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HomeMy WebLinkAboutP-25-059 Final SoW.pdf AGREEMENT NUMBER P-25-059 Clifton Larson Allen LLP EXHIBIT -1 CliftonLarsonAllen LLP https://www.claconnect.com Statement of Work - Audit Services - Special Purpose Framework February 3,2025 This document constitutes a statement of work("SOW")under the service agreement("MSA")dated December 9,2024, made by and between CliftonLarsonAllen LLP("CIA," "we," "us,"and"our")and County of Fresno("you," "your,"or"the entity").We are pleased to confirm our understanding of the terms and objectives of our engagement and the nature and limitations of the services CLA will provide for the entity for the period of February 3,2025 through February 2,2026. Rich Gonzalez,Principal is responsible for the performance of the audit engagement. Scope of audit services We will audit the financial statements of County of Fresno Public Works's West Annex Jail Project,which comprise the financial statements identified below,and the related notes to the financial statements (collectively,the"financial statements")for the period June 27, 2012 through the date of i00%of Project completion,which is the date the County receives the final invoice for Project completion. Statement of Project Revenues and Expenditures Statement of Approved Budget and Cumulative Expenditures Nonaudit services We will also provide the following nonaudit services: • Preparation of your financial statements and the related notes. Audit objectives The objectives of our audit are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,whether due to fraud or error,and to issue an auditors'report that includes our opinion about whether your financial statements are fairly presented,in all material respects,in conformity with the regulatory basis of accounting,which is a basis of accounting other than accounting principles generally accepted in the United States of America(U.S.GAAP).The effects on the financial statements of the variances between the regulatory basis of accounting and U.S.GAAP,although not reasonably determinable,are presumed to be material.Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in the United States of America(U.S.GAAS)will always detect a material misstatement when it exists.Misstatements,including omissions,can arise from Page 1 of 8 AGREEMENT NUMBER P-25-059 Clifton Larson Allen LLP fraud or error and are considered material if there is a substantial likelihood that,individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. Our audit will be conducted in accordance with U.S.GAAS and the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.Those standards require us to be independent of the entity and to meet our other ethical responsibilities,in accordance with the relevant ethical requirements relating to our audit.Our audit will include tests of your accounting records and other procedures we consider necessary to enable us to express such an opinion. We will issue a written report upon completion of our audit of your financial statements. The report will include a statement that the report is intended solely for the information and use of management,those charged with governance,others within the entity,and specific regulatory bodies and is not intended to be and should not be used by anyone other than these specified parties. Circumstances may arise in which our report may differ from its expected form and content based on the results of our audit.Depending on the nature of these circumstances,it may be necessary for us to modify our opinion,add an emphasis-of-matter or other-matter paragraph to our auditors'report,or if necessary, withdraw from the engagement.If our opinion is other than unmodified,we will discuss the reasons with you in advance.If circumstances occur related to the condition of your records,the availability of sufficient, appropriate audit evidence,or the existence of a significant risk of material misstatement of the financial statements caused by error,fraudulent financial reporting,or misappropriation of assets,which in our professional judgment prevent us from completing the audit or forming an opinion on the financial statements,we retain the right to take any course of action permitted by professional standards,including declining to express an opinion or issue a report,or withdrawing from the engagement. We will also provide a report(which does not include an opinion)on internal control over financial reporting and on compliance with the provisions of laws,regulations,contracts,and grant agreements, noncompliance with which could have a material effect on the financial statements,as required by Government Auditing Standards.The report on internal control over financial reporting and on compliance and other matters will include a paragraph that states(i)that the purpose of the report is solely to describe the scope of our testing of internal control and compliance and the results of that testing,and not to provide an opinion on the effectiveness of the entity's internal control or on compliance,and(2)that the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance.The paragraph will also state that the report is not suitable for any other purpose.If during our audit we become aware that the entity is subject to an audit requirement that is not encompassed in the terms of this engagement,we will communicate to management and those charged with governance that an audit conducted in accordance with U.S.GAAS and the standards for financial audits contained in Government Auditing Standards may not satisfy the relevant legal,regulatory,or contractual requirements. Auditor responsibilities, procedures, and limitations We will conduct our audit in accordance with U.S.GAAS and the standards for financial audits contained in Government Auditing Standards. Page 2 of 8 AGREEMENT NUMBER P-25-059 Clifton Larson Allen LLP Those standards require that we exercise professional judgment and maintain professional skepticism throughout the planning and performance of the audit.As part of our audit,we will: •Identify and assess the risks of material misstatement of the financial statements,whether due to fraud or error,design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,as fraud may involve collusion,forgery,intentional omissions,misrepresentations,or the override of internal control. •Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. However,we will communicate to you in writing any significant deficiencies or material weaknesses in internal control relevant to the audit of the financial statements that we have identified during the audit. •Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management,as well as evaluate the overall presentation of the financial statements, including the amounts and disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. •Conclude,based on the audit evidence obtained,whether there are conditions or events,considered in the