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ASSIGNMENT AND ASSUMPTION AGREEMENTASSIGNMENT AND ASSUMPTION AGREEMENT (City of Clearwater) This Assignment and Assumption Agreement (this "Assignment's is dated December 2010, by and among Kirkland, Russ, Murphy & Tapp, P.A., a Florida professional AR services corporation ("Assignor'j, and Mayer Hoffman McCann P.C., a Missouri professional corporation ("Assignee'. Assignor and Assignee agree as follows: 1. Assignment and Assumption. Assignor hereby assigns to Assignee all of Assignor's right, title, and interest in the engagement letter dated August 3, 2010, from Assignor to the City of Clearwater, Florida, and the Agreement dated August 13, 2010, between Assignor and the City of Clearwater, Florida, copies of which are attached to this Assignment as Exhibit "A" (together, the "Agreements', and Assignee hereby assumes and agrees to satisfy and discharge, as the same become due, all of the obligations under the Agreements arising on or after the effective date of this Assignment. 2. Further Assurances. Assignor and Assignee agree to execute such further and other assurances and to do such other acts as each party may reasonably require to implement the intentions of this Assignment. Assignor and Assignee confirm to the City of Clearwater, Florida, that (a) each of the shareholders of Assignor as of November 1, 2010, became shareholders of Assignee as of November 1, 2010, and (b) Assignee is a party to a Restated Administrative Services Agreement dated January 1, 2002, as amended, with CBIZ, Inc., pursuant to which CBIZ, Inc. provides certain services and personnel to Assignee on an ongoing basis and pursuant to which CBIZ, Inc. will provide certain services and personnel to Assignee in connection with Assignee's performance of its obligations under the Agreements. 3. Benefits, Binding Effect. This Assignment shall inure to the benefit of, and shall be binding upon, Assignor and Assignee and their respective successors and assigns. This Assignment will become effective upon the execution by the City of Clearwater, Florida, of the Consent to Assignment that is attached to this Assignment. 4. Counte arts. This Assignment may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same instrument. The signatures to this Assignment need not all be on a single copy of this Assignment, and may be facsimiles rather than originals, and shall be fully as effective as though all signatures were originals on the same copy. ASSIGNOR: KIRKLAND, RUSS, MURPHY & TAPP, P.A. By: &al Name: Title: Ede 7- 'Irv ASSIGNEE: MAYER HOFFMAN MCCANN P.C. By: Name: W,1 1 1, . 14? c- o c- k Title: CONSENT TO ASSIGNMENT The City of Clearwater, Florida, consents to the Foregoing assignment and assumption by Kirkland, Russ, Murphy & Tapp, P.A., a Florida professional services corporation, to Mayer Hoffman McCann P.C., a Missouri professional corporation. Countersigned: Frank V. Hibbard Mayor CITY OF CLEARWA".I'1;R, FLORIDA. By: William B. Horne, 11 City Manager W, Approved as to form: c Name: Laura Mahony u Title: Assistant City Attorney Attest: ?yx?tl?ia ?i.udi Ro s City Clerk dA 1 9A 2 02031-01900 600285 v3 NN ¦n R1R..I(LANL), Russ MURPHY TAPP CLRTIFIEJ) PUl3l...IC;ACCOUNTANTS August 3, 2010 Mr. Jay Ravins City of Clearwater P.O. Box 4718 Clearwater, FL 33758 Dear Mr. Ravins= hu k W Kirkland. J,: r?u„f, r J. Johns<n, Andrr,t' J. Hw C'iHdN Ah'e„r M,dt Brm e 11. Murphy Luu'u Krar,'rr' Agri( k William C. hipp Rolrr'r/ J. Hot, Pind c . Uuuham Kei in X r:.,.vr.c stevtn W. (Iruve Oonald kf. Jm les, Jr r1 f'ro(1u,+'i+?rud:1.+'av„'iu,i„n We are pleased to confirm our understanding of the services we are to provide the City of Clearwater (the City). We agree to meet the specific requirements as stated in a separate agreement dated August ,.3r` 2010. We will audit the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information, which collectively comprise the basic financial statements, of the City of Clearwater as of and for the fiscal year ended September 30, 2010, We will also audit the financial statements of each of the City's non-major governmental, non-major enterprise, internal service and fiduciary funds. 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 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 %vith auditing standards generally accepted in the United States of America. "T"hese 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 obtained during out- 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 RZ l is required by generally accepted accounting principles and will be subjected to certain limited procedures, but will not be audited: l) Management's discussion and analysis_ 2) Pension and post-employment benefit disclosures Supplementary information other than RSI also 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 of to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States ofAmerica and will provide an opinion on it in relation to the financial statements as a whole- 13577 Feather Sound Drive, Suite 4W, Clearwater, FL 33762-5539 ¦ Tel - 727,.572.1400 - 813,879.1400 ¦ rax - 727.571.193:3 ¦ KttMTC:PA.coin Mr, Jay Ravins August 3, 2010 Page 2 of 7 I) Schedule of'expenditures of federal awards and state financial assistance. 