HomeMy WebLinkAbout11750RESOLUTION NO. 11750
A RESOLUTION APPROVING AN ENGAGEMENT LETTER
BETWEEN THE CITY OF PUEBLO, A MUNICIPAL
CORPOR- ATION, AND MCPHERSON, BREYFOGLE,
DAVELINE & GOODRICH, PC, CERTIFIED PUBLIC
ACCOUNTANTS, RELATING TO PROFESSIONAL
AUDITING SERVICE AND AUTHORIZING THE
PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME
BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that:
SECTION 1
The Engagement Letter between the City of Pueblo, a Municipal Corporation,
and McPherson, Breyfogle, Daveline & Goodrich, PC, Certified Public Accountants, for
the rendering of professional auditing services to the City of Pueblo, dated November
23, 2009, a copy of which is attached hereto, having been approved as to form by the
City Attorney, is hereby approved.
SECTION 2
The President of the City Council is hereby authorized to execute the
Engagement Letter in the name of the City and the City Clerk is authorized and directed
to attest same and affix the Seal of the City thereto.
INTRODUCED: November 23, 2009
BY: Judy Weaver
COUNCILPERSON
APPR D' } �-
PRESIDENTaf Cfty Council
A77TSTED DY:
CITY CLERK
D �I �
�I ED
Background Paper for Proposed
RESOLUTION
AGENDA ITEM # M -2
DATE: November 23, 2009
DEPARTMENT: Law Department
TITLE
A RESOLUTION APPROVING AN ENGAGEMENT LETTER BETWEEN THE CITY OF
PUEBLO, A MUNICIPAL CORPORATION, AND MCPHERSON, BREYFOGLE,
DAVELINE & GOODRICH, PC, CERTIFIED PUBLIC ACCOUNTANTS, RELATING TO
PROFESSIONAL AUDITING SERVICE AND AUTHORIZING THE PRESIDENT OF
THE CITY COUNCIL TO EXECUTE SAME
ISSUE
Should City Council engage McPherson, Breyfogle, Daveline & Goodrich, PC, Certified
Public Accountants, to perform professional audit services.
City staff recommends approval.
BACKGROUND
McPherson, Breyfogle, Daveline & Goodrich, PC, Certified Public Accountants
"(MBDG "), was selected in 2008 through requests for proposals to perform professional
auditing services for the City for fiscal year ending December 31, 2008. The attached
Engagement Letter engages MBDG to perform professional auditing services for fiscal
years 2009 through 2013 with the City's and MBDG' s right to terminate the
Engagement Letter for any fiscal year subsequent to fiscal year 2009.
FINANCIAL IMPACT
MBDG's gross fee, including expenses, will not exceed $88,000.00 per year for each of
the years ending December 31, 2009 and 2010, and will not exceed $92,400 per year
for years ended December 31, 2011, December 31, 2012 and December 31, 2013.
503 N. Main Street, Suite 740
Pueblo, CO 81003
P Phone (719) 543 -0516
MBDG
® Fax (719) 544 -2849
McPherson,
Breyfog le,
Dave Iine &
Goodrich, PC
Certified Public Accountants
November 23, 2009
City Council
City of Pueblo, Colorado
We are pleased to confirm our understanding of the services we are to provide the City of Pueblo,
Colorado (the City) for each of the years ended December 31, 2009 through December 31, 2013. We
will audit the financial statements of the governmental activities, the business -type activities, each
discretely presented component unit, each major fund, and the aggregate remaining fund information,
which collectively comprise the basic financial statements of the City of Pueblo, Colorado as of and for
each of the years ended December 31, 2009 through December 31, 2013. Accounting standards
generally accepted in the United States provide for certain required supplementary information (RSI),
such as management's discussion and analysis (MD &A), to accompany the City of Pueblo, Colorado's
basic financial statements. As part of our engagement, we will apply certain limited procedures to the
City of Pueblo, Colorado's RSI. These limited procedures will consist principally of inquiries of
management regarding the methods of measurement and presentation, which management is responsible
for affirming to us in its representation letter. Unless we encounter problems with the presentation of
the RSI or with procedures relating to it, we will disclaim an opinion on it. The following RSI is
required by generally accepted accounting principles and will be subjected to certain limited procedures,
but will not be audited:
