Loading...
2hSou,•y Sou,t�h Miami b v IIIIV IryCOPP PATW •F �92� � O R10 P zoor CITY OF SOUTH MIAMI OFFICE OF THE CITY MANAGER INTER - OFFICE MEMORANDUM To: The Honorable Mayor Stoddard and Membe oft ity Commission From: Roger M Carlton, Acting City Manager Date: May 3, 2010 Subject: Completion of FY 08/09 Audit (CAFR) and Management Letter As reported to the City Commission in a number of previous Manager's Reports, the FY 08/09 Audit (CAFR) and Management Letter were scheduled to be completed by the end of April 2010. While the audit is nearing completion, the major element remaining is the Pension Audit whish is then incorporated into the full audit of the City. There have been a number of conversations over the past few months with Pension Board members and their various advisors. Initially the Pension Board requested that the City's Auditors perform the audit. Our auditor was hesitant to do this and the Pension Bard determined to seek such proposals for their own audit. Five proposals were requested and the only response was from Goldstein Schechter Koch who proposed on April 7, 2010 to complete the audit for a maximum fee of $17,000. This fee was determined to be too high and the discussion with the City's auditors was reopened. Rodriguez Trueba has proposed a fee of approximately $7,500 - $8,000 depending on what they find during the audit process. Since the Pension Board does not meet till May 14, 2010, the Pension Administrator sought non - binding opinions from the Pension Board and the vote was in favor of using the City's firm. One member suggested using the firm GSK and the seventh member did not respond. If we move forward with the Pension Board's recommendation, the City's audit should be completed in May at a reasonable cost. To not follow the recommendation will delay this audit significantly. There is an "add on item" on the May 4, 2010 City Commission Agenda presented by the Audit Committee for the FY 09/10 and beyond Pension Audit. There are specific recommendations regarding the scope of the audit which certainly can be followed by Rodriguez Trueba. The City Commission should be aware that there has not been an RFP adopted for the FY 09/10 Audit and the process will require at least 60 days even if fast tracked. Therefore, in order to complete the City's FY 08/09 audit in a timely manner, it is recommended that the informal recommendation of the Pension Board to award the Audit to Rodriguez Trueba at a fee not to exceed $8,000 with the scope of work recommended by the Audit Committee be accepted subject to formal adoption by the Pension Board at their May 14, 2010 meeting. Cc: Laurence Feingold, Mark Goldstein, Pension Board Members, Pension Board Attorney and Administrators, Rodriguez Trueba. Backup Documentation: Page 1 of 3 Carlton, Roger From: Emilie Smith [emilie @benefits- usa.org] Sent: Thursday, April 29, 2010 9:02 AM To: 'Javier Banos, Esq'; Carlton, Roger Cc: pete @benefits - usa.org Subject: RE: South Miami - Authorization for Use of City Auditor for Pension Fund Gentlemen, 1 received another affirmative vote late yesterday. Chairman Banos — Yes Trustee Torres — Yes Trustee Baker — Yes Trustee Montana — Yes Trustee Vageline — Yes Trustee Isern — suggested utilizing GSK Trustee Kosky — no response Regards, Emilie From: Javier Banos, Esq [mailto:jbanos @msn.coml Sent: Wednesday, April 28, 2010 5:53 PM To: 'Carlton, Roger' Cc: 'Emilie Smith' Subject: RE: South Miami - Authorization for Use of City Auditor for Pension Fund Hello Roger — there are seven members of the Board, so with 4 we are ok to go ahead. I know that I am one of the 4, but I do not know who are the other three — Emilie — let the Manager know who the other 3 votes were Javier Banos, Esq. (305) 519 -5581 Cell (305) 890 -2904 Office (305) 403 -1061 Fax lbanos ,msn.com 3126 Coral Way Miami, FL 33145 A Plom e Think Before Printing This communication constitutes an electronic communication within the meaning of the Electronic Communications Privacy Act, 18 U.S.C. § 2510, and its disclosure is strictly limited to the recipient 4/29/2010 Page 2 of 3 intended by the sender of this message. This transmission, and any attachments, may contain confidential attorney- client privileged information and attorney work product. If you are not the intended recipient, nor the employee or agent responsible for delivering it to the intended recipient, any disclosure, copying, distribution or use of any of the information contained in or attached to this transmission is STRICTLY PROHIBITED. Please contact us immediately by return email or at (305) 519 -5581, and destroy the original transmission and its attachments without reading or saving in any matter. Thank you THE ABOVE COMMUNICATION MAY BE AN ATTEMPT TO COLLECT A DEBT. ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE. IRS CIRCULAR 230 NOTICE: Pursuant to recently enacted U.S. Treasury Department Regulations, we are now required to advise you that, unless otherwise expressly indicated, any federal tax advice expressed above was neither written nor intended by the sender or this firm to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed under U.S. tax law. If any person uses or refers to any such tax advice in promoting, marketing or recommending a partnership or other entity, investment plan or arrangement to any taxpayer, then the advice should be considered to have been written to support the promotion or marketing by a person other than the sender or this firm of that transaction or matter, and such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor. From: Carlton, Roger [ mailto :Rcarlton @cityofsouthmiami.net] Sent: 04/28/2010 5:59 PM To: Javier Banos, Esq Subject: RE: South Miami - Authorization for Use of City Auditor for Pension Fund Javier, I am going to put this as a Manager's Report Tuesday. Can you clarify the four vote? Is that a majority and can you tell me the four who voted for it? From: Javier Banos, Esq [mailto:jbanos @msn.coml Sent: Wednesday, April 28, 2010 3:24 PM To: 'Emilie Smith' Cc: kenharrison @sugarmansusskind.com; Jess @sugarmansusskind.com; Baker, Doug; 'daniel montana'; 'Rita Torres'; Vageline, Thomas; trkosky @aol.com; peter.isern @ubs.com; 'Pete @benefits - usa.org'; 'Althea'; Carlton, Roger Subject: RE: South Miami - Authorization for Use of City Auditor for Pension Fund Thank you Emilie and Ken Javier Banos, Esq. (305) 519 -5581 Cell (305) 890 -2904 Office (305) 403 -1061 Fax jbbanos msn.com 3126 Coral Way Miami, FL 33145 Pfe3se Thins Sofore+ Printing This communication constitutes an electronic communication within the meaning of the Electronic Communications Privacy Act, 18 U.S.C. § 2510, and its disclosure is strictly limited to the recipient intended by the sender of this message. This transmission, and any attachments, may contain confidential attorney - client privileged information and attorney work product. If you are not the 4/29/2010 Page 3 of 3 intended recipient, nor the employee or agent responsible for delivering it to the intended recipient, any disclosure, copying, distribution or use of any of the information contained in or attached to this transmission is STRICTLY PROHIBITED. Please contact us immediately by return email or at (305) 519 -5581, and destroy the original transmission and its attachments without reading or saving in any matter. Thank you THE ABOVE COMMUNICATION MAY BE AN ATTEMPT TO COLLECT A DEBT. ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE. IRS CIRCULAR 230 NOTICE: Pursuant to recently enacted U.S. Treasury Department Regulations, we are now required to advise you that, unless otherwise expressly indicated, any federal tax advice expressed above was neither written nor intended by the sender or this firm to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed under U.S. tax law. If any person uses or refers to any such tax advice in promoting, marketing or recommending a partnership or other entity, investment plan or arrangement to any taxpayer, then the advice should be considered to have been written to support the promotion or marketing by a person other than the sender or this firm of that transaction or matter, and such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor. From. Emilie Smith [mailto:emilie @benefits - usa.org] Sent: 04/28/2010 2:55 PM To: 'Javier Banos' Cc: kenharrison @sugarmansusskind.com; Jess @sugarmansusskind.com; Dbaker @cityofsouthmiami.net; 'daniel montana'; Rita Torres; Thomas Vageline; trkosky @aol.com; peter.isern @ubs.com; 'Pete @benefits - usa.org'; 'Althea'; Rcariton @cityofsouthmiami.net Subject: South Miami - Authorization for Use of City Auditor for Pension Fund Importance: High Dear Chairman Banos, I received 4 affirmative votes to use the City's Auditor to complete the Pension Fund Audit at the expense of the City. I spoke to Attorney Harrison and he confirmed that the Board can move forward with the Auditor now. They will begin work and the Board will ratify this decision at the May 141h meeting. Please feel free to contact me if you require additional information. Best Regards, Emilie Smith Benefits USA 954 - 730 -2068 ext. 206 954 -730 -0738 Fax 4/29/2010 ° <n a Goldstein Schechter Koch o CEArlil %n Fad LIn AC C all N TA p 7S AND CO NS UI ;AN IS April 7, 2010 Board of Trustees City of South Miami Pension Fluid c/o Benefits USA, Inc. 3810 Inverrary, Boulevard Ste 303 Lauderhill, FL 33319 Deal- Board of Trustees: We are pleased to confirm our understanding of the services we are to provide for City of South Miami Pension fund (the "Fund ") l'or the year ended September 30, 2009. We will audit the Statement of Plan Net Assets of City of South Miami Pension Fund as of September 30, 2009 and the related Statement of Changes in Plan Net Assets for the year thelr ended. Also, the following additional information accompanying the basic financial statements, required by the Governmental Accounting Standards Board, will not be subjected to the auditing procedures applied in our audit of the financial statements: 1. Management's discussion and analysis 2. Schedule of funding progress 3. Schedule of contributions by employer and other contributing entity Audit Objectives `file objective of our audit is the expression of an opinion about whether your financial statements 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 the standards for financial audits contained in Gomm -n ueut Auditing Standards, issued by the Comptroller General of the United States, 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 on the financial statements is other