Anniston City Council - 12/18/12

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The agenda for the Anniston City Council meeting on December 18, 2012.

Transcript of Anniston City Council - 12/18/12

  • SPECIAL SESSION

    OF THE

    ANNISTON CITY COUNCIL

    DECEMBER 18, 2012

    5:00 p.m.

    INVOCATION (Mayor)

    PLEDGE OF ALLEGIANCE (Mayor)

    CALL TO ORDER (Mayor)

    ROLL CALL (Mayor)

    NEW BUSINESS (City Attorney)

    I. RESOLUTIONS

    (a) A resolution authorizing reimbursements to City officials for expenses incurred while traveling away from the City.

    (b) A resolution authorizing the City Manager to execute an Agreement with the Alabama Fire College and Personnel Standards Commission.

    II. MOTIONS

    (a) A motion to approve a Master Plan Development for the new Wells Fargo Bank located at 1000 Quintard Avenue.

    (b) A motion to appoint Kemp & Associates, CPA PC to audit the financial information of the City of Anniston for the period ending September 30, 2012, with

    the option for administration to renew the engagement to provide auditing services

    for the fiscal years ending September 30, 2013 and September 30, 2014.

    PUBLIC COMMENTS (Mayor)

    COUNCIL COMMENTS (Mayor)

    ADJOURNMENT (Mayor)

  • RESOLUTIONS

  • MOTIONS

  • C I T Y O F A N N I S T O N

    P.O. Box 2168

    Anniston, AL 36202

    MEMORANDUM

    TO: CITY COUNCIL & CITY MANAGER

    FROM: DANNY MCCULLARS, FINANCE DIRECTOR

    SUBJECT: AUDITING SERVICES

    DATE: 12/14/2012

    The Finance Department has solicited proposals for auditing services for FY 2012 with options for FY 2013

    and FY 2014. Invitations for proposal were sent to nine Alabama based accounting firms with

    governmental auditing experience. Six responded.

    FY 12 FY 13 FY 14

    Kemp and Associates $ 36,900.00 $ 34,900.00 $ 35,900.00

    Carr Riggs and Ingram 35,000.00 36,000.00 37,000.00

    Banks, Finley, White and Company 50,000.00 50,000.00 50,000.00

    Barfield, Murphy, Shank & Smith 55,000.00 55,000.00 55,000.00

    Jackson Thornton 63,000.00 58,000.00 58,000.00

    Machen, McChesney & Chastain 65,000.00 65,000.00 65,000.00

    Warren, Averett, Kimbrough and Marino Did not respond

    MDA Professional Group Did not respond

    Joan Sander and Associates Did not respond

    The proposals are attached along with this memorandum in Dropbox. Only one local firm submitted a

    proposal. Kemp and Associates has audited the City in the past. However, all the firms that submitted are

    certainly qualified to handle the reporting requirements of the City of Anniston. Other local firms,

    Warren, Averett, Kimbrough and Marino as well as Joan Sanders and Associates did not respond to our

    request for proposal.

    The responsibility pursuant to the Council Manager Act is for the Council to appoint the auditor. Based on

    price (Kemp was low cost edging Carr, Riggs and Ingram), past experience, as well as being a long standing

    Anniston firm, my recommendation would unofficially be for the Council to allow city administration to

    engage Kemp and Associates for up to these three years. However, this is not a formal recommendation,

    as this appointment must and should come from the elected body. Note, pursuant to the Council-

    Manager Act, the same firm cannot audit the city books more than three years in a row.

    If you have any questions, please feel free to email me over the weekend or whenever. I am always

    available to answer any issue that I may.

  • PROFESSIONAL SERVICES AUDITING PROPOSAL

    FOR

    CityofAnniston,Alabama

    December7,2012

    Proposer:

    Carr,Riggs&Ingram,L.L.C.210016thAvenueSouth

    Suite300Birmingham,Alabama35205

    205.933.7822CRIcpa.com

    Submittedby: JasonHarpe

    EngagementPartner205.949.8670 [email protected]

    BrianBarksdaleEngagementQuality

    ControlReviewPartner205.949.8601 [email protected]

  • CRIcpa.com 2

    Section Page

    QUALIFICATIONSOFFIRMUNDERSTANDINGYOURNEEDS 34

    FIRMPROFILE 57 ENGAGEMENTTEAM 813 OURCOMMITMENTTOQUALITY 14 RELEVANTEXPERIENCE 15 INDEPENDENCE 16 QUALITYCONTROL 1718

    SERVINGYOU SCOPEOFSERVICES 19TRANSITIONTOCRI 20

    OURAPPROACH 2127

    FEES 28

    APPENDIXAADDITIONALCLIENTREFERENCES 29

    TABLE OF CONTENTS

  • CRIcpa.com 3

    December7,2012DannyA.McCullars,DirectorofFinanceCityofAnnistonAnniston,AlabamaRe:RequestforProposalsforProfessionalAuditingServicesThankyouforallowingCarr,Riggs&Ingram,LLC(CRI)tosubmitthisproposaltoprovideprofessionalauditingservicestotheCityofAnniston,Alabama (theCity).Wearegenuinelyexcitedabouttheprospect of establishing a longterm relationship with you and believe the following factors arerelevantinyourassessmentofus: GovernmentalAuditingExpertise.CRIiskeenlyawareofthebusinessissuesfacingtheCity.Our

    firm maintains a specialized governmental practice and represents a large clientele ofgovernmental entities throughout the South which translates into a unique and diverseunderstanding of the environment in which the City operates. Your engagement partnersleveragemanyyearsofexperienceservinggovernmentalindustryclients,providingtheexpertiseyouexpectfromyourindependentauditors.

    LocalRelationships&NationalResources.Currentlyrankedamongthetop30publicaccountingfirms in theUnited States, CRI is the Souths third largest regional firm. Possessing both theappropriateresourcesanddecisionmakingauthoritypositionsustohelpyoumeetyourgoalsinatimely,efficientmanner.

    DedicatedTeamMembers.Yourassignedservice team iscomprisedofproactiveprofessionalswhoarecommittedtodeliveringthehighestlevelofbusinessacumenandknowledgetotheCity.Ourcommitment toprovidingyouwithconsistent staffingallowsyou tomaximize savingsandremainfocusedonbusiness.

    TransitionExperience.Ourteamoffersagreatdealofexperiencewithtransitioningnewclients,andourprovenprocessstreamlinesthetransitionwhileminimizingthedisruptiontoyouduringtheauditorchange.

    Fee Structure.Our fee is indicativeofourdesire to invest in a longterm,mutuallybeneficialrelationshipwiththeCityandwillprovideimmediateandcontinuingsavings.

    We understand that the City is seeking to engage a firm to audit the Citys annual financialstatements forthe fiscalyearsendingSeptember30,2012,2013and2014,andpreparetheA133SingleAudit. Theauditswillbeperformed inaccordancewithallapplicableprofessionalstandards.TheauditreportandrelatedfindingswillbeissuedandpresentedintheirfinalformtotheCityassetforthintheRFP.

    QUALIFICATIONS OF THE FIRM UNDERSTANDING YOUR NEEDS

  • CRIcpa.com 4

    Wewelcome theopportunity todisplay toyou thesame teamwork,expertise,and responsivenessthathasmadeusoneof the fastestgrowingpublicaccounting firms in theUnitedStatesover thepasttenyears.Pleasecontactmeat (205)9498670or [email protected]pa.comwithanyquestionsyoumayhave regardingourproposal.Again,weappreciateyourconsiderationofour firm to serveasyourexternalauditors.Sincerely,

    JasonHarpe,CPA

    QUALIFICATIONS OF THE FIRM UNDERSTANDING YOUR NEEDS

  • CRIcpa.com 5

    Carr,Riggs&Ingram,LLC(CRI)isaregionalcertifiedpublicaccountingandconsultingfirmrankedbyPublicAccountingReportasthe29thlargestfirminthenationandthe3rdlargestintheSouth.

    Asa resultofourmembership in theseorganizations,wearesubjecttostricterqualitycontrolstandardsthanfirmsthat choose not to take the voluntary steps to join thevarious AICPA and PCAOB organizations to improve thequalityoftheirpractices.CRI is also a member of Moore Stephens InternationalLimited,anetworkofindependentpublicaccountingfirmshaving 647 member offices in 98 countries, over 20,000peopleandfeeincomeof$2.23billion.Ourmembershipinthis prestigious alliance allows us to provide our clientswithbothnationalandinternationalresources.

