory seetior� • Stat[siical section -- � �"�iL.:!�(I`.c �i�iti._ , ��i�_:ti L_:?.ul. i.� � , li _'�I._�'.�i �i r ��.H_i.�j°�� .. .... �,li..!!—�li;f�uf�_{�'L'". '.1, ... .. �'. , . ..:lil' d.l�c�i; t ., !ii� . .1�� . ..i . t: . . ?i... . �. ..,. . ,�:il!� .. .�t1i ..i� �. 4, �. . .ii�' •.�1:ti�., 1' . . 'I�.���. � . � .. '��i �. �� � . . . .�.�T:•� ii 1!;i'� �I�c� thz Hv��arable Nlavc�r and Iviemb�rs of C'itv C'�€inci] Pz�rla�id, Te�as [v]ay�7,2fl]0 Page ? of 7 ���c�ik Ok�jecti��es Ttt� objectit�e e�t ��ur audi� is t�rz �.��r�s�QO�i �f' opinir�n, a, tu wlletlt�r y�u�� t�a,ie tAaY���tcial statz�nents are fairl�- preserit�d, in �ll �nateri�l respects, in cociforn�it_y ��itki U.S. ��ec�erall3� acc�pt�d accounting �rincigles �lnd to � on the fai� of the additional infori��ation refcrred to in the tic�st para¢ra�l1 ed�hen considered in re9ation to the basic tinancial statemznts taken as a�vhole. T'he objectit�e also ineludes re�oetino can • Internal c�ntrol s�elated to the financial state�nents ane� �c��7i�lian�e �vit�Y la�,��•s, regulataons, and tli� ,�rQVision5 of corltracts or trat�t agrecineEits, noncomp�iabu� �� ith «�17i4h cauld ]lave ��riat�rial et��c:t on th� tsnanci�l stat��n��Xs in accordance �vitlti Gor•er�rl�r���r .�lirrlitirig �t�tattTcn�rl:e. • 4ntei•nal eontr�l rel�Et�d ta n7ajor �raY=ra�ns and an Q�71I710t1 (rar disclai��a�r� of o�init�n} an coailpiiance wi�th la�vs, regulation�, and the pro��isioiis ofcontracts or �rant aQreemei7[s that eauld ha��e a dire�t �:nd anaterial effect on �ach majc�r pro�ram in accardanee n°itl� the Siii�le Audit Act Atn�ndoYl�nts o�f 1996 and iDivlB Circular A-133, ,4rutits of�Strrtc�s, Locrrl G�rc>>�»rrrc>�xts, attd :�`c�it-ProJ"rt Orgcrni=catiaars. The reports on internal control and co»iplianc� ��rill each include a statei��ent that the eepoet is intended solely for dhe �nforinatiQ�i and us� af marlaoen�ent, tli� body or ��idi��idua�s char�ed ��iCh �QVeF•nance, others n�Ettiin the esi�itv specifc le�islakiv� ar regulatory badies, fedzeal a�vardErrg a�encies, ant[ if applic�ble, p�ss-tl3rou�h entities and is not int�nded tc� be an� shauld not be u5ed Uy anyoaa� otlaer thaci these s�ecityed parties: Qur audit n��ll b� conducted i�� �acc�rclatice �vitti auditin� standards �ei�erally accepted in tlze Unit�d Sta�es of ��z�a the sta��dards for tinancia] audits contain�d in GorEl�itraz��rt :�iadi7ir�g 5�trrnrlci�•cls, issu�c3 b�� thz C'c�mptrnller Ger�eral of the Uriitec� States; the Sin�le Audit Act r�.mendinents of i 996; and thz prot isions of Q�IB f'ircular .�-1 �3, and ��;�il] includ� tests of accountiu� records, a determinaEia�i Of fnajc�r p�•o�ram(,) in aeeordance �i�it13 QA�fB Cieeular t1-L33, aitd other pro�edures «, e�onsider neces�ar5 to �nable us t� e:�press suc�1 opinia�ls artd to render the required reports. If our opinians an the ��nancial ;tatement, or th�. Sin�le Audit ecrntpliance o�in€ons ar� r�tlter khan unqualiii�c3, «e �t�ill Fullw� diticu,s tlle rea�ozis «�itti yoti in ad� a�lce. If, fc�r a�iy reason, «•e a��e u�iab6e �U con3��lete the audit or are unable to for or }�a��e not faa