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HomeMy WebLinkAboutUmbaugh- contract for software conversion H. J. Umbaugh & Associates c Certified Public Accountants, LLP 8365 Keystone Crossing i Su to 300 Indianapolis, IN 46240 -2687 Phone: 317-465-1500 0 � Fax: 317 465 -1550 www umbaugh.com ai aX. ,.: experience. January 11, 2013 Ms. Monica L. Harmon, Controller City of Jeffersonville 500 Quartermaster Court Suite 300 Jeffersonville, IN 47130 Re: Agreement for Financial Advisory Services — Software Conversion Dear Monica: You have requested that H.J. Umbaugh & Associates, Certified Public Accountants, LLP (the "Firm ") provide to the City of Jeffersonville, Indiana (the "CIient ") those services more fully set forth in Exhibit A hereto (the "Services "). Fees and Costs Fees charged for work performed are generally based on fees, 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. In addition to fees, we also charge for various ancillary services, for which you will be invoiced. Such charges may include long distance telephone charges, photocopying, facsimile transmission, computer research, mileage, travel expenses and other similar charges specifically applicable to the engagement. Disclosure of Conflicts of Interest with Various Forms of Compensation The Municipal Securities Rulemaking Board (MSRB) is expected to require 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 and we reserve the right to charge 1% interest per month for outstanding unpaid balances over thirty (30) days from the date of billing. 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. Ms. Monica L. Harmon, Controller Re: Agreement for Financial Advisory Services — Software Conversion January 11, 2013 Page 2 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. Accountants' Opinion In performing our engagement, we will be relying on the accuracy and reliability of information provided by Client personnel. 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 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). Ms. Monica L. Harmon, Controller Re: Agreement for Financial Advisory Services — Software Conversion January 11, 2013 Page 3 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. 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, 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. If you have any questions, please let us know. Very truly yours, H.J. Umbaugh & • ociates Certified Pub • • • untants, LLP \ / ieo ,...____ B% / / Daniel A. Hed • en, Partner The undersigned hereby acknowledges and agrees to the foregoing ler engagement. 9 City of Jeffersonvill l iana Date: 3 By: Li kj EXHIBIT A Services Provided ENGAGEMENT OBJECTIVES The engagement's objectives are to implement a computerized accounting software system (the "System ") that will meet the present and anticipated accounting and reporting needs of the Client. The implementation of the new System will include professional services related to installation, setup, and training. Firm will provide professional assistance with the evaluation of Client needs, development of the proposed chart of accounts, design of internal controls, development of management reporting and to supplement the training related to the new System. However, the engagement's ultimate success will depend primarily on Client personnel's skill and effort. SCOPE OF SERVICES Conversion Preparation Firm procedures will include extensive analysis and documentation of the current accounting system through past experience with the Client, interviews with Client staff, review of Client accounting records, review of Client reporting requirements, discussions with management, and other procedures that Firm may deem necessary in the circumstances. During the evaluation, Firm will document the Client's unique accounting system requirements for use as a basis to assist with the implementation of the Client's new System. Implementation and Testing Firm will provide assistance in planning the implementation of the new system. Firm will recommend the steps necessary to successfully install the new System and support Client staff in assembling the necessary setup information and accounting data used in the installation process. Firm training will cover transaction entry and posting, monthly and year -end reporting procedures, monthly and year -end closing procedures, and periodic backup procedures. Firm will provide support and training assistance to Client throughout the installation process. Upon completion, Firm will test the System to assure that it is functioning as intended and is producing accurate financial reports based on the information input by Client. Firm will work with representatives of the new System to resolve accounting and reporting issues to the satisfaction of the Client. i EXHIBIT A Services Provided (cont'd) RESPONSIBILITIES The engagement's nature will demand significant involvement by the accounting personnel of the Client. The engagement's ultimate success depends primarily on Client personnel and the effort contributed toward the new System's implementation. Firm will assist the Client, but in order to achieve a smooth and successful implementation, the Client should be prepared to assist with, complete and/or provide the following: Conversion Preparation • Document all weaknesses and deficiencies with the current accounting system. Document all desired improvements. • Ensure that key management and accounting staff are available for interviews without interruption. • Assemble examples of forms, reports, and statements used for tracking revenue and expense information. Indicate any desired improvements on these forms and reports. Implementation and Training • Attend Windows training as necessary. • Study accounting software literature and read manuals before training begins. • Order the necessary software and hardware. • Document all existing banking relationships and document relationships between bank accounts and funds. • Assemble the complete chart of accounts depicting all desired accounts and departments. Make any modifications, if necessary. • Assemble an up -to -date trial balance depicting current balances for all accounts as of the effective conversion date. • Assemble a complete listing of all vendors, including amounts outstanding, addresses, phone numbers, retainage percentages, vendor terms, vendor classes (if any), and other necessary vendor information. The total amounts outstanding on the vendor Iisting should agree with the total accounts payable on the trial balance schedule. EXHIBIT A Services Provided (cont'd) • Assemble a complete listing of all jobs in progress, detailing costs to date