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HomeMy WebLinkAbout2022 CRA ContractZehmann May 19, 2022 The Honorable Mayor and Members of the City Council Riverfront Community Redevelopment Agency 1225 Main Street Sebastian, FL 32958 Enclosed is the engagement letter for the Riverfront Community Redevelopmentggenry (A Component Unit of the City of Sebastian) for the year ended September 30, 2022. Government Auditing Standards (as amended) require that we communicate, during the planning stage of an audit, certain information to the Governing Body. This information includes the auditors' responsibilities in a financial statement audit, including our responsibilities for testing and reporting on compliance with laws and regulations and Internal control over financial reporting. The engagement letter includes the Items which must be communicated to the Governing Body. Therefore, please make copies of the attached engagement letter and forward the copies to Governing Body. Please sign and return the enclosed copy of the attached engagement letter to us at your earliest convenience. Sincerely, Enclosures Zehmann May 19, 2022 The Honorable Mayor and Members of the City Council Riverfront Community Redevelopment Agency 1225 Main Street Sebastian, FL 32958 We are pleased to confirm our understanding of the services we are to provide Riverfront Community Redevelopment Agency (A Component Unit of the City of Sebastian) (the "Agency") for the year ended September 30, 2022. BrMfITTOMMIrm7[7R@_ We will audit the financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information, including the disclosures, which collectively comprise the basic financial statements of the Agency as of and for the year ended September 30, 202Z Accounting standards generally accepted in the United States of America provide for certain required supplementary information (RSI) such as management's discussion and analysis (MD&A), to supplement the Agency's basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context As part of our engagement, we will apply certain limited procedures to the Agency's RSI in accordance with auditing standards generally accepted in the United States of America ("GAAS"). These limited procedures will consist of inquiries of management regarding the methods of preparing the information and comparing the Information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We will not express an opinion nor provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.Thefollowing RSI is required by generally accepted accounting principles and will be subjected to certain limited procedures, but will not be audited: Management's Discussion and Analysis Pension Schedules OPEBSchedules We have also been engaged to report on supplementary information other than RSI, such as combining and individual fund financial statements, that accompanies the Agency's basic financial statements. We will subject the supplementary information to the auditing procedures applied in our audit of the basic financial statements and certain additional procedures, includingcomparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves and other additional procedures, in accordance with auditing standards generally accepted in the United States of America and will provide an opinion on it in relation to the financial statements as a whole. The Honorable Mayor and Members of the City Council Riverfront Community Redevelopment Agency May 19, 2022 Page 2 The following other 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: 1. Introductory section of the Annual Comprehensive Financial Report 2. Statistical section of the Annual Comprehensive Financial Report The objectives of our audit are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinions as to whether the Agency's basic financial statements are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America and to report on the fairness of the supplementary information referred to in the second paragraph when considered in relation to the basic financial statements taken as a whole. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. Misstatements, including omissions, can arise from fraud or error and are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment of a reasonable user made based on the financial statements. We will also provide a report (that does not include an opinion) on internal control related to the financial statements and compliance with laws, regulations, and the provisions of contracts or grant agreements, noncompliancewith which could have a material effect on the financial statements as required by Government Auditing Standards. The reports on internal control and compliance will each include a paragraph that states that the purpose of the report is solely to describe the scope of testing of internal control over financial reporting and compliance, and the result of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance and that the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering internal control over financial reporting and compliance. The paragraph wil I also state that the report is not suitable for any other purpose. If during our audit we become aware that the Agency is subject to an audit requirement that is not encompassed in the terms of this engagement, we will communicate to management and those charged with governance that an audit in accordance with auditing standards generally accepted in the United States of America and the standards for financial audits contained in Government Auditing Standards may not satisfy the relevant legal, regulatory, or contractual requirements. The concept of materiality Is inherent in the work of an independent auditor. An independent auditor places greater emphasis on those items that have, on a relative basis, more importance to the financial statements and greater possibilities of material error than with those Items of lesser importance or those in which the possibility of material error is remote. Auditors' Resoonsihilities for the 4udit of the Financial5tatemer Our audit of the Agency's financial statements does not relieve management or those charged with governance of their responsibilities. We will conduct our audit In accordance with auditing standards generally accepted in the United States of America and the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and will include tests of the accounting records of the Agency and other procedures we consider necessary to enable us to express such opinions. As part of an audit in accordance with GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. The Honorable Mayor and Members of the City Council Riverfront Community Redevelopment Agency May 19, 2022 Page 3 We will evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management. We will also evaluate the overall presentation of the financial statements, including the disclosures, and determine whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 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 (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the Agency or to acts by management or employees acting on behalf of the Agency. Because the determination of abuse is subjective, GovernmentAuditing Standards do not expect auditors to provide reasonable assurance of detecting abuse. Because of the inherent limitations of an audit, combined with the inherent limitations of internal control, and because we will not perform a detailed examination of all transactions, there is an unavoidable risk that some material misstatements may exist and not be detected by us, even though the audit Is properly planned and performed in accordance with GAAS and GovernmentAuditing Standards. 