The URL can be used to link to this page

NOWLEN, HOLT & MINER Request for Proposal – Professional Auditing Services RFP #FN-2013-05 City of South Miami Maria M. Menendez, CMC, City Clerk 6130 Sunset Drive South Miami, FL 33143 June 5, 2013 Nowlen, Holt & Miner, P.A. Edward T. Holt, Managing Partner West Palm Beach Office 515 N. Flagler Drive, Suite 1700 Post Office Box 347 West Palm Beach, FL 33402 Telephone: (561) 659-3060 eth@nhmcpa.com Table of Contents Page Letter of Transmittal 1 General Requirements About Nowlen, Holt & Miner, P.A. 3 Independence 3 Licensed to Practice in Florida 3 Firm Qualifications and Experience Government Audit Staff 4 Experience in Governmental Audits and Single Audits 4 State and National Affiliations 4 GFOA Experience 4 Certified Fraud Examiners 5 Certified in Financial Forensics 5 External Quality Control Review 5 Federal or State Desk Reviews 8 Public Entity Crimes/Disciplinary Actions 8 Litigation 8 Joint Venture/Consortium 8 Additional Services 8 Partner, Supervisory and Staff Qualifications and Experience Staff Continuity and Longevity 9 Audit Team Members 10 Audit Team 11 Quality of Staff 12 Continuing Professional Education 12 Information Technology Specialist 12 Resumes 13 Prior Engagements with the City of South Miami 24 Similar Engagements with Governmental Entities References 24 Governmental Audits Performed by Our Audit Team 25 Specific Audit Approach 26 Approach to Providing Audit Services Audit Approach 27 Segmentation by Employee Classification 31 Sample Size and Statistical Sampling 31 Extent of Use of Electronic Data Processing 32 Analytical Procedures 33 Internal Control Procedures 33 Tests of Compliance with Laws and Regulations 34 Audit Sampling 35 Audit Concerns 35 Anticipated Potential Audit Problems 35 Price Proposal 36 Proof of Insurance 38 Addenda Acknowledgement Form 42 Required Schedules Public Entity Crimes and Conflicts of Interest 43 Drug Free Workplace 46 No Conflict of Interest/Non-Collusion Certification 47 Acknowledgement of Conformance with OSHA Standards 49 Related Parties Transaction Verification Form 50 Appendices A – Professional Resources/U.S. Cities 51 1 June 5, 2013 City of South Miami Attention: Maria M. Menendez, CMC 6130 Sunset Drive South Miami, FL 33143 Ladies and Gentleman: Thank you for giving us the opportunity to present our proposal to serve as external auditors for the City of South Miami (the “City”) for the fiscal years ending September 30, 2013 and 2014, with the option to extend one additional year. We understand the scope of services requested by the City as outlined in the City’s RFP. We are committed to exceeding the performance specifications outlined and meeting all the City’s time requirements. Nowlen, Holt & Miner, P.A (“NH&M”) believes our expansive governmental experience, quality of team members, and emphasis on client satisfaction makes our firm the best qualified to provide audit services to the City. Our firm is best qualified to perform the engagement and provide the City with the following added advantages:  Auditor Rotation – NH&M understands the transition from one audit firm to another can be a challenging process. Our team has extensive experience in successfully managing the transition process with minimal disruption to the City’s staff. We will work closely with the City to perform an efficient audit, meet deadlines, and issue reports.  Communication – NH&M strives to build strong relationships with our clients. An essential part of this relationship is communication. NH&M has a firm policy to respond to phone calls and/or emails within 24 hours. We encourage clients to call year-round to discuss questions or concerns as they arise. Our team is always prepared to answer questions or discuss audit issues at no additional charge.  Governmental Experience – NH&M has served a remarkable number of South Florida governmental entities for over 50 years. Unlike many other firms, NH&M’s primary focus is governmental entities. Consequently, our team has mastered the elements of the audit process and is prepared to resolve issues typical to governmental entities such as the City. Our expertise will be vital over the next several years with the implementation of the new Governmental Accounting Standards Board pronouncements. 2  Staff Continuity/Professional Qualifications – We are proud to have high staff retention and minimal turnover. Our engagement team will remain consistent from year-to-year and will include experienced individuals. Such continuity, stability and team work give our employees valuable client and industry-specific knowledge, which in turn, maximizes audit efficiency and strengthens our working relationship with the City.  Additional Resources – We are members of CPAmerica International, Inc. an international association of independent accounting firms. For this reason, we can draw from the vast consulting resources of CPAmerica International member firms with 500 offices in more than 370 cities around the globe (see Appendix A). Our proposal outlines our qualifications and expertise further. Thank you for giving us the opportunity to present our credentials. We are confident our qualifications make us the ideal firm to fulfill your audit needs and would like to emphasize our desire to serve as the City’s auditors. Again, thank you for your consideration, and we look forward to serving as your auditors. FIRM CONTACT AND INFORMATION Edward T. Holt, President, 515 N. Flagler Drive, Suite 1700, West Palm Beach, Florida 33401, (561) 659-3060. Mr. Holt is authorized to bind the offeror. This proposal is a firm and irrevocable offer for ninety (90) days. If you have any questions about this proposal, please contact Ed Holt at (561) 659-3060. Sincerely, Nowlen, Holt & Miner, P.A. City of South Miami 3 About Nowlen, Holt & Miner, P.A. NH&M is a local firm of certified public accountants. Established in 1961, we have offices in West Palm Beach and Belle Glade, Florida. We are a full service firm that provides audit, accounting, tax, business valuation, forensic accounting, litigation support and management services. NH&M’s philosophy is to combine the knowledge of experienced professionals with the responsiveness and flexibility of a local CPA firm. We have flipped the typical staff “pyramid” where much of the work is performed by partners and managers instead of first year team members. Independence As defined by generally accepted auditing standards and the U.S. General Accounting Office’s Government Auditing Standards, Nowlen, Holt & Miner, P.A. is independent of the City of South Miami and any component units of the City. Our firm has had no professional relationships involving the City within the past five years. We will give the City written notice of any professional relationships entered into during the period of the engagement that might create a conflict of interest. Our proposal is made without collusion with any other person or entity submitting a proposal pursuant to this RFP. Licensed to Practice in Florida NH&M is an entity licensed to practice in Florida. Most of our team members are Certified Public Accountants and are properly licensed to practice in Florida, and qualified to perform governmental audits. Our firm and all professionals are members in good standing of the American Institute of Certified Public Accountants (AICPA) and the Florida Institute of Certified Public Accountants (FICPA) and comply with the continuing professional education requirements of the AICPA, including those educational requirements established by quality control standards. A copy of NH&M’s State of Florida Board of Accountancy Business License is shown below. City of South Miami 4 Firm Qualifications and Experience Governmental Audit Staff We have a professional staff of nineteen people. All professional staff assigned to the audit will be working on the City’s engagement full time out of our West Palm Beach office. The number of our governmental audit employees, by employee classification, is as follows: Employee Classification Total Number Number of CPAs Partners 5 5 Managers 3 3 Supervisors - - Seniors 1 - Staff 1 - TOTAL 10 8 Experience in Governmental Audits and Single Audits Nowlen, Holt & Miner, P.A. has been auditing South Florida governmental entities for over 50 years. Several of our clients receive Federal and/or State funding which require compliance audits under OMB Circular A-133 and Chapter 10.550, Rules of the Florida Auditor General. Because NH&M’s main focus is governmental auditing, our team has an extensive understanding of issues related to government auditing and the accounting requirements. State and National Affiliations NH&M is a member in good standing of the Florida Institute of Certified Public Accountants (FICPA), FICPA State and Local Government Section, Government Finance Officers Association (GFOA), and Florida Government Finance Officers Association (FGFOA). Terry L. Morton and Kara Peterson currently serve on the GFOA’s CAFR Review Committee, which reviews CAFRs of governmental entities in order to determine whether a CAFR meets the reporting requirements necessary to obtain a Certificate of Achievement of Excellence in Financial Reporting. GFOA Experience NH&M has assisted a number of our past and current governmental clients with their CAFR preparation. This program is recognized as the highest award in governmental financial reporting. We assisted both the Children’s Services Council of Broward County and the City of Belle Glade with their initial CAFR preparation and are currently assisting several of our other governmental clients with their CAFR preparation. All governments we have assisted with their CAFR preparation have been awarded Certificates of Achievement for Excellence in Financial Reporting. City of South Miami 5 Certified Fraud Examiners Alexia Varga, Kara