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t-twrt of tVie Alts • • • Bill Lambert Mayor Jim Boland Council President Bonzo Council Vice-President Art Bettge Council Member Walter Steed Council Member Gina Tarascio Council Member John Weber Council Member • • • • Gary J. Riedner City Supervisor • • • • City of Moscow, City Hall lo Gary J. Riedner, City Supervisor 206 East 3rd Street P.O. Box 9203 Moscow ID 83843 Phone (208) 883-7000 Fax (208) 883-7018 Website: www.ci.moscow.id.us Hearing Impaired (208) 883-7019 • • • September 19, 2017 Mitchell J. Marx, Partner Presnell Gage PLLC 1216 Idaho Street Lewiston, ID 83501 Re: FY2017 City of Moscow Audit· Dear Mitch: Please forgive my not contacting you sooner with the official notice that the City of Moscow has selected Presnell Gage to conduct the annual audit of the City's finances for the fiscal year beginning October 1, 2016 and ending September 30, 2017 for the $29,200.00. You had previously provided an Audit Proposal dated June 13, 2017, and on September 18, 2017, the proposal was approved by City Council for the FY2017 audit. The proposal ·also contained a proposal for audit services to be provided to the Moscow Urban Renewal Agency. As the MURA is separate and distint entity from the City, I have forwarded tha:t proposal to Bill Belknap, MURA Executive Director, for MURA authorization. He has informed me that he will forward the proposal to the MURA Board for their consideration and authorization. I would also note that the proposal to the City of Moscow also proposes pricing for audit services for the four subsequent fiscal years (2018-2021 Please be advised that I intend to obtain City Council direction on those future services in the spring of2018. · We have appreciated the professional services you have provided in previous years, and we value your continued association in providing audit services to the City of Moscow. ntact me if you have any questions. ar City Supervisor/ Acting Finance Director c: Bill Lambert, Mayor Sarah Banks; Assistant Finance Director Laurie Hopkins, City Clerk ---PAGE BREAK--- ---PAGE BREAK--- CITY OF MOSCOW AND URBAN RENEWAL AGENCY AUDIT PROPOSALS PRESNELL GAGE, PLLC Accounting & Consulting MITCHELL J. MARX, PARTNER. 1216 Idaho Street Lewiston, Idaho 83501 (208) 746-8281 [EMAIL REDACTED] June 13, 2017 ---PAGE BREAK--- CITY OF MOSCOW & URBAN RENEWAL AGENCY TABLE OF CONTENTS TRANSMITTAL SCOPE OF SERVICES. Financial Statements Federal Single Audit Requirements Management Letters AUDITING STANDARDS Formal Auditing Standards Continuing Professional Education Peer Review PROPOSAL REQUIREMENTS Independence License to Practice in Idaho Firm Qualifications and Experience Partner, Supervisory and Staff Qualifications and Experience Similar Engagements with Other Government Entities Specific Audit Approach Identification of An.ticipated Potential Audit Problems Cosl Proposals Rates for Additional Professional Services APPENDICES 2 = 3 3 4 4 4 4 5 5 6 8 9 11 11 11 American Institute of Certified Public Accountants Peer Review A-1 Continuing Professional Education (CPE) A-2-3 City of Moscow and Urban Renewal Agency Schedule of Professional Fees All Services A-4 ---PAGE BREAK--- June 13, 2017 Sarah Banks City of Moscow PO Box 9203 Moscow, Idaho 83843 ACCOUNTING AND CONSULTING 609 S. Washington Street, Suite 202 Moscow, Idaho 83843 www.presnellgage.com (208) 882-2211 Fax: (208) 883-3808 We are pleased to present our qualifications for performing the audits of the City of Moscow and the Urban Renewal Agency for the year ending September 30, 2017, with the option to perform the audits for each of the four subsequent fiscal years. We will perform the audits as required by Professional Standards. Presnell Gage, PLLC is one of the largest CPA firms in ·the State of Idaho, with offices in Moscow, Pullman, Lewiston, Orofino, and Grangeville. Our extensive experience in auditing Idaho cities and other governmental entities makes us well qualified to perform your audits. We have been the auditors for the City of . Moscow for the last 17 years and the Urban Renewal Agency for the last 16 years. Our managing audit team members have been with Presnell Gage, PLLC for 12 to 38 years and are committed public accounting professionals. The experience and maturity of our staff will provide the framework to assist the City with meaningful management