    QUALIFICATIONS OF THE FIRM FIRM PROFILE

    ProfessionalOrganizationMembershipsAmericanInstituteofCertifiedPublicAccountants(AICPA)AllianceforCPAfirmsAICPAPrivateCompaniesPracticeSectionCenterforAuditQuality(CAQ)EmployeeBenefitPlanAuditQualityCenteroftheAICPAGovernmentalAuditQualityCenteroftheAICPAInformationSystemsAuditandControlAssociation(ISACA)InstituteofInternalAuditors(IIA)PublicAccountingOversightBoard(PCAOB)

  • CRIcpa.com 6

    Firmwide, CRI performs auditing and consulting services for over 200 governmental clientswithmore than100governmentalauditingstaff. Also,partners inourvariousofficesconfer frequentlyabout complex governmental accounting issues. CRI places emphasis on training staff ingovernmental accounting through inhouse training as well as State and National governmentalaccounting conferences and educational seminars. Partners and managers in CRIs governmentalaccounting services group teach governmental accounting courses tootherCPAs and governmentprofessionalsseveraltimesannually.We are confident we can and will provide superb engagement management to the City. Yourengagementteamwillbringastrong,balancedblendoftalentand industryexperienceimportantingredients for delivering superior, quality services. We also have two scholarsinresidenceprofessors to assist in technical accounting matters if necessary and we utilize other nationallyrecognizedgovernmentalaccountingexpertswithuniversityandGASBbackgrounds.CRIstechnologyconsultingdivisionalsoprovidesaresourcethatcanbeusedbyourclientsrelatedtocomputertechnologyandsecurity issues. Wefeelthatwehaveabroadamountofexpertise inthegovernmentaccountingarenaandweareavailableatany time toprovide technicaladviceorconsultation.Additionally, examples of partner involvement in the CPA profession, which demonstrates ourcommitmenttoquality,services,andcapabilityinclude: PastChairoftheU.S.AuditingStandardsBoard MembersoftheAlabamaStateBoardsofAccountancy PastChairoftheAlabamaSocietyofCertifiedPublicAccountants MemberoftheGAOAdvisoryCouncilonGovernmentAuditingStandards MultiplereviewersfortheGFOAsCertificateofAchievementforExcellenceinFinancial

    Reportingprogram FirmmembershipintheAICPAsGovernmentalAuditQualityCenter,includinganindividual

    memberoftheExecutiveCouncil Multipleauthorshipsofnationalgovernmentalpublications,guidesandarticlesincludingPPCs

    GuidetoSingleAuditsandAuditsofLocalGovernments MultiplespeakingengagementsforStateandNationalgovernmentalconferences

    QUALIFICATIONS OF THE FIRM FIRM PROFILE

  • CRIcpa.com 7

    TheauditoftheCityofAnnistonwillbeconductedbypartnersandstaffmembersofourBirminghamoffice. The professionals in the Birmingham office are comprised of 6 partners, 7managers, 10seniorsand10accountingstaff.With seven CPAs that focus specifically on governmental clients, the Birmingham officesgovernmental auditing staff has over 70 years combined experience in governmental accountingincludingA133SingleAudits.ItisouranticipationthatfourprofessionalstaffwillbedevotedtotheCitysauditonafulltimebasisandtwoprofessionalstaffwillparticipateonaparttimebasis.As needed on various engagements, we utilize professional staff members who have specializedtraining and experience in information technology (IT). For example, someofour staffmembershavedualdegreesordualmajorsinITaswellasaccounting.Inaddition,ourfirmemploysindividualswhohavebeencertifiedasNetworkEngineersandInformationSystemsAuditors.Theseindividualshavemanyyearsofexperienceinworkingwithawiderangeofinformationsystemsinareassuchasnetworkdesign,security,riskanalysisandotherareas.Ourprofessionalstaffmembersreceiveongoingcontinuingeducationtrainingintopicsapplicabletogovernmentalaccountingandauditingandreceivetherequirednumberofhoursonayearlybasis.AllofourgovernmentalauditprofessionalsfromseniorstopartnershavetrainingandexperienceintheapplicationofGASBStatement34,andallofourgovernmentalauditclientshavebecome fullycompliantwiththeprovisionsofthatpronouncement.

    QUALIFICATIONS OF THE FIRM FIRM PROFILE

  • CRIcpa.com 8

    Wehaveassembledateamofprofessionalswhowillensurethehighestlevelofpersonaldedicationand professional excellence to you. Our team has the requisite blend of technical, industry andbusinessskillsthatwebelieveareimportanttotheCity.Briefprofilesofeachmemberoftheteamidentifiedbelowfollowonsubsequentpages:

    BrianBarksdaleENGAGEMENTQUALITY

    CONTROLREVIEWPARTNERJasonHarpe

    ENGAGEMENTPARTNER

    HaroldL.Monk,Jr.TECHNICALREVIEWPARTNER

    CourtneyBrownENGAGEMENTMANAGER

    AndrewWaitsSUPERVISINGSENIOR

    CarleyEzzellSENIOR

    QUALIFICATIONS OF THE FIRM ENGAGEMENT TEAM

  • CRIcpa.com 9

    JasonHarpe,CPAEngagementPartner

    ExperienceJasonhasmorethan19yearsofexperienceinaccountingandauditing.Heallocatesthemajorityofhistimetothefirmsgovernmentalclients,providingbothauditsaswellascompliancetestingtoclientsinthis area. In addition, he provides consulting services related to internal controls and complianceconsulting.AreasofSpecialization Governmentalaccountingandauditing EducationalInstitutions

    Education,Licenses&Certifications B.S.,BusinessAdministration,withconcentrationinAccounting,AuburnUniversity CertifiedPublicAccountant

    ProfessionalAffiliations AmericanInstituteofCertifiedPublicAccountants AlabamaSocietyofCertifiedPublicAccountants

    Other PresidentAuburnUniversityAccountingAdvisoryBoard MemberAuburnUniversityCollegeofBusinessAdvisoryCouncil TreasurerBreastCancerResearchFoundationofAlabama

    QUALIFICATIONS OF THE FIRM ENGAGEMENT TEAM

  • CRIcpa.com 10

    BrianBarksdale,CPAEngagementQualityControlReviewPartner

    ExperienceBrian brings over 30 years of accounting and audit experience to this engagement, themajority ofwhichrelatestoservinggovernments,nonprofitsandeducationalinstitutions.AreasofSpecialization Governmentalaccountingandauditing Nonprofitentities EducationalInstitutions

    Education,Licenses&Certifications B.S.,BusinessAdministration,withconcentrationinAccounting,SamfordUniversity CertifiedPublicAccountant

    ProfessionalAffiliations AmericanInstituteofCertifiedPublicAccountants AlabamaSocietyofCertifiedPublicAccountants

    Other PartnerinChargeofCRIBirmingham FormerChairmanoftheBoardAlabamaSocietyofCertifiedPublicAccountants(20092010) MemberSamfordUniversityBusinessAdvisoryCouncil MemberUABAccountingAdvisoryBoard

    QUALIFICATIONS OF THE FIRM ENGAGEMENT TEAM

  • CRIcpa.com 11

    HaroldL.Monk,Jr.,CPATechnicalReviewPartner

    ExperienceHarold Monk has over 40 years of public, private and governmental accounting and auditingexperience.Harold is the immediate pastChair of theAuditing StandardsBoardof theAICPA.Heservedasamemberof theBoardofDirectorsof theAICPA,andhas served in thepaston theCPEExecutiveCommittee,PeerReviewBoard,AuditingSubcommitteeof theAICPABoardofExaminers,the Special Committee on Financial Reporting, and the Special Committee on Assurance Services.HaroldiscurrentlyservingonGAOsAdvisoryCouncilonGovernmentAuditingStandards.NumerousarticlesauthoredbyHaroldhavebeen featured instateandnationalpublicationsandhehasauthoredor coauthored AdvancedAuditing forPartnersandManagers (AICPA), ComplianceAuditing (AICPA),Guide toSingleAudits (PPC),AuditsofLocalGovernments (PPC),PreparingNon Profit Financial Statements (PPC), Annual Accounting and Auditing Update (PPC) andMaximizingSingleAuditEfficiency(PPC).Education,Licenses&Certifications BSBA,Accounting,UniversityofFlorida CertifiedPublicAccountant CertifiedFraudExaminer

    ProfessionalAffiliations AmericanInstituteofCertifiedPublicAccountants FloridaInstituteofCertifiedPublicAccountants GovernmentFinanceOfficersAssociation FloridaGovernmentFinanceOfficersAssociation

    QUALIFICATIONS OF THE FIRM ENGAGEMENT TEAM

  • CRIcpa.com 12

    CourtneyBrown,CPAManager ExperienceCourtneybringsover12yearsofauditexperiencetothisengagement.Approximately90%ofCourtneysworkloadisrelatedtogovernmentalclients.Education,Licenses&Certifications

    B.S.,Accountancy,AuburnUniversityMontgomery CertifiedPublicAccountant

    ProfessionalAffiliations

    AmericanInstituteofCertifiedPublicAccountants AlabamaSocietyofCertifiedPublicAccountants

    AndrewWaits,CPASupervisingSeniorExperienceAndrew brings over five years of audit experience to this engagement. Approximately 60% of hisworkloadisrelatedtogovernmentalclients.Education,Licenses&Certifications

    B.S.,BusinessAdministration,SamfordUniversity MastersofAccountancy,SamfordUniversity CertifiedPublicAccountant

    ProfessionalAffiliations

    AmericanInstituteofCertifiedPublicAccountants AlabamaSocietyofCertifiedPublicAccountants

    QUALIFICATIONS OF THE FIRM ENGAGEMENT TEAM

  • CRIcpa.com 13

    CarleyEzzell,CPASeniorExperienceCarley brings over four years of audit experience to this engagement. Approximately 60% of herworkloadisrelatedtogovernmentalclients.Education,Licenses&Certifications

    B.S.,Accounting,AuburnUniversity CertifiedPublicAccountant

    ProfessionalAffiliations

    AmericanInstituteofCertifiedPublicAccountants AlabamaSocietyofCertifiedPublicAccountants

    QUALIFICATIONS OF THE FIRM ENGAGEMENT TEAM

  • CRIcpa.com 14

    OURPEOPLEThequalityofaprofessionalservicesfirmisdeterminedbyitspeople.Toensurethehighestpossiblelevelofquality foreveryclient,weemploycarefullydesignedprotocols for recruiting,developing,promoting,andsupervisingourstaff.Ourprofessionalsparticipateinformaltrainingwithrespecttoaccounting, auditing, tax and other competencies, including industry specific topics. Additionally,theyallreceivebusinesstrainingthatfocusesontheirleadershipskills.

    CRISCPEWEEKTECHNICALTRAINING

    Youexpectyourauditteamtoprovideyouwithall of the information needed related to thelatest accounting and reporting hot topics andauditing requirements. Therefore, our firmfollowstherequirementssetforthinorbythe: FinancialAccountingStandardsBoard(FASB) GovernmentalAccountingStandardsBoard

    (GASB) SecuritiesandExchangeCommission(SEC) AICPA Government Auditing Standards issued by

    theComptrollerGeneraloftheUnitedStates PCAOB

    Fortheneededtechnicalupdatestoaddresstheabove, our firm hosts CPE Week, an annualcontinuing professional education seriesdesigned to inform our professionals.Additionally, it provides a forum for ourprofessionals to share best practicesensuringthat you receive thebenefitofexpertise fromourfirms800+professionals.

