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
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`AKIMA
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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
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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
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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.
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\.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.
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