Res. No. 165-06-12306RESOLUTION NO. 165-06-12 3 0 6
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF SOUTH MIAMI, FLORIDA AUTHORIZING THE CITY MANAGER TO
EXERCISE THE OPTION TO EXTEND THE AGREEMENT BETWEEN
CABALLERO & CASTELLANOS, P.A. CERTIFIED PUBLIC ACCOUNTANTS
AND THE CITY OF SOUTH 1VIIAMI, FOR THE PREPARATION OF THE
INDEPENDENT AUDIT FOR FISCAL YEAR ENDING SEPTEMBER 30, 2006.
WHEREAS, Article IV, Section 4(e) of the City Charter of South Miami requires the City
Commission to designate a qualified independent Certified Public Accountant to review, examine and
report on all fiscal matters; and
WHEREAS, pursuant to Resolution #176 -04 -11955 authorization was given to the City Manager
to enter into an agreement with Caballero & Castellanos, P.A. which currently provides independent
auditing services; and
WHEREAS, for the audit of fiscal year ending September 30, 2006, the City Manager received an
engagement letter from Caballero & Castellanos, P.A., in which the'.City reserves the right to extend the
agreement for an additional fiscal year subject to mutual agreement by the Auditor and the City
Commission.
NOW THEREFORE BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION
OF THE CITY OF SOUTH MIAMI, FLORIDA THAT:
Section 1. The City Manager is authorized to extend the agreement with Caballero &
Castellanos, P.A., to provide audit services for fiscal year ending September 30, 2006.
Section 2. This resolution shall take effect immediately upon approval.
PASSED AND ADOPTED this day off -_. , 2006.
f
ATTEST:
CITY CLERK_' ,
AS TO FORM:
ATTORNEY
COMMISSION VOTE:
3 -0
Mayor Feliu:
Yea
Vice Mayor Wiscombe: =.
_= Yea
Commissioner Palmer:
absent
Commissioner Birts:
absent
Commissioner Beckman:
Yea
South Miami
I I
"_ -•• � . CITY OF SOUTH MIAMI .
io929� OFFICE OF THE CITY MANAGER
° INTER- OFFICE MEMORANDUM 2001
To: The Honorable Mayor Feliu and Members of the City Commission
From: Yvonne S. McKinley, City Manager'�d.'
Date: September 19, 2006 Agenda Item:
Subject: Financial Audit Services- Contract Renewal for Additional Year
Request: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF SOUTH MIAMI, FLORIDA AUTHORIZING THE CITY
MANAGER TO EXERCISE THE OPTION TO EXTEND THE
AGREEMENT BETWEEN CABALLERO & CASTELLANOS, P.A.
CERTIFIED PUBLIC ACCOUNTANTS AND THE CITY OF SOUTH
MIAMI, FOR THE PREPARATION OF . THE INDEPENDENT AUDIT
FOR FISCAL YEAR ENDING SEPTEMBER 30, 2006.
Reason/Need: The attached resolution is requesting your authorization to renew the financial
audit services contract agreement between the City and the Certified Public Accountant firm of
Caballero & Castellanos, P.A. for an additional year.
Background: Pursuant to Resolution #176 -04 -11955 authorization was given to the City
Manager to enter into an agreement with Caballero & Castellanos, P.A., which currently
provides independent auditing services, with the option to renew for one more year, if so desired
by the City.
Approval of this firm to conduct the audit for fiscal year ending September 30, 2006 will bring
us in compliance with Article 4, section 4(e) of the. City Charter.
Cast: $38,000
Funding Source: Fiscal Year 2006 -07 budget
Backup Documentation: Copies of the following documents:.
Resolution 4 176 04 1195
Engagement letter dated 11/3104
City Charter Article 4, section 4(e)
Proposed fee
RESOLUTION NO.