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. However, we will inform the appropriate level of management of any material errors, any fraudulent financial reporting, or misappropriation of assets that come to our attention. We wil I also inform the appropriate level of management of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to later periods for which we are not engaged as auditors. We have advised the Agency of the limitations of our audit regarding the detection of fraud and the possible effect on the financial statements (including misappropriation of cash or other assets). We can, as a separate engagement, perform extended procedures specifically designed to potentially detect defalcations. Management acknowledges that the Agency has not engaged us to do so and does not wish to do so at this time. Internal Control Over Financial Rcoorting We will obtain an understanding of the Agency and its business environment, including internal control relevant to the audit, sufficient to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and to design and perform audit procedures responsive to those risks and obtain evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resultingfrom error, as fraud may involve collusion, forgery, intentional omissions, misrepresentation, or the override of internal control. 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 necessaryto render an opinion on internalcontrol and,accordingly, noopinionwill beexpressed incur report on internal control issued pursuant to Government Auditing Standards. An audit is not designed to provide assurance on internal control, or to identify significant deficiencies or material weaknesses in internal control, or to express an opinion on the effectiveness of internal control over financial reporting. Accordingly, we will express no such opinion. However, during the audit, we will communicate to the appropriate level of management and those charged with governance Internal control related matters that are required to be communicated under AICPA professional standards and Government The Honorable Mayor and Members of the City Council Riverfront Community Redevelopment Agency May 19, 2022 Page 4 AuditingStundards. These matters refer to significant matters related to the financial statement audit that are, in our professional judgment, relevant to the responsibilities of those charged with governance in overseeing the Agency's financial reporting process. When applicable, we are responsible for communicating certain matters required by laws or regulations, or by additional requirements that may be applicable to this engagement. Auditing standards generally accepted in the United States of America do not require the independent auditor to design or perform procedures for the purpose of identifying other matters to communicate with those charged with governance. Management is responsible for assessing the implications of and correcting any internal control -related matters brought to the Agency's attention by us. 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 (if applicable), and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, creditors, and financial institutions. We may request written representations from the Agency's attorneys as part of the engagement, and they may bill the Agency for responding to this inquiry. Comuliance with Laws and Regulations and the Provisions of Grant Agreements As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of the Agency's compliance with the provisions of applicable laws and regulations and the provisions of contracts and agreements, including grant agreements. However, the objective of our audit 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 GovernmentAuditingStandards. Other Services Assistance provided by our Firm in the preparation of a reasonably adjusted trial balance is considered an additional billable service. Responsibilities of Management for the Financial Statements Our audit will be conducted on the basis that you acknowledge and understand your sole and complete responsibility for designing, implementing, and maintaining effective internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, including ongoing monitoring activities; to help ensure that appropriate goals and objectives are met; for the selection and application of accounting principles; and for the preparation and fair presentation of the financial statements in conformity with an acceptable financial reporting framework. Management Is responsible for determining, and has determined, that the applicable and appropriate financial reporting framework to be used in the preparation of the Agency's financial statements is accounting principles generally accepted in the United States of America. Management is also solely and completely responsible for making drafts of financial statements, all financial records, and related information available to us, including a reasonably adjusted trial balance, and for the accuracy and completeness of that information (including information from outside of the general and subsidiary ledgers). Management is also responsible for providing us with (1) access to all information of which management is aware that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, identification of all related parties and all related -party relationships and transactions, and other matters, (2) additional information that we may request from management for the purpose of the audit, and (3) unrestricted access to persons within the Agency from whom we determine it necessary to obtain audit evidence. At the conclusion of our audit, we will also require certain written representations from management about the financial statements and related matters. The Honorable Mayor and Members of the City Council Riverfront Community Redevelopment Agency May 19, 2022 Page 5 For the purposes of this letter, related parties mean members of the governing body; board members; administrative officials; immediate families of administrative officials, board members, and members of the governing body; and any companies affiliated with or owned by such individuals. Management's responsibilities include adjusting the financial statements to correct material misstatements and for confirming to us in the written representation letter that the effects of any uncorrected misstatements 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. We will advise management (and the Governing Body, as necessary) about appropriate accounting principles and their application and may assist in the preparation of the Agency's financial statements, but the ultimate responsibility for the financial statements remains with management with oversight by those charged with governance. As part of our engagement, we may propose standard, adjusting, or correcting journal entries to the Agency's financial statements. Management is responsible for reviewing the entries, understanding the nature of any proposed entries and the impact they have on the financial statements, and the implications of such entries on the Agency's internal control over financial reporting. Further, the Agency is responsible for designating a qualified