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HomeMy WebLinkAbout1997-149ORDINANCE NO. % -JJ AN ORDINANCE OF THE CITY OF DENTON, TEXAS, AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT BETWEEN THE CITY OF DENTON AND DELOITTE AND TOUCHE LLP FOR INDEPENDENT AUDITS; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION I. That the City Manager is hereby authorized to execute, on behalf of the City, a Professional Services Agreement For Auditing Services between the City of Denton and Deloitte and Touch LLP for independent auditing services, a copy of which is attached hereto and incorporated by reference herein. SECTION II. That the expenditure of funds as set forth in the Agreement are hereby authorized. SECTION III. That this ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this then day of 1997 a 310 XILLER, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROftD AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY BY: PROFESSIONAL SERVICES AGREEMENT FOR AUDITING SERVICES STATE OF TEXAS § COUNTY OF DENTON § THIS AGREEMENT is made and entered into as of the day of , 1997, by and between the City of Denton, a Texas Municipal orporation, with its principal office at 215 E McKinney Street, Denton, Denton County, Texas 76201 (hereinafter referred to as "CITY") and Deloitte & Touche LLP, a Limited Liability Partnership, with an office at 2200 Ross Avenue, Suite 1600, Dallas, Texas, 75201 (hereinafter referred to as "AUDITOR") acting herein, by and through their duly authorized representatives WHEREAS, CITY desires to engage AUDITOR to provide audit services as herein defined, and WHEREAS, AUDITOR is willing to provide such services to CITY, NOW THEREFORE, in consideration of the promises and mutual undertakings herein contained, the parties agree as follows ARTICLE I ENGAGEMENT OF AUDITOR The CITY hereby contracts with AUDITOR, as an independent contractor, and the AUDITOR hereby agrees to perform the services herein in connection with the engagement as stated in the Articles to follow, with diligence and in accordance with the highest professional standards customarily obtained for such services in the State of Texas The professional services to be performed by Auditor are in connection with the engagement described in Article II below ARTICLE II SCOPE OF SERVICES The AUDITOR shall perform the following services A The AUDITOR will perform the annual audit of CITY's general purpose financial statements Such audit will be conducted in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller of the United States, the Single Audit Act of 1996, and the applicable OMB Circular, Audits of State and Local Governments, and any other applicable regulations as set forth by federal, state, or local regulating bodies B AUDITOR will issue a management letter to CITY reporting any material weaknesses in CITY's internal accounting controls discovered during the annual audits of CITY's financial statements C AUDITOR will perform the annual compliance audit of CITY's federal financial assistance programs Such audit will be conducted in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller of the United States, OMB's Compliance Supplement for Single Audits of State and Local Governments, the applicable OMB Circular, Audits of State and Local Governments, and AICPA Statement on Auditing Standard No 63, Compliance Auditing Applicable to Governmental Entities and Other Recipients of Governmental Financial Assistance, and any other applicable regulations as set forth by federal, state, or local regulating bodies D AUDITOR will perform all professional services as defined in the Proposal document attached hereto as Exhibit "A", which is PAGE 2 incorporated by reference herewith, together with those professional services outlined in the annual, officially accepted and agreed -upon Engagement Letters to be attached as Amendments Number One (1) through Five (5) hereto These five (5) amendments will be attached at the beginning of each annual engagement E During any fiscal year covered by this Agreement, CITY may request AUDITOR to provide services in addition to the services provided hereunder AUDITOR may, at its option, agree to provide such additional services upon terms and conditions as mutually agreed upon and outlined in Appendix A Rates in Appendix A reflect the first fiscal year (1996-97) rates These rates will be adjusted annually using the Consumer Price Index for the Dallas metroplex for March of each year March 1997 CPI will be used as the base year ARTICLE III DURATION OF AGREEMENT This Agreement for audit services, as specified herein, for the financial statements of CITY pertains to CITY's fiscal years ending September 30, 1997, September 30, 1998, and September 30, 1999, and, if CITY exercises its option pursuant to Article VI, CITY's fiscal years ending September 30, 2000 and September 30, 2001 This Agreement may be sooner terminated in accordance with the provisions hereof If the CITY exercises the two option years, the extension shall be considered part of this Agreement This extension will be documented by the CITY's receipt and official written acceptance of the annual engagement letter for the fiscal years ending September 30, 2000 and September 30, 2001 ARTICLE IV COMPLETION OF SERVICES AUDITOR's financial and compliance audit work shall be completed no later than December 23, after the CITY's fiscal year PAGE 3 end The City's Comptroller should be able at this time to begin preparation of the Comprehensive Annual Financial Report ("CAFR") The CAFR should be available for print by the 3rd Monday in January following the end of the latest fiscal year AUDITOR's completion of the compliance and audit work for the CITY is sub3ect to availability of the CITY's records The AUDITOR shall make all reasonable efforts to complete the services set forth herein as expeditiously as possible, and to meet the schedule established by CITY, acting through its City Manager or his designee ARTICLE V RESPONSIBILITIES OF CITY CITY understands that the proper and timely completion of AUDITOR's services hereunder require the reasonable cooperation of CITY (including, without limitation, its agencies, and their respective officers, directors, employees, other personnel and agents) CITY agrees to provide all such reasonable cooperation requested by AUDITOR, including, without limitation, the following A Access to, and/or copies of, CITY's books and records, B Access to CITY personnel, C Office space and access to support services such as copying and telephone, D Written representations from CITY's attorneys, both internal and external, the latter may bill CITY for such services, E Written representations from CITY about the financial statements and other matters, and F Closing of CITY's books and records of account in accordance with laws, regulations and professional standards applicable to the services provided hereunder CITY agrees with the provisions contained in the engagement letters for each of the fiscal years, as will be attached in Amendments One (1) through Five (5) at the beginning of each annual engagement PAGE 4 ARTICLE VI RENEWAL CITY may request renewal of this Agreement for two additional one-year periods for CITY's fiscal years ending September 30, 2000 and September 30, 2001 CITY shall exercise its renewal option for the one year period ending September 30, 2000 by March 31, 1999 CITY shall exercise its renewal option for the one year period ending September 30, 2001 by March 31, 2000 If CITY does not elect to exercise said option for renewal of this Agreement for said two additional one year periods, then CITY and AUDITOR agree that CITY may then issue requests for proposals for the fiscal years ending September 30, 2000 and September 30, 2001 ARTICLE VII COMPENSATION A CITY shall pay AUDITOR for time charges and expenses incurred AUDITOR'S standard hourly rate varies according to the degree of responsibility involved and the experience level of the personnel assigned to CITY's audit Except as provided hereunder, AUDITOR's fees for the performance of the services described in Article II for the fiscal years ending September 30, 1997, 1998, 1999, and if applicable, option years 2000 and 2001, shall not exceed these respective amounts $43,000 for 1997, $44,618 for 1998, $46,266 for 1999, and if applicable, $47,730 for option year 2000, and $49,400 for option year 2001 B CITY and AUDITOR recognize that the scope of services and compensation under this Agreement are predicated upon (i) current audit requirements imposed by laws, regulations and professional standards relating to such services, (ii) expectations of reasonable cooperation with AUDITOR by CITY pursuant to this Agreement, and (iii) the absence of any irregularities or circumstances which might necessitate the extension of audit services beyond the normal scope of auditing services PAGE 5 C Should (i) irregularities, (ii) the absence of such reasonable cooperation, (iii) increase in the level of services required under applicable laws, regulations or professional standards, or (iv) other unforeseen conditions be encountered which might necessitate the extension of auditing work beyond the scope of normal auditing procedures, AUDITOR agrees to advise CITY promptly in writing of the circumstances and to request an equitable adjustment in the maximum fee before significant additional time is incurred by AUDITOR Any such requests for adjustments shall be in writing and shall contain an explanation of why the adjustments are necessary D CITY and AUDITOR agree to negotiate in good faith to determine an equitable adjustment in the maximum fee Should CITY and AUDITOR be unable to agree upon an equitable adjustment within fourteen (14) days of AUDITOR's written request, or such other time period as agreed upon in writing by CITY and AUDITOR, either party may, notwithstanding any other provision in this Agreement, terminate this Agreement upon thirty (30) days written notice to the other party CITY shall be liable for time charges and expenses actually incurred by AUDITOR except for any such additional time and expense which has been incurred as a result of the circumstances necessitating the adjustment ARTICLE VIII BILLING AND PAYMENT A AUDITOR shall submit periodic detailed itemized invoices for time charges and expenses incurred as the services hereunder are performed Such invoices are payable upon presentation CITY will be in material breach of this Agreement if CITY's account becomes ninety (90) days or more overdue AUDITOR may, at its sole option and without waiver of any rights pursuant to the termination provision in this Agreement or otherwise, suspend its services and resume them upon receipt from CITY of the full amount due AUDITOR which has been submitted by invoice to CITY B Partial payments to the AUDITOR will be made on the basis of PAGE 6 detailed itemized statements rendered to and approved by the CITY through its City Manager or his designees, however, under no circumstances shall any statement for services exceed the value of the work performed by AUDITOR at the time a statement is rendered C Nothing contained in this Article shall require the CITY to pay for any work which is not submitted in compliance with the terms of this Agreement CITY shall not be required to make any payments to the AUDITOR when AUDITOR is in material default under this contract for more than 30 days after receipt of written notice of such default from CITY D It is specifically understood and agreed that AUDITOR shall not be authorized to undertake any work pursuant to this Agreement which would require additional payments by the CITY for any charge, expense or reimbursement above the maximum not to exceed fee as stated without first having obtained written authorization from the CITY ARTICLE IX OWNERSHIP OF WORKPAPERS, DOCUMENTS, AND PROPERTY A All workpapers of AUDITOR shall remain the property of AUDITOR In addition, to the extent that AUDITOR utilizes any of its property (including, without limitation, any hardware or software of AUDITOR or any proprietary or confidential information or trade secrets of AUDITOR) in performing the services hereunder, such property shall remain the property of AUDITOR, and CITY shall acquire no right or interest in such property B Except for the workpapers and other documentation described in Article IX A above, all documents prepared or furnished by the AUDITOR for delivery to CITY pursuant to this Agreement are instruments of service and shall become the property of the CITY upon the termination of this Agreement, and full and final payment of all undisputed amounts owed AUDITOR hereunder The AUDITOR is entitled to retain copies of all such documents PAGE 7 ARTICLE X INDEPENDENT CONTRACTOR AUDITOR shall provide services to CITY as an independent contractor, not as an employee of the CITY AUDITOR shall not have or claim any right arising from employee status ARTICLE XI INDEMNITY PROVISION AUDITOR shall indemnify and save and hold harmless the CITY and its officers, agents, and employees from and against any and all liability, claims, demands, damages, losses and expenses, including but not limited to court costs and reasonable attorney fees incurred by the CITY in each case solely for injury, death and physical damages to real or tangible personal property to the extent resulting from the negligent acts or omissions of the AUDITOR or its officers, partners, agents, or employees in the execution, operation, or performance of this Agreement, except that the indemnity provided for in this Article shall not apply to any liability resulting from the sole negligence of CITY, its officers, agents, employees or separate contractors, and in the event of joints and concurrent negligence of both AUDITOR and CITY, responsibility, if any, shall be apportioned comparatively in accordance with the laws of the State of Texas As a condition to the foregoing indemnity obligation, CITY shall provide AUDITOR with prompt notice of any claim for which indemnification shall be sought hereunder and shall cooperate in all reasonable respects with AUDITOR in connection with any such claim AUDITOR shall be entitled to control the handling of any such claim, with full disclosure of any and all claims, and actions taken thereunder, to the CITY, and AUDITOR shall be entitled to defend or settle any such claim, in its sole discretion, with counsel of its own choosing Nothing in this Agreement shall be construed to create a PAGE 8 liability to any person who is not a party to this Agreement and nothing herein shall waive any of the party's defenses, both at law or equity, to any claim, cause of action or litigation filed by anyone not a party to this Agreement, including the defense of governmental immunity, which defenses are hereby expressly reserved ARTICLE XII INSURANCE During the performance of the Services under this Agreement, AUDITOR shall maintain, throughout the duration of this Agreement, the following insurance A Professional Liability Insurance with policy limits of not less than $1,000,000 annual aggregate, with respect to negligent acts, errors, or omissions in connection with the professional services performed by AUDITOR pursuant to this Agreement B AUDITOR shall furnish insurance certificates or insurance policies at CITY's request to evidence such coverage The insurance policy shall contain a provision that such policy shall not be cancelled or modified without thirty (30) days prior written notice given by the Insurance carrier to CITY and AUDITOR In the event of cancellation or non -renewal of such coverage, AUDITOR shall, prior to the effective date of the non -renewal or cancellation, deliver to CITY a Certificate of Insurance evidencing that a substitute policy furnishing the same coverage is in full force and effect ARTICLE XIII ARBITRATION AND ALTERNATE DISPUTE RESOLUTION The parties may agree to settle any disputes under this Agreement by submitting the dispute to arbitration or other means of alternate dispute resolution such as mediation No arbitration or alternate dispute resolution arising out of or relating to, this PAGE 9 Agreement involving one party's disagreement may include the other party to the disagreement without the other's approval ARTICLE XIV TERMINATION OF AGREEMENT A Notwithstanding any other provision of this Agreement, either party may terminate by giving thirty (30) days advance written notice to the other party B This Agreement may be