    CRISLEADERSHIPACADEMYBUSINESSTRAINING

    In todays business world of constantcommunication, business skills are almost asimportant as technical expertise. We believethat building our next generation of leaders iskey to our firms success and essential forexcellentclientservice. Therefore,we invest inthe skills necessary for our professionals toprovidequalityserviceswhilecommunicatingeffectively throughout the process. This beliefled to investment in and the formation of ourLeadership Academy, which is designed toprovide trainingon the soft skillsofbusinessleadership.Theseskillsincludeanalyticalreview,communication,presentation,andleadership.Additionally, we believe that it is incumbentuponustoinstillandreinforceourcorevaluesofclient service, respect, and integrity. Therefore,weoffertwocoursesbasedspecificallyonthosevaluesatcriticalcareerpoints.

    QUALIFICATIONS OF THE FIRM OUR COMMITMENT TO QUALITY

  • CRIcpa.com 15

    Confidential

    CRIwilldeliverdeep resources,abilityandexperience to theCityofAnnistonensuringworldclassengagementmanagementtotheCity. Yourengagementteamboastsmanyyearsofexperience inprovidingauditandotherservicestogovernmentalentities,andbringsastrong,balancedblendoftalentandexperienceimportantingredientsfordeliveringsuperior,qualityservices.Belowwesharespecific,relevantclientreferences;weencourageyoutoconsultwiththemastoourperformance:

    Client

    ApproximateOngoingYearsofService

    TotalEngagement

    Hours AssignedStaff ScopeofWorkCityofHomewood,AlabamaMelodySalterPrincipalAccountant205.332.6108

    2years 350 JasonHarpeCarleyEzzell

    AuditofCityandrelatedorganizationsGovernmentAuditingStandardsandOMBA133

    CityofTarrant,AlabamaLynnJuneauFinanceDirector205.849.2800

    7years 300 JasonHarpeAndrewWaits

    AuditofCityandElectricAuthorityGovernmentAuditingStandardsandOMBA133

    CityofVestaviaHills,AlabamaMelvinTurnerTreasurer205.978.0128

    11years 325 JasonHarpeBrianBarksdaleCourtneyBrown

    AuditofCityandrelatedorganizationsGovernmentAuditingStandardsandOMBA133

    CityofMountainBrook,AlabamaSteveBooneDirectorofFinance205.802.3825

    16years 325 JasonHarpe

    AuditofCityandLibraryGovernmentAuditingStandardsandOMBA133

    CityofTalladega,AlabamaTheresaSt.JamesFinanceDirector256.362.8186ext.1025

    1year 350 JasonHarpeCourtneyBrownAndrewWaitsCarleyEzzell

    AuditofCityandrelatedorganizationsGovernmentAuditingStandardsandOMBA133

    PleaseseeAPPENDIXAforalistofadditionalclientreferences.

    QUALIFICATIONS OF THE FIRM RELEVANT EXPERIENCE

  • CRIcpa.com 16

    AffirmationofIndependenceThefirmandallkeyprofessionalstaffareproperlyregisteredandlicensedtopracticeintheStateofAlabama and are independent to the City of Anniston, as defined by the requirements ofGovernmentAuditingStandards,publishedbytheComptrollerGeneraloftheUnitedStates.Thereare no conflicts of interestwith regard to any otherwork performed by our firm for the City ofAnniston.The firm is ingoodstandingwith theAlabamaStateBoardofPublicAccountancy,andhashadnoenforcementactionsorcomplaintsfiledwiththeboardagainstthefirm,itspartnersoremployees.

    QUALIFICATIONS OF THE FIRM INDEPENDENCE

  • CRIcpa.com 17

    Peerreviewsareperformedeverythreeyearsbyanother independentpublicaccountingfirm. Themostrecentreviewofourfirm,whichincludedspecificgovernmentalengagements,wasperformedin2010byEideBailly.Thereportwasthemostfavorablepossibleandisincludedbelow.

    QUALIFICATIONS OF THE FIRM QUALITY CONTROL

  • CRIcpa.com 18

    INTERNALQUALITYCONTROLREVIEWSANDOTHEREXTERNALREVIEWSExperiencedpartnersandprofessionalstaffofourfirmconductqualitycontrolreviewsofouraudits.Eachpartnersworkisreviewedannually,andtheinspectionprocessincludesperiodictestingoftheeffectivenessofourqualitycontrolsandacontinuousimprovementprogram.Inaddition,weareregisteredwiththePCAOBandour2006and2009PCAOBinspectionreportswerealsothemostfavorablepossiblenoauditdeficienciesorqualitycontroldefectsidentified.The2009PCAOBreportcanbeviewedatwww.pcaob.com/inspections/public_reports/2009/Carr_Riggs.pdf.AUDITMETHODOLOGYFORQUALITYCONTROLREVIEWVirtually all of our audit documentation is maintained electronically. Compliance with ourmethodology is regularly reviewedandevaluatedaspartofour internalqualityprogram,which isfurther discussed in this section under INTERNAL QUALITY CONTROL REVIEWS AND EXTERNALREVIEWS. Comprehensivepoliciesandproceduresgoverningouraccountingandauditingpracticescoveringprofessionalandregulatorystandardsandimplementationissuesareconstantlyupdatedfornew professional developments and emerging issues. See PAGES 2127 for a more detaileddescriptionofourauditmethodologyandapproach.

    QUALIFICATIONS OF THE FIRM QUALITY CONTROL

  • CRIcpa.com 19

    CRIwillprovide the following services to theCity aspartofourengagements for the fiscal yearsendingSeptember30,2012through2014:

    Prepare the Citys annual financial statements (subject to review and approval bymanagement).

    Performexternalauditservicesinaccordancewithauditingstandardsgenerallyacceptedinthe United States of America (GAAS) and Generally Accepted Governmental AuditingStandards(GAGAS).

    Performareviewandprovidefeedback (i.e. limitedprocedures)regardingsupplementary

    information such as Managements Discussion and Analysis, budgetary comparisonschedules,statisticalinformation,etc.

    PrepareandissueaSingleAuditReportontheCitysMajorFederalprogramsinaccordance

    withOMBA133.

    Verbal and/or written communication with management with the express purpose ofenhancingthefinancialreportstoprovideaccurate,timelyinformationforusers.

    Communicatedirectlywithmanagementregardingtheresultsofourprocedures.

    Other related projects as they arise and upon request, while taking care to retain our

    independenceasrequiredbyauditingstandards.

    SERVING YOU SCOPE OF SERVICES

  • CRIcpa.com 20

    Yourdecisiontomakeanauditorchange issignificant,andworkingwithnew independentauditorscanoften be a concern. Our teammembers are experiencedwith the transition of new clients and arepositioned toprovideyouwithvalue from thevery firstencounter. Ourapproach isdesigned toavoidinterruptionof service, raise the standardof serviceandestablishongoing channelsofcommunicationwith the Citys management and audit committee. We will accomplish the transition with minimaldisruption and investment of managements time. CRI has a welldefined approach for ensuring asmooth,efficientandseamlesstransition.Thetransitionplaniscomprisedofthefollowingkeyactivities,andcanoccurwithinapproximatelytwoweeks,dependingontheavailabilityofthepartiesinvolved:

    PHASE

    ACTIVITY

    PreApprovalandAcceptance Managementand/orAuditCommitteeapprovesthe

    changeinauditor,pendingnewauditorcompletionofclientacceptanceprocedures

    CRIperformsclientacceptanceprocedures,suchas: Interviewkeyserviceproviderrelationships Interviewpredecessorauditor Internalfirmreviewandapproval

    PredecessorAuditorCommunications CRImakesinquiriesofandreviewspredecessorauditor

    workpapersrelatedtotheprioryearaudit Predecessorauditorprovidescopiesofrequested

    workpapersClientUnderstandingandPlanning CRI,Managementand/orAuditCommitteesign

    engagementletter CRI,Managementand/orAuditCommitteedevelop

    communicationplanprotocol CRIandManagementfinalizetimetableandkeydates(see

    OURAPPROACHfordrafttimetablesandkeydates) CRIdevelopsinitialunderstandingofinternalcontrols CRIreportstomanagementinternalcontrolandreview

    itemssubsequenttoinitialplanningstage

    SERVING YOU TRANSITION TO CRI

  • CRIcpa.com 21

    Our general audit approach is riskbased, specifically tailoring our audit procedures to Citys uniquecircumstances. We design the nature, timing and extent of our audit procedures based on acomprehensiveplanningprocesswhichincludesstudiesofinternalcontrol,inquirieswithclientpersonnelandinternalstrategysessions.Weinvolvepartnerandmanagerlevelpersonnelinallphasesofourauditanduseourexperience,technologyandhighcaliberstafftoperformaneffectiveandefficientaudit.