service projects. Few CPA firms can provide this .continuity and expertise. This proposal is a firm and irrevocable offer for the fiscal year 2017. We agree to follow the time line established by the Audit Committee. We are looking forward to continuing to serve you and believe we can provide you with high quality professional service. We would be available for an oral presentation at your convenience. If you have any questions, please contact Mitchell Marx. · Presnell Gage, PLLC 2 PLL ---PAGE BREAK--- SCOPE OF SERVICES Financial Statements We will audit the general purpose financial statements of the City of Moscow and the Urban Renewal Agency for ttie fiscal year ending September 30, 2017 and th.e subsequent four fiscal years that are optional. The objective of our audits will be the expression of an unmodified opinion on the general purpose financial statements, but our ability to express an opinion, and the wording of our opinion, will be dependent upon the facts and circumstances at the date of our report. If our opinion is other than unmodified, the reasons will be fully disclosed. We will assist in the preparation of and will review the City's CAFR that will be in compliance with the standards established for the Government Finance Officers Association Certificate of Achievement. Our firm assists in the preparation of CAFRs for two cities and, therefore, has experience in this area. Federal Single Audit Requirements We will audit the general purpose financial statements of the City and report on the Schedule of Expenditures of Federal Awards in relation to the general purpose financial statements taken as a whole. We will report on our understanding of the City's internal control structure and the assessment of control risk made as part of the financial statement audit as required under the Government Auditing Standards issued by the Comptroller General of the United State. We will report on the internal control (accounting and administrative) systems used in administering federal financial assistance programs as required by the new Uniform Guidance. Management Letters It is the policy of our firm to provide comprehensive management letters or exit conferences in conjunction with all major financial statement engagements. These letters or conferences are designed to suggest improvements in accounting control, accounting policies and procedures, managerial practices, operational efficiency and other matters which will contribute to the overall operating abilities of our clients. We anticipate continuing to meet with the administration, the Audit Committee, and other Council, or Board members, as requested, to discuss these items. 3 ---PAGE BREAK--- AUDITING STANDARDS Formal Auditing Standards Our audits will be performed in accordance with auditing standards generally accepted in the United States of America as set forth by the American Institute of Certified Public Accountants, the Uniform Guidance, Audits of States, Local Governments and Non-Profit Organizations, and the Standards set forth in the Government Auditing Standards issued by the Comptroller General of the United States. · Continuing Professional Education Presnell Gage, PLLC assures that all of our staff obtain at least 80 hours of continuing professional education (CPE) within a two-year period, with a minimum of 30 hours in one year. In addition, we assure that al.I professional staff are in compliance with the CPE requirements detailed in the Government Auditing Standards. These continuing education programs cover topics that address the special needs of our clients, our staff, and our firm as a whole. The formal training of staff to be assigned to the City's and the Agency's audits is documented in an appendix to this proposal. Peer Review A copy of our latest report issued by CPA Consulting, Inc., P.S., and performed using the standards established by the Peer Review Board of the AICPA is enclosed in an appendix for your review. These standards require that at least one governmental audit be reviewed. In fact, the reviewers selected two governmental audits. PROPOSAL REQUIREMENTS Independence Presnell Gage, PLLC affirms that the firm is independent of the City and Agency as defined by auditing standards generally accepted in the United States of America, the U.S. General Accounting Office's Government Auditing Standards, and the Code