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07-26-2007 CLIFTON & GUNDERSON, LLP PROFESSIONAL SERVICES AGREEMENTF Cn %GUu derson LLP Certified Public Accountants & Consultants July 26, 2007 Avon Town Council Members Town of Avon Attention: Scott Wright, Assistant Town Manager-Finance P.O. Box 975 Avon, Colorado 81620 Dear Council Members: We are pleased to serve you as your independent accountants. The purpose of this engagement letter and the accompanying Professional Services Agreement, which is attached and incorporated by reference, is to confirm the terms of our agreement. This letter and the attached Professional Services Agreement also clarify the nature, extent and limitations of the auditing and nonattest services to be provided. Services to be Provided Our services will include: Auditing services. We will audit the financial statements of the governmental activities, business-type activities, each major fund and the aggregate remaining fund information which together comprise the basic financial statements as of and for the year ended December 31, 2007. Our audit will be performed in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller General of the United States. In addition, we will perform a compliance audit in accordance with Office of Management and Budget (OMB) Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations." Nonattest services. We will also provide you with the following nonattest services: • Proposing adjusting journal entries Our Fees and Payment Terms The charges for our work are to be based upon the time involved, degree of responsibility assumed and skills required, plus expenses including internal and administrative charges. Bills for services are due when submitted. Interim bills may be submitted at periodic dates to cover charges and expenses incurred. If a bill for services is not paid when due, we reserve the right to cease work and withdraw from the engagement. 6399 South Fiddler; Green Circle, Suite 100 Greenwood Village, Colowdo 50111 tel: 303.779.5710 fax: 303.779.0348 www.cliftoncpa.com I .LUr,.inJ 1\.,,Lui l I x o 0 International Avon Town Council Members Town of Avon, Colorado July 26, 2007 Page 2 It is hereby agreed that our fee will not exceed $42,750. This fee is comprised of $37,750 for the financial statement audit (including the implementation of the new Statements of Auditing Standards numbers 104 through 111) and $5,000 for the Single Audit in accordance with OMB Circular A-133. This fee is based on our understanding that your accounting records, including supporting schedules, a list of which will be provided, will be substantially completed by May 1, 2007. We expect that your office personnel will help us by locating and providing us with invoices, vouchers, and other corporate documents and records that we request. We do not anticipate that we will encounter any substantial amount of accounting work to be completed or adjusted by us, or any defalcation or other significant problem or contingency. We will, of course, advise you before undertaking any work that would require an increase in the fee arrangement. Agreed and Accepted This engagement letter and the attached Professional Services Agreement constitute the entire agreement regarding services to be provided to you and supersedes all prior agreements, understandings, negotiations, and discussions between us relating to the scope of services described in this letter, whether oral or written. This agreement may be supplemented only by other written agreements. If the above terms, and the terms and conditions of the accompanying Professional Services Agreement, are in accordance with your understanding and acceptable to you, please sign, date, and return the duplicate copy of this letter to us. This engagement letter should not be signed unless the Professional Services Agreement is attached and you have read and understand its terms. We very much appreciate the opportunity to serve you and will be pleased to discuss any questions you may have. Very truly yours, Avon Town Council Members Town of Avon, Colorado July 26, 2007 Page 3 The services described in the foregoing letter and the Professional Services Agreement are in accordance with our requirements, and we understand and agree to the terms and conditions recited above. Zoo n, Colorado By ~i- Title &lag(o7 Date Professional Services Agreement Audit Services This Professional Services Agreement, together with the engagement letter, which is attached and incorporated by reference, represents the terms and conditions relating to the services Clifton Gunderson LLP will provide to your Town. This Professional Services Agreement is an integral part of the terms of our engagement and contains important and critical information. You should read it carefully before signing the engagement letter and contact us if you have any questions. Objective of the Audit The purpose and objective of our audit is to lead to the expression of an opinion with respect to your financial statements. The audit will include tests of your accounting records and other procedures we consider necessary to enable us to express our opinion on these basic financial statements (and to report on the schedule of expenditures of federal awards) and on the Town's compliance with laws and regulations and its internal controls as required by Government Auditing Standards and OMB Circular A-133. You understand that circumstances may exist or may arise that would preclude us from issuing such an opinion. We will inform you if we discover circumstances that will have an effect on our opinion on the basic financial statements or on compliance with the direct and material compliance requirements applicable to major programs in accordance with OMB Circular A-133. If our opinion, on the basic financial statements or on compliance with the requirements applicable to major programs in accordance with OMB Circular A-133, will be other than unqualified, the reasons will