    Conduct-audit

    conference

    Understand

    Evaluateeconomic &

    industry factors

    Review accounting &

    Review

    process

    Conductrisk Establish

    & accounting

    Conduct risk assessment

    Establish audit strategy

    Conduct post audit conference w/ representatives of the City

    ConductPreAuditConference

    Understand Business

    Concerns & Challenges

    Evaluate Economic &

    Industry Factors

    Review Accounting & Information

    Systems

    Review Accounting

    Internal Control Process

    Perform Audit Fieldwork

    Complete Audit & Accounting

    Specialist Reviews

    Discuss Draft of Financial

    Statements & Management

    Letter

    Issue Final Reports &

    Management Letters

    OUR APPROACH

  • CRIcpa.com 22

    Wewillsegmenttheengagementintofourseparatestages:1)planning,2)fieldworkperformance,3)review,and4)financialreporting.Eachsegmentwillincludepartnerandmanagerinvolvement,andwe will staff each segment appropriately with personnel based on their experience level andperformanceabilities.Thefollowingisabriefsummaryofthefoursegments. Planning Conductentranceconference(s)withCitypersonnel Communicate with predecessor auditor and review prior year workpapers, financial

    statementsandcommentletters(ifapplicable) Obtain an understanding of the Citys internal controls through interviews with City

    personnel Testing internal controls as deemed appropriate, including walk throughs of significant

    processesortransactions Perform analytical procedures on account balances, ratios and other transactions as

    deemedappropriate Holdinternaldiscussionsregardingsignificantauditandfraudrisks Preparedetailedauditprogramsbasedonriskassessments

    FieldworkPerformance PerformingsubstantiveauditproceduresontheCityassetand liabilitybalancesaswellas

    revenueandexpenseamounts CompletingauditproceduresasrequiredbyFederalsingleauditstandards CommunicatingthestatusofauditfieldworktotheCityonaregularbasis

    Review Detailedreviewofworkpapersbytheauditmanagers Reviewofkeyauditriskareasbytheengagementpartner

    FinancialReporting Conductexitconference(s)withCitypersonnel Reviewthedraftofthefinancialstatements,andprepareotherreportsandscheduledrafts

    forreviewandapprovalbyCitypersonnel ReviewfinancialreportsasrequiredunderOMBCircularA133(SingleAudit) Attendmanagementmeetingtosubmitandpresentauditreportifrequested

    OUR APPROACH

  • CRIcpa.com 23

    ANTICIPATEDAUDITSTRATEGYGAAP provides a conceptual framework for accounting, financial reporting, and disclosure; in theCity's situation, we must also consider governmental reporting requirements. The application ofGAAP varies depending on the facts and circumstances of transactions and managementsinterpretation.Ourgeneralauditapproachdescribedherein is tailored toaddress thenatureand inherent riskofeacharea.Forallareas,wewillmeetwithmanagementtogainanunderstandingofmanagementsprocessesandcontrols.Wewillthenassessandtestsuchcontrols,asnecessary.Wewillalsoperformsubstantive analytical audit procedures and tests of details as well as ensure that the properaccounting isapplied. Incertaincomplexareaswemayuse functional specialists (e.g. informationtechnology [IT], valuationof investmentsand reviewofactuarialassumptionsand calculations) toassistintheevaluationofcomplextransactionsandaccountbalances.Inaddition,wewillreviewthefinancialstatementdisclosuresandevaluatetheoveralltransparencyof the Citys financial reporting. We have outlined below the key areas of audit focus based onmaterialityandvariousjudgmentsinvolvedaswellasourpreliminaryknowledgeoftheCityandthegovernmentalindustry: AnticipatedAuditStrategy SubstantiveProcedures

    SignificantAreasAssessedLevelofRisk

    TestofControls Analytics

    TestofDetails

    UseofCAATs Notes

    Initialauditprocedures High Firsttimeauditallareaswillbeimpacted.Wealsowillperformtherequisitepredecessorsuccessorcommunications.

    Fraudrisks Moderate WillmeetAICPArequirementsfraudtesting.Fraudisconsideredanintentionalactthatresultsinamaterialmisstatementofthefinancialstatements.Wewillgatherinformationtoidentifyrisksofmaterialmisstatementduetofraud,andevaluatetheprogramsandcontrolsthataddressfraud.

    Financialreporting Moderate Periodendfinancialreportingisgenerallyimportant,thisiswheretheinformationiscompiledorreconciledtodetailedinformationfromunderlyingprocessesandsystems.

    Otherestimatesandcontingencies

    Moderate Compensatedabsenceswewillperformtestsofdetailsandsubstantiveanalyticstosubstantiateaccuracyofaccountbalance.

    Manualjournalentries Moderate Manualjournalentriesareinherentlyrisky.Cashandcashequivalents Moderate Cashissignificantbecauseofthelarge

    accountbalanceandnumberoftransactionsimpactingaccount.

    Accountsreceivable High Accountsreceivablearesignificantduetotheaccountbalance,numberoftransactionsandissuesrelatedtoestimatesassociatedwiththeallowancefordoubtfulaccounts.

    Capitalassetsandrelatedexpenditures

    Moderate Capitalassetsaresignificantduetotheaccountbalanceandsusceptibilitytomisappropriation.

    OUR APPROACH

  • CRIcpa.com 24

    AnticipatedAuditStrategy SubstantiveProcedures

    SignificantAreasAssessedLevelofRisk

    TestofControls Analytics

    TestofDetails

    UseofCAATs Notes

    Accountspayableandrelatedexpenditures

    Moderate Accountspayablearesignificantduetotheaccountbalanceandnumberoftransactionsimpactingaccountspayableandtherelatedexpenseaccounts.

    Payroll,relatedliabilitiesandpayrollexpenditures

    Moderate PayrollliabilityaccountsandrelatedexpendituresaresignificantduetotheaccountbalanceandpayrollexpenditurescompriseasignificantportionoftheCitysexpenditures.

    Longtermdebt/debtcovenants

    High Debtissignificantduetothesizeofaccountbalanceandcovenantsassociatedwithdebt.Wewillperformtestsofcompliancethroughsubstantiveanalyticsandconfirmationofcertaindatawithcreditorsandotherthirdparties.

    Deferredrevenue Moderate Deferredrevenueissignificantduetothesizeofaccountbalance.

    Revenuerecognition High TheCitygeneratesrevenuethroughpropertyandothertaxes.Wewilltestrevenuesystemsandprocessesandperformacombinationofsubstantiveanalyticalproceduresandtestsofdetailstotestthisarea.

    FederalandStateGrants High ASingleAuditisrequiredinaccordancewithOMBA133.GrantswouldbeconsideredhighriskduetotheinherentnatureofgrantsandtherequirementsofOMBA133.

    Entitylevelcontrols Moderate Wewillgainanunderstandingofthecontrolenvironment,riskassessment,monitoring,informationandcommunicationchannelstodeterminethenature,timing,andextentofrelianceonandtestsofcontrolsofcontrolactivities,analyticalproceduresandsubstantivetests.Ourgoalistoleveragetheworkalreadyperformedbymanagementtothedegreepossible,whichshouldreducecontrolsandsubstantivework.

    ITsystems High Theunderlyingfinancialandoperationalsystemssupportingthekeybusinesscyclesplayavitalroleintheabilitytogenerateandcompilecompeteandaccuratefinancialinformation.ThecontrolsoverITsecurity,computeroperationsandprogramchangeoverfinanciallysignificantapplicationsarevital.

    OUR APPROACH

  • CRIcpa.com 25

    Thefollowinggraphsdepictthekeyelementsofourauditprocess,aswellasthepreliminaryplannedtimingofourproceduresforfiscalyear2012:

    Timing of Audit Procedures

    PHASE 2012 2013

    Client Acceptance & Pre-planning D J F M A M J J A S O N D

    Appointment of audit firm

    Ongoing consultation on major issues, and developments

    Meet with management to discuss business risks and scope

    Hold CRI engagement team planning meetings

    Risk Assessment & Audit Strategy

    Gain understanding of significant processes and key

    Perform testing of key controls to reduce substantive testing

    Determine nature, timing and extent of substantive procedures

    Perform selected substantive procedures as of interim date

    Finalize and communicate plan to management/governance

    Audit Execution

    Conduct remaining substantive tests based on the results of audit procedures performed to date

    Discuss results of audit work with management

    Report & Monitor

    Review annual report(s)

    Meet with management/governance to discuss audit results

    Issue audit opinion(s)

    OUR APPROACH

  • CRIcpa.com 26

    Asrequested,CRIwillprovidethefollowingservicesaspartofourengagement:AuditsofthefinancialstatementsoftheCityfortheyearsendedSeptember30,2012through2014,in accordance with auditing standards generally accepted in the United States of America,Government Auditing Standards issued by the Comptroller General of the United States, theprovisionsoftheFederalSingleAuditActof1996,andtheUnitedStatesOfficeofManagementandBudget(OMB)CircularA133,AuditsofState,LocalGovernments,andNonprofitOrganizations.Werealizetheneedforflexibilityandcreativity indesigningaprocessthatworksforthe individualneedsofourclients. Ourauditprocess isbuilton frequentcommunicationwithmanagementandCitystaffwhichfocusesoncriticalissuesandauditrisksearlyintheauditprocess.ByconcentratingongatheringvaluableinformationabouttheCity,andinvestingthetimenecessarytounderstandthebusinessrisks,wewilldevelopanapproachthatisuniquetotheCity.FactorsthatdifferentiateCRIfrom other professional services firms include our focus on client relationships; our quest forknowledge of our clients operations before we begin the assurance process; our governmentalexperience;andtheseasonedjudgmentofourpartnersinthesharingofintellectualcapital.Ourclientsrecognizethebenefitsofaplanned,proactiveapproach.Byprovidingyouwithadetailedplanbeforeyourauditbegins,youaregivenaroadmapthatoutlinessteps intheprocess,andacorresponding timeline. Working closely with the Citys finance/accounting team, we identifypossibleareasofriskwhichmightrequirespecialcareandattention.Thisadvanceplanningtypicallyresults in amuchmore efficient audit process and yields an audit plan responsive to those risksidentified. We are committed toproviding ahigh levelof financial integritywith respect to yourfinancialstatements,andwedesignourauditplanaccordingly.UponselectionasauditorsfortheCitywewilldividetheauditintomanageablesegments,duringourpreliminary planning meetings. The natural segments will be along the major lines of businessactivitiesaswellasother required reportingunits. Utilizingprior financial information, the20112012budget,reviewsofthepriorauditorsworkpapersand interviewswithkeypersonnel,wewillidentifythesignificantauditareas.Significantauditareasaredeterminedbasedonperceivedriskoffinancialmisstatement,whetherbyerrororby fraud. ThesepreliminaryplanningmeetingswillbecompletedinamannerconsistentwiththecompletionoftimelinesassetforthintheCitysrequestforproposal.Aspartof thiswork,wewillprepare thedetailedauditplanandcoordinatewithCity staffon thepreparationofschedules,interimtestingandscheduling.Duringouraudit,wewillprovideopendialoguewithmanagement related to theprogressof theaudit. We will immediately communicate any issues related to the audit to prevent potentialdisagreements.Opencommunicationgenerallyeliminatesmiscommunicationsandisintegralinourprofessionalrelationship.Wealsoprideourselvesonbeingavailabletoansweranyquestionsduringourengagementandweareeasilyavailableforconsultationinperiodsbetweenaudits.

