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Backup Documents 09/09/2008 Item #10A Rachlin accountants. advisors lOA July 31, 2008 Mr. Stephen Y. Carnell, Director Collier County Purchasing 3301 Tamiami Trail East Naples, Florida 34112 Dear Mr. Carnell: Scooe and Baclurround This letter confirms our understanding of your retention of Rachlin LLP IRachlinJ to provide certain agreed upon procedures (the Engagement or Report) to the Board of County Commissioners of Collier County l"the County"). The objective of this engagement is the expression of an opinion as to whether or not all interest earned on County Funds was properly credited and remitted to the Board on a monthly basis in accordance with Resolution 2007-257. The audit period will consist of the interest income earned on the funds of the Board of the County during the period from October 1, 2007 through August 31, 2008, and recorded in the financial records of the Clerk of the Circuit Court of Collier County. The Engagement will be prepared and issued in accordance with Generally Accepted Accounting Principles as promulgated by the American Institute of Certified Public Accountants and in accordance with Generallv Accepted Government Auditing Standards as promulgated by the Comptroller General of the United States, and the County's Resolution 2000-257. We will complete this Special Audit as expeditiously as possible to present the findings to the County. Our Approach Phase I - Planninl! Through an initial phone meeting, we will: . Confirm our understanding of the County's assignment with a designated Staff member, . Identify the internal controls over the Clerk's cash activities, . Identify the respective cash accounts, financial institutions, and availability of Clerk accounting records and bank records to perform the procedures, . Specify any other necessary documents to complete the designated procedures, . Work with the Clerk of the Court of Collier County to coordinate our procedures so that there will be minimal disruption. We will also determine the most practical and effective way to analyze the information provided to generate the Report. ... Rachlin UP . One Southeast Third Avenue. Tenth Floor. Miami, Florida 33131 . Phone 305.377.4228 . Fall 305.377.8331 . www.rachlin.com An Independent Member of Baker Tilly International MIAMI. fORT lAUDERDAlE . WEST PALM BEACH lOA Mr. Stephen Y. Carnell, Director Collier County Purchasing Page 2 Phase 11- Execution of the Audit Procedures The following procedures will be performed: . Confirm and identify the custodial and concentration account(s) with the County, the Clerk, and the respective financial institution. . Confirm and identify all bank accounts and funds that are maintained, used and controlled by the Clerk and the respective financial institution. . Determine and identify in a schedule the amount of interest income received on a cash basis each month on Board investments that were held in a custodial account during the period from October 1, 2007 through August 31, 2008. . Determine and identify in a schedule the periodic allocation of interest income received as identified on a monthly basis. . Determine and identify in a schedule the dollar amount of interest income cash previous IV identified that was allocated to Fund Number 011, or any other fund maintained, used, and controlled by the Clerk. . Determine and identify by month in a schedule, the overnight interest earned on the Board's concentration account. Determine and identify if this overnight interest was returned to the Board's Concentration Account and recorded as interest income in the respective Board controlled funds participating in the Board's Concentration Account. . Determine and identify by month in a schedule, on a pro rata basis, the overnight interest earned on Revenue Account "361180", titled "Investment Interest", in Fund 011. Determine if this overnight interest was returned to the Board's Concentration Account and recorded as interest income in the respective Board controlled funds participating in the Board's Concentration Account. . Identify the amount of interest not returned to Board accounts on a monthly basis. . Identify the amount of interest earned on County funds that has been spent on costs to maintain the Clerk's operations in Fund 011 or any other fund maintained, used and controlled by the Clerk. Phase 11I- Evaluate Audit Results This phase includes a review of all procedures performed by the partner to ensure that testing and documentation support the conclusions reached. Phase IV -Issue SDecial ReDort In this phase of the Engagement, the engagement team will finalize the reports and our opinion to be given. We will review the Report with the County representative prior to issuance, and the engagement partners will be available to meet with County officials, as requested, to discuss the report and address any questions that arise. Rachlin ammuntants. adVIsors Mr. Stephen Y. Carnell, Director Collier County Purchasing Page 3 lOA Our Report will contain the following items: . Rachlin's opinion as to whether or not all interest earned on County Funds was properly credited and remitted to the Board on a monthly basis in accordance with Resolution 2007-257. . A schedule of the amount of interest income received on a cash basis each month on Board investments that were held in a custodial account during the period from October 1, 2007 through August 31, 2008. . A schedule of the periodic allocation of the interest income received by the Clerk. The schedule will also identify total interest income cash allocated, as well as the name and identifying number of any and all recipient Concentration Accounts. . A schedule of the dollar amount of interest income cash previously identified that was allocated to Fund Number 011, or any other fund maintained, used, and controlled by the Clerk. . A schedule of the overnight interest earned on the Board's concentration account by month, and the bank