terminated in whole or in part in the event of either party substantially failing to fulfill its obligations under this Agreement No such termination will be effected unless the other party is given (1) written notice (delivered by certified mail, return receipt requested) of intent to terminate and setting forth the reasons specifying the nonperformance, and not less than 30 days to cure the failure, and (2) an opportunity for consultation with the terminating party prior to termination C I£ the Agreement is terminated prior to completion of the ser- vices to be provided hereunder, AUDITOR shall immediately cease all services and shall render a final bill for services to the CITY within 30 days after the date of termination The CITY shall pay AUDITOR for all services rendered and satisfactorily performed and for reimbursable expenses incurred prior to the date of termination in accordance with the terms of this Agreement Should the CITY subsequently contract with a new AUDITOR for the continuation of services on the audit engagement, AUDITOR shall reasonably cooperate in providing information in accordance with, and to the extent required by, applicable professional standards The AUDITOR shall turn over all documents prepared or furnished by AUDITOR for delivery to CITY pursuant to this Agreement to the CITY on or before the date of termination, but may maintain copies of such documents for its files PAGE 10 ARTICLE XV SUBCONTRACTING Neither this Agreement, nor the audit services to be provided hereunder may be assigned or subcontracted without the prior written approval of CITY ARTICLE XVI RETENTION OF AND ACCESS TO RECORDS For a period of five years after the date of AUDITOR's report on any audit completed hereunder, upon reasonable written notice to AUDITOR and CITY, representatives of the cognizant audit agency (or its designee), the Texas state auditing agency and the United States General Accounting Office shall be entitled during AUDITOR's regular business hours during the said five year period to inspect and designate for copying AUDITOR's audit workpapers relating to such completed audit Copies will be made at CITY's or requestor's expense by, or under the control of, AUDITOR ARTICLE XVII NOTICES All notices, communications, and reports required or permitted under this Agreement shall be personally delivered or mailed to the respective parties by depositing same in the United States mail at the address shown below, certified mail, return receipt requested unless otherwise specified herein To AUDITOR Deloitte & Touche, LLP 2200 Ross Avenue Suite 1600 Dallas, Texas 75201 To CITY City of Denton, Texas ATTN Ted Benavides Title City Manager 215 E McKinney Denton, Texas 76201 All notices shall be deemed effective upon receipt by the party PAGE 11 to whom such notice is given ARTICLE XVIII ENTIRE AGREEMENT This Agreement, including all Exhibits and Amendments annexed hereto and made a part hereof, constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all other oral or written representations, understandings or agreements relating to the subject matter hereof Neither party shall be bound by the provisions of any pre-printed or other written terms and conditions subsequent to the date of this Agreement relating to the subject matter hereof unless such additional terms and conditions are made effective pursuant to the Amendments subsection of this section ARTICLE XIX SEVERABILITY If any provision of this Agreement is found or deemed by a court of competent jurisdiction to be invalid or unenforceable, it shall be considered severable from the remainder of this Agreement and shall not cause the remainder to be invalid or unenforceable In such event, the parties shall reform this Agreement to replace such stricken provision with a valid and enforceable provision which comes as close as possible to expressing the intention of the stricken provision ARTICLE XX COMPLIANCE WITH LAWS The AUDITOR shall comply with all federal, state, local laws, rules, regulations, and ordinances applicable to the professional services performed pursuant to this Agreement, as they may now read or may hereafter be amended PAGE 12 ARTICLE XXI EMPLOYMENT PRACTICES/DISCRIMINATION PROHIBITED In performing the services required hereunder, AUDITOR shall not discriminate against any person on the basis of race, color, religion, sex, national origin or ancestry, age, or physical handicap AUDITOR agrees that in connection with the services to be provided to CITY hereunder that it will comply with all applicable laws and regulations regarding employment discrimination ARTICLE XXII PERSONNEL/CONFLICTS OF INTEREST A AUDITOR represents that it has or will secure at its own expense all professional and support personnel required to perform all the services required under this Agreement Such personnel shall not be employees or officers of, nor have any contractual relations with CITY AUDITOR shall inform the CITY of any conflict of interest under the professional standards of the AICPA or the Texas State Board of Public Accountancy that may be discovered or arise during the term of this Agreement B All services required hereunder will be performed by AUDITOR All personnel engaged in work shall be qualified, and shall be authorized and permitted under state and local laws to perform such services ARTICLE XXIII ASSIGNABILITY AUDITOR shall not assign any interest in this Agreement and shall not transfer any interest in this Agreement (whether by assignment, novation or otherwise) without the prior written consent of the CITY PAGE 13 ARTICLE XXIV MODIFICATION OR AMENDMENT A No waiver or modification of this Agreement or of any covenant, condition or limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith and no evidence of any waiver or modification shall be offered or received in evidence in any proceeding arising between the parties hereto out of or affecting this Agreement, or the rights or obligations of the parties hereunder, unless such waiver or modification is in writing, duly executed, and, the parties further agree that the provisions of this section will not be waived unless as herein set forth B No amendment of this Agreement shall be valid unless in writing and signed by both parties ARTICLE XXV FORCE MAJEURE Notwithstanding any other provision in this Agreement, AUDITOR shall not be liable or held responsible for any failure to perform or delays in performing its obligations under this Agreement, including but not limited to, the completion of the audit and issuance of its report thereon, which result from circumstances or causes beyond AUDITOR's reasonable control, including, without limitation, acts or omissions or the failure to cooperate pursuant to this Agreement by CITY (including, without limitation, entities or individuals under its control, or any of their respective officers, directors, employees, other personnel and agents), fire or casualty, act of God, strike or labor dispute, war or other violence, or any law, order or requirement of any governmental agency or authority PAGE 14 ARTICLE XXVI MISCELLANEOUS A Venue of any suit or cause of action under this Agreement shall lie exclusively in Denton County, Texas This Agreement shall be governed by and construed in accordance with the laws of the State of Texas B In accomplishing this engagement, AUDITOR shall take such steps as are appropriate to coordinate the work involved with related work being carried on by CITY C CITY shall assist AUDITOR by placing at the AUDITOR's disposal, all available information pertinent to the engagement, including previous reports, any other data relative to the engagement, and arranging for the access to, and making all provisions for the AUDITOR to enter in or upon, public and private property as required for the AUDITOR to perform services under this Agreement D The headings of this Agreement are for informational purposes only and shall not in any way affect the substantive terms or conditions of this Agreement E Each party represents that it is authorized to enter into this Agreement and that the individual executing this Agreement on behalf of the party, is authorized to enter into this Agreement IN WITNESS WHEREOF, the City of Denton, Texas has caused this Agreement to be executed by its duly authorized City Manager, and AUDITOR has executed this Agreement by and through its duly authorized undersigned Director on this the �-_ day of 1997 PAGE 15 ATTEST JENNIFER WALTERS, CITY SECRETARY By \-" - APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY By %J-- A ATTEST A \AUDITSER K "CITY" CITY OF DENTON, TEXAS BY Ted Benavides, City Manager "AUDITOR" DELOITTE & TOUCHE, LLP By Terry ACile, Director PAGE 16 Deloitte & buche LLP v City of Denton Technical Proposal pbudw Apnl 1997 Tdmt$u IMamAn I Deloitte & Touche LLP Suite 1600 Texas Commerce Tower 2200 Ross Avenue Dallas Texas 75201 6778 April 14, 1997 City of Denton Purchasing Office 901-B Texas Street Denton, Texas 76201 Dear Auditor Selection Committee Telephone (214) 777 7000 Deloitte & Touche LLP is pleased to present our qualifications to continue to serve as independent auditors for the City of Denton (the "City") We have taken pride in our service to the City and to the public sector and are confident that you will continue to find our services to be of the highest degree of professionalism and quality A crucial factor underlying our ability to continue bringing you superior service is a simple one our relationship with you Our long-standing relationship with the City facilitates open lines of communication and helps prevent surprises You have the advantage of the best talent in our firm locally and, when needed, nationally In the future, we are committed not only to continuing to provide that level of service, but to enhancing it We have a solid, long-standing relationship with the City that can be characterized by enthusiastic, quality service and our commitment to your needs We fully intend to maintain our professional relationship that has been mutually beneficial since 1986 We understand that the City is seeking an independent public accounting firm to conduct an audit of the financial statements for the year ending September 30, 1997 The audit is to be conducted in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States, and the AICPA Audits of State and Local Government Units and subsequent amendments The services will include an audit of the City's federal and state financial assistance programs under the Single Audit Act, as revised, and OMB Circular A-133, resulting in the issuance of the appropriate reports As a by-product of the audit, we will issue a management letter addressing internal controls and operational issues We are fully committed to meeting the deadlines for issuance of the above reports as specified in your Request for Proposal Deloitte & Touche is a leading provider of accounting, financial reporting and consulting services to local government entities across the Metroplex In addition to the City of Denton, DeloltteTouche Tohmatsu International we currently serve other impressive governmental clients in the area, including the Garland, Plano, Hurst -Euless -Bedford, Grapevine-Colleyville and Richardson Independent School Districts, the Cities of Plano, Haltom City, Garland and Hurst, the Town of Addison, Tarrant County, Tarrant County Mental Health Mental Retardation, Trinity River Authority, and the North Central Texas Council of Governments This position of leadership has been attained through a strong commitment to our public sector practice and the devotion of dedicated personnel who are fully trained in governmental accounting Our experienced staff is able to understand the client's operations and exhibit sensitivity to management's concerns Deloitte & Touche utilizes several computerized audit tools to support our staff in increasing efficiency and cost-effectiveness which will yield tangible benefits to the City Our AS/2 software is considered the most advanced audit software in the profession This will benefit you as we can download your ledgers and utilize the spreadsheet you use in your day-to-day activities for audit purposes Our leadership role in the public sector is evident in our ongoing service with various regulatory entities George Scott, Partner -in -Charge of Public Sector Services in the Southwest Region, serves on the Governmental Accounting Standards Advisory Committee He is chairman of the AICPA Government Accounting and Auditing Committee George also serves on several GASB task force committees, including the task force dealing with the proposed reporting model Deloitte & Touche has taken an active role in working with the regulatory entities to effect the changes required by the Single Audit Act of 1996 The AICPA's guidance on the new Single Audit Act is being drafted by a committee headed by George Scott Four of the five full-time public sector managers and partners in the Metroplex practice are GFOA certificate reviewers As such, the City will have access to key resources who possess in-depth knowledge of these critical issues and can assist the City with implementing changes and moving into the 21st century Terry Me, Audit Director in our Public Sector Services Group, Southwest, is authorized to make representations for our firm and to bind our firm by a contract Our acceptance of the contract terms in your RFP is subject to complete review by the Firm's attorney This proposal is a firm and irrevocable offer for 90 days Please feel free to contact him at (214) 777-7475 if you should need additional information about any aspect of this proposal Yours truly, D44 .6t- a ro-" c i_ t_ P Delottte & Touche uP 0 11 Executive Summary Deloitte & Touche is proud to submit tlus record of qualifications to continue serving as the City of Denton's independent accounting firm Why Retain Deloitte & Touche9 We are eager and proud to have you review and evaluate our track record and our commitment We believe that in the end you will agree that Deloitte & Touche is your ideal independent accounting firm for these reasons • The efficiency and cordiality of our relationship • Deloitte & Touche's record of achievement on your behalf • The caliber and continuity of our team, now and into the future • The efficiency of our service approach and our future commitment to cost containment • The cash and intangible costs of needless change LE i .7 7"j; ill Executive Summary The City of Denton/Deloitte & Touche Relationship The crucial factor underlying our ability to continue bringing you superior service is a simple one our relationship with you We know you, you know us There are no surprises, no unknowns on either side Deloitte & Touche knows your business your operations your competitive environment your business strategy your internal organization your systems and procedures, informal as well as formal your culture your people This perspective enables us to see trends, anticipate opportunities and incipient problems, and present recommendations that suit your organization and business goals Our service in the past positions us ideally to continue serving you in the future In addition to the audit, our concrete knowledge of your resources and changing needs extends to your reporting requirements, information systems and analysis, operations, tax compliance, and diversification plans You have had the advantage of the best talent in our firm locally and nationally In the future, we are committed not only to continuing to provide that level of service, but to enhancing it A Team of Experienced Leaders The people on our service team - all of whom you know and all of whom will continue to play major service roles - are a true unitary team They work well together, they work well with your executives and managers, your executives and managers work well with them Efficiency and Cost -Effectiveness Our audit approach and methodology enabled us to climb up to the top of your learning curve rapidly Once there, we began and continue to become increasingly efficient because our audit process zeroes in on areas of disproportionate risk This enables us to put our resources where both you and we know they can do the most good rather than sampling and testing at random, or treating all areas of the business as if they were equally likely to cause financial statement risk In short, we work smarter instead of longer Cost of Change Even when fees are competitive, if any provider of professional services