Peterson and Mark Bymaster are all members of the Association of Certified Fraud Examiners (ACFE) and are Certified Fraud Examiners (CFE). In addition, both Terry L. Morton and N. Ronald Bennett are members of the ACFE. The ACFE is the world’s largest organization and premier provider of anti-fraud training and education. The CFE credential denotes proven expertise in fraud prevention, detection and deterrence. CFEs are trained to identify the warning signs and red flags that indicate evidence of fraud and fraud risk. CFEs also help entities, not only by uncovering fraud, but by assisting in implementing processes to prevent fraud from occurring in the first place. The ACFE’s Board of Regents awards this designation only to select professionals who meet a stringent set of criteria, including character, experience, and education. CFEs have a unique set of skills that are not found in any other career field or discipline; they combined knowledge of complex financial transactions with an understanding of methods, law and how to resolve allegations of fraud. Certified in Financial Forensics In addition to the ACFE membership, N. Ronald Bennett is Certified in Financial Forensics (CFF). The CFF credential is the mark of excellence in forensic accounting. It identifies those forensic accounting professionals who have the ability to provide sound and reliable forensic accounting services. Those who earn the CFF credential must:  Be a member in good standing of the AICPA  Hold a valid CPA certificate or license  Demonstrate experience in forensic accounting  Demonstrate a history of continuing education and commitment to lifelong learning External Quality Control Review Nowlen, Holt & Miner P.A. is a member of the AICPA’s Center for Audit Quality, and participates in the AICPA Peer Review Report every three years. Our most recent external peer review resulted in an unqualified opinion on the quality of our accounting and auditing practice with no letters of comment, which is the highest level of achievement in the peer review program. This review included a review of specific government engagements. We will provide the City with a copy of each peer review report and any letters of comment for each review conducted during the time period engaged by the City. A copy of NH&M’s 2012 peer review report and the AICPA Certificate of Recognition are included on the following pages. 6 7 City of South Miami 8 Federal or State Desk Reviews NH&M is committed to maintaining the highest level of quality control in our accounting and auditing practice. Our firm has never been involved in disciplinary actions with the State of Florida Board of Accountancy or any other professional organizations. NH&M has not received any comments from a Federal or State desk review, nor has NH&M undergone a field audit in the past three years. Public Entity Crimes/Disciplinary Actions Neither Nowlen, Holt & Miner, P.A., nor any of its officers, directors, executives, partners, shareholders, employees, members, or agents who are active in the management of the entity, nor any affiliate of the entity, has ever been charged with or convicted of a public entity crime. Additionally, no disciplinary actions have ever been taken nor are pending against the firm or any of its officers, directors, executives, partners, shareholders, employees, members, or agents by any State regulatory bodies or professional organizations. In the event that any disciplinary actions or complaints arise, we agree to notify the City immediately and submit a written report of all irregularities and illegal actions. Litigation Nowlen, Holt & Miner, P.A. has never had any litigation or proceeding where a court or any administration agency has ruled against the firm in any manner related to its professional activities. No current or pending litigation exists. Joint Venture/Consortium Nowlen, Holt & Miner, P.A. is neither a joint venture nor a consortium. Our firm will not subcontract, assign or transfer any portion of the work if awarded the contract. Additional Services If during the course of the audit, the City requires advice for items such as taxation services, computer consulting, accounting services or management advisory services, we will be able to assist you. NH&M has provided consulting services to governmental entities, non-profit organizations and small businesses for over 50 years. These services include, but are not limited to the following:  Taxation  Inventory control and management  Organization structure improvement  Internal controls  Staffing  Utility and franchise tax audits  Costs and expense control  Arbitration  Budgets, business plans, and management incentive program development  Accounting systems and Computer system evaluations City of South Miami 9 Partner, Supervisory and Staff Qualifications and Experience Staff Continuity and Longevity Hiring and retaining highly qualified professionals is at the core of our firm’s business philosophy. We believe staff retention is a crucial factor in increasing audit efficiency and maintaining high levels of client satisfaction. The following table outlines our staff’s experience and length of employment with the firm. Professional Staff Years of Experience in Public Accounting Years of Employment with Nowlen, Holt & Miner, P.A. Partners Edward T. Holt, CPA 42 42 Janet R. Baricevich, CPA 42 42 William B. Miner, CPA 38 38 Robert W. Hendrix, CPA 34 34 Terry L. Morton, CPA 25 25 N. Ronald Bennett, CPA 25 25 Alexia G. Varga, CPA, CFE 11 11 Brian J. Brescia, CPA, CFP® 10 7 Edward T. Holt, Jr., CPA 8 8 Sub-Total 235 232 Managers Kathleen A. Miner, CPA 30 30 Michael J. Stevens, CPA 29 22 Kara D. Peterson, CPA, CFE 7 7 Mark Bymaster, CPA, CFE 6 6 Sub-Total 72 65 Seniors Rudina Toro, MTax. 11 11 Janice Lai, CPA 3 2 Sub-Total 14 13 Staff Jacob Pistor 4 4 Ryan Shore, CPA 2 1 Tim Schmedes, CPA 1 1 Wei Pan, CPA 1 1 Sub-Total 8 7 Professional Staff Total 329 317 City of South Miami 10 Audit Team Members Managing Partner Edward T. Holt, CPA Key Roles  Responsible for overall audit practice  Assumes responsibility for quality control throughout firm  Assures all commitments to clients are timely met  Selects and assigns appropriate staff to engagements  Reviews audit documentation, financial statements, reports and management letters  Meets with clients on material matters  Signs audit reports and management letters Audit Partner Robert W. Hendrix, Jr., CPA Terry L. Morton, CPA N. Ronald Bennett, CPA Alexia G. Varga, CPA Key Roles  Develop overall audit approach, including preparing audit programs  Coordinate audit planning, development and timeline  Maintain client contact and communications regarding audit progress, significant findings and any client questions  Supervises audit team members to ensure quality control throughout audit engagement  Review workpapers, audit reports and financial statements Manager Michael J. Stevens, CPA Kara D. Peterson, CPA Mark Bymaster, CPA Key Roles  Implement audit approach  Performs risk assessment procedures to document understanding of client, including internal controls  Maintain client contact and communication regarding any client questions  Research technical accounting and audit issues as necessary  Recommends audit adjustments for partners review  Reviews workpapers of seniors and staff accountants  Reviews financial statements and audit reports  Prepares management letter for partners review Senior/Staff Rudina Toro, MTax Jacob Pistor Key Roles  Perform audit procedures as required by audit programs  Document understanding of client’s internal control  Prepare financial statements and audit reports for management’s review  Maintain and update audit documentation records  Confirm asset and liability account balances  Perform analytical procedures  Perform tests of compliance City of South Miami 11 Audit Team To provide the City with optimal audit service, we have assembled a talented audit team whose knowledge and experience will be ideal to meet the requirements of the City. All of our team members have more than four years of government auditing experience and over 75% of our team is a licensed CPA. It is NH&M’s policy not to assign first year staff to a new engagement therefore the City will not have to train their auditors. The proposed engagement team is as follows: Edward T. Holt, CPA – Audit Engagement Partner oversees responsibility for the engagement team and signing the final reports. Ed has managed the audits of over 100 different entities throughout his 42 years of auditing experience. His diverse experience includes governmental, non-profit, retail and construction industries. Terry L. Morton, CPA – Quality Control Review Partner responsible for reviewing the form and content of the audit workpapers, the independent auditors’ report, and other documents to ensure firm and industry standards have been met. Terry has been with the firm for 25 years and received a Certificate of Educational Achievement in both Governmental and Non-Profit Accounting and Auditing from the AICPA. N. Ronald Bennett, CPA – Technical Review Partner responsible for assigning personnel, reviewing the financial statements, independent auditor’ report and other documentations, maintaining client contact and overall engagement team oversight. Ron has been with the firm for 25 years and has extensive experience in auditing governmental entities and grant compliance testing. Kara Peterson, CPA and Mark Bymaster, CPA – Audit Managers responsible for daily client contact, execute and supervise the day-to-day fieldwork during the audit, develop audit programs, prepare the financial statements and reports, review the work of senior and staff, and report to the partners on the status of the engagement. Both Kara and Mark have over six years of experience auditing local governments in Florida including