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Backup Documents 06/26/2012 Item #16J 516J 5' , A-pp'vved �LIXLQ Llo) c90I2- 1Q -15 16J 5 MEMORANDUM Date: July 9, 2012 To: Derek Johnssen, General Accounting Manager From: Martha Vergara, Deputy Clerk Minutes & Records Department Cc: Joanne Markiewicz, Purchasing Manager Purchasing & General Services Re: Change Order #2 to Contract #09 -5270 Contractor: Ernst & Young, LLP Enclosed please find one (1) original of the document as referenced above (Agenda Item #16J5), which was approved by the Board of County Commissioners on Tuesday, June 26, 2012. An original has been kept by the Minutes & Records Department as part of the Boards Official Record. If you have any questions, please call me at 252 -7240. Thank you CHANGE ORDER CHANGE ORDER NO.2 TO: Ernst & Young LLP Attn: Gracelyn Hodgg 5100 Town Center Circle Suite 500 Boca Raton, FL 33486 Under our AGREEMENT dated June 22, 2010 CONTRACT NO. 09-5270 BCC Date: _6/22/10 Agenda Item: _16J6 16J 5' In accordance with Section 4 of the Agreement, you hereby are authorized and directed to make the following change(s) in accordance with terms and conditions of the Agreement: Add Exhibit A, Payment Milestones and Schedule for Auditing Services for Collier County for Fiscal Year 2012, herebly attached and incorporated by reference. FOR THE (Additive) Sum of six hundred seven thousand dollars ($607,000.00). Original Agreement Amount $575,000.00 Sum of Previous Changes $ 662,250.00 This Change Order add $ 607.000.00 Present Agreement Amount $ 1.844.250.00 The time for completion shall be as per attached Exhibit A due to this Change Order. Your acceptance of this Change Order shall constitute a modification to our Agreement and will be performed subject to all the same terms and conditions as contained in our Agreement indicated above, as fully as if the same were repeated in this acceptance. The adjustment, if any, to the Agreement shall constitute a full and final settlement of any and all claims of the Auditor arising out of or related to the change set forth herein, including claims for impact and delay costs. Accepted: h 2012 CONTRACT R: Ernst & Young LLP By: GrAelyn Hodge I AVA000' Type Name of Signator OWNER: / BOARD CO TY COMMISSIONERS OF CO IER LINTY, FLORIDA By: / /` Project Manager Collier County Clerk of the Circuit Court By: WILIA1 dj�� rystagKinzel Director of Finance and Accounting Collier County Clerk of the Circuit Court et a,tea,W woe "�x \4- UApproved As To Form and I Sufficienc . Deputy County Attorney Print Name: Scott Teach 09 -5270 — Annual Auditing Services 2 Change Order #I — Page 2 16J PROCUREMENT STRATEGI By: Lyn Wood BOARD OF COUNTY COMMISSIONERS OF COLLIER rCOUNTY FLORIDA BY: Fred W. Coyle, Chairman 5 Ms. Joanne Markiewicz Interim Purchasing/General Services Director Collier County Government Center 3327 Tamiami Trail East Naples, Florida 34112 -4901 Ladies and Gentlemen: 16J [Month XX,;20XX] 5' We appreciate the opportunity to continue to provide services to Collier County, Florida during the fiscal year ended September 30, 2012. This Addendum No. 2 to our Agreement dated June 22, 2010 and Amendment No. 1 dated May 17, 2011 documents our understanding of the fees for our Audit Services. All other information as set forth in our Agreement #09 -5270 and Addendum No. 1 dated June 22, 2010 and May 17, 2011 respectively, remains current unless indicated otherwise in this Addendum. Fees and billings The fee for our audit services for the fiscal year ending September 30, 2012 is as follows: Total base fee: $607,000* We will submit our invoices according to the attached billing schedule. Payment shall be made in accordance with Chapter 218, Florida Statutes, also known as the "Local Government Prompt Payment Act ". Billings shall include detail of employees and hours worked during each billing period. *Should the number of the County's grant programs required to be audited as major exceed twenty (20) programs, our fee for such additional major programs will be seven thousand, seven hundred twenty -five dollars ($ 7,918.00) per program and the amount of the last billing will be adjusted accordingly by change order. Additionally, our fee to perform and issue a report on Agreed Upon Procedures related to the Sheriff's Investigative Funds will be seven thousand, two hundred ten dollars ($7,390.00) if the major grant programs exceed twenty (20); otherwise, the Sheriff's Investigative Funds will be included under the major programs within the agreement, the amount of the last billing to be adjusted accordingly by change order. Amendment # 2 to Agreement # 09 -5270 Collier County, Florida Page 1 of 8 For any scope changes resulting from other additional services that may be requested by the County, we will notify the County of the estimated hours in advance