HomeMy WebLinkAboutO-1998-2282
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ORIGINAL
ORDINANCE NO. 98- 2282
AN ORDINANCE APPROVING AND AUTHORIZING AN AGREEMENT BETWEEN THE
CITY OF LA PORTE AND WRITE PETROV McHONE, CERTIFIED PUBLIC
ACCOUNTANTS, FOR AUDITING SERVICES; MAKING VARIOUS FINDINGS AND
PROVISIONS RELATING TO THE SUBJECT; FINDING COMPLIANCE WITH THE
OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE:
Section 1. The City Council hereby approves and authorizes
the contract, agreement, or other undertaking described in the
title of this ordinance, in substantially the form as shown in the
document which is attached hereto and incorporated herein by this
reference. The City Manager is hereby authorized to execute such
document and all related documents on behalf of the City of La
Porte. The City Secretary is hereby authorized to attest to all
such signatures and to affix the seal of the City to all such
documents.
Section 2. The City Council officially finds, determines,
recites, and declares that a sufficient written notice of the date,
hour, place and subject of this meeting of the City Council was
posted at a place convenient to the public at the City Hall of the
ci ty for the time required by law preceding this meeting, as
required by the Open Meetings Law, Chapter 551, Texas Government
Code; and that this meeting has been open to the public as required
by law at all times during which this ordinance and the subject
matter thereof has been discussed, considered and formally acted
upon. The City Council further ratifies, approves and confirms
such written notice and the contents and posting thereof.
Section 3. This Ordinance shall be effective from and after
its passage and approval, and it is so ordered.
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ORDINANCE NO. 98-2282
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PASSED AND APPROVED, this 14th day of September, 1998.
ATTEST:
i!ldJJl10J.l1.tiatL
Ma tha A. Gillett
City Secretary
~oJL
Knox W. Askins
City Attorney
By:
CITY OF LA PORTE
~A~
o an If: 1
Mayor
PAGE 2
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DISTRIBUTION LIST FOR RFP
Ross Johnson, Director
DELOITTE & TOUCHE
333 Clay, Suite 2300
Houston, Texas 77002
713 756-2000
Robert Belt, Senior Manager
wmTE PETROV MCHONE
1415 Louisiana, 24th Floor
Houston, Texas 77002-7352
713 659-1777
Lisa Anderson, Government Partner
KPMG PEAT MARWICK LLP
700 Louisiana, Suite 3100
Houston, Texas 77002
Wayne McConnell, Partner
MCCONNELL & JONES, PC
11 Greenway Plaza
Houston, Texas 77046
713 622-7666
Marvin R. Clement
WAKEFIELD AND HALLOWAY, PC
17047 El Camino Real, Suite 140
Houston, Texas 77058
713 486-7358
Brenda McDuffie, Senior Manager
ERNST & YOUNG LLP
1221 McKinney, Suite 2400
Houston, Texas 77010
713 750-1500
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COOPERS & LYBRAND
11 00 Louisiana, Suite 4100
Houston, Texas 77002
713 757-5200
William E. Swanson, Partner
ARTHUR ANDERSEN LLP
711 Louisiana, Suite 1300
Houston, Texas 77002
713 237-2323
PRICE WATERHOUSE LLP
1201 Louisiana
Houston, Texas
713 654-4100
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WHlTEPETROvMcHONE
August 26, 1998
Honorable Mayor Norman Malone
City of La Porte, Texas
605 W. Fairmont Parkway
La Porte, Texas 77571
We are pleased to confirm our understanding of the services we are to provide for THE CITY OF LA PORTE,
TEXAS (the City). We will audit the general purpose financial statements of the City as of and for the years
ended September 30, 1998, 1999, and 2000. Also, the documents we submit to you will include the combining,
individual fund and account group financial statements and schedules, and the Schedule of Expenditures of
Federal Awards that will be subjected to the auditing procedures applied in our audit of the general purpose
financial statements. The documents will also include a statistical section that will not be subject to the
auditing procedures applied in our audits of the general purpose financial statements, and for which our
accountants' report will disclaim an opinion. In addition, we will assist the City in obtaining the Government
Finance Officers Association's Certificate of Achievement for Excellence in Financial Reporting.