be fully disclosed. If, for any reason, we are unable to complete the audit or are unable to form an opinion, we may decline to issue a report and terminate our engagement. If these circumstances occur, we will bill you; you agree, under the terms of this letter, to pay for our time and expense incurred prior to the termination of our engagement. The concept of selective testing of data is generally accepted as a valid and sufficient basis for an auditor to express an opinion on financial statements. Selective testing involves judgment both as to the number of transactions we examine and the areas to be tested. Because we will not perform a detailed examination of all transactions, there is an inherent risk that we will not detect material errors, fraud, or other illegal acts, if they exist. We are available to perform additional procedures with regard to fraud detection and prevention at your request, subject to completion of our normal engagement acceptance procedures. We would document the actual terms and fees of such an engagement in a separate engagement letter to be signed by both you and Clifton Gunderson LLP. The audit will include certain procedures to test compliance with certain provisions of laws, regulations, contracts, and grants and the requirements applicable to the major federal award programs as required by OMB Circular A-133. Our procedures will consist of those identified in the OMB Circular A-] 33 Compliance Supplement applicable to each major program that we consider necessary to express our opinion on the direct and material compliance requirements of such programs. We are responsible for determining which programs are tested for compliance under the requirements of OMB Circular A-133. In addition, we are responsible for determining which compliance requirements have a direct and material effect on such programs. Procedures and Limitations Our audit is designed to provide reasonable, but not absolute, assurance of detecting misstatements, whether caused by error or fraud that, in our judgment, could have a material effect on the basic financial statements as a whole. It is not designed to detect error or fraud that is immaterial to the basic financial statements, or violations of laws or governmental regulations that do not have a direct and material effect on the basic financial statements. Our audit will be based upon tests and samples, since detailed auditing of all transactions is not practicable. In planning and performing our audit for the year ended December 31, 2007, we will consider internal control to the extent required to support our reports in accordance with Government Auditing Standards and OMB Circular A-133. We will obtain an understanding of the design of the relevant policies and procedures and whether they have been placed in operation. We will perform tests of controls, as required by OMB Circular A-133, to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or Page 4 detecting material noncompliance with the direct and material compliance requirements that are applicable to each major federal award program. Tests of controls may also be performed to test the effectiveness of certain policies and procedures that we consider relevant to preventing and detecting errors and fraud that are material to the basic 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 basic financial statements. We are not required to provide an opinion and we will not provide an opinion, at any level, on the internal controls over financial assertions. While an audit includes obtaining an understanding of internal control to the extent required to support our reports in accordance with Government Auditing Standards, it is not designed to identify significant deficiencies. We will inform you of any significant deficiencies that come to our attention. Our reports on internal control and compliance will each include a statement that the report is intended for the information and use of the Audit Committee (or equivalent), Management, and federal agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Your Responsibilities for the Fair Presentation of Financial Statements, Internal Control and Accounting Services We Perform You are responsible for making all financial records and related information available to us and for the completeness and accuracy of that information. You are responsible for adopting sound accounting policies and establishing and maintaining a system of internal control for the fair presentation of the basic financial statements in accordance with accounting principles generally accepted in the United States of America. This includes retaining qualified personnel in areas affecting financial matters and performing ongoing monitoring activities to ensure transactions are properly recorded, assets are safeguarded and the basic financial statements and the schedule of expenditures of federal awards are substantially accurate. You are also responsible for the design and implementation of programs and controls to prevent and detect fraud and for informing us of all known, suspected or alleged fraud involving the Town, its employees or others that could have a material effect on the basic financial statements. You are responsible for identifying and ensuring compliance with the laws and regulations and the provisions of contracts and grant agreements applicable to your activities. Although our firm may prepare or help in preparing your basic financial statements and the schedule of expenditures of federal awards, the statements and the schedule of expenditures of federal awards are the representations of Management. You are responsible for submitting the reporting package and for following up and taking corrective action on audit findings, including the preparation of a summary schedule of prior audit findings and a corrective action plan. You are responsible for adjusting the basic financial statements to correct material misstatements, and for affirming to us