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HomeMy WebLinkAbout10-1, Attachment 1,Audit 2013 Engagement Letter - Moss AdamsAttachment 1 WWW.MOSSADAMS.COM 805 SW Broadway, Suite 1200 Portland, OR 97205 T (5031242-1447 F 15031274-2789 Acumen. Agility. Answers. September 11, 2013 Jeff Bender Truckee Donner Public Utility District 11570 Donner Pass Road Truckee, CA 96161 Re: Audit Services Dear Mr. Bender: Thank you for the opportunity to provide services to Truckee Donner Public Utility District. This engagement letter ("Engagement Letter") and the attached Professional Services Agreement, which is incorporated by this reference, confirm our understanding of the terms and objectives of our engagement, and limitations of the services that Moss Adams LLP ("Moss Adams" and "we") will provide to Truckee Donner Public Utility District ("you," "your" and "District"). Scope of Services - Audit In this engagement, we will audit the District's Consolidated and Primary Government Only statements of net position as of December 31, 2013, and the related Consolidated and Primary Government Only statements of revenues, expenses and changes in net position, and cash flows for the year then ended. We will also report on whether the consolidating statements of net position, statements of revenues, expenses and changes in net position, and cash flows, presented as supplementary information, is fairly stated, in all material respects, in relation to the Consolidated and Primary Government Only financial statements as a whole. We have not been engaged to report on whether the management's discussion and analysis and the schedules of pension plan funding history, presented as supplementary information, is fairly stated, in all material respects, in relation to the Consolidated and Primary Government Only financial statements as a whole. Timing Julie Desimone is responsible for supervising the engagement and authorizing the signing of the report. We expect to begin our audit on approximately March 24, 2014 and issue our report no later than June 15, 2014. We anticipate that fieldwork will end on approximately March 28, 2014. As we reach the conclusion of the audit, we will coordinate with you the date the audited Consolidated and Primary Government Only financial statements will be available for issuance. Praxitx�: MFIIWR GLOIAL ■LUa1LCi OF eapEFEu0cul 111,WS Attachment 1 WWW.MOSSAOAMS.CCM MOSS DAMS LLP Jeff Bender Truckee Donner Public Utility District September 11, 2013 Page 2 of 3 You understand that (1) you will be required to consider subsequent events through the date the Consolidated and Primary Government Only financial statements are available for issuance, (2) you will disclose in the notes to the Consolidated and Primary Government Only financial statements the date through which subsequent events have been considered, and (3) the subsequent event date disclosed in the footnotes will not be earlier than the date of the management representation letter and the date of the report of independent auditors. We may experience delays in completing our services due to your staffs unavailability or delays in your closing and adjusting process. You understand our fees are subject to adjustment if we experience these delays in completing our services. Our services will be concluded upon delivery to you of our report on your Consolidated and Primary Government Only financial statements for the year ended December 31, 2013. Fees Our fees for the audit services will be $39,000. You will also be billed for expenses at our cost as they are incurred, not to exceed $4,500. Our ability to provide services in accordance with our estimated fees depends on the quality, timeliness and accuracy of the Company's records, and the number of general ledger adjustments required as a result of our work. To assist you in this process, we will provide you with a Client Audit Preparation Schedule that identifies the key work you will need to perform in preparation for the audit. We will also need your accounting staff to be readily available during the engagement to respond in a timely manner to our requests. Lack of preparation, poor records, general ledger adjustments and/or untimely assistance will result in an increase of our fees. Additional Services You may request that we perform additional services not contemplated by this Engagement Letter. If this occurs, we will communicate with you regarding the scope of the additional services and the estimated fees. It is our practice to issue a separate agreement covering additional services. However, absent such a separate agreement, all services we provide you shall be subject to the terms and conditions in the Professional Services Agreement. Attachment 1 WWW.MOSSADAMS.COM MOSS -ADAMS LLP Jeff Bender Truckee Donner Public Utility District September 11, 2013 Page 3 of 3 We appreciate the opportunity to be of service to you. If you agree with the terms of our engagement as set forth in the Agreement, please sign the enclosed copy of this letter and return it to us with the Professional Services Agreement. Very truly yours, l �- ( tex y m Julie Desimone, Partner for Moss Adams LLP Enclosures ACCEPTED AND AGREED: This Engagement Letter and the attached Professional Services Agreement set forth the entire understanding of Truckee Donner Public Utility District with respect to the services to be provided by Moss Adams LLP: Signature: Print Name: Title: Date: Client: #621763 v.12/20/2012 Attachment 1 PROFESSIONAL SERVICES AGREEMENT Audit and Non -Attest Services This Professional Services Agreement (the "PSA") together