of Professional Conduct. Furthermore, Presnell Gage, PLLC has no conflict of interest with regard to any other work performed by the firm for the City of Moscow or the Urban Renewal Agency. · 4 ---PAGE BREAK--- License to Practice in Idaho Presnell Gage, PLLC affirms that all members and all assigned key professional staff are properly licensed to practice in the State of Idaho. The firm does employ certain accountants who are in the process of obtaining their licenses as Certified Public Accountants. Firm Qualifications and Experience Size of Firm Presnell Gage, PLLC is an all-Idaho, regional firm established in Lewiston, Idaho in 1950. It has grown into one of the largest CPA firms in Idaho and has offices in Lewiston, Moscow, Pullman, Orofino, and Grangeville. The audits of the City of Moscow and Urban Renewal Agency will be managed by our Lewiston and Moscow offices. The following presents a recap of the total personnel in our firm (these two offices only): Personnel Paftfi s Managers Supervisors Seniors Other professional staff Support staff Lewiston 1 2 1 14 Moscow 5 1 1 ƙ 10 2 3 1 J! 24 ---PAGE BREAK--- Our governmental audit team in the Moscow and Lewiston offices and the anticipated staffing for your audits is composed of the following: Governmental Proposed Audit Team Audit Team Staffing Partners 4 3 Managers 1 Supervisors 1 Other professional staff .l tl _Q All proposed staffing in this engagement is expected to be employed on a full time basis. External Quality Control Review Presnell Gage, PLLC is a leader in the AICPA Peer Review Program. The Idaho Accountancy Act requires that we have a peer review every three years. Presnell Gage, PLLC had the first peer review conducted in ·the United States under this program and has had 12 subsequent reviews, all of which have resulted in pass ratings. The last six peer reviews included specific government engagements as required by professional standards. A copy of our latest report issued by our peer reviewer is enclosed for your review. State Desk Reviews Most of the audits that we perform for governments are reviewed by the State Legislative Auditor. All audits were accepted as filed. Disciplinary Actions Presnell Gage, PLLC has not had any disciplinary action taken against the firm in the last three years. Presnell Gage, PLLC is not aware of any pending actions against the firm at this time. Partner, Supervisory and Staff Qualifications and Experience Our firm has a Governmental Audit Team comprised of individuals from our Moscow and Lewiston offices. This team is charged with the responsibility of handling all audits of governmental units. Governmental units have audit and reporting requirements that are unique and specialized. By utilizing the same group of professionals on these audits, we are able to offer the individual entities an audit team that has a working knowledge of these special requirements. 6 ---PAGE BREAK--- The team members selected for your audits are listed below. Details of continuing professional education are listed in the appendices. Mitchell J. Marx, Engagement Partner Mr. Marx has been engaged in public accounting since 1983 and has been with Presnell Gage, PLLC, since 200. Mr. Marx is licensed to practice as a Certified Public Accountant in the State of Idaho. He has extensive experience in audits of governmental and non-profit entities, including cities, school districts and federal grantees. He has received specialized training in federal single audit requirements. He is a member of the American Institute of CPAs and the Idaho Society of CPAs. Mr. Marx will serve as the partner-in-charge of your audits and will be responsible for the planning, supervision, and review of your audits. Nick Nicholson, Engagement Partner Mr. Nicholson has been engaged in public accounting since 2005 when he came to work for Presnell Gage, PLLC. Mr. Nicholson is licensed to practice as a Certified Public Accountant in the State of Idaho. He has been an active participant in the audits of cities as well as other governmental entities for the pas years. e 1s a mem er o e a o oc1e y o s. r. 1c o son as been a member of the City of Moscow audit team for the last 12 years. Mr. Nicholson will serve as the audit partner of your audits. Scott J. Dockins, Review Partner Mr. Dockins has been engaged in public accounting since 1979 with Presnell