in the representation letter (as further discussed below) 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 opinion units in the financial statements. For all nonattest services we perform in connection with our engagement, you are responsible to designate a competent employee to oversee the services, make any management decisions, perform any management functions related to the services, evaluate the adequacy of the services, and accept overall responsibility for the results of the services. You will disclose any significant vendor relationships where the vendor transaction is structured such that the vendor is responsible for program compliance under OMB Circular A-133. Limitation on Who May Use Our Services It is our understanding that the primary intent of engaging our professional audit services is for the benefit of the Management and Town Council of Town of Avon, Colorado. Ownership, Retention, Access and Production of Workpapers and Original Documents The working papers supporting the services we perform are the sole and exclusive property of Clifton Gunderson LLP and constitute confidential and proprietary information. We do not provide access to our workpapers to you or anyone else in the normal course of business. Unless required by law or regulation to the contrary, we retain our workpapers in accordance with our record retention policy that typically provides for a retention period of seven years. Page 5 We will provide access to workpapers to applicable regulators for their regulatory oversight purposes. Access to the requested workpapers will be provided to the regulators under the supervision of Clifton Gunderson LLP personnel and at a location designated by our firm. In the event our workpapers are subpoenaed, we will require that your legal counsel assist us in obtaining a protective order, to prevent public disclosure of our workpapers. Should we ultimately be required by a regulatory agency, subpoena, or other enforceable action to produce copies of our workpapers, you agree to reimburse us for the time and out-of-pocket expense, including our legal fees, necessary to comply with such order. At the conclusion of our services, we will promptly return to you all of your original documents and records. Your original records are the primary records for your operations and comprise the principal back up and support for your financial statements. You should take the appropriate actions necessary to safeguard and preserve these original records. Any information that may be contained in our working papers is not a substitute for your own original records. The firm 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 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, the firm will remain responsible for the work provided by any such third-party service providers. Our Consent and Dissemination of Financial Statements and Other Information Should you decide to include or incorporate by reference these financial statements and our audit report(s) thereon into a future offering of debt securities, you agree that we are under no obligation to re-issue our report or provide consent for the use of our report in such an offering document. We will determine, at our sole discretion, whether we will re- issue our report or provide consent for the use of our report only after we have conducted any due diligence we deem necessary in the circumstances. If we decide to re-issue our report or consent to the use of our report, we will be required to perform certain procedures including, but not limited to, (a) reading other information incorporated by reference in the offering document and (b) subsequent event procedures. These procedures will be considered an engagement separate and distinct from our audit engagement, for which we will bill you separately. If we decide to re-issue our report or consent to the use of our report, you agree that we will be included on each distribution of draft offering materials and we will receive a complete set of final documents. If we decide not to re-issue our report or withhold our consent to the use of our report, you may be required to engage another firm to audit periods covered by our audit reports, and that firm will likely bill you for its services. While the successor auditor may request access to our working papers for those periods, we are under no obligation to permit such access. We may issue preliminary draft financial statements to you for your review. Any preliminary draft financial statements should not be relied upon, reproduced or otherwise distributed without the written consent of Clifton Gunderson LLP. With regard to electronic filings, such as in the World Wide Web area of the Internet, you understand that electronic sites are a means of distributing information and, therefore, we are not required to read the information contained in these sites or to consider the consistency of other information in the electronic site with the original document. In the interest of facilitating our services to you, we may communicate by sending electronic mail over the Internet or by facsimile transmission. Such communications may include information that is confidential to the Town. You acknowledge that e- mail travels over the public Internet, which is not a secure means of communication and, thus, confidentiality of the transmitted information could be compromised through no fault of our firm. Unless you issue specific instructions to do otherwise, we will assume that you consent to our use of these electronic devices and facsimile transmissions during this engagement as we deem appropriate. In addition, Page 6 we mutually agree that the engagement letter, including the professional services agreement, may be executed electronically. Management Representations During the course of our engagement, we may request information and explanations from Management regarding, among other matters, the Town's operations, internal controls, future plans, specific