c��iT�ions, ne ia�ay declirie t� ex�ress apinious or to i5sue a c•eport as a result of this znga�en�ent. �I��nagc nient �esponsibilities fVlan�r�em�;�7t is res}�onsible for the basic tirYancial stateu�e»ts and al9 �c�ortipanyin,� info� �s �� ell as a!1 re�res�ntatac�ils coeikained ther�in. hlana�ement is also i•�sponsible tor �i•e�aratioci a#�khe ,c�ecl��ile c�fexp�enditure, of feder•al a���ai•ds in acc�r�ianc� ��•ith llie rec�uir�u�ent:s ofOtN1B Cir�ular,'�- 13�. �� part of` th� �ud�t, ���e n°ill a,s�;t ���itki pr�para�ti��i �f y��ir t1na��cial st��r�:ment�s, sch�dul�. ot �spci�diture; of fzde�a�al a��°ards. and related not�es. Y'�u are res�roonsible for m�kin,� �all mana�e���enk d�ci,ioe�� and �erfcs��min�� all man��em�nt function; relatin�� to the Einaneial �t�tements, �ch�dule of ezpenditures c�f €ede� a����rds, and re'�ated i�ote•. asld t�r a��:eptin� ��11 respo�isi�alitv for such decisioAts. `t`ou ls�ill be ���quire�l to a��:no�r�lzr��e in t1�e �ti,zn�a�����neelt �•epres��itatioQi l�tt�1• uur as;:ist��7�:e ���ith �r�par�tic��i of t4ti� �lna���� ial stat�n�ent: and thz �clyzdule of e�p�nditurc. of f�d�.ral �i�� �rds aatd that wou �iat i� and a��r�a��ed the tinancial statei��e»ts. �chedule of e���c�ditur�; ot f4dcrz�l a«�arcf�. a�tii related noteti ��riom� co tlieir issuane� ai�d 17a��e accept�d responsibiliky fo� the�a�. F�irtl�er, ��o�u ar� rec�uirec� t�r desi�rn��te an indi��idual ����at�i suitable skill, I`o the Hc�nor�blL Mat`or �nd �viembers of Citv Ca��ncil Pearland, Tzxas t��Iay 27, ?O10 Pa�e � of 7 kno���led�;e, c�r e��erience to o��erse� an� nona�dit scrvice; ��.•e pro��ide and for e�aluatititi� the adequ�cy and s�es�lts of tlb�se services �nd t�ccepti��t� ��esponsibility far th�riz, f��t�na��em�i7t is res��oez�ible f�r �staf�lishin�� a�nd maintainin�� eftecti��e ineeenal contrc�ls, inc�udin`, ir�ternal cantrols or:�er coin�liance, �nd for mc�r�itarin�= on�Qin!� acti���tie�, Co he[p cns«re that a�propriate roa9s and objzcti��es are niet. I�nu are �isc, responsible �or the sel�c�ion and application oi' aecauntin� �rin�iples; #r�r tli� fair pi���s�ntatic�n in the fi�ianci�l stat�ments of the respecti��e f��a►�eial po�itic�» of the go�=ern�nental actit�ities, t�i�e bus9ness-type acti��iti�s, th� agarzQat� di�cr4tely p��esented ca�il�onent u�lits, eacti m�jc�r funci, ancl the a��gre�ate r�mainii�g fund infc,��mation caf the City acid the respective chanaes in tuianciaV po;itian at�d, ���here ap�]rcable„ casl� flo���s in confora�uty wiah U.S. ��enei•all�r accepted acc-oa�n[in�, pri�lciples; and for co���p�i�ance �r-ith applica6�� ➢a�vs ai�ci rzgulations and the pra��i�ions c�f contracts and e�•ant aureements. NTana,�ement is �lso res�o�isible fos �z�aki�14= all fir3ancial rzcords and related infori�iation availa'�le to us�and far ensuE•in�� that m�na4rc�nc,nt and �nancial informatiari is reliabie and praperly recorci�d. Your respansibilitie� also ir7cliide, including ident�tying signit3cant ��endor relationships in �a��lic1� the v�ndo�� 3�a� � for proeram compliance and f�¢ t9i� accuracy and completeness of that inforination.Your