HomeMy WebLinkAbout5.F.4. Approval of the 2014 Audit Proposal Submitted by Ken DeWenter, Viere, LTD Consent Business 5. F. 4.
.VIII
SHAKOPEE
TO: Mayor and City Council
Mark McNeill, City Administrator
FROM: Julie Linnihan, Finance Director/City Clerk
DATE: 12/16/2014
SUBJECT: Approval of the 2014 Audit Proposal Submitted by Kern, DeWenter, Viere, LTD (C)
Action Sought
Review and approval of the attached proposal provided by Kern, DeWenter, Viere, LTD for the
2014 audit process not to exceed $34,700 and an additional audit fee of$3,000 for a Single
Audit, determined by the receipt of Federal funds
Background
The City of Shakopee has retained the audit services of the firm of Kern, DeWenter, Viere, Ltd.
for services specific to the annual audit process, including audit of the overall financial statements,
footnotes specific to the financial statements, Required Supplementary Information (RSI) and
Management Discussion and Analysis (MDA) development.
The firm has provided the City with a consistent and reliable professional service since the mid
1990's. The compliance with current audit standards, as well as ability to work throughout the
year with the KDV audit staff has provided the City with a report and detailed information needed
to obtain the Certificate of Achievement in Financial Reporting from the Government Finance
Officers Association (GFOA) for over 20 years.
The fee proposed for this service is not to exceed $34,700 for the basic financial statement audit,
and a potential fee of$3,000 for the Single Audit program work, if it is determined that sufficient
Federal Grant funds have been recorded by the City to require a Single Audit. The report
preparation fees estimated by the firm of KDV will not be required in the 2014 audit process as
City Finance staff will be preparing the report document internally. This will eliminate the
estimated fee for$5,250 from the 2014 proposal.
Staff from KDV have also proposed a three year package for fees that include the 2015 and 2016
audit years. The rate for the future years are as follows:
2015 Basic fee $35,500 Single Audit fee $3,050
2016 Basic fee $35,900 Single Audit fee $3,150
The proposal for the audit process is attached for review.
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Recommendation
To review and approval of the attached proposal provided by Kern, DeWenter, Viere, LTD for the
2014 audit process not to exceed$$35,500 and Single Audit fee of$3,100.
Staff also recommends the approval of the 2015 and 2016 audit proposal.
Budget Impact
The Finance Department budget provides sufficient funds for this proposal.
Relationship to Vision
Maintain the City's strong financial health. (C)
Requested Action
To review and approve the proposal received from Kern, DeWenter, Viere, Ltd. for 2014 audit
services not to exceed $35,500 and the Single Audit of$3,100 specific to the 2014 fiscal year.
Staff also requests review of the 2015 and 2016 proposals, to ensure consistency in audit process.
Attachments: KDV Letter
KDV
Minneapolis
November 21,2014 3800 American Blvd W.
Sulte'000
Minneapo'i,,MN 55431
T (952)563 6800
F (952)563 6801
The Honorable Mayor, City Council and Management St.Cloud
City of Shakopee 220 Park AMe s.
sl.Cloud,MN 56301
do Julie Linnihan,Finance Director/Ci}��Clerk
� �J T (320)251 7010
129 Holmes Street South F (320)251 1784
Shakopee,p e, MN 55379
Dear Julie:
We are pleased to confirm our understanding of the services we are to provide the City of
Shakopee,Minnesota, (the"City")year ended December 31,2014. We will audit the
financial statements of the governmental activities,the business-type activities,the
aggregate discretely presented component units,each major fund, and the aggregate
remaining fund information,including the related notes to the financial statements,which
collectively comprise the basic financial statements, of the City as of and for the year
ended December 31,2014. Accounting standards generally g nerally accepted in the United States
of America provide for certain required supplementary information(RSI), such as
management's discussion and analysis(MD&A),to supplement the City's basic financial
statements. Such information, although not a part of the basic financial statements,is
required by the Governmental Accounting Standards Board who considers ers it to be an
essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic,or historical context.As part of our engagement,we
will apply certain limited procedures to the City's RSI in accordance with auditing
standards generally accepted in the United States of America. These limited procedures
will consist of inquiries of management eme n
t regarding the methods ods f preparing the
information and comparing the information for consistency with management's responses
to our inquiries,the basic fmancial statements,and other knowledge we obtained during
our audit of the basic financial statements. We will not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance. The following RSI is
required by generally accepted accounting principles and will be subjected to certain
limited procedures,but will not be audited:
1. Management's Discussion and Analysis.
2. Schedule of Funding Progress—Other Post-Employment Benefits
We have also been engaged to report on supplementary information other than RSI that
accompanies the City's financial statements. We will subject the following
supplementary'Y information to the auditin g procedures edures a p lied in our audit
of the financial
statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the
financial statements or to the financial statements themselves,and other additional
www.kdv.com
procedures in accordance with auditing standards generally accepted in the United States
of America and we will provide an opinion on it in relation to the fmancial statements as
a whole:
1. Schedule of Expenditures of Federal Awards,if required
2. Combining and Individual Fund Financial Statements
3. Supplemental Schedules
The following other information accompanying the fmancial statements will not be
subjected to the auditing procedures applied in our audit of the financial statements,and
our auditor's report will not provide an opinion or any assurance on that other
information.
1. Introductory Section of Comprehensive Annual Financial Report
2. Statistical Section of Comprehensive Annual Financial Report
Audit Objectives
The objective of our audit is the expression of opinions as to whether your financial
statements are fairly presented,in all material respects,in conformity with accounting
principles generally accepted in the United States of America and to report on the fairness
of the supplementary information referred to in the second paragraph when considered in
relation to the financial statements as a whole. The objective also includes reporting on:
• Internal control related to the financial statements and compliance with the
provisions of laws,regulations,contracts and grant agreements,noncompliance
with which could have a material effect on the financial statements in accordance
with Government Auditing Standards.
• Internal control related to major programs and an opinion(or disclaimer of
opinion)on compliance with laws,regulations, and the provisions of contracts or
grant agreements that could have a direct and material effect on each major
program in accordance with the Single Audit Act Amendments of 1996 and OMB
Circular A-133,Audits of States,Local Governments and Nonprofit
Organizations.
The Government Auditing Standards report on internal control over financial reporting
and on compliance and other matters will include a paragraph that states (1)that the
purpose of the report is solely to describe the scope of testing of internal control and
compliance and the results of that testing and not to provide an opinion on the
effectiveness of the City's internal control or on compliance,and(2)that the report is an
integral part of an audit performed in accordance with Government Auditing Standards in
considering the City's internal control and compliance. The OMB Circular A-133 report
on internal control over compliance will include a paragraph that states the purpose of the
report on internal control over compliance is solely to describe the scope of testing of
internal control over compliance and the results of that testing based on the requirements
of OMB Circular A-133. Both reports will state that the report is not suitable for any
other purpose.
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Our audit will be conducted in accordance with auditing standards generally accepted in
the United States of America;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-133,and will
include tests of accounting records, a determination of major program(s)in accordance
with OMB Circular A-133,and other procedures we consider necessary to enable us to
express such opinions. We will issue reports upon the completion of our Single Audit.
We cannot provide assurance that unmodified opinions will be expressed. Circumstances
may arise in which it is necessary for us to modify our opinions or add emphasis-of-
matter or other-matter paragraphs. If our opinions on the fmancial statements or the
Single Audit compliance opinions are other than unmodified,we will discuss the reasons
with you in advance. If,for any reason,we are unable to complete the audit or are unable
to form or have not formed opinions,we may decline to express opinions or issue reports,
or may withdraw from this engagement.