municipalities and special districts. Rudina Toro – Audit Senior will execute the day-to-day fieldwork during the audit; will assist in the preparation of the financial statements. Rudina has over 11 years of governmental auditing experience and will prove to be a valuable asset to the audit team. Jacob Pistor – Staff accountant will execute the day-to-day fieldwork during the audit. Katherine Allen, CPA, CISA, CRISC – Certified Information Systems Auditor (Computer Consultant), responsible for technology related audit standards, as well as assisting with data extraction when needed. City of South Miami 12 Quality of Staff Staff retention is an important part of NH&M’s strategy for increasing audit efficiency. Because of our firm’s low employee turnover rate, the City will see the same audit team members year-after-year. Team members will not be changed without the express prior written permission of the City. If staff rotation is necessary, the team member will be replaced with someone of comparable skills and experience. However, the City retains the right to approve or reject replacements. Consistency of audit team members from one year to the next, results in a more efficient audit by enhancing both client- specific and industry-specific experience. Continuing Professional Education All team members hold accounting degrees from accredited universities. Several of our team members have advanced degrees and/or multiple degrees in related areas. NH&M believes that, not only to comply with professional standards, but in order to consistently offer our clients the best and most current information, continuing education is a necessity. Training our team members is important in order to meet the needs of our clients and assist them with new accounting standards. All professionals receive at least the required 80 hours of continuing professional education, as required by Government Auditing Standards and the State Board of Accountancy, every two years. Our professionals attend in-house seminars as well as seminars provided by the AICPA, FICPA, FGFOA and GFOA. Due to our commitment to remain current on the technical pronouncements, we will keep the City informed of any new reporting requirements and will discuss any situations involving options in reporting formats. Information Technology Specialist In accordance with auditing standards, we may determine that specialized skills are needed for the audit. If considered necessary, NH&M will utilize the services of a Certified Information Systems Auditor (CISA) to review the Information Technology (IT) system. This review would be conducted in accordance with the relevant professional and ethical standards issued by the Information Systems Audit and Control Association. The objectives of this type of IT review include the following:  Identify areas of greatest IT risk exposure as it relates to financial data to focus resources  Asses the confidentiality, integrity and availability of information systems  Evaluate the effectiveness of management’s planning and oversight of IT activities  Evaluate the adequacy of operating processes and internal controls  Assess enterprise wide compliance efforts related to IT policies and internal control procedures City of South Miami 13 EDWARD T. HOLT, CPA Edward T. Holt is a partner with Nowlen, Holt & Miner, P.A. with 42 years of experience. He received his B.B.A from Arkansas A&M. He has managed the audits of over 100 different entities. His diverse experience includes governmental, non- profit, retail, construction, and coordinating the firm’s continuing professional education program. He is licensed as a CPA in Florida and affiliated with the following organizations:  American Institute of Certified Public Accountants  Florida Institute of Certified Public Accountants  Florida Government Finance Officers’ Association (FGFOA)  Government Finance Officers’ Association  Chamber of Commerce of the Palm Beaches  CPAmerica International – Council Member Relevant Continuing Professional Education Some of Ed’s more current seminars include the following:  05/07  06/07  06/07  02/08  06/08  07/08  05/09  06/09 Annual Update for Accountants & Auditors Nonprofit Accounting & Financial Reporting Considerations Theory & Practice of Fraud & Internal Control Grants Management Forensic Files: Auditing for Fraud Update: Governmental Accounting, Reporting & Auditing The New Fund Balance GASB No. 54 FGFOA 2009 Annual Conference  07/09  09/09  05/11  06/11  06/11  05/12  06/12 Governmental Accounting & Financial Reporting Annual Update for Accountants & Auditors Audits of 403(b) Plans Forensic Accounting Fraudulent Reporting and Concealed Assets FGFOA 2011 Annual Conference Annual Update for Accountants & Auditors Single Audit Training Non-Profit Experience As partner or our auditing team, Ed had directed the following audits of non-profit organizations:  Adopt-A-Family of the Palm Beaches, Inc.  Alzheimer’s Association, Southeast Florida Chapter  Area Agency on Aging of Palm Beach/Treasure Coast, Inc.  Better Business Bureau of Palm Beach County, Inc.  Catholic Charities of the Dioceses of Palm Beach  Center for Children in Crisis, Inc.  Comprehensive Aids Program of Palm Beach County, Inc.  District IX Health Council, Inc.  Early Learning Coalition of Broward  Early Learning Coalition of Palm Beach  Executive Service Corps of Southeast Florida  Florida Community Health Centers, Inc.  Glades Area ARC  Haitian Center for Family Services, Inc.  Hanley Center, Inc.  Hanley Center Foundation, Inc.  Hospice Foundation of Palm Beach County, Inc.  H.E.A.R.T., Inc.  Help Becomes Hope, Inc.  Hendry-Glades Mental Health Clinic, Inc.  Institute for Ethnomedicine, Inc.  New Beginnings Development Center, Inc.  Parent-Child Center, Inc.  Palm Beach County Chapter, The American Red Cross  Palm Beach Dramaworks, Inc.  Preservation Foundation of Palm Beach County, Inc.  St. Andrew’s Residence of the Palm Beaches, Inc.  Seagull Industries for the Disables, Inc.  South America Mission, Inc.  The Lords Place, Inc.  Urban League of Palm Beach County  World Servants, Inc.  Young Women’s Christian Association City of South Miami 14 Governmental Experience Ed has also directed the audits of the following governmental entities:  Children’s Services Council of Broward County  Children’s Services Council of Palm Beach County  City of Boynton Beach  City of Greenacres  City of Lake Worth  City of Pahokee  City of Palm Beach Gardens  City of Parkland  City of Riviera Beach  City of Riviera Beach CRA  City of South Bay  Conventional Low-Income Housing Development of Commerce – Economic Development Administration  Crossings at Fleming Island Community Development District  Department of Housing and Urban Development – Community Development Block Grants  Department of Labor, CETA  Florida Governmental Utility Authority  Glades Utility Authority  Hendry County  Housing Authority of West Palm Beach  Jupiter Inlet Colony  Jupiter Inlet District  Loxahatchee River Environmental Control District  North Palm Beach Heights Water Control District  Okeechobee Utility Authority  Palm Beach County  Palm Beach County Solid Waste Authority  Port of Palm Beach  Revenue Sharing Financial and Compliance Audits  School Board of Palm Beach County – Internal Accounts and Tangible Personal Property  Seacoast Utility Authority  Section 8 Housing Assistance Payments  Section 23 Low Income Housing  South Lake Worth Inlet District  Town of Gulf Stream  Town of Highland Beach  Town of Juno Beach  Town of Lake Clarke Shores  Town of Lake Park  Town of Lantana  Town of Loxahatchee Groves  Town of Mangonia Park  Town of Ocean Ridge  Town of Palm Beach  Town of Palm Beach Shores  Town of Sewall’s Point  Town of South Palm Beach  Village of North Palm Beach  Village of Palm Springs  Village of Royal Palm Beach  Village of Tequesta  West Palm Beach Golf Commission City of South Miami 15 TERRY L. MORTON, JR., CPA Terry L. Morton, Jr. is a partner with Nowlen, Holt & Miner, P.A. and has been with the firm for 25 years. His education includes a B.S. (with honors) and M.Acc. from the University of Florida. He has also received a Certificate of Educational Achievement in both Governmental and Non-Profit Accounting and Auditing from the AICPA. He is licensed as a CPA in Florida and affiliated with the following organizations:  American Institute of Certified Public Accountants  Florida Institute of Certified Public Accountants  Florida Government Finance Officers’ Association (FGFOA)  Government Finance Officers’ Association  Jerome Golden Center for Behavioral Health, Inc., Secretary  Jerome Golden Center Foundation, Treasurer  Gold Coast Area, Kairos Prison Ministry, Chairman Relevant Continuing Professional Education Some of Terry’s more current seminars include the following:  06/08  06/08  05/09  06/09  06/09  06/09 Risk Assessment Process & Government Auditing Overview FGFOA 2008 Annual Conference New Fund Balance GASB No. 54 FGFOA 2009 Annual Conference New Standards on Quality Control & Practice Implementation Tips OPEB Financial Reporting & Auditing  06/09  06/09  06/10  04/11  06/11  05/12  05/13 Implementing Risk Assessment Standards in Governmental Audit GAQC Annual Update litigation FGFOA 2010 Annual Conference Ethics & Professional Conduct for Florida CPAs FGFOA 2011 Annual Conference FGFOA 2012 Annual Conference Financial Implementation of Federal Health Care Reform Governmental Experience While with the firm Terry has managed the audits of the following governmental entities:  Belle Glade Housing Authority  Children’s Services Council of Broward County  Children’s Services Council of Palm Beach County  City of Belle Glade  City of Greenacres  City of Pahokee  City of Palm Beach Gardens  City of Riviera Beach  City of Riviera Beach CRA  Crossings at Fleming Island Community Development District  Florida Governmental Utility Authority  Glades Utility Authority  Hendry County  North Palm Beach Heights Water Control District  Jupiter Inlet Colony  Jupiter Inlet District  Loxahatchee River Environmental Control District  Okeechobee Utility Authority  Palm Beach County  Port of Palm Beach  School Board of Palm Beach County – Internal Accounts  Seacoast Utility Authority  Town of Gulf Stream  Town of Lake Park  Town of Loxahatchee Groves  Town of Mangonia Park  Town of Palm Beach Shores  Town of Sewall’s Point  Village of North Palm Beach  Village of Tequesta  West Palm Beach Golf Commission City of South Miami 16 Non-Profit Experience While with the firm Terry has worked on the audits of the following non-profit entities:  Adopt-A-Family of the Palm Beaches, Inc.  