responsit�ilitieti iuclud� adjusting th� fi�ian�ia� stateinents to corc material m'ssstatementl and confia•min� to us in the re�resentation letter that th� effeets of aci�� uncorrected misstateme� ay�reQat�d by us dui tt�e eurr�nt engage�t�ent anci pertaining to the [ate�T period �resented ar� ����nat�rial, botf� indil-idually and in the a�gre�at�, to the financial staiements taken as a ���hole. 4 You are responsible f��• the de�iv�n anc� i�alplementation of ��°ograin� anc� controls to pr•e�.e�lt and det�ct fraud, �nd Foj• ii�foret�ing u, at�out all knca�,z n or su��ected fraud oa• il���al acty affzctiij� the govera�inent int�c�lvi�s{� ( 1} mana;�e�n�sit, (2 } emplo}fe�a «�lio ha��e si�nificant roles in inter�l�1 co�itrc�l, and (3) o�he� ��=l�ere the trat►d or ill��a] acts could hav� a�nat�ri�� eff�ck on t��e titx�ancial st�teialent�. Y"our res�onsibilitie5 ir�cl�.�de informina us of }�c�ui• kno���le�ge of any ai�e�atians c�f �ra�id �r susp�cted fraud affectin, the gover�iilient rec�i�ed irl coi�aaaltii�icatia��s froti� �mplayezs, former e�n���yees, grantors, reQu�ators. or o[hers. In additiorl, y�u are r�spo�lsible for identityin, and ensuriri�� tha� thz entity coi�z�li�s �a-ith applicable la�,vs, re{7tilatioitis, coi�te�acts, a�rezments, and �rants. Additianallv, as eequix�e:�i b�' O�IB Circu9ar A-1.i3, it i; manageinent'� �°es}7Q���ibilit�' t� fc�llo�s° up and take cc���rective a�ction on reported audit fy��din«� and to p� a �sua�t�t��r�F �ch�dule of ��ric7r auc�it tisidings and a c�orrective actic�n �lan. Ivfan�geii72��it is re��onsible for est�blishin�= and �zlaintaiuinu a�rocess Ec�r kracki�tit� tl7e stat��s of audit findiiigs and reuom«endations. l-1�rsa�e��lent is als� a'espo�nsibl� far itlentifyiia� tc�a� u� �re��ious firyancia� aud�ts, attest�tion e��i��i��e�ncnt�, perfornl�nce audits, or other ,tudies related to the c�bjecti��es ciiscusseci ii7 the .�.udat Ol�jc:ct�� es �ectic�n of thi� l�tt�r. Tl�iy res}�on,ibili�t�,� includes rel�avi�l�� �c� L��, corres;ti� actions ta�:en to addr�ss si�s�iticant tindiir�s ��id reconiulz��c�a[io��s re,ultin�.� frc�m those aud�t�, att4�tatiozi en�a�en�e��ts perie�rm�xnce a��dits, ar studi�s. You are al�o respt�nsiMl� for �ra� idin� managertzent's �-ie�� s c��i c�ua� current findin��s, canclusio�l,, anc� reccacninendations, a; �k ell a, �our pl��siriec� cc�rrectiti�e aetiotis, for the report, and for tl�� timin�s and f�i•mat fc�r �� tl7at infc,rmation. � :ludit Procedures General ta�t audit i�tti�udes �xai�3inin«., on a te.t b�sis, ���idcn�;e su�p��rtin�, the �inount; :�n� di;closure� in et1� tinancial st�rements: t�ierzfoa�e, c�ur audit w�•ill i�7��c�l��e jud�n7ei3t �€6out tl7e num'�er �� ��an;a�tions to be ���amined aeld tl�e ar��� �to b� tested. GVe «�ill �1���� astc� ped the �udit to obtain a�e�sor�abl� rat�i�r khati abscal�u� �ss�u•ance �hout «�liether th� ti�lancial state�nents are fr�e To tt�e I�o��oa h�Za}�or and i��I�Enbers ofCitvCc�uncil Feaa�lastd, Te�as �-i34�?