with the Engagement Letter, which is hereby incorporated by reference, represent the entire agreement (the "Agreement") relating to services that Moss Adams will provide to the Company. Any undefined terms in this PSA shall have the same meaning as set forth in the Engagement Letter. Objective of the Audit The objective of our audit is the expression of an opinion about whether your financial statements and supplementary information are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. Our audit will be conducted in accordance with U.S. generally accepted auditing standards and will include tests of your accounting records and other procedures we consider necessary to enable us to express such an opinion. If our opinion is other than unqualified, 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 an opinion, we may decline to express an opinion or to issue a report as a result of this engagement. Procedures and Limitations Our procedures may include tests of documentary evidence supporting the transactions recorded in the accounts, tests of the physical existence of inventories, and direct confirmation of certain receivables and certain other assets, liabilities and transaction details by correspondence with selected customers, creditors, and financial institutions. We may also request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. The supplementary information will be subject to 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. At the conclusion of our audit, we will require certain written representations from management about the financial statements and supplementary information and related matters. Management's failure to provide representations to our satisfaction will preclude us from issuing our report. An audit includes examining evidence, on a test basis, 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. Also, we will plan and perform the audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. Such material misstatements may include errors, fraudulent financial reporting, misappropriation of assets, or violations of laws or governmental regulations that are attributable to the entity or to acts by management or employees acting on behalf of the entity that may have a direct financial statement impact. A risk exists that we may not detect material misstatements because (a) an audit is designed to provide reasonable, rather than absolute, assurance the financial statements are free of material misstatement, (b) we will not perform a detailed examination of all transactions as such is cost prohibitive, and (c) 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. However, we will inform you of any material errors, fraudulent financial reporting or misappropriation of assets, and violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any time period for which we are not engaged as auditors. Our audit will include obtaining an understanding of the Company and its environment, including its internal control sufficient to assess the risks of material misstatements of the financial statements whether due to error or fraud and to design the nature, timing, and extent of further audit procedures to be performed. An audit is not designed to provide assurance on internal control or to identify deficiencies in the design or operation of internal control. However, if, during the audit, we become aware of any matters involving internal control or its operation that we consider to be significant deficiencies under standards established by the American Institute of Certified Public Accountants, we will communicate them in writing to management and those charged with governance. We will also identify if we consider any significant deficiency, or combination of significant deficiencies, to be a material weakness. We may assist management in the preparation of the Company's financial statements and supplementary information. Regardless of any assistance we may render, all information included in the financial statements and supplementary information remains the representation of management. We may issue a preliminary draft of the financial statements and supplementary information to you for your review. Attachment 1 Professional Services Agreement Audit and Non -Attest Services Page 2 of 6 Any preliminary draft financial statements and supplementary information should not be relied upon, reproduced or otherwise distributed without the written consent of Moss Adams. Your Responsibility for Financial Statements You are responsible for making all financial records and related information available to us and for the accuracy and completeness of that information. We may advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, but you are responsible for the financial statements. This responsibility includes the establishment and maintenance of adequate records and effective internal controls over financial reporting, the selection and application of accounting principles, and the safeguarding of assets. You are 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 Company involving: (a) management, (b) employees who have significant roles in internal control, and (c) others where the fraud could have a material effect on the financial statements. You are responsible for informing us of your knowledge of any allegations of fraud or suspected fraud affecting the Company received in communications from employees, former employees, regulators or others. You are responsible for adjusting the financial statements to correct material misstatements and for 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. You are also