and provide a fee estimate for approval by the County based on the additional audit effort required at the following billing rates: Level Billing Rate Partner $ 417 Senior Manager $ 295 Manager $ 238 Senior $ 174 Staff $ 132 Our estimated pricing and schedule of performance are based upon, among other things, our preliminary review of the County's records and the representations County personnel have made to us. Our estimates also are dependent upon the County's personnel providing a reasonable level of assistance during the audit. Should our assumptions with respect to these matters be incorrect or should the results of our procedures, condition of records, degree of cooperation, or other matters beyond our reasonable control require additional commitments by us beyond those upon which our estimated fees are based, we may adjust our fees and planned completion dates. Fees for any special audit - related projects, such as proposed business combinations or research and /or consultation on special business or financial issues, will be billed separately from the fees referred to above and will be the subject of other written agreements. We are expecting to complete the audits of the Constitutional Officers and issue the related reports by December 20, 2012, and complete the audit of the Board of County Commissioners and issue our report on the County's financial statements during February 2013, contingent upon timely receipt of the client prepared financial information and financial statements as wells as related information from third parties such as the receipt of legal letters and any third party reports. Provisions to be incorporated into the Agreement Audit responsibilities and limitations We will conduct the audit in accordance with auditing standards generally accepted in the United States, as established by the American Institute of Certified Public Accountants (the "AICPA "). Those standards require that we obtain reasonable, rather than absolute, assurance that the financial statements are free of material misstatement whether caused by error or fraud. As management is aware, there are inherent limitations in the audit process, including, for example, selective testing and the possibility that collusion or forgery may preclude the detection of material error, fraud, or illegal acts. Accordingly, because of the inherent limitations of an audit, together with the inherent limitations of internal control, an unavoidable risk exists that some material misstatements may not be detected, even though the audit is properly planned and performed in accordance with auditing Amendment # 2 to Agreement # 09 -5270 Collier County, Florida Page 2 of 8 16J 5 standards generally accepted in the United States, as established by the AICPA. Also, an audit is not designed to detect error or fraud that is immaterial to the financial statements. Management's responsibilities and representations The basic financial statements are the responsibility of management. Management also is responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, for properly recording transactions in the accounting records, for safeguarding assets, and for the overall fair presentation of the basic financial statements in accordance with U.S. generally accepted accounting principles. Management also is responsible for the identification of, and for the County's compliance with, laws and regulations applicable to its activities. Management is responsible for providing us access to: all information of which management is aware that is relevant to the Audit Services, such as records, documentation and other matters to complete the Audit Services on a timely basis; additional information that we may request from management for purposes of the audit; and unrestricted access to persons within the County from whom we determine it necessary to obtain audit evidence. Management's failure to do so may cause us to delay our report, modify our procedures, or even terminate the Audit Services. As required by AICPA auditing standards, we will make specific inquiries of management about the representations contained in the basic financial statements. AICPA auditing standards also require that, at the conclusion of the audit, we obtain representation letters from certain members of management about these matters and to represent that management has fulfilled its responsibilities as set out in this Agreement, including that all material transactions have been recorded in the accounting records and are reflected in the financial statements and unaudited interim financial information. The responses to those inquiries, the written representations, and the results of our procedures comprise evidence on which we will rely in forming an opinion on the basic financial statements. Management is responsible for the preparation