1. Management's discussion and analysis.
2. Budgetary comparison schedules for the general fund and all major special revenue funds.
Supplementary information other than RSI also accompanies the City of Pueblo, Colorado's basic
financial statements. We will subject the following supplementary information to the auditing
procedures applied in our audit of the basic financial statements and will provide an opinion on it in
relation to the basic financial statements.
1. Schedule of expenditures of federal awards.
2. Combining and individual fund financial statements and schedules.
The following additional information accompanying the basic financial statements will not be subjected
to the auditing procedures applied in our audit of the financial statements, and for which our auditors'
report will disclaim an opinion.
Statistical section
1-
Audit Objectives
The objective of our audit is the expression of opinions as to whether the basic financial statements are
fairly presented, in all material respects, in conformity with U.S. generally accepted accounting
principles and to report on the fairness of the additional information referred to in the first paragraph
when considered in relation to the basic financial statements taken as a whole. The objective also
includes reporting on —
• Internal control related to the financial statements and compliance with laws, regulations and the
provisions of contracts or grant agreements, noncompliance with which could have a material
effect on the financial statements in accordance with Government Auditing Standards.
• Internal control related to major programs and an opinion (or disclaimer of opinion) on
compliance with laws, regulations, and the provisions of contracts or grant agreements that could
have a direct and material effect on each major program in accordance with the Single Audit Act
Amendments of 1996 and OMB Circular A -133, Audits of States, Local Governments and Non-
Profit Organizations.
The reports on internal control and compliance will each include a statement that the report is intended
solely for the information and use of management, the body or individuals charged with governance,
others within the City, specific legislative or regulatory bodies, federal awarding agencies, and, if
applicable, pass- through entities and is not intended to be and should not be used by anyone other than
these specified parties.
Our audit will be conducted in accordance with auditing standards generally accepted in the United
States of America; the standards for financial audits contained in Government Auditing Standards issued
by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; and the
provisions of OMB Circular A -133, and will include tests of accounting records, a determination of
major programs in accordance with Circular A -133, and other procedures we consider necessary to
enable us to express such opinions and to render the required reports. If our opinions on the financial
statements or the Single Audit compliance opinions are other than unqualified, we will fully discuss the
reasons in advance. If, for any reason, we are unable to complete our audit or are unable to form or have
not formed opinions, we may decline to express opinions or to issue a report as a result of this
engagement.
Management Responsibilities
Management is responsible for the basic financial statements and all accompanying information, as well
as all representations contained therein. Management is also responsible for preparation of the schedule
of expenditures of federal awards in accordance with the requirements of OMB Circular A -133. As part
of the audit, we will assist with preparation of the financial statements, schedule of expenditures of
federal awards, and related notes. Management is responsible for making all management decisions and
performing all management functions relating to the financial statements, schedule of expenditures of
federal awards, and related notes and for accepting full responsibility for such decisions. Management
will be required to acknowledge in the management representation letter our assistance with preparation
of the financial statements and the schedule of expenditures of federal awards and that management has
reviewed and approved the financial statements, schedule of expenditures of federal awards, and related
notes prior to their issuance and have accepted responsibility for them. Further, management is required
to designate an individual with suitable skill, knowledge, or experience to oversee any nonaudit services
we provide and for evaluating the adequacy and results of those services and accepting responsibility for
them.
-2-
Management is responsible for establishing and maintaining effective internal controls, including
internal controls over compliance, and for monitoring ongoing activities to help ensure that appropriate
goals and objectives are met. Management is also responsible for the selection and application of
accounting principles; for the fair presentation in the financial statements of the respective financial
position of the governmental activities, the business -type activities, each discretely presented component
unit, each major fund, and the aggregate remaining fund information of the City of Pueblo, Colorado
and the respective changes in financial position and, where applicable, cash flows in conformity with
U.S. generally accepted accounting principles; and for compliance with applicable laws and regulations
and the provisions of contracts and grant agreements.
