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