Management Responsibilities
Management is responsible for the financial statements, schedule of expenditures of
federal awards,and all accompanying information as well as all representations contained
therein. Management is also responsible for identifying all federal awards received and
understanding and complying with the compliance requirements, and for preparation of
the schedule of expenditures of federal awards(including notes and noncash assistance
received)in accordance with the requirements of OMB Circular A-133. As part of the
audit, we will assist with preparation of your financial statements,schedule of
expenditures of federal awards,and related notes. These nonaudit services do not
constitute an audit under Government Auditing Standards and such services will not be
conducted in accordance with Government Auditing Standards. You agree to assume all
management responsibilities relating to the financial statements,schedule of expenditures
of federal awards,related notes,and any other nonaudit services we provide. You will be
required to acknowledge in the management representation letter our assistance with
preparation of the financial statements,schedule of expenditures of federal awards,and
related notes and that you have reviewed and approved the fmancial statements, schedule
of expenditures of federal awards,and related notes prior to their issuance and have
accepted responsibility for them. Further you agree to oversee the nonaudit services by
designating an individual,who possesses suitable skill,knowledge, or experience;
evaluate the adequacy and results of those services; and accept responsibility for them.
Management is responsible for(a)establishing and maintaining effective internal
controls, including internal controls over compliance and for evaluating and monitoring
ongoing activities,to help ensure that appropriate goals and objectives are met;
(b)following laws and regulations;(c)ensuring that there is reasonable assurance that
government programs are administered in compliance with compliance requirements;and
(d)ensuring that management is reliable and financial information is reliable and
properly reported. Management is also responsible for implementing systems designed to
achieve compliance with applicable laws, regulations,contracts,and grant agreements.
You are also responsible for the selection and application of accounting principles; for
the preparation and fair presentation of the financial statements in conformity with
accounting principles generally accepted in the United States of America; and for
compliance with applicable laws and regulations and the provisions of contracts and grant
agreements.
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Management is also responsible for making all financial records and related information
available to us and for the accuracy and completeness of that information. You are also
responsible for providing us with(1)access to all information of which you are aware
that is relevant to the preparation and fair presentation of the financial statements,(2)
additional information that we may request for the purpose of the audit, and
(3)unrestricted access to persons within the government from whom we determine it
necessary to obtain audit evidence.
Your responsibilities also include identifying significant vendor relationships in which
the vendor has responsibility for program compliance and for the accuracy and
completeness of that information. Your responsibilities include adjusting the financial
statements to correct material misstatements and confirming to us in the management
representation letter that the effects of any uncorrected misstatements aggregated by us
during the current engagement and pertaining to the latest period presented are
immaterial, both individually and in the aggregate,to the financial statements taken as a
whole.
You are responsible for the design and implementation of programs and controls to
prevent and detect fraud, and for informing us about all known or suspected fraud
affecting the government involving(1)management,(2)employees who have significant
roles in internal control, and(3) others where the fraud could have a material effect on
the financial statements. Your responsibilities include informing us of your knowledge of
any allegations of fraud or suspected fraud affecting the government received in
communications from employees,former employees,grantors, regulators, or others. In
addition,you are responsible for identifying and ensuring that the government complies
with applicable laws,regulations, contracts,agreements,and grants. Management is also
responsible for taking timely and appropriate steps to remedy fraud and noncompliance
with provisions of laws,regulations,contracts, and grant agreements,or abuse that we
report. Additionally,as required by OMB Circular A-133,it is management's
responsibility to follow up and take corrective action on reported audit findings and to
prepare a summary schedule of prior audit findings and a corrective action plan. The
summary schedule of prior audit findings should be available for our review during
fieldwork.