management -level individual to be responsible and accountable for overseeing these nonattest services. Management is 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 affecting the government involving (1) management, (2) employees who have significant roles in internal control, and (3) others where the fraud could have a material effect on the financial statements. Management's responsibilities include informing us of its knowledge of any allegations of fraud, suspected fraud, or illegal acts affecting the government received in communications from employees, former employees, grantors, regulators, or others. In addition, management is responsible for identifying and ensuring that the Agency complies with applicable laws, regulations, contracts, agreements and grants and for taking timely and appropriate steps to remedy any fraud, violations of contracts or grant agreements, or abuse that we may report Management is responsible for the preparation of the supplementary information that is presented fairly in relation to the basic financial statements. Management agrees to include our report on the supplementary information in any document that contains and indicates that we have reported on the supplementary information. Management also agrees to include the audited financial statements with any presentation of the supplementary information that includes our report thereon. Management's responsibilities include acknowledging to us in the representation letter that (1) management is responsible for presentation of the supplementary information in accordance with GAAP; (2) that management believes the supplementary information, including its form and content, is fairly presented In accordance with GAAP; (3) that the methods of measurement or presentation have not changed from those used In the prior period (or, If they have changed, the reasons for such changes); and (4) management has disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the supplementary information. Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying for us previous financial audits, attestation engagements, performance audits, or other 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, attestation engagements, performance audits, or studies. Management is also responsible for providing management's views on our current findings, conclusions, and recommendations, as well as management's planned corrective actions for the report, and for the timing and format for providing that information. The Honorable Mayor and Members of the City Council Riverfront Community Redevelopment Agency May 19, 2022 Page b The Agency is required to disclose the date through which subsequent events have been evaluated, which ordinarily is the date the financial statements were available to be issued. The Agency will not date the subsequent event note earlier than the date of management's written representation letter and the date of our independent auditors' report. During the course of our engagement, we will request information and explanations from management regarding the Agency's operations, internal control over financial reporting, various matters concerning fraud risk, future plans, specific transactions, and accounting systems and procedures. At the conclusion of our engagement,wewill require, as a precondition to the issuanceof our report, that management provide certain representations in a written management representation letter. Management is responsible for the basic financial statements and all accompanying information as well as all representations contained therein. As part of the audit, we will assist with the preparation of the Agency's financial statements and related notes. Management will be required to acknowledge in the management representation letter our assistance with preparation of the financial statements and that management has reviewed and approved the financial statements and related notes prior to their issuance and has accepted responsibility for them. Management agrees to assume all management responsibilities for any nonaudit services we provide; oversee the services by designating an individual, preferably from senior management, who possesses suitable skill, knowledge, and/or experience to oversee any nonaudit services we provide; evaluate the adequacy and results of these or other nonattest services provided by our Firm; and understand and accept responsibility for the results of such services. We are not hosts for any Agency information. Management is expected to retain all financial and non -financial information that management uploads to a portal (document sharing site), and management is responsi ble for downloading and retaining in a timely manner anything we upload. Portals are meant as a method only of transferring and sharing data, and are not intended for the storage of Agency information, which may be deleted at any time. Management is expected to maintain control over the Agency's accounting systems to include the licensing of applications and the hosting of said applications and data. We do not provide electronic security or back-up services for any of the Agency's data or records. Giving us access to the Agency's accounting system does not make us hosts of information contained within. We, in our sole professional judgment, reserve the right to refuse to perform any procedure or take any action that could be construed as assuming management functions or responsibilities. Em The base fee for the audit of the financial statements will be charged at rates commensurate with the value of our professional services rendered and are not expected to exceed $5,000 and will be due upon issuance of the report. This fee is based on the assumption that unexpected circumstances will not be encountered during the audit. This fee is based on anticipated cooperation from the Agency's personnel, continued readiness and proactive assistance on their part in providing us with complete and accurate Information (whether financial or nonfinancial in nature) considered necessary by us to form an appropriate opinion, and the assumption that unexpected circumstances will not be encountered during the audit. Such circumstances include, but are not necessarily limited to significant addition or deletion of funds, component units or related entities and first- time application of significant new professional accounting or auditing pronouncements. In addition, the fee above assumes management will analyze and maintain appropriate support for significant valuation assertions embodied in the financial statements including the valuation of investment securities, the actuarial methods and assumptions used to calculate the net pension and other postemployment benefits liabilities, The Honorable Mayor and Members of the City Council Riverfront Community Redevelopment Agency May 19, 2022 Page 7 impairment of capital assets including those held for sale, the valuation of inventories and land held for resale, allowances for uncollectible receivables, and the estimate for incurred -but -not -reported self insurance claims. If significant additional time is necessary, we will discuss the related circumstances with management and arrive at a new fee estimate, which may or may not occur before we incur the additional time. In these circumstances, we may also issue a change order form (an attached example is provided.) Eneaeement Administration and Other Management shall discuss any