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CCR1998249AMENDED COMMON COUNCIL - CITY OF MUSKEG0 RESOLUTION #249-98 AUTHORIZE EXECUTION OF ENGAGEMENT LETTER SUBMITTED BY VIRCHOW, KRAUSE 8 COMPANY, LLP FOR AUDIT SERVICES FOR YEAR ENDING 12/31/98 WHEREAS, The accounting firm of Virchow, Krause & Company, LLP submitted an engagement letter outlining the terms and objectives to perform the audit of the City's general fund and sewer and water utilities for the year ending December 31, 1998; and WHEREAS, The Finance Committee has reviewed the engagement letter and has recommended approval. NOW, THEREFORE, BE IT RESOLVED That the Common Council of the City of Muskego, upon the recommendation of the Finance Committee, does hereby accept the terms and objectives of services of the engagement letter submitted by Virchow, Krause & Company, LLP. as amended, to perform the audit of the City's general fund and sewer and water utilities for the year ending December 31, 1998 BE IT FURTHER RESOLVED That the Finance Director is authorized to negotiate new liability language and make any other technical changes to the terms of the engagement letter in the name of the City. 0 engagement, in consultation with the Mayor and City Attorney, and to execute the SPONSORED BY: FINANCE COMMllTEE Ald. Mark Slocomb Ald. David Sanders Ald. Nancy Salentine This is to certify that this is a true and accurate copy of Resolution #249-98 which was adopted by the Common Council of the City of Muskego. 0 COMMON COUNCIL - CITY OF MUSKEG0 RESOLUTION #249-98 AUTHORIZE E SUBMITTED BY VIRCHOW, KRAUSE a COMPANY, FOR AUDIT SERVICES FOR YEAR ENDING 1Z WHEREAS, The accounting firm of Virchow, Krause & , LLP submitted an engagement letter outlining the terms and objectives to he audit of the City’s general fund and sewer and water utilities for the year e December 31, 1998; and WHEREAS, The Finance Committe recommended approval. NOW, THEREFORE, BE IT RES0 ommon Council of the City of Muskego, upon the recommendati accept the terms and objectives o e engagement letter submitted by Virchow, Krause & Company, LL sewer and water utilities for the year e ecember 31, 1998. BE IT FURTHER RESOLVED That inance Director is authorized to execute the engagement letter in the name DATED THIS DAY OF , 1998. SPONSORED BY: FINANCE COMMITTEE Ald. Mark Slocomb Ald. David Sanders Ald. Nancy Salentine This is to certify that this is a true and accurate copy of Resolution #249-98 which was adopted by the Common Council of the City of Muskego. 12l98jmb Clerk-Treasurer Virchow, Krause 8 Company, LLP 20800 Swenson Drive PO. Box 867 * Waukesha. WI 53167.0867 414l798-8900 * FAX 414f798-8977 Certiiied Public Accountants 8 Consultants November 4, 1998 Ms. Dawn R. Gunderson. Finance Director City of Muskego Wl82 S8200 Racine Avenue Muskego. WI 531 50 Dear Ms. Gunderson: This letter is to confirm our understanding of the terms and objectives of our engagement and the nature and limitations of the services we will provide. We shall audit the general purpose financial statements of the City of Muskego as of December 31, 1998, and for the year then ended. Our audit will be made in accordance with generally accepted auditing standards and, accordingly, will include such tests of the accounting records and such other auditing procedures as we consider necessary in the circumstances. At the conclusion of our audit, we will submit to you a report containing our opinion on the financial statements. If, for any reason, we are unable to render an unqualified opinion on the financial statements. we will discuss this with you. The City's financial statements are solely the representation and responsibility of the City's management. Although management may consult with us regarding accounting principles applied to the financial statements and methods of application, the selection of accounting principles and method of application is a determination made solely by management. taken as a whole. An audit is not a guarantee of financial statements largely because. to be Our audit will be directed lo the expression of our opinion on the mentioned financial Statements cost-effective, it is based on the concept of selective testing. That, coupled with the fact that it is possible to override or circumvent the internal controls established by you to provide assurance. among other things, as to the reliability of financial records, means that our engagement is subject lo the inherent risk that material errors, irregularities, or illegal acts, including fraud or defalcations, may not be detected if they exist. However, should any such matters come to Our attention, we will report them to you. We will also submit to you a memorandum containing any suggestions for improvement 'of the existing internal control structure. accounting policies and procedures, and other related matters which come lo our attention during the course of our engagement. year 1998 is recorded as a 98). Such systems may not be able to process dates accurately in Many computerized systems use only two digits to record the year in date fields (for example, the the year 2000 and after, The effects of this problem will vary from system to system and may adversely affect your operations as will as your ability to prepare financial statements. An audit of financial statements is 