I am impressed with the Draft letter provided by Sexton and Schnoll. Not only have they expressed fully that their firm follows the laws explicitly as well as the General Accepted Accounting Principles and Government Auditing Standards, but that they will, if there is question, discuss a situation with our Town Attorney. They obviously have been in business for 20 years, because they do not make up the rules as they go forward.
They also provide the responsibilities of our Management team, including internal controls, none of which we currently have. Part of our dilemma in White Springs is the fact that not only do we NOT have internal controls, but no one has indicated what Pam Tomlinson’s job is.
Now a professional CPA may just take some of the specifications as being general, but if Sexton and Schnoll do what they state they will do in their draft letter, this is a firm that we require. For years our audit firms has laughed at Pam Tomlinson’s efforts as an accountant but the situation is no longer funny. And we need a CPA firm who will state what the problem is, what is done incorrectly, what needs to change and perhaps, just perhaps, since Stacy Tebo would not listen to Helen Miller or Joe Griffin, perhaps she will have to listen to an outside party who knows what they are talking about. Pam has been the butt of many accountants joke and it’s not her fault. She unfortunately is not educated and the sad part is after all years, she believes she knows it all and our Town Manager is ignorant of what needs to be done. I suggest you read this letter from the firm. And start doing your jobs for the betterment of White Springs…if you have the ability to do so.
OBVIOUSLY SEXTON AND SCHNOLL, CPA’S DID HAVE A LETTER OF ENGAGEMENT WHICH WAS REITERATED AS FOLLOWS;
Sexton and Schnoll, CPA’s was established as a full-service CPA firm to serve th tax accounting, auditing and consulting needs of individuals, small businesses and local governments in the North-Central Florida area. They strive to strike the perfect balance between small, local attentive service and professional experience and expertise.
Listening is the foundation of a lasting client relationship built on trust and respect. Their goal is to provide financial leadership, guidance and advice that our Town can really use to help us grow and become more successful. Sexton and Schnoll believe that a relationship exists between them and their clients that doesn’t end at the release of the report. They are available for additional services and technical support throughout the period of the engagement.
Founded in 2004, governmental auditing has been an important part of their practice. The firm is led by Marc Schnoll, CPA, MBA, MAcc, who has over twenty years’ experience with governmental audit and accounting engagements. He will be the engagement partner and will be responsible for supervising the engagement and signing the report. The audit supervisor will be Chrissy Hammond, who also has extensive governmental experience. They are engaged on their tenth annual audit with the City of Hawthorne whose activities and functions are similar to that of our Town.
The Firm is a member of the American Institute of CPAs (AICPA), which requires that firms providing audit services undergo Peer Review at least every three year. Earlier in 2018, the Firm went through this process and received the highest possible rating and
Engagement administration fees and other
The Firm estimates its fee for services WILL NOT exceed $15,000. Invoices for these fees will be rendered each month as work progresses and are payable on presentation.
In accordance with the Firm’s policies, work may be suspended if the Account becomes 30 days or more overdue and may not be resumed until the account is paid in full.
If the Firm elects to terminate its services for nonpayment, its engagement will be deemed to have been completed, upon written notification of termination, even if the report has not been completed.
The Town is obligated to compensate the Firm for all time expended and to reimburse the firm for all out-of-pocket costs through the date of termination.
The above fee is based on anticipated cooperation from the Town’s personnel and the assumption that unexpected circumstances will not been encountered during the audit.
If significant additional time is necessary, we will discuss it with the Town and arrive at a new fee estimates before the additional costs will be incurred.
An initial payment of $5,000 is required at the outset of work; this amount will be applied to the overall fee.
Sexton & Schnoll estimate of fees for the audits will be $15,000 (2019), $15,500 (2020) and $16,000 (2021). If a single audit is required, an additional $2,500 will be charged for that year.
Sexton and Schnoll expects to begin work on December 1, 2019 and fulfill the requirements as outlined in the solicitation including but not limited to:
- Auditing the financial statements of the Town of White Springs
- Preparing the Comprehensive Annual Financial Report (CAFR) and audit report
- Submit to the Town no later than March 31 of each year
- Provide support for all entries
- Provide a written report detailing any weaknesses found in internal control
- Will provide suggestions for improvements in efficiency, support presentation of the audit and assist the Town with other professional auditing and accounting services
- Provide routing consultation as requested.
- The audit work plan will consist of planning, fieldwork, drafting and presentation.
- Will employ analytical and substantive procedures and evaluation of internal controls by walkthroughs, discussions with the client and observation.
- The audit supervisor will be Chrissy Hammond
- The engagement partner will be Marc Schnoll, CPA, MBA, MAcc
DRAFT LETTER of SERVICES
- Confirming their understanding of the services to be provided the Town of White Springs for the year ended September 30, 2019
- The financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund and the aggregate remaining fund information including the related notes to the financial statements, which collectively comprise the basic financial statements of the Town of White Springs as of and for the year ended September 30, 2019 will be audited.
- Generally Accepted Accounting Standards (GAAP) provides certain required supplementary information (RSI) such as management’s discussion and analysis (MD&A) to supplement the Town of White Springs’ basic financial information, although not a part of the basic financial statements, but required by the Governmental Accounting Standards Board.
- Circumstances may arise in which it is necessary for the firm to modify their opinions or add emphasis-of-matter or other-matter paragraphs.If their opinions are other than unmodified, they will discuss the reasons with the Town in advance. If, for any reason the firm is unable to complete the audit or are unable to form or have not formed opinions, the firm may decline to express opinions or may withdraw from this engagement.
- A report which does not include an opinion on internal controls related to the financial statement and compliance with the provisions of laws, regulations, contracts and grant agreements, for which there is noncompliance with which could have a material effect on the financial statement as required by the Government Auditing Standards will be provided.