is guilty of service lapses, failed deadlines, bad judgment, frequent technical DOM & Touche ur 0 1V Executive Summary errors or faulty relationship management, for example, it is not only prudent but necessary to undergo the expense and disruption of switching to another provider But, in the absence of any strong reason, switching is imprudent In the accounting profession, it is generally accepted that it takes a firm about two years to become thoroughly familiar with a new client like the City All the major accounting firms absorb the direct costs they incur in learning to serve such a new client But there are substantial costs to the client, too, costs that can be measured in money, time and stress The main reason for staying with Deloitte & Touche, however, lies in the value of our track record You have seen the value we add for five years The major cost of change would be the loss of the experience and value of continuity that are the underlying themes of this entire proposal Our Service Philosophy Our service philosophy is a simple one and may be summed up as "uncompromising dedication to distinctive client service " It is the canon of our Chairman, Mike Cook, and our professionals seek to embody this approach in all the work they perform for our clients Valued Client The City will be a most valued client, not only of our Metroplex practice but also of our national organization As a pledge of our commitment to you, we have taken several steps to ensure that the City receives the degree of high-level attention it merits - attention from some of the best people our firm has to offer Your organization operates in a complex, highly visible environment The City needs an accounting firm that does not just "audit' but that can be a business advisor that contributes to moving your City forward We will get involved to assist you in dealing with the many business issues the City faces Our approach to serving a complex organization like the City of Denton is to Appoint a local client service team with skills, capabilities and experiences to meet your needs • Obtain staffing and technical assistance, as necessary, from members of the Firm involved in similar engagements • Conduct extensive client service planning in concert with management DB o& & Touche ur 0 Executive Summary • Execute an audit plan specifically designed to meet your organization's unique requirements Our team will meet regularly to brainstorm creative ideas for your consideration Ideas developed at these sessions will be brought to your attention This approach will work for the City, because we will obtain a thorough understanding of your reporting requirements, your regulatory relationships and your tax issues, and we already have in-depth knowledge of the environment in which public sector entities operate Our unique perspective allows us to see trends, anticipate opportunities, provide knowledgeable assistance, make strong recommendations and perform audits of your entity, with a minimum of disruption to management and staff Our services to similar entities in the past ideally position us to serve you in the future Conclusion We do not merely make promises - we deliver results - and we have the track record to prove it We meet deadlines, we are accessible and we are creative on your behalf We will continue to take the initiative to identify improvement opportunities and to develop plans for capturing them, and we will continue to bring outstandingly qualified people to your service and keep them there In short, we will continue to be fully responsive to the City's needs D8181h & Thuche up 0 vi Contents Section 1 2 3 4 5 6 7 8 Cover Letter Executive Summary Table of Contents Firm Background, Principal Officers and Prior Experience Scope and Audit Approach Proposed Schedule Understanding of Work to Be Performed by the Internal Auditor Other References Additional Data and Other Information Concluding Remarks Cost Proposal Appendices A Resumes B Representative Governmental Clients Served by the Dallas/Fort Worth Metroplex Practice C Peer Review Report Page i m vu 1 18 35 36 37 39 43 45 IUI i LLP 0 vn Firm Background, Principal Officers and Prior Experience In This Section Firm Qualifications and Experience Partner, Supervisory and Staff Experience and Qualifications Prior Engagements for the City of Denton Similar Engagements With Other Government Entities Client Listing Firm Qualifications and Experience Delortte & Touche is one of the world's largest professional services firms - a limited liability partnership providing comprehensive auditing and accounting, tax consulting and compliance, management consulting and actuarial services to thousands of public and private companies and governmental entities of all sizes through 106 offices throughout the United States Our U S firm has a full- time professional and support staff complement of 20,000, including more than 1,500 partners Our international organization consists of nearly 700 offices in more than 100 countries, with a total staff complement of 63,000 professionals Local Practice The Dallas/Fort Worth Metroplex offices of Delortte & Touche will provide services to the City of Denton Major local clients include the Cities of Denton, Plano and Garland, the Fort Worth, Plano and Richardson Independent School Districts, Tarrant and Dallas Counties, the Dallas/Fort Worth International Airport Board, Union Pacific Resources Company, Kimberly-Clark Corporation, and Texas Utilities -1- Firm Background, Principal Officers and Prior Experience Our professionals are articulate, intelligent and highly trained individuals with diverse backgrounds and skills Many partners and members of the client service staff have graduate degrees in business, accounting, tax, law and other related fields With a staffing level of 571 professionals from partner through administrative staff, the Metroplex office is large enough to handle both the City's day-to-day and peak service needs Because of our strong practice in local government accounting, more than 40% of our Metroplex audit staff has "hands on" experience and training in governmental accounting, auditing and financial reporting As a result, we have a pool of trained and experienced professionals available to serve the City The professional staff by level and department is listed in the chart below We anticipate that the City's audit will be staffed with one senior accountant and two staff accountants on a full-time basis Your audit director and manager will provide supervisory assistance and will frequently be on site during the audit process Committed to the Public Sector Deloitte & Touche in the Metroplex is comrrutted to serving the public sector, which is one of our office's fastest growing (and strongest) practice areas Nationally, State and Local Government is one of our firm's target industries, and locally, we commit considerable resources to serving the public sector George Scott, Terry Kile and Jay Riley, all of whom will serve the City, devote 100% of their professional time to serving government clients The Dallas/Fort Worth practice of Delonte & Touche has a staff of 571, including 54 partners and directors The professional complement is as follows Audit M&A Tax Consulting MSS ABC Valuation Support Total Partners/ Directors 17 2 9 10 6 3 2 5 54 Managers 20 3 26 34 16 9 10 1 119 Staff 100 54 69 25 14 14 1 277 Adnun 9 1 13 25 6 2 3 62 121 Totals ]9¢ ¢ L42 LU 51 2$ 22 ¢2 17.1 De1elt6e & bucheuP 0 -2- Firm Background, Principal Officers and Prior Experience Our firm's strong commitment to the public sector means that the City will be served by individuals who are knowledgeable about governmental accounting issues At the most basic level, this experience means that work for the City will progress smoothly and efficiently with no last-minute surprises More important, however, these skilled individuals have the breadth of experience to provide workable, practical solutions to issues affecting cities your size Meeting the Public Sector's Needs Our Range of Services Conducting an audit of the City of Denton requires an in-depth knowledge of government operations We have demonstrated to our clients that we have that in-depth knowledge We have proficient, competent and experienced staff to complete the engagement in an efficient and timely manner We also have personnel available for consultation on a continuing basis who are experienced in governmental accounting In addition to the professional staff we have selected to serve the City, our Metroplex practice includes a large complement of accountants and consultants with a broad base of experience in rendering professional services to local governmental organizations Because of our diverse experience, we understand such entities, their operations and the problems confronting them We are familiar with statutory requirements, management practices, administrative and accounting systems, financial operations and principles, and other factors that are unique to local government As a result of the depth of our service to government entities, we provide our clients with many services beyond those involved in the traditional audit Some are provided to support the audit (e g , actuarial evaluations of pension plans, when necessary) and some are provided to management to improve the efficiencies of their operations In light of the soaring cost of public services and diminishing revenue sources, our clients have found our ideas and services fresh, innovative and effective Some of our services available to the City of Denton are • Public Securities Offerings (bonds and other debt structuring services) • Bond Verification Services • Arbitrage Rebate Services • Tax Information Reporting • Management and Operational Reviews • Privatization Studies • Management Information Systems Services -3- D8101ft & Touche up 0 Firm Background, Principal Officers and Prior Experience • Rate Studies • Actuarial, Benefits and Compensation Services • Business Systems Consulting Services Summarized on the following pages are the types of additional services we have provided to our clients Financial Services Public Security Offerings - Deloitte & Touche has extensive experience assisting government clients with public securities offerings The members of the management team selected to serve the City are thoroughly familiar with the relevant procedures, including the guidelines set forth in the GFOA publication, Disclosure Guidelmes for Offerings of Securities by State and Local Governments Our National Government Group keeps local offices informed about the effects of the Tax Reform Act of 1986 ("TRA") on tax-exempt securities, including the status of proposed regulations under consideration by the Internal Revenue Service and the new requirements by the Securities and Exchange Comriussion that will impact municipal securities offerings The amendment to SEC Rule 15(c)2-12 now "prohibits a broker, dealer or municipal securities dealer ("Participating Underwriter") from purchasing or selling municipal securities unless the Participating Underwriter has reasonably determined that an issuer of municipal securities or an obligated person has undertaken in a written agreement or contract for the benefit of holders of such securities to provide certain annual financial information and event notices to various information repositories " This, therefore, requires additional annual reporting by all issuers of municipal securities • Bond Verification Services - A national team of bond verification specialists is located in our Houston office This specialized team serves clients across the country, and their expertise would be available to the City Since no two refunding transactions are structured alike, our computer program is tailored to meet the specifications and requirements of the individual transactions As a part of our service, we verify the accuracy of certain mathematical computations and issue a report to the governmental entity, the underwriters, bond counsel and financial advisors Tax Services Typically, tax consultation is not significant to a government unit However, the Tax Reform Act of 1986 imposed several tax law changes that D8101 e & Touche up 0 -4- Firm Background, Principal Officers and Prior Experience have substantial impact on the operations of local government Perhaps the most complex and restrictive of these changes are the arbitrage rebate provisions of TRA As part of our public sector practice, Metroplex tax specialists provide a range of tax services designed to help governmental entities in such areas as compliance with arbitrage rebate provisions and information reporting requirements Arbitrage Rebate Services - Because of the concentration of governmental experience in the Metroplex, our local office has been named the Deloitte & Touche National Center for Arbitrage Rebate Services Deloitte & Touche arbitrage rebate services are comprehensive in scope We can calculate the yield on the tax-exempt bonds, compute the amount of the rebate (if any) for the period, issue a report detailing current and cumulative investment activity and the rebate result, and prepare any necessary Internal Revenue Service forms to accompany a rebate payment Tax Information Reporting - All organizations have been affected by the new IRS information reporting regulations Reporting requirements have become increasingly complex and pervasive, and the IRS is assessing substantial penalties for noncompliance much more frequently Metroplex tax specialists have conducted information reporting evaluations for several clients to ensure they are in compliance with the relatively new IRS rules Consulting Services Our Management Solutions & Services ("Solutions") Group was developed to provide a balanced range of consulting services consistent with our practice as certified public accountants Our consulting staff, located in Dallas/Fort Worth and other key cities throughout the United States, provides a breadth and depth of experience necessary to service clients in a wide range of business and functional areas of operations This approach brings together the necessary generalized and specialized skills and supervision to attain successful results Many of our consultants joined our firm from positions in government and are experienced in areas such as financial management, general management, data processing, industrial engineering and personnel administration This blend of business disciplines has enabled us to respond constructively, creatively and realistically to client requirements for consulting services in a wide range of activities De101tte & Touche uP 0 -5- Firm Background, Principal Officers and Prior Experience Our approach has always been to provide our clients with the finest professional services available We make every effort to render prompt, effective and efficient services wherever and whenever needed We staff each engagement with highly qualified personnel who have the skills and experience to match the client's needs In addition, we will make available to the City any of our specialists who have a particular expertise that you may need Summarized below is a sample of some of the consulting services we can provide • Management and Operational Reviews - Typically referred to as a management audit, a management/operational review provides an independent analysis of an entity's operations and offers recommendations for streamlining operations, improving programs and cutting costs The service focuses on the efficiency and effectiveness of a particular department, division or function An organization and staffing analysis can be included Recent management audits conducted by Deloitte & Touche consultants have included such areas as purchasing, municipal court, risk management and public works • Privatization Studies - Privatization studies focus on whether governmental entities should contract for services with outside vendors or continue to provide the services internally An operational review of existing operations is the first step in identifying opportunities to reduce costs and improve productivity Deloitte & Touche consultants determine the real cost of a service by analyzing direct and indirect costs and the level of service currently being provided If privatization is still a viable alternative, we can help you develop a request for proposal and analyze the proposals received • Management Information Systems - Deloitte & Touche management information systems services