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HomeMy WebLinkAboutFnance Annual Report UMBAUGH H.J.Umbaugh&Associates Certified Public Accountants,LLP 8365 Keystone Crossing Suite 300 Indianapolis,IN 46240-2687 Phone:317-465-1500 Fax:317-465-1550 May 18, 2018 www.umbaugh.com Heather Metcalf,Controller City of Jeffersonville 500 Quartermaster Court, Suite 300 Jeffersonville, Indiana 47130 Re: Jeffersonville(Indiana)Proposed Accounting Services— Comprehensive Annual Financial Report Project Dear Ms. Metcalf: Thank you for requesting that H.J.Umbaugh&Associates,Certified Public Accountants,LLP(the"Firm") provide to the City of Jeffersonville, Indiana(the"Client")those services more fully set forth in Exhibit A hereto(the"Services"). Fees and Costs Fees charged for work performed are generally based on hourly rates, as set forth in Exhibit B,for the time expended,a fixed amount or other arrangement as mutually agreed upon as more appropriate for a particular matter.Hourly rates for work performed by our professionals vary by individual and reflect the complexity of the engagement. Disclosure of Conflicts of Interest with Various Forms of Compensation The Municipal Securities Rulemaking Board (MSRB) requires us, as your municipal advisor, to provide written disclosure to you about the actual or potential conflicts of interest presented by various forms of compensation. Exhibit C sets forth the potential conflicts of interest associated with various forms of compensation. By signing this letter of engagement, the signee acknowledges that he/she has received Exhibit C and that he/she has been given the opportunity to raise questions and discuss the matters contained within the exhibit with the municipal advisor. Billing Procedures Normally, you will receive a monthly statement showing fees and costs incurred in the prior month. Occasionally, we may bill on a less frequent basis if the time involved in the prior month was minimal or if arrangements are made for the payment of fees from bond proceeds. The account balance is due and payable on receipt of the statement. Once our representation has been concluded or terminated, a final billing will be sent to you. If requested to provide an estimate of our fees for a given matter, we will endeavor in good faith to provide our best estimate, but unless there is a mutual agreement to a fixed fee, the actual fees incurred on any project may be less than or exceed the estimate. Any questions or errors in any fee statement should be brought to our attention in writing within sixty (60)days of the billing date. Termination Both the Client and the Firm have the right to terminate the engagement at any time after reasonable advance written notice. On termination, all fees and charges incurred prior to termination shall be paid promptly. Unless otherwise agreed to by the Client and the Firm, the scope of services provided in Exhibit A will terminate 60 days after completion of the services in each Article. Heather Metcalf, Controller City of Jeffersonville Re: Jeffersonville (Indiana)Proposed Accounting Services— Comprehensive Annual Financial Report Project May 18, 2018 Page 2 Accountants' Opinion In performing our engagement, we will be relying on the accuracy and reliability of information provided by Client personnel. The services provided may include financial advisory services, consulting services, and accounting report services such as compilation, preparation, and agreed upon procedures reports. Please see Exhibit A and Exhibit D. We will not audit, review, or examine the information. Please also note that our engagement cannot be relied on to disclose errors, fraud, or other illegal acts that may exist. However, we will inform you of any material errors and any evidence or information that comes to our attention during the performance of our procedures that fraud may have occurred. In addition, we will report to you any evidence or information that comes to our attention during the performance of our procedures regarding illegal acts that may have occurred,unless they are clearly inconsequential. We have no responsibility to identify and communicate significant deficiencies or material weaknesses in your internal control as part of this engagement. The procedures we perform in our engagement will be heavily influenced by the representations that we receive from Client personnel. Accordingly, false representations could cause material errors to go undetected. The Client, therefore, agrees to indemnify and hold us harmless for any liability and all reasonable costs (including legal fees)that we may incur in connection with claims based upon our failure to detect material errors resulting from false representations made to us by any Client personnel and our failure to provide an acceptable level of service due to those false representations. The responsibility for auditing the records of the Client rests with the Indiana State Board of Accounts and the work performed by the Firm shall not include an audit or review of the records or the expression of an opinion on financial data. Client Responsibilities It is understood that the Firm will serve in an advisory capacity with the Client. The Client is responsible for management decisions and functions, and for designating an individual with suitable skill, knowledge or experience to oversee the