Gage, PLLC. Mr. Dockins is licensed to practice as a Certified Public Accountant in the State of Idaho. His areas of auditing experience include school districts, municipalities, water ·and sewer districts, flnanclal Institutions, electric utilities, and lumber mills. He is a member of the American Institute of CPAs and the Idaho Society of CPAs. He is a qualified peer reviewer who has conducted over 70 reviews on CPA firms throughout the western United States. Mr. Dockins will provide final technical and quality review of the results of the audits. Staff Accountants Staff accountants will be chosen from the governmental audit team to the extent necessary. All staff accountants are in the process of obtaining their certification and licensing. All clients of our firm for whom financial review or audit services are provided have a partner and supervisor assigned to their account. · This team approach provides our clients with an assurance of accessibility to our firm and continuity of service. We will continue to provide a level of staff continuity to your organizations that will prove to be very satisfactory. 7 ---PAGE BREAK--- Similar Engagements with Other Government Entities We have performed the audits for the City of Moscow and the Urban Renewal Agency since September 30, 2000. Other similar engagements are: City of Lewiston Report issued: Comprehensive Annual Financial Report Dates performed: 1963-2016 Engagement partner: Mitchell J. Marx, CPA Principal client contact: Dan Marsh, Finance Director, (208) 746-3671 Federal single audit performed: yes City of Orofino Report issued: Independent Audit Dates performed: 1965-2016 Engagement partner: Mitchell J. Marx, CPA Principal client contact: Rick Laam, City Administrator, (208) 476-4725 Federal single audit performed: yes Plummer/Worley Joint School District No. 44 Report issued: Independent Audit Dates performed: 1988-2016 Engagement partner: Mitchell J. Marx, CPA Principal client contact: Marcia Hoffman, (2mU 686-1211 Federal single audit performed: yes City of Potlatch Report issued: Independent Audit Dates performed: 1998-2016 Engagement partner: Scott J. Dockins, CPA Principal client contact: Dave Brown, Mayor, (208) 875-0708 Federal single audit performed: As required Specific Audit Approach City Personnel Assistance We would expect the City personnel to prepare agreed-upon schedules and other data. Our audit approach will be designed to perform in the most efficient manner by allowing the City to perform the accounting procedures and allowing our 'personnel to perform auditing procedures. We will assist in the preparation of all financial statements, auditor's reports, and schedules that must be included in the general purpose financial statements. City personnel will prepare additional schedules required for the CAFR. 8 ---PAGE BREAK--- General Financial Audit Our general financial audit approach may be divided into four phases which, although distinct in the items they cover, may overlap and should be considered as an ongoing process. Results of subsequent phases may require the auditor to reassess the decisions arrived at in the prior phase and may necessitate changes in the approach to the audit. A brief summary of the phases follows: Phase I - Our initial audit objective is to gain an understanding of the City's accounting environment, the internal control structure, and the accounting system. This understanding will be obtained by review of system documentation, interviews with City personnel, and review of information prepared by City personnel. During this phase, we will also draw upon our experience as auditors for this and other Idaho cities to consider the types of problems or adjustments that we may encounter. Phase II - The second phase of our audit will include designing an audit program based upon the audit committee's and our expectations. This phase will include testing the City's accounting procedures and assessing the degree of reliance we can place on those systems. As noted under Phase 111, we believe that some of the revenue and expenditure tests are most efficiently completed by corresponding with State and County officials to verify the completeness of City revenues and expenditures. We generally use methods as outlined In accounting standards because the sampling procedure is only one ot' the audit procedures performed on an account