of the supplementary information in accordance with SAS 119. For any document that contains the supplementary information and indicates that we have issued a report on the supplementary information, management will include the audit report on such supplementary information. The supplementary information will be presented with the audited basic financial statements. Management will make appropriate representations to us regarding these matters. Amendment # 2 to Agreement # 09 -5270 Collier County, Florida Page 3 of 8 16,1 5 Other matters Terms and Conditions From time to time, and depending on the circumstances, (1) we may subcontract portions of the Audit Services to other EY Firms, who may deal with the County or its affiliates directly, although EY alone will remain responsible to you for the Audit Services, and (2) personnel (including non - certified public accountants) from an affiliate of EY or another EY Firm or any of their respective affiliates, or from independent third -party service providers (including independent contractors), may participate in providing the Audit Services. In addition, third -party service providers may perform services for EY in connection with the Audit Services. Unless prohibited by applicable law, we may disclose County Information to other EY Firms and their personnel who may collect, use, transfer, store or otherwise process (collectively, "Process ") it to facilitate performance of the Audit Services, to comply with regulatory requirements, or for quality, risk management or financial accounting purposes. Either EY or the County may use electronic media to correspond or transmit information relating to the Audit Services, and such use will not, in itself, constitute a breach of any confidentiality obligations. Sole recourse EY shall remain fully responsible for the Audit Services and for all of its other responsibilities, covenants and obligations under this Agreement, notwithstanding that we may subcontract portions of the Audit Services to other EY Firms or that other EY Firms may participate in the provision of the Audit Services. The County may not make a claim or bring proceedings relating to the Audit Services or otherwise under this Agreement against any other EY Firm and EY shall not contest its responsibility for the Audit Services on the basis that any of them were performed by another EY Firm. The County shall make any claim or bring proceedings only against EY. This paragraph is intended to benefit the other EY Firms, which shall be entitled to enforce it. Each EY Firm is a separate legal entity. Terms and Conditions We may Process County information that can be linked to specific individuals ( "Personal Data "). We may Process Personal Data in various jurisdictions in which EY and the other EY Firms (which are listed at www.ey.com) operate to facilitate performance of the Audit Services, to comply with regulatory requirements, to check conflicts or for quality, risk management or financial accounting processes. We will Process the Personal Data in accordance with applicable law and professional regulations, including, where applicable, the European Union Safe Harbor program of the U.S. Department of Commerce, in which EY participates. We will require any service provider that Processes Personal Data on our behalf to adhere to such requirements. If any County information is protected health information under the Health Insurance Portability and Accountability Act, as amended, this Agreement is deemed to incorporate all of the terms otherwise required to be included Amendment # 2 to Agreement # 09 -5270 Collier County, Florida Page 4 of 8 16J 5 _ in a business associate contract relating to such information. The County warrants that it has the authority to provide the Personal Data to EY in connection with the performance of the Audit Services and that the Personal Data provided to us has been Processed in accordance with applicable law. Choice of Law provision This Agreement, and any non - contractual matters or obligations arising out of this Agreement or the Audit Services, including (without limitation) claims arising in tort, fraud, under statute or otherwise relating to the Audit Services, or questions relating to the scope or enforceability of this paragraph, shall be governed by, and construed in accordance with, the laws of New York applicable to agreements made, and fully to be performed, therein by residents thereof. Except for a claim limited solely to seeking non - monetary or equitable relief, any dispute or claim arising out of or relating to the Audit Services, this Agreement, or any other services provided by or on behalf of EY or any of its subcontractors or agents to the County or at the County's request, shall be resolved by mediation or arbitration as set forth in the attachment to this