transactions, and accounting systems and procedures. As a precondition to the issuance of our report, we will require that you provide us a written representation letter confirming some or all of the representations made by you and your staff during the engagement. The procedures we will perform in our engagement will be heavily influenced by the representations that we receive in the representation letter and otherwise from Management. Accordingly, inaccurate, incomplete or false representations could cause us to expend unnecessary efforts or could cause a material error or fraud to go undetected by our procedures. Prohibition Against Employment of Illegal Aliens We shall not knowingly employ or contract with an illegal alien to perform work under this Professional Services Agreement or contract with a sub-contractor who knowingly employs or contracts with an illegal alien to perform work under this Professional Services Agreement. Execution of this Professional Services Agreement by Clifton Gunderson LLP shall constitute a certification by Clifton Gunderson LLP that it does not knowingly employ or contract with an illegal alien and that Clifton Gunderson LLP has participated or attempted to participate in the Basic Pilot Employment Verification Program administered by the United States Department of Homeland Security, ("Basic Pilot Program") in order to confirm the employment eligibility of all employees who are newly hired for employment in the United States. We shall comply with the following: (a) We shall confirm or attempt to confirm the employment eligibility of all employees who are newly hired for employment in the United States through participation in the Basic Pilot Program. We shall apply to participate in the Basic Pilot Program every three months until all Clifton Gunderson LLP requirements under this Professional Services Agreement are completed or until Clifton Gunderson LLP is accepted into the Basic Pilot Program, whichever occurs earlier. (b) We shall not utilize the Basic Pilot Program procedures to independently undertake pre- employment screening of job applicants. (c) We shall require each subcontractor to certify that subcontractor will not knowingly employ or contract with an illegal alien to perform work under this Professional Services Agreement. If we obtain actual knowledge that a subcontractor performing work under this Professional Services Agreement knowingly employs or contracts with an illegal alien we shall be required to: i. Notify the subcontractor and the Town within three (3) days that we have actual knowledge that the subcontractor is employing or contracting with an illegal alien; and ii. Terminate the subcontract with the subcontractor if within three (3) days of receiving notice from Clifton Gunderson LLP, the subcontractor does not stop employing or contracting with the illegal alien; except that we shall not terminate the contract with the subcontractor if during such three (3) days the subcontractor provides information to establish that the subcontractor has not knowingly employed or contracted with an illegal alien. (d) We shall comply with any reasonable request by the Department of Labor and Employment ("Department") made in the course of an investigation by the Department. If we violate any provision hereof, the Town may terminate this Professional Services Agreement immediately and we shall be liable to the Town for actual and consequential damages of the Town resulting from such termination and the Town shall report such violation by Clifton Gunderson LLP to the Colorado Secretary of State as required by law. Other Matters Our relationship with you is limited to that described in this letter. As such, you understand and agree that we are acting solely as independent accountants. We are not acting in any way as a fiduciary or assuming any fiduciary responsibilities for you. We are not responsible for the preparation of any report to any governmental agency, or any other form, return, or report or for providing advice or any other service not specifically recited in this letter. Government Auditing Standards require that we provide you with a copy of our most recent quality Page 7 control review report. Our December 14, 2004 peer review report accompanies this letter. For all purposes, we mutually agree that the laws of the State of Colorado will govern any disputes regarding this engagement. In the event that any portion of this professional services agreement or the attached engagement letter is deemed invalid or unenforceable, that fmding shall not invalidate the remainder of the engagement letter or professional services agreement. Entire Agreement The attached engagement letter and this Professional Services Agreement constitute the entire agreement regarding services to be provided to you and supersedes all prior agreements, understandings, negotiations, and discussions between us relating to the scope of services described in the attached engagement letter, whether oral or written. This agreement may be supplemented by other written agreements and is null and void if not executed within sixty days of the date on the initial page of the agreement. This Professional Services Agreement is an integral part of the terms of our engagement and contains important and critical information. You should read it carefully before signing the engagement letter, and contact us if you have any questions. Page 8 ,i u., :ANI. Q'-:INCY it R,-1 XM 'U.:\ a::\; LA `AKIMA .l 0 fo the Partners of Clifton Gunderson L L P and the Center for Public Company Audit Finns Peer Review Committee We have reviewed the system of quality control for the accounting and auditing practice of Clifton Gunderson 1_.LP (the firm) applicable to non-SEC issuers in effect for the year ended July 31. 