account the overnight interest was returned to, and what general ledger interest income account the concentration account's interest was recorded in. . A schedule, on a pro rata basis, the overnight interest earned by month on Revenue Account "361180", titled "investment Intenest", in Fund 011, the bank account the overnight interest was returned to, and what general ledger interest income account the concentration account's interest was recorded in. . Schedule of the amount of interest not returned to Board accounts on a monthly basis. . Schedule of the amount of interest earned on County funds that have been spent on costs to maintain the Clerk's operations in Fund 011 or any other fund maintained, used and controlled by the Clerk. . Any recommendations that we have to improve the County's internal controls or monitoring functions of the Clerk's activities. Protect Schedule All work will be performed within the time frames required by the County. The Engagement will be completed and the Report will be presented to the County on an agreed upon date. We estimate that we can have our procedures completed in a period of two to three weeks, assuming the rapid availability of financial records from the respective financial institution Is) and from the Clerk for the relevant cash accounts. If we determine that the financial records are not available, we will coordinate any schedule revisions with the County representative. Reauest for Information You acknowledge that, to complete our engagement, we will need access to certain types of information that we previously identified in order to conduct our forensic reviews. You understand that it is important for us to obtain this information in order complete our engagement in an efficient time period. Rachlin BGOountBnts.ad~sors Mr. Stephen Y. Carnell, Director Collier County Purchasing Page 4 lOA Enl!allement Team The proposed engagement audit partner, Marta Alfonso, will serve as the Engagement Partner and will have the responsibility for supervising the engagement and preparing the Report. We will use other professionals to complete the review given the skills, deadlines, and the levels of services required. We are prepared to start upon the execution of this engagement letter. Rachlin will provide communications to the County as necessary and as requested. ProDOsed Fee Schedule Rachlin proposes that the fees for the Engagement will range between $15,000 to $20,000, and $5,000 out-of-pocket costs for reasonable out-of-pocket, travel and related expenses, in accordance with Section 112.061, Florida Statutes. These fees assume the rapid availability of financial records from the respective financial institution(s) and from the Clerk for the relevant cash accounts. If we determine that the financial records are not available, we will coordinate any fee impacts with the County representative prior to proceeding. If additional services are required or requested, these services will be billed at an average blended rate of $195.00 per hour. Partner in charge Manager Staff $300 - 425 $200 - 280 $130 -150 Additional Terms and Conditions We acknowledge your right to terminate our services at any time, and you acknowledge our right to resign at any time (including instances where, in our judgment, our independence has been impaired or we can no longer rely on the integrity of the County), subject in either case to our right to payment for charges incurred to the date of termination or resignation. You agree to indemnify and hold this firm, its partners, its directors and employees harmless from any and all liabilities, costs and expenses relating to this engagement, as well as expenses (and those of our legal counsel) incurred by reason of any action taken or committed to be taken by us in good faith. In no event will our firm be liable for incidental or consequential damages even if we have been advised of the possibility of such damages, subject to limitations per Section 768.28, Florida Statutes. It is our goal to maintain a constructive and positive relationship with you. If for any reason you are dissatisfied with the quality or costs of our services, please let us know so we can discuss and, hopefully, rectify the problem. Should we be unable to amicably resolve any such dispute, we believe a prompt and fair resolution, without the time and expense of formal court proceedings, would be in our mutual interests. To this end, we both agree that any controversy lincluding fee disputes and malpractice claims) we may have shall be submitted to binding arbitration to be conducted in Florida before the American Arbitration Association ("AAA") in accordance with the Commercial Arbitration Rules of the AAA. We both waive any right to bring a court action, or to have a jury trial, and agree that the party prevailing in any arbitration shall be entitled to recover from the non-prevailing party its reasonable attorney's fees and costs, including fees and costs, which might be incurred in litigation, related to the arbitration. Rachlin accountants. advisors .----- IDA Mr. Stephen Y. carnell, Director Collier COUnty Purth.slng Pale 5 By acknowledging acceptance of the terms of this engagement, you represent and warrant that you have the authority to employ our firm on the terms and conditions set forth herein. If the terms and conditions of this engagement letter are in accordance with your understanding and meet with your approval, please sign and date one copy of this letter In the space provided. Please forward the signed engagement letter In the enclosed self-addressed envelope. We look forward to working with you. Very truly yours, RAOlLlN UP ~t4'1 J Jerry Chiocca Partner AGREED: the understanding of the County. . By: Title: Tom Henninq, Chairman f the Board of County Commissioners Date: ~\~\o"l. .,\.'\ " ) ATTI;ST: HT;E.BROC;K. Cl,ERK , to form & legal sufficiency , kow cc; Dep\1\y>,Cltl k ." ' Attest"a,to CtM. , 11llllltul".~lllO" Rachlin lIDOll\JIItanI8.1dvIIor8