Alzheimer’s Association, Southeast Florida Chapter  Area Agency on Aging of Palm Beach/Treasure Coast, Inc.  Better Business Bureau of Palm Beach County, Inc.  Catholic Charities of the Dioceses of Palm Beach  Center for Children in Crisis, Inc.  Comprehensive Aids Program of Palm Beach County, Inc.  Doveland, Inc.  Early Learning Coalition of Broward  Early Learning Coalition of Palm Beach  Executive Service Corps of Southeast Florida  Florida Community Health Centers, Inc.  Florida Community Health Centers, Inc. Retirement Plan  Glades Area ARC  Glades Community Development Corporation  Glades Diamond, Inc.  Glades Pioneers, Inc.  Haitian Center for Family Services, Inc.  Hanley Center, Inc.  Hanley Center Inc., 401(k) Plan  Hanley Center Foundation, Inc.  Healthy Start Prenatal and Infant Care, Inc.  Help Becomes Hope, Inc.  Hospice Foundation of Palm Beach County, Inc.  Hospice of Palm Beach County, Inc.  Institute for Ethnomedicine, Inc.  New Beginnings Community Development Center, Inc.  NOAH Development Corporation  NOAH, Inc.  Parent-Child Center, Inc.  Palm Beach County Chapter, The American Red Cross  Palm Beach Dramaworks, Inc.  Palm Beach County Resource Center, Inc.  South America Mission, Inc.  Street Beat, Inc.  The Lord’s Place, Inc.  Urban League of Palm Beach County  Western Palm Beach County Mental Health Clinic  World Servants, Inc.  Young Women’s Christian Association City of South Miami 17 N. RONALD BENNETT, CPA, ABV, CVA, CFF N. Ronald Bennett is a partner with Nowlen, Holt & Miner, P.A. and has been with the firm for 25 years. His education includes an MBA in Finance from Florida State University where he was also a member of Beta Gamma Sigma Honor Society, and a Bachelor of Aerospace Engineering (with high honors) from Georgia Institute of Technology. He is licensed as a CPA in Florida and affiliated with the following organizations:  American Institute of Certified Public Accountants  Florida Institute of Certified Public Accountants  Florida Government Finance Officers’ Association (FGFOA)  Government Finance Officers’ Association  American Society of Mechanical Engineers  National Association of Certified Valuation Analysts  Association of Certified Fraud Examiners Relevant Continuing Professional Education Some of Ron’s more current seminars include the following:  02/08  05/08  06/08  06/08  06/08  08/08  12/08  05/09  06/09 Investment Practices & Products FICPA Accounting & Reporting Practices for Non Profit Organizations Auditors Risk Assessment Process Forensic Files: Auditing for Fraud Ethics Protecting the Integrity of Florida CPAs FICPA State and Local Government Electronic Tools for Governmental Auditing New Fund Balance GASB No. 54 GAQC Annual Update  06/09  08/09  01/10  06/10  08/10  09/10  06/11  05/12 OPEB Financial Reporting & Auditing FICPA State & Local Government Accounting Conference Valuation, Forensic Accounting & litigation Services Conference FGFOA 2010 Annual Conference FICPA State & Local Government Accounting Conference Major Changes to Compliance Literature FGFOA 2011 Annual Conference FGFOA 2012 Annual Conference Governmental Experience While with the firm Ron has managed the audits of the following governmental entities:  City of Boynton Beach  City of Greenacres  City of Lake Worth  City of Pahokee  City of Parkland  City of Riviera Beach  City of Riviera Beach CRA  North Palm Beach Heights Water Control District  Palm Beach County Solid Waste Authority  Port Mayaca Cemetery  Port of Palm Beach  School Board of Palm Beach County – Internal Accounts and Tangible Personal Property  South Lake Worth Inlet District  Town of Gulf Stream  Town of Highland Beach  Town of Lake Clarke Shores  Town of Manalapan  Town of Ocean Ridge  Town of Palm Beach  Town of Palm Beach Shores  Town of South Palm Beach City of South Miami 18 Non-Profit Experience While with the firm Ron has worked on the audits of the following non-profit entities:  Area Agency on Aging of Palm Beach/Treasure Coast, Inc.  Better Business Bureau of Palm Beach County, Inc.  Palm Beach County Chapter, The American Red Cross  South American Mission, Inc.  Western Palm Beach County Mental Health Clinic  World Servants, Inc. City of South Miami 19 KARA D. PETERSON, CPA, CFE Kara Peterson is a manager with Nowlen, Holt & Miner, P.A. with seven years of experience. She received her B.S. in Accounting from Florida State University. She is licensed as a CPA in Florida and is a Certified Fraud Examiner. Kara is affiliated with the following organizations:  American Institute of Certified Public Accountants  Florida Institute of Certified Public Accountants  Florida Government Finance Officers’ Association (FGFOA)  Government Finance Officers’ Association  Association of Certified Fraud Examiners  Governmental Finance Officers’ Association Special Review Committee Relevant Continuing Professional Education Some of Kara’s more current seminars include the following:  12/08  05/09  06/09  06/09  06/09  06/09  06/09 Electronic Tools for Governmental Audits New Fund Balance GASB No. 54 FGFOA 2009 Annual Conference New Standards on Quality Control and Practical Implementation Tips Implementing Risk Assessment Standards in a Governmental Statement Audit OPEB Financial Reporting & Auditing 2009 GAQC Annual Update  04/10  06/10  07/10  08/10  05/11  06/11  06/11  05/12  05/13 Accounting & Auditing Update in a Recovering Economy FGFOA 2010 Annual Conference 2010 Governmental Update FICPA State & Local Government Accounting Conference Audits of 403(b) Plans Forensic Accounting, Fraudulent Reporting and Concealed Assets FGFOA 2011 Annual Conference FGFOA 2012 Annual Conference Financial Implementation of Federal Health Care Reform Governmental Experience While with the firm Kara has worked on the audits of the following governmental entities:  Children’s Services Council of Broward County  City of Belle Glade  City of Boynton Beach  City of Parkland  Crossings at Fleming Island Community Development District  Florida Governmental Utility Authority  Glades Utility Authority  Jupiter Inlet District  Loxahatchee River Environmental Control District  North Palm Beach Heights Water Control District  Okeechobee Utility Authority  Port of Palm Beach  Seacoast Utility Authority  Town of Mangonia Park  Town of Ocean Ridge  Town of Palm Beach  Town of Palm Beach Shores  Town of Sewall’s Point City of South Miami 20 Non-Profit Experience While with the firm Kara has worked on the audits of the following non-profit entities:  Early Learning Coalition of Broward  Early Learning Coalition of Palm Beach  Executive Service Corps of Southeast Florida  Florida Community Health Centers, Inc.  Hanley Center, Inc.  Hanley Center Foundation, Inc.  Help Becomes Hope, Inc.  Noah Development Corporation  NOAH, Inc.  Palm Beach Dramaworks  Palm Beach County Chapter, The American Red Cross  Urban League of Palm Beach County, Inc. City of South Miami 21 MARK J. BYMASTER, CPA, CFE Mark Bymaster is a senior at Nowlen, Holt & Miner, P.A. with six years of experience. His education includes a B.S. in Finance and Information Studies from Florida State University. He received a MAcc. and a Masters in Economics from Florida Atlantic University. He is licensed as a CPA in Florida and is a Certified Fraud Examiner. Mark is affiliated with the following organizations:  American Institute of Certified Public Accountants  Florida Institute of Certified Public Accountants  Florida Government Finance Officers’ Association (FGFOA)  Association of Certified Fraud Examiners Relevant Continuing Professional Education Some of Mark’s more current seminars include the following:  07/08  08/08  10/08  01/09  05/09  06/09 Designing Efficient Audit Engagements Pension Update Guide to Understanding & Testing Internal Control Form 990 Update New Fund Balance GASB No. 54 OPEB Financial Reporting & Auditing  06/09  07/10  06/10  06/11  07/11  05/12  06/12 2009 GAQC Annual Update 2010 Governmental Update FGFOA 2010 Annual Conference FGFOA 2011 Annual Conference 2011 Governmental Update FGFOA 2012 Annual Conference Single Audit Training Governmental and Non-Profit Experience While with the firm Mark has worked on the audits of the following governmental and non-profit entities:  Area Agency on Aging of Palm Beach/Treasure Coast, Inc.  City of Boynton Beach  City of Greenacres  City of Riviera Beach  City of Riviera Beach CRA  City of Pahokee  Hanley Center, Inc.  Hanley Center Foundation, Inc.  Help Becomes Hope, Inc.  