independence matters with Rehmann that, in management's judgment, could bear upon Rehmann's independence. By applying a digital signature to this engagement letter or other document via DocuSign or a similar third - party digital signature service, management acknowledges the Agency's consent to receive and execute such documents via this method. Management further acknowledges that a digital signature applied via DocuSign or a similar third -party digital signature service has the same legal commitment as a traditional physical signature - We will provide copies of our reports to the Agency; however, management is responsible for distribution of the reports and the financial statements. Unless restricted by law or regulation, or containing privileged and confidential information, copies of our reports are to be made available for public inspection. The audit documentation for this engagement is the property of Rehmann and constitutes confidential information. However, pursuant to authority given by law or regulation, we may be requested to make certain audit documentation available to a cognizant or grantor agency for audit 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 management of any such request. If requested, access to such audit documentation will be provided under the supervision of Rehmann 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 date or for any additional period requested by the cognizant agency, oversight agency for audit, or pass -through entity. if we are aware that a federal awarding agency or auditee is contesting an audit finding, we will contact the parties contesting the audit finding for guidance prior to destroying the audit documentation. Our audit engagement and responsibility as auditors ends on delivery of our audit report Any follow-up services that might be required will be part of a separate, new engagement. The terms and conditions of that new engagement will be governed by a new, specific engagement letter for that service. Government Auditing Standards require that we provide the Agency with a copy of our most recent external peer review report and any subsequent peer review reports received during the period of the contract. Our 2020 peer review report accompanies this letter. The Honorable Mayor and Members of the City Council Riverfront Community Redevelopment Agency May 19, 2022 Page 8 This engagement letter, Including the attached Rehmann Audit Engagement Letter Terms and Conditions which are incorporated herein by reference as If set forth within the body of this engagement letter in their entirety, reflect the entire understanding between us relating to the audit services covered by this agreement. This agreement may not be amended or varied except by a written document signed by both Parties. it replaces and supersedes any previous proposals, correspondence, and understandings, whether written or oral. The agreements of the Agency and Rehmann contained in this document shall survive the completion or termination of this engagement If any term hereof is found unenforceable or invalid,this shall not affect the other terms hereof, all of which shall continue in effect as if the stricken term had not been Included. BYRartin We will issue a written report upon completion of our audit of the Agenofxs financial statements. Our report will be addressed to the Governing Body of the Agency. We cannot provide assurance that unmodified opinions will be expressed. Circumstances may arise in which our report may differ from its expected form and content based on the results of our audit. Depending on the nature of these circumstances, it may be necessary for us to modify our opinions, add a separate section, or add emphasis -of -matter or other -matter paragraphs to our report, or if necessary, withdraw from this engagement. If our opinions on the financial statements are other than unmodified, we will discuss the reasons with management in advance. If circumstances occur and come to our attention related to the condition of the Agency's records, the availability of sufficient, appropriate audit evidence, or the existence of a significant risk of material misstatementof the financial statements caused by error, fraudulent financial reporting, or misappropriation of assets, orwe become aware that information provided by the Agency is incorrect, incomplete, inconsistent, misleading contains material omissions, or is otherwise unsatisfactory which in our professional judgment prevent usfrom completing the audit or forming an opinion on the financial statements, we retain the right to take any course of action permitted by professional standards, including declining to express an opinion or issue a report, orwithdrawing from the engagement. We appreciate the opportunity to be of service to the Agency and believe the arrangements outlined above and in the attached Rehmann Audit Engagement Letter Terms and Conditions accurately summarize the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement, please sign the enclosed copy of this document and return it to us. P. Ross Cotherman, Principal, CPA Principal Executive responsible for supervising the engagement and signing our report The Honorable Mayor and Members of the City Council Riverfront Community Redevelopment Agency May 19, 2022 Page 9 GC�7 i:C�P.`/gdrZelY7_1:14_[4ad31d.T This letter correctly sets forth the understanding of Riverfront Community Redevelopment Agency (A Component Unit of the CityofSebastlon). Officer Signature Printed Name Title Date The Honorable Mayorand Members of the City Council Riverfront Community Redevelopment Agency May 19, 2022 Page 9 ACKNOWLEDGED AND ACCEPTED: This letter correctly sets forth the understanding of R(verfmnt Community Redevelopment Agency (A Component Unit of the CItY of Sebastian). CWficerSignature Paul E. Carlisle Printed Name City Manager Title ,lone 9, 2022 Date Rehmann Audit Engagement Letter and Conditions ADDITIONAL SERVICES - The Agency may request that we perform a kfitionalservkes not addressed in Ihlsengagement letterif thisocars, we will communicate with management regarding the scope of the additional services and the estimated separate fees We also may ieaea change ardor farm (an attached example is provides, or a separate engagement lettercoveAngth.iniitional services. Intheabsenceofany Other written communication from us documenting such additional services. Our attest services will continue to be governed by the temp of this engagement letter. CODE OF CONDUCT - Management is responsible for identifying any violations byemployeesof the Agenryscodeaftnnduct. CHANGES IN STANDARDS, LAWS AND REGULATIONS - We perform services for the Agency based on present professional standards, lawsand regulations. While we may on occasion be able to communicate with mmagement with respect to changes in professional standards, laws and regulations, as a general principle we cannot undertake with clients to advise them of every change that may occur. The Agency can always obtain reassurance In this regard by contactingus for an updated review of the Agency'"Nuatl on. MANAGEMENTS REPRESENTATIONS - The procedures we will Perform inourengagement and the conclusionswe reach as a basis forour report will be heavily Influenced by the written and oral representations that we receive from management Accordingly, false, misleading. Incomplete. butudistent or omitted representations could cause us to expend unnecessary