�, �a1c� Pa�� � of 7 of r�naterial i��isstare«1er�t, «�hetl�er fi•a�n (1) eri•�rs, (?) fi�audulent tinartcial re�ortin�, {3) misappropriation of assets, or (-�) ��iolatio�l� of la«�s or ��a� ernmental r�.gulations that are attributa8�le to t}te zntity or ta act, by m�Fia��e�n4nt car eo��ployees actin�T on behalf of the entity. Bec���se thz dz��i•iY�ination af al�us� i; su'k�j�cti���, Gc�i�el�l�it�iefrt .�4�rili�ti��g ,Stancl�r�•c�� do not zx��ct �udi�ors ta p�'�ti�ic3e rea5�nable assurance ofdetectinQ abuse. B����use ars aiadit is d�.i��r�i:d to provide rea;onaule, laut not absolutz �s�u�•a�3ce a��d bec�use �� e tri�l nvt perfc�rn� a detailed era�uination c,f all transactions, there is � ri�k th�t �n�terial misstateme�lts or noric��uplia�►c� may exist and nat b� detected by us. In additi�n, �n audit is nat �3�si��n�zd t� detect in�i��aterial �nisstaten�ents or ��i�alations of la�vs or governmental regulatioi�s that do t�ot li���e a direct and r effect oEl the fi�lanr:ial staten��nt; or �najc�r pro��E�an�s. I-lo��, ���er, �ve �vill ir�form you of anv materi�] eri and any fraudulent financial repor•tin� �r misappropriation of assets tl7at �c���l� to au�� a�tenti��7. ���e ri-i11 also inform you of any ��iolatio�7s af 1����s or go�°ea�nmental re�,ulakions EhaT ccru�e to our att�ntion, unless clearly inc6nsec�uential. ��e �vi[t in�lude su�;h mattei•s in th� i�eparts required f��r a Single Audit. Our rzs�onsit�il�ty as auditors i5 limited to the peric�d eovered bv our audit and does not exte��cf t� any late� pea�iods for �vhic}i �Ee are not e��ga��ed as a udi �o rs. Our procedut°es t�-ill i�iclude te,ts of docume�ttary e� idence :�uppartiri�� the transactions rec�rcied in the accounts, and �nay include tests of th4 �hysi�al ��iste�ice ofin��entoe�ies, and dirzct coi3firn�ation c�f recei��ahles and cz;rtain �t�ier asset� and liabilities by cori•�spancience ���at�l selected indi��icRuals, fun�in� saurees, creditc�rs, an�i tinan�ial institutic�ns. �Ve «�ill request �vritten representations from yc�u� attorn�ys as part af tkte enga�em�nt, and they n�ay bill you for r�s�oii�iing to tl�is inquiz�y. At the conclusion of our audit, «�e �.��all requit•e �;�rtain �.��rittesi representations frc�nY you ab�ut tl�e financial statzn�ents and r�lated ir�atters. Audit Procedures---Internal CantroEs ��r audit 4i�i11 include c�btai��ir��� ar� und�.rstandin� at the entity and its environinent, includ'in� �nternal control, s�ifticient to ass�ss tlie risks af material missRateme�nt of tl�e tii7anc:ial ;,ta[ements and to d�siti�n the nature, t�aniti�, a�id extent of f�rther• au�it pra�cedui�es. Tests of cantrols �l�ay be p�a ta �eyt tl�e effe�ti� enz�s of certain contrals that �� e consi�ier re(e� ant to pre� c:ntiij�= and detectin�� errnrs anc3 fr�iucl that ar� cnat�F�ial to the tinancial statem�nts ar�d to pre��entin� and det�e�Cing m6s,tatemcnts resultii7�= froan ��le,�al a�;ts and oth�r noncouipliance anatters t9Yat ha��e a direct as��3 mat4ria! �ff�4t on the tinancial statzsnents. Ou�� tests, if periormzd, �� ill l�e less in scc�pe than ���e,uld be i�eczssarv ko render an opiniotz oi� inter�lal co��ta•al aud, aecordin��ly, no openion �ti�ill b�; e��ressed in our re�ort on interna7 con�ral issued pud�suant to Ga�•errrnre�a�.