The objective of our audits is the expression of an opinion as to whether the general purpose financial
statements are fairly presented, in all material respects, in conformity with 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 general purpose financial statements taken as a whole. The objective also includes
reporting on the City's compliance with laws and regulations and the provisions of contracts and grant
agreements and its internal controls as required by the Single Audit Act Amendments of 1996 and OMB
Circular A-I33, Audits of States, Local Governments, and Non-Profit Organizations. Our audits will be
conducted in accordance with generally accepted auditing standards; the standards for financial audits contained
in Government 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-I33, and will include tests of the accounting
records of the City and other procedures we consider necessary to enable us to express such an opinion and to
render the required Single Audit reports. If our opinion on the general purpose 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 express an opinion, we may
decline to express an opinion or may not issue a report as a result of this engagement,
The management of the City is responsible for establishing and maintaining internal control. 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 general purpose financial statements in accordance with generally accepted accounting
principles; and that federal financial assistance programs are managed in compliance with applicable laws and
regulations and the provisions of contract and grant agreements.
A Professional Corporation
Certified Public Accountants & Consultants
17225 El Camino Real, Suite 444 . Houston, Texas 77058.2768
Firm: 281.488.4450 . Fax: 281.486.9668 · wpmcpas@wpmnet.com
Member of Summit International Associates, Inc.
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City of La Porte, Texas
August 26, 1998
Page 2
In planning and performing our audits for the years ended September 30, 1998, 1999, and 2000, 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 general purpose 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
general purpose 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 general purpose financial
statements. (Tests of controls 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.
We will perform tests of controls, as required by OMB Circular A-I33, to evaluate the effectiveness of the
design and operation of controls that we consider relevant to preventing or detecting material noncomplianc~
with compliance requirements that are applicable to each of your major federal award programs. Our tests will
be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion
will be expressed.
An audit is not designed to provide assurance on internal control or to identify reportable conditions, However,
we will inform you 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 general purpose
financial statements. We will also inform you of any nonreportable conditions or other matters involving
internal control, ifany, as required by OMB Circular A-l33.
Identifying and ensuring that the City complies with laws, regulations, contracts, and agreements, including
grant agreements, is the responsibility of management. As part of obtaining reasonable assurance about
whether the general purpose 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 our audit will not be to provide an opinion on overall
compliance, and we will not express such an opinion.
,
dur audits will be conducted in accordance with the standards referred to in the second paragraph, OMB
Circular A-I33 requires that we plan and perform the audit to obtain reasonable assurance about whether the
auditee has complied with applicable laws and regulations, and contracts and grant agreements applicable to
major programs. Our procedures will consist of the applicable procedures described in the OMB's compliance
supplement. The purpose of these procedures will be to express an opinion on the City's compliance with
requirements applicable to major programs.
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City of La Porte, Texas
August 26, 1998
Page 3
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 audits, we will also request certain written representations
from you about the financial statements and related matters.
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 audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement, whether caused by error or fraud. As required by the
Single Audit Act Amendments of 1996 and OMB Circular A-133, our audits will include tests of transactions
related to federal award programs for compliance with applicable laws and regulations and the provisions of
contract and grant agreements, Because of the concept of reasonable assurance and because we will not
perform a detailed examination of all transactions, there is a risk that material misstatement may exist and not
be detected by us. In addition, an audit is not designed to detect errors, fraud, or other illegal acts that are
immaterial to the general purpose financial statements or to major programs. However, we will inform you of
any material errors and any fraud that comes to our attention. We will also inform you of any illegal acts 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 audits and does not extend
to matters that might arise during any later periods for which we are not engaged as auditors.
Management is responsible for making all financial and related information available to us. We understand that
yqu will provide us with the basic information required for our audits and that you are responsible for the
~ccuracy 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, but the responsibility for t~e
financial statements remains with you. That responsibility includes the establishment and maintenance of
adequate records and effective internal control over financial reporting, the selection and application of
accounting principles, and the safeguarding of assets. Additionally, as required by OMB Circular A-133, you
will prepare the summary of prior audit findings.
We understand that your employees will: provide us with trial balances, general ledgers, type all cash or other
confirmations we request, and locate any invoices selected by us for testing.
The workpapers for this engagement are the property of WHITE PETROY McHONE, A Professional
Corporation and constitute confidential information. However, we may be requested to make certain
workpapers available to your cognizant or grantor agency pursuant to authority given to it by law or regulation.
If requested, access to such workpapers will be provided under the supervision of WHITE PETROY McHONE
personnel. Furthermore, upon request, we may provide photocopies of selected workpapers to your cognizant
or grantor agency. Your cognizant or grantor agency may intend, or decide, to distribute the photocopies or
information contained therein to others, including other governmental agencies.
