Loading...
1997-149AN 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: ~ 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. ~ That the expenditure of funds as set forth In the Agreement are hereby authorized. ~ That this ordinance shall become effective Immediately upon its passage and approval. PASSED AND APPROVED this the~-day of ~, 1997 ATTEST: JENNIFER WALTERS, CITY SECRETARY APPRO D AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY U 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 Munlclpal~orporatlon, with its prlnclpal off~ce at 215 E McK~nney Street, Denton, Denton County, Texas 76201 (hereinafter referred to as "CITY") and Deloitte & Touche LLP, a L~mlted Liability Partnership, w~th an off~ce at 2200 Ross Avenue, Suite 1600, Dallas, Texas, 75201 (hereinafter referred to as "AUDITOR") acting here~n, by and through their duly authorized representatives WHEREAS, CITY desires to engage AUDITOR to provide audit services as here~n deflned, and WHEREAS, AUDITOR ~s w~lllng to provide such services to CITY, NOW THEREFORE, ~n consideration of the promises and mutual undertakings here~n contained, the part~es agree as follows ARTICLE I ENGAGEMENT OF AUDITOR The CITY hereby contracts with AUDITOR, as an ~ndependent contractor, and the AUDITOR hereby agrees to perform the services here~n ~n connection with the engagement as stated ~n the Articles to follow, with diligence and in accordance w~th the h~ghest professional standards customarily obtained for such services ~n 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 Audlt~n~ 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 ~n accordance with generally accepted auditing standards, Government Aud~tlnq Standards, issued by the Comptroller of the United States, OMB's Compliance Supplement for Single Audits of State and Local Governments, the applicable OMB C~rcular, Audits of State and Local Governments, and AICPA Statement on Auditing Standard No 63, Compliance Audltlnq Applicable to Governmental Entitles and Other Recipients of Governmental F~nanc~al 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, offzclally accepted and agreed~upon Engagement Letters to be attached as Amendments Number One (1) through F~ve (5) hereto These fzve (5) amendments wlll be attached at the beginning of each annual engagement E Durmng any f~scal year covered by th~s Agreement, CITY may request AUDITOR to provide services ~n addition to the services provlded hereunder AUDITOR may, at its option, agree to provide such addltzonal services upon terms and cond~tzons as mutually agreed upon and outlined ~n Appendzx A Rates an Appendix A reflect the first f~scal year (1996-97) rates These rates wlll 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 DURATION OF AGREEMENT Th~s Agreement for audit services, as speclfzed herezn, for the fznanclal statements of CITY pertains to CITY's f~scal years ending September 30, 1997, September 30, 1998, and September 30, 1999, and, if CITY exerclses its option pursuant to Article VI, CITY's fzscal years endzng September 30, 2000 and September 30, 2001 Th~s Agreement may be sooner terminated ~n accordance wzth the provisions hereof If the CITY exercises the two option years, the extension shall be consmdered part of thzs Agreement Th~s extenszon wzll be documented by the CITY's receipt and offzc~al 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 flnanczal and compliance audzt work shall be completed no later than December 23, after the CITY's flscal year PAGE 3 end The City's Comptroller should be able at this time to begin preparation of the Comprehenslve Annual Financial Report ("CAFR") The CAFR should be available for print by the 3rd Monday ~n January following the end of the latest f~scal year AUDITOR's completion of the compliance and audit work for the CITY ~s subject to availability of the CITY's records The AUDITOR shall make all reasonable efforts to complete the services set forth herein as expedltlously as possible, and to meet the schedule established by CITY, acting through ~ts C~ty Manager or h~s 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 (~ncludlng, wlthout llmltat~on, 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 copzes of, CITY's books and records, B Access to CITY personnel, C Off~ce space and access to support servzces such as copying and telephone, D Written representations from CITY's attorneys, both internal and external, the latter may bill CITY for such servzces, E Written representations from CITY about the f~nanc~al statements and other matters, and F Closing of CITY's books and records of account in accordance with laws, regulatzons and professional standards applicable to the servlces provided hereunder CITY agrees with the provisions contazned zn the engagement letters for each of the fzscal years, as wzll 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 Septentber 30, 2000 and September 30, 2001 CITY shall exercise its renewal optmon 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 addltmonal 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 mncurred AUDITOR'S standard hourly rate varmes 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 mn Article II for the fiscal years ending September 30, 1997, 1998, 1999, and mf 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 applmcable, $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 (1) current audit requirements imposed by laws, regulations and professional standards relating to such services, (mm) expectations of reasonable cooperation with AUDITOR by CITY pursuant to this Agreement, and (mml) the absence of any mrregularmtles or circumstances which might necessmtate the extension of audit services beyond the normal scope of auditing services PAGE 5 C Should (1) lrregularmtles, (lm) the absence of such reasonable cooperation, (~) mncrease in the level of servmces required under applicable laws, regulatmons or professional standards, or other unforeseen condmtlons be encountered whmch mmght necessItate the extensIon of aud~tmng work beyond the scope of normal audmt~ng procedures, AUDITOR agrees to advise CITY promptly mn writing of the clrcumstances and to request an equmtable ad3ustment in the maximum fee before smgn~fmcant additional time ~s incurred by AUDITOR Any such requests for adjustments shall be mn writing and shall contamn an explanatmon of why the adjustments are necessary D CITY and AUDITOR agree to negotmate in good famth to determine an equmtable adjustment mn the maximum fee Should CITY and AUDITOR be unable to agree upon an equitable adjustment wmthln fourteen (14) days of AUDITOR's written request, or such other time permod as agreed upon mn wr~tmng by CITY and AUDITOR, e~ther party may, notwzthstand~ng any other provzsmon zn th~s Agreement, termmnate thms Agreement upon thirty (30) days written notice to the other party CITY shall be liable for tzme charges and expenses actually mncurred by AUDITOR except for any such addmtlonal tmme and expense whmch has been incurred as a result of the cmrcumstances necessztatmng the adjustment ARTICLE VIII BILLING AND PAYMENT A AUDITOR shall submit permodzc detailed ltemmzed lnvozces for tmme charges and expenses mncurred as the services hereunder are performed Such mnvomces are payable upon presentatzon CITY w~ll be mn material breach of this Agreement mf CITY's account becomes nmnety (90) days or more overdue AUDITOR may, at mrs sole optmon and wmthout wamver of any r~ghts pursuant to the termmnatlon provisIon mn this Agreement or otherwzse, suspend mrs services and resume them upon receipt from CITY of the full amount due AUDITOR whmch has been submitted by znvolce to CITY B Partzal payments to the AUDITOR wzll be made on the basis of PAGE 6 detalled ltemlzed statements rendered to and approved by the CITY through its Clty Manager or his designees, however, under no clrcumstances shall any statement for services exceed the value of the work performed by AUDITOR at the time a statement · s rendered C Nothing contained in this Article shall require the CITY to pay for any work which ~s not submitted in compliance w~th the terms of th~s Agreement CITY shall not be required to make any payments to the AUDITOR when AUDITOR is in mater~al default under thls contract for more than 30 days after receipt of written not~ce of such default from CITY D It ls specifically understood and agreed that AUDITOR shall not be authorized to undertake any work pursuant to th~s Agreement which would require additional payments by the CITY for any charge, expense or reimbursement above the maximum not to exceed fee as stated w~thout first having obtained written authorization from the CITY ARTICLE IX OWNERSHIP OF WORKPAPERS, DOCUMENTS, AND PROPERTY A Ail workpapers of AUDITOR shall remain the property of AUDITOR In addition, to the extent that AUDITOR utilizes any of ~ts property (~nclud~ng, without l~m~tat~on, any hardware or software of AUDITOR or any proprietary or confldentlal ~nformatlon 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 descrlbed ~n Article IX A above, all documents prepared or furnished by the AUDITOR for delivery to CITY pursuant to this Agreement are ~nstruments of servlce and shall become the property of the CITY upon the termlnatlon of th~s Agreement, and full and final payment of all undlsputed amounts owed AUDITOR hereunder The AUDITOR ~s entitled to retain cop~es of all such documents PAGE 7 ARTICLE X INDEPENDENT CONTRACTOR AUDITOR shall provide services to CITY as an mndependent contractor, not as an employee of the CITY AUDITOR shall not have or cla,zm any rmght armsmng from employee status ARTICLE XI INDEMNITY PROVISION AUDITOR shall mndemnmfy and save and hold harmless the CITY and · ts offmcers, agents, and employees from and against any and all lmab~lmty, clamms, demands, damages, losses and expenses, including but not lmmlted to court costs and reasonable attorney fees incurred by the CITY in each case solely for mn]ury, death and physical damages to real or tangible personal property to the extent resultzng from the negligent acts or ommssmons of the AUDITOR or lts offzcers, partners, agents, or employees mn the executmon, operation, or performance of thms Agreement, except that the indemnity provided for in this Artmcle shall not apply to any lmab~lmty resultlng from the sole negligence of CITY, zts offzcers, agents, employees or separate contractors, and zn the event of 3olnt, and concurrent negligence of both AUDITOR and CITY, responsmbllmty, mf any, shall be apportmoned comparatively mn accordance wmth the laws of the State of Texas AS a condition to the foregoing mndemn~ty oblmgatlon, CITY shall provlde AUDITOR wmth prompt notice of any clazm for whmch ~ndemnlfmcat~on shall be sought hereunder and shall cooperate in all reasonable respects with AUDITOR zn connection wzth any such claim AUDITOR shall be entmtled to control the handlmng of any such clazm, wmth full disclosure of any and all claims, and actmons taken thereunder, to the CITY, and AUDITOR shall be entztled to defend or settle any such clamm, mn mts sole dmscretlon, wmth counsel of mts own chooszng Nothing in thls Agreement shall be construed to create a PAGE 8 llabzlzty to any person who zs not a party to thzs Agreement and nothing herein shall waive any of the party's defenses, both at law or equzty, to any clazm, cause of action or l~tzgatlon fzled by anyone not a party to this Agreement, zncludlng the defense of governmental zmmunlty, whzch defenses are hereby expressly reserved ARTICLE XII INSURANCE During the performance of the Services under this Agreement, AUDITOR shall malntazn, throughout the duration of this Agreement, the following znsurance A Professzonal Lzabzlzty Insurance with policy llmzts of not less than $1,000,000 annual aggregate, with respect to negligent acts, errors, or omlsszons an connection wzth the professional services performed by AUDITOR pursuant to thzs Agreement B AUDITOR shall furnzsh insurance certificates or insurance polzcles at CITY's request to evidence such coverage The insurance policy shall contazn a provlszon that such policy shall not be cancelled or modzfled without thirty (30) days przor wrztten notzce gzven by the Insurance carrier to CITY and AUDITOR In the event of cancellation or non-renewal of such coverage, AUDITOR shall, przor to the effective date of the non-renewal or cancellatzon, deliver to CITY a Certzflcate of Insurance evidencing that a substitute policy furnishing the same coverage is in full force and effect ARTICLE XIII ARBITP~ATION AND ALTERNATE DISPUTE RESOLUTION The partzes may agree to settle any d~sputes under this Agreement by submzttlng the dispute to arbltratzon or other means of alternate d~spute resolution such as mediation No arbltratzon or alternate dispute resolution arlszng 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 Notwzthstandlng any other provision of this