Palm Beach County Chapter, The American Red Cross  Town of Gulf Stream  Town of Highland Beach  Town of Lake Clarke Shores  Town of Manalapan  Town of Ocean Ridge  Town of Palm Beach  Seacoast Utility Authority  Young Women’s Christian Association City of South Miami 22 RUDINA TORO Rudina Toro is a senior accountant at Nowlen, Holt & Miner, P.A. with 11 years of experience. She received her B.S. in Accounting and Finance from Palm Beach Atlantic University, with honors, and her Masters in Taxation from Florida Atlantic University. Rudina is affiliated with the following organizations:  Florida Government Finance Officers’ Association (FGFOA) Relevant Continuing Professional Education Some of Rudina’s more current seminars include the following:  06/08  06/08  06/08  07/08  01/09  05/09  06/09  06/09 Audit Risk Assessment Process 2008 Compilation and Review Update Forensic Files: Auditing Fraud Governmental Accounting & Financial Reporting Form 990 Update New Fund Balance GASB No. 54 Sampling in a Single Audit Internal Control Considerations in a Single Audit  04/10  05/10  06/10  06/11  07/11  05/12  06/12 Accounting & Auditing Update In a Recovering Economy 2010 GAAP Update FGFOA 2010 Annual Conference FGFOA 2011 Annual Conference 2011 Governmental Update FGFOA 2012 Annual Conference Single Audit Training Non-Profit and Governmental Experience While with the firm Rudina has worked on the audits of the following non-profit and governmental entities:  Adopt-A-Family of the Palm Beaches, Inc.  Area Agency on Aging of Palm Beach/Treasure Coast, Inc.  Catholic Charities of the Diocese of PB  Children’s Services Council of Palm Beach County  City of Belle Glade  City of Pahokee  City of Palm Beach Gardens  Comprehensive Aids Program of Palm Beach County, Inc.  Early Learning Coalition of Broward  Early Learning Coalition of Palm Beach  Executive Service Corps of Southeast Florida  Florida Community Health Centers, Inc.  Hanley Center, Inc.  Hanley Center Foundation, Inc.  Help Becomes Hope, Inc.  Institute for Ethnomedicine, Inc.  Jupiter Inlet Colony  New Beginnings Community Development Center, Inc.  Palm Beach Dramaworks, Inc.  Palm Beach County Chapter, The American Red Cross  Port of Palm Beach  The Lord’s Place, Inc.  Town of Gulf Stream  Town of Highland Beach  Town of Lake Park  Town of Sewall’s Point  Urban League of Palm Beach County, Inc.  Village of North Palm Beach  West Palm Beach Golf Commission City of South Miami 23 JACOB P. PISTOR Jacob Pistor is a staff accountant at Nowlen, Holt & Miner, P.A. with four years of experience. His education includes a B.A. in Accounting Studies from Florida Atlantic University. Jacob is affiliated with the following organizations:  Florida Government Finance Officers’ Association (FGFOA) Relevant Continuing Professional Education Some of Jacob’s more current seminars include the following:  01/09  05/09  07/10  08/10 2008 Form 990 Update New Fund Balance GASB No. 54 2010 Governmental Update State and Local Government Accounting  06/11  07/11  05/12  06/12 FGFOA 2011 Annual Conference 2011 Governmental Update FGFOA 2012 Annual Conference Single Audit Training Governmental and Non-Profit Experience While with the firm Jacob has worked on the audits of the following governmental and non-profit entities:  Area Agency on Aging of Palm Beach/Treasure Coast, Inc.  Alzheimer’s Association  City of Belle Glade  City of Boynton Beach  City of Greenacres  City of Pahokee  City of Parkland  Florida Community Health Centers, Inc.  Town of Gulf Stream  Town of Highland Beach  Town of Lake Clarke Shores  Town of Manalapan  Town of Mangonia Park  Town of Ocean Ridge  Okeechobee Utility Authority  Port of Palm Beach  Village of North Palm Beach City of South Miami 24 Prior Engagements with the City of South Miami NM&M has had no professional relationships involving the City within the past five years. Similar Engagements with Governmental Entities References NH&M has audited, reviewed and compiled the financial statements of numerous governmental entities. Our experience qualifies us to provide the City with efficient and thorough auditing services. We are proud of our history and our abilities to understand and work within the complex guidelines of Generally Accepted Auditing Standards and Government Auditing Standards. Below are governmental references you may contact regarding the audit services we have provided to their respective organizations. Client Contact Address Length of Service Engagement Partner City of Boynton Beach Tim Howard Director of Finance 561-742-6312 howardt@bbfl.us 100 E. Boynton Beach Blvd. Boynton Beach, FL 33435 2006-2010 Edward T. Holt N. Ronald Bennett  Performed Financial Statement Audit conducted in accordance with U.S. generally accepted auditing standards of the AICPA, the standard for financial and compliance audits contained in Government Auditing Standards, Florida Statutes, and other rules as applicable  Performed Federal and State Single Audit  Assisted with CAFR preparation City of Parkland Nancy Morando Finance Director 954-753-5040 nmorando@cityofparkland.org 600 University Dr. Parkland, FL 33067 2009-Current Edward T. Holt N. Ronald Bennett  Performed Financial Statement Audit conducted in accordance with U.S. generally accepted auditing standards of the AICPA, the standard for financial and compliance audits contained in Government Auditing Standards, Florida Statutes, and other rules as applicable.  Assisted with CAFR preparation City of Belle Glade Diana L. Hughes Assistant Finance Director 561-996-0100 diana@belleglade-fl.com 110 Dr. Martin Luther King Jr., Blvd. West Belle Glade, FL 33430 > 20 years Robert W. Hendrix Terry L. Morton  Performed Financial Statement Audit conducted in accordance with U.S. generally accepted auditing standards of the AICPA, the standard for financial and compliance audits contained in Government Auditing Standards, Florida Statutes, and other rules as applicable.  Assisted with CAFR preparation. Village of North Palm Beach Samia Janjua Director of Finance 561-841-3360 sjanjua@village-npb.org 501 US Highway 1 North Palm Beach, FL 33408 2006-Current Edward T. Holt Terry L. Morton  Performed Financial Statement Audit conducted in accordance with U.S. generally accepted auditing standards of the AICPA, the standard for financial and compliance audits contained in Government Auditing Standards, Florida Statutes, and other rules as applicable  Assisted with CAFR preparation Town of Highland Beach Cale Curtis Finance Director 561-278-4548 CCurtis@ci.highland-beach.fl.us 3614 S. Ocean Blvd. Highland Beach, FL 33487 2004-Current Edward T. Holt N. Ronald Bennett  Performed Financial Statement Audit conducted in accordance with U.S. generally accepted auditing standards of the AICPA, the standard for financial and compliance audits contained in Government Auditing Standards, Florida Statutes, and other rules as applicable  Performed Federal Single Audit  Assisted with CAFR preparation City of South Miami 25 Governmental Audits Performed by Our Audit Team Nowlen, Holt, & Miner, P,A. was the lead auditor on the following engagements: * Represents current governmental clients  Belle Glade Housing Authority*  Children’s Services Council of Broward County  Children's Services Council of PBC  City of Belle Glade*  City of Boynton Beach  City of Greenacres  City of Lake Worth  City of Pahokee*  City of Palm Beach Gardens  City of Parkland*  City of Riviera Beach  City of Riviera Beach Comm. Redevelopment Agency  City of South Bay  City of West Palm Beach – Utility Tax Audit  Crossings at Fleming Island Comm. Develop. District  Florida Governmental Utility Authority  Glades Utility Authority*  Housing Authority of WPB  Jupiter Inlet District*  Loxahatchee River Environmental Control District*  NPB Heights Water Control District*  Okeechobee Utility Authority*  PBC Solid Waste Authority  Port of Palm Beach*  School Board of PBC  Seacoast Utility Authority  South Lake Worth Inlet District  Town of Gulf Stream*  Town of Highland Beach*  Town of Hypoluxo  Town of Juno Beach  Town of Jupiter Inlet Colony*  Town of Lake Clarke Shores*  Town of Lake Park*  Town of Loxahatchee Groves*  Town of Manalapan*  Town of Mangonia Park*  Town of Ocean Ridge*  Town of Palm Beach Shores*  Town of Palm Beach*  Town of Sewall’s Point  Town of South Palm Beach*  Village of North Palm Beach*  Village of Palm Springs  Village of Royal Palm Beach  Village of Tequesta  West Palm Beach Golf Commission City of South Miami 26 Specific Audit Approach Planning Understand operations environment Assess audit risk and determine materiality levels Develop audit strategy Prepare audit programs Audit Procedures Evaluate internal controls and need for test of controls Perform test of transactions Continuous Procedures Review of work papers by partner and manager Discuss audit and internal control findings with management Reporting Finalize audit procedures Communicate final results to management Present Audit Report to the Board Assist management with financial statement completion Test compliance with laws and regulations Fulfill Program-specific testing requirements City of South Miami 27 Approach to Providing Audit Services Audit Approach NH&M understands the scope of work to be performed for the City, and commits to meet, if not exceed, the City’s expectations. Along with information gathered from the City, we will use our broad experience with other governmental entities to plan an efficient and effective audit strategy. Our audit will be conducted in accordance with Generally Accepted Auditing Standings and Government Auditing Standards. We will also consider state statutes and local ordinances applicable to the City. The audit engagement will be segmented into the following stages:  Develop an Audit Plan  Execute the Audit Plan  Completion and Reporting 1. Develop an Audit Plan In order to provide the City with the most efficient audit services, NH&M will need to develop an in-depth understanding of the City and its operations. To obtain this understanding, NH&M will discuss operations with City staff and review budgets, organizational charts, City manuals and other sources of information. During this time the engagement partner and supervisory team members will meet with City staff to discuss timing and other expectations the City has regarding the audit process. During this phase we will perform the following:  Conduct an entrance conference  