We expect to begin our interim audit procedures in September and to issue our report for the year ended
September 30, 1998, no later than February 10, 1999, assuming all year end accounting work is completed in a
t.h:nely fashion.
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City of La Porte, Texas
August 26, 1998
Page 4
Our fees for these services will be based on the actual time spent at our standard hourly rates, plus travel and
other out-of-pocket costs such as report production, typing, postage, etc, We estimate our fees including out-of-
pocket costs will be $31,000, $32,000, and $33,000 for the years ended September 30, 1998, 1999, and 2000,
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 within 30 days. 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 before we incur the additional
costs,
Government Auditing Standards require that we provide you with a copy of our most recent quality control
review report. Our peer review report accompanies this letter.
Because many computer systems use only two digits to record the year in date fields, such systems may not be
able to accurately process dates including the year 2000 and after. The effects of this problem will vary from
system to system and may adversely affect your operations as well as the ability to prepare financial statements,
An audit of financial statements conducted in accordance with generally accepted auditing standards is not
designed to detect whether your systems are year 2000 compliant. Further, we have no responsibility with
regard to your efforts to make your systems year 2000 compliant or to provide assurance on whether you have
addressed, or will be able to address, all of the affected systems on a timely basis. These are your
rC?~ponsibilities. However, we may choose to communicate matters that come to our attention relating to t~e
potential effects of the year 2000 on your computer systems.
We appreciate the opportunity to be of service to the CITY OF LA PORTE, TEXAS 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 letter, please sign one of the enclosed copies and return it to us in
the business reply envelope we have provided for your convenience. The other copy is for your files.
Very truly yours,
WlllTE PETROV McHONE
A Profeli/A1 Corporation a ;j
By: ~LofP}~L
correctly sets forth the und . tanding of the CITY OF LA PORTE, TEXAS.
'"
N rman Malone, Mayor
q l,q(r3
Date
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na~lbJb~ Bro",~
Go,.".MUa & l&
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Z3D South BemIIlDn A".nue
St. LDuaa. M!aouri I310S
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MX 3141727-1195
To the Shareholders
White Petrov McHone
A Professional Corporation
We have reviewed the system of quality control for the accounting and auditing
practice of White Petrov McHone, A Professional Corporation, (the firm) in effect for
the year ended July 31, 1995. Our review was conducted in conformity with
standards for peer reviews promulgated by the peer review committee of the SEe
practice section of the AICPA Division for CPA Firms (the section). We tested
compliance with the firm's quality control policies and procedures and with the
membership requirements of the section to the eztent we considered appropriate.
These tests included the application of the firm's policies and procedures on selected
accounting and auditing engagements.
In perfonDing our review, we have given consideration to the general characteristics
of a system of quality control as described in quality control standards issued by the
AICPA Such a system should be appropriately comprehensive and suitably designed
in relation to the firm's organizational structure, its policies, and the nature of its
practice. Variance in individual performAnce can afrect the degree of compljAnce with
a firm's prescribed quality control policies and procedures. Therefore, adherence to
all policies and procedures in every case may not be possible. As is customary in a
peer review, we are issuing a letter under this date that sets forth comments related
to certain policies and procedures or compliance with them. None of these matters
were considered to be of sufJicient significance to afrect the opinion ezpressed in this
report.
In our opinion, the system of quality control for the accouutiWW aDd auditing practice
of White Petrov McBone, A ProfessioD8l Corporation, in effect for the year ended
July 31, 1995, met the objectives of quality control standards establ;ahed by the
AICPA, and was beiug complied with during the year then ended to provide the finD
with reaBmuahle assurance of conforming with professicmal standards. Also, in our
opiniOD, the finD was in conformity with the membership requirements of the section
in aD material respects.
October 18, 1995
~~~~Jr;.
~k~,-~WN, GORNSTEIN & CO.
Certified Public AccoD4tants
Member; SummIt InIemIIIaIIII MIacia-. tnc.. with DftIaIIIn ........ u.s. MlIIrdImatIanaJ au.