�lPCCltti�i�=Staa��fcr�°ds. :1s rec�uirecl by QI�fB Circular A-1.i3, rve tv�ll E��rfc�rm tests o� c�ntro[, oticr eom�liance to eva6uate the effectiti�ene,s of t�ie de:�ir�u and oy�eratiai� of contra�s that �ve wonsid�E� i to pr�� or detecti�ig inaterial n���s;e�m�lia��ce li itl� c��npliaslce requiresiienks applieable to each ma�or fedei•al a�� ard pro;�r�ia�l. [ er, ou�� tc,ts n ill he less in sca�e than �i•��u�a ve neces;ary to ��znder an a�i�ti��i on t}�t7,� cc��tit��olti and, ac�ord�n��ly. no opinian �kti�ill be etpre:,sed i1� our re�ort �on intern�id cantrol issued �ursuant to �14IBCiz•�ular,�-133. Ai� a��dit i5 not desi��Yecl ta �ro��id� assur�nce an i��teE ennt� or ta id�:ntify si;,nifc�nt cieticiencie:. Hot�etier, clurin17 t13e a�idit, ���r �� �ammunicat4 ta �xtar�a;�eme�it a�ic1 tho�e Lhar� ���itl� �r,r,•�r�yae�+�e inC�r��al control rel��k�d matte_a that are required to be cou�n7unicated u��de�• .a.IC'P.-� profesai���ial ;ta�idardy, Gr�i•c���aa��rcr�it .°Iir�Jitira,� Strrr���lm an� D�IB C'ircu[ar a-133 as f�ll�G4�:,: • T17ese mattc rs, to the cxtei�lt the�• are applical�le, inci�iclz: To t�le Ho�loi and i�fembers of City Cou�ICil 4"eaa�la�i�l, Texas tviav ?7, 20l 0 Pa�e 5 af 7 • O�r �°iz« s ab�ut yoti� si�ni#icant ac� ounkin� ��ractsces, islcluciiEi�� accoueitin�� polici�s, ai;counting est�a��ates and fiilar7cial staten�e��t discl�sur�s. • Si�t�ificant difticulties encountereci durin� the a�idit � Uncorrected mrsstatem�nts, oth�r than tticrse the auditor belie�.�e�s are trivial • Disagreeinents ���ith ina�la�,�zn��nt • �,�tat�ri�l, corre�ted misstate�nentfi t� «-er� brou�l�t to �he attention af m�na�eineTtit as a eeault af audit prc�cedur�� (recommended aciju;tm�nts ko t�iianceal stateinents). • Repre�entatians n�e are requestina fa ntatia��entenk. • Managernent`s corrs�ltatio�is �i ith other accountants • Sr`i7iticank i:�;sues arisitig froin the auc�it that nere discusscd, or the subj�ct of �oi•s ���itlj mana��ment • Otl7er findin��� or issues, if a�iv, arisinQ frou� tl�e aud�t that are, in oa�r pt�afe�tiianal jud�n3ent, signitic3nt and rele�,�ant to you r you�• o� ersi�ht of the financial repoi•kia�� prr�c�:ti�;. Audit Prc�eet�ures---Compliance As �art of c�btaiiasn�� reascanable assurance about �vlYetl�et the tinancial stateinents are free ot material misstate�nealt, ��-e �t�ill perfor»i tzsts of the City's con��li�nce �vikh a�plicable la�r�s a��d r�g�ilations and the provisi�ns of contracts and a��i including gj�ant agreemz�its. Ho���et�er, the objeetive of Chcase procedu�°es tvill not be ta provide an opimion on o�'era�l compliance and «�e «ill not e��ress such an opini�n ir� our report on co�npliance issued pursuank te� Goi•e��iriner�t .�trditir�g Sta�aclarrls•. �lbi$ Circular A-133 requ�i that «�e also plan and �erf�rm tl�e audiR to obtain reasc+nable assurance about whether tl�e auditee ha� com�lied �vith a�plicable la��-s and re�ulatie�ns an� the pro��isions of cocYtraets �i3d Mrant a,reecnents a�plica}�le tc� a��ajas pro�rams Our pro��dures ��.