Management is also responsible for making all financial records and related information available to us
and for ensuring that financial information is reliable and properly recorded. Management's
responsibilities also include identifying significant vendor relationships in which the vendor has
responsibility for program compliance and for the accuracy and completeness of that information.
Management responsibilities include adjusting the financial statements to correct material misstatements
and confirming to us in the representation letter that the effects of any uncorrected misstatements
aggregated by us 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.
Management is responsible for the design and implementation of programs and controls to prevent and
detect fraud and for informing us about all known or suspected fraud or illegal acts affecting the City
involving (1) management, (2) employees who have significant roles in internal control and (3) others
where the fraud or illegal acts could have a material effect on the financial statements. Management
responsibilities include informing us of their knowledge of any allegations of fraud or suspected fraud
affecting the City received in communications from employees, former employees, grantors, regulators
or others. In addition, management is responsible for identifying and ensuring that the City complies
with applicable laws, regulations, contracts, agreements and grants. Additionally, as required by OMB
Circular A -133, it is management's responsibility to follow up and take corrective action on reported
audit findings and to prepare a summary schedule of prior audit findings and a corrective action plan.
Management is responsible for establishing and maintaining a process for tracking the status of audit
findings and recommendations. Management is also responsible for identifying for us previous financial
audits, attestation engagements, performance audits, or other studies related to the objectives discussed
in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective
actions taken to address significant findings and recommendations resulting from those audits,
attestation engagements, performance audits, or studies. Management is also responsible for providing
management's views on our current findings, conclusions and recommendations, as well as their
planned corrective actions.
Audit Procedures - General
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; therefore, our audit will involve judgment about the number of transactions to be
examined and the areas to be tested. We will plan and perform our audit to obtain reasonable rather than
absolute 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 City or to acts by management or employees
acting on behalf of the City. Because the determination of abuse is subjective, Government Auditing
Standards do not expect auditors to provide reasonable assurance of detecting abuse.
-3-
Because an audit is designed to provide reasonable, but not absolute assurance and because we will not
perform a detailed examination of all transactions, there is a risk that material misstatements or
noncompliance may exist and not be detected by us. In addition, an 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 or major programs. However, we will inform you of any
material errors and any fraudulent financial reporting or misappropriation of assets that come to our
attention. We will also inform you of any violations of laws or governmental regulations that come to
our attention, unless clearly inconsequential. We will include such matters in the reports required for a
Single Audit. Our responsibility as auditors is limited to the period covered by our audit and does not
extend to matters that might arise during any later periods for which we are not engaged as auditors.
Our procedures will include tests of documentary evidence supporting the transactions recorded in the
accounts and may include tests of the physical existence of inventories and direct confirmation of
receivables and certain other assets and liabilities by correspondence with selected individuals, funding
sources, creditors and financial institutions. We will request written representations from your attorneys
as part of the engagement and they may bill you for responding to this inquiry. At the conclusion of our
audit, we will also require certain written representations from management about the financial
statements and related matters.
Audit Procedures — Internal Controls
Our audit will include obtaining an understanding of the City 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 we consider relevant to preventing and detecting errors and fraud
that are material to the financial statements and to preventing and detecting misstatements resulting from
illegal acts and other noncompliance matters that have a direct and material effect on the financial
statements. Our 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 our report on internal control issued
pursuant to Government Auditing Standards.
As required by OMB Circular A -133, we will perform tests of controls over compliance to evaluate the
effectiveness of the design and operation of controls that we consider relevant to preventing or detecting
material noncompliance and compliance requirements applicable to each major federal award program.
However, our tests will be less in scope than would be necessary to render an opinion on those controls
and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to OMB
Circular A -133.
An audit is not designed to provide assurance on internal control or to identify significant deficiencies.