by phase, budgets (if desired), and other necessary job information. The total amount of the jobs in progress on the job listing should agree with the total on the trial balance. • Include a complete listing of all customers, detailing outstanding amounts receivable, billing addresses, phone numbers, and other necessary information. The total amounts of accounts receivable on this listing should agree with the total accounts receivable on the trial balance schedule. • Include a copy of the financial statement formats the Client desires for both the internal management needs and external reporting requirements, as well as other financial reports. • Make personnel available to enter the setup information and financial data. • Make personnel available to discuss existing processes and, if necessary, to develop new processes for key operational and management tasks (payroll, cash receipts, accounts payable, capital assets etc). • Provide bank reconciliations as of the conversion date. • Fully participate in vendor provided training. • Document new policies and procedures to ensure the ability for ongoing training of existing and new personnel. • Analyze month end financial information in the new accounting system to ensure accuracy. • Develop procedures to ensure that monthly bank reconciliations in the new accounting system no later than the 15 of the ensuing month. • Develop policy for ongoing user training and participation in vendor provided user forums. EXHIBIT B Fees The Firm's fees for services and expenses to be rendered for the Client shall be as listed below: DURATION AND PROFESSIONAL FEES Firm estimates that this project will span a nine to twelve month period. Firm estimate fees for this service will not exceed $50,000 (fifty- thousand dollars). Estimate is based on standard charges for services and is based upon approximately 275 hours of assistance to include travel, on -site and remote support. Client will only pay for actual hours used. Firm will provide monthly billing with hourly totals so that the Client can maintain budgetary control over the project. Conversion Preparation $14,500 to $18,000 Implementation and Testing $16,000 to $27,000 Contingencies $5,000 Standard Hourly Rates by Job Classification* 01/01/2013 Senior Partners $300.00 to $500.00 Partners / Principals $210.00 to $350.00 Managers $1 65.00 to $275.00 Accountants /Financial Analysts $90.00 to $200.00 Paraprofessional Staff $90.00 to $150.00 Support Personnel $60.00 to $105.00 *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. EXHIBIT C Disclosure of Conflicts of Interest with Various Forms of Compensation The forms of compensation for municipal advisors vary according to the nature of the engagement and requirements of the client, among other factors. Various forms of compensation present actual or potential conflicts of interest because they may create an incentive for an advisor to recommend one course of action over another if it is more beneficial to the advisor to do so. This exhibit discusses various forms of compensation and the timing of payments to the advisors. Fixed fee. Under a fixed fee form of compensation, the municipal advisor is paid a fixed amount established at the outset of the transaction. The amount is usually based upon an analysis by the client and the advisor of, among other things, the expected duration and complexity of the transaction and the agreed -upon scope of work that the advisor will perform. This form of compensation presents a potential conflict of interest because, if the transaction requires more work than originally contemplated, the advisor may suffer a loss. Thus, the advisor may recommend less time - consuming alternatives, or fail to do a thorough analysis of alternatives. There may be additional conflicts of interest if the municipal advisor's fee is contingent upon the successful completion of a financing, as described below. Hourly fee. Under an hourly fee form of compensation, the municipal advisor is paid an amount equal to the number of hours worked by the advisor times an agreed -upon hourly billing rate. This form of compensation presents a potential conflict of interest if the client and the advisor do not agree on a reasonable maximum amount at the outset of the engagement, because the advisor does not have a financial incentive to recommend alternatives that would result in Firm hours worked. In some cases, an hourly fee may be applied against a retainer (e.g., a retainer payable monthly), in which case it is payable whether or not a fmancing closes. Alternatively, it may be contingent upon the successful completion of a financing, in which case there may be additional conflicts of interest, as described below. Fee contingent upon the completion of a financing or other transaction. Under a contingent fee form of compensation, payment of an advisor's fee is dependent upon the successful completion of a financing or other transaction. This form of compensation presents a conflict because the advisor may have an incentive to recommend unnecessary financings or financings that are disadvantageous to the client. For example, when facts or circumstances arise that could cause the financing or other transaction to be delayed or fail to close, an advisor may have an incentive to discourage a full consideration of such facts and circumstances, or to discourage consideration of alternatives that may result in the cancellation of the fmancing or other transaction. Fee paid under a retainer agreement. Under a retainer agreement, fees are paid to a municipal advisor periodically (e.g., monthly) and are not contingent upon the completion of a financing or other transaction. Fees paid under a retainer agreement may be calculated on a fixed fee basis (e.g., a fixed fee per month regardless of the number of hours worked) or an hourly basis (e.g., a minimum monthly payment, with additional amounts payable if a certain number of hours worked is exceeded). A retainer agreement does not present the conflicts associated with a contingent fee arrangement (described above). Fee based upon principal or notional amount and term of transaction. Under this form of compensation, the municipal advisor's fee is based upon a percentage of the principal amount of an issue of securities (e.g., bonds) or, in the case of a derivative, the present value of or notional amount and term of the derivative. This form of compensation presents a conflict of interest because the advisor may have an incentive to advise the client to increase the size of the securities issue or modify the derivative for the purpose of increasing the advisor's compensation.