176 -04 -11955
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF SOUTH MIAMI, FLORIDA, RELATING TO FINANCIAL AUDIT
SERVICES, AUTHORIZING THE CITY MANAGER TO HIRE A NEW
FINANCIAL .AUDITOR AND EXECUTE A TWO -YEAR AUDIT CONTRACT
WITH THE AUDIT FIRM OF CABALLERO & CASTELLANOS, P.A., WITH
THE OPTION TO RENEW FOR ONE YEAR, IF SO DESIRED BY THE CITY,
AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, article 4, section 4(e) of the City Charter prohibits the use of the same Financial
Auditor for more than three consecutive years; and
WHEREAS, the City hired the accounting firm of Grau and Company last year for a two -year
period to audit its books; and
WHEREAS, the City has been informed by the representative of Grau and Company that
because of their unexpected present situation of severe staff shortage, they will not be able to- continue
performing audit services for the City; and
WHEREAS, the City Administration solicited bids for financial audit .services and received
responses from five different firms with license to operate within the State of Florida; and
WHEREAS, the bids were reviewed by a committee of three professional employees from other
Miami -Dade cities, who provided recommendations for the City to hire the firm of Caballero and
Castellanos; P.L.
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION
OF THE CITY OF SOUTH MIAMI, FLORIDA, THAT:
Section I. The City Manager is authorized to engage the firm of Caballero and Castellanos, P.L.
to provide financial auditing services for the City.
Section 2. The City Manager is authorized to sign the service contract for two years with the
option to renew for an additional year, if so desired by the City.
Section 3. This resolution shall take effect immediately upon approval.
PASSED AND ADOPTED this day of 2004.
ATTEST:
Y CLERK
AS TO FORM:
RNEY
APPROVED:
M OR
Commission Vote: 4-0
Mayor Russell: out of room
Vice Mayor Palmer: Yea
Commissioner Wiscombe: Yea
Commissioner Birts- Cooper: Yea
Commissioner Sherar: Yea
CABALLERO} &
2655 Le Jeans, Suite 500
CAS'T'ELLANO S, P.L. coral Gables, FL 33134
CERTIFIED PUBLIC ACCOUNTANT'S AND CONSULTANTS Tel (305) 779 -3043
Fax {305) 380.7596.
November 3, 2004
Ms. Maria Davis, City Manager
City of South Miami, Florida
6130 Sunset Drive
South Miami, Florida 33143
Dear Ms. Davis:
We are pleased to confirm our understanding of the services we are to provide the City of South Miami,
Florida, (the "City") for the years ended September 30, 2004 and 2005. 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 entity's basic financial statements,
of the City of South Miami, Florida (except for the South Miami Redevelopment Agency, which will be
audited by another C. P.A firm) as of and for the years ended September 30, 2004 and 2005.
Also, the document we will submit to you will include the following additional information that will be
subjected to the auditing procedures applied in our audit of the financial statements:
• Management's Discussion and Analysis
• Supplemental Combining and individual fund statements and schedules
--•--- Sehedu le- of- Expenditures- afFederal- Awards
-- -- - - -
The document will also include the following additional information that will not be subject to the auditing
procedures applied in our audit of the financial statements, and for which our report will disclaim an
opinion.
• GASB required supplementary pension information (Schedule of Funding Progress and Schedule
of Employer Contributions)
• Information required for the Comprehensive Annual Financial Report ( "CAFR") including financial
schedules and statistical data.
Audit Objectives
The objective of our audit is the expression of an opinion as to whether your financial statements are fairly
presented, in all material respects, in conformity with U.S. generally accepted accounting principles and
to report on the fairness of the additional information referred to in the first paragraph when considered in
relation to the financial statements taken as a whole. The objective also includes reporting on internal
control related to the financial statements and compliance with laws, regulations, and the provisions of
contracts or grant agreements, noncompliance with which could have a material effect on the financial
statements in accordance with Govemment Auditing Standards.
The CPA_ Never Underestimate The ValueP
Ms. Maria Davis, City Manac3
City of South Miami
Page 2 of 6
Internal control related to major programs and an opinion (or disclaimer of opinion) on compliance with
laws, regulations, and the provisions of contracts or grant agreements that could have a direct and
material effect on each major program in accordance with the Single Audit Act Amendments of 1996 and
OMB Circular A -133, Audits of States, Local Governments, and Non -Profit Organizations.