However, during the audit, we will communicate to management and those charged with governance
internal control related matters that are required to be communicated under AICPA professional
standards, Government Auditing Standards and OMB Circular A -133.
Audit Procedures — Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of material
misstatement, we will perform tests of the City of Pueblo, Colorado's compliance with applicable laws
and regulations and the provisions of contracts and agreements, including grant agreements. However,
the objective of those procedures will not be to provide an opinion on overall compliance and we will
not express such an opinion in our report on compliance issued pursuant to Government Auditing
Standards.
-4-
OMB Circular A -133 requires that we also plan and perform the audit to obtain reasonable assurance
about whether the auditee has complied with applicable laws and regulations and the provisions of
contracts and grant agreements applicable to major programs. Our procedures will consist of tests of
transactions and other applicable procedures described in the OMB Circular A -133 Compliance
Supplement for the types of compliance requirements that could have a direct and material effect on each
of the City of Pueblo, Colorado's major programs. The purpose of those procedures will be to express
an opinion on the City of Pueblo, Colorado's compliance with requirements applicable to each of its
major programs in our report on compliance issued pursuant to OMB Circular A -133.
Engagement Administration, Fees and Other
At the conclusion of the engagement, we will complete the appropriate sections of the Data Collection
Form that summarizes our audit findings. It is management's responsibility to submit the reporting
package (including financial statements, schedule of expenditures of federal awards, summary schedule
of prior audit findings, auditors' reports, and corrective action plan), along with the Data Collection
Form to the federal audit clearinghouse. We will coordinate with you the electronic submission and
certification. If applicable, we will provide copies of our report for you to include with the reporting
package you will submit to pass - through entities. The Data Collection Form and the reporting package
must be submitted within the earlier of 30 days after receipt of the auditors' reports or nine months after
the end of the audit period, unless a longer period is agreed to in advance by the oversight agency for
audits.
The audit documentation for this engagement is the property of McPherson, Breyfogle, Daveline &
Goodrich, PC and constitutes confidential information. However, pursuant to authority given by law or
regulation, we may be requested to make certain audit documentation available to the oversight agency
or its designee, a federal agency providing direct or indirect funding, or the U.S. Government
Accountability Office for purposes of a quality review of the audit, to resolve audit findings, or to carry
out oversight responsibilities. We will notify management of any such request. If requested, access to
such audit documentation will be provided under the supervision of McPherson, Breyfogle, Daveline &
Goodrich, PC personnel. Furthermore, upon request, we may provide copies of selected audit
documentation to the aforementioned parties. These parties may intend, or decide, to distribute the
copies or information contained therein to others, including other governmental agencies.
The audit documentation for this engagement will be retained for a minimum of five years after the
report release or for any additional period requested by the oversight agency for audit or any pass -
through entity. If we are aware that a federal awarding agency, pass - through entity, or auditee is
contesting an audit finding, we will contact the party(ies) contesting the audit finding for guidance prior
to destroying the audit documentation.
Our fee for these services will be billed at the following hourly rates for each of the identified years:
December 31, 2009 and
December 31, 2010
December 31, 2011,
December 31, 2012 and
December 31, 2013
Shareholder
$ 145
$ 153
Manager
125
132
Supervisor
105
111
Junior
85
90
Clerical
60
63
-5-
We agree, however, that our gross fee, including expenses, will not exceed $88,000 per year for each of
the years ended December 31, 2009 and 2010, and our gross fee, including expenses, will not exceed
$92,400 per year for each of the years ended December 31, 2011, December 31, 2012 and December 31,
2013. The above stated fees are based on anticipated cooperation from City personnel and the
assumption that unexpected circumstances will not be encountered during the audit for each year. If
significant additional time is necessary, we will discuss it with you and management and arrive at a new
fee estimate before we incur the additional costs.
Government Auditing Standards require that we provide you with a copy of our most recent external
peer review report and any letter of comment and any subsequent peer review reports and letters of
comment received during the period of the contract. Our 2008 peer review report accompanies this
letter.