than unqualified, we will discuss the reasons with management 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. We will also provide a report (which does not include an opinion) on internal control related to the financial statements and compliance with laws, regulations, and the provisions contracts or agreements, noncompliance with which could have a material effect on the financial statements as required by Government Auditing Standards. The report on internal control and compliance will include a statement that the report is intended solely for the information and use of management, the body or individuals charged with governance, others within the organization, and specific legislative or regulatory bodies and is not intended to be and should not be used by anyone other than these specified parties. If during our audit we become aware that the City of South Miami Pension Fund is subject to an audit requirement that is not encompassed in the terms of this engagement, we will communicate to management and those charged with governance that an audit in accordance with generally accepted auditing standards established by the Auditing Standards Board (United States) and the standards for financial audits curtained in Government Audithkq Standards may not satisfy the relevant legal, regulatory, or contractual requirements. 7.121 Ponce de Lean Blvd, - i w) noon • Coral Gables, ft. 33134 Peon &1(305)442 -7,200 > I?,F (305)444.OBBl abue1gsk4pas.cren • %v%vw.gskcpss.com s GSK Goldstein Schechter Koch Hoard of Trustees City of South Miami Pension Fund April 77 3010 Page 2 of 5 Management Responsibilities Management is responsible for the basic financial statements and all accompanying information as well as all representations contained therein. As part of the audit, we will assist with the preparation of your Financial statements and related notes. You arc responsible for making all management decisions and performing all management functions relating to the financial statements, and related notes and for accepting full responsibility for such decisions. You will be required to acknowledge in the management representation letter our assistance with preparation of the financial statement and that you have reviewed and approved file financial statements and related notes prior to their issuance and accepted responsibility for them. Further, you are required to designate a management -level individual with suitable skills, knowledge, or experience to oversee any nonattest 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 monitoring ongoing activities; for helping to ensure appropriate goals and objectives are met; for the selection and application of accounting principles; and for the fair presentation in the financial statements of the financial status and changes in financial status of the Find in conformity with U.S. generally accepted accounting principles. . 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 property recorded. Your responsibilities include adjusting the financial statements to correct material misstatements and for confirming to its 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 statement's taken as a whole. You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing its about all known or suspected fraud or illegal acts affecting the Fund involving (a) f=und management, (b) employees who have significant roles in internal control, and (c) 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 Fund received in communications from employees, former employees, regulators, or other. in addition, you are responsible for identifying and ensuring that the Fund complies with applicable laws, regulations, contracts, and agreements and for taking timely and appropriate steps to remedy any 'fraud, illegal acts, violations of contracts or agreements, or abuse that we may report. Management is responsible for establishment and maintenance 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 responsib'ilit'y includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits, attestation engagements, performance audits, or studies. The Fund is also responsible for providing management's views on out- current findings, conclusions, and recommendations, as well as your planned corrective actions for the report, and the timing and format for providing that information. e�nao Goldstein Schechter Koch ti C9'IT, rlf:0 PUBLIC ACC 01? it IAN[S AA) 00113 U 1. i Atl 7 Board of Trustees City of South Miami Pension Fund April 7, 2010 Page 3 of 5 Audit Procedures -- General An audit includes examining, on a test basis, evidence supporting the amount's and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether from (a) errors, (b) fraudulent Financial reporting, (c) misappropriation of assets, or (d) violations of laws or governmental regulations, including prohibited transactions with parties in interest or other violations, that are attributable to the Fluid or to acts by management or employees acting on behalf of the Fund. Because the determination of abuse is subjective, Government Auditing Standards do not 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 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. I lowever, we will iinform you of any material errors and any fraudulent financial reporting or misappropriation of assets that come to our attention. We will also inform you of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. 