You are responsible for preparation of the schedule of expenditures of federal awards
(including notes and noncash assistance received)in conformity with OMB Circular A-
133. You agree to include our report on the schedule of expenditures of federal awards in
any document that contains and indicates that we have reported on the schedule of
expenditures of federal awards. You also agree to include the audited financial statements
with any presentation of the schedule of expenditures of federal awards that includes our
report thereon OR make the audited financial statements readily available to intended
users of the schedule of expenditures of federal awards no later than the date the schedule
of expenditures of federal awards is issued with our report thereon. Your responsibilities
include acknowledging to us in the written representation letter that(1)you are
responsible for presentation of the schedule of expenditures of federal awards in
accordance with OMB Circular A-133; (2)you believe the schedule of expenditures of
federal awards,including its form and content,is fairly presented in accordance with
OMB Circular A-133;(3)the methods of measurement or presentation have not changed
from those used in the prior period(or,if they have changed,the reasons for such
changes); and(4)you have disclosed to us any significant assumptions or interpretations
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underlying the measurement or presentation of the supplementary information,including
the schedule of expenditures of federal awards.
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You are also responsible for the preparation of the other supplementary information,
which we have been engaged to report on,in conformity with U.S. generally accepted
accounting principles. You agree to include our report on the supplementary information
in any document that contains and indicates that we have reported on the supplementary
information. You also agree to include the audited financial statements with any
presentation of the supplementary information that includes our report thereon OR make
the audited financial statements readily available to users of the supplementary
information no later than the date the supplementary information is issued with our report
thereon. Your responsibilities include acknowledging to us in the written representation
letter that(1)you are responsible for presentation of the supplementary information in
accordance with GAAP; (2)you believe the supplementary information,including its
form and content,is fairly presented in accordance with GAAP; (3)the methods of
measurement or presentation have not changed from those used in the prior period(or,if
they have changed,the reasons for such changes); and(4)you have disclosed to us any
significant assumptions or interpretations underlying the measurement or presentation of
the supplementary information.
Management is responsible for establishing and maintaining a process for tracking the
status of audit findings and recommendations. Management is also responsible for
identifying for us previous financial audits,attestation engagements,performance audits,
or other studies related to the objectives discussed in the Audit Objectives section of this
letter. This responsibility includes relaying to us corrective actions taken to address
significant findings and recommendations resulting from those audits, attestation
engagements,performance audits, or studies. You are also responsible for providing
management's views on our current findings, conclusions, and recommendations, as well
as your planned corrective actions,for the report, and for the timing and format for
providing that information.
Audit Procedures—General
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. An audit also
includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management,as well as
evaluating the overall presentation of the financial statements. We will plan and perform
the audit to obtain reasonable rather than absolute assurance about whether the financial
statements are free of material misstatement,whether from(1)errors, (2)fraudulent
financial reporting,(3)misappropriation of assets or 4 violations of laws or
(4)
governmental regulations that are attributable to the government or to acts by
management or employees acting on behalf of the government. Because the
determination of abuse is subjective, Government Auditing Standards do not expect
auditors to provide reasonable assurance of detecting abuse.
Because of the inherent limitations of an audit,combined with the inherent limitations of
internal control,and because we will not perform a detailed examination of all
transactions,there is a risk that material misstatements or noncompliance may exist and
not be detected by us, even though the audit is properly planned and performed in
accordance with U.S. generally accepted auditing standards and Government Auditing
Standards. In addition, an audit is not designed to detect immaterial misstatements or
violations of laws or governmental regulations that do not have a direct and material
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effect on the fmancial statements or major programs. However,we will inform the
appropriate level of management of any material errors, any fraudulent financial
reporting or misappropriation of assets that come to our attention. We will also inform
the appropriate level of management of any violations of laws or governmental
regulations that come to our attention,unless clearly inconsequential,and of any material
abuse that comes to our attention. 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
audit and does not extend to any later periods for which we are not engaged as auditors.
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, funding sources, 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 audit,we will require certain written representations from you about your
responsibilities for the financial statements; schedule of expenditures of federal awards;
federal award programs; compliance with laws,regulations,contracts, and grant
agreements; and other responsibilities required by auditing standards generally accepted
in the United States of America.
Audit Procedures—Internal Control
Our audit will include obtaining an understanding of the government and its environment,
including internal control,sufficient to assess the risks of material misstatement of the
financial statements and to design the nature,timing and extent of further audit
procedures. 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 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 financial statements. 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 in our report on internal control issued pursuant to Government
Auditing Standards.
