HomeMy WebLinkAbout13103RESOLUTION NO. 13103
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 SERVICES 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 services to the City of Pueblo dated November 23, 2014, 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 on behalf of Pueblo, a Municipal Corporation, and the City Clerk
shall affix the seal of the City thereto and attest the same.
SECTION 3.
The officers and staff of the City are directed and authorized to perform any and
all acts consistent with the intent of this Resolution and the contract to effectuate the
transactions described therein.
SECTION 4.
This Resolution shall become effective immediately upon passage and approval.
INTRODUCED: November 24, 2014
BY: Eva Montoya
City Clerk’s Office Item # M-2
Background Paper for Proposed
Resolution
COUNCIL MEETING DATE:
November 24, 2014
TO: President Stephen G. Nawrocki and Members of City Council
CC: Sam Azad, City Manager
VIA: Gina Dutcher, City Clerk
FROM: Daniel C. Kogovsek, City Attorney, Law Department
SUBJECT: 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 SERVICES AND
AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE
SAME
SUMMARY:
Attached is a proposed Resolution that would authorize the City to execute an Engagement
Letter with McPherson, Breyfogle, Daveline & Goodrich, PC, Certified Public Accountants, to
perform professional auditing services for the City of Pueblo for fiscal years 2014 and 2015.
PREVIOUS COUNCIL ACTION
:
City Council approved an engagement with McPherson, Breyfogle, Daveline & Goodrich, PC,
Certified Public Accountants (MBDG), on November 23, 2009, under Resolution No. 11750 to
perform professional auditing services for fiscal years 2009 through 2013.
BACKGROUND:
The current engagement between the City and MBDG ends with the auditing services for the
fiscal year ended December 31, 2013. There are two very significant changes that will affect
the Finance Department and the City’s financial statements in fiscal years 2014 and 2015. The
first is the conversion of the City’s entire financial ERP system from HTE to Tyler Munis on July
1, 2014. The second significant affect on the financial reporting for the City of Pueblo will be the
implementation of two new Governmental Accounting Standards, GASB 67, Financial Reporting
for Pension Plans, and GASB 68, Accounting and Financial Reporting for Pensions. These
standards will be implemented in 2015 and will have a dramatic impact on the financial reporting
for the City. MBDG has an in-depth knowledge of the City’s legacy system (HTE), which will be
extremely beneficial when auditing the financial conversion. MBDG also has extensive
knowledge of the five pension plans in which the City participates. Staff recommends extending
the auditing services contract for the 2014 and 2015 fiscal years to maintain continuity during
these major financial implementations.
FINANCIAL IMPLICATIONS
:
The current engagement with MBDG provides that gross fees, including expenses, will not
exceed $92,400 for fiscal years 2009 through 2013. Because of MBDG’s familiarity with the
City’s financial systems and processes, MBDG was able to discount fees for fiscal years 2012
and 2013 to $88,000 each year, mainly due to their need to perform less field work than in
previous years. The proposed engagement currently before the City Council would extend the
current arrangement between the City of Pueblo and MBDG for two years. The engagement
further reduces the fees for fiscal year ended December 31, 2014, to $85,000 and maintains the
fees for fiscal year ended December 31, 2015, at $92,400 due to the additional services that will
be required as a result of GASB 67 and GASB 68.
BOARD/COMMISSION RECOMMENDATION
:
Not applicable.
STAKEHOLDER PROCESS
:
None.
ALTERNATIVES
:
Council could direct Administration to request proposals for auditing services.
RECOMMENDATION
:
Approval of the Resolution.
Attachments
: Engagement Letter
503 N. Main St.,Suite 740
II
� Pueblo,CO 81003-3131
It Phone(719)543-0516
Fax(719)544-2849
McPherson,
Breyfogle,
Daveline &
Goodrich , PC
Certified Public Accountants
October 21, 2014
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 the years ended December 31, 2014 and 2015. We will audit the financial
statements of the governmental activities, the business-type activities, each discretely-presented
component unit except for Pueblo Urban Renewal Authority, 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 City as of and for the years ended December 31, 2014 and
2015. Accounting standards generally accepted in the United States of America provide for certain
required supplementary information (RSI), such as management's discussion and analysis (MD&A), to
supplement the City's basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board who considers it to
be an essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic, or historical context. As part of our engagement, we will apply certain limited
procedures to the City's RSI in accordance with auditing standards generally accepted in the United
States of America. These limited procedures will consist of inquiries of management regarding the
methods of preparing the information and comparing the information for consistency with
management's responses to our inquiries, the basic financial statements, and other knowledge we obtain
during our audit of the basic financial statements. We will not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient evidence
to express an opinion or provide any assurance. 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—general fund and major special revenue funds.