responsible for identifying and ensuring that the Company complies with applicable laws and regulations. You agree that as a condition of our engagement you will provide us, in a timely and orderly way, with information in your possession that we request or that has a material impact on the nature or characterization of any material transaction to complete our engagement and that information will be, to the best of your knowledge and belief, truthful and accurate. Your Responsibility for Supplementary Information You are responsible for the preparation of the supplementary information in accordance with the applicable criteria. You agree to include the auditor's report on the supplementary information in any document that contains the supplementary information and that indicates that we have reported on such supplementary information. You are responsible to present the supplementary information with the audited financial statements or, if the supplementary information will not be presented with the audited financial statements, to make the audited financial statements readily available to the intended users of the supplementary information no later than the date of issuance by the entity of the supplementary information and the auditor's report thereon. For purposes of this Agreement, audited financial statements are deemed to be readily available if a third party user can obtain the audited financial statements without any further action by you. For example, financial statements on your Web site may be considered readily available, but being available upon request is not considered readily available. Dissemination of Financial Statements Our report on the financial statements must be associated only with the financial statements that were the subject of our engagement. You may make copies of our report, but only if the entire financial statements (including related footnotes and supplementary information, as appropriate) are reproduced and distributed with our report. You agree not to reproduce or associate our report with any other financial statements, or portions thereof, that are not the subject of this engagement. You may choose to publish your financial statements electronically on the Company's Internet website. You agree we are not required under professional standards or this Agreement to read or monitor the information contained on your website or to consider the consistency of other information in the electronic site with the original document. However, we reserve the right to review the information as presented on your Internet website and to withdraw our report should we disagree with the form, context or manner of presentation of the financial statements upon which we reported. You agree that upon written notification of our objections you will immediately remove our report and any reference thereto or to Moss Adams from your Internet website. Attachment 1 Professional Services Agreement Audit and Non -Attest Services Page 3 of 6 Offering of Securities This Agreement does not contemplate Moss Adams providing any services in connection with the offering of securities, whether registered or exempt from registration, and Moss Adams will charge additional fees to provide any such services. You agree not to incorporate or reference our report in a private placement or other offering of your equity or debt securities without our express written permission. You further agree we are under no obligation to re -issue our report or provide written permission for the use of our report at a later date in connection with an offering of securities, the issuance of debt instruments or for any other circumstance. We will determine, at our sole discretion, whether we will re -issue our report or provide written permission for the use of our report only after we have conducted any due diligence we deem necessary in the circumstances. You agree to provide us with adequate time to review documents where our report is; (a) requested to be reissued, (b) referred to, or (c) reference to our firm as "Experts" is expected to be made. If we decide to re -issue our report or provide written permission to the use of our report, you agree that Moss Adams will be included on each distribution of draft offering materials and we will receive a complete set of final documents. If we decide not to re -issue our report or withhold our written permission to use our report, you may be required to engage another firm to audit periods covered by our audit reports, and that firm will likely bill you for its services. While the successor auditor may request access to our engagement documentation for those periods, we are under no obligation to permit such access. Changes in Professional or Accounting Standards To the extent that future federal, state, or professional rule -making activities require modification of our audit approach, procedures, scope of work, etc., we will advise you of such changes and the impact on our fee estimate. If we are unable to agree on the additional fees, if any, that may be required to implement any new accounting and auditing standards that are required to be adopted and applied as part of our engagement, we may terminate this Agreement as provided herein, regardless of the stage of completion. Representations of Management During the course of our engagement, we may request information and explanations from management regarding, among other matters, the Company's operations, internal controls, future plans, specific transactions, and accounting systems and procedures. At the conclusion of our engagement, we will require, as