balance or a class of transactions. If we were placing sole reliance on the sampling procedure, we would use statistical sampling procedures. We use sample sizes as outlined in accounting standards and generally use a random number selection process, although in some situations a systematic sampling method is more appropriate. Sampling tests will be performed in testing the City's internal control structure and also in compliance testing for the Single Audit requirements. Phase Ill - The third phase of our audit involves the year-end testing of account balances. For the City of Moscow and the Urban Renewal Agency, these procedures will include correspondence with the State and County officials as a cost effective method of testing the City's financial statements as well as our procedures to test internal accounting records. 9 ---PAGE BREAK--- Phase IV - The fourth phase is· preparation and publishing of the statements, the management letter, if necessary, along with meetings with City and URA personnel. · Staffing and Hours by Phase Phase I procedures will be performed by the engagement partner and the in charge supervisor. This phase should take approximately 40 hours. Designing the audit program in Phase II will again be done by the engagement partner and the in-charge supervisor. The bulk of the testing will be performed by the in charge supervisor and the staff accountants. This phase should take approximately 50 hours. Phase Ill procedures will be performed mainly by the in charge supervisor and staff accountants with supervision by the engagement partner as required. This phase should take approximately 150 hours. Phase IV procedures will be performed mainly by the in-charge supervisor and staff accountants with supervision by the engagement partner as required. This phase should take approximately 70 hours. Use of Analytical Procedures We make extensive use of analytical procedures during the audit. These procedures include comparisons to prior years, comparisons to budget, certain ratio and cost analysis, and analysis of client-specific relationships and their reasonableness. Use of EDP Software We utilize "ProSystems" audit software for our own workpapers and analysis and do not use any software that interacts directly with the City's EDP system. However, we do request final trial balances in Microsoft Excel format if possible. Our approach on this engagement would be to audit around the EDP system rather than through it. Our use of the Pro-Systems software allows us to be more efficient in our audit as well as provide detailed trial balances and proposed adjustments to the City staff for their review and approval. Determining Applicable Laws and Regulations We will determine the laws and regulations that are subject to audit test work through our knowledge of Idaho cities, research of program documentation, and inquiry of City personnel. 10 ---PAGE BREAK--- Identification of Anticipated Potential Audit Problems Based on preliminary discussions with the Finance Director and our knowledge of the controls in place at the City and the Agency, we do not anticipate any audit problems requiring extended assistance from your personnel. Of course, this may change during the audit process. If such an event should occur, we would contact you or the audit committee prior to performing any additional services. Cost Proposals Our proposed fees for the fiscal years ending September 30, 2017-21 are presented below. These fees are "total, all-inclusive, maximum prices" and will not increase as long as there is no significant decline in City and Agency participation where a corresponding increase in outside accounting assistance is required. Any decline in client participation will be discussed with the Finance Director prior to incurring additional accounting fees. 2017 audit and report 2018 audit and report 2019 audit and report CITY $29,200 29,400 29,600 ' 30,000 URA $4,800 4,900 5,000 ' 5,200 The requested Cost Proposal Form is in the appendices. Rates for Additional Professional Services Additional professional ser.1ices \Ni!! be bi!!ed using the fo!!O\Ning schedule: Partners Managers Supervisor Seniors Cost per hour - Cost per hour - Cost per hour - Cost per hour 11 $170 - 220 160 105 90 ---PAGE BREAK--- INC P.S. t f.'llll'l:P 1'111\lll- \C(LlliNJ:\,\Jl 1 i\11,iN=)>CilN\l,I l\Nf\ July 24, 2014 To The Shareholders