Either we or the City may terminate our engagement and this engagement letter at any time and for any
reason, with respect to the audit of any or all fiscal years subsequent to fiscal year 2009 by giving to the
other party written notice of such termination on or before September 30 of such fiscal year or years.
We acknowledge and agree that (a) all financial obligations of the City under this engagement letter for
fiscal years subsequent to the current fiscal year are subject to funds being appropriated and budgeted
for such purposes; (b) in the event City does not budget and appropriate funds specifically for such
purpose, our sole and only remedy is to terminate this agreement; (c) we, our officers and employees are
independent contractors and not employees of the City and we are responsible for all their withholdings,
FICA, employment and other taxes and workers' compensation coverage and benefits, and will hold the
City harmless for all claims therefore; and (d) the State - mandated or Related Contract Clauses attached
hereto as Attachment No. 1 are incorporated herein as if set out herein in full and for the purpose
thereof, we are the "Contractor ".
We appreciate the opportunity to be of service to the City of Pueblo, Colorado and believe this letter
accurately summarizes the significant terms of our engagement. If you have any questions, please let us
know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed
copy and return it to us.
Very truly yours,
Ilk Pku,
McPHERSON, BREYFOGLE, DAVELINE & GOODRICH, PC
RESPONSE:
This letter corrpctly sets forth the understanding of the City of Pueblo, Colorado.
an
President of Citv Council
November 23, 2009
LAD:jm
-6-
State - Mandated or Related Contract Clauses
As used in this section, "Contractor" shall mean the firm or entity ( whether referred to as
Consultant, Company, Contractor, Architect Accountant or by other term) entering into
this Agreement with Pueblo, a Municipal Corporation ( which may be referred to in this
Agreement as City, Client, Customer or by other term).
PERA LIABILITY Contractor shall reimburse the City for the full amount of any
employer contribution required to be paid by City to the Public Employees' Retirement
Association ( "PERA ") for salary or other compensation paid to a PERA retiree
performing contracted services for the City under this Agreement. Contractor shall fill
out the questionnaire attached as Exhibit "A" and submit the completed form to City as
part of the signed Agreement.
SOLE SOURCE CONTRACTS - Article XXVIII of the Colorado Constitution was
amended by vote of the people on November 4, 2008 ("Amendment 54) to provide certain
limitations on holders of "sole source' government contracts entered into by government
entitles. On August 12, 2009, Denver District Court Judge Catherine Lemon issued an
order granting a preliminary injunction against enforcement of Amendment 54, holding
that it violated rights of free speech and association guaranteed by the First Amendment.
The parties agree that if, at any time during the term of this Agreement, a court of
appropriate jurisdiction determines that (1) Amendment 54 is constitutional or otherwise
lawful under applicable law; or (2) Amendment 54, if lawful, applies to agreements such as
this Agreement and must be included in such agreements, then City and Contractor agree to
negotiate the inclusion of complying Amendment 54 language in this Agreement.
STATE - IMPOSED MANDATES PROHIBITING ILLEGAL ALIENS FROM
PERFORMING WORK UNDER THIS CONTRACT
(a) At or prior to the time for execution of this Contract, Contractor shall
submit to the Purchasing Agent of the City its certification that it does not knowingly
employ or contract with an illegal alien who will perform work under this Contract and
that the Contractor will participate in either the AE- Verify Program created in Public
Law 208, 104 Congress, as amended and expanded in Public law 156, 108 Congress,
as amended, that is administered by the United States Department of Homeland Security
or the "Department Program" established pursuant to section 8- 17.5- 102(5)(c), C.R.S.
that is administered by the Colorado Department of Labor and Employment in order to
confirm the employment eligibility of all employees who are newly hired for employment
to perform work under this Contract.
(b) Contractor shall not:
(1) Knowingly employ or contract with an illegal alien to perform
work under this Contract;
(ll) Enter into a contract with a subcontractor that fails to certify to
Contractor that the subcontractor shall not knowingly employ or contract with an
illegal alien to perform work under this Contract.