2) Combining and individual fund statements and schedules 'file following other information accompanying the financial statements will riot be subjected to the auditing procedures applied in our audit of the financial statements, and for which our auditor's report will not provide an opinion or any assurance- I ) introductory section 2) Statistical section Audit Objectives The objective of our audit is the expression of opinions as to whether your 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 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 laws, refulations, and the provisions of contracts or grant agreements. nortcornpliance with which could have a material effect on the financial statements in accordance with Government Auditing Slandar°ds_ 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 rnajor prograrn in accordance with the Single Audit. Act Amendment% of' 1996 and OMB Circular A,-1:33, Autlits gf'51ate.s, Local Governments, and Non-Profit Orgunizutions, the Florida Single audit Act, and Chapter 10.550, Rules of 1he Auditor General. The reports on internal control and compliance will each include a statement that tale report is intended solely for the information and use of the City Mayor. City Council Members, City Manager and City Management, the State of.Florida Office of the Auditor General and applicable federal and state awarding agencies and is riot intended to be and should not be used b-v 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 Governruerrt Auditing Standurds, issued by the Comptroller General of the United States: the Single Audit Act Amendments of' 1996; and tale provisions of OMB Circular A-133, and will include tests of accounting records, a determination of major program(s) in accordance with OMB 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 <.m the financial statements or the Single Audit compliance opinions are other than unqualified, we will fully discuss the reasons with you in advance. If we are unable to complete the audit or are unable to form or have not formed opinions due to the City's failure to provide reasonably sufficient intornaation or documentation as required tinder the audit Agreement, we reserve the right to decline to express opinions or to issue a report as a result of this engagement. Mr. Jay Ravins August. 3, 201 t) Page 3 of 7 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 identi{}ing government award programs and understanding and complying with the compliance requirements, and for preparation of the schedule of expenditures of federal awards in accordance with the requirements of'OMB Circular A-133. You are 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. You are 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. Management is responsible for 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 and that there is reasonable assurance that government programs are administered in compliance with compliance requirements. You are 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 major fund, and the aggregate rernaming fund information of the City and the respective changes in financial position and, where applicable, cash flows in conformit'y 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 management and financial information is reliable and properly recorded. Your responsibilities also include identifying significant vendor relationships in which the vendor has responsibility for prograrn compliance and for the accuracy and completeness of that information. Your 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 takers as a whole. 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 or illegal acts affecting the government 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. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the government received in communications from employees, former employees, grantors; regulators, or others. In addition you are responsible for identifying and ensuring that the entity 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- The summary schedule of prior audit findings should be available for our review on November 1, 2010. You are responsible for the preparation of the supplementary information in conformity with U.S. generally accepted accounting principles. You agree to include our report on the supplementary information in any document that contains and indicates that we have reported on the supplementary information. You also agree to present the supplementary information with the audited financial statements. Mr. Jay Ravins August 3, 2010 Page 4of7 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 oilier 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. You are also responsible for providing management's views on our current findings, conclusions, and recommendations, as well as your planned corrective actions, for the report, and for the timing and format for providing that information. Audit Procedures-- -General An audit includes examining, oil 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 plant and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether from (l) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) 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. Because the determination of abuse is subjective, Government Auditing Stanclards do riot expect auditors to provide reasonable assurance of detecting abuse. 