include developing information system strategic plans, selecting hardware and/or software, designing operational environments and determining communication/support requirements Since we do not have any proprietary financial software or binding contractual agreements with either hardware or software vendors, Deloitte & Touche can be totally independent in its recommendations • Rate Studies - Deloitte & Touche is nationally recognized as a leader in performing rate studies for municipal governments and public utilities We have specialists in our Dallas office who have conducted cost of Deloitte & Touche uP 0 Firm Background, Principal Officers and Prior Experience service studies and rate analyses to develop water and sewer rates and rate structures for cities in the Metroplex and throughout the nation Actuarial, Benefits and Compensation Services - Our ABC Group provides a full range of services in the areas of employee benefit plans, compensation plans, employer health care services, and pension and actuarial services These services are particularly valuable to our clients as personnel and benefit costs continue to spiral higher Business Systems Consulting Services - Our Business Systems Consulting Group consists of full-time professionals specializing in PC/LANs and minicomputer -based financial systems They have helped many entities install new software packages as well as helping companies in rightsizing their information systems and related organization structure This scope of expertise is unsurpassed, most firms offer one or only a few of these services Our ability to meet many clients' needs from within our organization is a factor that distinguishes Deloitte & Touche Moreover, our client -centered service approach ensures that all aspects of the work we do for the City will be relevant and well managed Included in Appendix B is a listing of the services Deloitte & Touche provides to our governmental clients served by the Metroplex offices We have a depth of experience serving all types and sizes of governmental organizations Our clients range from metropolitan cities, major school districts and regional entities to smaller suburban cities, school districts and other entities New Accounting Standards Our commitment to the public sector practice includes active monitoring of accounting issues and standards We believe it is important to assist our clients in the early implementation of new standards after joint identification of the advantages that early implementation will provide Deloitte & Touche conducts an annual Governmental Accounting Standards Board ("GASB") update seminar for our clients to keep them abreast of recent pronouncements George Scott is former Chairman of the American Institute of Certified Public Accountants Governmental Accounting and Auditing Committee and former Chairman of the Texas Society of Certified Public Accountants Governmental Standards Committee In addition, Dela tte & Touche up 0 7- Firm Background, Principal Officers and Prior Experience George serves on the Governmental Accounting Standards Board's Public Authorities Reporting Model and Governmental Not -for -Profit Entities Task Forces The involvement of the City's engagement team members in professional organizations is described later in this section Quality Control We enthusiastically endorse the increasing professionalism of governmental accounting that the Government Auditing Standards' requirements express As part of our overall practice, Deloitte & Touche has submitted to AICPA reviews of our quality control policies and procedures since the reviews were initiated in 1977 As a member of the SEC Practice Section of the AICPA Division for CPA Firms, we have received an unqualified opinion in each peer review, conducted every three years Our latest peer review report, filed in November 1996, is included as Appendix C of this proposal All government engagements were subject to selection during the peer review In addition to this external peer review, we also conduct internal peer reviews of each Deloitte & Touche office across the United States to ensure compliance with our own internal quality control procedures We believe that few other firms can match this rigorous system of both internal and external reviews of their quality control systems The respect our peers have for the high quality of our professional services is demonstrated by the fact that Deloitte & Touche has been selected by both Price Waterhouse & Co and Arthur Andersen & Co to provide peer reviews of their accounting and auditing practices In addition, the Metroplex office of Deloitte & Touche has had three quality control reviews by federal audit agencies performed in the last three years No findings were identified through these reviews Our performance met the requirements of the GAO, the AICPA and OMB Circular A-128 We also confirm that no disciplinary actions have been taken or are pending against the Metroplex offices during the last three years with federal or state regulatory bodies or professional organizations lZ Deloitte & Touche uP 0 Firm Background, Principal Officers and Prior Experience Why Deloitte & Touche As a result of our understanding of your service needs and our considerable knowledge of public sector entities, we believe the City needs an accounting firm that can demonstrate superior qualifications in several major areas • Proactive Advice - Identify financial issues before they become a problem • Creativity - Understand the nature of your operations and formulate ideas that may result in increased financial resources to the City • Responsiveness - Immediate and well-informed attention to your questions, problems and opportunities, a service plan that is complete and action-onented, involvement throughout the year • Top -Caliber People - A team of professionals with a "hands on" service style and the right mix of experience serving public sector entities We will provide professionals capable of working effectively with your City Council, management and staff • Valued -Added Service - A focus on adding value to your organization is an integral part of the audit process Audit Excellence - Thorough familiarity with public sector entities and the issues that have an impact on business, financial and audit risks Our experience with new public sector clients has shown that we are committed to excellence and strive to provide clients with proactive advice, creativity, responsiveness, top -caliber people and value-added service If we are accepted as your independent accountants, the City of Denton would become an important client of our Metroplex practice Partner, Supervisory and Staff Experience and Qualifications We have assembled a team of experienced industry and functional practitioners from whom the City can expect to receive the highest level of professional excellence Our engagement team will comprise A core service team of partners, managers and professional staff responsible for the planning and execution of our audit, which includes our leading specialists in governmental accounting, auditing and consulting services OB101 e & Touche uP 0 Firm Background, Principal Officers and Prior Experience A network of firmwide resources, consisting of partners and managers whose expertise is available to integrate into our services to the City Selecting the Right People In choosing the members of our service team for the City, we have drawn heavily on the knowledge and understanding of the public sector that we have acquired during our relationship with dozens of state and local governments over the years Accordingly, our team members provide a strong blend of relevant industry expertise, technical proficiency and understanding of your operations, as outlined in this section First and foremost, we understand the importance of timely and responsive service to the City We have evaluated the workload of each team member to ensure that we can meet our commitments We want to emphasize a policy to which every team member subscribes client service is the first priority in all of our activities Our proposed City of Denton service team will work well with your people They have a track record of providing responsive service to clients, and each member has developed the communication skills to frame valuable suggestions in terms of action and results Engagement Organization The audit of the City will be directed by Terry Kde Terry's personal involvement ensures the high level of attention that the City and its management meat, and guarantees our commitment to provide quality service Our service team is composed of management with the professional stature and maturity to work confidently and effectively with elected officials and other City personnel All members of our client service team who are CPAs are licensed to practice in the State of Texas They are skilled at managing all types of public sector engagements, have in-depth public sector accounting and auditing expertise, and are creative professionals and astute business advisors 0eloftte & Thuche up 0 lo- Firm Background, Principal Officers and Prior Experience City of Denton Principal Service Team Client Service Team Director of Client Services Terry Me, CPA, a firm -designated specialist in governmental accounting and reporting, will serve as Director responsible for the direction of our overall services to the City Terry has 16 years of diversified audit and accounting experience in the public sector and has participated in numerous special projects involving local governments, including compliance audits, compliance with bond covenants, specified auditing procedures for state programs and agreed -upon procedures Clients have included the City of Hurst, City of Lancaster, City of Haltom City, City of Burleson, Texas Education Agency, Dallas Area Rapid Transit, Trinity River Authority of Texas, North Texas Council of Governments, Tarrant County, Gregg County and Hurst -Euless -Bedford Independent School District W Firm Background, Principal Officers and Prior Experience Concurring Partner George Scott, the Regional Partner-m-Charge of our Public Sector Services Group, Southwest, will serve as Concurring Partner to the City George is a firm -designated government specialist who spends all his time serving public sector clients He is familiar with both the technical and communication needs of organizations such as the City George serves as National Audit Partner for Arbitrage Rebate Services In addition, he is a national specialist on the single audit and Chairman of the AICPA Government Accounting and Auditing Committee George serves on the Governmental Accounting Standards Advisory Committee Audit Manager Scott Henderson, CPA, a firm -designated specialist in state and local government accounting, reporting and auditing, will serve as audit manager with day-to-day responsibility for the management of our services to the City Scott has five years of public accounting experience, serving both the public and private sectors He has extensive knowledge of and experience in local government accounting and auditing, including GASB pronouncements His governmental clients have included the City of Denton His nucrocomputer skills and experience with AS/2, our proprietary audit software, will be an asset to the City Audit Technical Manager David Pate, CPA, will serve as Audit Technical Manager on the City engagement David, a GFOA Certificate Reviewer, has seven years of public accounting experience, serving both the public and private sectors He has extensive knowledge of and experience in public sector accounting and auditing, including compliance auditing and reporting issues David has participated in a variety of special projects for state and local governments, including the Texas Education Agency ("TEA") Public School Financial Accountability System project His governmental clients have included the City of Denton, City of Garland, City of The Colony, Town of Highland Park, Fort Worth Independent School District, Plano Independent School District, Garland Independent School District and Texas Education Agency Management Advisory Services Jay Riley, Local Government Consulting Director, will direct any consulting services for the City Jay is a firm -designated specialist in management audits and governmental consulting and is the Local Government Consulting Services Director for North Texas, one of DeIOHte & buche ur 0 12- Firm Background, Principal Deloitte & Touche's major public sector practice areas He has directed Officers and Prior major consulting projects for Metroplex public sector clients and Experience participated in projects for regional, national and international public sector clients Tax Services R. Andrew Parker, CPA, Tax Director, will direct any tax services for the City Andy is a tax specialist with more than 15 years of public accounting experience He was the technical manager for the development of arbitrage rebate services for Deloitte & Touche and has extensive experience in this area He has been a frequent speaker on tax issues and has extensive knowledge of the tax issues within the public sector Participation in Professional Organizations Our engagement team members have actively participated in major professional organizations and are frequent speakers at conferences and seminars George Scott, Concurring Partner, speaks extensively to various groups on governmental auditing He has served as a discussion leader for AICPA, TSCPA and the North Central Texas Council of Governments' courses on auditing and public finance He is an active member of GFOA and GFOA of Texas George served as Chairman for the Texas Society of Certified Public Accountants Governmental Standards Committee George is former chairman of the American Institute of Certified Public Accountants Governmental Accounting and Auditing Committee He also serves on the Governmental Accounting Standards Advisory Council and several GASB Task Force Committees George is the author of articles on the Single Audit Act published by Practical Accountant and School Business Affairs His article on Arbitrage and Rebate Services was published in the GFOA of Texas Newsletter He serves on the faculty of the Texas Tech Southwest School of Government Finance Your Director, Terry Kile, has made numerous presentations to various public sector groups and participates in several public sector organizations He is on the faculty of the Texas Tech Southwest School of Government Finance Jay Riley, Director of Local Government Consulting Services, has made presentations to numerous public sector organizations on the subjects of -13- DBlolb & Touche ur 0 Firm Background, Principal Officers and Prior Experience human resource management, operational efficiency and performance reviews His articles have been published in Texas Town and City, and in cooperation with a Deloitte & Touche partner, he has written an article on Management Audit Projects which has been published He is also on the faculty of the Texas Tech Southwest School of Government Finance Additional information regarding team members, including educational background and continuing education, is included in their resumes in Appendix A Staff Continuity We recognize the importance of staff continuity Turnover is not only disruptive to our clients but also affects our ability to perform efficiently Our goal in staffing is to strike a balance and to provide continuity of our staff We want to provide for as great a degree of continuity as possible at the engagement management level This means less time getting acquainted with your business We will commit to a high level of staff continuity Our policy on rotation is to anticipate our staff s development and plan engagements accordingly Specialized Government Training Deloitte & Touche's continuing professional education ("CPE") requirements comply with the requirements of the AICPA Division for CPA Firms All professional staff, including partners, have a minimum of 20 hours of qualifying CPE each calendar year and at least 120 hours for each three-year period In addition, our professionals involved in governmental auditing are required to meet the Yellow Book requirements of 80 credit hours, 24 of which must be in governmental accounting and auditing for each two-year period Deloitte & Touche recognizes the critical importance of providing specialized training to our professional staff who are involved in particular industries such as state and local government