Finance Committee Agenda and Packet 2013 03 18

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City of Louisville Request for Proposals Professional Auditing Services 3 of 10 The audit shall be performed in accordance with generally accepted auditing standards as promulgated by the American Institute of Certified Public Accountants and applicable state and federal regulations. Following the completion of the audit, the auditor shall issue a report on the fair presentation of the financial statements in conformity with generally accepted accounting principles. It is contemplated that the selected firm will express an unqualified opinion on the financial statements. If during the performance of the audit, it appears probable that an unqualified opinion cannot be issued, the selected auditing firm must promptly notify the Finance Committee and Finance Director in writing, stating all matters which preclude the issuance of an unqualified opinion. The auditor shall be responsible to directly contact the Finance Committee and/or the City Manager should concerns raised during the City audit warrant such contact. B. REPORTING REQUIREMENTS Following the completion of the audit of the fiscal year's financial statements, the auditor shall issue: 1. A report of examination of the financial statements stating the scope of the examination and that the audit was performed in accordance with generally accepted auditing standards. It must include an opinion as to whether the statements conform to generally accepted accounting principles. 2. A letter to management containing comments on compliance, recommendations for improvements, and any other comments deemed pertinent by the auditors and recommendations affecting the financial statements, internal control, accounting, accounting systems, legality of actions, other instances of noncompliance with laws and regulations, and any other material matters. 3. A letter to management communicating any significant deficiency, material weakness, or other control deficiency found during the audit. A control deficiency shall be deemed to have occurred whenever the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency shall be defined as a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected. A material weakness shall be defined as a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected. Significant deficiencies that are also material weaknesses shall be identified as such in the report. Auditors shall be required to make an immediate, written report of all irregularities and illegal acts. D. REPORTING TO THE FINANCE COMMITTEE Auditors shall assure themselves that the City of Louisville Finance Committee is informed of each of the following: 1. The auditor's responsibility under generally accepted auditing standards 2. Significant accounting policies 3. Management judgments and accounting estimates 4. Significant audit adjustments 5. Auditor’s judgments about the quality of the entity’s accounting principles 6. Other information in documents containing audited financial statements 7. Disagreements with management 8. Management consultation with other accountants 9. Major issues discussed with management prior to retention 10. Difficulties encountered in performing the audit 8