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 fraudUleilt financial repoaing 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, and of any material abuse that comes to our attention. We will inctude 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 your attorneys as part of the engagement, and they rnay bill you for responding to this inquiry. At the conclusion of our audit, we will require certain written representations from you about the financial statements and related matters. Audit Procedures----Internal Controls Our audit will include obtaining an understanding of the entity 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 Mr- Jay Ravins August 3, 2010 Page 5 of 7 internal control arid, 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 with compliance requirements applicable to each major federal award prograrn. 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 OMR 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 corn municate to management and those charged with governance internal control related matters that are required to be communicated under AICPA professional standards, Governnzetzt Azditing 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'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 Govcrnrment Auditing Standards-. 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 ('ircular A-133 Compliance Supplement and related addenda 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. Engagement Administration, Fees, and Other We may from time to time, and depending on the circumstances, use third-party service providers in serving your account. We may share confidential information about you with these service providers, but remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures, and safeguards to protect the confidentiality of your personal information. In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information and we will take reasonable precautions to determine that they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others, In the event that we are unable to secure an appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your confidential information with the third-party service provider-, Furthermore, we will remain responsible for the work provided by any such third-party service providers. We understand that your employees will prepare all cash, accounts receivable, or other confirmations we request and will locate any documents selected by us for testing. Mr. Jay Ravins August 3, 2010 Page 6 of 7 At the inclusion of the engagement, we will complete the appropriate sections of the Data Collection Form that surnnlarizes 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 cognizant or oversight agency for audits. The audit documentation for this engagement is the property of Kirkland, Russ, Murphy & Tapp, P.A. and constitutes confidential information. However, pursuant to authority given by law or regulation, we may be requested to make certain audit documentation available to your cognizant agent or its designee, a federal agency providing direct or indirect funding, or the 1.1.5. 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 you of any such request. If requested, access to such audit documentation will be provided under the supervision of Kirkland, Russ, Murphy & Tapp, P.A. personnel. Furthermore; upon request, we may provide copies of selected audit documentation to the aforementioned parties. 't`hese 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 minirnurn of five years after, the report release or for any additional period requested by the cognizant agent. 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. We will meet with you after finalization of the engagement letter and contract to determine an approximate start date and will issue our reports no later than February 28. 2011 _ Laura Krueger Brock is the engagement partner and is responsible for supervising the engagement and signing the reports or authorizing another individual to sign them. Our fee for these services will be at our standard hourly rates plus out-of-pocket costs (such as report reproduction, word processing, postage, travel, copies, telephone, etc.) except that we agree that our gross fee, including expenses, will not exceed $1 14,750 for the fiscal year 2010 audit. Our standard hourly rates vary according to the degree of"responsibility involved and the experience level of the personnel assigned to your audit- Our invoices for these fees will be rendered each month as follows and are payable oil presentation. August 10°% $11,475 September 10% $1 1,475 October 10% $11,475 November 10% $11,475 December 10% $11,475 January 20% $22,950 February 20% $22,950 Upon delivery of final reports 10% $1 1„475 100% $_1.14,70 Mr. Jay Ravins August 3, 2010 Page 7 of 7 In accordance with our firm policies, work may be suspended if your account becomes 30 days or more overdue and may not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed upon written notification of termination, even if we have not completed our report(s). You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket costs through the date of termination. 