efforts or mid cause material error or a fraud to be, undetected byour procedures. In vle laftheforegoing theAgencyagrees that we shall not be responsible for any material miestatements in the Agencysfimncialstatementsthatwemayfailtodetectasaresultofblre, moderate. Incomplete. Inconsistent or misleading representabom that are made to us by management In addition, the Agency further agrees to indemnify and hold us harmless for any liability and all reasonable costs, including legal fees, that we may incur as a it of the services Parfnrmed under this engagement in the event there are lake or misleading representations made to us by any member of the AgenNs management. CLIENT ASSISTANCE -We understand that the Agency's employees will prepare all cash, accounts receivable, and other confirmations we request and will Iodate and m le any documents selected by us for testing In addition, management will provide us with copies of all minutes add other documents that we believe may have a bearing on our evaluation of the AgenNs financial affairs. WORK SPACE - The Agency shall provide reasonable work space for Rebmann personnel at audit work sites, as well as occasional clerical support services. TIMELY DECISIONS AND APPROVALS - The Agency understands chat Rebmanni Performance Is dependent on the AgenNs timely and effective satisfaction of Its own activities and responsibilities In correction with this engagement, as well as barely decisions and approvals by Agency Personnel. ACCURACY AND COMPLETENESS OF INFORMATION - Management agrees to ensure that all information provided to us is acmrate. complete, and consistent In all material respects, contains no material omissions and is updated on a prompt and continuous basis. in additiaq management will also be responsible for obtaining all third -party canon, if am, required to enable Rebmann to access and use any third -party products necessary toourped rind nce. EMAIL - The Agency acknowledges that (a) Rebmann, the Agency, nib others. if any, pertkipeli ng in this engagement may correspond or convey documentation via Internet e-mail unless the Agency expressly requests otherwise, (b) no party has central over the performance, reliability, availability, or security of Internet e-mail, and (c) Rehmann shall not be liable for any loss, damage. expense, harm or inconvenience resulting Rom the loss, delay. Interception, corruption, or alteration of any Internet ee. mall due to any reason beyond Rehmann's reasonable control. OFFERS OF EMPLOYMENT - Professional standards require us to be Independent with respect to the Agency in the Performance of our regard ing a discusslonslh id page a threat Our independence. regarding employment could pose a threat m cur independence. Therefore, are request that management Intend us prior to any such our miseper sa that we on Implement appropriate safeguards m maintain wrindependeMe. Nelther Party shall, during the term of this engagement latterandform, (1) year offer its termination, solicit for hire as an employee, consultant or otherwise any of the other Pertys personnel without such other parry's express written consent. If the Agency desires to offer employment to a Rebmann associate and the associate Is hired in any capacity by the Agency, a market -driven compensation placement fee may apply. ADDITIONAL FEESAND BILLING POLICIES -It must be understand that the nature of our engagement requires us to exercise our independent professional judgment with respect to various auditing, amounting and related Issues. In reaching our conclusions, we must retain the right to judge the nature and scope of the work required in order to conform to professional standards, as well as the work we deem necessary to enable us to reach the conclusions and form the opinions required of us. If our judgment as to the scope of the work required causes us to reassess our estimate of fees for this engagement, we will so advise the Agency. We reserve the right to refrain from performing additional work land thereby incurring additional time charges) unless and until the Agency has confirmed Its understanding of, and agreement to, any additional estimateddharges Our fee estimate is based upon our discussions with management in which management has disclosed no unusual Problems or issues which would require us to conduct an audit of unusual scope or otherwise expend lime and effort in excess of that immully anticipated In an engagement of thls type. The estimate also assumes that we coil I have the full cooperation of Agency persmnel, as r fired, and that Mere is a reasonable continuity of Agency personnel familiar with the matters to which our engagement relates. In addi[iam our fee is based on the experience level of our personnel, at their respective standard hourly ratesperformingcertainauditwme uresatcertaintimehames. Ifweare caused to vary from that planning formula, additional fees will deed to be charged to allow for more experienced personnel Performing we work, reallocation of our client priority, overtime, etc Further, managementwill provide us with the schedules and records that we request (which ordinarily are detailed in a request list In advance of our fieldwork) ant that all such schedules and records will be pravid d to us timely in accordance with the scheduled fieldwork dates, to be, mutually agreed upon. If the requested schedules and records are not provided to us in accordance with the scheduled dates and we are unable to continue our work, we will attempt to resume our work as soon as the schedules and records are provided to us and our professionals assigned to the engagement again become available. As a result of well -publicized events, global economic comminute. and the continued evolution of the accounting profession, accounting and auditing standard setters and regulators are continually evaluating the reduction of the level of assistance ark prepanni the Ageruy is able to provide. We expect that Our clients maycontime m look to us to assist the time required to provide the services described in this letter or to complete new tasks required by such changes, we reserve the right to adjust Our fees appropriately. We will endeavor to advise the Agency of In accordance with our Firm policies, work may be suspended if the Agencys account becomes 30 days or more overdue and will net be resumed until the account is paid in full or we have a definitive payment agreement approved by our Firm administrator In Saginaw. Michigan. If we elect to terminate our services for nonpayment our engagement will be deemed to have been completed even If we have not issued our report The Agency will be obligated to compensate us for all time expended and Rehmann Audit Engagement Letter and Conditions to reimburse us for all out-of-pocket expenditures through the date of tdemallon. Our terms aMcandRiorn Impose a late charge of 1.5%per month,which Is an annual percentage rate of 1891,Balances not paid within 3D days of the recelptof invdce are past due and a latecharge of L516will be applied to the entire past due amount. Hohmann tharges a 3%com enlence Are on credit card payments ❑AIMS - Because there are inherent tlithcu Itles in reulliry or preserving information as the period after an engagement Increases, the Agency agrees that mMithstanding the statute of Iimltntbm of any particular State w US. Territory, any claim based on the audit engagement most be Mind within U months after performance of our