services we provide. The Client is responsible for evaluating adequacy and results of the services performed and accepting responsibility for such services. The Client is responsible for establishing and maintaining internal controls,including monitoring ongoing activities. Additional Services Exhibit A sets forth the scope of the Services to be provided by the Firm. From time to time, additional services may be requested by the Client beyond the scope of Exhibit A. The Firm may provide these additional services and be paid at the Firm's customary fees and costs for such services. In the alternative, the Firm and the Client may complete a revised and supplemented Exhibit A to set forth the additional services (including revised fees and costs, as needed) to be provided. In either event, the terms and conditions of this letter shall remain in effect. E-Verify Program The Firm participates in the E-Verify program. For the purpose of this paragraph, the E-Verify program means the electronic verification of the work authorization program of the Illegal Immigration Reform and Immigration Responsibility Act of 1996 (P.L. 104-208), Division C, Title IV, s.401(a), as amended, operated by the United States Department of Homeland Security or a successor work authorization program designated by the United States Department of Homeland Security or other federal agency authorized to verify the work authorization status of newly hired employees under the Immigration Reform and Control Act of 1986(P.L. 99-603). The Firm does not employ any "unauthorized aliens"as that term is defined in 8 U.S.C. 1324a(h)(3). Heather Metcalf,Controller City of Jeffersonville Re: Jeffersonville(Indiana)Proposed Accounting Services— Comprehensive Annual Financial Report Project May 18, 2018 Page 3 Investments The Firm certifies that pursuant to Indiana Code 5-22-16.5 et seq.the Firm is not now engaged in investment activities in Iran. The Firm understands that providing a false certification could result in the fines, penalties,and civil action listed in I.C. 5-22-16.5-14. Municipal Advisor Registration The Firm is a Municipal Advisor registered with the Securities and Exchange Commission and the Municipal Securities Rulemaking Board. As such,the Firm is providing certain specific municipal advisory services to the Client. The Firm is neither a placement agent to the Client nor a broker/dealer. The offer and sale of any Bonds shall be made by the Client, in the sole discretion of the Client, and under its control and supervision. The Client agrees that the Firm does not undertake to sell or attempt to sell the Bonds, and will take no part in the sale thereof. Mediation Provision The Client and the Firm agree that if any dispute(other than our efforts to collect any outstanding invoice(s)) arises out of or relates to this engagement, or any prior engagement we may have performed for you, and if the dispute cannot be settled through informal negotiation, the parties agree first to try in good faith to settle the dispute by mediation administered by the American Arbitration Association under its Commercial Mediation Procedures (or such other administrator or rules as the parties may mutually agree) before resorting to litigation. The parties agree to engage in the mediation process in good faith once a written request to mediate has been given by any party to the engagement. Any mediation initiated as a result of this engagement shall take place in Indianapolis,Indiana,or such other location as the parties may mutually agree. If the parties are unable to mutually agree on the selection of a mediator, the mediator shall be determined in accordance with the American Arbitration Association's Commercial Mediation Procedures. The results of any such mediation shall be binding only upon a written settlement agreement executed by each party to be bound. Each party shall bear its own costs and fees,including attorneys' fees and expenses, in connection with the mediation. The costs of the mediation, including without limitation the mediator's fees and expenses, shall be shared equally by the participating parties. Any ensuing litigation shall be initiated and maintained exclusively before any state or federal court having appropriate subject matter jurisdiction located in Indianapolis, Indiana. Other Financial Industry Activities and Affiliations Umbaugh Cash Advisory Services, LLC ("UCAS") is a wholly-owned subsidiary of the Firm. UCAS is registered as an investment adviser with the Securities and Exchange Commission under the federal Investment Advisers Act. UCAS provides non-discretionary investment advice with the purpose of helping clients create and maintain a disciplined approach to investing their funds prudently and effectively. UCAS may provide advisory services to the clients of the Firm. UCAS has no other activities or arrangements that are material to its advisory business or its clients with a related person who is a broker-dealer, an investment company, other investment adviser or financial planner,bank, law firm or other financial entity. If the foregoing accurately represents the basis upon which we may provide Services to the Client, we ask that you execute this letter, in the space provided below setting forth your agreement. Execution of this letter can be performed in counterparts each of which will be deemed an