'fhe above fee is based on anticipated cooperation from your personnel and the aSSUn1ptlo11 that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. Goverriment Auditing Standards require that we provide you with a copy of our most recent external peer review report and any letter of comment, and any subsequent peer review reports and letters of comment received during the period of the contract.. Our 200$ peer review report and letter of comment accompanies this letter. We appreciate the opportunity to be of service to the City of Clearwater and believe this letter accurately summarizes the significant terms of our engagement. If you have an_v 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, cy-Za4-Ir- Owf-v?? Laura Krueger Brock R[:.SP0NSE: This letter correctly sets forth the understanding of the City of Clearwater. By: Date: e12-O, v AGREEMENT THIS AGREEMENT, made and entered into this /2 day of , 2010 by and between the CITY OF CLEARWATER, FLORIDA, a muri?ic? p 1 corporation of the State of Florida, located at 112 S. Osceola Avenue, Clearwater, Florida 33756, hereinafter referred to as "City", and Kirkland, Russ, Murphy & Tapp, P.A., a firm of Certified Public Accountants, located at 13577 Feather Sound Drive, Suite 400, Clearwater, Florida 33762, hereinafter referred to as "Contractor"; WITNESSETH WHEREAS, the City is required by Article II, Sect'-on 2.01(c)(3) of the City Charter to provide for an annual audit of its financial accounts; and WHEREAS, the City participates in various Federal, State and County Assistance programs which require independent financial and compliance audits in accordance with rules established by the U.S. Department of Housing and Urban Development, Florida Auditor General, and other agencies; and WHEREAS, the Contractor is in the business of public accounting, is fully qualified to meet the requirements of applicable City, State and Federal law, and desires to perform the necessary services: NOW, THEREFORE, the parties agree as follows: 1. Recitals. The foregoing recitals are true and correct and are incorporated in and form a part of 'this Agreement. 2. The "Auditor Services Documents" form the Auditor Services Agreement. The Auditor Services Documents consist of this Agreement between the City and the Contractor (hereinafter "Agreement") and it's attached Exhibits: City of Clearwater Request For Proposal for Professional Auditing Services, ("RFP 16-10") issued May 11, 2010 (Exhibit "A"); Proposal to provide Professional Auditing Services to the City of Clearwater, Florida ("Proposal") submitted June 8, 2010 (Exhibit "B") ; Engagement Letter from Contractor to City confirming understanding of the services to be provided under the Agreement ("Engagement Letter") (Exhibit "C"); written modifications of the Agreement executed by the parties hereto, issued after execution of the Agreement. The Auditor Services 7_ Documents shall no- be cons rued to create a contractual relationship of any kind with any third party, including any third party service provider used by the Contractor in the fulfillment of its obligations under the Agreement. 3. This agreement relates specifically to the City's fiscal. years ending September 30, 2010 thru 2014. This agreement may be terminated by the City on the basis of unsatisfactory performance, as determined by the City in its sole discretion, with written notice at least six months prior to the September 30 fiscal year-end, or by the contractor for reasons specified in the Engagement Letter which is hereby incorporated by reference and made a part hereof. City Charter Section 2.01(c)(3) currently prohibits any single audit firm from being employed for more than five consecutive years. The fees for subsequent years are fixed per this agreement and not expected to deviate from the amounts stated herein except for unanticipated significant oranges in the scope of auditing services required by the City. 4. The Contractor shall review the City's comprehensive annual financial report for compliance with GAAP and the applicable requirements of the Certificate of Achievement for Excellence in Financial Reporting program of the Government Finance Officers Association and assist the City in complying with new or existing requirements. The Contractor shall, subject to the terms and conditions of the engagement letter, render a report on the fair presentation of the City's basic financial statements and all individual non-major fund financial statements, in conformity with generally accepted accounting principles, for the fiscal years ending September 30, 2010 thru 2014. The Contractor shall, subject to the terms and conditions of the engagement letter, render a report on the fair presentation of the City's combining and individual fund financial statements and schedules in conformity with generally accepted accounting principles. The Contractor is not required to audit the supplementary information contained in the comprehensive annual financial report, however, the Contractor shall provide an "in-relation-to" report on the supplementary information based on the audit procedures applied during the audit of the basic financial statements and the combining and individual fund financial statements and schedules. The. Contractor is not required to audit the statistical section of the report. The Contractor shall also perform the required financial and compliance audits associated with Federal, State, and County Assistance programs in accordance with the Federal. Single Audit Act of 1984 as amended; U.S. Office of Management and Budget (OMB) Circular A-133; the provisions of the Florida Single Audit Act (Section 215.97 Florida Statutes); and rules of other agencies. 