Long before the Yellow Book established specific requirements for individuals involved in governmental auditing, our firm had instituted national and regional seminars designed specifically for those professionals These seminars address all facets of the government arena, including single audit, compliance auditing, accounting, financial reporting, arbitrage and rebate requirements, efficiency studies and consulting DOI0ft & Touche uP 0 -14- Firm Background, Principal Officers and Prior Experience The Firm maintains national networks of experts who study developments of industrywide concern These experts and outside consultants such as college professors are brought together to speak at our national and regional seminars In addition, our professional staff members attend conferences, courses and seminars conducted by the GFOA, the Texas GFOA, the AICPA and TSCPA, and other technical organizations These national and regional conferences and seminars are supplemented with local in-house formal education for our professional staff All professional staff are required to attend these local classes As demonstrated by this educational requirement, Deloitte & Touche has a significant interest in committing the necessary time and resources to the government industry Certain of our training programs will be available to City staff. For example, we recently sponsored a seminar which addressed topics such as GASB update and current city issues Prior Engagements for the City of Denton Delortte & Touche has performed the financial and compliance audits for the City of Denton for the past 11 years Similar Engagements With Other Government Entities Client satisfaction is one of the best measures of the quality of services we provide to clients Delortte & Touche is proud of its record of service to the many governmental clients in the Metroplex and is pleased to provide the City of Denton with a list of our recent government clients We invite and encourage the City to contact the individuals listed in this section Additional references will be provided upon request Town of Addison (1996 - present) Scope Financial Audit, Single Audit Engagement Partner George Scott Hours 400-600 Contact Mr Randy Moravec, Director of Finance (214) 450-7050 City of Hurst (1990 • present) Scope Financial Audit, Single Audit, Self -Insured Actuarial Services, Real Estate Consulting Services Engagement Director Terry Kile Hours 500-700 Contact Ms Anita Thetford, Director of Fiscal Services (817) 788-7000 Delof$e & Touche up 0 -15- Firm Background, Principal Officers and Prior Experience City of Cedar Hill (1990 - present) Scope Financial Audit, Single Audit, Accounting Issues Engagement Director Terry Kile Hours 500-700 Contact Mr Hardy Browder, Director of Finance (972) 291-5117 City of Garland (1993 - present) Scope Financial Audit, Single Audit, Annual Report Preparation, Internal Controls, Information Systems Strategy, Operations Review of the MIS Department, Review of Accounting Alternatives of the Utility Operation Engagement Partner George Scott Hours 1,100-1,300 Contact Mr George Kaufman, Director of Finance (214) 205-2469 City of Haltom City (1996 - present) Scope Financial Audit, Single Audit Engagement Director Terry Kile Hours 400-600 Contact Mr Pat Elfrink, Director of Finance (817) 429-0702 Client Listing Appendix B shows the audit clients we have served in the last five years and the type of services provided We would be pleased to provide you additional information regarding these clients, or provide additional references, upon request 16- 0810 tte & Touche uP O A(A(imm 1 mid I_Inlll)vo; Ii(: iI,i ds G"II llino A 11 �itrMgil I'{v;l�ddm I_i tiqMlioll Slgilxxl MM I'll]l-:I1IM11 nn�l Ope:Itllinn�d 1-{c:vir=w�; Phlvrltiztllioll f3usino'S; Systr-;III:; C:unsulil ly Gomplikn Acswew ,, ; Gwlu iyn.Ii Nb bn f, irl,:: F.nlii i lh:nini If , I. i Clty I j II I :ny nl r„il VJ�„ni t lily of i51iLUI�I UdY ul I lur.l cav �n vi �nr t lay �,I 0 �wb al CII lIIIVI Ily '.0 1. :ul➢IIiJI�'IO l'l,/:I r.. lI 1 1[ 1 1iy •:alll n.I.d1,ai ,auLc. GenBy t jiavf.;nll l VI, 4Ili h'd.a ua to ni I i it u,iI cI I A IIt'.I I I ,I Vv.,ill, Lid.an .: �.Ji. l l'Idl ,�..vII I�, I:� dI"wdh, Il i�loli,nrvn:ln s�a l�,� �I I n:nl L.I if IrI if il',I I VIl a n�lY-(;LJ.IIin ��L �I I�ni L yci, L ayy G,II �i.l.du,u �, id�eu i.w 4✓L�ri ., i-0nO lihel ii i v i�.hhml�li.i ul jai vy ':II e:Nc hrurltltin {i alcl 'Liw, Lxha �,m��qa Scliie. q',h rva .... � i _, i .IN haul 'S�. L.,i l wa a✓.f .i.Jl:�il wi�.i u.✓. ;it�Nol e.l. �I' II".�„I"Ianni ie fI, �i nnl ui::Jb.uc. lnc I.,I II I i.i ll lly i.Wli „I 1ulaBm'...n ' Utility/ Real ` Energy L, Estate Public Construction/ Sector Engineering Insurance Manufacturing Retail Scope and Audit Approach Our business -oriented approach will help the City achieve its objectives In This Section Specific Audit Approach AuditSystem/2 Government Audit Standards Multiyear Approach Identification of Improvement Opportunities Identification of Anticipated Potential Audit Problems Im Specific Audit Approach One of the most important considerations in the selection of independent auditors is their ability to perform and complete the work in a timely and efficient manner, with a nummum of interference with your day-to-day operations and your personnel As described below and in the attached flowchart, we have developed an audit plan for you which matches optimum efficiency with the highest level of quality audit work and adherence to professional standards One of our first priorities will be to review this plan with your management and make any necessary revisions so that our work will be scheduled at times that are most convenient for your personnel and consistent with meeting deadlines you establish We believe that a carefully prepared, well -thought-out, organized audit plan is of primary importance in accomplishing our audit objectives Accordingly, we will use our audit programs, related check lists and other audit procedures as appropriate in examining your operations In addition, we will apply our governmental experience in refining programs and procedures Scope and Audit Approach to fit the City's specific methods of operation and unique areas of concentration, thereby ensuring thorough analysis of your procedures and customization to ensure the highest -quality service delivery to meet your requirements Accounting and Auditing Deloitte & Touche's accounting and auditing services go far beyond basic attest functions Our business-onented approach will help you achieve your operational objectives and goals, strengthen your management processes and improve resource utilization Your selection of an auditing and accounting firm centers on forming a relationship with people That is why Deloitte & Touche places such a premium on judgment and personal chemistry Our professionals possess superior technical skills Equally important, they have strong personal qualities, demonstrated perceptiveness, the ability to think strategically and detect future implications of current trends and internal circumstances, communication and project management abilities, and energy, enthusiasm and commitment to client service and high professional standards Risk -Focused Audit Approach We approach the audit from the same perspective that your top management views the City What are the important issues and where are the risks9 We consider the likelihood a specific business risk could impair the integrity of your financial statements You will benefit directly from this approach because we allocate our resources on the basis of specific risk identification at all appropriate business unit levels We can then focus on these precisely defined areas rather than treating all business activities equally or assigning random or arbitrary levels of risk For that reason, our entire engagement team participates in the planning process with appropriate client managers The Deloitte & Touche Audit Process The Deloitte & Touche audit philosophy is to tailor our approach to meet the specific needs of each client Where appropriate, we involve specialists from our Management Advisory Services and Tax departments in the planning Their technical expertise very frequently enables us to make constructive observations and recommendations in areas beyond those normally addressed by auditors 0010ltte & Touche uP 0 -19- I !I Fnrla I m nl I lNd Peiform Pre-Engaqullenr -------- -- - ---- Activitieti - 6 11b11 II I r llll: I I nrl ulunb II! f Un III ! 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Fill, C., 4111 I I IlVll ulllll I11 ASSefi5 Risk IlndwnBlnJ Ihu Cnnlrn Ll l,l Fre;ub: Cnmj,h: mi: ; u i11, 1 �L': uldl Ad lliuns' 1 Ih RI I II fll A v:� uul fi l l :nml Ind.1 1i.6:d 111 II yi, I Specific Idontitled Rlak No Specific Identified Ilish � Develop Audit Plan No Yea Yes � No I I �nlill I n!r I mJ. ll 11 "My Cuull'l Old Elli,u nI t Ilblc:hfl 1, Ir Ib rr I I In .. _,(� I I nbul: m I Cnr ul rlirnr __._ _Ai furl fin ln(.r,n�'rli; Ir„ F If fin ,ru;; 1 I rinun 111 1 vu1 I I d :Ad f ud �7;: I I ul,el. nrrl 1 ;h Sul I1Ibl 15c�C: Perform I lum( rnl huu �71 'r:: lur Audi[ Plnll � 11 II nhG l yl 1 n,J Ill ,I H I o,gl.un 11 ul m6, n _ . I'_vl fin ul .jo �nlll n!I-I ' Iv Obl un nl m.lrl,:I j, 11 1 1 r =olj1 N n Conclude and Report I .1 orI „r Fnl m d I U,m nl ul I I al r 1/I m Im ivl Fl rrl l I n lal N ul Jim,, It t ll In.ul. Scope and Audit Approach We also utilize functional or industry specialists Involving these personnel early in the planning process allows us to identify areas for potential improvements in our procedures Auditing is a dynamic process, and our audit plan may therefore change during the course of the engagement as new information and circumstances come to our attention Perform Preliminary Planning During the preliminary planning stage of the audit, your engagement team will gain an understanding of the City's business We believe it is important for your auditors to comprehend what City management perceives as the vital issues and risk areas within the organization Through discussions with City personnel and review of City financial information, we will develop knowledge of the City's operations, the unique services provided and the flow of transactions through the accounting function As part of understanding the flow of transactions, Deloitte & Touche personnel will document the City's accounting processes Information gathered during this phase would include types and volume of transactions processed, the method of processing those transactions, input and output of the various accounting systems, and the summarization and reporting of transactions Understanding any history of errors associated with certain accounts or transactions would also be a key part of this phase The engagement team will perform a preliminary analytical review of your operating results for the year in order to understand significant changes in the operations of the City This review also helps pinpoint risk areas, which will aid us in allocating our audit resources effectively During this phase, we will also set the materiality levels for the audit An important part of the preliminary planning is the development of client service objectives Our client service objectives include not only audit - related services, but also the additional professional services which we can offer to the City From financial and tax services to consulting services, Deloitte & Touche can provide the City with a fresh perspective and value- added services from our local pool of experts Assess Risk Our audit approach is a nsk-based approach, meaning that we identify risk areas in order to most efficiently use our resources, as such, we place emphasis in the early part of the engagement on assessing risk As part of our consideration of risk, we will understand the City's internal control structure Interviews with your personnel and review of the documentation of your systems will allow us to grasp key controls over the -21 _ D6I01b & Touche ur 0 Scope and Audit Approach safeguarding of assets and the reliability of data processed This information impacts the audit plan, as areas with strong internal controls will require less audit attention than those with relatively weak controls During this phase, we will also determine how the City monitors compliance with laws and regulations, whether there have been any instances of noncompliance during the year and how management has responded to any such noncompliance The engagement team will then assess risk at the account level Based on the information gathered in the preliminary planning process and the consideration of the internal control structure, we will assign a level of risk to each account (or set of accounts) Accounts determined to be high -risk will receive greater audit attention, and our audit programs will be tailored to address the risk In some cases, additional selections may be made for testing, or more experienced staff may be assigned to audit those areas Likewise, low -risk accounts will receive a more basic level of testing In this way, you receive the most efficient and effective audit services Develop Audit Plan Our audit plan - the specific steps we will perform to test the City's accounts - is dependent upon what level of risk we have identified and the controls which may mitigate those risks Deloitte & Touche has standardized audit programs for all accounts which we can utilize if no risks are identified and if strong controls are in place and functioning These standardized programs will be tailored by the engagement team for identified risks During the tailoring process, we will consider the types of documentation the City has readily available, so as to utilize the same reports and information that management uses in performing our audit procedures wherever possible Perform Audit Plan We will test your internal controls to ensure that they are functioning as designed and as documented during the risk assessment phase Testing of internal controls may be completed by sampling of documentary evidence and reviewing for evidence of controls, by corroborative inquiry of those persons responsible for the controls or through observation of personnel performing control procedures After controls have been tested, we will turn our attention to substantive testing of the financial statement accounts Our audit procedures may consist of observation, confirmation, tests of detail and analytical review, in accordance with the audit plan discussed above 0e101tte & Touche ur 0 -22- Scope and Audit Approach Sample sizes will vary depending on the particular application Our general tests of details are based on a materiality factor ranging from 5% to 5% of revenues or expenditures by fund type, depending on the size of the entity, the reliability of internal controls and the audit risk assessments which may extend our sample Our samples are all representative of the total populations being tested, however, statistical samples are only used when the selection time does not substantially exceed that for other sampling techniques We make extensive use of analytical procedures, including a detailed analytical review of actual amounts to budget or account balance expectations in our basic audit work This provides a focus for additional audit procedures in areas that are identified For the single audit, we will use Deloitte & Touche's specialized programs prepared nationally to test for compliance with federal laws and regulations All sample selections will be subject to legal compliance testing Our audit approach for legal compliance testing and reporting is consistent with Statement on Auditing Standards No 74, "Compliance Auditing Considerations for Governmental Entities and Recipients of Governmental Financial Assistance," issued by the American Institute of Certified Public Accountants in 1995 We will evaluate the results of our tests of controls and substantive tests As the final step in performing the audit plan, we perform an overall analytical review at the financial statement level This final analytical review helps us discover inconsistencies in reporting as well as providing a big picture look at the City as a whole Conclude and Report During this final phase of our audit, we review for evidence of significant events occurring subsequent to the balance sheet date which would require modification of or disclosure in the financial statements We will obtain representation letters from City management and will contact the City's attorneys