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 direct confirmation of investments, Fund obligations, benefit obligations, and certain other assets and liabilities by correspondence with financial institutions, actuaries, and other third parties. We will also request written representations front your attorneys as part ofthe engagement, and they may 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 Control 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 front 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 all opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards. An audit is not designed to provide assurance on internal control or to identify significant deficiencies. However, during the audit, we will communicate to you and those charged with governance internal control related matters that are required to be communicated under AIC13A professional standards and Government Auditing Standards. � t �Kh 1r Goldstein {A SK,, l Koch Board of f rustees City of South Miami Pension fund April 7, 2010 Page 4 of 5 Audit Procedures— Compliance As part of obtaining reasonable assurance about whether the financial statements are Gee of material misstatement, we will perform tests of the City of South Miami Pension fund's compliance with the provisions of applicable laws, regulations, contracts and agreements. However, the objective of our audit 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 Audiiing Standards. Audit Administration, Pees, 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. 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, la 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 personnel will prepare schedules and analyses and type all confirmations we request and will locate any invoices or other documents selected by us for testing. We will provide copies of our reports to the Fund; however, management is responsible for distribution of the, reports and the financial statements. Unless restricted by law or regulation, 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 Goldstein Schechter Koch, P.A. and constitutes confidential information. However, we may be requested to make certain audit documentation available to the City of South Miami or the U.S. Government Accountability Office for purposes of quality review of the audit or the carryout of oversight responsibilities, pursuant to authority given to them by law. We will notify you of any such request. If requested, access to such audit documentation will be provided under the supervision of Goldstein Schechter Koch, P.A, personnel. Furthermore, upon request, we may provide copies of selected audit documentation to the City of South Miami or the U.S. Government Accountability Office. The City of South Miami or the U.S. Government Accountability Office may intend or decide, to distribute the copies of information contained therein to others, including other governmental agencies. Vincent Carrodeguas is the engagement partner and is responsible for supervising the engagement and signing the report. We expect to begin our audit soon after the execution of this engagement letter and issue our report after the approval of the report at a board meeting to be determined by the Board of Trustees. ^e� Goldstein Schechter Koch 0 69 III IFIF0 P III JC IC,0 U N TAN TS AIJ17 CU!ISU Lt A H IS 9 Board of Trustees City of South Miami Pension Fund April 7, 2010 Page 5 of 5 Parties to this engagement agree that any dispute that may arise regarding the meaning, performance, or enforcement of this engagement will, prior to restoring to litigation, be submitted to mediation upon the written request: of any party to the engagement. All mediations initiated as a result of this engagement shall be administered by the American Arbitration Association (AAA). The results of this mediation shall be binding only upon the agreement of each party to be bound. Costs of any mediation proceeding shall be shared equally by both parties. The fees and out-of-pocket direct costs will be capped at $17,000 for the audit. The fee estimate is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. if significant additional time is necessary, we wil I discuss it with you and arrive at a new fee estimate before we incur the additional costs. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. In accordance with our firm policies, work may be suspended if your account becomes 60 days or more overdue and will 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. You will be obligated to compensate us for all time expended and to reimburse us for all out -of- pocket expenditures through the date of termination. Government Auditbvg Slanrlarcly 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 2006 peer review report accompanies this letter. We appreciate the opportunity to be of service to City of South Miami Pension Fund and believe this letter accurately summari2es the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. stnccrely, v Nice eg Certified Public Accountant VC:CJJIec Enclosure ']'his letter correctly sets forth the understanding of City of South Miami Pension Fund. Officer Date