    OUR APPROACH

  • CRIcpa.com 27

    Furthermore, CRIwill act as your advisor. As stated earlier, our vast expertise in governmentalauditing and accounting allows us to provide sound advice related to unique governmentalaccountingmatters. Duringthecourseofourengagement,wewillconsistentlyseekopportunitiesfor improvement while recognizing problems or critical areas requiring added attention. Wewillprovide this information in two ways: 1) as part of our ongoing communication; and 2) via amanagementletterwhichwillbeissuedatthecompletionoftheengagementifnecessary.ResolutionofAuditorAccountingIssues Anyauditoraccounting issues thatareencounteredduring thecourseof theengagementwillbebroughttotheattentionofmanagementand/ortheauditcommittee,asdeemedappropriate.TheengagementteamwillworkwiththeCitysmanagement, inordertoresolveany issues inatimelyandacceptablemanner. If significantaccounting issuesareencounteredduring thecourseof theaudit and it is determined that additional time will be required of CRI personnel, we willcommunicate with the City an estimate of costs for additional services required, before thoseservicesarerendered.AuditCommunicationsAt the conclusion of the audit, in addition to written communications required to be issued inaccordancewithcurrentauditingstandardstothosechargedwiththegovernanceoftheCity,wewillpresent our audit findings and internal control deficiencies and recommendations to the auditcommittee.AnticipatedPotentialAuditProblemsWe do not anticipate any audit problems. Should any issues arise, we have the experience andknowledgetodetermineanappropriateresolution.

    OUR APPROACH

  • CRIcpa.com 28

    Our goal is to create mutuallyrewarding relationships. We trust, therefore, that our high quality,responsive servicewill yield returns far greater than your investment in our professional fees. Belowpleasefindourproposaloffeestoprovidetherequestedservices.Ourfeesfortheproposedservicesareasfollows:

    FiscalYear TotalFeePerFiscalYearSeptember30,2012 $35,000September30,2013 $36,000September30,2014 $37,000

    Theaboveproposed feesarethetotalallinclusivemaximumprice,peryear,andcontainalldirectandindirectcosts,includingalloutofpocketexpenses.IftheCityrequestsadditionalservicesoutsideofthisauditcontract,professionalfeehourlyratesareasfollows,butmaybenegotiateddependingontheprojectrequest:

    Classification HourlyRatePartner $225Manager $140Senior $100Staff $80ITSpecialist $200FraudSpecialist $200

    OurprofessionalfeesarebasedonthekeyassumptionsthattheCitywill:

    Ensure that the predecessor auditors workpapers will be made available for our timelyreview;

    Make availabledocuments andworkpapers for review at theCitysheadquarters location,althoughwemaychoosetoreviewatalternatelocations;

    Preparecertainschedulesandanalyses; Provideuswithsupportingdocumentsasrequested; AssistusinobtaininganunderstandingoftheaccountingsystemsoftheCity; Notexperienceasignificantchangeinbusinessoperations(i.e.adjustmentstothequotedfee

    maybenecessaryfor itemssuchas,butnot limitedto,significantacquisitions, investments,newserviceofferings,orsignificantchangesintheCitysICFR);and

    Notexperienceasignificantchange in financialreportingstandards (i.e.adjustmentstothequotedfeemaybenecessaryforitemssuchas,butnotlimitedto,adoptionofInternationalFinancialReportingStandards(IFRS)).

    FEES

  • CRIcpa.com 29

    ServicesProvided AnnualAudit

    A133Audit

    GFOACertif.

    ITAdvisory

    VariousAcctg.Services

    MunicipalGovernmentClientsCityofBirmingham,Alabama CityofEnterprise,Alabama CityofTuskegee,Alabama CityofMontgomery,Alabama CityofAndalusia,Alabama CityofBrundidge,Alabama CityofFlorala,Alabama CityofTallahassee,Florida CityofCallaway,Florida CityofPalatka,Florida CityofBonifay,Florida CityofPanamaCityBeach,Florida CityofLynnHaven,Florida CityofMexicoBeach,Florida CityofDestin,Florida CityofGainesville,Florida WaterandSewerIndustryClientsAlabamaDrinkingWaterFinanceAuthority AlabamaWaterPollutionControlAuthority AlabamaWaterandWastewaterInstitute,Inc. CityofEnterpriseWaterWorksBoard WaterWorksandSewerBoardofSelma,Alabama TheUtilitiesBoardoftheCityofOpp,Alabama TheUtilitiesBoardoftheCityofAndalusia,Alabama CoffeeCountyWaterAuthority UtilitiesBoardoftheCityofFlorala,Alabama StateAgencyClientsRetirementSystemsofAlabama AlabamaDepartmentofEconomicandCommunityAffairs AlabamaDepartmentofInsurance FloridaDepartmentofFinancialServices MississippiDivisionofMedicaid CountyGovernmentClientsWaltonCounty,Florida HolmesCounty,Florida PutnamCounty,Florida BayCounty,Florida GulfCounty,Florida AlachuaCounty,Florida JacksonCounty,Florida St.JohnsCounty,Florida SumterCounty,Florida WashingtonCounty,Florida BakerCounty,Florida DixieCounty,Florida GilchristCounty,Florida ClayCounty,Florida LevyCounty,Florida

    APPENDIX A ADDITIONAL CLIENT REFERENCES

  • 2

    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    Submitted by:

    John Shank, CPA, CVA Barfield, Murphy, Shank & Smith, P.C.

    1121 Riverchase Office Road Birmingham, AL 35244

    (205) 982-5513 [email protected]

  • 3

    December 6, 2012 Danny A. McCullars Jarrod Simmons City of Anniston 1128 Gurnee Avenue Anniston, AL 36202 Dear Danny & Jarrod, Barfield, Murphy, Shank & Smith (BMSS) would like to thank you for the opportunity to offer the City of Anniston solutions for its audit needs. We understand your need for quality audited financial statements, reports on compliance and internal controls and single audit report on compliance for each major program and are committed to issuing all within the timelines in your request for proposal. Having worked extensively with municipalities and government agencies for over 20 years, we understand the operational, financial, compliance and legal issues you face. However, we realize that each organization is unique and will focus on understanding the City of Annistons distinctiveness and needs. The following characteristics, which we can provide, are essential for a CPA firm to have in order to provide successful solutions for your accounting goals and objectives:

    Value Service, responsiveness and open communication Efficient and effective delivery of your audit reports Depth of not-for-profit experience Understanding of your needs

    Value You want to ensure you are receiving high-quality work at a reasonable value that is congruent with your budget. Our fee structure represents a streamlined and coordinated approach to providing high-quality services from experienced and knowledgeable auditors utilizing advanced technology. By working closely with your staff, committing to open communication and providing regular progress reports, we are able to maximize your investment in our services. BMSS has uniquely low employee turnover which allows us to minimize staff changes on engagements. Staff consistency allows us to create strong, long-term client relationships and provide efficient and effective audit solutions while reducing costs to our clients. We want to remove fees as a barrier to our discussions. If you have any questions or concerns in this regard, please feel free to discuss them openly with us.

  • 4

    Service, Responsiveness and Open Communication As a BMSS client, the City of Anniston will experience superior levels of service and responsiveness. We believe the key to a successful relationship is the day-to-day rapport that is developed between you and your BMSS team. Our client-focused approach centers on hands-on involvement from experienced, knowledgeable auditors (including a high level of shareholder involvement) who will invest the time required to understand the City of Annistons operations, people, goals and needs. Your BMSS audit team will be available to meet with your staff to discuss concerns and provide thorough insight, research and advice. Any issues encountered are promptly addressed and brought to your attention. Input and open communication are welcome and regular meetings are encouraged to share feedback related to your audit goals and objectives. Efficient and Effective Delivery of Your Audit Reports You deserve accountants who value communication, emphasize planning and can quickly understand and adapt to your changing needs to efficiently and effectively complete your audit engagements. We believe BMSS can provide the City of Anniston with this solution. Your goal is to have a high quality and timely audit performed. We are committed to beginning and finishing the audit by your delivery schedule. BMSS works closely with clients through open communication and regular progress reports to maximize efficiency, effectiveness and the value of our services. As a member of the AICPA Peer Review Program, we meet industry standards of quality control and have passed each of our peer reviews. Membership in the AICPA Center for Audit Quality and Governmental Audit Quality Center involves voluntarily adhering to additional training, quality control, and internal inspection which is a testament to our dedication to achieve audit quality. Client references will tell you they not only enjoy the efficient and effective way we conduct our audit engagements, but they truly enjoy the close relationship and rapport we maintain with them throughout the year. Our significant level of client loyalty and retention speaks volumes to our effectiveness, results and value. We have been told by clients that we exceed their expectations of an accounting firm. By providing you with an experienced team with deep technical knowledge, a high level of shareholder involvement and staff continuity on your engagements, we are able to efficiently and effectively meet your audit needs within your budget and timeframe.

  • 5

    Depth of Experience and Understanding of Your Needs The more training, knowledge and experience accountants have, the more familiar they will be with audit best practices, requirements and standards as well as your own specific needs. BMSS, known for having one of the premier auditing practices in Alabama, performs over 100 audits annually. By specializing in audit services, we maximize knowledge, training, research and implementation of best practices for our clients. Working with cities, counties, municipalities and government agencies with budgets from $1 - $500 million, our professionals have deep industry knowledge and technical experience working with government entities. We currently work with over 90 not-for-profit and governmental clients. Over the past 20 years, BMSS has helped municipalities identify ways to maximize the value they deliver to their residents and businesses and has developed practical solutions to internal control issues while delivering quality audit solutions. Because of the depth of our experience, we are well-versed on issues you may encounter and we bring a knowledge-based perspective on trends, opportunities, issues and regulations that frames our approach and addresses your needs and requirements. Why Should The City of Anniston Select BMSS As Their Audit Partner? Not all accounting firms are alike. We are not the standard black and white zebra. Our zebra stands out in the herd of accounting firms! The City of Anniston deserves accountants with knowledge and experience in providing quality services for organizations similar to yours. We offer qualified, knowledgeable and experienced accountants who are focused on service and communication and have a solid understanding of auditing municipalities. Our interest in your organization would go far beyond handling your audit - BMSS wants to be your trusted business and financial advisor and provide value-added services to you through educational seminars, newsletters and articles. BMSS is passionate about exceeding your expectations of a CPA firm and looks forward to working with you as your audit partner.

    Sincerely,

    Barfield, Murphy, Shank & Smith, P.C.

  • 6

    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    Table of Contents

    Page

    BMSS Profile ............................................................................................................................. 7

    Value: Fees & Understanding of Investment ............................................................................ 9 Qualifications: Experience & Understanding of Your Needs ................................................. 10 Qualifications: Your BMSS Team ............................................................................................ 12

    Qualifications: Client References ............................................................................................ 15 Solutions: Audit Approach & Plan .......................................................................................... 16 What Makes BMSS Different & Why Should You Select Us? ................................................. 22 Peer Review Report ................................................................................................................. 23

    Statement of Confidentiality The information in this document is considered by Barfield, Murphy, Shank & Smith to be confidential. We request that it be treated as such and in turn, assure you that any and all information provided to produce this proposal will be treated in the same fashion.

  • 7

    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    BMSS Profile BMSS recently celebrated its 20th anniversary of providing accounting services. Two decades highlighted by steady growth and professional recognition. In 1991, Don Murphy, Keith Barfield and John Shank decided to create a public accounting firm where employees can have a successful career that also supports their lives outside the office. The founders began the firm as the only employees, with zero clients, in the basement of one of their homes. Steve Smith joined in 1994. Now, twenty years later, BMSS has a staff of 9 shareholders, 95 employees (including 50 CPAs) and provides services to over 2,000 clients. BMSS is one of the largest locally-owned firms in Alabama and ranks in the Top 10 in size in the state and Top 200 in the United States. This expansion has not been through mergers or acquisitions but through organic growth contributed in part to the family-friendly policies and core values of the firm: Character, Family, Life/Work Balance, and Treating Everyone Professionally. BMSS has a high level of employee satisfaction, low turnover and the ability to recruit topnotch professionals. We utilize our low turnover to minimize staff changes. Staff consistency allows us to reduce costs to clients and ensure long-term relationships. The employee growth and low turnover has allowed BMSS to receive several recognitions including Top Small Workplace by The Wall Street Journal, Best Accounting Firm to Work For by Accounting Today, Best Place to Work by the Birmingham Business Journal and the Alfred P. Sloan Award for Business Excellence in Workplace Flexibility. We are proud to be named a Southern Hero by SouthernLINC Wireless and to have received the AICPA Public Service award for our commitment to our community as demonstrated through service projects and employee volunteer days. BMSS established sister companies Abacus IT Solutions (www.abacusit.com), Payroll & Benefit Solutions (www.pbspay.com) and Benefits Administration Services (www.bastpa.com) to further meet our clients needs. In 1998, BMSS was selected to join the prestigious BDO Seidman Alliance. This arrangement allows BMSS to access national resources to assist with specialized needs. Clients recognize the value of working with BMSS. Of the 2,000 clients currently served by BMSS, over 500 of those clients have been with BMSS for over 10 years. With BMSS, you will discover not all accounting firms are alike.

    BMSS Profile 20 years of success

    Top 10 in size in Alabama, Top 200 in U.S.

    95 employees, 50 CPAs

    Low employee turnover

    Top Small Workplace by The Wall Street Journal

    Best Accounting Firm to Work For by Accounting Today

    BDO Seidman Alliance

    Client loyalty & retention

  • 8

    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    BMSS Profile (continued) Independence Your engagement will be conducted in accordance with generally accepted auditing standards which require that an auditor be independent in both fact and appearance. BMSS meets the independence standards of the U.S. General Accountability Offices Government Auditing Standards as well as the American Institute of Certified Public Accountants Code of Professional Ethics and independence rules with respect to The City of Anniston, and we will confirm such independence. We obtain annual independence representations from all professional personnel, conduct independence training annually and consider any potential conflicts of interest during both client acceptance and engagement planning. There are no identified or known conflicts of interest between BMSS and the City of Anniston. License to Practice BMSS and all assigned key professional staff are properly licensed and in compliance with registration requirements to practice in Alabama. There have been no letters of comment, state or federal reviews, or disciplinary actions against our firm. BMSS is in good standing with the State Board of Accountancy. Dedicated to achieving the highest possible standards of audit quality, we are members of the AICPA Peer Review Program and have passed every peer review. Our last peer review was performed in November 2011. (See page 23.)

  • 9

    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    Value: Fees & Understanding of Investment You want to ensure you are receiving high-quality work at a reasonable value. Our fee structure is very competitive based on our streamlined and coordinated approach to providing high-quality services from knowledgeable and experienced professionals who maximize advanced technology. Based on our discussions, we expect our fees would be as follows:

    2012 2013 2014

    All-Inclusive Maximum Fee and Out-of-Pocket Expenses for Audit Services

    $55,000 $55,000 $55,000

    In addition to the services listed above, we will provide: Ongoing communications* Recommendations about areas in which we observe opportunities for improvement Formal presentation of reports if requested 24/7 access to your secure client portal to access, upload and download documents

    This quote assumes accounting conditions will remain relatively stable, you do not make significant changes in your internal controls, accounting or financial reporting systems, key personnel, and certain information will be available when requested. *If telephone assistance and communication do not involve extensive research, it is our policy not to charge for answering your question. If we have to perform research to find the answer, we will let you know and give you an estimate of fees (billed at our standard rates). Quoted fees are based on budgeted time expended by each professional at standard billing rates (listed below) which are very competitive and create value based on the experience and knowledge of our team and advanced technology utilized.

    2012 Rate $ Shareholder 250 315 Senior Accountant 100 140 Senior Manager 170 250 Staff Accountant 90 130 Manager 120 215 Bookkeeper 75 115 Supervisor 110 175

    Valid for 90 days from date of cover letter. Rates subject to change annually. Fees for future years would be expected to increase by our annual composite individual rate adjustments and the impact of accounting pronouncements, as applicable. We want to remove fees as a barrier to our discussions. If you have any questions or concerns, please feel free to discuss them openly with us.

  • 10

    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    Qualifications: Experience & Understanding of Your Needs BMSS Governmental Accounting Practice With over 100 years of combined experience and 20 years devoted to the not-for-profit and governmental industry, BMSS is known for having one of the premier accounting practices in Alabama. BMSS has over 95 employees, including 50 CPAs. Our Not-For-Profit & Governmental Practice Group contains 12 auditors (all working from our one office in Birmingham) within our management group and all are licensed as a CPA to practice in Alabama. (See your team on pages 12-14.) Our firm is committed to meeting the industry standards of corporate governance, quality control and industry best practices. We stay current on laws and regulations applicable to not-for-profits and government entities. At BMSS, we annually perform over 100 audits ranging from $1 million to over $2 billion in revenues and have performed A-133 audits for eight different organizations and agencies. Membership in the AICPA Center for Audit Quality and Governmental Audit Quality Center involves voluntarily adhering to additional training, quality control, and internal inspection and is a testament to our dedication to audit quality. The Governmental Audit Quality Center is designed to help CPAs meet the challenges of performing quality audits in this unique and complex area. We focus on serving clients of a similar size and scope as the City of Anniston and currently provide accounting, auditing and tax solutions to over 90 organizations and governmental agencies. (See references on page 15). To further our commitment to the industry, we are active in the Alabama Association of Nonprofits, Government Finance Officers Association and the BDO Seidman Alliance Non-Profit and Governmental Industry Groups. (See page 11 for more info on BDO.) By specializing in not-for-profit and governmental accounting and auditing, we maximize knowledge, training, research and implementation of best practices for our clients. The power of not-for-profit industry experience is the perspective we bring to help you leverage your own capabilities and resources. We are passionate about helping you succeed and exceeding your expectations of an accounting firm.

    BMSS Experience:

    Over 100 years combined

    Perform over 100 audits annually

    Meet quality control standards of AICPA Peer Review

    AICPA Center for Audit Quality and Governmental Audit Quality Center

    20 years devoted to not-for-profit and governmental industry

    Focus on clients of similar size and scope - over 90 not-for-profit and governmental clients

    Member of Alabama Association of Nonprofits and Government Finance Officers Association

  • 11

    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    Qualifications: Experience & Understanding of Your Needs (continued)

    BDO Seidman Alliance The BDO Seidman Alliance is a nationwide association of independently owned local accounting firms with similar client service goals. By supplementing our services, the BDO Seidman Alliance brings us tools to better serve our clients with greater flexibility, efficiency and cost effectiveness. As an independent member firm, our BDO Seidman Alliance allows BMSS to:

    Enhance our client services and broaden our capabilities; Gain greater technical knowledge in specialty areas; Utilize governmental accounting specialists; Access the most up-to-date technical information; Participate in the latest training programs; and Provide our clients with key business contacts throughout the U.S.