a precondition to the issuance of our report, that management provide us with a written representation letter confirming some or all of the representations made during the engagement. The procedures that we will perform in our engagement will be heavily influenced by the representations that we receive from management. Accordingly, false representations could cause us to expend unnecessary efforts or could cause a material error or fraud to go undetected by our procedures. In view of the foregoing, you agree that we will not be responsible for any misstatements in the Company's financial statements and supplementary information that we fail to detect as a result of false or misleading representations, whether oral or written, that are made to us by the Company's management. While we may assist management in the preparation of the representation letter, it is management's responsibility to carefully review and understand the representations made therein. In addition, because our failure to detect material misstatements could cause others relying upon our audit report to incur damages, the Company further agrees to indemnify and hold us harmless from any liability and all costs (including legal fees) that we may incur in connection with claims based upon our failure to detect material misstatements in the Company's financial statements and supplementary information resulting in whole or in part from knowingly false or misleading representations made to us by any member of the Company's management. Attachment 1 Professional Services Agreement Audit and Non -Attest Services Page 4 of 6 Fees and Expenses The Company acknowledges that the following circumstances will result in an increase of our fees: • Failure to prepare for the audit as evidenced by accounts and records that have not been subject to normal year-end closing and reconciliation procedures; • Failure to complete the audit preparation work by the applicable due dates; • Significant unanticipated transactions, audit issues, or other such circumstances; • Delays causing scheduling changes or disruption of fieldwork; • After audit or post fieldwork circumstances requiring revisions to work previously completed or delays in resolution of issues that extend the period of time necessary to complete the audit; • Issues with the prior audit firm, prior year account balances or report disclosures that impact the current year engagement; • An excessive number of audit adjustments. We will endeavor to advise you in the event these circumstances occur, however we may be unable to determine the impact on the estimated fee until the conclusion of the engagement. We will bill any additional amounts based on the experience of the individuals involved and the amount of work performed. Billings are due upon presentation and become delinquent if not paid within 30 days of the invoice date. Any past due fee under this Agreement shall bear interest at the highest rate allowed by law on any unpaid balance. Expenses are billed as incurred and include charges for such items as transportation, meals, lodging, long distance phone, postage, computer charges, photocopying, graphics preparation, invoicing and report processing. Direct expenses are passed through to you without markup. Indirect costs incurred specifically for your work, such as computer processing and copying, are passed through at our estimated clerical and equipment cost of providing the particular service or material. If we elect to suspend our engagement for nonpayment, we may not resume our work until the account is paid in full. If we elect to terminate our services for nonpayment, or as otherwise provided in this Agreement, our engagement will be deemed to have been completed upon written notification of termination, even if we have not completed our work. You will be obligated to compensate us for fees earned for services rendered and to reimburse us for expenses made through the date of termination. You acknowledge and agree that in the event we stop work or terminate this Agreement as a result of your failure to pay on a timely basis for services rendered by Moss Adams as provided in this Agreement, or if we terminate this Agreement for any other reason, we shall not be liable to you for any damages that occur as a result of our ceasing to render services. Limitation on Liability IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR OTHERWISE ARISING OUT OF THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR EXEMPLARY OR PUNITIVE DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT. Subpoena or Other Release of Documents As a result of our services to you, we may be required or requested to provide information or documents to you or a third -party in connection with governmental regulations or activities, or a legal, arbitration or administrative proceeding (including a grand jury investigation), in which we are not a party. You may, within the time permitted for our firm to respond to any request, initiate such legal action as you deem appropriate to protect information from discovery. If you take no action within the time permitted for us to respond or if your action does not result in a judicial order protecting us from supplying requested information, we will construe your inaction or failure as consent to comply with the request. Our efforts in complying with such requests or demands will be deemed a part of this engagement and we shall be entitled to additional compensation for our time and reimbursement for our out-of-pocket expenditures (including legal fees) in complying with such request or