2004. The firm's accounting and auditing practice applicable to SEC issuers was not reviewed by us since the Public Company Accounting Oversight Board (PCAOB) is responsible for inspecting that portion of the firms accounting and auditing practice in accordance with PCAOB requirements. A system of quality control encompasses the firm's or-anizational structure and the policies adopted and procedures established to provide it with reasonable assurance of complying with professional standards. The elements of quality control are described in the Statements on Quality Control Standards issued by the American Institute of Certified Public Accountants (the AICPA). The design ofthe system and , compliance with it, are the responsibilities of the firm. Our responsibility is to express an opinion on the design of the system, and the firm's compliance with that system based on our review. Our review was conducted in accordance with standards established by the Peer Review Committee of the Center for Public Company Audit Finns and included procedures to plan and perform the review that are summarized in the attached description of the peer review process. Our review would not necessarily disclose all weaknesses in the system of quality control or all instances of lack of compliance with it since it was based on selective tests. Because there are inherent limitations in the effectiveness of am system of quality control, departures from the system may occur and not be detected. Also, projection of any evaluation of a system of quality control to future periods is subject to the risk that the system ofquality control may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the system of quality control for the accounting and auditing practice applicable to the non-SEC issuers of Clifton Gunderson UP in effect for the year ended July 31, 2004, has been designed to meet the requirements of the quality control standards for an accounting and auditing practice established by the AICPA, and was complied with during the year then ended to provide the firm with reasonable assurance of complying with applicable professional standards- Spokane. Washington December 14, 2004 F CUSto r son LLP Certified Public Accountants & Consultants January 11, 2007 Avon Town Council Members Town of Avon Attn: Scott Wright, Finance Director P.O. Box 975 Avon, Colorado 81620 Dear Council Members: We are pleased to serve you as your independent accountants. The purpose of this engagement letter and the accompanying Professional Services Agreement, which is attached and incorporated by reference, is to confirm the terms of our agreement. This letter and the attached Professional Services Agreement also clarify the nature, extent and limitations of the auditing and nonattest services to be provided. Services to be Provided Our services will include: Auditing services. We will audit the financial statements of the governmental activities, business-type activities, each major fund and the aggregate remaining fund information which together comprise the basic financial statements of the Town of Avon, Colorado as of and for the year ended December 31, 2006. Our audit will be performed in accordance with auditing standards generally accepted in the United States of America Nonattest services. We will also provide you with the following nonattest services: • Proposing adjusting journal entries Our Fees and Payment Terms The charges for our work are to be based upon the time involved, degree of responsibility assumed and skills required, plus expenses including internal and administrative charges. Bills for services are due when submitted. Interim bills may be submitted at periodic dates to cover charges and expenses incurred. If a bill for services is not paid when due, we reserve the right to cease work and withdraw from the engagement. It is hereby agreed that our fee will not exceed $30,000. This. fee is based on our understanding that your accounting records, including supporting schedules, will be substantially completed by ~'sal~h Z9,97"' c,Wy,ie~C ectl at your office personnel will help us by locating and providing us G) ccn wood Village, Colorado 80111 tel: 303.779.5710 fax: 303.779.0348 D www.cliftoncp.a.com 1111 II IJIr .tai ~`.I ~IIII lult. )t D International n, v Board of Directors Town of Avon, Colorado November 30, 2006 Page 2 with invoices, vouchers, and other corporate documents and records that we request. We do not anticipate that we will encounter any substantial amount of accounting work to be completed or adjusted by us, or any defalcation or other significant problem or contingency. We will, of course, advise you before undertaking any work that would require an increase in the fee arrangement. Agreed and Accepted This engagement letter and the attached Professional Services Agreement constitute the entire agreement regarding services to be provided to you and supersedes all prior agreements, understandings, negotiations, and discussions between us, whether oral or written. This agreement may be supplemented only by other written agreements. If the above terms, and the terms and conditions of the accompanying Professional Services Agreement, are in accordance with your understanding and acceptable to you, please sign, date, and return the duplicate copy of this letter to us. This engagement letter should not be signed unless the Professional Services Agreement is attached and you have read and understand its terms. We very much appreciate the opportunity to serve you and will be pleased to discuss any questions you may have. Very truly yours, ) A Greenwood Village, Colorado Board of Directors Town of Avon, Colorado November 30, 2006 Page 3 The services described in the foregoing letter and the Professional Services Agreement are in accordance with our requirements, and we understand and agree to the terms and conditions recited above. Tow Av , Colorado By -M4-yo p- Title Date 1s r _ ! wT' t Er'' A Professional Services Agreement Audit Services This Professional Services Agreement, together with the engagement letter, which is attached and incorporated by reference, represents the terms and conditions