service. unless management has previously provided us with a written notke of a specific defect in our services that farms the deals of the eftim. TERMINATION OF SERVICES - We reserve the right to suspend or terminate services for reasonable cause such as fallureto Wyourinvoices on a time IV basis or failure to provide adequate information in response to our Inquiries necessary for successful performance of our audit servims. Our engagement will be deemed to be completed upon written notification of termination, even Awe have not completed the audit and Issued our signed auditors repodThe Agency is obligated W compensate us for the time expended to that mint and to reimburse us for all out -of - rocket expenditures through the date of termination, We acknowledge the Agency's right to terminate our services at anytime, and the Agenryacknowledges our right to withdrawat anytime, including, but not limited to, for example, Instances where, in our judgment. (a) the conditions in the first paragraph of the Audit Objectives section of this letter exist, (b) our Independence has been Impaired (c)we can no longer rely on the Integrity & management, h0management (or the Audit Committee, If applicable) falls to reasonably support our efforts to perform the engagement in accordancewith what we belleve is ancestor, to comply with professional standards, or (a) a lack of professionalism exhibited by management appears to demonstrate a lack of respect for our personnel such as that evidenced in inappropriate or threatening language/emalls, subject In either use to our right to paymentforcharges incurred to the date of termination or our resignation. In the event that we determine to resign, and the Agency reeks damages allegedly resulting from such resignation, our maximum liability to the Agency in the event we are held liable because of such resignation shall be limited W the fees actually paid to us for current year audit work performed up to the date of resignation. INDIAL ISSUANCE OF OUR AUDIT REPORT ON FINANCIAL ourSTAanditm do the Agency intendstopublishor otherwisereproduce Fianna epert enlMfinarcWl Inanamnts al repormakerefererce exloony Firm name, wchasive Annual inaancial eport).(such aspro,pe Wrexampk, in a Comstatement. or Annual Financial Report). proncorporctus, ion by statement, cur similar di nl ag document including incorporation by referehicaddocam rtfororyevidwtoprovroval witha copyofthefinal reproduced document for onr review and approval before in is dim fouled. audit retl or wbmifted other fees for Issuance it inclusion of her wrist report and/or any otM1er reference to our Firm in such other tloament coil I be based on our standard hourly rates. With regard to electronic dissemination of audited financial statements, including financial statements published electronically on the Agenwys Internet Web site. the Agency understands that electronic sites are a means to distribute Information and, therefore, we are not required to read the information contained In these sites or to consider the consistency of other Information In the electronic site with the original document. SUBSEQUENT REPRODUCTION OF OUR AUDIT REPORT ON FINANCIALSTATEMENTS- If the Agency decides to Include, publish or otherwise reproduce our audit report on the financial statements at a date subsequent to our original report Issuance, such as for Inclusion In a Preliminary or Official Shimmentan exempt offering in connection with stale of bonds or notes, or other securities, or in a similar exempt offering or other disclosure document such as a prospectus, official statement, etc. (hereinafter referred to as the'document'), our Firm is presumed not to be associated with such document and we have no obligation to perform any procedures with respect to such document. In these circumstances, the Agemyagrees to include in such document a statement that Ashman Me cot been engaged ro pertcoon and has not performed, skeeter date of our audit report being reproduced, any procedures on the financial statements contained in such document or on any unaudited financial or other information contained In the deconlent or on the document itseff. ff, however, management or the Agency's agent (wch as an midedmiter, bard counsel, placement agent financial adviser. broker -dealer, etc) requests our involvement, thereby causing us to he engaged to or othersvere prepare a written acknowledgement (sometimes referred to as a'comenr ca'eWee to iMual letter all to including our audit report in such a document, or requests or engages us to assist in preparing or reviewing finandial or other Information contained in such document, a participate in related ant due diligence meetings or offering dismssbns. our Firm then becomes associated with the document In this event, in accordance with professional standards, we will be required to perform certain subsequent events-0ased or other limited procedures with resided to this creepier unaudited information contained In the document shortly before the initial Wul any subsequent distribution, circulation. or submission. Fees for reissuance or inclusion of our audit report in such a docamu llhe based on our standard hourly rates. IftheAgency wishes to make reference in such a document to our Firms role in connection with the purpose and dissemination of the document, the caption 'Independent Auditors' may be used to title or label that section of the document In accordance with professional standards, the caption 'Experts' should not be used nor should our Firm be referred to as 'Experts' anywhereinthedocument. INFORMAL ADVICE- As part of our engagement we may provide advice on operalin& internal control over financial reporting and other matters that come to our attention. Informal advice is not considered to be a consulting service unless we have entered into a separate engagement. THIRD PARTY PROCEEDINGS- As a result of our prior orfuture services to the Agency, we might be requested or subpoenaed W provide information or documents to management, a court. a trier of fad,or a third party in a legal, investigative, regulatory, administrative, mediation, or arbitration or similar proceeding in whichwe are not a party. If this occurs, our efforts in complying with such requests will he billable W the Agency as a separate engagement. We shall be entitled to compensation for our time at our standard or special hourly rates and reasonable eimbursement far our expenses (including our legal fees) In complying with this request Fare]] such requests, we will observe the confidentiality requirements of our profession and will notify management promptly of the request Thispangraph will survive the termination of this agreement for any reason, ant will be binding upon successors to the Agency. PEER REVIEW - Our Flom as well as other major accounting firms. participates Ina 'peerreNeW program covering nor audit and a¢wntlin practices. This program requires that rnce every threecoears we subject our dust fly assurance practices to an exams nation by another accounting Am As part of the process, the peer real ewer will revew a sample of ou r work It is possible that the work we perfarm for the Agency may be tolectedbythepeerreview rtWrimpeclionlfitis,thepeerreviewer is bound by professional standards to keep all information coMltleatlal. If management objects to having the work we perform for the Agency reviewed by our peer reviewer. please notify us in writing, PROMOTIONAL MATERIALS -The Agency consents to Rebmann's use of your Agency name and a factual description of the services to be performed by Rehmann under this agreement in Rehmann's advertising and promotional materials and other proposal opportunities MEDIATION - If any dispute arises among the parties hereto, the parties agree first to try in good faith to settle the dispute by mediation administered by the American Arbitration Assalation under its Rules for professional Accounting and Related services Disputes before resorting to binding arbitration or litigation Costs of any mediation proceeding shall be shared equally by all parties. Rehmann Audit Engagement Letter and Conditions GOVERNING I.AWThis Agmement shall be &vernd by and construed Inac dance Mth the eftheStatecfMkhtgan, wlthautregard to the RdnciCles 0 conflicts of law thereof. Rehmann EXAMPLE CHANGE ORDER Client: Riverfront Community Redevelopment Agency (A Component Unit of the City of Sebastian) (the "Agency") Date: Project Description (and estimated completion date, if appropriate): Estimated Additional Fees We believe it is our responsibility to exceed the Agency's expectations. This Change Order is being prepared because performance by us of the above project and/or additional service efforts was not anticipated in our original Agreement dated May 19, 2022.The estimated fees for the above project have been mutually agreed upon by the Agency and Rehmann. It is our goal to ensure that the Agency is never surprised by the price for any Rehmann service and, therefore, we have adopted the Change Order Policy. The estimated additional amount above is due and payable upon completion of the project described. If management agrees with the above project description and the estimated fee amount, please authorize and date the Change Order below. A copy is enclosed for the Agency's records. Thank you for letting us serve the Agency. Agreed to and accepted Officer Signature Printed Name Title Date l ClittonLamonAllen U-P CLAwnnecLwm REPORT ON THE FIRM'S SYSTEM OF QUALITY CONTROL September 15, 2020 To the Principals of Rehmann Robson LLC and the National Peer Review Committee We have reviewed the system of quality control for the accounting and auditing practice of Rehmann Robson LLC (the Firm) applicable to engagements not subject to PCAOB permanent inspection in effect for the year ended March 31, 2020. Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public Accountants (Standards). A summary of the nature, objectives, scope, limitations of, and the procedures performed in a System Review as described in the standards may be found at www.aicoa.oratorsummarv. The summary also includes an explanatlon of how engagements identified as not performed or reported in conformity with applicable professional standards, if any, are evaluated by a peer reviewer to determine a peer review rating. Firm's Responsibility The Firm is responsible for designing a system of quality control and complying with it to provide the Firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. The Firm is also responsible for evaluating actions to promptly remediate engagements deemed as not performed or reported in conformity with professional standards, when appropriate, and for remediating weaknesses in its system of quality control, if any. Peer Reviewer's Responsibility Our responsibility is to express an opinion on the design of the system of quality control and the Firm's compliance therewith based on our review. Required Selections and Considerations Engagements selected for review included engagements performed under Government Auditing Standards (including compliance audits under the Single Audit Act), audits of employee benefit plans, an audit performed under the Federal Deposit Insurance Corporation Improvement Act (FDICIA), and an examination of a service organization (SOC 1 engagement). As a part of our peer review, we considered reviews by regulatory entities as communicated by the Firm, if applicable, in determining the nature and extent of our procedures. Nexia A mamGer of � terruuonai To the Principals of Rehmann Robson LLC and the National Peer Review Committee Page 2 Opinion In our opinion, the system of quality control for the accounting and auditing practice of Rehmann Robson LLC applicable to engagements not subject to PCAOB permanent inspection in effect for the year ended March 31, 2020, has been suitably designed and complied with to provide the Firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Finns can receive a rating of pass, pass with deficiency(ies), or fail. Rehmann Robson LLC has received a peer review rating of pass. Clifton LarsonAllen LLP Riverfront Community Redevelopment Agency 427575 Zehmann E-Billing Enrollment/Confirmation Timely and easy -to -access invoices and statements will now be entailed to you. Please provide your contact information below to start taking advantage of electronic invoicing and statements. Primary Billing Contact, Billing Phone Number: Email Address: Comments: If you are already taking advantage of e-Billing, we will confirm this information in our systems. Additionally, the billing contact will receive Information on e-Payment options to simplify your accounts payable process. Zehmann Select Year: 2021 v n The 2021 Florida Statutes Title X1 Umpter 218 View Entire TAXATION AND FINANCIAL MATTERS PERTAINING TO POLITICAL fbaRYeE FINANCE SUBDIVISIONS 218.391 Auditor selection procedures.— (1) Each local governmental entity, district school board, charter school, or charter technical career center, prior to entering into a written contract pursuant to subsection (7), except as provided in subsection (8), shall use auditor selection procedures when selecting an auditor to conduct the annual financial audit required in s. 218.39. (2) The governing body of a county, municipality, special district, district school board, charter school, or charter technical career center shalt establish an auditor selection committee. (a) The auditor selection committee for a county must, at a minimum, consist of each of the county officers elected pursuant to the county charter or s. 1(d), Art. VIII of the State Constitution or their respective designees and one member of the board of county commissioners or its designee. (b) The auditor selection committee for a municipality, special district, district school board, charter school, or charter technical career center must consist of at least three members. One member of the auditor selection committee must be a member of the governing body of an entity specified in this paragraph, who shall serve as the chair of the committee. (c) An employee, a chief executive officer, or a chief financial officer of the county, municipality, special district, district school board, charter school, or charter technical career center may not serve as a member of an auditor selection committee established under this subsection; however, an employee, a chief executive officer, or a chief financial officer of the county, municipality, special district, district school board, charter school, or charter technical career center may serve in an advisory capacity. (d) The primary purpose of the auditor selection committee is to assist the governing body in selecting an auditor to conduct the annual financial audit required in s. 218.39; however, the committee may serve other audit oversight purposes as determined by the entity's governing body. The public