for information on potential legal issues Finally, we will issue a report on the City's financial statements, a report to management and the single audit reports, according to your timetable A chart graphically depicting our time -phased audit plan appears on the following pages 0e10ltte & Tou0he uP a 23 - Critical Audit -Related Dates - City of Denton June November December Estimated Time Perform and finalize audit planning, including coordination of Single Audit S/M/P S/M/P 40 Read minutes of City Council meetings S/M/P S/M/P S/M/P 16 Plan for participation of City personnel S/M S/M 20 Evaluate internal accounting controls and, for Single Audit, applicable grant administrative controls S S 40 Evaluate EDP system controls S 16 Discuss format and preparation of financial and Single Audit reports, and review potential audit and reporting problems with management and, as to Single Audit, the cognizant agency M/P M/P 10 Perform Single Audit procedures by evaluating compliance with applicable statutes, ordinances and regulations St St St 60 Meet with management to review audit status S/M/P S/M/P S/M/P 20 Hours P Partners 30 M Managers 72 S Seniors 250 St Staff 430 Total M -24- 08101b TOUCh@ LLP O Critical Audit -Related Dates - City of Denton (Continued) June November December Estimated Time Review and test (including Single Audit procedures) Revenues and expenditures St S/St S/St 50 Cash and investments St St St 30 Taxes receivable St St St 20 Receivables St St St 10 Inventories St St St 16 Fixed assets St St St 20 Other assets St St St 16 Accounts payable and accrued liabilities St St St 30 Long-term debt, capital leases and interest St St St 24 Other liabilities and deferred revenue St St 16 Interfund receivables/payables St St 10 Fund balances St St 20 Other contingencies St St 24 Review trial balances by fund and fund type S S 40 Supervision and review of staff S/M/P S/M/P S/M/P 30 Prepare all applicable Single Audit reports S/M 20 Review drafts of Comprehensive Annual Financial Report (CAFR) S/M/P 60 Review drafts of CAFR and other reports with City management S/M/P 20 Prepare management letter S/M/P S/M/P S/M/P 30 Issue CAFR, present to City Council M/P 20 Review management letter with appropriate City management S/M/P 24 Issue management letter and Single Audit reports, present to City Council M/P 30 Total Hours 2a DBloitte & Touche ur 0 -25- Scope and Audit Approach I AudttSystem/2 AuditSystem/2 represents a major reengmeermg of our audit service capabilities and delivery platform This reengmeermg substantially sharpens our ability to deliver world -class accounting and auditing services consistently, seamlessly, globally and in accordance with our demanding client service standards AuditSystem/2 integrates our audit approach, which focuses on adding value to our clients, common documentation that is industry -specific and capable of being tailored to the needs of individual clients, and state-of-the- art technology Value -Added Audit Approach We have radically reengmeerd our audit approach to enhance our effectiveness and efficiency and to increase our focus on client service Our audit approach emphasizes adding value to our clients by enhancing quality and productivity We consult with our clients to determine their needs, expectations and professional service requirements before preparing and executing appropriate client service and audit plans Partners lead our audit engagement teams, drive both planning and performance, and provide our clients with meaningful advice and insights on the condition of their business We recognize that every client is unique, requiring an audit plan tailored to its particular operations, accounting processes, control environment and financial reporting requirements Our focus is therefore both industry - specific and client -specific Our audit approach remains nsk-based This means that we get rapidly to the heart of issues that affect our clients and their financial statements as a whole We then plan our audits to focus timely and sufficient attention on identified risk areas We continue to focus on clients' systems and internal controls in order to identify controls that are effective and relevant, and that can be tested efficiently In addition, we support management in fulfilling their responsibility to safeguard assets and ensure the efficient operation of the enterprise DOM & Thuche uP 0 -26- Scope and Audit Approach Common Documentation Incorporating Best Practices We have embedded best practices collected from thousands of audit engagements in our internationally developed common documentation - a baseline set of model documentation that helps ensure worldwide consistency and quality The common documentation is tailored to national and industry requirements and is made available as model sets of planning tools, audit procedure data bases, standard templates, and audit guidance known as "audit packs " Audit packs are then modified to meet the specific needs of individual clients Powerful Technology The AuditSystem/2 software supports all phases of the audit process - planning, executing and reporting - and thereby leverages the time and skills of our audit professionals In order to ensure maximum compatibility with our clients' systems today and in the future, we have built the software with standard Microsoft Windows -based components Teamwork is critical to successfully serving the world's most complex multinational companies and large national enterprises A notable feature of AuditSystem/2 is that it is specifically designed for teams, not just individuals AuditSystem/2 maximizes the effectiveness and efficiency of engagement teams, whether those teams are located at one site, multiple sites within a country, or spread around the globe AuditSystem/2 in Action Auditing Smarter AuditSystem/2 incorporates our proprietary Smart Audit Support technology, which significantly enhances the quality of audit planning It helps audit professionals identify and assess risks, evaluate internal controls, and develop an audit plan and supporting programs that address relevant issues effectively and efficiently Using advanced decision support software, Smart Audit Support assists and guides the auditor in a manner that complements and amplifies the individual's professional judgment without ever substituting for it DOWN & buche LLP O -27- Scope and Audit Approach Smart Audit Support is an integral part of the common documentation and is built into industry -specific audit packs It suggests approaches and procedures, maintains the integrity and consistency of information, and dynamically modifies audit planning processes to reflect that information Smart Audit Support provides direct links to the Firm's professional policies and guidance, and to other professional and industry materials as appropriate Immediate on-line access helps our professionals respond to issues and questions as they arise Bulky reference materials are history Effective and Efficient Paperless Auditing The AuditSystem/2 software provides an intuitive folder system to help track, manage and organize the information normally stored in audit files It also facilitates sharing that information electronically within the engagement team and with client personnel Audit packs contain templates for most situations, so documents seldom need to be developed from scratch Documents can also be updated as the software provides a controlled carryforward of audit files from year to year AuditSystem/2 documents contain text, spreadsheets and graphics, and they can incorporate financial data from trial balances and lead sheets Documents can also be cross-referenced, reviewed, annotated and signed off as appropriate They are easy to review on-line, thus eliminating the time, effort and expense required to print and reprint work papers Client Compatibility, Direct Data Access Built from Windows -based, industry -standard components, the AuditSystem/2 software is compatible with most clients' systems It provides numerous capabilities for directly accessing and handling data through all stages of the audit engagement up to and including the production of financial statements This makes it easy to share schedules, reports and other documents electronically without having to print or retype them Efficiencies can be even greater when internal auditors also use AuditSystem/2 AuditSystem/2 includes file interrogation software that provides direct access to computerized client data It is used, for example, to create trial balances, age accounts receivable, extract records that meet certain criteria and select statistical samples Procedures are completed in a fraction of the time it takes to perform them manually and are less disruptive to the client's operations Dela to & Teuche ur 0 -28- Scope and Audit Approach It is often possible to test 100% of a population lust as easily as a sample, or to perform procedures that would otherwise simply not be feasible In addition, file interrogation often reveals information that is helpful to the client but not provided through regular management reports Financial Reporting Computerized client trial balances can easily be imported into AuditSystem/2, where the software's trial balance capabilities can be used for many purposes, including multilevel consolidations, foreign currency translations and journal adjustments Financial information flows smoothly from trial balances into integrated financial statements, lead sheets and analytical review schedules Client - ready financial statements and other reports can be prepared, reviewed and issued on the most timely basis possible AuditSystem/2 trial balances can be used for tax engagements, thus further integrating our services and reducing demands on clients We can also export the results to external tax preparation and compliance systems Analysts, Interpretation, Insight Great software should help people think, and that is what AuditSystem/2 does It frees auditors from tedious, time-consuming tasks, allowing them to focus on more valuable professional activities, it provides tools that amplify auditors' analytical and interpretive skills, and it makes possible innovative procedures and approaches that could not otherwise be considered AuditSystem/2's analytical tools include spreadsheets and graphs which, used together with file interrogation techniques, can extract useful information from raw data and provide business condition insights These tools also include Statistical Techniques for Analytical Review ("STAR") STAR is effective at identifying significant fluctuations in financial data that warrant further investigation in light of materiality and reliability objectives Using statistical modeling techniques, STAR provides an objective and rigorous basis for reliance on analytical procedures It also helps auditors understand underlying data relationships within the business Effective and Creative Communications The AuditSystem/2 software facilitates effective, creative and responsive communications with our clients For example, a spreadsheet analysis can Belot e & Touche up O -29- Scope and Audit Approach be transformed into a visually stimulating graph which can then be pasted into a slide for presentation at a meeting - all within seconds AuditSystem/2 also facilitates communication among the members of the engagement team Linked to our global communications system, it speeds the resolution of issues as well as review and reporting procedures on multinational and other multilocation audit engagements Integration With Other Services and Software The AuditSystem/2 software significantly increases the integration between audit and tax services It also complements many other software -based services the Firm offers, such as internal control consulting Because the software is based on industry standards, it will capitalize on future technological developments We will continue to leverage the capabilities of our technology platform to offer innovative services to our clients The AuditSystem/2 software integrates Deloitte Touche Tohmatsu International's proprietary audit technology with software from Microsoft and other leading vendors The software runs on Microsoft Windows 95 OLE (Object Linking and Embedding), Microsoft's key integrating technology, provides the glue that makes AuditSystem/2's components work as a seamless whole WE-& Lip 0 -30- Scope and Audit Approach I World -Class Service We developed AuditSystem/2 to meet the many different and changing needs of our clients and our audit professionals Our goal is to provide tools that let auditors make the best use of their time and skills to deliver world - class service Government Audit Standards We recognize that our audit must comply with Generally Accepted Government Audit Standards ("GAGAS"), the audit standards set forth in the Government Auditing Standards (Standards for Audit of Governmental Organizations, Programs, Activities, and Functions) issued by the Comptroller General of the United States Our audit will also comply with generally accepted auditing standards ("GAAS"), the audit standards issued by the American Institute of Certified Public Accountants that are applicable to and generally accepted for audits conducted to express opinions on the fairness with which an organization's financial statements present the financial position, results of operations and cash flows as incorporated into GAGAS for financial audits We recognize that GAGAS contains standards for audits of government organizations, programs, activities and functions, and of government funds received by contractors, nonprofit organizations and other nongovernment organizations The standards are to be followed by auditors and audit organizations when required by law, regulation, agreement or contract, or policy The standards pertain to the auditor's professional qualifications, the quality of the audit effort, and the characteristics of professional and meaningful audit reports The standards are required by federal legislation for audits of federal organizations, programs, activities and functions, by the Office of Management and Budget ("OMB") Circular A-73 for audits of federal executive departments and agencies, by the Single Audit Act of 1996 for audits of state and local governments which receive federal financial assistance, and by OMB Circular A-128 (A-133, when it is finalized) for audits of other entities receiving federal assistance Multiyear Approach Should you extend our contract over a multiyear period, our knowledge and understanding of your systems will certainly be used in the additional years Our audit approach provides for additional emphasis being applied on a rotating basis over a multiyear period to various systems within your Dela the & Teuche up 0 -31- Scope and Audit Approach I organization We can benefit from past experience with you, however, our approach in no way depends on future audits to provide audit assurance in the current year Identification of Improvement Opportunities During the course of the audit, our partners, managers and staff will be alert to identify improvements that may be made in financial controls or operational efficiencies As part of our procedures, we will observe your operations and raise questions and exchange ideas with your people in many areas internal controls, data processing, financial structure, cash management and inventory control We will develop our constructive service suggestions as the audit progresses and discuss important matters with you as they arise Members of our engagement team will meet regularly with your management to review interim reports and ensure that the work being done is in line with the City's expectations We will issue a separate management letter that formally documents these observations related to the City's operations, procedures and other material matters Identification of Anticipated Potential Audit Problems While we do not foresee any insurmountable problems associated with the audit of the City of Denton, we believe the following issues will need to be addressed during the next three years Application of New Audit Standards - The President recently signed the Single Audit Act of 1996 Our proposed concurring partner, George Scott, currently chairs the AICPA's Single Audit Working Group, and is actively involved in the implementation of this proposed change Therefore, any effect on the audit of the City will be known and planned for well in advance of its first