original and all of which together will constitute the same document. Heather Metcalf, Controller City of Jeffersonville Re: Jeffersonville(Indiana)Proposed Accounting Services— Comprehensive Annual Financial Report Project May 18, 2018 Page 4 If you have any questions, please let us know. We appreciate this opportunity to be of service to you and the City of Jeffersonville,Indiana. Very truly yours, H.J. Umbaugh&Associates Certified Public • - s.ntants,LLP By: L/�. i ' . Daniel A. Hedden, 'artner The undersigned hereby acknowledges and agrees to the foregoing letter of engagement. City of Jeffersonville, diana • Date: V"k3-% By: Exhibit A Services Provided Scope of Services This information is offered to communicate the Firm's understanding of the terms and objectives of the engagement. This information includes a description of the limitations of the services the Firm can provide. The Firm will perform the following preparation services related to the Comprehensive Annual Financial Report Project("CAFR") for the Client: Article I. Comprehensive Annual Financial Report(Preparation and Consulting Services) Assist the Client with preparation and analysis of the information for the introductory, financial and statistical sections of the CAFR for the year ended December 31, 2017. Article H. Analyze Client Financial Statements(Preparation and Consulting Services) A. Analyze, from information provided by the Client,the basic financial statements as of and for the calendar year ended December 31, 2017. B. Analyze the client prepared accounting report in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. C. Perform checklist analysis based on the General Purpose Preparer's checklist as available through the Government Finance Officers Association. Our analysis differs significantly from a compilation, review or an audit of financial statements. Our analysis does not contemplate performing inquiry, analytical procedures, or other procedures performed in a review. Additionally, our analysis does not contemplate obtaining an understanding of the entity's internal controls; assessing fraud risk; tests of accounting records by obtaining sufficient appropriate audit evidence through inspection, observation, confirmation, the examination of source documents (for example, cancelled checks or bank images); or other procedures ordinarily performed in an audit. Therefore, Firm's services do not provide a basis for expressing any level of assurance on the financial statements being compiled. The Client remains responsible for making all management decisions and performing all management functions, and for designating an individual with suitable skill, knowledge or experience to oversee any bookkeeping services or other services the Firm provides. The Client is responsible for evaluating the adequacy and results of the services performed and accepting responsibility for such services. The Client is responsible for establishing and maintaining internal controls, including monitoring ongoing activities. Article III. Adjusting Entries (Preparation and Consulting Services) Firm is available to assist the Client's bookkeeper(s) or other designee to adjust the books of accounts in order to adjust the working trial balance from which financial statements can be prepared. Client bookkeeper(s)or designee will provide the Firm with a detailed trial balance and any supporting schedules required. Exhibit A Services Provided (cont'd) Article IV. Meetings (Consulting Services) If requested, Firm is available to attend meetings with representatives of the working group to include auditors, CAFR review experts and local officials. For budgetary control Firm will attend meetings and will provide separate billing for those meetings. Exhibit B Fees The Firm's fees for services set forth in Exhibit A will be billed at the Firm's standard billing rates based upon the actual time and expenses incurred.For planning purposes, each 50 hours of professional services will result in fees of approximately$11,000 to$13,000. Standard Hourly Rates by Job Classification 1/1/2018 Partners/Principals $240.00 to $550.00 Managers $200.00 to $325.00 Senior Consultants $150.00 to $250.00 Consultants $135.00 to $200.00 Municipal Bond Disclosure Specialists $120.00 to $190.00 Support Personnel $110.00 to $150.00 • Billing rates are subject to change periodically due to changing requirements and economic conditions. Actual fees will be based upon experience of the staff assigned and the complexity of the engagement. The above fees shall include all expenses incurred by the Firm with the exception of expenses incurred for mileage which will be billed on a separate line item. No such expenses will be incurred without the prior authorization of the Client. The fees do not include the charges of other entities such as rating agencies, bond and official statement printers, couriers, newspapers, bond insurance companies, bond counsel and local counsel, and electronic bidding services, including Parity®. Coordination of the printing and distribution of Official Statements or any other Offering Document are to be reimbursed by the Client based upon the time and expense for such services. Exhibit C Disclosure Statement of Municipal Advisor PART A—Disclosures of Conflicts of Interest MSRB Rule G-42 requires that municipal advisors provide to their