Communicate with predecessor auditor and review prior year workpapers, financial statements, and management letters  Document the nature, timing, and extent of procedures to be performed to obtain sufficient and appropriate audit evidence  Perform risk assessment procedures  Document the City’s internal control procedures and perform walk-throughs and interviews with City staff  Prepare audit programs based on risk assessments  Perform analytical procedures on account balances  Request assistance from City staff in the preparation of certain schedules and pull requested documentation City of South Miami 28 Risk Assessment Our audit will be conducted on a risk-based approach. Risk assessment procedures will be performed to provide a basis for the identification and assessment of risks of material misstatement at both the financial statement and relevant assertion levels. Assessed risk considers planning materiality and the identification of significant accounts. Significant accounts are identified based on quantifiable information and the extent to which they are affected by subjective judgments. Consideration of Fraud Generally Accepted Auditing Standards establishes standards and provides guidance on the auditor’s responsibility to consider the risk of fraud and to design the audit to provide reasonable assurance of detecting fraud that result in the financial statements being materially misstated. The auditor’s consideration of fraud is not separate from consideration of risk, but is integrated into the overall risk assessment process. There are two types of misstatements that are relevant to the auditor’s consideration of fraud in a financial statement audit:  Misstatements resulting from fraudulent financial reporting  Misstatements resulting from misappropriation of assets When assessing the risk of material misstatement due to fraud, NH&M will consider the type of risk, the significance of the risk, the likelihood of fraud occurring, and the pervasiveness of the risk. The following risk assessment process is used to identify fraud risks:  Hold a discussion among engagement team members to consider the susceptibility of the City’s financial statements to material misstatements due to fraud  Make inquiries of management and other City staff  Evaluate unusual or unexpected relationships identified by analytical procedures Assistance to be Provided by City Staff In order to perform an effective and efficient audit, we will rely on City staff to prepare reconciling and back-up schedules, as well as retrieve back-up documents as necessary. Management level employees will also be relied upon to answer various audit questions and explain particular variances as they arise. Staff and management will be allowed necessary time to comply with our audit requests for documents; our staff will always be available to answer any questions City staff may have on documents or schedules requested. City of South Miami 29 2. Execute the Audit Plan After obtaining a thorough understanding of the City the audit team will perform the majority of transaction testing and complete audit requirements during the execution of the audit plan. During this segment of the audit we will:  Obtain third party confirmations  Test account balances and details  Perform analytical procedures  Test transactions and controls  Test compliance with applicable laws and regulations Computer Assisted Audit Techniques Computer Assisted Audit Techniques are used to automate and simplify the data analysis process. NH&M uses IDEA Data Analysis Software which allows us to extract and look at data from different angles to gain greater insight into the City’s operations. The IDEA software can accept electronic records from virtually any bookkeeping/financial accounting system. With the help of IDEA we can quickly select a statistically valid sample of transactions on which to base our audit, evaluate general ledger accounts and journal entries, and even detect fraud. We do this work from our office, saving your staff time and inconvenience. Communications Our firm’s working relationship with the City will stress communication and prompt discussion of all important matters as they arise. We will report at least bi-weekly to the City on the status of any potential audit adjustments, so that the City may have adequate opportunity to investigate, gather information, and respond as necessary. If necessary, the partner and manager in charge will meet with the City representatives on any material matters that could affect the financial position or results of operations and will attend the audit committee meeting and commission meetings, on an as needed basis, for discussion of the audit reports as deemed necessary by the City. We maintain open communication with clients and respond within 24 hours to requests for assistance with, or information on, accounting and other reporting matters. We encourage clients to call year-round to discuss questions or concerns as they arise, at no additional charge. 3. Completion and Reporting The final step in the audit process is the completion and reporting segment. During this segment all audit documentation will be reviewed by the partners to ensure that the testing performed supports the conclusions reached. This stage also includes preparing the financial statements in accordance with auditing and firm standards. City of South Miami 30 The final segment will include, but is not limited to the following:  Preform final analytical procedures  Review draft financial statements and prepare draft reports for the City to review  Discuss with management audit findings  Conduct an exit conference with City management and/or audit committee  Engagement partner presents the audit report to the City Commission Management Letter Philosophy We are required to comply with certain professional standards regarding reporting on internal control, compliance, illegal acts, and errors and irregularities. In addition, it is our firm's philosophy to assist our clients in improving their accounting policies and procedures. We do not recommend change for the sake of change. Our recommendations will focus on the effectiveness and efficiency of the operations and financial reporting of the City. We will not suggest any change if it is not practical and cost effective. Reports Following the completion of the audit, we will issue the following reports: A. A report on the fair presentation of the financial statements in conformity with generally accepted accounting principles. B. A report on internal control structure based on the auditor’s understanding of the control structure and assessment of control risk. C. Reports on compliance with applicable laws and regulations. D. Schedules of federal and state financial assistance and related reports on the administering of federal and state financial assistance programs, if applicable. E. A report to management (management letter). F. An immediate, written report of all irregularities and illegal acts discovered. In the required report(s) on internal controls, we will communicate any significant deficiencies found during the audit. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City’s ability to initiate, authorize, record, process or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City’s financial statements that is more than inconsequential will not be prevented or detected by the City’s internal control. Significant deficiencies that are also material weaknesses will be identified as such in the report. The report on compliance will include all material instances of noncompliance. City of South Miami 31 Segmentation by Employee Classification The following chart presents key procedures and estimated number of hours by employee classification for our proposed segmentation of the engagement. Audit Segment Partner Manager Senior Staff Initial Year Planning X X General Planning X X Consideration of Internal Control Structure X X Development of Audit Programs X X Substantive Test X X X Tests of Compliance X X X X Analytical Procedures X X X X Report Preparation and Review X X X Review X X Sample Size and Statistical Sampling Audit sampling is the application of an audit procedure to less than 100% of the items within an account balance or class of transactions for the purpose of evaluating some characteristic of the balance or class. The items constituting the account balance or class of transactions of interest are the population. The portion of the account balance or class of transactions to be examined is the sample. It is important to note that a test that involves application of procedures to less than 100% of the items in the population but that does not involve projecting the results to the entire account balance or class of transactions is not audit sampling. All audit sampling involves judgment in planning and performing the sampling procedure and evaluating the results of the sample. The audit procedures performed in examining the selected items in a sample generally do not depend on the sampling approach used. When a decision is made to use audit sampling, the auditor must choose between statistical and non- statistical sampling. The choice is primarily a cost-benefit consideration. If sampling is used, some sampling risk is always present. Statistical sampling uses the laws of probability to measure sampling risk. Any sampling procedure that does not measure the sampling risk is a non-statistical sampling procedure. A properly designed non-statistical sampling application can provide results that are as effective as those from a properly designed statistical sampling application. City of South Miami 32 Statistical sampling generally involves additional costs to design individual samples that meet statistical requirements and to select the items to be examined. The basic requirements that relate to all audit samples, statistical and non-statistical, are as follows:  Planning – Relate the population to the objective of the audit tests  Selection – Select items that can be representative of the population  Evaluation – Project sample results to the population and consider sampling risk Because of the costs associated with audit sampling, it is important to consider the effectiveness of alternative approaches before concluding that sampling is necessary. Audit sampling may not always be appropriate. It may be more efficient to test an account balance or class of transactions by applying analytical review procedures. In some cases legal requirements might necessitate 100% examination. In other situations some items might be examined 100% because acceptance of sampling risk is not justified or 100% examination is more cost effective in the circumstances. Our professional judgment will be used to determine whether sampling is appropriate. Extent of Use of Electronic Data Processing Our office uses computers extensively to perform audit steps that a computer can accomplish faster and more efficiently than manual calculations. The following will be performed on computers:  Development of trial balances and lead schedules – We will download your trial balance to our firm’s specialized audit software. As we make adjusting journal entries, they will be electronically posted, and an updated trial balance will be available immediately.  