5. In performing the services described in #4 above, the Contractor shall comply with the following: ry ° generally accepted auditing standards ° standards set forth for financial audits in the U_S. General Accounting Office's (GAO) Governmenz Auditing Standards ° provisions of the Federal Single Audit Act as amended ° U.S. Office of Management and Budget (OMB) Circular A- 133 Chapter 11.45 Florida Statutes the Rules of the Auditor General. of the State of Florida, Chapters 10.550 and 10.600 Regulations of the State Department of Banking and Finance ° Audits of State and Local Governmental Units - ASCPA As a part of the audit, the Contractor will consider the City's internal control structure, as required by generally accepted auditing standards and Government Auditing Standards. 6. Following completion of the audit, the Contractor shall, subject to the terms and conditions of the engagement letter, render the following reports: A report on the fair presentation of the financial statements in conformity with generally accepted accounting principles. A report on the internal control structure based on the auditor's understanding of the control structure and assessment of control risk. ° A report on compliance with applicable laws and regulations, including those relating to funds received form a State of Florida grants and a_d appropriation pursuant to a grant or contract. A report on the internal control structure used in administering federal assistance programs. ° A report on compliance with laws and regulations related to major and non-major federal financial assistance programs. ° A Management Letter as required by Section 10.554(1)(i) of the Rules of the Auditor General of the State of Florida. ° A report on compliance with general compliance requirements as required by the Single Audit Act and OMB Circular A-133. ° A report on compliance as required by the Florida Single Audit Act and Chapter 10.550, Rules of the Auditor General of the State of Florida. 7. In conjunction with City debt issuances, the Contractor will provide Consent Letters and Citations of Expertise and/or Comfort Letters at no additional cost to the City. 8. The Contractor shall retain all working papers for a minimum of five (5) years, unless notified in writing by the City of 'the need to extend the retention period. The Contractor shall make working papers available, upon request, to the following parties or their designees: City of Clearwater ° U.S. Department of Housing and Urban Development ° U.S. General Accounting Office (GAO) ° Parties designated by the federal or state governments or by the City of Clearwater as part of an audit quality review process 4 ° Auditors of entities of which the City of Clearwater is subrecipient of grant funds In addition the Contractor shall, providing all fees have been paid, respond to the reasonable inquiries of successor auditors and allow successor auditors to review working papers relating to matters of continuing accounting significance. 9. The Contractor shall assist the City in scheduling the Comprehensive Annual Financial Report to be completed and issued no later than March 15`r', succeeding each fiscal year. Contractor/City meetings will be held at least once per month until completion of this contract. Weekly status meetings shall be held while the Contractor is working at the City. The Contractor shall complete performance under this contract by March 31St succeeding each fiscal year. 10. The Contractor shall bill the City and the City shall pay the Contractor for the performance of the services under this contract on the basis of the Contractor's normal and customary charges for such services, plus ordinary out-of- pocket expenses customarily stated separately by the Contractor in his general practice. The total amount of this contract, including out--of-pocket expenses, shall not exceed: Fiscal 2010 $114,750 Fiscal 2011 $117,300 Fiscal 2012 $120,600 Fiscal 2013 $124,450 Fiscal 2014 $128,400 The City may, by amendment of this agreement, increase this maximum fee and/or extend the completion date upon the Contractor's showing evidence of conditions which require substantially more time than would generally be required to perform the prescribed services. Progress payments will be made periodically for work completed to date based on i-voices submitted by the Contractor. The sum of such progress payments shall not exceed ninety percent (900) of the maximum: specified above. The final payment will be made within thirty (30) days of receipt of the final- audit reports. Miscellaneous Provisions 11. Budaet Allocations. The obligations of the parties are subject to appropriate budgeted funds being available in each budget year to achieve the purposes of this Agreement. In the event that sufficient budgeted funds are not available in a subsequent fiscal year, this Agreement shall terminate on the last day of the fiscal year for which sufficient budgeted funds are available without penalty to either of the parties. 