As required by OMB Circular A-133,we will perform tests of controls over compliance
to evaluate the effectiveness of the design and operation of controls that we consider
relevant to preventing or detecting material noncompliance with compliance
requirements applicable to each major federal award program. However,our tests will be
less in scope than would be necessary to render an opinion on those controls and,
accordingly,no opinion will be expressed in our report on internal control issued
pursuant to OMB Circular A-133.
An audit is not designed to provide assurance on internal control or to identify significant
deficiencies or material weaknesses. However,during the audit,we will communicate to
management and those charged with governance internal control related matters that are
required to be communicated under AICPA professional standards, Government Auditing
Standards and OMB Circular A-133.
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Audit Procedures—Compliance
As part of obtaining reasonable assurance about whether the financial statements are free
of material misstatement, we will perform tests of the City's compliance with provisions
of applicable laws,regulations,contracts and agreements,including grant agreements.
However,the objective of those procedures will not be to provide an opinion on overall
compliance and we will not express such an opinion in our report on compliance issued
pursuant to Government Auditing Standards.
OMB Circular A-133 requires that we also plan and perform the audit to obtain
reasonable assurance about whether the auditee has complied with applicable laws and
regulations and the provisions of contracts and grant agreements applicable to major
programs. Our procedures will consist of tests of transactions and other applicable
procedures described in the OMB Circular A-133 Compliance Supplement for the types
of compliance requirements that could have a direct and material effect on each of the
City's major programs. The purpose of these procedures will be to express an opinion on
the City's compliance with requirements applicable to each of its major programs in our
report on compliance issued pursuant to OMB Circular A-133.
Engagement Administration,Fees and Other
We may from time to time,and depending on the circumstances,use third-party service
providers in serving your account. We may share confidential information about you
with these service providers, but remain committed to maintaining the confidentiality and
security of your information. Accordingly,we maintain internal policies,procedures and
safeguards to protect the confidentiality of your personal information. In addition,we
will secure confidentiality agreements with all service providers to maintain the
confidentiality of your information and we will take reasonable precautions to determine
that they have appropriate procedures in place to prevent the unauthorized release of your
confidential information to others. In the event that we are unable to secure an
appropriate confidentiality agreement,you will be asked to provide your consent prior to
the sharing of your confidential information with the third-party service provider.
Furthermore,we will remain responsible for the work provided by any such third-party
service providers.
We understand that your employees will prepare all cash, accounts receivable,or other
confirmations we request and will locate any documents selected by us for testing.
At the conclusion of the engagement,we will complete the appropriate sections of the
Data Collection Form that summarizes our audit findings.It is management's
responsibility to submit the reporting package(including financial statements,schedule
of expenditures of federal awards,summary schedule of prior audit findings,auditors'
reports, and corrective action plan)along with the Data Collection Form to the federal
audit clearinghouse. We will coordinate with you the electronic submission and
certification.If applicable,we will provide copies of our report for you to include with
the reporting package you will submit to pass-through entities. The Data Collection Form
and the reporting package must be submitted within the earlier of 30 days after receipt of
the auditors' reports or nine months after the end of the audit period,unless a longer
period is agreed to in advance by the cognizant or oversight agency for audits.
We will provide copies of our reports to the City;however,management is responsible
for distribution of the reports and the financial statements.
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The audit documentation for this engagement is the property of Kern,DeWenter,Viere,
Ltd.and constitutes confidential information. However,subject to applicable laws and
regulations audit documentation and appropriate individuals,will be made available upon
request and in a timely manner to oversight,regulatory or state agencies,or their
designee, a federal agency providing direct or indirect funding, or the U.S. Government
Accountability Office for purposes of a quality review of the audit,to resolve audit
findings or to carry out oversight responsibilities. We will notify you of any such
request. If requested,access to such audit documentation will be provided under the
supervision of Kern,DeWenter,Viere,Ltd's personnel. Furthermore,upon request, we
may provide copies of selected audit documentation to the aforementioned parties. These
parties may intend,or decide,to distribute the copies or information contained therein to
others,including other governmental agencies.