    This arrangement within the Alliance is very similar to the arrangement that exists between national firms with multiple offices. We do not anticipate utilizing the Alliance for your engagement team. However, BDO and the Alliance firms are available as technical resources or for any future specialized needs you may have. BDO (www.bdo.com), the fifth largest accounting network in the world, serves clients through 41 offices and more than 400 independent Alliance firm locations nationwide. As the U.S. independent member firm of BDO International Limited, BDO serves multi-national clients through a global network of 1,100 offices in 135 countries. BDOs commitment to the not-for-profit industry led to the development of the Institute of Nonprofit Excellence (the Institute) in Washington, D.C. The Institute develops strategies for tax-exempt organizations and disseminates information pertaining to accounting and business management. BDO provides information on impending changes such as pension administration and new GASB and FASB implementation. With over 2,000 clients in the government and not-for-profit industries, BDO is one of the industry leaders in providing OMB Circular A-133 audits to individual organizations that have corporate Federal funding in excess of $10 million. BMSS can utilize BDO and our Alliance partners to assist in complex transactions or draw upon our close contacts at regulatory institutions or professional service organizations to provide you with quick responses when timing is critical. We can provide you access to BDOs Acsense, a complimentary series designed to assist committee members and financial executives in keeping up-to-date on the latest corporate governance and financial reporting developments through webinars and self-study courses. The BDO Seidman Alliance gives you the resources, coverage, and experience of a national accounting firm, while we provide you with exceptional local service and rates.

  • 12

    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    Qualifications: Your BMSS Team The BMSS Not-For-Profit & Governmental Practice Group provides you with qualified, knowledgeable auditors who can quickly adapt to meet your changing needs. Because of our extensive experience, we are well-versed on various issues you may encounter. BMSS takes the lead in research and in educating our clients by providing seminars, newsletters and articles. As a result, we are available to keep you updated on legislative changes, recent cases and issues both from a technical and practical viewpoint. Commitment to Staff Development and Continuity BMSS devotes significant resources to train and provide our team with the necessary Continuing Professional Education (CPE) to stay on top of changes that affect our profession and the areas in which they practice. Because of our uniquely high level of employee satisfaction, we have extremely low turnover. We utilize our low turnover to strive to dedicate the same team to serve you each year to maximize our experience with your facility, staff and procedures. Staff continuity on year-to-year engagements allows us to create strong, long-term client relationships and provide efficient and effective accounting solutions while reducing costs to our clients. Your BMSS team members participate in the following CPE related to not-for-profit and governmental accounting and auditing:

    Accounting & Auditing Update Audit Documentation Auditing Non-Profits: Tips & Traps Becoming a Better Auditor Conducting Governmental Audits under

    GAAS, GAGAS and Single Audit Fieldwork & Planning Logistics

    Focus on Fraud Fraud Risk Assessment Non-Profit Accounting & Auditing Non-Profit Accounting & Reporting from

    Start to Finish Obtaining and Evaluating Audit Evidence

    Your BMSS team members participate in these related organizations:

    AICPA Center for Audit Quality AICPA Governmental Audit Quality Center Alabama Association of Nonprofits BDO Seidman Alliance Governmental Industry Group BDO Seidman Alliance Nonprofit Industry Group Government Finance Officers Association of Alabama

  • 13

    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    Qualifications: Your BMSS Team After carefully reviewing your needs, we identified the professionals to lead your BMSS audit team. The professionals selected are all licensed to practice as a CPA in Alabama, have established track records with governmental clients, strong technical abilities and outstanding leadership and communication skills. John Shank, CPA, CVA Founding Shareholder

    As audit engagement shareholder, John Shank will lead the team in providing you with quality services and ensure that you receive the right level of resources. He will be the primary decision maker on key audit issues.

    John brings over 26 years of experience to you and is one of the shareholders who founded BMSS in 1991. He leads our Not-For-Profit & Governmental Practice Group and serves as lead shareholder on over 50 BMSS audit clients.

    He is the shareholder for the City of Moody, Southeastern Bible College and Talladega Randolph Clay Child Care Corporation and has previously worked on the audits for the City of Leeds, City of Montgomery, City of Enterprise, City of Autaugaville and the Town of Indian Springs.

    As a Certified Valuation Analyst (CVA), John performs business valuations during the purchase or sale of a business, succession planning and estate taxes.

    John is Past Chair of the Alabama Society of CPAs, is a trustee with the Birmingham Business Alliance and is on the board of the Birmingham Venture Club. He has been awarded "Who's Who in Law and Accounting" and "Top 40 Under 40" by the Birmingham Business Journal.

    B.A. Accounting with Honors Huntingdon College

    Derrel G. Curry, CPA Concurring Audit Shareholder Derrel Curry will serve as the concurring shareholder and will be responsible for the independent quality review and for making certain that the technical audit matters have been properly addressed by the engagement team.

    Derrel has 29 years of experience providing auditing services as well as accounting and consulting on financial reporting and operational issues, with a focus on governmental and not-for-profit clients.

    He serves as shareholder for the Bessemer Airport Authority and Shelby County Community Corrections and has worked on special projects for the City of Homewood.

    Derrel serves as the BMSS Accounting & Auditing Quality Control Shareholder and leads a monthly Accounting & Auditing Update for all BMSS auditors. He has served numerous clients who are of the size and complexity of the City of Anniston throughout his career. Prior to joining BMSS, Derrel worked with Ernst & Young, LLP and was responsible for the audits of significant clients.

    He serves on the Accounting Advisory Boards for Samford University, UAB and Troy University and was inducted into the Accounting Hall of Fame at Troy University.

    B.S. Accounting with Honors University of Alabama

  • 14

    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    Qualifications: Your BMSS Team Patrick Bowman, CPA Senior Manager, Engagement Leader Patrick Bowman will serve as the engagement leader in providing guidance to the team and coordinating resources. He will perform reviews of the work performed and will be a key component of the engagement planning.

    Patrick has 13 years of public accounting experience and joined BMSS in 2001. He works with governmental and not-for-profit clients providing accounting & auditing services, budgeting and forecasting and internal control reviews and serves as engagement leader on the majority of our governmental and not-for-profit clients.

    He is the engagement leader for the Bessemer Airport Authority, City of Moody, Shelby County Community Corrections, Southeastern Bible College and Talladega Randolph Clay Child Care Corporation, the A-133 audits for Family Connection, Inc. and Habitat for Humanity of Birmingham and previously worked with the City of Leeds.

    Patrick is responsible for overseeing CPE efforts for BMSS auditors and monitoring updates in accounting techniques and pronouncements.

    He serves on the Board of Directors of the Alabama Association of Nonprofits and is a member of the Government Finance Officers Association of Alabama.

    B.A. and Masters in Accounting Troy University

    Stephen N. Von Hagel, CPA Audit Manager

    Stephen Von Hagel has been providing accounting services for 8 years, with a focus on audits, single audits and internal control documentation for government agencies. He manages the audits for the City of Moody, Shelby County Community Corrections and Southeastern Bible College and the A-133 audits for Family Connection, Inc. and Habitat for Humanity of Birmingham.

    He serves on his church finance council, leads the BMSS basketball team and is a member of the ASCPA Leadership Program.

    B.S. Commerce and Business Administration Master of Accountancy University of Alabama Ashley Caldwell, CPA Senior Accountant

    Ashley Caldwell began her accounting career as an intern at BMSS in 2007. Ashley has 5 years of experience providing accounting and auditing services with a focus on not-for-profit and governmental clients. She works on the audits for the City of Moody and the Birmingham Business Alliance, the Single Audit for Entegreat, Inc. and has worked on the audit for the City of Leeds.

    Ashley is active in BMSS employee recruiting and training new employees on audit practices, standards and software.

    B.S. Accounting Master of Accountancy University of Alabama

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    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    Qualifications: References of Similar Clients Bessemer Airport Authority Financial statement compilation client since 2007 Shareholder: Derrel Curry Engagement Leader: Patrick Bowman Supervisor: Marcie Morris Total Hours: 30 Clinton Harris, (205) 424-7234 City of Moody & GUSC Board Audit client since 1991 Shareholder: John Shank Engagement Leader: Patrick Bowman Manager: Stephen Von Hagel Total Hours: 302 Patsy Beard, (205) 640-2503 Shelby County Community Corrections Audit client since 2007 Shareholder: Derrel Curry Engagement Leader: Patrick Bowman Manager: Stephen Von Hagel Supervisor: Marcie Morris Total Hours: 150 David Horn, (205) 669-8965

    Southeastern Bible College Audit and A-133 Audit client since 2004 Shareholder: John Shank Engagement Leader: Patrick Bowman Manager: Stephen Von Hagel Supervisor: Marcie Morris Total Hours: 205 Paul Willard, (205) 970-9206 Talladega Clay Randolph Child Care Corporation Audit, A-133 Audit & 401k Audit client since 2008 Shareholder: John Shank Engagement Leader: Patrick Bowman Manager: Stephen Von Hagel Supervisor: Marcie Morris Total Hours: 210 Angela Thomas, (256) 362-3852

    Client Testimonials We have been a very satisfied client of BMSS since 2000. We have found the staff to be knowledgeable and professional in all aspects. Our financial statements are prepared on a timely basis along with various other reports completed during the year. More importantly is the character and integrity of BMSS who has earned the trust and respect of our senior management. The different ideas presented to us by BMSS have benefited us more than we could have ever imagined. Their promptness is impeccable and something we were not used to in the past with another firm. I have been very impressed with the quality of service and personnel and their dedication to client service. I highly recommend any of the numerous services provided by BMSS. From an accounting firm, I expect three things: Independence from management, Value, & Timeliness. I believe that BMSS is a strong group of auditors and tax professionals who provide a good value for the money. I rely on their judgment as a check and balance. Ive worked with them since 1999.