12. Record ?detention. Documents related to this agreement may be construed as public record and shall be retained and provided as required by law. 13. Compliance With the Law. Both Parties shall comply with all federal, state, county, and local laws, regulations, and ordinances at all times. 14. Discrimination Prohibited. The Parties shall, during the performance of this agreement, comply with all applicable provisions of federal, state and local laws and regulations pertaining to prohibited discrimination. 15. Assignment. This agreement is riot assignable. 16. Severabilitv. Should any section or part of any section of this Agreement be 6 rendered void, invalid, or unenforceable by any court of law, for any reason, such a determination shall not render void, invalid, or unenforceable of any other section or any part of any section of this Agreement. 17. Amendments. This Agreement constitutes the entire Agreement between the Parties, and no change will be valid unless made by supplemental written agreement executed by both Parties. 18. Notices. All notices, requests, demands, or other communications required by law, or this Agreement shall be in writing and shall be deemed to have been served as of the delivery date appearing upon the return receipt if sent by certified mail, postage prepaid with return receipt requested, to: Jay Ravins, Asst. Finance Director City of Clearwater 100 South Myrtle Ave. Clearwater, Florida 33756 Laura Brock Kirkland, Russ, Murphy & Tapp 13577 Feather Sound Drive, Suite 400 Clearwater, Florida 33762 19. Non-Wa1v(,r_ No act of omission or commission of either Party, including without .limitation, any failure to exercise any right, remedy, or recourse, shall be deemed to be a waiver, release, or modification of the same. Such a waiver, release, or modification is to be effected only through a written modification to this Agreement. 7 20. Authority. Each Party to this Agreement represents and warrants to the other Party that (i) it is duly organized, qualified and existing entities under the laws of the State of Florida, and (ii) all appropriate authority exists so as to duly authorize the persons executing this Agreement to so execute the same and fully bind the Party on whose behalf they are executing. This Agreement is subject to approval by the Parties. 21. Governina Law. This Agreement shall be construed and enforced in accordance with Florida Law. IN WITNESS WHEREOF, the parties hereto have caused this agreement 'to be executed the day and year first above written: Countersigned: Frar k V. Hibbard May r Approved as to form -aR4 Oer ee-s - LAura Mahony Assistant Citv Attorney CITY OF CLEARWATER, FLORIDA BYtiaI?r I ? liam B. Horne, II City Manager Attest: 4nt-flia E. Goudeau ty Clerk ??..?kr ?' f y„f Y. :z Kirkland, Russ, Murphy « Tapp, P.A. By: 8 NNATHERSON & COMPANY, P.A. ` Certified Public Accountants 1801 Glengary Street 544 Bay Isles Road Sarasota, Florida 34231 Longboat Key, Florida 34228 (941) 923-1981 (941) 387-8555 Fax 923-0065 December 2, 2008 To the Shareholders of Kirkland, Russ, Murphy & Tapp, P.A. and the Center for Public Company Audit Firms Peer Review Committee Members American Institute of Certified Public Accountants Florida Institute of Certified Public Accountants Russell S. Natherson, G.P.A. Patrick L. Gnllaghar. C.P.A. Russell E. Notherson. C.P.A. Randall L. Natharson, C.P.A. Eileen A. Sarris. C.P.A. We have reviewed the system of quality control for the accounting and auditing practice of Kirkland, Russ, Murphy & Tapp, P.A. (the firm) applicable to non-SEC issuers in effect for the year ended May 31, 2008. The firm's accounting and auditing practice applicable to SEC issuers was not reviewed by us since the Public Company Accounting Oversight Board (PCAOB) is responsible for inspecting that portion of the firm's accounting and auditing practice in accordance with PCAOB requirements. A system of quality control encompasses the firm's organizational structure and the policies adopted and procedures established to provide it with reasonable assurance of complying 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 (the AICPA). The design of the system, and compliance with it, are the responsibilities of the firm. Our responsibility is to express an opinion on the design of the system, and the firm's compliance with that system based on our review. Our review was conducted in accordance with standards established by the Peer Review Committee of the Center for Public Company Audit Firms and included procedures to plan and perform the review that are summarized in the attached description of the peer review process. Our review would not necessarily disclose all weaknesses in the system of quality control or all instances of lack of compliance with it since it was based on selective tests. Because there are inherent limitations in the effectiveness of any system of quality control, departures from the system may occur and not be detected. Also, projection of any evaluation of a system of quality control to future periods is subject to the risk that the system of quality control may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the system of quality control for the accounting and auditing practice applicable to the none-SEC issuers of Kirkland, Russ, Murphy & Tapp, P.A. in effect for the year ended May 31, 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 complying with applicable professional standards. 