(c) The following state- imposed requirements apply to this Contract:
ATTACHMENT NO. 1
(I) The Contractor shall have confirmed the employment eligibility of
all employees who are newly hired for employment to perform work under this
Contract through participation in either the E- Verify Program or Department
Program.
(II) The Contractor is prohibited from using either the E- Verify
Program or Department Program procedures to undertake pre- employment
screening of job applicants while this Contract is being performed.
(III) If the Contractor obtains actual knowledge that a subcontractor
performing work under this Contract knowingly employs or contracts with an
illegal alien to perform work under this Contract, the Contractor shall be required
to:
A. Notify the subcontractor and the Purchasing Agent of the
City within three (3) days that the Contractor has actual knowledge that
the subcontractor is employing or contracting with an illegal alien; and
B. Terminate the subcontract with the subcontractor if within
three (3) days of receiving the notice required pursuant to subparagraph
(c)(III)A. above the subcontractor does not stop employing or contracting
with the illegal alien; except that the Contractor shall not terminate the
contract with the subcontractor if, during such three (3) days, the
subcontractor provides information to establish that the subcontractor has
not knowingly employed or contracted with an illegal alien.
(IV) The Contractor is required to comply with any reasonable request
by the Colorado Department of Labor and Employment (hereinafter referred to as
ACDLE @) made in the course of an investigation that CDLE is undertaking
pursuant to its authority under '8-17.5-102(5), C.R.S.
(d) Violation of this Section by the Contractor shall constitute a breach of
contract and grounds for termination. In the event of such termination, the Contractor
shall be liable for City =s actual and consequential damages.
(e) Nothing in this Section shall be construed as requiring the Contractor to
violate any terms of participation in the E- Verify Program.
EXHIBIT "A"
COLORADO PUBLIC EMPLOYEES RETIREMENT ASSOCIATION
SUPPLEMENTAL QUESTIONNAIRE TO BE ANSWERED BY
ANY BUSINESS PERFORMING SERVICES FOR THE CITY OF PUEBLO
Pursuant to section 24 -51- 1101(2), C.R.S., salary or other compensation from the
employment, engagement, retention or other use of a person receiving retirement benefits
(Retiree) through the Colorado Public Employees Retirement Association (PERA) in an
individual capacity or of any entity owned or operated by a PERA Retiree or an affiliated
party by the City of Pueblo to perform any service as an employee, contract employee,
consultant, independent contractor, or through other arrangements, is subject to employer
contributions to PERA by the City of Pueblo. Therefore, as a condition of contracting for
services with the City of Pueblo, this document must be completed, signed and returned
to the City of Pueblo:
(a) Are you, or do you employ or engage in any capacity, including an
independent contractor, a PERA Retiree who will perform any services for the City of
Pueblo? Yes , No -V--.
(b) If you answered Ayes@ to (a) above, please answer the following question:
Are you an individual, sole proprietor or partnership, or a business or company owned or
operated by a PERA Retiree or an affiliated party? Yes _, No If you
answered Ayes@ please state which of the above entities best describes your business:
(c) If you answered Ayes@ to both (a) and (b), please provide the name, address
and social security number of each such PERA Retiree.
Name
Address
Social Security Number
Name
Address
Social Security Number
(If more than two, please attach a supplemental list)
Failure to accurately complete, sign and return this document to the City of Pueblo
may result in your being denied the privilege or doing business with the City of Pueblo.
If you answered Ayes@ to both (a) and (b), you agree to reimburse the City of
Pueblo for any employer contribution required to be paid by the City of Pueblo to PERA
for salary or other compensation paid to you as a PERA Retiree or paid to any employee
or independent contractor of yours who is a PERA Retiree performing services for the
City of Pueblo. You further authorize the City of Pueblo to deduct and withhold all such
contributions from any moneys due or payable to you by the City of Pueblo under any
current or future contract or other arrangement for services between you and the City of
Pueblo.