The audit documentation for this engagement will be retained for a minimum of five
years after the report release date or for any additional period requested by the oversight,
regulatory or state agencies. If we are aware that a federal awarding agency,pass-
through entity or auditee is contesting an audit fmding,we will contact the party(ies)
contesting the audit finding for guidance prior to destroying the audit documentation.
Steven Wischmann is the engagement partner and is responsible for supervising the
engagement and signing the reports or authorizing another individual to sign them.
Our fees for these services will be$ 35,500 for the audit of the City's basic financial
statements, $ 5,450 for CAFR report preparation if requested,and$3,100 for the Single
Audit, if required. The fee estimate is based on anticipated cooperation from your
personnel and the assumption that unexpected circumstances will not be encountered
during the engagement.
Our three year package fees for the December 31, 2014,2015 and 2016 audits will be as
follows:
December 31,2014: Basic F/S $ 34,700, $ 5,250 CAFR Prep and$3,000 Single Audit
December 31,2015: Basic F/S $ 35,500, $ 5,350 CAFR Prep and$ 3,050 Single Audit
December 31,2016: Basic F/S $ 35,900, $ 5,450 CAFR Prep and$ 3,150 Single Audit
If significant additional time is necessary,we will discuss it with you and arrive at a new
fee estimate before we incur the additional costs. Our invoices for these fees will be
rendered each month as work progresses and are payable on presentation. In accordance
with our firm policies, work may be suspended if your account becomes 60 days or more
overdue and may not be resumed until your account is paid in full. If we elect to
terminate our services for nonpayment, our engagement will be deemed to have been
completed upon written notification of termination,even if we have not completed our
report(s). You will be obligated to compensate us for all time expended and to reimburse
us for all out-of-pocket costs through the date of termination. A service charge of 1%per
month,which is an annual rate of 12%,will be added to all accounts unpaid 30 days after
billing date. If collection action is necessary,expenses and reasonable attorney's fees
will be added to the amount due.
If you intend to publish or otherwise reproduce the financial statements and make
reference to our Firm name,you agree to provide us with printers' proofs or masters for
our review and approval before printing. You also agree to provide us with a copy of the
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final reproduced material for our approval before it is distributed. Additionally,if you
include our report or a reference to our Firm name in an electronic format, you agree to
provide the complete electronic communication using or referring to our name to us for
our review and approval prior to distribution.
During the course of our engagement,we will request information,and explanations from
management regarding the City's operations,internal controls,future plans, specific
transactions and accounting systems and procedures. At the conclusion of our
engagement we will require,as a precondition to the issuance of our report, that
management provide certain representations in a written representation letter. The
procedures we will perform in our engagement and the conclusions we reach as a basis
for our report will be heavily influenced by the written and oral representations that we
receive from management. Accordingly, false representations could cause us to expend
unnecessary efforts or could cause a material error or a fraud to go undetected by our
procedures. In view of the foregoing,you agree that we shall not be responsible for any
misstatements in the City's financial statements that we may fail to detect as a result of
false or misleading representations that are made to us by management.
Any disputes between us that arise under this agreement,or for a breach of this
agreement or that arise out of any other services performed by us for you,must be
submitted to nonbinding mediation before either of us can start a lawsuit against the
other. To conduct mediation, each of us shall designate a representative with authority to
fully resolve any and all disputes,and those representatives shall meet and attempt to
negotiate a resolution of the dispute. If that effort fails,then a competent and impartial
third party acceptable to each side shall be appointed to hold and conduct a nonbinding
mediation proceeding. You and we will equally share in the expenses of the mediator
and each of us will pay for our own attorney's fees,if any. No lawsuit or legal process
shall be commenced until at least 60 days after the mediator's first meeting with the
parties.