relating to the services Clifton Gunderson LLP will provide to your Town. This Professional Services Agreement is an integral part of the terms of our engagement and contains important and critical information. You should read it carefully before signing the engagement letter and contact us if you have any questions. Objective of the Audit The purpose and objective of our audit is to lead to the expression of an opinion with respect to your financial statements. The audit will include tests of your accounting records and other procedures we consider necessary to enable us to express our opinion on these basic financial statementsYou understand that circumstances may exist or may arise that would preclude us from issuing such an opinion. We will inform you if we discover circumstances that will have an effect on our opinion on the basic financial statements. If our opinion on the basic financial statements will be other than unqualified, the reasons will be fully disclosed. If, for any reason, we are unable to complete the audit or are unable to form an opinion, we may decline to issue a report and terminate our engagement. If these circumstances occur, we will bill you; you agree, under the terms of this letter, to pay for our time and expense incurred prior to the termination of our engagement. Procedures and Limitations Our audit is designed to provide reasonable, but not absolute, assurance of detecting misstatements, whether caused by error or fraud that, in our judgment, could have a material effect on the basic financial statements as a whole. It is not designed to detect error or fraud that is immaterial to the basic financial statements or violations of laws or governmental regulations that do not have a direct and material effect on the basic financial statements. Our audit will be based upon tests and samples, since detailed auditing of all transactions is not practicable. The concept of selective testing of data is generally accepted as a valid and sufficient basis for an auditor to express an opinion on financial statements. Selective testing involves judgment both as to the number of transactions we examine and the areas to be tested. Because we will not perform a detailed examination of all transactions, there is an inherent risk that we will not detect material errors, fraud, or other illegal acts, if they exist. We are available to perform additional procedures with regard to fraud detection and prevention at your request, subject to completion of our normal engagement acceptance procedures. We would document the actual terms and fees of such an engagement in a separate engagement letter to be signed by both you and Clifton Gunderson LLP. Your Responsibilities for the Fair Presentation of Financial Statements, Internal Control and Accounting Services We Perform You are responsible for making all financial records and related information available to us and for the completeness and accuracy of that information. You are responsible for adopting sound accounting policies and establishing and maintaining a system of internal control for the fair presentation of the basic financial statements in accordance with accounting principles generally accepted in the United States of America (or other comprehensive basis of accounting). This includes retaining qualified personnel in areas affecting financial matters and performing ongoing monitoring activities to ensure transactions are properly recorded, assets are safeguarded and the basic financial statements are substantially accurate. You are also responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us of all known, suspected or alleged fraud involving the Town, its employees or others that could have a material effect on the basic financial statements. You are responsible for identifying and ensuring compliance with the laws and regulations and the provisions of contracts and grant agreements applicable to your activities. Although our firm may prepare or help in preparing your basic financial statements, the statements are the representations of Management. You are responsible for adjusting the basic financial statements to correct material misstatements, and for affirming to us in the representation letter (as further discussed below) that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are Page 4 immaterial, both individually and in the aggregate, to the opinion units in the financial statements. For all nonattest services we perform in connection with our engagement, you are responsible to designate a competent employee to oversee the services, make any management decisions, perform any management functions related to the services, evaluate the adequacy of the services, and accept overall responsibility for the results of the services. Limitation on Who May Use Our Services It is our understanding that the primary intent of engaging our professional audit services is for the benefit of the Avon Town Council Members and the Management of the Town of Avon, Colorado. Ownership, Retention, Access and Production of Workpapers and Original Documents The working papers supporting the services we perform are the sole and exclusive property of Clifton Gunderson LLP and constitute confidential and proprietary information. We do not provide access to our workpapers to you or anyone else in the normal course of business. Unless required by law or regulation to the contrary, we retain our workpapers in accordance with our record retention policy that typically provides for a retention period of seven years. In the event our workpapers are subpoenaed, we will require that your legal counsel assist us in obtaining a protective order, to prevent public disclosure of our workpapers. Should we ultimately be required by a regulatory agency, subpoena, or other enforceable action to produce copies of our workpapers, you agree to reimburse us for the time and out-of-pocket expense, including our legal fees, necessary to comply with such