Agreement, which is incorporated herein by reference. Judgment on any arbitration award may be entered in any court having jurisdiction. If any portion of this Agreement is held to be void, invalid, or otherwise unenforceable, in whole or part, the remaining portions of this Agreement shall remain in effect. This Agreement applies to all Audit Services (as defined in paragraph 1), including any such services performed or begun before the date of this Agreement. Dispute resolution procedures In deciding the dispute, the arbitration panel shall apply the limitations period that would be applied by a court deciding the matter in the same jurisdiction, and shall have no power to decide the dispute in any manner not consistent with such limitations period. By your signature below, you confirm that the County, through its Board of Commissioners, has authorized you to enter into this Addendum No. 2 to the Agreement No. 09 -5270 and Addendum No. 1 dated June 22, 2010 and May 17, 2011, respectively on the County's behalf and that you have been expressly authorized to execute this Addendum No. 2 on behalf of, and to bind, the County. In addition, you confirm that management agrees to, acknowledges, and understands its responsibilities as outlined in "Management's responsibilities and representations." Either EY or the County may execute this Addendum No. 2 to the Agreement No. 09 -5270 and Addendum No. 1 (and any supplements or modifications hereto) by electronic means, and each of EY and the County may sign a different copy of the same document. EY appreciates the opportunity to be of assistance to the County. If this Addendum No. 2 to the Agreement 09 -5270 and Addendum No. 1 accurately reflects the terms on which the County has Amendment # 2 to Agreement # 09 -5270 Collier County, Florida Page 5 of 8 16J 5 agreed to engage EY, please sign below on behalf of the County and return it to Gracelyn Hodge, Ernst & Young LLP, 5100 Town Center Circle, Suite 500, Boca Raton, Fl 33486. Very truly yours, Ernst & Young LLP Agreed and accepted by: Collier County, Florida 0-03 Joanne Markiewicz Interim Purchasing /General Services Director Amendment # 2 to Agreement # 09 -5270 Collier County, Florida Page 6 of 8 16J 5 Attachment: Basis of Compensation and Billing Schedule For the Services provided for in the Agreement #09 -5270, Addendum #1 and the related Addendum #2 herein, the County agrees to make the lump sum payments to Auditor in accordance with the terms stated below. Auditor will invoice the County in accordance with the following Schedule, and payment shall be made in accordance with Chapter 218, Florida Statutes, also known as the "Local Government Prompt Payment Act ". Payment of any particular line item noted below shall not be due until all services associated with any such line item have been substantially completed to County's reasonable satisfaction. 2. Payments for Additional Services of Auditor will be in accordance with the terms outlined in Article 4 of the Agreement #09 -5270 and the related Addendum. Amendment # 2 to Agreement # 09 -270 Collier County, Florida Page 7 of 8 16J 5 Task 1 Meet with executives and financial $ 25,000 Upon completion of all July management to co- develop expectations. items associated with Conduct planning meetings, develop detailed Task 1. audit plan. Attend Audit Committee Planning Meeting. Task 2 Perform interim fieldwork (understanding and $ 120,000 $60,000 August; August- testing of internal controls and systems). $60,000 September. September Perform single audit planning and interim single audit testing. Task 3 Perform fieldwork for Constitutional Officers. $ 120,000 $75,000 November; November- Review of Constitutional Financial Statements $45,000 December December and conduct exit interviews on Constitutional Statements December 1 -15, 2012. Task 4 Perform fieldwork for Board financial $ 120,000 Upon completion of all December statement audit. Complete single audit update items associated with testing and draft reports. Task 4. Task 5 Complete Board fieldwork. The Clerk of $ 125,000 Upon completion of all Courts oversees preparation of draft financial items associated with statements, notes and required supplemental Task 5. schedules and statistical data. First draft of financial statements to auditors January 18, 2013. Second draft to auditors one week after review. Task 6 Issue opinion on Comprehensive Annual $ 97,000 Upon completion of all February Financial Report (CAFR). Issue all other items associated with required reports, including single audit. Task 6. Present CAFR to the Board. Completion and delivery of all other required reports, including single audit and data collection reports on February 26, 2013. TOTAL FEE* (Total Items 1 -6) $ 607,000 Amendment # 2 to Agreement # 09 -5270 Collier County, Florida Page 8 of 8