    Client Testimonials: Knowledgeable and

    professional

    Very timely

    Character & integrity

    Earned trust and respect of senior management

    Impeccable promptness

    Benefitted from different ideas presented

    Dedicated to client service

    Good value

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    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    Solutions: Approach & Plan Seamless Transition

    Our team members are experienced with the transition of new clients and can readily resolve problems that may occur during this change. We devote the highest priority to the careful and thoughtful planning required to help ensure a smooth audit transition to BMSS with the least possible disruption to your personnel and operations. BMSS has extensive, first-hand experience in transitioning services from various accounting firms. We view the transition as an opportunity to provide a fresh perspective of your accounting systems, controls and operations and are confident we have the experience and resources required to complete the transition in a timely, efficient and seamless manner. Service, Responsiveness and Open Communication The City of Anniston will continue to experience a superior level of service and responsiveness. As a BMSS client, you will note:

    You will be treated with integrity and professionalism. You will work with knowledgeable, personable and experienced staff. Our client-focused approach centers on hands-on involvement from experienced,

    knowledgeable accountants who will invest the time required to understand your operations, people and needs.

    We encourage regular meetings to ensure we contribute meaningful ideas, strategies and solutions to define and prioritize timetables and designate responsibility to proper individuals.

    We promptly address issues and report back to you. We welcome open communication, input and feedback. Our goal is to exceed your expectations of a CPA firm.

    Efficient & Effective Delivery of Your Audit Reports Efficient and effective delivery of successful audit engagements at the best value to the City of Anniston depends on certain factors that we can provide including:

    Staff continuity on your engagements; Significant technical experience; Advanced approach to utilizing state-of-the-art technology; Extensive and timely planning; Close coordination with you; Quality control; and Emphasis on developing quality recommendations to you regarding financial and

    operational matters.

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    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    Solutions: Approach & Plan (continued) Commitment to Open Communication BMSS believes in the importance of open communication and we will make ourselves available to you to address issues, questions and to provide the appropriate guidance. Your BMSS team is available to meet with you throughout the year, not just at the start or conclusion of the audit engagement. Our policy is to respond to voicemail and email within 24 hours. Even if we do not have an answer to your question, we will respond to give you an estimated time frame. We understand the importance of communicating relevant information to you on a timely basis. Because your staff has schedules and other matters to deal with and you need to conduct business with minimal disruptions, it is our policy to schedule meetings in advance to keep management informed of the progress. Your BMSS team will conduct pre-audit meetings with you and pertinent staff, management or committee members. This meeting will be early in the planning phase of the engagement, to discuss and develop a detailed listing of information requested, establish timetables, designate responsibility to proper individuals and discuss other matters necessary. By identifying and resolving issues on a continuing basis, we help address these matters before they possibly develop into problems, surprises or delays. Progress meetings will be scheduled at mutually convenient times. Our quality control process will be accomplished without causing surprises as our quality control review members are involved throughout the process. Working closely with your staff allows us to eliminate duplication of effort, create a more efficient and effective approach to accounting and to strive to maximize your investment in external services. Additionally, our goals are congruent with yours - fair and meaningful financial statements prepared under a strong system of internal control by honest management. Maintaining open communications ensures continual and effective challenge of the audit approach, which we believe is beneficial in driving efficiency from the top down. We want you to feel comfortable communicating with everyone on your team. Continuous feedback is encouraged and input is always welcome.

    Communication: Ongoing access to your

    BMSS team

    Timely basis

    Pre-audit meeting

    Progress conferences

    Keep management informed of progress

    Identify and resolve issues on continuing basis

    Continuous feedback

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    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    Solutions: Approach & Plan (continued) Audit Methodology BMSS utilizes a five-step approach to provide efficient, effective and quality audit services:

    Extensive planning; On-going open communication; Close coordination with you, your staff and management; State-of-the-art techniques utilizing advanced technology; and Timely, appropriate recommendations and management letters.

    Our approach is a risk-based combination of substantive and compliance auditing using the most widely accepted electronic auditing guidance in the U.S. This fosters an active understanding of your strategic direction, particular risks, control strengths and weaknesses and other significant matters pertaining to the audit cycle, which is critical to audit quality. BMSS follows a top-down, risk-based approach to assess the entity level risks and controls in order to assess the overall general risks and controls (including IT general controls) and to identify specific financial reporting risks. The information gathering analysis performed by the audit team establishes a risk assessment for each significant financial statement area. This risk assessment also takes into account the general risks and controls (including IT general controls) identified in the analysis. By utilizing our fieldwork when we are at your facility learning more about your organization, together with our understanding of the governmental industry, we can provide insightful and constructive suggestions that can result in improved operations, as well as improved accounting procedures and controls. Our five-step approach allows us to deliver an audit tailored to the specific and unique facts and circumstances surrounding the City of Anniston. Overall Supervision To maximize the effectiveness of our services, we exercise a high degree of oversight, supervision and shareholder involvement. Planning is performed by everyone on the engagement including the shareholder. The engagement leader exercises the day-to-day supervision and oversight and keeps the shareholder updated during the engagement and will be communicating with you regarding any issues that arise.

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    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    Solutions: Approach & Plan (continued) Audit Fieldwork Fieldwork will be scheduled to meet your reporting deadlines. To ensure the most cost effective and efficient audit for our clients, BMSS has made a significant commitment to utilizing state-of-the-art technology in the audit process. Our investment in technology allows us to focus on providing quality technical services and add value to our clients. ProSystem Engagement electronically interfaces with client general ledger systems for preparation of trial balances and financial statements. Our automated workflow management system allows staff to know the status of every project and allows us to easily provide clients with project updates. With our employees having secure remote connections, they can quickly access data and software from their current location. Paperless and electronic documentation, along with online bank confirmations, saves time and costs. (Please see additional information about how BMSS provides value through our advanced technology on page 21.) Information Requested Your BMSS audit team will request internal control narratives be provided to us by your accounting staff and we will also provide internal control questionnaires to be completed by you and your accounting staff. We will interview appropriate individuals for fraud considerations and obtain an understanding of the internal control system. We will test payroll and insure that individuals in the organization's employment are being paid an appropriate amount. Using a variety of analytical procedures, we will analytically test both balance sheet and income statement accounts. We use a variety of sampling techniques to perform detail testing on account balances and will also use sampling to test processes and procedures. We will inspect contracts, agreements, funding source agreements, and any other information that affects the revenues and expenses. We will research single audit compliance requirements and design our tests appropriately in order to issue the A-133 reports and will select the appropriate sample sizes in order to test those requirements. We will test the revenues of the organization by examining the original documentation for each major category of revenue. To minimize disruption of your staff, we provide a detailed Client Assistance Letter in advance that contains information we will need to perform our procedures so you can have time to gather requested information. We have designed our audit fees with the expectation that most of the information requested in the Client Assistance Letter will be available when we arrive for fieldwork. If needed, we can discuss all the items with you in the letter.

  • 20

    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    Solutions: Approach & Plan (continued) Audit Report Preparation and Delivery We do not anticipate any potential problems. If we become aware of any irregularities and illegal acts, we will report those in writing to the Finance Director. Your BMSS team will meet with management at an exit conference at the end of fieldwork to review drafts of the financial statements and management letter. Once management has had a chance to thoroughly review the financial statement drafts and BMSS has performed its quality control process, we will prepare the annual financial statements with all required note disclosures, including all statements and supplemental information required, and express an opinion on the fair representation of the financial statements in conformity with GAAP. We will issue a management letter to make recommendations related to financial statements, internal controls, management controls, operations, accounting systems, compliance issues including material weaknesses and significant deficiencies and identifying possible noncompliance with legal provisions as well as any other areas in which we may have seen any opportunities for improvement. We will prepare a Single Audit report on the financial statements, internal controls and compliance in accordance with GAS and OMB A-133. At completion, BMSS will provide the requested 10 quantities of the bound audit reports, including management letters, as well as making the high quality PDF file reports available to you in electronic format via our secure client portal. If requested, BMSS will make a formal presentation of the report to the Board.

    Workpaper Review & Access We will be happy to make our workpapers available as requested. Because our audit workpapers are maintained in a paperless environment, the easiest way for someone to review our workpapers is electronically. We are glad to provide hard copies of workpapers requested. Workpapers will be retained for a minimum of five years from the date of the written audit.

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    OUR PROPOSED REQUEST TO SOLVE YOUR AUDIT NEEDS

    Solutions: Approach & Plan (continued) Use of Advanced Technology At BMSS, we are an early adopter of industry-leading software, processes and programs. We place significance on utilizing state-of-the-art technology including a high-speed fiber network in our office and VoIP system for faster and more efficient communications. An automated workflow management system allows our staff to know the exact status of every project and allows us to easily provide clients with project updates. With our employees having secure remote connections, they can quickly access data and software from their current location. Paperless and electronic documentation, along with online bank confirmations, saves time and costs. BMSS has used paperless documentation and processing since 2003 and received the Practical Accountant Practice Innovation Award for our early, successful paperless adoption. We have helped clients implement paperless processes in their offices as well. Robust online research databases and industry-leading software allow us to handle more complex and technical accounting engagements. Our sister company, Abacus IT Solutions, is available for data mining, reporting consultation and business intelligence, as well as consulting on your current hardware, software and IT infrastructure. Your private data is critical to protect. Laptops are secured with two-factor identification password protection. Secure networking of our computers and servers allows us to share information without having to use higher risk removable storage devices. We destroy any electronic or hard copy information we obtain other than what is necessary to maintain. BMSS offers a secure client portal which you can access 24/7 at no additional cost. In your portal, you can access electronic copies going back 10 years (if applicable) and upload your own files for secure recordkeeping. Our investment in technology allows us to focus on providing quality technical services and adding value to our clients.

    Use of Advanced Technology: Early adopter of industry-leading

    software, processes, and programs

    High-speed fiber network

    VoIP

    Workflow management system for quick status updates

    Paperless documentation

    Paperless processing

    Online bank confirmations

    Robust online research