application Application of New Accounting Standards - We do not foresee difficulties in the application of any impending new accounting standards City personnel will be consulted immediately upon the effective date of new accounting standards so that we may work in concert to implement any required new standards in the manner best suited to the City -32- Deloitte & Touche wi O Scope and Audit Approach I Our Understanding of the Governmental Environment - Accounting and Auditing Developments Of great significance to the City and various departments are proposed changes in governmental accounting, financial reporting and auditing standards Generally accepted accounting principles for the government have undergone significant changes over the past several years Beginning in 1979, a number of significant changes occurred which defined GAAP for governments and provided incentives to implement GAAP-based financial statements and the related budgeting and accounting systems While governmental GAAP has changed significantly since 1979, the preparers and users of financial statements will have difficulty recognizing governmental financial reporting in upcoming years The actions being either currently taken or proposed by the Governmental Accounting Standards Board ("GASB"), the General Accounting Office ("GAO"), the OMB, the American Institute of Certified Public Accountants ("AICPA") and others will significantly alter governmental accounting, financial reporting and auditing over the next several years Some of the changes that will become effective soon that directly affect the City are discussed below GASB issued Statement No 27, entitled "Accounting for Pensions by State and Local Governmental Employers," in November 1994 This statement, which is effective for periods beginning after June 15, 1997, establishes standards for the measurement, recognition and display of pension expenditures/expense and related liabilities, assets, note disclosures and, if applicable, required supplementary information in the financial statements of state and local governmental employers • GASB issued Statement No 28, "Accounting and Financial Reporting for Securities Lending Transactions," which is effective for periods beginning after December 15, 1995 GASB issued Statement No 30, "Risk Financing Omnibus " This statement is effective for periods beginning after June 15, 1996, and requires specific incremental claim adjustment expenditures in the determination of liabilities for unpaid claims • GASB issued Statement No 31, "Accounting and Financial Reporting for Certain Investments and for External Investment Pools," which will be effective for periods beginning after June 15, 1997 The statement requires that most investments be recorded at fair value and that 06101 0 & Thuche ur 0 -33- Scope and Audit Approach fluctuations in the fair value of investments be recorded in the operating statements GASB's exposure draft on the new reporting model will radically impact financial reporting of state and local governments GASB has also issued an exposure draft on certain other matters An exposure draft on the new reporting model will radically impact financial reporting of state and local governments Deloltte & Touche ur O -34- Schedule -35- Meeting Your Deadlines Meeting your deadlines for completion of the financial statement audit, single audit and management letter means precise, timely execution of each step in the audit process Our extensive experience serving many governmental entities means we are thoroughly familiar with the time and personnel needed to serve you effectively A master timetable, however efficient, does not take into account the individual needs of each client We therefore tailor our schedule based on your needs A detailed listing of schedules to be provided by the City and the timing for completion of such is expected to be substantially the same as the City has provided to Deloitte & Touche over the past few years As evidence of this partnership • attitude, we would make available to your internal audit staff certain of our staff training programs Your internal auditors would Understanding of Work to Be receive full continuing education credit as required by governmental Performed by the Internal auditing standards for any of these sessions Auditor In addition, we will meet on a regular basis to discuss our mutual plans and goals The purpose of Internal Audit Partnership these discussions is threefold At Deloitte & Touche, our is to create a • To ensure there is no philosophy duplication of efforts or working relationship and partnership with your internal procedures between the audit department consistent with professional auditing internal auditor and our audit team standards and the expectations of the City • To identify areas where our audit procedures or testing may be reduced because of reliance on the work of your internal auditor • To keep each other informed about our respective activities We look forward to working with the City Auditor's Office on this engagement It is our intention to utilize the City's audit staff to perform audit procedures for the capital projects funds and the general fixed assets account group, inventories, certain cash and investment procedures, and the single audit We will work with the City Auditor to evaluate the most effective utilization of internal audit resources, we anticipate this evaluation will result in approximately 200 hours of the City audit staff s time VICFM up 0 -36- Other References energetic, proactive approach to service will fit in well with the commitment and dedication the City shows each day toward its local community -37- Deloitte & Touche is pleased to present additional references in our technical proposal to perform audit services for the City of Denton Tarrant County Mental Health Mental Retardation Services (1994 - present) Scope Financial Audit Single Audit Annual Report Preparation Contact Mr George Banks, Chief Financial Officer (817)735-3800 Dallas County (1994 - present) Scope Financial Audit Single Audit Annual Report Preparation Contact Ms Virginia Porter, County Auditor (214)653-6472 DallaslFort Worth International Airport (1993 - present) Scope Financial Audit Single Audit Bond Services Litigation Support Services Organization Study Human Resources Services Verification Services Other References Contact Mr Robert Fernandez, Board Member (817) 877-3911 City of Bryan Scope Financial Information for Utility Rate Design Study Contact Mr Dan Wilkerson, Director - Electric Utility Services (409) 821-5715 City of Plano (1995 - present) Scope Financial Audit Single Audit Annual Report Preparation Pension Consulting • Bond Services • Cooperative Procurement Operations Review Contact Mr John McGrane, Director of Finance (214)424-6531 INM 0eloitte & Thuche uP 0 Additional Data and Other Information In This Section Commitment to Equal Opportunity and Affirmative Action Professional Indemnity Insurance Independence License to Practice in Texas Commitment to Equal Opportunity and Affirmative Action Like the City, Delortte & Touche is comrmtted to equal employment opportunity and affirmative action within our firm and to increasing minority representation within the a(,countmg and consulting professions as a whole Affirmative Action Policies Both locally and nationally, Delortte & Touche is committed to an aggressive program of affirmative action in practice as well as in principle We actively seek to recruit, employ and promote women and members of minority groups In the Metroplex offices as in Delortte & Touche as a whole, minorities and women are represented at all staff levels INROADS/Dallas Internally, Delortte & Touche sponsors other programs designed to aid minority students The Metroplex offices participate in INROADS/Dallas, a program designed to increase the opportunities for gifted minority students in their chosen professions Delortte & Touche sponsors students in the program as interns and contributes each year directly to INROADS to assist in the management and continuation of the program IOIg9 LLP a 39 - Additional Data and Other Information Recruitment and Hiring Initiatives In keeping with our firm's affirmative action policy statements, the Metroplex offices actively recruit minority accounting students from major southwestern colleges and universities In addition, a Metroplex office recruiter visits two predominantly minority college campuses each year Administratively, we have employed minority high school students from inner-city magnet high schools on a vocational work/study program Minority Professional Association In addition, the Metroplex offices of Deloitte & Touche provide both financial support and speakers for the National Association of Black Accountants and other minority business and accounting groups Deloitte & Touche has often enlisted the services of various of the many qualified minority accounting practices in the Metroplex By often joining in such joint venture relationships, we believe we meet and exceed the true spirit of many public sector entities' minority business enterprise goals and our own affirmative action policies Summary of Deloitte & Touche Perspective Deloitte & Touche is extremely proud of its record with respect to human resources Our goal is to recruit and retain the "best and brightest" professionals our country has to offer We know that efforts in this area are important to the City, so we take this opportunity to summarize for you our firm's progress in the recruitment and retention of women and minorities Valuing Diversity Deloitte & Touche has established the Minority Development, Retention and Recruiting ("MDR2") Committee to stimulate, implement and monitor programs for hiring, training, promoting and networking mmonty professionals In order for our firm to maintain a leadership positron among professional services firms, we need to continue to design and implement programs successfully managing and developing our minority professionals The MDR2 Committee consists of partners, line professionals and human resource professionals who are committed to helping the Firm achieve these goals The following outlines some of the Firm's achievements in the areas of recruiting, retention and development 06101 & Touche uP 0 -40- Additional Data and Other Information Recruiting and University Relations. The MDR2 Committee launched an intensive Historically Black College ("HBC") recruitment and development program We have established this program to enhance our recruiting and college relations at HBCs Dedicated recruiting teams identify and recruit the top African -American students as well as maintain good college relations at these campuses In the past year, we have more than doubled our full-time, entry-level hires and interns from these schools Our firm provides financial support of and recruits at the annual National Association of Black Accountants ("NABA") regional and national conferences We also participate with and identify students from the National Black MBA ("NBMBA") conferences Deloitte & Touche was also awarded the 1993 University of Pennsylvania Wharton Award for African-Amencan MBA Recruiting We provide major financial support for minority institutions and scholarship programs, and we sponsored the Southeastern Student Case Study Seminar for top minority students attending targeted HBCs Retention and Development The Deloitte & Touche Minority Outreach Network has been developed to support our minority professionals by assigning advisors/advisees nationwide in an effort to further develop mentoring relationships Professionals are given the opportunity to discuss matters related to their professional development as well as issues of special significance or concern to minorities We have entered into corporate sponsorships and have encouraged participation in appropriate professional associations, such as national and regional NABA events An additional retention program is the distribution of our MDR2 Crossroads newsletter quarterly to our minority professionals The newsletter includes profiles of successful minorities in the Firm, a listing of minority association events, an overview of the MDR2 Committee meetings and other pertinent articles Recently, Deloitte & Touche appointed Betty Maple, a partner in our Detroit office, to the newly created positron of National Director of Diversity to work with our national human resources in identifying ways to improve diversity within the Firm Community Involvement. Our involvement is rounded out by various community programs, for example, sponsorship and participation in dozens of "adopt -a -school' programs in urban areas nationwide, active participation in mentor programs in urban areas nationwide and long-time corporate sponsorship of the INROADS summer intern program at numerous practice offices (we discussed INROADS/Dallas earlier in this section) Deloitte & Touche has been a sponsor of the Harlem YMCA 41- Deloitte & Touche up 0 Additional Data and Other Information "Black Achievers in Industry" project since 1973, which has been our way of recognizing on a national basis the contributions that outstanding African -Americans have made to Deloitte & Touche Professional Indemnity Insurance Deloitte & Touche maintains professional indemnity insurance coverage believed to be similar to the programs of other major accounting firms in the United States The similarity, however, is assumed, rather than known, because data about professional indemnity insurance coverage has historically been among accounting firms' most proprietary and confidential information Deloitte & Touche believes that its carriers' interests, as well as its own, require that this confidentiality be preserved Deloitte & Touche has obtained professional indemnity insurance at the maximum levels currently available in the marketplace This insurance applies to all professional services rendered by Deloitte & Touche Deloitte & Touche's insurance coverage sufficiently covers the services detailed in the City's Request for Proposal Independence We confirm that we are independent with respect to the City of Denton and all component units as defined by generally accepted auditing standards and Government Auditing Standards (the Yellow Book), as revised in 1994 None of our partners, managers or staff have any direct or indirect financial interest in City contracts, and no one assigned to the audit of the City will be related to any employee of the City Upon notification of our appointment as your auditors, we will continue to ensure that all of our partners and professional staff meet all independence standards In addition, Deloitte & Touche LLP meets the independence requirements of the AICPA and the SEC In compliance with such guidelines, our firm will maintain professional objectivity and independence with respect to any services performed for the City At the time of this proposal, we are not aware of any potential conflicts of interest, past or present, with regard to the City of Denton License to Practice in Texas Deloitte & Touche is a limited liability partnership registered in the state of Texas and hereby affirms that we are a properly licensed certified public accounting firm Our Certificate of Registration is available upon request 0610 tte & Touche up 0 -42- Year -Round Consultation Our communication with the City of Dallas will not stop when the audit reports are issued We Concluding Remarks believe it is in the best interest of the City and Deloitte &Touche to maintain year-round communication with City management Open Imes of communication allow us to provide you with insights on changes in accounting principles and upcoming standards which will give the City a head start on addressing issues Likewise, you can keep us apprised of changes in City policy and of significant transactions We are available to City management at any time for consultation on accounting, operational, systems and pension/actuanalissues Communication of issues on a timely basis during the year, and early resolution of those issues, ensures a smoother year-end closing and fewer "last minute" surprises Deloitte & Touche as Business Advisor We take pride in our ability to offer the City sometlung more than basic accounting and auditing services We want to be the City's business advisors Our In This Section management comment letters are a key part of that business advisor Year -Round Consultation role Deloitte & Touche as Business Advisor LLP