clients disclosures relating to any actual or potential material conflicts of interest, including certain categories of potential conflicts of interest identified in Rule G-42, if applicable. If no such material conflicts of interest are known to exist based on the exercise of reasonable diligence by the municipal advisor, municipal advisors are required to provide a written statement to that effect. Material Conflicts of Interest—The Firm makes the disclosures set forth below with respect to material conflicts of interest in connection with the Scope of Services under this Agreement, together with explanations of how the Firm addresses or intends to manage or mitigate each conflict. General Mitigations — As general mitigations of the Firm's conflicts, with respect to all of the conflicts disclosed below, the Firm mitigates such conflicts through its adherence to its fiduciary duty to Client, which includes a duty of loyalty to Client in performing all municipal advisory activities for Client. This duty of loyalty obligates the Firm to deal honestly and with the utmost good faith with Client and to act in Client's best interests without regard to the Firm's financial or other interests. The disclosures below describe,as applicable,any additional mitigations that may be relevant with respect to any specific conflict disclosed below. I. Affiliate Conflict. UCAS,an affiliate of the Firm(the"Affiliate"),has or is expected to provide certain advice to or on behalf of Client that is directly related to the Firm's activities within the Scope of Services under this Agreement. In particular, providing advice to Client regarding investment of bond proceeds. The Affiliate's business with Client could create an incentive for the Firm to recommend to Client a course of action designed to increase the level of Client's business activities with the Affiliate or to recommend against a course of action that would reduce or eliminate Client's business activities with the Affiliate. In addition to the general mitigations described above, this conflict of interest is mitigated in part by the fact that Client had already engaged the Affiliate prior to engaging the Firm as a municipal advisor, and therefore the Firm as a municipal advisor did not influence this decision. Furthermore, this potential conflict is mitigated by the fact that the Affiliate is subject to its own comprehensive regulatory regime as a registered investment adviser with the Securities and Exchange Commission under the federal Investment Advisers Act. II. Compensation-Based Conflicts. The fees due under this Agreement are based on hourly fees of the Firm's personnel, with the aggregate amount equaling the number of hours worked by such personnel times an agreed-upon hourly billing rate. This form of compensation presents a potential conflict of interest if Client and the Firm do not agree on a reasonable maximum amount at the outset of the engagement,because the Firm does not have a financial incentive to recommend alternatives that would result in fewer hours worked. This conflict of interest is mitigated by the general mitigations described above. III. Other Municipal Advisor Relationships. The Firm serves a wide variety of other clients that may from time to time have interests that could have a direct or indirect impact on the interests of Client. For example, the Firm serves as municipal advisor to other municipal advisory clients and, in such cases,owes a regulatory duty to such other clients just as it does to Client under this Agreement.These other clients may, from time to time and depending on the specific circumstances, have competing interests, such as accessing the new issue market with the most advantageous timing and with limited competition at the time of the offering. In acting in the interests of its various clients, the Firm could potentially face a conflict of interest arising from these competing client interests. This conflict of interest is mitigated by the general mitigations described above. Exhibit C Disclosure Statement of Municipal Advisor(cont'd) PART B—Disclosures of Information Regarding Legal Events and Disciplinary History MSRB Rule G-42 requires that municipal advisors provide to their clients certain disclosures of legal or disciplinary events material to its client's evaluation of the municipal advisor or the integrity of the municipal advisor's management or advisory personnel. Accordingly,the Firm sets out below required disclosures and related information in connection with such disclosures. I. Material Legal or Disciplinary Event. There are no legal or disciplinary events that are material to Client's evaluation of the Firm or the integrity of the Firm's management or advisory personnel disclosed,or that should be disclosed, on any Form MA or Form MA-I filed with the SEC. II. How to Access Form MA and Form MA-I Filings.The Firm's most recent Form MA and each most recent Form MA-I filed with the SEC are available on the SEC's EDGAR system at http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001610268. III. Most Recent Change in Legal or Disciplinary Event Disclosure.The Firm has not made any material legal or disciplinary event disclosures on Form MA or any Form MA-I filed with the SEC. PART C—Future Supplemental Disclosures As required by MSRB Rule G-42,this Disclosure Statement may be supplemented or amended, from time to time as needed, to reflect changed circumstances resulting in new conflicts of interest or changes in the conflicts of interest described above, or to provide updated information with regard to any legal or disciplinary events of the Firm. The Firm will provide Client with any such supplement or amendment as it becomes available throughout the term of the Agreement. PART D—Rule G-10: Investor and Municipal Advisory Client Education and Protection MSRB Rule G-10 requires that municipal advisors to notify their clients of the availability of a client brochure on the MSRB's website that provides information on the processes for filing a client complaint. Accordingly, the Firm sets out below the required information. I. The Firm is registered as a Municipal Advisor with the Securities and Exchange Commission (867- 00278)and the Municipal Securities Rulemaking Board (K0171). II. The website address for the Municipal Securities Rulemaking Board is www.msrb.org. III. The website for the Municipal Securities Rulemaking Board has a link to a brochure that describes (i) the protections that may be provided by the Municipal Securities Rulemaking Board rules and (ii) describes how to file a complaint with an appropriate regulatory authority. Exhibit D Preparation Accounting Services Our Responsibilities: The objective of our engagement is to prepare financial statements in accordance with accounting principles generally accepted in the United States of America or the cash basis of accounting based on information provided by you. We will conduct our preparation engagement in accordance with the Statements on Standards for Accounting and Review Services (SSARS) promulgated by the Accounting and Review Services Committee of the AICPA and comply with the AICPA's Code of Professional Conduct, including the ethical principles of integrity, objectivity,professional competence, and due care when performing the bookkeeping services or preparing financial statements. We are not required to,and will not,verify the accuracy or completeness of the information you will provide to us for the engagement or otherwise gather evidence for the purpose of expressing an opinion or a conclusion. Accordingly, we will not express an opinion or a conclusion nor provide any assurance on the financial statements. Our engagement cannot be relied upon to identify or disclose any financial statement misstatements, including those caused by fraud or error,or to identify or disclose any wrongdoing within the entity or noncompliance with laws and regulations. We in our sole professional judgement, reserve the right to refuse any procedure or take any action that could be construed as assuming management responsibilities. Your Responsibilities: The engagement to be performed is conducted on the basis that management acknowledges and understands that our role is the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America or in accordance with the cash basis of accounting. Management has the following overall responsibilities that are fundamental to our undertaking the engagement to prepare your financial statements in accordance with SSARS: 1. The selection of the cash basis of accounting or accounting principles generally accepted in the United States of America as the financial reporting framework to be applied in the preparation of the financial statements. 2. The election to omit substantially all disclosures normally included in the financial statements in accordance with the cash basis of accounting or accounting principles generally accepted in the United States of America. 3. The design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements. 4. The prevention and detection of fraud. 5. To ensure that the Client complies with the laws and regulations applicable to its activities. Exhibit D Preparation Accounting Services(cont'd) 6. The accuracy and completeness of the records, documents, explanations, and other information, including significant judgments, you provide to us for the engagement. 7. To provide us with— • access to all information of which you are aware is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, and other matters. • additional information that we may request from you for the purpose of the preparation engagement. • unrestricted access to persons within the Client of whom we determine it necessary to make inquiries. You are also responsible for all management decisions and responsibilities and for designating an individual with suitable skills,knowledge,and experience to oversee our bookkeeping services and the preparation of your financial statements. You are also responsible for evaluating the adequacy and results of the services performed and accepting responsibility for such services. The financial statements may not be accompanied by a report. However, you agree that the financial statements will clearly indicate that no assurance is provided on them. Our Report: As part of our engagement, we may issue a report that will state that we did not audit, review or compile the financial statements and that, accordingly, we do not express an opinion, a conclusion, nor provide any assurance on them. If,for any reason, we are unable to complete the preparation of your financial statements,we will not issue a report on such statements as a result of this engagement.