ArMrtcIn .......... of CerUftId PuIlIIc ~
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DB / Babin.. Bro",~
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230 South 8emISIDn Awnue
St. LauaI. Maaoun 13'105
1IIecInot. 3M1727.etSO
FlU 3Ml727081es
To the Shareholders
White PetnJv McHone
A Professional Corporation
We have reviewed the system of quality control for the accounting and auditing
practice of White Petrov McHone, A Professional Corporation, (the firm) in effect for
the year ended July 31, 1995. Our review was c:cmducted in conformity with
standards for peer reviews promulgated by the peer review committee of the SEC
practice section of the AICPA Division for CPA Firms (the section). We tested
compl;Al'ce with the firm's quality control policies and procedures and with the
membership requirements of the section to the extent we considered appropnate.
These tests included the application of the firm's policies and procedures on selected
accounting and auditing engagements.
In. performiDg our review, we have given consideration to the general characteristics
of a system of quality control as described in quality control standards issued by the
AICPA. Such a system should be appropriately comprehensive and suitably designed
in relation to the firm's orpn;7.ational structure, its policies, and the nature of its
practice. Variance in individual performAnce can a1I'ect the degree of compliAnee with
a firm's prescribed quality control policies and procedures. Therefore, adherence to
all policies and procedures in every case may not be possible. As is customary in a
peer review, we are issuing a letter under this date that sets forth comments related
to certain policies and procedures or compliance with them. None of these matters
were considered to be or sufficient llig1lificance to a1I'ect the opinion ezpressed in this
report.
In our opinion, the system of quality c:ontrol far the accounti"g and auditing practice
of White PetnJv McHone, A Professional Corporation, in effect for the year ended
July 31, 1995, met the objectives of quality c:ontrol standards estRbl;Jlhed by the
AICPA, and was beiug complied with during the year then ended to provide the &r.m
with reasmulnle assurance or conformiDg with ~ssiODal standards. Also, in oar
opinion, the firm was in canfomlity with the membembip req~eu&ents ortbe sectian
in aD material respects.
October 18, 1995
~4uu,,~~, (1,.
~k~,-~WN, GORNSTEIN It CO.
Certified PabJic AccouutaDts
Member: SummllII*maIIDnaI MIac:ia-. Inc., wIItl offiaIe In ....... us. ad ........tianaI au.
AIMrtcM InIIItute or c.tIIIId PuIIIIc ~
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WHlTEPETROVMCHONE
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A Pnlfessicmal CorponIIion
Cenifi=d Public AccoIlllllllllS IlIId Cousull8lltll
1415 Louisiana. TIMlIIIy Fourlh Floor. HoustDD, Texas 77002.7352
Firm: 713.659.ITn . Fax 713.658.9606 . WJlIIICIlIIS@wpcom
Member of Summit 1mcmBIicma1 Assoc:iales. lnc.
CODfacr. Robert Belt
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WHITEPETRoVMCHONE
LETTER OF TRANSMITTAL
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July 8, 1998
Honorable Mayor and Members
of City Council and Audit Committee:
We appreciate the opportunity to present our firm, White Petrov McHone,
("WPM") and the professional services we can provide the City of La Porte (the
"City"). We are very proud of the heritage of our firm and our reputation in the
community. Therefore, with great pride we present our proposal.
We hope that within this document we communicate how WPM distinguishes
itsel~ and the benefits of the service we can provide the City. In addition, we
are hopeful that after your careful review of the audit firm candidates that you
will select our Firm based on our reputation, value of our services and our abili-
ties to meet your needs.
We fully understand the work to be done and are committed to its completion
within the time period specified in your request for proposal. You can consider
this proposal a firm and irrevocable offer for 90 days.
Thank you once again for the opportunity to present our firm. I am authorized
to make representations for the Firm, should you need additional information or
have any questions.
Sincerely,
~u;..{u~
Mark McGrath, C.P.A., Owner
A ProfeSlionll Corpotllioo
CenilIecI PubUc AcccuDlIIIlI and Coo5llillll1l
1415 Louilian.. T....lly Fourth Floor. HOlIIllln, Texu 77C02. 7352
Firm: 713.659.1777 . FIX 713.658.96C6 . wpmcpu@wpmoet.com
Member of SlIIIIIIIillolCnllliooll AsIDCiIfa. toe.