Signed Opp --Yosu )-3 , 200__.
Mcl��- 2.s v�_I��QF Fnu� 1�evF+ -�rar a- Lr��t),ztG?t, �L
By
Name: L Y , ] U>
Title: 1 Xh'T
For purposes of responding to question (b) above, an Aaffiliated party@ includes (1) any person who
is the named beneficiary or cobeneficiary on the PERA account of the PERA Retiree; (2) any person who is
a relative of the PERA Retiree by blood or adoption to and including parents, siblings, half - siblings,
children, and grandchildren; (3) any person who is a relative of the PERA Retiree by marriage to and
including spouse, spouse =s parents, stepparents, stepchildren, stepsiblings, and spouse =s siblings; and (4)
any person or entity with whom the PERA Retiree has an agreement to share or otherwise profit from the
performance of services for the City of Pueblo by the PERA Retiree other than the PERA Retiree =s regular
salary or compensation.
Schulz & Company, P.C. Michael L, Schulz, CPA
Certified Public Accountants Tracy G. Schulz, CPA
November 21, 2008
To the Shareholders of
McPherson, Breyfogle, Daveline & Goodrich, PC
We have reviewed the system of quality control for the accounting and auditing practice
of McPherson, Breyfogle, Daveline & Goodrich, PC, (the firm) in effect for the year
ended June 30, 2008. A system of quality control encompasses the firm's organizational
structure, the policies adopted and procedures established to provide it with reasonable
assurance of conforming with professional standards. The elements of quality control are
described in the Statements on Quality Control Standards issued by the American
Institute of Certified Public Accountants (AICPA). The firm is responsible for designing
a system of quality control and complying with it to provide the fine with reasonable
assurance of conforming with professional standards in all material respects. Our
responsibility is to express an opinion on the design of the system of quality control and
the firm's compliance with its system of quality control based on our review.
Our review was conducted in accordance with standards established by the Peer Review
Board of the AICPA. During our review, we read required representations from the firm,
interviewed firm personnel and obtained an understanding of the nature of the firm's
accounting and auditing practice, and the design of the firm's system of quality control
sufficient to assess the risks implicit in its practice. Based on our assessments, we
selected engagements and administrative files to test for conformity with professional
standards and compliance with the firm's system of quality control. The engagements
selected represented a reasonable cross: section of the firm's accounting and auditing
practice with emphasis on higher -risk engagements. The engagements selected included
among others, audits of Employee Benefit Plans and engagements performed under
Government Auditing Standards. Prior to concluding the review, we reassessed the
adequacy of the scope of the peer review procedures and met with firm management to
discuss the results of our review. We believe that the procedures we performed provide a
reasonable basis for our opinion.
In performing our review, we obtained an understanding of the system of quality control
for the firm's accounting and auditing practice. In addition, we tested compliance with
the firm's quality control policies and procedures to the extent we considered appropriate.
These tests covered the application of the firm's policies and procedures on selected
engagements. Our review was based on selective tests therefore it would not necessarily
disclose all weaknesses in the system of quality control or all instances of lack of
compliance with it. There are inherent limitations in the effectiveness of any system of
quality control and therefore noncompliance with the system of quality control may occur
and not be detected. Projection of any evaluation of a system of quality control to future
periods is subject to risk that the system of quality control may become inadequate
because of changes in conditions, or because the degree of compliance with the policies
or procedures may deteriorate.
15200 E, Girard Avenue, Suite 4900, Aurora, Colorado 80014
(303) 690 -7275 Fax (303)690 -9110
In our opinion, the system of quality control for the accounting and auditing practice of
McPherson, Breyfogle, Daveline & Goodrich, PC in effect for the year ended June 30,
2008, has been designed to meet the requirements of the quality control standards for an
accounting and auditing practice established by the AICPA and was complied with
during the year then ended to provide the firm with reasonable assurance of conforming
with professional standards.
5:" &„ pe
Schulz & Company, P.C.