order. At the conclusion of our services, we will promptly return to you all of your original documents and records. Your original records are the primary records for your operations and comprise the principal back up and support for your financial statements. You should take the appropriate actions necessary to safeguard and preserve these original records. Any information that may be contained in our working papers is not a substitute for your own original records. The firm 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 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-parry service provider. Furthermore, the firm will remain responsible for the work provided by any such third-party service providers Our Consent and Dissemination of Financial Statements and Other Information Should you decide to include or incorporate by reference these financial statements and our audit report(s) thereon into an offering of debt securities, you agree that we are under no obligation to re-issue our report or provide consent for the use of our report in such an offering document. We will determine, at our sole discretion, whether we will re- issue our report or provide consent for the use of our report only after we have conducted any due diligence we deem necessary in the circumstances. If we decide to re-issue our report or consent to the use of our report, we will be required to perform certain procedures including, but not limited to, (a) reading other information incorporated by reference in the offering document and (b) subsequent event procedures. These procedures will be considered an engagement separate and distinct from our audit engagement, for which we will bill you separately. If we decide to re- issue our report or consent to the use of our report, you agree that we will be included on each distribution of draft offering materials and we will receive a complete set of final documents. If we decide not to re-issue our report or withhold our consent to the use of our report, you may be required to engage another firm to audit periods covered by our audit reports, and that firm will likely bill you for its services. While the successor auditor may request access to our working papers for those periods, we are under no obligation to permit such access. We may issue preliminary draft financial statements to you for your review. Any preliminary draft financial statements should not be relied upon, reproduced or otherwise distributed without the written consent of Clifton Gunderson LLP. Page 5 \.B With regard to electronic filings, such as in the World Wide Web area of the Internet, you understand that electronic sites are a means of distributing information and, therefore, we are not required to read the information contained in these sites or to consider the consistency of other information in the electronic site with the original document. In the interest of facilitating our services to you, we may communicate by sending electronic mail over the Internet or by facsimile transmission. Such communications may include information that is confidential to the Town of Avon, Colorado. You acknowledge that e-mail travels over the public Internet, which is not a secure means of communication and, thus, confidentiality of the transmitted information could be compromised through no fault of our firm. Unless you issue specific instructions to do otherwise, we will assume that you consent to our use of these electronic devices and facsimile transmissions during this engagement as we deem appropriate. In addition, we mutually agree that the engagement letter, including the professional services agreement, may be executed electronically. Management Representations During the course of our engagement, we may request information and explanations from Management regarding, among other matters, the Town of Avon, Colorado's operations, internal controls, future plans, specific transactions, and accounting systems and procedures. As a precondition to the issuance of our report, we will require that you provide us a written representation letter confirming some or all of the representations made by you and your staff during the engagement. The procedures we will perform in our engagement will be heavily influenced by the representations that we receive in the representation letter and otherwise from Management. Accordingly, inaccurate, incomplete or false representations could cause us to expend unnecessary efforts or could cause a material error or fraud to go undetected by our procedures. Other Matters Our relationship with you is limited to that described in this letter. As such, you understand and agree that we are acting solely as independent accountants. We are not acting in any way as a fiduciary or assuming any fiduciary responsibilities for you. We are not responsible for the preparation of any report to any governmental agency, or any other form, return, or report or for providing advice or any other service not specifically recited in this letter. For all purposes, we mutually agree that the laws of the State of Illinois will govern any disputes regarding this engagement. In the event that any portion of this professional services agreement or the attached engagement letter is deemed invalid or unenforceable, that finding shall not invalidate the remainder of the engagement letter or professional services agreement. Entire Agreement The attached engagement letter and this Professional Services Agreement constitute the entire agreement regarding services to be provided to you and supersedes all prior agreements, understandings, negotiations, and discussions between us, whether oral or written. This agreement may be supplemented by other written agreements. This Professional Services Agreement is an integral part of the terms of our engagement and contains important and critical information. You should read it carefully before signing the engagement letter, and contact us if you have any questions. Page 6