Agreement, either party may terminate by giving thzrty (30) days advance written notice to the other party B This Agreement may be termznated in whole or in part in the event of either party substantially falling to fulfzll its oblzgatlons under this Agreement No such termination will be effected unless the other party zs given (1) wrztten notice (delivered by certified mall, return receipt requested) of intent to termznate 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 termlnatzng party przor to termination C If the Agreement is terminated prior to completion of the ser- vzces to be provzded hereunder, AUDITOR shall zmmedlately cease all services and shall render a final bzll for services to the CITY wzthln 30 days after the date of termlnatzon The CITY shall pay AUDITOR for all servzces rendered and satlsfactorzly performed and for rezmbursable expenses zncurred przor to the date of termination in accordance wzth the terms of thzs Agreement Should the CITY subsequently contract wzth a new AUDITOR for the continuation of servzces on the audzt engagement, AUDITOR shall reasonably cooperate zn provzdlng information zn accordance with, and to the extent requzred by, applicable professzonal standards The AUDITOR shall turn over all documents prepared or furnished by AUDITOR for delzvery to CITY pursuant to this Agreement to the CITY on or before the d~te of termznatlon, but may malntazn 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 deslgnee), the Texas state auditing agency and the Un~ted States General Accounting Office shall be entitled during AUDITOR's regular business hours during the said five year period to inspect and deslgnate for copying AUDITOR's audzt workpapers relating to such completed audit Copzes will be made at CITY's or requestor's expense by, or under the control of, AUDITOR ARTICLE XVII NOTICES Ail notices, communications, and reports required or permitted under thls Agreement shall be personally delivered or mailed to the respective parties by depositing same in the United States mall at the address shown below, certlfmed mall, return receipt requested unless otherwise specified here~n To AUDITOR To CITY Deloitte & Touche, LLP City of Denton, Texas 2200 Ross Avenue ATTN Ted Benavldes Suite 1600 Title City Manager Dallas, Texas 75201 215 E McKlnney Denton, Texas 76201 Ail notices shall be deemed effective upon receipt by the party PAGE 11 to whom such notice is given ARTICLE XVIII ENTIRE AGREEMENT Th~s Agreement, including all Exhibits and Amendments annexed hereto and made a part hereof, constitutes the entire agreement between the part~es hereto w~th 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 th~s section ARTICLE XIX SEVERABILITY If any provision of this Agreement Ks found or deemed by a court of competent jurlsdlctlon to be ~nvalld or unenforceable, it shall be considered severable from the remainder of th~s Agreement and shall not cause the remainder to be ~nval~d or unenforceable In such event, the partles shall reform this Agreement to replace such stricken prov~slon w~th a valid and enforceable provision which comes as close as possible to expressing the lntentlon of the stricken provision ARTICLE XX COMPLIANCE WITH LAWS The AUDITOR shall comply with all federal, state, local laws, rules, regulations, and ordznances applicable to the professional services performed pursuant to thls 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 or~gln or ancestry, age, or physical hand~cap AUDITOR agrees that zn connection w~th the services to be provided to CITY hereunder that ~t w~ll comply w~th all applicable laws and regulations regarding employment d~scrlm~nat~on ARTICLE XXII PERSONNEL/CONFLICTS OF INTEREST A AUDITOR represents that it has or w~ll secure at its own expense all professzonal and support personnel requzred to perform all the services required under this Agreement Such personnel shall not be employees or officers of, nor have any contractual relations wzth CITY AUDITOR shall ~nform the CITY of any conflict of ~nterest under the professIonal standards of the AICPA or the Texas State Board of Public Accountancy that may be discovered or arzse during the term of th~s Agreement B All services required hereunder wzll be performed by AUDITOR All personnel engaged zn work shall be qualified, and shall be authorlzed and permitted under state and local laws to perform such services ARTICLE XXIII ASSIGNABILITY AUDITOR shall not asszgn any interest ~n thzs Agreement and shall not transfer any interest in th~s Agreement (whether by assignment, novation or otherwise) w~thout the prior written consent of the CITY PAGE 13 ARTICLE XXIV MODIFICATION OR AMENDMENT A No wazver or modzfmcatzon of thms Agreement or of any covenant, condmtlon or lmmltatmon herein contained shall be valid unless in wrmtmng and duly executed by the party to be charged therewIth and no evmdence of any wamver or modmflcatmon shall be offered or recemved mn evidence mn any proceeding arising between the partzes hereto out of or affecting thms Agreement, or the rzghts or obllgatmons of the parties hereunder, unless such waiver or mod~fmcatmon ms in wrmtmng, duly executed, and, the parties further agree that the provlsmons of this sectmon will not be wamved unless as herein set forth B No amendment of thms Agreement shall be valmd unless mn wrmt~ng and signed by both partmes ARTICLE XXV FORCE MAJEURE Notwithstanding any other provmsmon in thms Agreement, AUDITOR shall not be liable or held responsmble for any failure to perform or delays mn performIng mts obligations under thms Agreement, Including but not lmmzted to, the completion of the audmt and mssuance of its report thereon, which result from circumstances or causes beyond AUDITOR's reasonable control, mncludlng, wmthout lmmmtatlon, acts or ommssmons or the failure to cooperate pursuant to thms Agreement by CITY (~nclud~ng, wmthout l~m~tatlon, entmtmes or mndlvmduals under mts control, or any of their respectIve officers, dmrectors, employees, other personnel and agents), fire or casualty, act of God, strmke or labor d~spute, war or other vmolence, or any law, order or requirement of any governmental agency or authormty PAGE 14 ARTICLE XXVI MISCELLANEOUS A Venue of any suzt or cause of action under thzs Agreement shall lze excluszvely zn Denton County, Texas This Agreement shall be governed by and construed in accordance with the laws of the State of Texas B In accomplzshzng thzs engagement, AUDITOR shall take such steps as are approprzate to coordinate the work involved wzth related work being carrzed on by CITY C CITY shall asszst AUDITOR by placzng at the AUDITOR's dzsposal, all avazlable lnformatzon pertznent to the engagement, lncludzng prevzous reports, any other data relatzve to the engagement, and arrangzng for the access to, and makzng all provlszons for the AUDITOR to enter in or upon, publzc and przvate property as required for the AUDITOR to perform services under thzs Agreement D The headzngs of thzs Agreement are for znformatzonal purposes only and shall not in any way affect the substantive terms or condztzons of thzs Agreement E Each party represents that zt ls authorzzed to enter znto thzs Agreement and that the zndlvzdual executzng this Agreement on behalf of the party, is authorized to enter into this Agreement IN WITNESS WHEREOF, the Czty of Denton, Texas has caused thzs Agreement to be executed by zts duly authorzzed Czty Manager, and AUDITOR has executed this Agreement by and th~r~u~h its duly authorzzed underszgned D~rector on this the6~/~/~. day of PAGE 15 "CITY" CITY OF DENTON, TE~S Te~ Benavldes, City Manager ATTEST JE~IFER WALTERS, CITY SECRETLY APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY "AUD I TOR" DELOITTE & TOUCHE, LLP Terry ~lle, Director ATTEST A \AUDITSER K PAGE 16 Deloitte & TouCheLLP ~ City of Denton Technical Proposal II~l~t Apnl 1997 Intallatl~l Deloitte& Touche LLP Suite 1600 Telephone (214) 777 7000 ~ 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 Au&tor Selection Committee Delome & Touche LLP is pleased to present our quahfications to conunue to serve as independent auditors for the C~ty of Denton (the "City") We have taken pride In our service to the Cny and to the pubhc sector and are confident that you will continue to find our services to be of the highest degree of professionalism and quahty A crucial factor underlying our ability to continue bnnging you superior service is a simple one our relationship with you Our long-standing relationship with the City faclhtates open hnes of commumcaUon 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 comnutted not only to contmmng to prowde that level of service, but to enhancing xt We have a sohd, long-standing relauonship w~th the C~ty that can be characterized by enthusmsuc, quality service and our comrmtment to your needs We fully intend to mmntmn our professional relauonsh~p that has been mutually beneficial since 1986 We understand that the City ~s seelong an ~ndependent public accounung firm to conduct an audit of the Qnancial statements for the year ending September 30, 1997 The audit is to be conducted ~n accordance w~th generally accepted auditing standards and Government Auditing Standards, ~ssued by the Comptroller General of the Umted States, and the AICPA Audits of State and Local Government Umts and subsequent amendments The services will include an audit of the City's federal and state financial assistance programs under the Single Au&t Act, as rewsed, and OMB C~rcular A-133, resulting ~n the ~ssuance of the appropriate reports As a by-product of the audit, we will ~ssue a management letter addressing internal controls and operauonal ~ssues We are fully comrmtted to meeting the deadhnes for ~ssuance of the above reports as specified ~n your Request for Proposal Delome & Touche ~s a leading provider of accounting, fmancml reporting and consulUng serwces to local government enuues across the Metroplex In addiuon to the City of Denton, DeloltteTouche Tohmatsu International we currently serve other ~mpresslve governmental chents ~n the area, ~ncludmg the Garland, Plano, Hurst-Euless-Bedford, Grapewne-Colleywlle and Rmhardson Independent School D~str~cts, the C~t~es of Plano, Haltom C~ty, Garland and Hurst, the Town of Add~son, Tarrant County, Tarrant County Mental Health Mental Retardation, Tnmty R~ver Authority, and the North Central Texas Council of Governments Th~s pos~Uon of leadership has been attmned through a strong conumtment to our pubhc sector practace and the devonon of dedicated personnel who are fully trained m governmental accounting Our experienced staff ~s able to understand the chent's operations and exhlba sensmv~ty to management's concerns Delmtte & Touche utahzes several computerized audit tools to support our staff m ~ncreasmg efficiency and cost-effectaveness which will yield tanDble benefits to the C~ty Our AS/2 software is considered the most advanced audat software ~n the profession This will benefit you as we can download your ledgers and utlhze the spreadsheet you use m your day-to-day actlwtles for audit purposes Our leadership role m the pubhc sector ~s ewdent m our ongoing serwce w~th varmus regulatory ent~taes George Scott, Partner-m-Charge of Pubhc Sector Servmes ~n the Southwest Region, serves on the Governmental Accountang Standards Adwsory Comnuttee He ~s chmrman of the AICPA Government Accountang and Auditing Committee George also serves on several GASB task force comrmttees, Including the task force dealing w~th the proposed reporting model Delmtte & Touche has taken an actave role ~n workang w~th the regulatory ent~t~es to effect the changes reqmred by the Single Audit Act of 1996 The AICPA's gmdance on the new Single Audit Act ~s being drafted by a comrmttee headed by George Scott Four of the five full-tame pubhc sector managers and partners ~n the Metroplex practme are GFOA certaficate rewewers As such, the C~ty w~ll have access to key resources who possess m-depth knowledge of these critical ~ssues and can assist the C~ty with ~mplementmg changes and mowng mto the 21 st century Terry Kale, Audit D~rector m our Pubhc Sector Servmes Group, Southwest, ~s anthonzed to make representations for our firm and to b~nd our firm by a contract Our acceptance of the contract terms ~n your RFP ~s subject to complete rewew by the F~rm's attorney This proposal is a firm and ~rrevocable offer for 90 days Please feel free to contact h~m at (214) 777-7475 ~f you should need adthtlonal mformat~on about any aspect of th~s proposal Yours truly, Deloi e & TouChoLLP Why Retain Deloitte & Executive Summary Toucher We are eager and proud to have Deloitte & Touche is proud to submit thts record of you review and evaluate our track quahflcattons to continue serving as the C~ty of Denton's record and our commitment We beheve that m the end you will independent accounting f~rm agree that Deloitte & Touche ~s your tdeal ~ndependent accounting firm for these reasons · The efficiency and cordlahty of our relationship · Deloitte & Touche's record of achievement on your behalf · The cahber 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 lntang~ble costs of needless change Executive Summary The Ctty of Denton/Delottte & Touche Relattonship The crucial factor underlying our ability to continue bringing you superior service is a simple one our relat~onslup w~th you We know you, you know us There are no surprises, no unknowns on either side Deloitte & Touche knows your bus]ness your operations your competative environment your business strategy your ~ntemal organ]zataon your systems and procedures, informal as well as formal your culture your people This perspecuve enables us to see trends, anticipate opportunities and incipient problems, and present recommendations that suit your orgamzat]on and business goals Our service m the past positions us ideally to continue serving you ~n the future In add]tmn to the aucht, our concrete knowledge of your resources and changing needs extends to your reporting reqmrements, reformation systems and analysis, operatmns, 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 corarmtted 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 contmue to play major service roles - are a true umtary team They work well together, they work well w~th your executives and managers, your executives and managers work well with them Efficiency and Cost-Effectiveness Our audit approach and methodology enabled us to chmb 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 thsproportlonate risk Th~s enables us to put our resources where both you and we know they can do the most good rather than samphng and tesung at random, or treattng all areas of the business as d they were equally hkely to cause financial statement risk In short, we work smarter mstead of longer Cost of Change Even when fees are competitive, If any prowder of professional services is guilty of service lapses, foaled deadhnes, bad judgment, frequent techmcal Deloitte& TeuDheLLP Executive Summary errors or faulty relationship management, for example, it 1s 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 ~s imprudent In the accountang profession, it ~s generally accepted that ~t takes a firm about two years to become thoroughly fanuhar w:th a new client hke the C~ty All the major accounting firms absorb the direct costs they incur xn learning to serve such a new client But there are substantial costs to the chent, too, costs that can be measured in money, t~me and stress The mmn reason for staying w~th Deloitte & Touche, however, hes 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 Phdosophy Our service philosophy is a simple one and may be summed up as "uncomprorms~ng dedication to distinctive chent serwce" It xs the canon of our Chmrman, Mike Cook, and our professionals seek to embody th~s approach in all the work they perform for our chents Valued Chent The City w~ll be a most valued chent, not only of our Metroplex practice but also of our national orgamzatlon As a pledge of our commatment to you, we have taken several steps to ensure that the C~ty receives the degree of high-level attention ~t merits - attention from some of the best people our firm has to offer Your organization operates in a complex, h~ghly visible environment The C~ty needs an accounting f~rm that does not just "audit" but that can be a business adwsor that contributes to moving your C~ty forward We w~ll get involved to assist you in deahng with the many business issues the City faces Our approach to serwng a complex orgamzat~on hke the City of Denton is to · Appoint a local client service team w~th slolls, capablhtles and experiences to meet your needs · Obtmn staffing and techmcal assistance, as necessary, from members of the Firm involved :n s~rmlar engagements · Conduct extensive client service planning ~n concert w~th management Deloitte& ToucheLLP ¥ Executive Summary · Execute an audit plan specifically designed to meet your orgamzat~on's unique requirements Our team w~ll meet regularly to br~unstorm creative ideas for your cons~deration Ideas developed at these sessions w~ll be brought to your attention Th~s approach will work for the C~ty, because we w~ll obtain a thorough understanding of your reporting reqmrements, your regulatory relationships and your tax ~ssues, and we already have m-depth knowledge of the environment m which pubhc sector ent~t~es operate Our umque perspective allows us to see trends, anticipate opportumt~es, prowde knowledgeable assistance, make strong recommendations and perform audits of your entity, w~th a nunlmum of disruption to management and staff Our services to s~mllar ent~t~es ~n the past ~deally pos~t~on us to serve you m the future Conclusion We do not merely make promises - we dehver results - and we have the track record to prove it We meet deadlines, we are accessible and we are creative on your behalf We w~ll continue to take the lmtiative to ~dentlfy improvement opportunities and to develop plans for capturing them, and we will continue to bring outstandingly quahfied people to your service and keep them there In short, we w~ll continue to be fully responsive to the C~ty's needs Deloitte& TouDhBLLP Contents Section Page Cover Letter ~ Executive Summary m Table of Contents w~ 1 Firm Background, Pnnc~pal Officers and Prior Experience 1 2 Scope and Audit Approach 18 3 Proposed Schedule 35 4 Understanding of Work to Be Performed by the Internal Auditor 36 5 Other References 37 6 Additional Data and Other lnformanon 39 7 Concluding Remarks 43 8 Cost Proposal 45 Appendices A Resumes B Representative Governmental Chents Served by the Dallas/Fort Worth Metroplex Practice C Peer Rewew Report Ftrm Quahficattons and Experience Deloitte & Touche ~s one of the world's largest professional Firm Background, Principal serv,cesfirms-ahm~tedhabd~ty partnerstup providing Officers and Prior Experience comprehenslveaudmngand accounting, tax consulung and compliance, management consulting and actuarial services to thousands of public and private compames and governmental ent~t~es of all sizes through 106 offices throughout the Umted States Our U S firm has a full- t~me professional and support staff complement of 20,000, ~nclud~ng 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 Deloitte & Touche will provide semces to the C~ty of Denton Major local clients ~nclude the C~t~es of Denton, Plano and Garland, the Fort Worth, Plano and Rmhardson Independent School D~stncts, Tarrant and Dallas Counttes, the Dallas/Fort In Th~s Section Worth International Atrport Board, Umon Pacific Resources Company, Kimberly-Clark Firm Quahficat~ons and Experience Partner, Supervisory and Staff Experience and Quahficat~ons Corporatmn, and Texas Utilities Prior Engagements for the City of Denton Similar Engagements With Other Government Entitles Chent Listing Firm Background, Principal Our professionals are articulate, intelligent and highly trained individuals Officers and Prior with diverse backgrounds and slalls Many partners and members of the Experience 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 adrmnlstrat]ve staff, the Metroplex office is large enough to handle both the City's day-to-day and peak service needs Because of our strong practlc e 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 trmned and experienced professionals available to serve the City The professional staff by level and department is hsted 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 comrmtted 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 Kale and Jay Riley, all of whom will serve the City, devote 100% of their professional time to serving government chents The Dallas/Fort Worth practace of Delmtte & Touche has a staff of 571, including 54 partners and directors The professmnal complement ~s as follows ~ud~t M&A. Ta_._~xConsulting MSS ABC Valuation Support Total Partners/ Directors 17 2 9 10 6 3 2 5 54 Managers 20 3 26 34 16 9 10 I 119 Staff 100 54 69 25 14 14 I 277 Adrmn ~9 1 1_.~3 2~5 ~6 _~2 ~3 6.~2 121 Totals 146 6 102 138 53 28 29 69 571 Deloltta & TouCheLLP Firm Background, Principal Our firm's strong commitment to the pubhc sector means that the C~ty w~ll Officers and Prior be served by ~nd~wduals who are knowledgeable about governmental Experience accounting issues At the most basic level, th~s experience means that work for the City will progress smoothly and efficiently w~th no last-minute surprises More important, however, these skalled md~wduals have the breadth of experience to prowde workable, practmal solutions to ~ssues affecting crees your size Meeting the Public Sector's Needs Our Range of Services Conducting an audit of the City of Denton requires an 1n-depth knowledge of government operations We have demonstrated to our chents that we have that m-depth knowledge We have proficient, competent and experienced staff to complete the engagement in an effiment and t~mely manner We also have personnel available for consultation on a continuing bas~s who are experienced in governmental accounting In adthtmn to the professional staff we have selected to serve the C~ty, our Metroplex practice includes a large complement of accountants and consultants w~th a broad base of experience In rendering professional services to local governmental orgamzations Because of our diverse experience, we understand such ent~ties, their operations and the problems confronting them We are farmhar w~th statutory reqmrements, management practices, administrative and accounting systems, financial operations and pnnc~ples, and other factors that are umque to local government As a result of the depth of our sermce to government ent~txes, we provide our clients w~th many servmes beyond those tnvolved In the traahtional audit Some are provxded to support the audit (e g, actuarial evaluatmns of pensxon plans, when necessary) and some are prowded to management to xmprove the efhmencxes of their operatxons In hght of the soaring cost of pubhc services and dimlrnshlng revenue sources, our clients have found our ideas and services fresh, innovative and effective Some of our servmes available to the City of Denton are * Public Securities Offenngs (bonds and other debt strnctunng servmes) Bond Venficataon Services · Arbitrage Rebate Services · Tax Information Reporting · Management and Operational Rewews · Pnvattzation Stuches · Management Information Systems Servmes Deloitte& ToucheuP Firm Background, Principal * Rate Studies Officers and Prior * Actuarial, Benehts and Compensation Services Experience · Business Systems Consulting Services Summarized on the following pages are the types of additional services we have provided to our clients Ftnanctal Servtces · 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 farmhar with the relevant procedures, lncluchng the gmdehnes set forth ~n the GFOA publication, Disclosure Guldehnesfor Offertngs of Securittes 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, ~ncludlng the status of proposed regulations under consideration by the Internal Revenue Service and the new requirements by the Securitaes and Exchange Comnussion that will ~mpact mumc~pal securities offerings The amendment to SEC Rule 15(c)2-12 now "prohibits a broker, dealer or mumcipal securities dealer ("Participating Underwriter") from purchasing or selhng municipal securities unless the Participating Underwriter has reasonably determined that an ~ssuer of mumc~pal 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 reformation and event notices to various information repositories" Th~s, therefore, reqmres additional annual reporting by all issuers of municipal securities · Bond Verification Services - A national team of bond verification speclahsts ~s located in our Houston office Th~s specialized team serves clients across the country, and their expertise would be avmlable 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 Servtces Typically, tax consultation is not significant to a government unit However, the Tax Reform Act of 1986 ~mposed several tax law changes that Deloitte& TeUChBLLP Firm Background, Principal have substantial impact on the operations of local government Perhaps the Officers and Prior most complex and restrictive of these changes are the arbitrage rebate Experience 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 detmhng 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 Consulttng Servtces Our Management Solutions & Services ("Solutions") Group was developed to provide a balanced range of consulting services consistent with our practice as certtfied 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 attmn 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 DsIottt8 & TouCheLLP Firm Background, Principal Our approach has always been to provide our clients with the freest Officers and Prior professional