�ill co��aist c�f test� of tratl�actions and other applieable �rocedures descr96ed in the D.LIB Ca� f1- 133 C�r�a��linaac�c Sii��Eal���aerrt foE the tyges of co�npliance requirecnents that could has-� a direct and t�iaterial etfect a�t each of Ciri� of Pearland, Texas's �najor pro,rains. The purpose of tktese prc�cedures �vill L�e tr� e3przss an o�inion on Cit,f of� Pe�rl�ncl, Teras's co�lly�liance «it�� rec�uiremetits applieable to zacli c�f its �t�ajor programs in oue report c�rl cc�inpliance issued �ursuant t� OI�iB Circul��• A-133. Eneagement Administi•ation, Fccs, and Other �Ve exp�ect to be�in our auc�it i�i Ju�ie and �o issue o�r report, nc� later ti���l Kht fol{��1�i»g Ivlarc�i. Christo�l�er L. Breau:�, CPA «�ill be desi,�nated a� tl�e en<�agem��it �artr�Gr a��d «-ill he responsible for super��i�in�t� t�ie �r�t�a��;ment and si�ning the report. EVe underst��ld that y'�ur ein�ioyees «�i9i prepare all casfi or other �ontiru�atic�ns n�� a�equ�st and n�ill aocate anv docnn7ent5 s�lected b}- us for testitig. Th� audit dti�cui»zi�tatinn for this e�i«aueii�e��t i�s tkie �ro�ertv of Null Laira��ti, P.�'. and constitutes �onfic�e»tial ���t�arm�tia�l. H�«�e�.�er, pursua�3t to authar�t� �,ir,•�� b�� lati�� �or r�����tion, ���e ��la}r b� requested t� anake certain Rudit documLnta�ion at�ai�able tc� � fec3eral �i�ency ���o� icti�iy� ciirect or i�ldirect �utidin�, or thz U.�. G��,�ern�nena A�:�c,u��tabil�tv C)ti��lz f�a� pt�rpr�,e; of a quality r���i�:��� c�f [l�e audit, to eesc�l��z audiC �ia�din��r:�, or t�o carr} out o� ersit,klt r�5�o�l:ibiluties. l�'`e �� ill natifv you of any such requ�.t. If r�qaiested, access t� su�h auc�it dacum�ntation «�ill t�e pr��� undzr �h� supert isictici at i�1u11 L3irs��ti, P.C, personnel. Fiirtllcr»lore, upon request, �� e ulay p�•ot�ic�e copies of seleetec� audit dacusn�ntatian t� tl�e aforetl�etuioi3ed parCiz,. Thes� paeti�� ma�r d��tend, oi dccide. to Tc� the Honorable l��ay�or anc� Memlaers c�f Cit}� Cc�uncil �'c;arlanc�, `Ce.r Ni�y ? 7, 201(} Pa�e 6 raf 7 distribute the copies or infortnatEOri coratained kherein to others, includinQ ather go�•ernmental a�:encies. Our f�;e fc�r thesz serti ices ���ill be at our standard hourly� rates plus out-of-pocket costs (such as report reproduciian, s��ord �i•�ocessing, �ostatre, te•avzl, copies, tele�hane, etc.} except that 1<<e agree that our �eoss f�e, incluc�inQ erpenses, «�ill not etce�d �6�,404. T�lis fee estimate consists of an esti�nated 53,000 fc�r additior�al audit procedures required as a eesult of the City receiving a suhstantial amoun� of fedzral funding. C)ur standard hourly rates ��ary accordin� to tl�e degree of respon5ibility ialvol�•ed and the experience le���l of tE�e �ersanneC assa�n�c3 to yaur audi4. Qur ic�voicts for tliese fees �vill be rendered each »ionth as �tnrk ��°ogrzsses a�td are paya6��e on presentation. In accardance ���itli �UI" tll"111 policies, ��,�ork tnay be su�pended if your ac�;ount becoines h0 days or more overd�ie and may not be resumed until your account is paid in ful4. If ���e elect to terminate our serviees for nonpay�nen�, our en�a�e�nent �vill