Efficient paperless environment – Our firm utilizes Creative Solutions Accounting (CSA) software, which allows us to conduct paperless engagements. Paperless audits facilitate our firm with the following advantages:  Simultaneous access to workpapers by multiple users  Enhanced collaboration among audit team members for sharing and reviewing workpapers  Linking CSA, Excel, and Word documents/files to generate reports  Faster turnaround time for financial statements and the auditor’s report  Electronic Reports – We provide our clients with original PDF copies of the auditor’s report rather than a scanned version of the report  Citrix® ShareFile® – NHM uses ShareFile, web-based software that helps us exchange files, regardless of size, easily, securely and professionally with our clients. City of South Miami 33 Analytical Procedures Analytical procedures are an important part of the audit process and range from simple comparisons to the use of complex models involving many relationships and elements of data. Understanding financial relationships is essential in planning and evaluating the results of analytical procedures and requires knowledge of the client and the industry in which the client operates. Understanding the purpose of analytical procedures and the limitations of those procedures is also important. Accordingly, the relationships and types of data used, as well as conclusions reached when recorded amounts are compared to expectations, require the auditor’s judgment. We will use analytical procedures to:  Assist in planning the nature, timing, and extent of other auditing procedures  Obtain evidential matter about particular assertions related to account balances of classes of transactions  Review of financial information in the final review stage of the audit When used as substantive tests, analytical procedures may include, but not be limited to, the following:  Comparison of prior year and current year balances  Comparison of actual and budgeted amounts  Ratio and trend analysis  Predictive tests based upon relationships between financial and nonfinancial information Internal Control Procedures The City’s Commission, management, and other personnel establish the internal control structure of the City, which is an important source of information about the types and risks of potential material misstatements that could occur in financial statements. We will use this information to design appropriate substantive tests that will provide reasonable assurance of detecting material misstatements. We usually perform these procedures only to gain a general understanding of the overall internal control structure and the way the City operates. Under most circumstances, we believe formal documentation of control activities, including tests of controls, is not the most efficient method of achieving audit objectives in most entities your size. We will use all the internal control information we gather as a supplement to our industry and audit knowledge to ensure the development of the most efficient audit possible for the City. City of South Miami 34 In evaluating the control environment of the City we will consider items such as the following:  Frequency of commission meetings  Qualifications and involvement of commission members  Other external factors Control activities are policies and procedures that help ensure that management’s directives are carried out and the City’s objectives are met. The types of items we will consider in understanding your control activities are:  Policies for comparing actual results to budgeted amounts  Billing and collection procedures  Purchasing procedures, such as the use of competitive bidding  Payment procedures Tests of Compliance with Laws and Regulations Audits conducted in accordance with generally accepted auditing standards provide the basis for expressing an opinion on the fairness of financial statements in accordance with generally accepted accounting principals. However, due to the special nature of governments, the traditional audit scope has been broadened to encompass determinations of whether the governmental unit has complied with governing laws, regulations, rules, grantor guidelines, and other finance related legal requirements. Generally, compliance criteria can be found in Florida law, rules, grant agreements, local ordinances, resolutions, policies, contracts and similar documents. Specific compliance criteria will be identified early in the audit process in order to facilitate the design and performance of appropriate audit procedures for testing compliance. The following are examples of the types of laws and regulations that may have a direct and material effect on the financial statements:  Procurement  Taxing authority  Legal authority for transactions  Tax reporting  Establishment of funds  Debt limitations  Budgets and budgetary reporting  Restrictions on expenditures City of South Miami 35 NH&M has performed governmental audits for over 50 years. Thus, we have developed numerous compliance checklists to enhance the efficiency and effectiveness of compliance testing. These checklists are designed and continuously updated to test compliance with current Florida Statutes, Rules of the Auditor General, and other legal and regulatory requirements. These checklists will increase the efficiency of our audit of the City. For compliance testing, we will simultaneously conduct tests of items that can be quantified in terms of dollars and substantive tests of transaction classes and account balances. Under this approach, items selected for substantive testing will also be tested for compliance. Because of the type of evidence available, certain compliance requirements do not lend themselves to testing in conjunction with substantive tests. These requirements will be tested by inquiry, observation, and inspection. The audit process is guided by generally accepted auditing standards and not by specific cookbook-type procedural instructions. Therefore, the auditor's professional judgment is an extremely important element in defining the audit scope properly, especially with respect to compliance testing. Audit Sampling Audit sampling involves judgment in planning and performing the sampling procedure and evaluating the results of the sample. When a decision is made to use audit sampling, the auditor must choose between statistical and non-statistical sampling. Because of the costs associated with audit sampling, it is important to consider the effectiveness of alternative approaches before concluding that sampling is necessary. Audit Concerns All issues to be reviewed from City Staff, elected officials and other appropriate individuals will be communicated to the City as they arise. Discussing issues promptly gives the City the opportunity to investigate, gather information, and respond as necessary. If necessary, the partner and manager in charge will meet with the City representatives on any material matters that could affect the financial position or results of operations and will attend the audit committee meeting and commission meetings, on an as needed basis, for discussion of the audit reports as deemed necessary by the City. Anticipated Potential Audit Problems Nowlen, Holt & Miner, P.A. does not foresee needing any special assistance from the City nor do we anticipate any potential audit problems. The designated key team members will monitor the progress of the audit on a continuous basis. Any minor problems will be communicated verbally. If more significant issues arise, the problems will be communicated in writing. City of South Miami 37 PRICING SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR NON-AUDIT ADDITIONAL SERVICES Hourly rates include all equipment, tools machines, software, etc. Clerical expenses are considered job overhead costs and are not billable. Classification Hourly Rates Partner $195 Manager $160 Supervisor $150 Senior $120 Staff $110 Other (Para-professional) $ 65 City of South Miami 38 Proof of Insurance Nowlen, Holt & Miner, P.A. maintains the following insurance policies:  Workers’ Compensation Insurance and Employers’ Liability Insurance  General Liability Insurance  Professional Liability Insurance Please see the following pages for copies of the of the declaration page from our current policies. If awarded the contract, Nowlen, Holt & Miner, P.A. will agree to provide a Certificate of Insurance naming the City of South Miami as an additional insured for all liability purposes. 39 40 41 43 PUBLIC ENTITY CRIMES AND CONFLICTS OF INTEREST Pursuant to the provisions of Paragraph (2) (a) of Section 287.133, Florida State Statutes – “A person or affiliate who has been placed on the convicted vendor list following a conviction for a public entity crime may not submit a Bid on a Contract to provide any goods or services to a public entity, may not submit a Bid on a Contract with a public entity for the construction or repair of a public building or public work, may not submit bids on leases of real property to a public entity, may not be awarded to perform work as a Contractor, supplier, Subcontractor, or Consultant under a Contract with any public entity, and may not transact business with any public entity in excess of the threshold amount Category Two of Section 287.017, Florida Statutes, for thirty six (36) months from the date of being placed on the convicted vendor list”. The award of any contract hereunder is subject to the provisions of Chapter 112, Florida State Statutes. BIDDERS must disclose with their Bids, the name of any officer, director, partner, associate or agent who is also an officer or employee of the City of South Miami or it’s agencies. SWORN STATEMENT PURSUANT TO SECTION 287.133 (3)(a), FLORIDA STATUTES, ON PUBLIC ENTITY CRIMES THIS FORM MUST BE SIGNED AND SWORN TO IN THE PRESENCE OF A NOTARY PUBLIC OR OTHER OFFICIAL AUTHORIZED TO ADMINISTER OATHS. 1. This sworn statement is submitted to Nowlen, Holt & Miner, P.A. [print name of the public entity] by Edward T. Holt, Managing Principal [print individual’s name and title] for Nowlen, Holt & Miner, P.A. [print name of entity submitting sworn statement] whose business address is 515 N. Flagler Drive, Suite 1700 West Palm Beach, FL 33401 and (if applicable) its Federal Employer Identification Number (FEIN) is (If the entity has no FEIN, include the Social Security Number of the individual signing this sworn statement: 59-2749772 .) 2. I understand that a “public entity crime” as defined in Paragraph 287.133 (1)(g), Florida Statutes, means a violation of any state or federal law by a person with respect to and directly related to the transaction of business with any public entity or with an agency or political subdivision of any other state or of the United States, including, but not limited to , any bid or contract for goods or services to be provided to any public entity or an agency or political subdivision of any other state or of the United States and involving antitrust, fraud, theft, bribery, collusion, racketeering, conspiracy, or material misrepresentation. 44 3. I understand that “convicted” or “conviction” as defined in Paragraph 287.133 (1)(b), Florida Statutes, means a finding of guilt or a conviction of a public entity crime, with or without an adjudication of guilt, in any federal or state trial court of record relating to charges brought by indictment or information after July 1, 1989, as a result of a jury verdict, non-jury trial, or entry of a plea of guilty or nolo contendere. 4. I understand that an “affiliate” as defined in Paragraph 287.133 (1)(a), Florida Statutes, means: (a) A predecessor or successor of a person convicted of a public entity crime; or (b) An entity under the control of any natural person who is active in the management of the entity and who has been convicted of a public entity crime. The term “affiliate” includes those officers, directors, executives, partners, shareholders, employees, members, and agents who are active in the management of an affiliate. The ownership by one person of shares constituting a controlling interest in any person, or a pooling of equipment or income among persons when not for fair market value under an arm’s length agreement, shall be a prima facie case that one person controls another person. A person who knowingly enters into a joint venture with a person who has been convicted of a public entity crime in Florida during the preceding 36 months shall be considered an affiliate. 5. I understand that a “person” as defined in Paragraph 287.133 (1)(e), Florida Statutes, means any natural person or entity organized under the laws of any state or of the United States with the legal power to enter into a binding contract and which bids or applies to bid on contracts for the provision of goods or services led by a public entity, or which otherwise transacts or applies to transact business with a public entity. The term “person” includes those officers, directors, executives, partners, shareholders, employees, members, and agents who are active in management of an entity. 6. Based on information and belief, the statement which I have marked below is true in relation to the entity submitting this sworn statement. [Indicate which statement applies.] X Neither the entity submitting this sworn statement, nor any of its officers, directors, executives, partners, shareholders, employees, members, or agents who are active in the management of the entity, nor any affiliate of the entity has been charged with and convicted of a public entity crime subsequent to July 1, 1989. The entity submitting this sworn statement, or one or more of its officers, directors, executives, partners, shareholders, employees, members, or agents who are active in the management of the entity, or an affiliate of the entity has been charged with and convicted of a public entity crime subsequent to July 1, 1989. The entity submitting this sworn statement, or one or more of its officers, directors, executives, partners, shareholders, employees, members, or agents who are active in the management of the entity, or an affiliate of the entity has been charged with and convicted of a public entity crime subsequent of July 1, 1989. However, there has 50 RELATED PARTIES TRANSACTION VERIFICATION FORM I Edward T. Holt , individually and on behalf of Nowlen, Holt & Miner, P.A. (“Firm”) Name of Representative Company/Vendor/Entity have read the City of South Miami (“CSM”)’s Code of Ethics, Section 8A-1 of the CSM’s Code of Ordinances and I hereby certify, under penalty of perjury that to the best of my knowledge, information and belief: (1) neither I nor the Firm have any conflict of interest (as defined in section 8A-1) with regard to the contract or business that I, and/or the Firm, am(are) about to perform for, or to transact with, the CSM, and (2) neither I nor any employees, officers, directors of the Firm, nor anyone who has a financial interest greater than 5% in the Firm, has any relative(s), as defined in section 8A-1, who is an employee of the CSM or who is(are) an appointed or elected official of the CSM, or who is(are) a member of any public body created by the City Commission, i.e., a board or committee of the CSM, and (3) neither I nor the Firm, nor anyone who has a financial interest greater than 5% in the Firm, nor any member of those persons’ immediate family (i.e., spouse, parents, children, brothers and sisters) has transacted or entered into any contract(s) with the CSM or has a financial interest, direct or indirect, in any business being transacted with the CSM, or with any person or agency acting for the CSM, other than as follows: (use a separate sheet to supply additional information that will not fit on this line but make reference to the additional sheet which must be signed under oath). (4) no elected and/or appointed official or employee of the City of South Miami, or any of their immediate family members (i.e., spouse, parents, children, brothers and sisters) has a financially interest, directly or indirectly, in the contract between you and/or your Firm and the CSM other than the following individuals whose interest is set forth following their names: (use a separate sheet to supply additional information that will not fit on this line but make reference to the additional sheet which must be signed under oath). The names of all CSM employees and that of all elected and/or appointed CSM officials or board members, who own, directly or indirectly, an interest of five percent (5%) or more of the total assets of capital stock in the firm are as follows: (use a separate sheet to supply additional information that will not fit on this line but make reference to the additional sheet which must be signed under oath). (5) I and the Firm further agree not to use or attempt to use any knowledge, property or resource which may come to us through our position of trust, or through our performance of our duties under the terms of the contract with the CSM, to secure a special privilege, benefit, or exemption for ourselves, or others. We agree that we may not disclose or use information, not available to members of the general public, for our personal gain or benefit or for the personal gain or benefit of any other person or business entity, outside of the normal gain or benefit anticipated through the performance of the contract. (6) I and the Firm hereby acknowledge that we have not contracted or transacted any business with the CSM or any person or agency acting for the CSM, and that we have not appeared in representation of any third party before any board, commission or agency of the CSM within the past two years other than as follows: (use a City of South Miami APPENDIX A PROFESSIONAL RESOURCES/U.S. CITIES City of South Miami 52 CPAmerica International, Inc. As described in the proposal, CPAmerica International is an association of accounting firms with offices and professionals in more than 370 cities world-wide. CPAmerica International, in partnership with Horwath International, provides our firm with access to limitless world-wide accounting and consulting services and expertise. The following pamphlets depict in further detail CPAmerica’s mission, services, activities and locations.