services available We make every effort to render prompt, Experience effective and efficient services wherever and whenever needed We staff each engagement with highly quahfied personnel who have the sk~lls and experience to match the client's needs In addition, we w~ll make available to the C~ty 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 analys~s of an entlty's operations and offers recommendations for streamlining operations, ~mprovlng programs and cutting costs The service focuses on the efficiency and effectiveness of a particular department, d~wsion or function An orgamzatlon and staffing analysis can be included Recent management audits conducted by Deloitte & Touche consultants have ~ncluded such areas as purchasing, mumclpal court, risk management and pubhc works · Privatization Studies - Prlvatlzat~on 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 deterrmne the real cost of a service by analyzing direct and indirect costs and the level of service currently being provided If pnvatszation 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 lnfonnataon system strategic plans, selecting hardware and/or software, deslgmng operational environments and determlmng commumcatlon/support reqmrements Since we do not have any propnetary 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 m performing rate studies for mumc~pal governments and public utilities We have specialists in our Dallas office who have conducted cost of Deloitte & TouDheLLP Firm Background, Principal service studies and rate analyses to develop water and sewer rates and Officers and Prior rate structures for crees in the Metroplex and throughout the nation Experience · Actuarial, Benefits and Compensation Services - Our ABC Group provides a full range of services ~n the areas of employee benefit plans, compensation plans, employer health care services, and pension and actuarial services These services are particularly valuable to our chents as personnel and benefit costs continue to spiral higher · Bus]ness Systems Consulting Services - Our Business Systems Consulting Group consists of full-Ume professionals speciahzmg m PC/LANs and mamcomputer-based financial systems They have helped many entitles install new software packages as well as helping compames in nghtslzmg their information systems and related orgamzat]on structure TMs scope of expertise is unsurpassed, most firms offer one or only a few of these services Our ablhty to meet many chents' needs from within our organization is a factor that dlstingmshes Deloitte & Touche Moreover, our chant-centered service approach ensures that all aspects of the work we do for the City will be relevant and well managed Included m Appendix B is a hstmg of the services Deloitte & Touche provides to our governmental clients served by the Metroplex offices We have a depth of experience servmg all types and sizes of governmental orgamzatlons Our clients range from metropohtan cltaes, major school districts and regional entitles to smaller suburban cities, school districts and other entitles New Accounting Standards Our comrmtment to the public sector practice includes active momtorlng of accountang issues and standards We beheve it is important to assist our chents In the early implementation of new standards after joint ]dentlficataon of the advantages that early implementation will provide Deloitte & Touche conducts an annual Governmental Accounting Standards Board ("GASB") update semanar for our clients to keep them abreast of recent pronouncements George Scott is former Chatrman of the American Institute of Certified Pubhc Accountants Governmental Accounting and Auditing Comrmttee and former Chmrman of the Texas Society of Certified Pubhc Accountants Governmental Standards Committee In addmon, Deloitte& ToucheLLP -7- Firm Background, Principal George serves on the Governmental Accounting Standards Board's Pubhc Officers and Prior Authormes Reporting Model and Governmental Not-for-Profit Entities Task Experience Forces The involvement of the C~ty's engagement team members ~n professional organizations ~s described later in this section Quahty Control We enthusiastically endorse the increasing professionalism of governmental accountang that the Government Audtttng Standards' reqmrements express As part of our overall practice, Deloitte & Touche has subnutted to AICPA reviews of our quahty control pohc~es and procedures since the reviews were mmated m 1977 As a member of the SEC Practice Section of the AICPA D~v~s~on for CPA F~rms, we have received an unqualified op]mon In each peer rewew, conducted every three years Our latest peer rewew report, f~led ~n November 1996, is included as Appenthx C of th~s proposal All government engagements were subject to select]on during the peer review In addition to th~s external peer review, we also conduct internal peer reviews of each Deloitte & Touche office across the Umted States to ensure comphance w~th our own ~nternal quality control procedures We beheve that few other firms can match th~s rigorous system of both internal and external reviews of their quahty control systems The respect our peers have for the h~gh quahty of our professional services ~s demonstrated by the fact that Deloitte & Touche has been selected by both Price Waterhouse & Co and Arthur Andersen & Co to provide peer rewews of their accounting and auchtmg practices In adtht~on, the Metroplex office of Deloitte & Touche has had three quality control rewews by federal autht agencies performed ~n the last three years No findings were ~dentaf]ed through these rewews Our performance met the reqmrements of the GAO, the AICPA and OMB Circular A- 128 We also confirm that no thsc~phnary actions have been taken or are pending against the Metroplex offices during the last three years w~th federal or state regulatory bodies or professional orgamzatlons Deloitte& TouDheLLP Firm Background, Principal Why Deloitte & Touche Officers and Prior Experience 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-oriented, Involvement throughout the year · Top-Caliber People - A team of professionals with a "hands on" service style and the right mix of experience serving pubhc sector entitles 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 fanuharlty with public sector entitles 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 comnutted to excellence and strive to provide chents with proactive advice, creativity, responsiveness, top-cahber people and value-added service If we are accepted as your Independent accountants, the City of Denton would become an important chent of our Metroplex practice Partner, Supervisory and Staff Experience and Quahficattons 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, authtmg and consulting services Deloitte & TouCheLLP -9- Firm Background, Principal · A network of firmwide resoumes, consisting of partners and managers Officers and Prior whose expertise is available to ~ntegrate ~nto our services to the C~ty Experience Selecting the Right People In choosing the members of our service team for the C~ty, we have drawn heavily on the knowledge and understanding of the public sector that we have acquired dunng our relationship w~th dozens of state and local governments over the years Accordingly, our team members provide a strong blend of relevant ~ndustry expertise, techmcal proficiency and understanding of your operations, as outhned in ttus section First and foremost, we understand the importance of timely and responsive service to the C~ty 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 serwce is the first priority m all of our activities Our proposed C~ty of Denton service team w~ll work well with your people They have a track record of prowdlng responsive service to clients, and each member has developed the commumcatlon skills to frame valuable suggestions ~n terms of action and results Engagement Orgamzat]on The audit of the C~ty will be directed by Terry Kfle Terry's personal involvement ensures the high level of attention that the City and its management merit, and guarantees our comnutment to provide quality service Our service team ~s composed of management with the professional stature and maturity to work confidently and effectively w~th elected officials and other C~ty personnel All members of our client service team who are CPAs are hcensed to practice in the State of Texas They are slalled at managing all types of public sector engagements, have ~n-depth pubhc sector accounting and auditing expertise, and are creative professionals and astute business advisors Deloitte& TouuheLLP Firm Background, Principal City of Denton Officers and Prior Experience Prmc~pal Servtce Team Client Serwce Team Dtrector of Chent Serwces Terry YAle, CPA, a flrm-des;gnated spemahst in governmental accounting and reporlang, w~ll serve as D;rector responsible for the dlrectton of our overall services to the C~ty Terry has 16 years of d~vers~fied audit and accounting experience m the public sector and has part~mpated m numerous special projects ~nvolwng local governments, ~ncluchng comphance audits, comphanee with bond covenants, specdied auchtlng procedures for state programs and agreed-upon procedures Chents have ~ncluded the City of Hurst, C~ty of Lancaster, City of Haltom City, City of Burleson, Texas Education Agency, Dallas Area Rap~d Transit, Tr~mty R~ver Authority of Texas, North Texas Councd of Governments, Turrant County, Gregg County and Hurst-Euless-Bedford Independent School District Firm Background, Principal Concurnng Partner Officers and Prior Expemence George Scott, the Regional Partnerqn-Charge of our Pubhc Sector Services Group, Southwest, wdl serve as Concurring Partner to the C~ty George is a firm-designated government spec~al~st who spends all h~s t~me serving pubhc sector chents He ~s famd~ar w~th both the techmcal and commumcatlon needs of orgamzat~ons such as the C~ty George serves as Natmnal Audit Partner for Arbitrage Rebate Servmes In addition, he ~s a national spemahst on the single audit and Chmrman of the AICPA Government Accounting and Auditing Committee George serves on the Governmental Accounting Standards Adwsory Comnuttee Audtt Manager Scott Henderson, CPA, a firm-designated specmhst ~n state and local government accounting, reporting and auditing, will serve as audit manager w~th day-to-day responsibility for the management of our serwces to the C~ty Scott has five years of pubhc accounting experience, serving both the pubhc and private sectors He has extensive knowledge of and experience m local government accounting and auditing, including GASB pronouncements H~s governmental chents have ~ncluded the C~ty of Denton His nucrocomputer skills and experience w~th AS/2, our proprietary andlt software, w~ll be an asset to the C~ty Audtt Techntcal Manager David Pate, CPA, will serve as Audit Techmcal Manager on the City engagement Dawd, a GFOA Cert~hcate Rewewer, has seven years of pubhc accounting experience, serving both the pubhc and private sectors He has extensive knowledge of and experience ~n pubhc sector accounting and auditing, mcludmg comphance auditing and reporting ~ssues Dawd has participated ~n a variety of special projects for state and local governments, ~ncludmg the Texas Education Agency ("TEA") Pubhc School F~nanc~al Accountability System project H~s governmental chents have included the C~ty of Denton, C~ty of Garland, C~ty of The Colony, Town of H~ghland Park, Fort Worth Independent School D~stnct, Plano Independent School D~stnct, Garland Independent School D~stnct and Texas Education Agency Management Advtsory Servtces Jay Riley, Local Government Consulting D~rector, wall d~rect any consulting services for the C~ty Jay ~s a firm-des;gnated spec~ahst m management and~ts and governmental consulting and ~s the Local Government Consulting Servmes D~rector for North Texas, one of Deloitte& ToucheLLP Firm Background, Principal Deloitte & Touche's major pubhc sector practice areas He has d~rected Officers and Prior major consulting projects for Metroplex pubhc sector chents and Experience participated in projects for regional, national and ~nternat~onal pubhc sector chents Tax Servtces R. Andrew Parker, CPA, Tax D~rector, w~ll d~rect any tax services for the C~ty Andy ~s a tax spec~ahst w~th more than 15 years of pubhc accounting experience He was the techmcal manager for the development of arbitrage rebate services for Deloitte & Touche and has extensive experience ~n th~s area He has been a frequent speaker on tax ~ssues and has extensive knowledge of the tax ~ssues within the pubhc sector Participation in Professional Orgamzations Our engagement team members have actively participated m major professional orgamzat~ons 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 d~scuss~on leader for AICPA, TSCPA and the North Central Texas Council of Governments' courses on auditing and pubhc finance He ~s