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Overview of White
Petrov McHone
Established in 1945, White Petrov
McHone (the "Rrm" ) is a time proven
institution, surviving and thriving,
through the GuW Coast Area's economic
cycles,' Continuity is a large part of
what WPM is all about. Continuity of the
Firm is the direct result of the loyalty of
our clients, By providing exceptional
service, which has also helped our
"Continuity is a large part
of what WPM is all about"
clients survive and thrive, we have
ensured our own longevity and
success,
Our Founders established a public
accounting firm with a sterling
reputation and they cultivated
individuals in the Rrm that could
continue to uphold the reputation of
the Rrm that bears their name. We
strive to enhance that reputation each
day, Of course
the best way to
find out
someone's
reputation is to
"ask around"
and we
encourage
anyone
interested in our firm, client or
associate, to do just that. The
cultivation process started by our
Founders is still going on today, to
make sure WPM's sterling reputation is
always kept polishedl
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Clients love the continuity of our team
members, We are known for the tenure
of our people, At thirty-four years, our
President has been with WPM longer
than most firms have been in business.
Even support staff have made WPM
their home having four members with
over fourteen years of service, In fact,
as noted in the following chart, we
believe the average tenure of our team
members, which even includes our
summer interns, May graduates and
personnel for new market segments, is
probably twice as high as the industry
average, This means our clients'
"Clients love the continuity
of our team members"
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phone calls are answered by someone
that knows who they are and are
directed to someone that has helped
service their account for years,
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Tenure at WPM
Group Numbcl" Total A'era~c
Owner 7 152 22
Manager 10 67 7
Professionals 15 23 2
Support 11 70 6
Of Counsel 2 85 43
TOTAL 45 397 9
Although we are
one of the larger
local firms with
forty five of the
most talented
individuals in the
industry, we
recognize strength
is not always in numbers, That is why
we have assembled what we believe is
one of the best teams of professionals
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and support personnel in the area, In
addition to most of our professional
team members being CPAs, we also
have an attorney on staff, five members
with MBAs and three individuals with
advanced certifications,
One thing that remains the same is
WPM is a leader. In a profession
historical~ dominated by males, WPM
was one of the first firms in the area to
admit a female owner. In this area WPM
still,~ands out with four of. ~ur seven
partners beihg:Yipmen, Our leadership
role h~ a1s?: ~r~.~ed u~ ?everal
opportunities to giVe input. into the
. legislative and regul~t()ry process. For
example, WPM'~ instrum~ntal in
establishing accounting and aud~ing
procedures for utility districts in Texas
and bui~ a substantial practice in this
area.
One of the ways WPM ensures the
continuity of service to clients is to
divide the Firm into five practice
e
segments or llgroups" which can focus
their attention on the special needs of
clients which they serve. One of our
largest groups, and of greatest
importance to you is our Governmentl
Nonprofit Group, which is discussed in
greater detail in the remainder of this
proposal,
WPM services clients principally in the
Gulf Coast Area of Texas through its
primary office located in the Wedge
International Tower in downtown
Houston and satellne office in the Clear
Lake area.
Being a member of Summit International
Associates, Inc., allows WPM to provide
services to a number of international
clients and many of the benefits
associated with national and
international accounting firms.
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Wealth of (indian tribes,
Experience special (
authorities,
Audit and related compliance and etc,). The Rrm (
consulting services is one of the many has experience
areas in which WPM is highly regarded, in auditing
school districts E
It speaks highly of the quality of our
work iri this area to note that despite and housing
the crises in the petrochemical industry authorities but r
in the 70's, drop in real estate values has made a
business decision not to work in these
;;:
areas. Resources of firms with any ~
significant share of the governmental
market are stretched to the limit during .;
the fall, so this decision allows us to t
wisely use our resources, "
"
"We get quality work out -
the door and into our .
f.
clients hands"
. ~.~ ....
in the 80's and the whole collapse of
the Texas savings and loan industry,
WPM's reputation has remained
untarnished, despite having significant
client base in each of the affected
markets,
Our governmental group is the largest
provider of audit and consulting
services within our firm and has the
greatest concentration in specific client
types. Our focus is on municipalities
and its derivative, municipal utility
districts and other special entitiesO
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We have a large number of clients with
September 30th fiscal year ends, To
ensure client satisfaction, specifically
timeliness, we have refined a number
of systems over the years to ensure
that the clients financial statements are
delivered within 120 days from the
fiscal year end. Unlike the City, our
infrastructure can not be seen. These
intangible systems were designed over
our fifty three years of practice to get
quality work out the door and into our
clients hands.
Our systems are put to the test each
year. We annually audit approximately
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Lake area and would work on the City's
audit, The final processing of the audit
and review would occur at our downtown
office.