3. Schedules of funding progress— old-hire pension plans and other post-employment benefit plans, as
applicable.
4. Other RSI as required upon implementation of GASB 68 as of and for the year ended December 31,
2015.
-1-
We have also been engaged to report on supplementary information other than RSI that accompanies the
City's financial statements. We will subject the following supplementary information to the auditing
procedures applied in our audit of the financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other records
used to prepare the financial statements or to the financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America,
and we will provide an opinion on it in relation to the financial statements as a whole in a separate
written report accompanying our auditors' report on the financial statements or in a report combined
with our auditors' report on the financial statements.
1. Schedule of expenditures of federal awards.
2. Combining and individual fund financial statements and schedules for the nonmajor governmental
and enterprise funds and budget to actual comparison schedules as required for applicable funds,
together with other required schedules.
The following other information accompanying the financial statements will not be subjected to the
auditing procedures applied in our audit of the financial statements and our auditors' report will not
provide an opinion or any assurance on that other information:
1. Introductory section
2 Statistical section
Audit Objectives
The objective of our audit is the expression of opinions as to whether the 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 supplementary information referred to in the second paragraph when
considered in relation to the financial statements as a whole. The objective also includes reporting on—
• Internal control related to the financial statements and compliance with the provisions of laws,
regulations, contracts, and 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,
as applicable and modified by the "Uniform Administrative Requirements, Cost Principles and Audit
Requirements for Federal Awards" which is effective for the year ended December 31, 2015.
The Government Auditing Standards report on internal control over financial reporting 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 and compliance and the results of that testing,
and not to provide an opinion on the effectiveness of the City's internal control or on compliance, and
(2) that the report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the City's internal control and compliance. The OMB Circular A-133 report
on internal control over compliance is solely to describe the scope of testing of internal control over
compliance and the results of that testing based on the requirements of OMB Circular A-133 as
applicable and modified by the "Uniform Administrative Requirements, Cost Principles and Audit
Requirements for Federal Awards". Both reports will state that the report is not suitable for any other
purpose.
-2-
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, as applicable, the "Uniform Administrative Requirements,
Cost Principles and Audit Requirements for Federal Awards", and will include tests of accounting
records, a determination of major programs in accordance with OMB Circular A-133, and, as applicable,
the "Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal
Awards", and other procedures we consider necessary to enable us to express such opinions. We will
issue written reports upon completion of our Single Audit. Our reports will be addressed to City
Council of the City. We cannot provide assurance that unmodified opinions will be expressed.
Circumstances may arise in which it is necessary for us to modify our opinions or add emphasis-of-
matter or other-matter paragraphs. If our opinions on the financial statements or the Single Audit
compliance opinions are other than unmodified, we will discuss the reasons with you in advance. If, for
any reason, we are unable to complete the audit or are unable to form or have not formed opinions, we
may decline to express opinions or issue reports, or may withdraw from this engagement.
Management Responsibilities
Management is responsible for the financial statements, schedule of expenditures of federal awards, and
all accompanying information, as well as all representations contained therein. Management is also
responsible for identifying all federal awards received and understanding and complying with the
compliance requirements, and for preparation of the schedule of expenditures of federal awards
(including notes and noncash assistance received) in accordance with the requirements of OMB Circular
A-133 and, as applicable, the "Uniform Administrative Requirements, Cost Principles and Audit
Requirements for Federal Awards". As part of the audit, we will assist with preparation of the financial
statements, schedule of expenditures of federal awards, and related notes. These nonaudit services do
not constitute an audit under Government Auditing Standards and such services will not be conducted in
accordance with Government Auditing Standards. Management agrees to assume all management
responsibilities relating to the financial statements, schedule of expenditures of federal awards, related
notes, and any other nonaudit services we provide. Management will be required to acknowledge in the
management representation letter our assistance with preparation of the financial statements, schedule of
expenditures of federal awards, and related notes and that they have 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 agrees to oversee the nonaudit services by
designating an individual, preferably from senior management, who possesses suitable skill, knowledge,
or experience; evaluate the adequacy and results of those services; and accept responsibility for them.