an active member of GFOA and GFOA of Texas George served as Chmrman for the Texas Society of Certified Pubhc Accountants Governmental Standards Comrmttee George ~s former chmrman of the American Institute of Certified Pubhc Accountants Governmental Aecount~ng and Auditing Comrmttee He also serves on the Governmental Accounting Standards Adwsory Council and several GASB Task Force Comrmttees George ~s the author of articles on the Single Audit Act pubhshed by PracttcaIAccountantandSchoolBustnessAffatrs H~s article on Arbitrage and Rebate Serwces was pubhshed ~n the GFOA of Texas Newsletter He serves on the faculty of the Texas Tech Southwest School of Government Finance Your D~rector, Terry Fdle, has made numerous presentations to various pubhc sector groups and participates in several pubhc sector orgamzat~ons He ~s on the faculty of the Texas Tech Southwest School of Government Fmance Jay Rtley, D~rector of Local Government Consulting Serwces, has made presentations to numerous pubhc sector orgamzat~ons on the subjects of Deloitte & TouCheLLP Firm Background, Principal human resource management, operational efficiency and performance Officers and Prior reviews His articles have been published in Texas Town and Ctty, and in Experience cooperation with a Deloitte & Touche partner, he has written an article on Management Audit Prolects 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 contmmty 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 rmmmum 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 senunars designed specifically for those professionals These sermnars address all facets of the government arena, including single audit, compliance auditing, accounting, financial reporting, arbitrage and rebate requirements, efficiency studies and consulting Deloitta& TeucheLLP Firm Background, Principal The Firm mamtmns national networks of experts who study developments Officers and Prior of ~ndustryw~de concern These experts and outside consultants such as Experience college professors are brought together to speak at our national and regional sermnars In add~taon, our professional staff members attend conferences, courses and sen~unars conducted by the GFOA, the Texas GFOA, the AICPA and TSCPA, and other technical organizations These national and regional conferences and sen'unars 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 slgmflcant ~nterest in committing the necessary t~me and resources to the government ~ndustry Certain of our tralmng 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 Ctty of Denton Deloitte & Touche has performed the financial and compliance audits for the City of Denton for the past 11 years Similar Engagements Wtth Other Government Entities Chent satisfaction is one of the best measures of the quahty of services we provide to chents Deloitte & Touche ~s proud of ~ts record of service to the many governmental chents ~n the Metroplex and is pleased to provide the C~ty of Denton with a hst of our recent government clients We ~nv~te and encourage the City to contact the m&viduals hsted in this section Addmonal references w~ll be provided upon request Town of Addison (1996 - present) Scope Financial Audit, S~ngle Audit Engagement Partner George Scott Hours 400-600 Contact Mr Randy Moravec, Director of F~nance (214) 450-7050 City of Hurst (1990 - present) Scope F~nanc~al Audit, Single Audit, Self-Insured Actuarial Services, Real Estate Consulting Services Engagement Director Terry Klle Hours 500-700 Contact Ms Amta Thetford, Director of Fiscal Services (817) 788-7000 Deloitte & ToucheLLP Firm Background, Principal City of Cedar Hill (1990 - present) Officers and Prior Experience Scope Financial Audit, Single Audit, Accounting Issues Engagement Director Terry Vale Hours 500-700 Contact Mr Hardy Browder, Director of F~nance (972) 291-5117 C~ty 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 Utthty 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 Vale Hours 400-600 Contact Mr Pat Elfrlnk, Director of Finance (817) 429-0702 Client L~sttng Append:x 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 ~nformat;on regarding these clients, or provide additional references, upon request Deloitte& TouCheLLP Profile of Our Metroplex Offices Representahve Chents The Dallas/Fort Worth Practice · Provides ~ Aud~hng, Tax Consulhng e of Management · More Th ; Sector, Specialized Services Our Metroplex Offices Offer to the Pubhc Sector Major Industnes We Serve Deloitte& TouCheLLP -]7- ~ Specific Audit Approach One of the most important considerations in the selection of independent auditors ~s their Scope and Audit Approach abdlty to perform and complete the work in a timely and efficient manner, with a nunlmum of interference w~th your day-to-day operations and your personnel As described below and m the attached flowchart, we have developed an audit plan for you which matches optimum efficiency w~th the tughest level of quality audit work and adherence to professional standards One of our first priorities will be to rewew th~s plan with your management and make any necessary rews~ons so that our work wall be scheduled at t~mes that are most convement for your personnel and consistent w~th Our business-oriented approach wtl! help the Ctty achteve tt$ objecttvesmeeting deadlines you establish We believe that a carefully prepared, well-thought-out, organized audit plan ~s of primary ~mportance in accomphshmg our audit objectives Accordingly, we will use our audit In This Section programs, related check hsts and other audit procedures as appropriate m exarmmng your Spectflc Aucht Approach operations Aud~tSystern/2 Government Audit Standards In addition, we wall apply our Mult~year Approach governmental experience m Idenuficat~on of Improvement Opportumttes refimng programs and procedures Idenuflcat~on of Antm~pated Potentml Audit Problems Scope and Audit Approach to fit the City's spec]ftc methods of operation and unique areas of concentration, thereby ensuring thorough analysis of your procedures and custormzation to ensure the highest-quality service delivery to meet your reqmrements Accounting and Auditing Deloitte & Touche's accounting and auditing services go far beyond basic attest functions Our business-oriented approach will help you ach]eve your operational objectives and goals, strengthen your management processes and improve resource ut]hzat]on Your selection of an auditing and accounting firm centers on forrmng a relataonshlp w~th people That is why Deloitte & Touche places such a prermum on judgment and personal chenustry Our professionals possess superior technical skalls Equally ~mportant, they have strong personal quaht]es, demonstrated perceptiveness, the abd]ty to think strategically and detect future ]mphcatlons of current trends and internal circumstances, commumcatlon and project management ablht]es, and energy, enthusiasm and commdtment to chent service and h~gh professmnal standards Risk-Focused Audit Approach We approach the audit from the same perspective that your top management v~ews the City What are the important issues and where are the risks9 We cons]der the hkehhood a specific business risk could lmpmr the mtegr;.ty 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 bus]ness 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 m the planning process w~th appropriate chent managers The Deloitte & Touche Audit Process The Deloitte & Touche audit philosophy is to tmlor our approach to meet the specific needs of each chent Where appropriate, we ~nvolve specialists from our Management Adwsory Services and Tax departments in the planmng Their techmcal expertise very frequently enables us to make constructive observations and recommendations in areas beyond those normally addressed by auditors Delodte & ToucheLLr Deloitte & Touche Audit Approach Integrates A 128/A 133 Prccedurea Deloitte& 'Tbu~heLLP - 2o- ~ 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 Preltmtnary Planntng During the preliminary planning stage of the audit, your engagement team will gain an understanding of the City's business We beheve 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 dunng 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 Dunng this phase, we will also set the materlallty levels for the audit An important part of the prehrmnary planning is the development of chent 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 consultang services, Deloitte & Touche can provide the City with a fresh perspective and value- added services from our local pool of experts Assess Rtsk Our audit approach is a risk-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 Deloitte& ToUDhBLLP Scope and Audit Approach safeguarding of assets and the rehab~hty of data processed Th~s mformat~on ~mpacts the audit plan, as areas w~th strong ~ntemal controls w~ll reqmre less audit attention than those w~th relatively weak controls During tlus phase, we w~ll also detern~ne how the C~ty momtors comphance w~th laws and regulations, whether there have been any ~nstances of noncomphance during the year and how management has responded to any such noncomphance The engagement team w~ll then assess risk at the account level Based on the mformat~on gathered m the prehm~nary planmng 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 h~gh-r~sk w~ll receive greater audit attention, and our audit programs w~ll be tmlored to address the r~sk In some cases, additional selections may be made for testing, or more experienced staff may be assigned to audit those areas L~kew~se, low-r~sk accounts will receive a more basic level of testing In this way, you receive the most efficient and effective audit services Develop Audtt Plan Our audit plan - the specific steps we w~ll perform to test the City's accounts - ~s dependent upon what level of risk we have ~dentd]ed and the controls which may n~t~gate those risks Deloitte & Touche has standard~zed audit programs for all accounts which we can ut~hze ~f no risks are ~dentff~ed and ff strong controls are m place and functioning These standard~zed programs w~ll be tmlored by the engagement team for ~dentdied r~sks Durmg the ta~lonng process, we will cons]der the types of documentation the C~ty has readily available, so as to ut]hze the same reports and ~nformat]on that management uses ~n perforrmng our audit procedures wherever possible Perform Audtt Plan We w~ll test your internal controls to ensure that they are functioning as designed and as documented during the r~sk assessment phase Testing of ~nternal controls may be completed by samphng of documentary evidence and rewewmg for ewdence of controls, by corroborative ~nqmry of those persons responsible for the controls or through observation of personnel perforrmng 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 rewew, accordance w~th the audit plan d~scussed above Deloitte & TouDheLLP Scope and Audit Approach Sample sizes will vary depending on the particular application Our general tests of detmls are based on a matenahty 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 populataons being tested, however, statistical samples are only used when the selectaon 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 obtmn 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 Deloitte & TouDheLLP Critical Audit-Related Dates - City of Denton Estimated June November December Time Perform and finalize audit planning, including coordination of Single Audit S/M/P S/M/P 40 Read nunutes of City Council meetings S/M/P S/M/P S/M/P 16 Plan for participation of City personnel S/M SfM 20 Evaluate internal accounting controls and, for Single Audit, applicable grant adm~mstratlve controls S S 40 Evaluate EDP system controls S 16 Discuss format and preparation of financial and Single Audit reports, and revIew potentml audit and reporting problems w~th management and, as to Single Autht, the cogmzant agency M/P M/P 10 Perform Single Audit procedures by evaluating compliance with apphcable statutes, ordinances and regulations St St St 60 Meet w~th management to revIew audit status S/M/P S/M/P S/M/P 20 Hours P Partners 30 M Managers 72 S Semors 250 St Staff 43..__~0 Total 782 Deloitte & TouDheLLP Critical Audit-Related Dates - City of Denton (Continued) Estimated June November December Time Revtew and test (tncludmg Single Audtt procedures) Revenues and expenthtures 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 habthttas St St St 30 Long-term debt, capital leases and interest St St St 24 Other habdlt~es 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 wtth Ctty 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 C~ty management S/M/P 24 Issue management letter and Single Audtt reports, present to City Council M/P 3.