demand. Attachment 1 Professional Services Agreement Audit and Non -Attest Services Page 5 of 6 Document Retention Policy At the conclusion of this engagement, we will return to you all original records you supplied to us. Your Company records are the primary records for your operations and comprise the backup and support for the results of this engagement. Our records and files, including our workpapers whether kept on paper or electronic media, are our property and are not a substitute for your own records. Our firm policy calls for us to destroy our engagement files and all pertinent work papers after a retention period of seven years (or longer, if required by law or regulation), after which time these items will no longer be available. We are under no obligation to notify you regarding the destruction of our records. We reserve the right to modify the retention period without notifying you. Catastrophic events or physical deterioration may result in our firm's records being unavailable before the expiration of the above retention period. Except as set forth above, you agree that Moss Adams may destroy paper originals and copies of any documents, including, without limitation, correspondence, agreements, and representation letters, and retain only digital images thereof. Use of Electronic Communication In the interest of facilitating our services to you, we may communicate by facsimile transmission or send electronic mail over the Internet. Such communications may include information that is confidential to the Company. Our firm employs measures in the use of facsimile machines and computer technology designed to provide reasonable assurance that data security is maintained. While we will use our best efforts to keep such communications secure in accordance with our obligations under applicable laws and professional standards, you recognize and accept that we have no control over the unauthorized interception of these communications once they have been sent. Unless you issue specific instructions to do otherwise, we will assume that you consent to our use of facsimile transmissions to your representatives and other use of these electronic devices during this engagement as we deem appropriate. Enforceability In the event that any portion of this Agreement is deemed invalid or unenforceable, said finding shall not operate to invalidate the remainder of this Agreement. Entire Agreement This Professional Services Agreement and Engagement Letter constitute the entire agreement and understanding between Moss Adams and the Company. The Company agrees that in entering into this Agreement it is not relying and has not relied upon any oral or other representations, promise or statement made by anyone which is not set forth herein. In the event the parties fail to enter into a new Agreement for each subsequent calendar year in which Moss Adams provides services to the Company, the terms and conditions of this PSA shall continue in force until such time as the parties execute a new written Agreement or terminate their relationship, whichever occurs first. Use of Moss Adams' Name The Company may not use any of Moss Adams' name, trademarks, service marks or logo in connection with the services contemplated by this Agreement or otherwise without the prior written permission of Moss Adams, which permission may be withheld for any or no reason and may be subject to certain conditions. Use of Nonlicensed Personnel Certain engagement personnel who are not licensed as certified public accountants may provide services during this engagement. Attachment 1 Professional Services Agreement Audit and Non -Attest Services Page 6 of 6 Dispute Resolution Procedure and Venue This Agreement shall be governed by the laws of the state of California, without giving effect to any conflicts of laws principles. If a dispute arises out of or relates to the engagement described herein, and if the dispute cannot be settled through negotiations, the parties agree first to try in good faith to settle the dispute by mediation using an agreed upon mediator. If the parties are unable to agree on a mediator, the parties shall petition the state court that would have jurisdiction over this matter if litigation were to ensue and request the appointment of a mediator, and such appointment shall be binding on the parties. Each party shall be responsible for its own mediation expenses, and shall share equally in the mediator's fees and expenses. The mediation shall occur in Truckee, California. If the claim or dispute cannot be settled through mediation, each party hereby irrevocably consents to the exclusive jurisdiction and venue of the appropriate state or federal court located in Nevada County, state of California, in connection with any dispute hereunder or the enforcement of any right or obligation hereunder. Termination This Agreement may be terminated by either party, with or without cause, upon ninety (90) days' written notice. In such event, we will stop providing Services hereunder except on work, mutually agreed upon in writing, necessary to carry out such termination. In the event of termination: (a) you shall pay us for Services provided and expenses incurred through the effective date of termination, (b) we will provide you with all finished reports that we have prepared pursuant to this Agreement, (c) neither party shall be liable to the other for any damages that occur as a result of our ceasing to render Services, and (d) we will require any new accounting firm that you may retain to execute access letters satisfactory to Moss Adams prior to reviewing our files.