The nature of our engagement makes it inherently difficult,with the passage of time,to
present evidence in a lawsuit that fully and fairly establishes the facts underlying any
dispute that may arise between us. We both agree that notwithstanding any statute of
limitation that might otherwise apply to a claim or dispute,including one arising out of
this agreement or the services performed under this agreement,or for breach of contract,
fraud or misrepresentation,a lawsuit must be commenced within twenty-four(24)months
after the date of our report. This twenty-four(24)month period applies and starts to run
on the date of each report, even if we continue to perform services in later periods and
even if you or we have not become aware of the existence of a claim or the basis for a
possible claim. In the event that a claim or dispute is not asserted at least sixty(60)days
before the expiration of this twenty-four(24)month period,then the period of limitation
shall be extended by sixty(60)days,to allow the parties to conduct non-binding
mediation.
Our role is strictly limited to the engagement described in this letter,and we offer no
assurance as to the results or ultimate outcomes of this engagement or of any decisions
that you may make based upon our communications with, or our reports to you. Your
City will be solely responsible for making all decisions concerning the contents of our
communications and reports,for the adoption of any plans and for implementing any
p lans you may develop,
including any that we may discuss with you.
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You agree that it is appropriate to limit the liability of KDV,Ltd. its shareholders,
directors, officers, employees and agents and that this limitation of remedies provision is
governed by the laws of Minnesota,without giving effect to choice of law principles.
You further agree that you will not hold us liable for any claim,cost or damage,whether
based on warranty,tort,contract or other law,arising from or related to this agreement,
the services provided under this agreement,the work product, or for any plans,actions or
results of this engagement,except to the extent authorized by this agreement. In no event
shall we be liable to you for any indirect, special,incidental,consequential,punitive or
exemplary damages,or for loss of profits or loss of goodwill,costs or attorney's fees.
The exclusive remedy available to you shall be the right to pursue claims for actual
damages that are directly caused by acts or omissions that are breaches by us of our
duties under this agreement.
Government Auditing Standards require that we provide you with a copy of our most
recent external peer review report and any letter of comment,and any subsequent peer
review reports and letters of comment received during the period of the contract. Our
2014 peer review report accompanies this letter.
We appreciate the opportunity to be of service to the City 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 as
described in this letter,please sign the enclosed copy and return it to us.
Sincerely,
KERN, DEWENTER,VIERE,LTD.
WAA
Steven Wischmann
Certified Public Accountant
RESPONSE:
This letter correctly sets forth the understanding of the City of Shakopee, Minnesota.
By:
Title:
Date:
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Lewis, KIsch & 1125 South Frontage Road,Suite 1•Hastings,MN 55033•T(651)437-3356•F(651)437-3808
Associates, Ltd. James V.Lewis,CPA Carol J.Sailer,CPA Thomas A.Madsen,CPA Jennifer A.Schutz,CPA I
CERTIFIED PUBLIC ACCOUNTANTS
SYSTEM REVIEW REPORT
July 24,2014
i I
To the Shareholders
Kern, DeWenter,Viere, Ltd.
and the Peer Review Committee of the Minnesota Society of Certified Public Accountants
We have reviewed the system of quality control for the accounting and auditing practice of
Kern, DeWenter,Viere, Ltd. (the firm)in effect for the year ended March 31,2014. Our peer review was
conducted in accordance with the Standards for Performing 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 designing a system of quality control and complying with it to
provide the firm with reasonable assurance of performing 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 based on our review. The natur ,
objectives,scope, limitations of, and the procedures performed in a System Review are described in the
standards at www.aicpa.org/prsummary.
As required by the standards, engagements selected for review included engagements performed
under Government Auditing Standards and audits of employee benefit plans.
In our opinion,the system of quality control for the accounting and auditing practice of
Kern, DeWenter,Viere, Ltd. 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
deficiency(ies), or fail. Kern, DeWenter, Viere, Ltd. has received a peer review rating of pass.
Respectfully submitted,
MN Members
CPA rd.d "` Minnesota Society of Certified Public Accountants
AICPA)
��..,� American Institute of Certified Public Accountants