~9.0 Total Hours 782 Deloitte & TouDheLLP Scope and Audit Approach AudttSystem/2 AudltSystem/2 represents a major reenglneenng of our audit service capabilities and dehvery platform This reeng~neermg substantially sharpens our ability to deliver world-class accounting and auditing services consistently, seamlessly, globally and in accordance w~th our demanding client service standards Aud~tSystem/2 integrates our audtt approach, whmh focuses on adding value to our clients, common documentatton that IS industry-specific and capable of being tmlored to the needs of ~nthwdual chents, and state-of-the- art technology Value-Added Audit Approach We have radically reeng]neered our audit approach to enhance our effectiveness and efficiency and to ~ncrease our focus on client service Our audit approach emphasizes adding value to our chents by enhancing quality and productivity We consult with our chents to deterrmne their needs, expectations and professional service reqmrements before prepanng and executing appropriate chent serwce and audit plans Partners lead our audit engagement teams, drive both planning and performance, and prowde our clients with meaningful adwce and insights on the condition of their business We recognize that every chent ~s unique, reqmnng an audit plan tatlored to Its particular operations, accounting processes, control environment and hnanc~al reporting reqmrements Our focus is therefore both ~ndustry- specific and client-spec]tic Our autht approach remmns risk-based This means that we get rapidly to the heart of issues that affect our clients and their financml statements as a whole We then plan our andas to focus timely and sufficient attention on ldentffied risk areas We continue to focus on chents' systems and ~ntemal controls m order to ~dentlfy controls that are effective and relevant, and that can be tested efficiently In addition, we support management in fulfilling their responsthlhty to safeguard assets and ensure the effiment operation of the enterprise Deloitte& TeucheLu, Scope and Audit Approach Common Documentation Incorporating Best Practices We have embedded best practices collected from thousands of audit engagements m our internationally developed common documentation - a baseline set of model documentation that helps ensure worldwide consistency and qualtty The common documentation ts tatlored to nattonal and industry reqmrements and ts made avmlable as model sets of plannmg tools, audit procedure data bases, standard templates, and audit guidance known as "audtt packs" Audit packs are then moddied to meet the specific needs of lnd~vtdual chents Powerful Technology The AudltSystem/2 software supports all phases of the audit process - planning, executing and reporting - and thereby leverages the time and sk~lls of our audit professionals In order to ensure maximum compatibthty w~th our chents' systems today and tn the future, we have bruit the software w~th standard M~crosoft Wtndows-based components Teamwork ts critical to successfully serving the world's most complex mult~national companies and large national enterprtses A notable feature of AuditSystem/2 ts that tt ts specifically designed for teams, not just mdtvtduals AudltSystem/2 maxirmzes the effecttveness and efficiency of engagement teams, whether those teams are located at one site, multiple sites wtthm a country, or spread around the globe AuditSystem/2 in Action Audtttng Smarter AudttSystem/2 incorporates our proprietary Smart Audit Support technology, whtch slgmflcantly enhances the quality of audit plannmg It helps audit professionals tdentdy and assess risks, evaluate internal controls, and develop an audit plan and supporting programs that address relevant ~ssues effectively and efftclently Using advanced dectsion support software, Smart Audit Support asststs and grades the auditor in a manner that complements and amphfles the tndtvldual's professional judgment without ever substttuttng for it Deloitte& TouDheLLP Scope and Audit Approach Smart Autht Support is an integral part of the common documentation and Is built into ~ndustry-specfflc audit packs It suggests approaches and procedures, mmntalns the integrity and consistency of information, and dynarmcally modifies audit planning processes to reflect that reformation Smart Audit Support provides direct hnks to the Firm's professional pohcies and gu]dance, and to other professional and industry materials as appropriate Immedmte on-hne access helps our professionals respond to Issues and questions as they ar]se Bulky reference materials are history Effective and Effictent Paperless Audtttng The Aud~tSystem/2 software provides an intuitive folder system to help track, manage and orgamze the mformat~on normally stored m audit files It also facilitates sharing that reformation electromcally w~th]n the engagement team and with chent personnel Audit packs cont0an 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 AudltSystem/2 documents contmn 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-hne, thus ehnunatlng the nme, effort and expense required to print and repnnt work papers Chent Compattbthty, Dtrect Data Access Built from Windows-based, ~ndustry-standard components, the AudltSystem/2 software Is compatible with most clients' systems It provides numerous capab]lmes for threctly accessing and handhng data through all stages of the audit engagement up to and including the productaon of financml statements Th~s makes it easy to share schedules, reports and other documents electromcally w~thout having to pnnt or retype them Efficiencies can be even greater when internal authtors also use AudltSystem/2 Aud]tSystern/2 includes file interrogation software that provides direct access to computerized client data It ~s used, for example, to create mai balances, age accounts receivable, extract records that meet certmn criteria and select stat~sncal samples Procedures are completed m a fraction of the t~me it takes to perform them manually and are less dlsmpnve to the client's operations Deloit & TouDhOLLP Scope and Audit Approach It is often possible to test 100% of a population just as easily as a sample, or to perform procedures that would otherwise s~mply not be feasible In addition, f~le interrogation often reveals mformat~on that ~s helpful to the chent but not prowded through regular management reports Ftnanctal Reporttng Computerized chent trial balances can easily be ~mported ~nto AuchtSystem/2, where the software's trial balance capablht~es can be used for many purposes, including multilevel consohdat~ons, foreign currency translations and journal adjustments Financial reformation flows smoothly from trial balances into integrated f~nanc~al statements, lead sheets and analytical review schedules Chent- ready financial statements and other reports can be prepared, reviewed and issued on the most t~mely bas~s possible Aud~tSystem/2 tr~-al balances can be used for tax engagements, thus further ~ntegratmg our services and reducing demands on chents We can also export the results to external tax preparation and compliance systems Analysts, lnterpretatton, lnstght Great software should help people think, and that is what Aud~tSystem/2 does It frees auditors from tedious, t~me-consum~ng tasks, allowing them to focus on more valuable professional activities, it provides tools that amphfy auditors' analytical and ~nterpret~ve skills, and ~t makes possible innovative procedures and approaches that could not otherwise be considered Aud~tSystem/2's analytical tools include spreadsheets and graphs which, used together w~th f~le interrogation techmques, can extract useful ~nformat~on from raw data and prowde bus]ness condition ~ns]ghts These tools also include Statistical Techmques for Analytical Rewew ("STAR") STAR ~s effectave at ~dentify]ng s~gmflcant fluctuations m financial data that warrant further investigation m hght of mater~allty and rehab]hty objectives Using statistical modehng techmques, STAR prowdes an object~ve and rigorous bas~s for rehance on analytical procedures It also helps auditors understand underlying data relationships within the business Effecttve and Creattve Communtcattons The Aud~tSystem/2 software fac~htates effective, creative and responsive commumcat~ons w~th our chents For example, a spreadsheet analysis can Deloitte& ToucheLLP Scope and Audit Approach be transformed into a visually stimulating graph which can then be pasted into a slide for presentauon 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 reportang procedures on multinational and other multllocauon audit engagements lntegratton Wtth Other Servtces and Software The AudltSystem/2 software significantly increases the integration between audit and tax services It also complements many other software-based services the Firm offers, such as ~nternal control consulting Because the software is based on industry standards, it will capitalize on future technological developments We wdl continue to leverage the capabilities of our technology platform to offer innovative services to our clients Building Blocks System Hardware The AudxtSystem/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), Mlcrosoft's key integrating technology, provides the glue that makes Aud~tSystem/2's components work as a seamless whole Scope and Audit Approach World-Class Serwce We developed AudltSystem/2 to meet the many different and changing needs of our clients and our audit professionals Our goal ~s to provide tools that let auditors make the best use of their t~me and sk~lls to deliver world- class service Government Autht Standards We recogmze that our audit must comply w~th Generally Accepted Government Audit Standards ("GAGAS"), the audit standards set forth m the Government Audtttng Standards (Standards for Audtt of Governmental Organtzattons, Programs, Acttvtttes, and Fttncttons) issued by the Comptroller General of the Umted States Our audit w~ll also comply w~th generally accepted auditing standards ("GAAS"), the audit standards issued by the American Institute of Cert~fied Public Accountants that are apphcable to and generally accepted for audits conducted to express opinions on the f0amess with which an orgamzat~on's financial statements present the financial position, results of operations and cash flows as incorporated ~nto GAGAS for financial audits We recogmze that GAGAS cont0ans standards for audits of government orgamzations, programs, activities and functions, and of government funds received by contractors, nonprofit orgamzations and other nongovernment organ~zations The standards are to be followed by auditors and audit organizations when reqmred by law, regulation, agreement or contract, or policy The standards pertoan to the authtor's professional quahficat~ons, the quahty of the audit effort, and the characterist~cs of professional and meamngful audit reports The standards are required by federal legislat~on for audits of federal organizations, programs, activities and functions, by the Off~ce 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 entit~es rece~wng federal assistance Multiyear Approach Should you extend our contract over a multlyear period, our knowledge and understanding of your systems will cert0anly be used ~n the additional years Our andlt approach prowdes for additional emphas~s being applied on a rotating bas~s over a mult~year per~od to various systems w~thln your Daloit'm a -:31 - Scope and Audit Approach orgamzat~on We can benefit from past experience with you, however, our approach m no way depends on future audits to provide audit assurance m the current year Identificatton of Improvement Opportumttes During the course of the audit, our partners, managers and staff will be alert to ~dentlfy ~mprovements that may be made m financial controls or operational efflc~encles As part of our procedures, we will observe your operations and raise questions and exchange ideas with your people ~n many areas ~nterual controls, data processing, financial structure, cash management and inventory control We will develop our constructive service suggestions as the audit progresses and d~scuss 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 ~s ~n hne with the City's expectauons We wall ~ssue a separate management letter that formally documents these observations related to the City's operations, procedures and other material matters Identtficatton of Antictpated Potenttal Audtt Problems While we do not foresee any insurmountable problems associated with the audit of the C~ty of Denton, we believe the following issues will need to be addressed during the next three years Apphcatlon of New Audit Standards - The President recently s~gned the Smgle Auaht Act of 1996 Our proposed concurring partner, George Scott, currently chairs the AICPA's S~ngle Audit Workang Group, and is actively involved in the ~mplementat~on of th~s proposed change Therefore, any effect on the audit of the C~ty will be known and planned for well ~n advance of ~ts first apphcat~on Apphcation of New Accounting Standards - We do not foresee difficulties m the apphcation