of Presnell Gage, PLLC and the Peer Review Committee of the Idaho Society of CPAs System Review Report We have reviewed the system of quality control for the accounting and auditillg practice of Presnell Gage, PLLC (the firm) in effect for the year ended March 31, 2014. Our peer review was conducted in accordance with the Standards for Perfonning and Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public Accountants. As a part of our peer review, we considered reviews by regulatory entities, if applicable, in determining the nature and extent of our procedures. The firm is responsible for designin<• a system of quality control and complying with it to provide the firm with reasonable assurance of perfom1ing and reporting in conformity with applicable professional standards in all material respects. Our responsibility is to express an opinion on the design of the system of quality control and the firm's compliance therewith õased on our review. The nature, objectives, scope, limitations of, and the procedures performed in a System Review are described in the standards at w:ww .aicpa.org/prsummary. As required by the standards, engagements selected for review included engagements performed under the Government Auditing Standards and an audit of an employee benefit plan. In our opinion, the system of quality control for the accounting and auditing practice of Presnell Gage, PLLC in effect for the year ended March 31, 2014, has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass, pass with dejiciency(ies) or .fail . Presnell Gage, PLLC has received a peer review rating of Pass. CPfl comwfl/lr 111c- 125 CPA Consulting, Inc., P.S. Certified Public Accountants A-1 - - ---PAGE BREAK--- CITY OF MOSCOW AND URBAN RENEWAL AGENCY AUDIT PROPOSAL CONTINUING PROFESSIONAL EDUCATION Date of Seminar Mitchell J. Marx 2016 GAQC Annual Update 4/19/16 Governmental & Not-for-Profit Annual Update 6/16/16 Advanced Topics in Single Audit 6/17/16 Engagements Under Governmental Auditing Standards 8/8/16 Federal Awards: Changes under the Revised Uniform Grant Guidance 4/24/15 GAQC 2015 Annual Update 4/28/15 Audits of State and Local Governments 5/20/15 Engagements Under Government Auditing "tandard 812:11 GAQC 2014 Annual Update 4/29/14 Engagements Under Government Auditing Standards 8/3/14 Testing and Documenting Internal Control Over Compliance in a Single Audit 8/8/14 Advanced OMB Circular A-133 Issues 9/25/14 Studies on Single Audit & Yellow-Book Deficiencies 9/26/14 Nick Nicholson Governmental & Not-for-Profit Annual Update 6/16/16 Advanced Topics in a Single Audit 6/17/16 Audits of State and Local Governments 12/12/16 · Federal Awards: Changes Under the Revised Uniform Grant Guidance 4/24/15 GAQC 2015 Annual Update 4/28/15 Audits of State and Local Governments 5/20/15 Annual Update: Top Governmental and Non-for-Profit A & A 6/23/15 Audits of State and Local Governments: What You Need to Know 6/24/15 A-2 Hours 2 8. 8 4 2 2 2 4 2 4 2 8 8 8 8 8 2 2 2 8 8 ---PAGE BREAK--- CITY OF MOSCOW AND URBAN RENEWAL AGENCY AUDIT P.ROPOSAL CONTINUING PROFESSIONAL EDUCATION (CONTINUED) Nick Nicholson (continued) Annual Goyernmental GAAP Update Advanced OMB Circular A-133 Issues Studies on Single Audit & Yellow Book Deficiencies Scott J. Dockins Peer Review Industry Update: Governmental -GAS Advanced Topics in a Single Audit 2016 GAQC Annual Update Peer Rev. Conf- Government Auditing Stds GAQC 2015 Annual Update Advanced OMB Circular A-133 Issues Engagements under GAS A-3 Date of Seminar 12/3/15 9/25/14 9/26/14 5/18/16 6/17/16 7/15/16 8/8/16 4/28/15 9/25/14 8/3/14 4 8 8 2 8 2 4 2 8 4 ---PAGE BREAK--- CITY OF MOSCOW AND URBAN RENEWAL AGENCY ATTACHMENT TO THE PROPOSAL SCHEDULE OF PROFESSIONAL FEES ALL SERVICES Year of Service to be Provided Audit Services 2016/2017 Audit Services 2017/2018 Audit Services 2018/2019 Audit Services 2019/2020 Audit Services 2020/2021 City Total Price $29,200 29,400 29,600 29,800 30,000 URA Total Price $4,800 4,900 5,000 5,100 5,200 The proposer warrants that all information provided by it in connection with this proposal is true and accurate. . Signature ofOfficial: .aJ . Name of Official: Mitchell J. Marx Title: Certified Public Accountant, Partner Firm: Presnell-Gage, PLLC Address: 1216 Idaho Street, Lewiston, ID 83501 Email: [EMAIL REDACTED] Firm Home Page Address: www.presnellgage.com Date: June 13, 2017 A-4