The reports on internal control and compliance will each include a statement that the report is intended for
the information and use of the audit committee, management, specific legislative or regulatory bodies,
federal awarding agencies, and if applicable, pass - through entities and is not intended to be and should
not be used by anyone other than these specified parties.
Our audit will be conducted in accordance with U.S. generally accepted auditing standards; the standards
for financial audits contained in Govemment Auditing Standards, issued by the Comptroller General of the
United States; the Single Audit Act Amendments of 1996; and the provisions of OMB Circular A -933, and
will include tests of accounting records, a determination of major program(s) in accordance with Circular
A -133, and other procedures we consider necessary to enable us to express such an opinion and to
render the required reports. If our opinion on the financial statements or the Single Audit compliance
opinion is other than unqualified, we will fully 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.
Management Resl2onsibillities
Management is responsible for establishing and maintaining internal control and for compliance with the
provisions of applicable laws, regulations, contracts, agreements, and grants. In fulfilling this
responsibility, estimates and judgments by management are required to assess the expected benefits
and related costs of the controls. The objectives of internal control are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use
or disposition, that transactions are executed in accordance with management's authorizations and
recorded properly to permit.the preparation of financial statements in accordance with generally accepted
accounting principles, and that federal award programs are managed in compliance with applicable laws
and regulations and the provisions of contracts and grant agreements.
Management is responsible for making ail financial records and related information available to us. We
understand that you will provide us with such information required for our audit and that you are
responsible for the accuracy and completeness of that information. We will advise you about appropriate
accounting principles and their application and will assist in the preparation of your financial statements,
including the schedule of expenditures of federal awards, but the responsibility for the financial
statements remains with you. As part of our engagement, we may propose standard, adjusting, or
correcting journal entries to your financial statements. You are responsible for reviewing the entries and
understanding the nature of any proposed entries and the impact they have on the financial statements.
That responsibility includes the establishment and maintenance of adequate records and effective internal
control over financial reporting and compliance, the selection and application of accounting principles,
and the safeguarding of assets. Management is responsible for adjusting the financial statements to
correct material misstatements and for confirming to us in the representation letter that the effects of any
uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest
period presented are immaterial, both individually and in the aggregate, to the financial statements taken
as a whole.
Ms. Maria Davis, City ManacgGr
City of South Miami
Page 3 of 6
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 government 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 also responsible for 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 and regulations.
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 December 6, 2004.
If as part of our audit, we prepare a draft of your financial statements and related notes, in accordance
with professional standards, you will be required to review and approve those financial statements prior to
their issuance and have a responsibility to be in a position in fact and appearance to make an informed
judgment on those financial statements. Further you are required to designate a qualified management
level individual to be responsible and accountable for overseeing our services.
With regard to the electronic dissemination of audited financial statements, including financial statements
published electronically on your Internet website, you understand that electronic sites are a means to
distribute information and, therefore, we are not required to read the information contained in these sites
or to consider the consistency of other information in the electronic site with the original document.
Audit Procedures — General
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; therefore, our audit will involve judgment about the number of transactions to be
examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than
absolute assurance about whether the financial statements are free of material misstatement, whether
from 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. As required by the Single Audit Act Amendments of 1996 and OMB Circular A-
133, our audit will include tests of transactions related to major federal award programs for compliance
with applicable laws and regulations and the provisions of contracts and grant agreements. Because an
audit is designed to provide reasonable, but not absolute assurance and because we will not perform a
detailed examination of all transactions, there is a risk that material misstatements or noncompliance may
exist and not be detected by us. In addition, an audit is not designed to detect immaterial misstatements
or violations of laws or governmental regulations that do not have a direct and material effect on the
financial statements or major programs. However, we will inform you of any material errors and any
fraudulent financial reporting or misappropriation of assets that comes to our attention. We will also
inform you of any violations of laws or governmental regulations that come to our attention, unless clearly
inconsequential. We will include such matters in the reports required for a Single Audit. Our responsibility
as auditors is limited to the period covered by our audit and does not extend to matters that might arise
during any later periods for which we are not engaged as auditors.