of any ~mpendmg new accounting standards C~ty personnel will be consulted ~mmed~ately upon the effective date of new accounting standards so that we may work in concert to implement any reqmred new standards in the manner best suited to the City Deloith & Tou hBLLP Scope and Audit Approach Our Understanding of the Governmental Environment - Accounting and Auditing Developments Of great slgmficance to the City and various departments are proposed changes m 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 s]gmficant 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 m upconung 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 sigmf]cantly 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 begmmng after June 15, 1997, establishes standards for the measurement, recogmtion and display of pensmn expenditures/expense and related hab]htles, assets, note disclosures and, If applicable, required supplementary reformation m the financial statements of state and local governmental employers · GASB issued Statement No 28, "Accounting and Financial Reporting for Secuntaes 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 per]ods beginning after June 15, 1996, and reqmres specific incremental claim adjustment expenditures in the determination of hab]ht]es 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 begmmng after June 15, 1997 The statement reqmres that most investments be recorded at fair value and that Deloitte & ToUehBLLP -33 - Scope and Audit Approach fluctuations ~n the fair value of ~nvestments 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 w~ll radically impact financial reporting of state and local governments Deloitte& TouCheLLP Meeting Your Deadhnes Meeting your deadhnes for completion of the financial statement audit, single audit and ProposedSchedule management letter means precise, t~mely execution of each step in the audit process Our extensive experience servmg many governmental ent~ttes means we are thoroughly fam~har w~th the t~me and personnel needed to serve you effectively A master ttmetable, however effictent, does not take ~nto account the md~wdual needs of each chent We therefore tmlor our schedule based on your needs A detaded hst~ng of schedules to be provided by the City and the timing for completion of such ~s expected to be substantially the same as the C~ty has provided to Deloitte & Touche over the past few years As ewdence of this partnership attitude, we would make avmlable to your internal audit staff certmn of our staff trmmng programs Your internal auditors would Understanding of Work to Be receivefullcontlnmngeduca, on credit as reqmred by governmental Performed by the Internal audit~ngstandards for any of theSesess~ons Auditor In addition, we will meet ona regular basis to discuss our mutual plans and goals The purpose of Internal Audit Partnershtp these d~scusslons is threefold · To ensure there is no AtDelottte& Touche, our pIulosophy ts to create a duphcatlon of efforts or working relattonshlp and partnership wtth your mternal procedures between the ~nternal auditor and our audit audit department conststent wtth professtonal auditing team standards and the expectattons 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 ~nformed about our respective activities We look forward to worlong w~th the City Auchtor's Office on t~s engagement It is our mtentmn to utthze the C~ty' s audit staff to perform audit procedures for the capital projects funds and the general fixed assets account group, ~nventones, certmn cash and investment procedures, and the sxngle audit We will work w~th the C~ty Auditor to evaluate the most effective utfiizat~on of internal audit resources, we anticipate th~s evaluation will result m approximately 200 hours of the City audit staff's t~me Deloitte & Touche is pleased to present additional references in our technical proposal to perform audit services for the C~ty of Denton Other References Tarrant County Mental Health Mental Retardatton Servtces (1994 - present) Scope Financial Audit Single Audit Annual Report Preparation Contact Mr George Banks, C~ef Fmancml Officer (817) 735-3800 Dallas County (1994 - present) Scope F~nanclal Audit S~ngle Audit Annual Report Preparation Contact Ms V~rgima Porter, We pledge to serve the Ctty of Denton wtth the utmost professtonaltsm, our energettc, proacttve approach to service wtll fit tn well wtth the commttment County Auditor and dedtcatton the Ctty shows each day toward tls local commumty (214) 653-6472 Dallas/Fort Worth lnternattonal Atrport (1993 - present) Scope Financial Audit Single Audit Bond Serwces Llttgat~on Support Services Orgamzat~on Study Human Resources Services Venficauon Serwces -37 - 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 Wllkerson, Director - Electric Utahty Services (409) 821-5715 Ctty 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 Deloitte& Touchem, Commttment to Equal Opportumty and Affirmattve Actton Like the C~ty, Deloitte & Touche Additional Data and Other ls commatted to equal employment opportunity and affirmative actton Information with,nour firm and to Increasing m~nonty representation within the accounting and consulting professions as a whole Affirmative Actmn Policies Both locally and nationally, Deloitte & Touche is conumtted to an aggressive program of aff~rmative action ~n practice as well as in pnnclple We actively seek to recrmt, employ and promote women and members of minority groups In the Metroplex offices as m Deloitte & Touche as a whole, rmnorltles and women are represented at all staff levels INROADS/Dallas Internally, Deloitte & Touche sponsors other programs designed to aid minority students The Metroplex offices participate in INROADS/Dallas, a program designed to ~ncrease the opportumues for gdted mlnon~ students in their chosen In This Section professions Deloitte & Touche sponsors students in the program Commitment to Equal Opportunity and Affirmative Action as ~nterns and contributes each Professional Indemmty Insurance year dtrectly to INROADS to Independence assist ~n the management and License to Practice m Texas continuation of the program Additional Data and Other Recruitment and Hiring Inlt~ahves Information In keeping with our firm's affirmative action pohcy statements, the Metroplex offices actively recruit minority accounting students from major southwestern colleges and umvers~tles In addition, a Metroplex office recmzter ws~ts two predormnantly rmnonty college campuses each year Adnumstratively, we have employed minority htgh school students from ~nner-city magnet high schools on a vocational work/study program M~nority Professional Association In addmon, the Metroplex offices of Deloitte & Touche provide both financial support and speakers for the National Associat~on of Black Accountants and other minority business and accounting groups Delottte& Touche has often enlisted the services of various of the many qualified m~norzty accounting practices in the Metroplex By often .lolmng m such joint venture relationships, we believe we meet and exceed the true splrxt of many pubhc sector entities' n~unor~ty business enterprise goals and our own affirmative action pohcxes Summary of Delmtte & Touche Perspective Delottte& Touche is extremely proud of tts record wzth respect to human resources Our goal ts to recruit and retain the "best and brightest" professionals our country has to offer We know that efforts tn this area are important to the C~ty, so we take thts opportumty to summarize for you our f:rm's progress m the recruitment and retention of women and rmnont~es Valtttng Dtverstty Deloitte & Touche has estabhshed the Mznortty Development, Retention and Recruttmg ("MDR2") Committee to stimulate, zmplement and momtor programs for hmng, trtumng, promoting and networlang rmnor~ty professxonals In order for our firm to mamttun a leadership postt~on among profess:onal services firms, we need to continue to design and zmplement programs successfully managing and developing our rmnor~ty professionals The MDR2 Conumttee consists of partners, line professionals and human resource professionals who are committed to helping the Firm achxeve these goals The following outlines some of the Ftrm's achievements in the areas of recrmtmg, retentton and development Deloit B& TouCheLLP Additional Data and Other Recruiting and University Relations. The MDR2 Committee launched an Information intensive Historically Black College ("HBC") recruitment and development program We have established this program to enhance our recruiting and college relataons 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-American 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/advlsees nationwide in an effort to further develop mentonng relationships Professionals are given the opportunity to discuss matters related to their professional development as well as issues of special significance or concern to rmnorltles 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 minonues in the Firm, a listing of rmnonty association events, an overview of the MDR2 Comrmttee meetings and other pertinent articles Recently, Deloitte & Touche appointed Betty Maple, a partner in our Detroit office, to the newly created position 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 participataon 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 bas been a sponsor of the Harlem YMCA Deloitte& TouDheLLP o4! - Additional Data and Other "Black Achievers in Industry" project since 1973, which has been our way Information of recogmzmg on a national bas~s the contributions that outstanding African-Americans have made to Deloitte & Touche Professional Indemnity Insurance Deloitte & Touche mmntmns professional ]ndemmty insurance coverage believed to be s~mllar to the programs of other major accounting firms In the Umted States The s]zmlanty, however, is assumed, rather than known, because data about professional indemnity insurance coverage has histor~cally been among accounting firms' most propr]etaxy and confidential ~nformat~on Deloitte & Touche beheves 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 ~n the marketplace Th~s insurance applies to all professional services rendered by Deloitte & Touche Delo:tte & Touche's ~nsurance coverage sufficiently covers the services detailed ~n the C~ty's Request for Proposal Independence We confirm that we are independent w~th respect to the C~ty of Denton and all component umts as defined by generally accepted auditing standards and GovernmentAuchttng Standards (the Yellow Book), as revised m 1994 None of our partners, managers or staff have any d~rect or indirect financial interest m C:ty 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 professmnal staff meet all independence standards In add~taon, Deloitte & Touche LLP meets the independence reqmrements of the AICPA and the SEC In comphance with such guidelines, our f~rm will mmntmn professional object]wty and independence with respect to any services performed for the C~ty At the time of this proposal, we are not aware of any potential conflicts of interest, past or present, with regard to the C~ty of Denton Ltcense to Practice in Texas Deloitte & Touche ns a limited habihty partnership registered in the state of Texas and hereby affirms that we are a properly licensed certified public accounting firm Our Certificate of Registrataon is available upon request Deloitte& TouDheLLP Year-Round Consultation Our commumcatlon w~th the C~ty of Dallas wall not stop when the audit reports are ~ssued We i u, g' onc'ua:n'- Remarks beheve ~t is ,n the best ~nterest of the City and Deloitte & Touche to m~unta~n year-round communication with City management Open hnes of commumcat~on allow us to prowde you w~th ~nslghts on changes ~n accounting pnnc~ples and upcoming standards which will give the C~ty a head start on addressing Issues L~kew~se, you can keep us apprised of changes m C~ty pohcy and of slgmficant transactions We are avmlable to C~ty management at any time for consultation on accounting, operational, systems and pension/actuarial ~ssues Commumcat~on of ~ssues on a t~mely basis dunng the year, and early resolution of those ~ssues, ensures a smoother year-end closing and fewer "last nunute" surprises Delottte& Touche as Business Advtsor We take pride in our ability to offer the City sometlung more than basic accounting and auditing services We want to be the C~ty's business advisors Our In Th~s Section management comment letters are a key part of that bus~ness adwsor Year-Round Consultation role Deloitte & Touche as Business Advisor Concluding Remarks Dunng the course of audit fieldwork, our staff will see a s~gmflcant port~on of the C~ty's accounting functions and operanons Our external perspective allows us to give you fresh insights and innovative ~deas on ways to improve efficiency and effectiveness of accounting and operational areas We believe our business