be deemed to l�ave i�een cpmpletzd e�}�on �;�ritt�n notification of termination, e��en if we have nat cnmp3eted our report. You t�rill be obli[�ated Co compensate us far all time e�p�ndecl and to rein�bul•se us for all out-of-poc�Cet casts throuQh the daCe oftermination. Ttte above fee �s bas�d on anticipated cao�zration from your personnel and the assumption [hat unexpected circurnstarlce� �vill r�ot be encountered during the audit. If si�nificant additional timz is n�cessary, �ve �vil] discuss it ti��ith you and arri5�� at a ne«I fe� estimat� before ��re in�cur tlie additional cosgs. You xnay request that �ve perforin additional ser��ices not contei�p4atect by t�is en�a�z»sent leKter. If khis occurs, �ve �vill coininunica;te ��.�ith you reQardin� khe scope of the adtiiti€�a�al se� atid the estirnated fzes. ��e also inay issue a separ�te en�lgemeai3 lett�r cow�erin� the additional services. tn khe absence of any other ���ritten cocninunicakion fr•om us docwl�entin� suckl additional' ser��iees, our services �.��ill continue to be go��ei•ned bv tl�e ter�iis of thi, sn�a��eir�ent letter. At tlle conclusion of tlte enga�e�n�nt, r��e �� ill eomplete the appro�ariatz sections of a�td sign the Data Collzciion Forin that summarizes our audit tind�n�s. It is management''s responsibility to su6mit the reportinL? packa�e (ineludin� financial stateinents, schedule of e�penditures of federal a�varc�s, su�ni�lary schedule of �eior audit findin�s, auditars' repn� a��d a correc�ive actioti pla�i} alon4 n�itll tki� Data Callec�i�n Foc�m to �he c�esi�nat�d federal elearingkiouse and, if apF�ro�eiate, to pass- throu,h entities. The Data Cc�llection Forn� a�id th� re�ortin� packa�e nzusC be subiY�itted ��fitli�n t�ie earlier af 30 days after reczi�t of th� auditors' reports or nine months atter khe en�l af the audit period, unless a lon{�e� �eriod is aareed to in advan�e b}f ttle coanizant or o��ersEg�it aaei�cy for aud'ats. At tlie canclusion of the en���emei�t, ��e ���ill prc��•ide infarmation to manageme»t a, to �vl�ere th� reportiFi�� packages sliould be submi�ted �nd Ch� nu�fiher to �ubmik. Go��c�•fir�ac:�at Aiirlitr�rg Srrr�idru•ds requirz tllat �ve pro��icQe yau n•itli a copy of our cnost reeeiit ���ernal peer r���ie�v re�ork �nd ar�_y letter ot cc�mment, and any subsec�uent peer rzvie«� re�orts and letter� of tcamninent recei��ed durin� tl�e pe1•iod of tli� conta�act. W� t�are a[tacl�ed our in�r�t recenC peer revi���- a�e�oi �l'e appreciate th� ca�pcsrtunit4� to b� of szrvice to tl�e C'i[y and belie� e rhis letter accurateEy suG��mariz�s the si�niticant te�•ms of olu ent�a�,emntint. If you lla�°e ail�° questions, pCea�e lzt us knon�. lf v�u aRre� 1��ith t�ie term> of ��i� ��n�a<tic»Zent as des�rib�d in tltiis l�tter, plza�� �ig�i the ericloszd capy �rtd return it to us. Ver� teu1;�- ynues, �, � , �� �� - �� To the Honorable Iv�ayor and M�mbers ofCityC�uneil Pearland, Texas May 27, 201 Q Page 7 of 7 RESPQNSE: This ietter eorrectly sets h khe understandin� o�th� ��ty ofPearland, �'exas. By: - -- Title; Bil1 Eisen, City Manager Date: June 14 , 2 O 10