Management is responsible for (a) establishing and maintaining effective internal controls, including
internal controls over compliance, and for evaluating and monitoring ongoing activities, to help ensure
that appropriate goals and objectives are met; (b) following laws and regulations; (c) ensuring that there
is reasonable assurance that government programs are administered in compliance with compliance
requirements; and (d) ensuring that management is reliable and financial information is reliable and
properly reported. Management is also responsible for implementing systems designed to achieve
compliance with applicable laws, regulations, contracts, and grant agreements. Management is also
responsible for the selection and application of accounting principles; for the preparation and fair
presentation of the financial statements 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.
-3-
Management is also responsible for making all financial records and related information available to us
and for the accuracy and completeness of that information. Management is also responsible for
providing us with(1) access to all information of which they are aware that is relevant to the preparation
and fair presentation of the financial statements, (2) additional information that we may request for the
purpose of the audit, and (3) unrestricted access to persons within the City from whom we determine it
necessary to obtain audit evidence.
Management 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 management 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 affecting the City 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. 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. Management is also responsible for taking timely
and appropriate steps to remedy fraud and noncompliance with provisions of laws, regulations,
contracts, and grant agreements, or abuse that we report. Additionally, as required by OMB Circular A-
133, and, as applicable, the "Uniform Administrative Requirements, Cost Principles and Audit
Requirements for Federal Awards", 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, if necessary.
Management is responsible for preparation of the schedule of expenditures of federal awards (including
notes and noncash assistance received) in conformity with OMB Circular A-133, and, as applicable, the
"Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards".
Management agrees to include our report on the schedule of expenditures of federal awards in any
document that contains and indicates that we have reported on the schedule of expenditures of federal
awards. Management also agrees to include the audited financial statements with any presentation of the
schedule of expenditures of federal awards that includes our report thereon or make the audited financial
statements readily available to intended users of the schedule of expenditures of federal awards no later
than the date the schedule of expenditures of federal awards is issued with our report thereon.
Management responsibilities include acknowledging to us in the written representation letter that (1)
they are responsible for presentation of the schedule of expenditures of federal awards in accordance
with OMB Circular A-133, and, as applicable, the "Uniform Administrative Requirements, Cost
Principles and Audit Requirements for Federal Awards"; (2) they believe the schedule of expenditures
of federal awards, including its form and content, is fairly presented in accordance with OMB Circular
A-133, and, as applicable, the "Uniform Administrative Requirements, Cost Principles and Audit
Requirements for Federal Awards"; (3) the methods of measurement or presentation have not changed
from those used in the prior period (or, if they have changed, the reasons for such changes); and (4) they
have disclosed to us any significant assumptions or interpretations underlying the measurement or
presentation of the schedule of expenditures of federal awards.
-4-
Management is also responsible for the preparation of other supplementary information, which we have
been engaged to report on, in conformity with U.S. generally accepted accounting principles.
Management agrees to include our report on the supplementary information in any document that
contains and indicates that we have reported on the supplementary information. Management agrees to
include the audited financial statements with any presentation of the supplementary information that
includes our report thereon or make the audited financial statements readily available to users of the
supplementary information no later than the date the supplementary information is issued with our report
thereon. Management responsibilities include acknowledging to us in the written representation letter
that (1) they are responsible for presentation of the supplementary information in accordance with
GAAP; (2) they believe the supplementary information, including its form and content, is fairly
presented in accordance with GAAP; (3) the methods of measurement or presentation have not changed
from those used in the prior period(or, if they have changed,the reasons for such changes); and (4) they
have disclosed to us any significant assumptions or interpretations underlying the measurement or
presentation of the supplementary information.
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, for the report, and for the timing and format for providing that information.
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. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of significant accounting estimates made by management, as well
as evaluating the overall presentation of the financial statements. We will plan and perform the 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, of(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.