advisor approach ~s umque We have a w~de range of expertise, locally and nationally, which we can call upon to assist the Cay in achiev~ng its goals The breadth of governmental service of our Metroplex offices g~ves Deloitte & Touche a singular abday to identify ~ssues and call upon the experience of in-house professionals to provide soluUons Our management comment letters are designed to communicate these ~ssues and solutions DeloBth & TouDhBLLP We control our professional fees by · Making s~gmficant, ongmng investments in enhancing our CostProposal audit tools, techniques and technologies · Coordinating manpower ut~hzat~on, budgeting our Our firm has undertaken many lnltlat~ves in recent years to services on a task bas~s and ensure that our professional services are cost-effective moartonng results against that budget · Regularly reviewing the progress of our audit performance with our chents · Obtmmng advance fee agreements for additional services as requested We would be pleased and excited to provide professional serwces to the City of Denton Accordingly, we pledge to you quahty professional serwces at a reasonable cost We exercised specml care ~n selecting a management team to provide you w~th quahty service, and we have set our fee to reflect our desire to serve you Appendices Appendix A - Resumes Terry D. Klle, CPA Dtrector, Au&t Services Project Role - Director, Audit Services Sixteen years of pubhc City of Bufleson American Institute of Cemfied accounting experience City of Cedar Hill Public Accountants Flrm-destgnated specialist m the City of Hurst Texas Society of Cemfied Public public sector City of Lancaster Accountants Participat~on m comphanee City of Rowlett Texas AssociaUon of County audits under the Single Audit Act Town of Highland Park Auditors of 1984 for various governmental Ch'egg County Tarrant County Food Bank entities Tan:ant County Adopt-A-School Program Experience m providing agreed- Carrollton-Farmers Branch ISD Government Finance Officers upon procedures, including Hurst-Euless-Bedford ISD Association (GFOA) lmganon support, fraud Fort Worth ISD GFOA of Texas investigation, acqmsiaon due Garland ISD Associat~on of Governmental dthgence and.~omt operation Piano ISD Accountants audits Richardson ISD Member, GFOA Cemficate of Expenenee m reviews of internal Grapevme-Colleyvflle lSD Achievement for Excellence m audit departments Texas Education Agency Financial Reporting Special Microcomputer speclahst with Lancaster Housing Authority Review Committee experience m developing Dallas Area Rapid Transit customized nucrocomputer Dallas County Utthty Reclamation apphcaUons for service chents Dlstrtct B B A, Abfiane Christian Dallas/Fort Worth lntemaaonal University, summa cum lande, A~rport 1981 North Central Texas Council of Continuing Education 160 total Governments credit hours of cont~nmng Tnmty Pdver Authonty professional educauon obtmned dunng the past two years, lnclu&ng 141 crecht hours specific to government accountmg and auditing George A. Scott, CPA Regional Partner.tn-Charge, Pubhc Sector Services, Deloitte & Touche Project Role - Concurring Partner Twenty.two years of experience City of Addison American Institute of Certffied with Deloitte & Touche Firm- City of Baytown Pubhc Accountants, designated specialist in educanon Cay of Burleson Governmental Accounting and services and governmental City of Cedar Hill Auditing Committee. Chmrman accounUng City of Denton Texas Associatmn of School Natmnal Autht Partner for City of Farmers Branch Business Officials Deloitte & Touche K-12 and C~ty of Fort Worth Panel Chmrman, ASBO Certificate Arbitrage Rebate Services Cay of Garland of Excellence Special Review Serves on Governmental City of Grapevine Comnuttee Accounting Standards Board's C~ty of Houston Government Finance Officers Public Authorities, Reporting C~ty of Irvmg Association (GFOA) Model and Governmental Not- C~ty of New Orleans OFOA of Texas for-Profit Ent~tles Task Forces City of Piano Member, GFOA Certificate of Chmrman of the American C~ty of University Park AchIevement for Excellence in Inst~tate of Cartffied Public Town of Highland Park Fmanmal Reportmg Special Accountants' Governmental Dallas/Fort Worth International Review Comrmttee Accounting and Authtmg Airport Commumttes m Schools, Board of Comrmttee Dallas Area Rapid Transit D~rectors and Treasurer ProJect partner on the Texas Dallas Independent School Dlsmct Intercultura, Board of Directors and Education Agency's Pubhc Dallas County Treasurer School Fmancml Accountabthty Fort Worth ISD Texas Tech Umvers~ty Southwest System project Carrollton-Farmers Branch lSD School of Government Finance, B B A, Texas Christ~an Piano lSD Advisory Board of D~rectors Umvers~ty Houston 1SD Government Accounting Standards Continuing Education 180 total Dallas ISD Advisory Council, Vice credit hours of contrnumg Richardson ISD Chairman of Agenda Comrmttee 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 EducaUon Agency Texas Education Agency - specffic to government Texas Employees Retirement "Coordinating Task Force" accounting and and~tmg System Texas Lottery Commtas~on Texas Natural Resource Conservation CornnUSSlOn Texas National Research Laboratory ComHllSSlOn State of Arkansas Tnmty R~ver Authority of Texas Utah State Office of EducaUon State of Oklahoma Scott Henderson, CPA Audit Manager ProJect Role - Audit Manager F~ve years of experience serving Union Pacific Resources Texas Society of Certified Public governmental entitles City of Denton Accountants F~rm-deslgnated speclahst in GS Roofing American Institute of Cerufied state and local government Davoll Public Accountants accoantmg, reporting and Stevens Graphics audmng SJBRT Parttelpatton in compliance PBRT audits under the Single Audit Act MSR Exploration of 1984 for various governmental entitles Extensive training and experience in utlhzatlon of the Firm's computer auditing software and techmques GFOA Ceraficate reviewer B B A, Umverstty of Texas Continuing Education 120 total credit hours of contmumg professional education obtmned dunng the past throe years, including 24 credit hours specific to govemmant accounting and audmng David B. Pate, CPA Audtt Manager Project Role - Audit Technical Manager Seven years of experience City of Garland Texas Society of Certffied Public serving governmental enUt~es City of Denton Accountants Firm-designated specialist in City of The Colony American Institute of Certffied state and local government City of Bryan Public Accountants accounting, reporOng and Town of Highland Park Texas Association of School auditing Fort Worth Independent School Business Officials Participation m compliance Drst~lct Member, GFOA Certfficate of audits under the Single Audit Act Piano Independent School District Achievement for Excellence m of 1984 for various governmental Garland Independent School District Financial Reporting Spectal enttties Texas Education Agency Review Comrmttee Extensive trammg and Dallas Area Rapid Transit experience in utdizatlon of the Lincoln Property Company Firm's computer audmng Motel 6 software and techniques Has panaclpated in numerous special projects revolving local governments, including the Texas EducaUon Agency's Public School Financial Accountability System project GFOA Cart~ficate temcwer B B A, Umversay of Texas at Dallas Continuing EducaUon 173 total credtt hours of continuing professional education obt~uned dunng the past two years, lncludtng 111 [redit hours specific to government accounting and auditing Jay Riley D~rector, Local Government Consultzng ProJect Role - D~roctor, Local Government Consulting Director, local government City of Dallas Southwest School of Government consulting for the Dallas/Fort City of Denton Finance, Faculty Member Worth offices of Deloitte & City of Farmers Branch Touche, with over ten years' City of Fort Worth consulting experience and over City of Plano 11 years' experience tn City of Pdchland Hills municipal government, including Dallas/Fort Worth International City Manager for the cities of Airport Lancaster and Navasota, Texas Fort Worth Independent School A firm-designated specialist in Dismct serving cities, school districts, Garland Indepandent School Dlsmct state agencies and governmental Houston Independent School District entities, with specialization in Irving Independent School Dlsmct management audits, operational Piano Independent School Dtsmct reviews, financial analysis and Richardson Independent School planning, performance auditing Drstnct and human resoumes Select Committee on Public ProJect Manager on the Texas Education Education Agency's Public Spnng Branch Independent School School Flnanmal Accountability Drsmct System project Texas Comptroller of Public M P A, East Texas State Accounts University Texas Education Agency B S, The University of Texas at Town of Addison Austin Utah State Office of Education Continuing Education 120 tetal credit hours of continuing professional education obtiuned dunng the past two years, including 100 credit hours specific to government accounung and audltmg R. Andrew Parker, CPA Director, Tax Services Project Role - Director, Tax Services Flf~en years' experience as a tax City of Davis, California American Institute of Certified specialist with Deloitte & City of Lansing, Mmbagan Public Accountants Touche City of Fort Worth Technical manager for the City of Alameda, Cahfomia development of arbitrage rebate City of Boise, Idaho services for Deloitte & Touche City of Chicago, Illinois Frequent speaker on tax issues, City of College Smtmn pamcularly in the area of City of Davenport, Iowa arbitrage rebate City of Denton Represented clients at all levels City of Elyna, Ohio of Internal Revenue Service City of Hayward, Cahfomia Supervising or consulting City of I~hngs Mountain, North manager (with prmuury technical Carolina responsibility) for arbitrage City of Milford, Connecticut services to Delmtte & Touche City of Orange, California clients throughout the nat~on City of Pine Bluff, Arkansas Muster of Accounting, Pace City of Plqua, Ohio University City of Rocklln, California B A m Economics, Pace City of Rosevdle, California University City of Aahevdle, North Carolina CommumgEducaUon ll0total Clty of Los Angeles, Califomla credit hours of continuing City of New Britain, ConnecUcut professional educaUon obtained City of Oklahoma C~ty, Oklahoma durmg the past two years, State of Utah mcluchng 26 ere&t hours specffic State of Hawan to government and government- Commonwealth of Puerto Rico related accounting and authtmg Appendix B - Representative Governmental Clients Served by the Dallas/Fort Worth Metroplex Practice _c ~r o.O Appendix C - Peer Review Report Peer Review Report II El~T&~NG Ltl' Deloitte& TouCheLLP Partners 30 $290 $145 $ 4,350 Managers 72 $200 $100 $ 7,200 Superv~soryStaff 250 $130 $ 65 $16,250 Staff 430 $ 70 $ 35 $15,050 Total hours/Personnel 782 $ 42,850 Other Expenses (Credits) Typing and pnntmg of reports $150 $ 150 Total Not-to-Exceed Cost - Gross $43,000 Internal Audit Hours - Opt~onalAdjustment* $ 35 $ 7,000 Net Total w~th Internal Audit Adjustment $36,000 Partners 30 $300 $150 $ 4,500 Managers 72 $208 $104 $ 7,488 Superv~soryStaff 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 - Opt~onalAdjustment* $ 36 $ 7,280 Net Total w~th Internal Audit Adjustment $37,338 *To be negotiated on an annual bas~s 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 Partnem 30 $312 $156 $ 4,680 Managers 72 $216 $108 $ 7,776 Supervisory Staff 250 $142 $ 71 $17,750 Staff 430 $ 74 $ 37 $15,910 Total hours/Personnel 782 $ 46 116 Other Expenses (Credits) $150 $ 150 Total Not-to-Exceed Cost - Gross $46 266 Internal Audit Hours - Opt~onalAdjustment* $ 38 $ 7,571 Net Total w~th Internal Audit Adjustment $ 38,795 Partners $290 $145 $ Managers $ 200 $100 $ Supervisory Staff $130 $ 65 $ Staff $ 70 $ 35 $ Total hours/Personnel $ Other Expenses (Credits) $ $ $ $ $ Total Not-to-Exceed Cost - Gross $ Internal Audit Hours - Optional Adjustment* $ $ Net Total w~th Internal Audit Adjustment $ * To be negobated on an annual bas~s This represents only possible allowance for assistance **These rates are subject to change based on the scope of the project and the type of spec~ahst required for the work ~l~lT BY DELOITTE & TOUCHE §-13-~)? , § OOP~ , DOWNTOltN DALL~S~ [617388778~} # l/ 1 Deloitte& Tolleh6 LLP ~ Suite 1600 Telephone (214) 777 7000 Texas Commerce lOWer 2200 Roes Avenue Dallas Texas 75201~778 May 13, 1997 ~ty of Dento~ 21~ E. McKlrmoy l:~nton, T~x~ 76201 Dear As you rtatu~ted tlt~ total not~to.~x¢oed audit f~ for th~ y~ar~ 2000 and 2001 Without W~th Int~l A~dlt ~ Audit 2000 $~7,730 $40,330 200! $4~),400 $41,800 rhe fees with interns{ Audit Aastatauee aaaume 200 hours ofasmatan~ejttat as the other fees hated m 8o0t~on 8, Coat Propoaal If you have any queattons feel fi~e to call me at (214) 77/-7488 Sincerely, D~wd B Pate Inten o