Our procedures will include tests of documentary evidence supporting the transactions recorded in the
accounts, and may include tests of the physical existence of inventories, and direct confirmation of
receivables and certain other assets and liabilities by correspondence with selected individuals, creditors,
and financial institutions. We will request written representations from your attorneys as part of the
engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will
also require certain written representations from you about the financial statements and related matters.
Ms. Maria Davis, City Manager
City of South Miami
Page 4 of 6
Audit Procedures— Internal Controls
In planning and performing our audit, we will consider the internal control sufficient to plan the audit in
order to determine the nature, timing, and extent of our auditing procedures for the purpose of expressing
our opinions on the City's financial statements and on its compliance with requirements applicable to
major programs.
We will obtain an understanding of the design of the relevant controls and whether they have been placed
in operation, and we will assess control risk. 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. Tests of
controls relative to the financial statements are required only if control risk is assessed below the
maximum level. Our tests, if performed, will be less in scope than would be necessary to render an
opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control
issued pursuant to Government Auditing Standards.
As required by OMB Circular A -133, we will perform tests of controls to evaluate the effectiveness of the
design and operation of controls that we consider relevant to preventing or detecting material
noncompliance with compliance requirements applicable to each major federal award program. However,
our tests will be less in scope than would be necessary to render an opinion on those controls and,
accordingly, no opinion will be expressed in our report on internal control issued pursuant to OMB
Circular A -133.
An audit is not designed to provide assurance on internal control or to identify reportable conditions.
However, we will inform the governing body or audit committee of any matters involving internal control
and its operation that we consider to be reportable conditions under standards established by the
American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our
attention relating to significant deficiencies in the design or operation of the internal control that, in our
judgment, could adversely affect the entity's ability to record, process, summarize, and report financial
data consistent with the assertions of management in the financial statements. We will also inform you of
any nonreportable conditions or other matters involving internal control, if any, as required by
Government Auditing Standards and OMB Circular A -133.
Audit Procedures — Compliance
Our audit will be conducted in accordance with the standards referred to in the section titled Audit
Objectives. 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 Government 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 the
applicable procedures described in the OMB Circular A -133 Compliance Supplement for the types of
compliance requirements that could have a direct and material effect on each of the City's major
programs. The purpose of those 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-1 33.
Ms. Maria Davis, City Manager
City of South Miami
Page 5 of 6
Audit Administration, Fees, and Other
We understand that your employees will prepare all cash, accounts receivable, or other confirmations we
request and will locate any invoices selected by us for testing.
At the conclusion of the engagement, we will complete the appropriate sections of and sign the Data
Collection Form that summarizes our audit findings. We will provide copies, an original and print -ready
master of our reports to the City; however, it is management's responsibility to submit the reporting
package (including financial statements, schedule of expenditures of federal awards, summary sdhedule
of prior audit findings, auditors' reports, and a corrective action plan) along with the Data Collection Form
to the designated federal clearinghouse and, if appropriate, 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. At the conclusion of the engagement, we will
provide information to management as to where the reporting packages should be submitted and the
number to submit.
The audit documentation for this engagement is the property of Caballero & Castellanos, P.L. and
constitutes confidential information. However, pursuant to authority given by law or regulation, we may be
requested to make certain audit documentation available to governmental agencies or their designee, a
federal agency providing direct or indirect funding, or the U.S. General Accounting 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 Caballero & Castellanos, P.L. personnel. Furthermore, upon request, we may provide
copies of selected audit documentation to the aforementioned parties. These parties may intend, or
decide, to distribute the copies or information contained therein to others, including other governmental
agencies.
The audit documentation for this engagement will be retained for a minimum of three years after the date
the auditors' report is issued or for any additional period requested by your Oversight Agency. 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 expect to begin our audit on December 6, 2004 and to issue our reports no later than March 31, 2005,
except for delays which are not of our controls.