Because of the inherent limitations of an audit, combined with the inherent limitations of internal
control, 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, even though the audit is
properly planned and performed in accordance with U.S. generally accepted auditing standards and
Government Auditing Standards. 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 the appropriate level of
management of any material errors, any fraudulent financial reporting, or misappropriation of assets that
come to our attention. We will also inform the appropriate level of management of any violations of
-5-
laws or governmental regulations that come to our attention, unless clearly inconsequential, and of any
material abuse that comes to our attention. 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 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 the City
attorney as part of the engagement. At the conclusion of our audit, we will require certain written
representations from management about their responsibilities for the financial statements; schedule of
expenditures of federal awards; federal award programs; compliance with laws, regulations, contracts,
and grant agreements; and other responsibilities required by generally accepted auditing standards.
Audit Procedures—Internal Control
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, and, as applicable, the "Uniform Administrative Requirements,
Cost Principles and Audit Requirements for Federal Awards", 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 with 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, and, as applicable, the "Uniform
Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards".
An audit is not designed to provide assurance on internal control or to identify significant deficiencies or
material weaknesses. 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, and, as
applicable, the "Uniform Administrative Requirements, Cost Principles and Audit Requirements for
Federal Awards".
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's compliance with provisions of applicable laws,
regulations, 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.
-6-
As required by OMB Circular A-133, and, as applicable, the "Uniform Administrative Requirements,
Cost Principles and Audit Requirements for Federal Awards", 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 with 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, and, as applicable, the "Uniform
Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards".
An audit is not designed to provide assurance on internal control or to identify significant deficiencies or
material weaknesses. 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, and, as
applicable, the "Uniform Administrative Requirements, Cost Principles and Audit Requirements for
Federal Awards".
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's compliance with provisions of applicable laws,
regulations, 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.
OMB Circular A-133, and, as applicable, the "Uniform Administrative Requirements, Cost Principles
and Audit Requirements for Federal Awards", 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 and, as applicable, the Compliance Supplement issued in conjunction with the
"Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards"
for the types of compliance requirements that could have a direct and material effect on each of the
City's major programs. The purpose of these procedures will be to express an opinion on the City's
compliance with requirements applicable to each of its major programs in our report on compliance
issued pursuant to OMB Circular A-133, and, as applicable, the "Uniform Administrative Requirements,
Cost Principles and Audit Requirements for Federal Awards".
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 management the electronic submission
and certification. If applicable, we will provide copies of our report to include with the reporting
package management 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.
-7-
We will provide copies of our reports to the City; however, management is responsible for distribution
of the reports and the financial statements. Unless restricted by law or regulations, or containing
privileged and confidential information, copies of our reports are to be made available for public
inspection.
The audit documentation for this engagement is the property of McPherson, Breyfogle, Daveline &
Goodrich, PC and constitutes confidential information. However, subject to applicable laws and
regulations, audit documentation and appropriate individuals will be made available upon request and in
a timely manner to the oversight agency for audit 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 date or for any additional period requested by the oversight agency for audit or a 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.
Larry A. Daveline, C.P.A. is the engagement partner and is responsible for supervising the engagement
and signing the reports or authorizing another individual to sign them.
Our gross fee, including expenses, will not exceed $85,000 for the year ended December 31, 2014 and
$92,400 for the year ended December 31, 2015. The fee increase for the year ended December 31, 2015
compared to the year ended December 31, 2014 is due to the required implementation of Governmental
Accounting Standards Board statement 68, Accounting and Financial Reporting for Pensions. The
above quoted fees are based on anticipated cooperation from City personnel and the assumption that
unexpected circumstances will not be encountered during the audit. If significant additional time is
necessary, we will discuss it with management and arrive at a new fee estimate before we incur the
additional costs. With respect to professional fees for other accounting services, firm policy provides
that such assistance is free of charge if the matter can be resolved with minimal effort. More extensive
time requirements for these services will be billed at $153 per hour.
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 engagements for the years ended December 31, 2014
and 2015.
ilAmyttlYti pikkftAmk, tHtivok,t,a,
-8-
RESPONSE:
This letter correctly sets forth the understanding of th- of Pueblo, Colorado.
4111111
Governance Signature: ,, .
Title: PrPsideut of City Council
Date: November 24, 2014
-9-