may not be excluded from the proceedings under this section. (3) The auditor selection committee shalt: (a) Establish factors to use for the evaluation of audit services to be provided by a certified public accounting firm duly licensed under chapter 473 and qualified to conduct audits in accordance with government auditing standards as adopted by the Florida Board of Accountancy. Such factors shall include, but are not limited to, ability of personnel, experience, ability to furnish the required services, and such other factors as may be determined by the committee to be applicable to its particular requirements. (b) Publicly announce requests for proposals. Public announcements must include, at a minimum, a brief description of the audit and indicate how interested firms can apply for consideration. (c) Provide interested firms with a request for proposal. The request for proposal shall include information on how proposals are to be evaluated and such other information the committee determines is necessary for the firm to prepare a proposal. (d) Evaluate proposals provided by qualified firms. If compensation is one of the factors established pursuant to paragraph (a), it shall not be the sole or predominant factor used to evaluate proposals. (e) Rank and recommend in order of preference no fewer than three firms deemed to be the most highly qualified to perform the required services after considering the factors established pursuant to paragraph (a). If fewer than three firms respond to the request for proposal, the committee shall recommend such firms as it deems to be the most highly qualified. (4) The governing body shall inquire of qualified firms as to the basis of compensation, select one of the firms recommended by the auditor selection committee, and negotiate a contract, using one of the following methods: (a) If compensation is not one of the factors established pursuant to paragraph (3)(a) and not used to evaluate firms pursuant to paragraph (3)(e), the governing body shall negotiate a contract with the firm ranked first. If the governing body is unable to negotiate a satisfactory contract with that firm, negotiations with that firm shall be formally terminated, and the governing body shall then undertake negotiations with the second -ranked firm. Failing accord with the second -ranked firm, negotiations shall then be terminated with that firm and undertaken with the third -ranked firm. Negotiations with the other ranked firms shall be undertaken in the same manner. The governing body, in negotiating with firms, may reopen formal negotiations with any one of the three top -ranked firms, but it may not negotiate with more than one firm at a time. (b) If compensation is one of the factors established pursuant to paragraph (3)(a) and used in the evaluation of proposals pursuant to paragraph (3)(d), the governing body shall select the highest -ranked qualified firm or must document in its public records the reason for not selecting the highest -ranked qualified firm. (c) The governing body may select a firm recommended by the audit committee and negotiate a contract with one of the recommended firms using an appropriate alternative negotiation method for which compensation is not the sole or predominant factor used to select the firm. (d) In negotiations with firms under this section, the governing body may allow a designee to conduct negotiations on its behalf. (5) The method used by the governing body to select a firm recommended by the audit committee and negotiate a contract with such firm must ensure that the agreed -upon compensation is reasonable to satisfy the requirements of s. 218.39 and the needs of the governing body. (6) If the governing body is unable to negotiate a satisfactory contract with any of the recommended firms, the committee shalt recommend additional firms, and negotiations shall continue in accordance with this section until an agreement is reached. (7) Every procurement of audit services shall be evidenced by a written contract embodying all provisions and conditions of the procurement of such services. For purposes of this section, an engagement letter signed and executed by both parties shall constitute a written contract. The written contract shall, at a minimum, include the following: (a) A provision specifying the services to be provided and fees or other compensation for such services. (b) A provision requiring that invoices for fees or other compensation be submitted in sufficient detail to demonstrate compliance with the terms of the contract. (c) A provision specifying the contract period, including renewals, and conditions under which the contract may be terminated or renewed. (8) Written contracts entered into pursuant to subsection (7) may be renewed. Such renewals may be done without the use of the auditor selection procedures provided in this section. Renewal of a contract shall be in writing. (9) If the entity fails to select the auditor in accordance with the requirements of subsections (3)-(6), the entity must again perform the auditor selection process in accordance with this section to select an auditor to conduct audits for subsequent fiscal years. History.—s. 65, ch. 2001.266; s. 1, ch. 2005.32; s. 15, ch. 2019-15. Copyright m 1995-2022 The Florida Legislature . Pn"vacy Statement • Contact Us an s SEBASTIAN HOME OF PELICAN ISLAND CITY COUNCIL AGENDA TRANSMITTAL COUNCIL MEETING DATE: June 8, 2022 AGENDA ITEM TITLE: Approval to Engage the Auditing Finn of Rehmann Robson to Perform Auditing Services for the City for the Fiscal Year Ending September 30, 2022 and for the City Manager to sign the Engagement Letter. RECOMMENDATION: Staff recommends that Rehmann Robson be Engaged to Perform Auditing Services. BACKGROUND: The City initiated the Auditor Selection process in accordance with Florida Statutes 218.391. This included the appointment of the Auditor Selection Committee and advertising a request for proposal (RFP). A mandatory pre -proposal meeting was established with the RFP. There were no firms that appeared at that scheduled meeting. Following up with several firms we presumed to have an interest, we understand that two believed their fee would be unacceptable, one had the employee responsible absent due to COVID and one was just mistaken on the scheduled date of the meeting. Paragraph (9) of Statute 218.391 provides that if an entity fails to select the auditor in accordance with the process, we must again perform the selection process for subseauent fiscal veers. Considering the time needed to re -advertise the RFP well enough in advance to allow any new firm to adequately prepare for the audit, Staff recommends that Rehmann Robson, the City's present auditor, be engaged to perform this year's audit and defer the selection process to next fiscal year. Rehman Robson has agreed to keep the same terms and pricing as this year. So it will be $41,400 for the financial audit, $4,800 for the single audit and $5,000 for the requirement to have a separate audit on the Community Redevelopment Agency. IF AGENDA ITEM REQUIRES EXPENDITURE OF FUNDS: Budgeted Amount: $51,200 Appropriation Required: To be included in FY 2022-23 Annual Budget ATTACHMENT: 1. Florida Statutes 218.391 2. City Wide Engagement Letter 3. CRA Engagement Letter .Administrative Services Department view. rvl City Attorney Review: Procurement Division Re l w, ifap l2bl , / � l✓ C — Z — 2 L City Manager Ajuthorizatiore Date: �/J 1i� ✓