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two hundred governmental entities, so
we have gotten report production down
to a science. In fact we have even
n~~ thts P9~ion of ~ui:;firm as the
Re~rt P~t.icf!?n Group':or as we call it
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Sev~n members ~;~ur Firm work on
governmental ~lierits almOst exclusively
and are full time members of our
Governmental/Nonprofit Group. They
are supported by a central staff which
includes twelve professionals. During
our peak periods, much of the central
staff is dedicated to ensuring that all of
our reports go out on time. Several
members of our staff reside in the Clear
Ma~datOli ~. cr}t~~~'-Dot 'o~~'~h!~e~ i~~lu4ed'~i~liiil':~liiS p'~posai. :'.:
. .. _.- '. '. ..-.~ ._" ~"' \ ~:j' - -: "., -~ ~ :. ~ : -.' i~- ',~'- ~.~:,\ ".', ~ ' . ." . ':" " .
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Go~~~t:AUdi~g ~~~;~~:~~e.~~v~;~ .tici;P.t~f~si~ii1~i~taq~~~s ~vol~_8:~e:.' :
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Engagement
Team
Our proposed engagement team
consists of the most qualified municipal
auditors in the area and is optimally
designed to get the City's audit
completed in the most efficient arid
timely manner possible,
Mark McGrath will serve as the
"partner in charge" and be responsible
for ensuring your satisfaction and final
approval of the
audit.
Mark is no stranger
to city operations.
He is currently
serving on the City
Council for the Oty
of Meadows Place.
He has also worked
on various city
committees prior to being elected to
his current position. This provides our
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team with a leader that can also look at
the audit from an elected officials
perspective.
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As you would expect, Mark's
credentials are quite impressive. He
has twenty years of professional
experience, fourteen of which are with
WPtf. DU~ng tfii~:flijte he haS, audited j;'
aI~ ~~h' loc~ 9bvertifn~ c1ienr::~
type~\ln a~itio~, Mark ~ ~ '.:.. : ~~
parti~~pat~)~ ~ vah.'er[6f prog' ~. s ,~i..
....' .:=;:,.-. ....
geareaJo gOyernmer,tal entijies. -
includi~g the;~FOA;~ .Speci~~Revi~ .,
Committee.
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Robert Belt will be directly managing
your engagement onsite and will be
actively involved in the day to day
aspects of your audit,
!
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Robert has ten years experience
auditing cities in the Houston area. He I
has worked in some capacity with most I'
of the cities in the area with a
population of 6,000-50,000. This I
focus on cities enabled
Robert to be involved i
in special city I
consulting projects, I
which has increased his
: value as an auditor. I
. : Because of his I'
knowledge of city
operations, the Firm I.
has recently been
engaged to investigate alleged abuses/
mismanagement in a City's police
department.
e
Robert has prepared countless CAFRs
which received the GFOA Certificate of
Achievement for Excellence in Financial
Reporting Award, including first time
submissions. In add~ion, he has served
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League City
Seabrook
EI Lago
Friendswood
Pearland
Alvin
l\'Ianvel
Hillcrest
South Houston
Galena Park
Jacinto City
Mont Belvieu
N ederland
Humble
Conroe
Shenandoah
Oak Ridge North
Brookshire
Katy
WaUis
Fulshear
Spring Valley
Hilshire Village
Hedwig Village
Bunker Hill
Piney Point
Bellaire
Rosenberg
Sugar Land
on the GFOA's special review committee
and reviewed financial statements from
cities across the nation. Robert is also a
. recipient of the A1CPA's Certificate of '
Educational Achievement in Financial
Aud~s of Governmental Entities,
Amanda Eaves will be the senior
assigned to the City's engagement team
and will supervise the two staff members
on the team, Amanda comes to us with .
two years of accounting experience with
the City of Nederland, She has put this
experience to good use while conducting
audits for cities while at the Firm.
Patsy Wadrop will conduct the 11second
partner" review as a final step to give
the audit one last look by someone not
directly involved in the engagement. In
Patsy's twenty two years at the Firm
conducting and reviewing governmental
audits has well qualified her for this
position.
As you would expect, the key members
of your engagement team are CPAs and
members of the A1CPA and Texas
Society of CPAs, Other organizations in
which they participate include the Gulf
Coast Chapter of GFOAT and the
National Association of Local
Government Auditors. In addition, all of
the key members have met yellow book
CPE requirements for the last three
years.
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WInnl'E1nMmlE
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interl1lii~ontrolS;:'Even: ,.
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count on a thoro~'au-
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Scope and
Approach
We are "city auditors" therefore our
scope and approach is geared to the
unique operating environment for a
Texas municipality. The Oty of La
Porte's finance department is '\veil
thought of' in the financial commu-
nity, therefore we would expect to
fine tune our procedures while per-
forming our on-site planning proce-
dures at the ine::eption of the audit.
"an audit should bring
value to the city being
audited"
Our audit will be conducted in accor-
dance with the standards noted in the
table below and we will provide the City
with project deliverables as noted in
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the table to the far right, as you should
expect of any firm bidding on your audit.
However, we believe our work product
will be substantially different despite the
similarities in the outward appearances.
We believe that in addition to receiving
assurance from a reputable firm that
your financial statements are fairly pre-
sented, an audit should bring value to
the City. That is why our approach is
structured to do just that.
Our independence and intimate knowl-
edge of municipal operations provides
us the opportunity to "step back" dur-
ing the course of the audit, and identify
opportunities, for management and/or
the elected officials to consider. We be-
lieve that we can make constructive
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non-threatening suggestions that will
h~l~ the ~Ity .i.n the future.
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Ou~r cre se.~ic~~ auditihg, and we are
. I'j .:~;o; ': 1:; . ~..
;", "an:::iudlt ~hauld Grin
,,:: '~! .: "::: . 0:1 g
::.:yah~~ to d~e ~!tY ~~ing
:~audtted" :,?:! ":~
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continuously refining our aud~ process,
This means we are always mon~oring
changes in auditing and reporting, to
determine how they will impact our
clients and our audit techniques. We
regularly early implement new stan-
dards, when allowed. One of our former
staff members, David Holt, with whom
we are still closely associated, provides
training across the nation on account-
ing, reporting, and auditing in the gov-
e
ernmental arena. This association as-
sures that our staff and clients are al-
ways ~pt a-breast of changes in the
industry. Rapid changes in technology
always provides us with new tools to
enhance the quality and efficiency of
our'M>rk. We have an EDP expert on
staff, to ensure that our tools are state-
of-the-art and that our computer soft-
ware is fully integrated, In fact, we be-
lieve that many of the systems, which
we have implemented and planned, en-
sure that we are a quantum leap ahead
of our compet~ors and will stay in that
position.
We understand the prestigious nature
of the GFOA Certificate of Achievement
for Excellence in Financial Reporting
Award, An important part of the service
we propose to perform is our review for
compliance with program criteria, We
can guarantee the Oty will receive the
award if items identified during our re-
view can be corrected.
111
WHm.PmovM:Hoo
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I Fees [
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generally
The cost of the annual audit is slightly higher (
obviously an important part of the than our
evaluation process. However, it is competitors,
important to remember that a~hough We believe we I
the work products the City receives are the best
should be relatively the same, the value value, but r
seldom are we
"the product should be the lowest cost.
the same but the value
may be substantially We encourage your phone calls and
that philosophy is reflected in our f
of the audits may be substantially ,
billing policy. We take a vested interest I.
I..
different. in each of our clients and we are
available to help, Routine phone calls .
Our recommendations for fine tuning and other incidental consultations
any number of aspects of the City's through out the year are absorbed in r
~,
operations could produce benefits far our estimated fee, ::
in excess of the audit fee.
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Fec Estimate i
I
LCHI of Staff Hours Rate Total i
.\
Principals (ownen) 30 $150
Senior manager 110 125
Senior accountant 90 90
Staty accountant 90 65
Other Support 10 50
TOTAL 330
Out of pocket expenses
Discount
TOTAL COMMITMENT
OPTION A
At the request of the City, we
$4,500 can prepare the City another
13,750 award winning CAFR. The cost
8,100 of report preparation, of the
5,850 financial statements, notes, and
500 all required supplementary
J2,700 schedules, including typing of
300 the camera ready copy of the
33,000 master copy of the entire CAFR
2,000 is not included within our base
$:31 000 bid. Such costs are included
,
separately as Option A.
Total all-inclusive not to exceed fees for the years
ended 1998, 1999 and 2000 are 531,000,532,000
and 533,000, respectively. The above fees do not
include Option A for an additional ,500.
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City of Oak Ridge
City of Shenandoah
City of Hedwig Village
Gulf Coast Waste Disposal Authority4'
Polk County4'
Ron Bourbeau
Waldrop
McGrath
80 Beth Staten
400 Paul Lessard
McGrath
275 John Thompson
*Ineludes preparation of GFOA CAFR
If the City would like for us to prepare
the CAFR, we can match any formatting
convention the City would like us to use,
We have a number of report styles to
choose from or we can customize one
especially for the City, Sample formats
are available if they are needed.
The City would have the option of
engaging our firm for the fiscal years
ending September 30, 2001, 2002,
and 2003, Terms for these periods
(including price acceptable to both the
City and the Firm) would be negotiated.
111
WHmPmcv~t!m
LetailS abQut our fee::quote:
: . '.. ~ : ", ... - . - -. . ..... '. .. . ...
. .
. . - .
.' . - . - ...
Fees;iot~o~.~~ ~~. ~:,~ our ~ckci hoUr~Y ~tes.: .~es~:r~~t~:~~~~~~ ~~.ii:Ve.i" '
'incIudeadditional tiine-I 'uired in the'event of lack' of com liiJiceWith'"liLwS' and"r~l1tiOn .... . >.
~t~~~~dr:m!t~zr~~jL';
State B~i;tof~~1icA~iDi~~;,we:~e n9tJx>~d.t~~proyide'~~ 'a~~for .~~ "~~ed'i"'/ .-:.: :
aui~t.: .:.~~~~;:.~.:~~~:'wehon~:,~~91,1oteS< ,-:".: ~.~_'., ..::>".::;'."':::'.\..:.:. .>:.".... . .
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APPENDIX A
SCHEDULE OF PROFESSIONAL FEES, EXPENSES
GUARANTEES, AND WARRANTIES
FOR PROFESSIONAL AUDITING SERVICES
FOR YEAR(S) ENDING SEPTEMBER 30, 1998, 1999 and 2000
PART 1 - Annual Not To Exceed Fee for the completion of the base financial audit, as outlined
and described in Section n, B, C and D.
30
Standard Quoted
Hourly Hourly
Rates Rates Total
$ 150 $ 150 $ 4,500
125 125 13,750
90 90 8,100
65/50 65/50 6,350
32,700
Hours
Partners
Managers
110
Supervisory staff
90
Staff
100
Subtotal Part 1
330
Out-of-Pocket expenses:
Meals and lodging
300
Transportation
Other (specify):
Other (specify):
Other (specify): Di scount
( 2,000)
Total for Part 1 - (annual all-inclusive Not To Exceed Fee) September 30,
September 30,
September 30,
1998 $ 31,000
1999 $32,000
2000 $33,000
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APPENDIX A, CONTINUED
FOR YEAR(S) ENDING SEPTEMBER 30, 1998, 1999 and 2000
PART 2 - Not to Exceed Fee for completion of any items in Section IT E that will be charged
separately.
Nature of Service to be Provided
Total Price
$ No Cha rge
Total for Pan 2
$
PART 3 - Optional Services. As described in the request, the City traditionally prepares and
publishes its own CAFR. However, the City does request that fee proposals be submitted for
preparation of the CAFR by the Audit Firm. If feasible, the City might elect to execute this
option.
Option A - Annual Not To Exceed Fee proposal for the preparation of the a
Camera ready master of the City's CAFR, excluding the Letter of
Transmittal Section.
$4.500
.
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APPENDIX A, CONTINUED
FOR YEAR(S) ENDING SEPTEMBER 30, 1998, 1999 and 2000
PART 4 - Guarantees and Warranties
GUARANTEES
The proposer certifies' it can and will provide and make available, at a minimum, all
services set forth in Section IT, Nature of Services Required.
WARRANTIES
A. Proposer warrants that it is willing and able to comply with State of Texas laws
with respect to foreign (non-state of Texas) corporations.
B. Proposer warrants that it is willing and able to obtain an errors and omissions
insurance policy providing a prudent amount of coverage for the willful or
negligent acts, or omissions of any officers, employees or agents thereof.
C. Proposer warrants that it will not delegate or subcontract its responsibilities under
an agreement without the express prior written permission of the City.
D. Proposer warrants that it is willing and able to meet required dates and report
deadlines.
E. Proposer warrants that all information provided by it in connection with this
proposal is true and accurate. J _ /.. I!.. Q A
Signature ofOfficial:-1h a~ W~ ~:~L
Name (typed): Mark W, McGrath'
Title: Owner
Finn: White Petrov McHone
Date: 7/8/98