- The report on internal control and on compliance and other matters will include a paragraph that states (1) that the purpose of the report is solely to describe the scope of testing of internal control compliance and the results of that testing and not to provide an opinion on the effectiveness of the entity’s internal control compliance and that the report is an integral part of the audit performed in accordance with the Government Auditing Standards in considering the entitiy’s internal control and compliance.
AUDIT PROCEDURES – GENERAL
- The audit will involve judgment about the number of transactions to be examined and the areas to be tested
- An Audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management
- The Audit will evaluate the overall presentation of the financial statements
- The firm will plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether from(1) errors (2) fraudulent financial reporting (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the government or to acts by management or employees acting on behalf of the government.
- Procedures will include tests of documentary evidence supporting the transactions recorded in the accounts
- May include tests of the physical existence of inventories and direct confirmation of receivables and certain other assets and liabilities, funding sources, creditors and financial institutions.
- The firm will request written representations from the Town Attorneys as part of the engagement and they may bill the Town for responding to this inquiry.
- At the conclusion of the audit, certain written representations about the responsibilities for the financial statement, compliance with laws, regulations, contracts and grant agreements and other responsibilities required by GAAP will be required.
Because the determination of abuse is subjective Government Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse.
Because of the inherent limitations of an audit, combined with the inherent limitations of internal control, and because the firm will not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected, even though the audit is properly planned and performed in accordance with US GAAP and Government Auditing Standards.
The Audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements but the Town will be informed of any material errors, fraudulent financial reporting, or misappropriation of assets that come to their attention. Any violations of laws or governmental regulations which come to their attention, unless clearly inconsequential, if any, or material abuse will be reported to the appropriate level of management.
An audit is not designed to provide assurance on internal control or to identify significant deficiencies or material weaknesses. However, during the audit, the Firm will communicate to management and those charged with governance internal control related matters that are required to be communicated under AICPA professional standards and Government Auditing Standards.
AUDIT PROCEDURES – INTERNAL CONTROL
- Audit will include obtaining an understanding of the government and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature timing and extent of further audit procedures.
- Tests of controls may be performed to test the effectiveness of certain controls that are considered relevant to preventing and detecting errors and fraud that are material to the financial statement and to prevent and detect misstatements resulting from illegal acts or other noncompliance matters that have a direct and material effect on the financial statements.
- The Firms tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and accordingly, no opinion will be expressed in their report on internal controls issued pursuant to Government Auditing Standards.
- The firm will perform tests of the Town of White Springs’ compliance with the provisions of applicable laws, regulations, contracts, agreements and grants. The object of their audit will not be to provide an opinion on overall compliance and they will not express such an opinion in their report of compliance issued pursuant to Government Auditing Standards.
- Responsible for designing, implementing and maintaining effective internal controls
- Responsible for evaluating and monitoring ongoing activities to help ensure that appropriate goals and objectives are met
- Responsible for following laws and regulations
- Responsible for ensuring that management and financial information is reliable and properly reported
- Responsible for implementing systems designed to achieve compliance with applicable laws, regulations, contracts and grant agreements.
- Responsible for the selection and application of accounting principals
- Responsible for the preparation and fair presentation of the financial statements and all accompanying infirmity with U.S. Generally accepted accounting principals
- Responsible for compliance with applicable laws and regulations and the provisions of contracts and grant agreements.
- Management is responsible for making all financial records and related information available to the Firm
- Is responsible for the accuracy and completeness of that information.
- Responsible for providing the firm with (1) access to all information of which you are aware that is relevant to the preparation and fair presentation of the financial statement
- (2) additional information which the firm may request for the purpose of the audit
- Responsible to provide unrestricted access to persons within the government from whom the firm may determine it necessary to obtain audit evidence.
- Management’s responsibilities include adjusting the financial statement to correct material misstatements and for confirming to the firm in the written representation letter that the effects of any uncorrected misstatements aggregated by the firm during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole.
- Responsible for the design and implementation of programs
- Responsible for controls to prevent and detect fraud
- Responsible for informing all known or suspected fraud affecting the government involving (1) management (2) employees who have significant roles in internal control and (3) others where the fraud could have a material effect on the financial statements.
- Responsible for informing the firm of your knowledge of any allegations of fraud or suspected fraud affecting the government received in communications from employees, former employees, grantors, regulators or others.
- Responsible for identifying and ensuring that the government complies with applicable laws, regulations, contracts, agreements and grants and for taking timely and appropriate steps t remedy fraud and noncompliance with provisions of laws, regulations contracts or grant agreements or abuse that we report.
- Responsible for the preparation of the supplementary information, which the firm has been engaged to report on in conformity with US GAAP.
- Responsible for the preparation of the supplementary information
- You agree to include the audited financial statements with any presentation of the supplementary information that includes the firm’s report.
- Management is responsible for establishing and maintaining a process for tracing the status of audit findings and recommendations.
- Is responsible for identifying and providing report copies of previous financial audits, attestation agreements, performance audits or other studies related to the objectives discussed in the Audit Object sections of this letter.
- Responsible for providing management’s views on the firm’s current findings, conclusions and recommendations as well as the planned corrective actions
- The Town agrees to assume all management responsibilities relating to the financial statements and related notes and any other non-audit services provided.
- The Town will be required to acknowledge in the management representation letter, their assistance with the preparation of the financial statements and related notes and that the Town has reviewed and approved the financial statement and related notes prior to issuance and have accepted responsibility for them.
- The Town agrees to oversee the noaudit services by designating an individual, preferably from senior management, with suitable skill, knowledge, or experience
- Evaluate the adequacy and results of these services and accept responsibility for them.