a 43 - Concluding Remarks During the course of audit fieldwork, our staff will see a significant portion of the City's accounting functions and operations Our external perspective allows us to give you fresh insights and innovative ideas on ways to improve efficiency and effectiveness of accounting and operational areas We believe our business advisor approach is unique We have a wide range of expertise, locally and nationally, which we can call upon to assist the City in achieving its goals The breadth of governmental service of our Metroplex offices gives Deloitte & Touche a singular ability to identify issues and call upon the experience of in-house professionals to provide solutions Our management comment letters are designed to communicate these issues and solutions DOIONte & Touche uP 0 ME We control our professional fees • by • Making significant, ongoing investments in enhancing our Cost Proposal audit tools, techniques and technologies • Coordinating manpower Our firm has undertaken many initiatives in recent years to utilization, budgeting our services on a task basis and ensure that our professional services are cost-effective monitoring results against that budget • Regularly reviewing the progress of our audit performance with our clients • Obtaining advance fee agreements for additional services as requested We would be pleased and excited to provide professional services to the City of Denton Accordingly, we pledge to you quality professional services at a reasonable cost We exercised special care in selecting a management team to provide you with quality service, and we have set our fee to reflect our desire to serve you -45- Appendices Appendix A - Resumes uP 0 Project Role - Director, Audit Services • Sixteen years of public accounting experience • Firm -designated specialist in the public sector • Participation in compliance audits under the Single Audit Act of 1984 for various governmental entities • Experience in providing agreed - upon procedures, including litigation support, fraud investigation, acquisition due diligence and joint operation audits • Experience in reviews of internal audit departments • Microcomputer specialist with experience in developing customized microcomputer applications for service clients • B B A, Abilene Christian University, summa cum laude, 1981 • Continuing Education 160 total credit hours of continuing professional education obtained during the past two years, including 141 credit hours specific to government accounting and auditing Terry D. Kde, CPA Director, Audit Services City of Burleson City of Cedar Hill City of Hurst City of Lancaster City of Rowlett Town of Highland Park Gregg County Tarrant County Carrollton -Fanners Branch ISD Hurst -Euless -Bedford ISD Fort Worth ISD Garland ISD Plano ISD Richardson ISD Grapevine-Colleyville ISD Texas Education Agency Lancaster Housing Authority Dallas Area Rapid Transit Dallas County Utility Reclamation District Dallas/Fort Worth International Airport North Central Texas Council of Governments pity River Authority American Institute of Certified Public Accountants Texas Society of Certified Public Accountants Texas Association of County Auditors Tarrant County Food Bank Adopt -A -School Program Government Finance Officers Association (GFOA) GFOA of Texas ssociation of Governmental Accountants [ember, GFOA Certificate of Achievement for Excellence in Financial Reporting Special Review Committee IYY411O � George A. Scott, CPA Regional Partner -in -Charge, Public Sector Services, Deloitte & Touche Protect Role - Concurring Partner • Twenty-two years of experience City of Addison American Institute of Certified with Deloine & Touche Firm- City of Baytown Public Accountants, designated specialist in education City of Burleson Governmental Accounting and services and governmental City of Cedar Hill Auditing Committee, Chairman accounting City of Denton Texas Association of School • National Audit Partner for City of Farmers Branch Business Officials Deloitte & Touche K-12 and City of Port Worth Panel Chairman, ASBO Certificate Arbitrage Rebate Services City of Garland of Excellence Special Review • Serves on Governmental City of Grapevine Committee Accounting Standards Board's City of Houston Government Finance Officers Public Authorities, Reporting City of Irving Association (GFOA) Model and Governmental Not- City of New Orleans GFOA of Texas for -Profit Entities Task Forces City of Plano Member, GFOA Certificate of • Chairman of the American City of University Park Achievement for Excellence in Institute of Certified Public Town of Highland Park Financial Reporting Special Accountants' Governmental Dallas/Fort Worth International Review Committee Accounting and Auditing Airport Communities in Schools, Board of Committee Dallas Area Rapid Transit Directors and Treasurer • Protect partner on the Texas Dallas Independent School District Intercultura, Board of Directors and Education Agency's Public Dallas County Treasurer School Financial Accountability Fort Worth ISD Texas Tech University Southwest System project Carrollton -Farmers Branch ISD School of Government Finance, • B B A, Texas Christian Plano ISD Advisory Board of Directors University Houston ISD Government Accounting Standards • Continuing Education 180 total Dallas ISD Advisory Council, Vice credit hours of continuing Richardson ISD Chairman of Agenda Committee professional education obtained Jefferson Parish Public Schools Practitioner Publishing Company - during the past two years, Garland ISD Editorial Advisory Board including 144 credit hours Texas Education Agency Texas Education Agency - specific to government Texas Employees Retirement "Coordinating Task Force" accounting and auditing System Texas Lottery Commission Texas Natural Resource Conservation Commission Texas National Research Laboratory Commission State of Arkansas Trinity River Authority of Texas Utah State Office of Education State of Oklahoma & e UP Scott Henderson, CPA Audit Manager Project Role - Audit Manager • Five years of experience serving Union Pacific Resources Texas Society of Certified Public governmental entities City of Denton Accountants • Firm -designated specialist in GS Roofing American Institute of Certified state and local government Davod Public Accountants accounting, reporting and Stevens Graphics auditing SJBRT • Participation in compliance PBRT audits under the Single Audit Act MSR Exploration of 1984 for various governmental entities • Extensive training and experience in utilization of the Firm's computer auditing software and techniques • GFOA Certificate reviewer • B B A, University of Texas • Continuing Education 120 total credit hours of continuing professional education obtained during the past three years, including 24 credit hours specific to government accounting and auditing Project Role - Audit Technical Manager Seven years of experience serving governmental entities Firm -designated specialist in state and local government accounting, reporting and auditing Participation in compliance audits under the Single Audit Act of 1984 for various governmental entities Extensive training and experience in utilization of the Firm's computer auditing software and techniques Has participated in numerous special projects involving local governments, including the Texas Education Agency's Public School Financial Accountability System project GFOA Certificate reviewer B B A, University of Texas at Dallas Continuing Education 173 total credit hours of continuing professional education obtained during the past two years, including I I I credit hours specific to government accounting and auditing David B. Pate, CPA Audit Manager City of Garland City of Denton City of The Colony City of Bryan Town of Highland Park Fort Worth Independent School District Plano Independent School District Garland Independent School District Texas Education Agency Dallas Area Rapid Transit Lincoln Property Company Motel 6 Texas Society of Certified Public Accountants American Institute of Certified Public Accountants Texas Association of School Business Officials mber, GFOA Certificate of Achievement for Excellence in Financial Reporting Special Review Committee Ioi& LLP 0 Jay Riley Director, Local Government Consulting Project Role - Director, Local Government Consulting • Director, local government consulting for the Dallas/Fort Worth offices of Deloitte & Touche, with over ten years' consulting experience and over 11 years' experience in municipal government, including City Manager for the tides of Lancaster and Navasota, Texas • A firm -designated specialist in serving cities, school districts, state agencies and governmental entities, with specialization in management audits, operational reviews, financial analysis and planning, performance auditing and human resources • Project Manager on the Texas Education Agency's Public School Financial Accountability System project • M P A, East Texas State University • B S , The University of Texas at Austin • Continuing Education 120 total credit hours of continuing professional education obtained during the past two years, including 100 credit hours specific to government accounting and auditing City of Dallas City of Denton City of Farmers Branch City of Port Worth City of Plano City of Richland Hills Dallas/Fort Worth International Airport Fort Worth Independent School District Garland Independent School District Houston Independent School District Irving Independent School District Plano Independent School District Richardson Independent School District Select Committee on Public Education Spring Branch Independent School District Texas Comptroller of Public Accounts Texas Education Agency Town of Addison Utah State Office of Education Southwest School of Government Finance, Faculty Member Project Role - Director, Tax Services • Fifteen years' experience as a tax specialist with Deloitte & Touche • Technical manager for the development of arbitrage rebate services for Deloitte & Touche • Frequent speaker on tax issues, particularly in the area of arbitrage rebate • Represented clients at all levels of Internal Revenue Service • Supervising or consulting manager (with primary technical responsibility) for arbitrage services to Delonte & Touche clients throughout the nation • Master of Accounting, Rice University B A in Economics, Rice University Continuing Education 110 total credit hours of continuing professional education obtained during the past two years, including 26 credit hours specific to government and government - related accounting and auditing R. Andrew Parker, CPA Director, Tax Services City of Davis, California City of Lansing, Michigan City of Fort Worth City of Alameda, California City of Boise, Idaho City of Chicago, Illinois City of College Station City of Davenport, Iowa City of Denton City of Elyria, Ohio City of Hayward, California City of Kings Mountain, North Carolina City of Milford, Connecticut City of Orange, California City of Pine Bluff, Arkansas City of Piqua, Ohio City of Rocklin, California City of Roseville, California City of Asheville, North Carolina City of Los Angeles, California City of New Britain, Connecticut City of Oklahoma City, Oklahoma State of Utah State of Hawaii Commonwealth of Puerto Rico American Institute of Certified Public Accountants up 40 Appendix B - Representative Governmental Clients Served by the Dallas/Fort Worth Metroplex Practice ur a « _ k ! §» k \ : \ \ \\ m r=94 9 0c !a , > �f-! , #_ )/ 2| ) { - !\ ` k� {/o | (k kjE| : ! \ k ƒ ƒ/ I\2f { �k!\K2f $§�ƒ{ $f§!` �2tf|ot +f)■&�!&!; f2`E |a 5 !a);;rmk;-:©� !! ! )\7k§) );2$!k) 017L /7\))/ ■ )/ ' Ilk <a k) §k �a 00§ « « * * , k _ \ ƒ 4) j/ kk )/ \/ (& }k {( {& {i {& /! A=o= o= a= o= o= o= os ) kr \ §f « k(7 S!r § ||I ! , 2 §2; ■ ■ &A! `t■ ;a777 52,E©7� ��« t!f «r; 2 $ !�) )!0 0of : "d16 I- m5 E S�( ; § )� ) kk� }\� k2 _D Ho <A!«0x 7f � k! �!k ■ )! §) <J )k * � oa {| i () � % ! { 0. !: ®� �$ �/ �f �� )\ { \/ K7 \/ \} ƒ/ { !/ os o= o= C5 o= o= o=oc e= & § 2! 0 � § - k� 0 | » a k) ! ) � )/ \) @ )J §k k! !` t ) / #z : � k+ 7} g{ fA )/ )m /( Z! OR t/ {/ oc oc os a= = oc ;2 \ ® E 0'o0 r a 0 E §k\ | ) f \ {! t \ke ( k kk{ :am I■ �)'|!;_� \$k /kf§&7\kcc k■)m\§)/ �,=0C/) ft§ 8 §\! 75 2aE ƒ! \� /}) )�� } §�! §�\�/�rD . 7| $ � i2 \k\ a! §2 * + a _ { \\ , ek §2 \ \2\ \ (( wm e= :k= !m $M o= - ■■ | �\k ( § § ) / k | k om- mf{� k! - r!! k{\) ®� } ~ k JCL U) / \tff & , �k{Et�f 2 !MEW 0M i cvL,a M0 �a0 �\ ( J 2;ooz!!O £!(Lo !o k!§ ■ k! o! /D ) k k ) k ® k !_ ! { { ]ff U) k/ ) ��/ LU \k ƒ�k�� 2= j\ \ g= - 2% -= e-= 8 - ) ■ � _ ) ƒ ){ § | ! E k )\ ! f ■ / \ME §{k # ®U E 00 | )! §/ J) o! F )) } r nm / : \# \f\ ro {\ 0_ tm ©§ Z- ,m >_ !4% S U.< k - elf- § § \�c � ��� - § ) !!{k\00 ! £ & !3!!!#f A A {Cc 2§ k2 ; ` _ �— { �k� �!} § { /k ) !f ! 2�§ ,a! a^ !§ ! ®E2 ;E! »/ tt fƒƒ {)k +{! ,0. )& Jk k#& )k/ k{ k\ k\ ƒ( \\ \\\ )\ §)\ §k\ * # ■ |ERE ® /a2 ,o Ec § ) _ ,( ,;|® ! / � § ) t_I , \ § _ ter£;° ! §k / \! k)jk0- \ \) �c� \wk k))\kk{ ` ) }J Irro'. §� «! )k - oa !` \7 !my ƒ§i 7 / »®= S) ) k f+ )\ ) C. ( 2 k// \(!/ f / \) )f/ 7)/ {)\ /) \\ ))\ �\\ )/)\ 2!\ $ * Appendix C - Peer Review Report UP 0 Peer Review Report O ERNSTa CCP µ wi°nuer°wA+u'' MNa �h�.i1�90! �E110aYLLP �maiuw•h^LL^ ro eM°° Eua b° Fnm^, tdh^ odP�adv� � d dm'n° "e1NW wLv Mu,W a a, No 1996 &ERAIr& YOUn'G[[P 'e Mmmugti QY°Iht k Taypsl lLP ^ Po q yam, he ft6ft*W Fyb llyg , b mw°Wwbw �'°^PW,y„ by °oA CO�WaI oW mcp. 4kwy, Qbm °*w +�^01 4yhh 4e +Yrtea N No°M 'n1,w ^aWi �9uWelly�ea_n�h�M�. 4 �mOYNhtl ^wozmFWe Wn py,h� '- Z W.e`fubav ofo°°„C^Nt W "¢ 01 Ph,hy u aAWNn PhNeOw a ) bp, Lbeh,W °'I "^ °buy � °ot. -� 'r�nPuuoOgL'b�bw,bi.°u` ,�„n �wro)eu, ba F^°,MWNLgy�M wYu„oLp� r,,,u "`°p0L0^buId A,w Fw U a Sua TOA1°°MP F10^Pmo,� PW °bbYl n'^Fira lu, ^PotlaM`"M"W )0aw.he^ b°`mllyMmt�.ah "h^^.i W^w � Hem° Fift P)wi' a., W)� Fob �.hbe,uW H ld 'M '^hhYeppyV bMd Mdoft ^'4. Pq gWq MWa L � aWrml°^Wpr ye�urn ,y �f 08181 6& lbuche LLP O Partners 30 $290 $145 $ 4,350 Managers 72 $200 $100 $ 7,200 Supervisory Staff 250 $130 $ 65 $16,250 Staff 430 $ 70 $ 35 $15,050 Total hours/Personnel 782 $42,850 Other Expenses (Credits) Typing and printing of reports $150 $ 150 Total Not -to -Exceed Cost - Gross $43,000 Internal Audit Hours - Optional Adjustment* $ 35 $ 7,000 Net Total with Internal Audit Adjustment $36,000 Partners 30 $300 $150 $ 4,500 Managers 72 $208 $104 $ 7,488 Supervisory Staff 250 $136 $ 68 $17,000 Staff 430 $ 72 $ 36 $15,480 Total hours/Personnel 782 $44,468 Other Expenses (Credits) Typing and printing of reports $150 $ 150 Total Not -to -Exceed Cost - Gross $44 618 Internal Audit Hours - Optional Adjustment* $ 36 $ 7,280 Net Total with Internal Audit Adjustment $37,338 *To be negotiated on an annual basis This represents only possible allowance for assistance Cost Proposal Form Without With Internal Audit Internal Audit Assistance Assistance 1997 $43,000 $36,000 1998 $ 44,618 $ 37 338 1999 $46,116 $38,795 TVI�Ix seitalanvC�tavi�tiC=�za., xYC�vi.^„^."T�v".".. Sl , Managers•: Supervisory• hours/Personnel 782 $46116 OtherTotal •- 'Total Not -to -Exceed Cost Gross Audit Hours - OptionalInternal Net Total with Internal Audit Adjustment $38,795 d'^vM'.�.�' Y..:._. .+...ui': .me w`..Xe�' i •��8ii.'J�-1�'a�.:�_I tit • �. •. ' ...w '±"""'.' Tp '.L'.ky ANd 441i^,rll 'FY ai M�F ;w- � �.* 41y^♦� - • t •1 I1l Partners •• Managers0• •0 Supervisory Staff $130 Total hours/Personnel $ Other TotalNot-to-Exceed •Gross Audit Hours - OptionalInternal TotalNet • Adjustment • To be negotiated on an annual basis This represents only possible allowance for assistance "These rates are subject to change based on the scope of the project and the type of specialist required for the work RECEIVED 5 13 97 4 28PM, 214 777 7325 -- DENTON•CITWACCTO, k1 iMT BY DELOITTE & TOUME 5-13-97 , 5 OOFN , DOWNTOWN D&US 18173837789 Deloitte & ^Touch8 LLP a May 13, 1997 City of Denton Kristin Newman Controller 215 E, McKinney Denton, Texas 76201 Dear Kristin, Suite 1600 Texas Commerce rower 2200 Ross Avenue Dallas Texas 75201-6178 Tnlephow (214) 777 7000 As you requested the total not -to -exceed audit foes for the years 2000 and 2001 are Without With Internal Audit internal Audit Assistance Amstance 2000 $47,730 $40,330 2001 $49,400 $41,800 fhe fees with Internal Audit Assistance assume 200 hours of aasistancro just as the other fees listed in Soohon 8, Cost Proposal If you have any questions feel five to call me at (214) 777-7488 Sincerely, sl. P,)Qp David B Pate Manager TOIn1" l4wpa r4i