9 1 "6 t7) P, A - Attachment to the Peer Review Report of Kirkland, Russ, Murphy & Tapp, P.A. Description of the Peer Review Process Overview Firms enrolled in the AICPA Center for Public Company Audit Firms (the (:enter) Peer Review Program have their system of quality control periodically reviewed by independent peers. These reviews are system and compliance oriented with the objectives of evaluating whether: The reviewed firm's system of quality control for its accounting and auditing practice applicable to non-SEC issuers has been designed to meet the requirements of the Quality Control Standards established by the AICPA. The reviewed firm's quality control policies and procedures applicable to non-SEC issuers were being complied with to provide the fine with reasonable assurance of complying with professional standards. A peer review is based on selective tests and directed at assessing whether the design of and compliance with the firm's system of quality control for its accounting and auditing practice applicable to non-SEC issuers provides the firth with reasonable, not absolute, assurance of complying with professional standards. Consequently a peer review on the firm's system of quality control is not intended to, and does not, provide assurance with respect to any individual engagement conducted by the firm or that none of the financial statements audited by the firm should be restated. The Center's Peer Review Committee (PRC) establishes and maintains peer review standards. At regular meetings and through report evaluation task forces, the PRC considers each peer review, evaluates the reviewer's competence and performance, and examines every report, letter of comments, and accompanying response from the reviewed firm that states its corrective action plan before the peer review is finalized. The Center's staff plays a key role in overseeing the performance of peer reviews working closely with the peer review teams and the PRC. Once the PRC accepts the peer review reports, letters of comments, and reviewed firms' responses, these documents are maintained in a file available to the public. In some situations, the public file also includes a signed undertaking by the firm agreeing to specific follow-pup action requested by the PRC. Firms that perform audits or play a substantial role in the audit of one or more SEC issuers, as defined by the Public Company Accounting Oversight Board (PCAOB), are required to be registered with and have their accounting and auditing practice applicable to SEC issuers inspected by the PCAOB. Therefore, we did not review the firm's accounting and auditing practice applicable to SEC issuers. Attachment to the Peer Review Report of Kirkland, Russ, Murphy & Tapp, P.A. Description of the Peer Review Process - Continued Planning the Review for the Firm's Accounting and Auditing Practice Applicable to Non-SEC Issuers To plan the review of Kirkland, Russ, Murphy & Tapp, P.A., we obtained an understanding of (1) the .nature and extent of the firm's accounting and auditing practice, and (2) the design of the firm's system of quality control sufficient to assess the inherent and control risks implicit in its practice. Inherent risks were assessed by obtaining an understanding of the firm's practice, such as the industries of its clients and other factors of complexity in serving those clients, and the organization of the firm's personnel into practice units, Control risks were assessed by obtaining an understanding of the design of the firm's system of quality control, including its audit methodology, and monitoring procedures. Assessing control risk is the process of evaluating the effectiveness of the reviewed firm's system of quality control in preventing the performance of engagements that do not comply with professional standards. Performing the Review for the Firm's Accounting and Auditing Practice Applicable to Non-SEC Issuers Based on our assessment of the combined level of inherent and control risks, we selected engagements to test for compliance with the firm's system of quality control. The engagements selected for review included audits of Employee Benefit Plans. The engagements selected for review represented a cross-section of the firm's accounting and auditing practice with emphasis on higher-risk engagements. The engagement reviews included examining working paper files and reports and interviewing engagement personnel, The scope of the peer review also included examining selected administrative and personnel files to determine compliance with the firm's policies and procedures for the elements of quality control pertaining to independence, integrity, and objectivity; personnel management; and acceptance and continuance of clients and engagements. Prior to concluding the review, we -? reassessed the adequacy of scope and conducted a meeting with firm management to discuss our findings and recommendations.