Our fees 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 $31,000 and $33,000 for fiscal years ending September
30, 2004 and 2005, respectively. 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 work progresses and are payable on presentation. The above fees are 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 will discuss it with you
and arrive at a new fee estimate before we incur the additional costs.
Government Auditing Standards require that we provide you with a copy of our most recent external peer
review report and any letter of comment, and any subsequent peer review reports and letters of comment
received during the period of the contract. However, Caballero & Castellanos, P.L. was established on
March 2004 and our first external peer review is not required until September 2005.
Ms. Maria Davis, City Manay,;r
City of South Miami
Page 6 of 6
We appreciate the opportunity to be of service to the City of South Miami, Florida and believe this letter
accurately summarizes the significant terms of our engagement. If you have any questions, please let us
know. If you agree with the terms of our engagement as described in this fetter, please sign the enclosed
copy and return it to us.
Very truly yours,
Caballero & Castellanos, P.L.
Nestor Caballero, CPA
Partner
RESPONSE:
This letter correctI forth*the understanding of City of South Miami, Florida.
By: 4�4-1'0 S
Maria DaQ, City Manager
Date: 0
ARTICLE IV (Coat'd)
SECTION 4.
Admini s tra ti. on
A. .Control The City Manager shall have charge of the
administration of the financial affairs of the City in accordance
with Article III, Section 5.
B. Custody of Public Funds The City Manager shall have
custody of all public funds belonging to or under control of the
City or any office or department thereof, and deposit all fund
coming into his or her hands in such depositories as may be
designated by Resolution of the Commission.
C. Approval of Expenditures The City Manager shall approve
all proposed expenditures, but, unless he or she shall certify
that there is an unencumbered balance of appropriation and
available funds, no appropriation shall be encumbered and no
expenditure shall be made.
D. Multi - annual Contracts No contract involving the
payment of money out of the appropriations of more than one year
shall be made for a period -of more than five years, nor shall any
such contract be valid unless -'made or approved by a-dina ~�
resolution adopted by the Commission. The Commission shall
provide budget and appropriate funds in each succeeding budget
for contracts extending more than one year. This section shall
not restrict the term of General Obligation or Revenue Bonds.
(Amended 2/14/05)
E. Audit The Commission shall designate a qualified
Certified Public Accountant who, at the end of the fiscal year
and at such' other times as ordered by the Commission, shall make
an independent examination in accordance with generally accepted
auditing standards and review of accounts and other financial
transactions by the City and shall submit such report; together,
with recommendations for improving fiscal control, to the
Commission and to the City Manager. The accountant shall have
no personal interest, direct or indirect, in the fiscal affairs
of the City government or any of its officers. - The accountant
shall not maintain any accounts or records of the City business,
but within specifications approved by the Commission, shall post -
audit the annual financial statements of the City and all
accounts kept by any office or department of' the City. The
Certified Public Accountant shall not serve as the city's
independent auditor for more than three consecutive years.
(Amended 2/8/00)
20 SOUTH ML4 U CITY CHARTER
AMENDED 2/14106
Page 1 of 1
Hussein, Adriana
From: Nestor Caballero fnestor @acc- cpa.corn]
Sent: Tuesday, June 13, 2006 4:05 PM
To: 'Hussein, Adriana'
Subject: Proposed audit fee
Adriana,
I discussed the fee with my partner and we propose the following fee for the 2006 audit:
City 38,000
CRA 7,000
Total 45,000
This includes the federal single audit and the audit of the pension plans. Thanks.
Nestor Caballero, CPA
Alberni Caballero & CasteIlanos, L.L.P.
4649 Ponce de Leon Blvd., Suite 404
Coral Gables, FL 33146
(305) 662 -7272
(305) 675 -8376 Fax
www.acc-opa.com
Please Note - -This e -mail contains information which may be confidential and privileged. Unless you are the addressee (or
authorized to receive for the addressee), you may not use, copy or disclose to anyone the message or any information
contained in the message.
6/13/2006