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, or any other systems, such as those of your vendors, service providers, or any other third parties, Year 2000 compliant or provide assurance on whether you have addressed or will be able to address all of the affected systems on a timely basis. These are the responsibilities of management. We may, for the benefit of management, choose to communicate matters that come to our attention relating to the Year 2000 issue. Ms. Dawn R. Gunderson. Finance Director City of Muskego November 4, 1998 Page 2 We can, at your request, provide separate consulting services to assist you in identifying Year 2000 issues. Such an engagement would be a separate engagement that you may contract with us to complete. At this time no such separate contract to provide these consulting services has been entered into, and we are under no obligation to provide any such services. We will also prepare the annual financial report form for the Wisconsin Department of Revenue. We will also assist with the preparation of the Public Service Commission Report. We will ask that your personnel, to the extent possible, prepare various schedules and analyses. and make various invoices and other documents available to our staff. This assistance by your personnel will serve to facilitate the progress of our work and minimize our time requirements. At the conclusion of our audit, we will request certain representations from you confirming your responsibility for the fair presentation in the financial statements of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles, and related matters. We will be pleased to meet with you at various times throughout the year to discuss accounting and auditing matters, budgeting, capital plans, etc. affecting you. You should feel free to call on us at any time in this regard. Our charges to the City for our services will be made at our regular rates plus out-of-pocket expenses. Below we have provided you with our estimated fees for auditing, bookkeeping and the preparation of the financial report filed with the Wisconsin Department of Revenue for 1999 with a comparison lo the actual fees charged in 1998. Audit and Bookkeepinq Actual Estimated Fees City and Utilities 1998 1999 General Fund and all other funds exclusive of funds detailed below $ 25,075 $ 25,000 Water Utility 7,500 7,800 Sewer Utility 8,250 8.250 Preparation of Financial Report filed with the Wisconsin Department of Revenue 3.100 3.100 Subtotal 43,925 44,150 TIF Funds 27,000 27.000 (1) TOTAL " Notes: (I) 1998 fees for the TIF Fund audit are estimated as work is not yet complete The fees quoted for 1998 are the same as the prior year except for a $300 increase related to the Water audit. Any additional inflationary increases in charges should be offset by the efficiencies of having a Finance Director, rate consultation, water rate studies, other special studies or accounting and bookkeeping The 1999 fee estimates summarized above do not include services for budget assistance, sewer consultation which occurs outside of the audit process. Also, the fees quoted are based on the premise that the books and records will be in a condition at least equal to that of the prior year Ms. Dawn R. Gunderson. Finance Director City of Muskego November 4, 1998 Page 3 Billings will be rendered as the work progresses, with payment to be made upon presentation. A finance charge of 1% per month shall be imposed on accounts not paid within 30 days of the receipt of our statement for services. We would expect to continue to perform our services under the arrangements discussed above from year to year, unless for some reason you or we find that some change is necessary. We will, of course be happy to provide the City of Muskego with any other services you may find necessary or desirable. You agree that our liability to you for any damages incurred as a result of this engagement, shall be limited to the amount paid by you for services under this engagement or Five Thousand Dollars ($5,000), whichever is greater No action, regardless of form, arising out of the services under this agreement may be brought or within one year of discovery of such act, error, or omission, whichever occurs last. by either party more than three years after the act, event or service that is subject of such action mutually resolved by us shall be submitted to binding arbitration under the rules and procedures It is agreed that all disputes that arise in connection with our engagement that cannot be of the American Arbitration Association. This letter comprises the complete and exclusive statement of the agreement between the parties, superseding all proposals oral or written and all other communications between the parties. If any provision of this letter is determined to be unenforceable, all other provisions shall remain in force. We believe the forgoing correctly sets forth our understanding. but if you have any questions, agreement to the understanding by signing and returning lo us the copy enclosed. please let us know. If you find the arrangements acceptable, please acknowledge your It is a pleasure for us to be of service to you. We look forward to many years of pleasant association with you and the City of Muskego. Sincerely, VIRCHOW, KRAUSE 8 COMP NY, LLP w7/$ Donald N. Vilione. CPA, Partner DNV:dcf Enclosures Accepted by: Date: Title: