05-18-10 Special Called Regular Meeting of Fiscal Affairs Committee

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PROJECT APPROACH We understand the unique organizational structure and operating environment under which cities operate and have developed procedures designed specifically for special purpose audit engagements. We understand the scope of the project as described in the City's RFQ is as follows: . Review all transactions of 5-Points project . Review transactions between the City and the Developer . Review financial real estate transactions . Review URS (vendor) billing as they apply to policies and procedures · Determine whether the funds for the Type B Development Corporation were properly applied to the project Segmentation of Audit and Staffmg Plans Our auditing and consulting service approach includes the most current techniques available. In addition to the heavy involvement of our partners and managers, our staff will also be familiar with the City's operating environment due to their ongoing involvement with other municipal and special purpose audit engagements. A brief overview of the different phases or segments of our audit process is as follows: The Planning Phase Prior to any fieldwork being performed, strategic planning sessions are held both internally and with the City's staff to identify key audit and operational issues, establish communications with critical firm, City staff, and relevant third parties, as well as determining timing and individual responsibility schedules. We will also meet with the Fiscal Affairs Committee to discuss any specific matters of concern. The planning phase will also entail us gaining a thorough understanding of the agreements and contracts in place between the City and Developer, which would include reviewing contracts and agreements to compare with actual transactions in order to verify contract compliance. We will also ascertain the proper use of funds for the Type B Development Corporation as it relates to the 5-Points Project by determining the purpose executed by those charged with governance, which will be compared to actual transactions during audit fieldwork. Fieldwork Our audit programs for the City of La Porte 5-Points project will include procedures related to review and evaluation of its developer and financial real estate transactions, determination of compliance with vendor billing policies and procedures, determination of compliance and proper application of funds dedicated to the project, statistical sampling and analytical procedures designed to determine reasonableness of costs that can lead toward evaluating efficiency and effectiveness in administrative operations. Report Issuance and Closure Report issuance and exit conferences of an audit are often the most critical portions because it is in this phase that most external communications are discussed. Our reports undergo an internal quality control process in which our Quality Control partners review reports to ensure they are meeting firm and general accounting and reporting standards. We also have technical support from our administrative professionals to make certain that reports and other deliverables are meeting high quality standards. The results of our audit will be reviewed with the appropriate level of management, including the Fiscal Affairs' Committee and others charged with governance. This review will also include our audit findings li'L 5