aggregate,that raise substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time. Although our audit planning has not been concluded and modifications may be made,we have identified the following significant risk(s)of material misstatement as part of our audit planning: •Management's ability to override internal controls is considered a fraud risk. There is an unavoidable risk,because of the inherent limitations of an audit,together with the inherent limitations of internal control,that some material misstatements may not be detected,even though the audit is properly planned and performed in accordance with U.S. GAAS. Because we will not perform a detailed examination of all transactions, material misstatements,whether from(1)errors,(2)fraudulent financial reporting,(3)misappropriation of assets,or(4)violations of laws or governmental regulations that are attributable to the entity or to acts by management or employees acting on behalf of the entity,may not be detected. In addition,an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements. However,we will inform the appropriate level of management and those charged with governance of any material errors,fraudulent financial reporting,or misappropriation of assets that come to our attention.We will also inform the appropriate level of management and those charged with governance of any violations of laws or governmental regulations that come to our attention,unless clearly inconsequential. As part of obtaining reasonable assurance about whether the financial statements are free of material Page 3 of 8 AGREEMENT NUMBER P-25-059 Clifton Larson Allen LLP misstatement,we will perform tests of the entity's compliance with the provisions of laws,regulations, contracts,and grant agreements that have a material effect on the financial statements. Such provisions include those provisions identified in the State of California's Board of State and Community Corrections (BSCC)Audit Guide. However,the objective of our audit will not be to provide an opinion on overall compliance with those provisions(except for compliance with the State of California's Board of State and Community Corrections(BSCC)Audit Guide under this paragraph,which is the objective of our audit)and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards. We will include in our report on internal control over financial reporting and on compliance relevant information about any identified or suspected instances of fraud and any identified or suspected noncompliance with provisions of laws,regulations,contracts,or grant agreements that may have occurred that are required to be communicated under Government Auditing Standards. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors. Management responsibilities Our audit will be conducted on the basis that you(management and,when appropriate,those charged with governance)acknowledge and understand that you have certain responsibilities that are fundamental to the conduct of an audit. Management is responsible for the preparation and fair presentation of the financial statements in accordance with the regulatory basis of accounting.Management's responsibilities include the selection and application of accounting principles;recording and reflecting all transactions in the financial statements; determining the reasonableness of significant accounting estimates included in the financial statements; adjusting the financial statements to correct material misstatements;and confirming to us in the management representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are irgmaterial,both individually and in the aggregate,to the financial statements taken as a whole. Management is responsible for including all informative disclosures that are appropriate for the regulatory basis of accounting.Those disclosures will include(a) a description of the regulatory basis of accounting, including a summary of significant accounting policies,and how the regulatory basis of accounting differs from U.S.GAAP; (b)informative disclosures similar to those required by U.S.GAAP; and(c)additional disclosures beyond those specifically required that may be necessary for the financial statements to achieve fair presentation. You are responsible for the design,implementation,and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error,including monitoring ongoing activities and safeguarding assets.You are responsible for the design,implementation,and maintenance of internal controls to prevent and detect fraud;assessing the risk that the financial statements may be materially misstated as a result of fraud;and for informing us about all known or suspected fraud affecting the entity involving(r) management,(2)employees who have significant roles in internal control,and(3)others where the fraud could have a material effect on the financial statements.Your responsibilities include Page 4 of 8 AGREEMENT NUMBER P-25-059 Clifton Larson Allen LLP informing us of your knowledge of any allegations of fraud or suspected fraud affecting the entity received in communications from employees,former employees,regulators,or others.In addition, you are responsible for identifying and ensuring that the entity complies with applicable laws and regulations,and informing us of all instances of identified or suspected noncompliance whose effects on the financial statements should be considered. You are responsible for providing us with(1)access to all information of which you are aware that is relevant to the preparation and fair presentation of the financial statements,including amounts and disclosures,such as records,documentation,identification of all related parties and all related-party relationships and transactions,and other matters,and for the accuracy and completeness of that information(including information from within and outside of the general and subsidiary ledgers);(2) additional information that we may request for the purpose of the audit;and(3)unrestricted access to persons within the entity from whom we determine it necessary to obtain audit evidence. You agree to inform us of events occurring or facts discovered subsequent to the date of the financial statements that may affect the financial statements. Management is responsible for providing us with a written confirmation concerning representations made by you and your staff to us in connection with the audit. During our engagement,we will request information and explanations from you regarding,among other matters,the entity's operations,internal control,future plans,specific transactions,and accounting systems and procedures.The procedures we will perform during our engagement and the conclusions we reach as a basis for our report will be heavily influenced by the representations that we receive in the representation letter and otherwise from you. Accordingly,inaccurate,incomplete,or false representations could cause us to expend unnecessary effort or could cause a material fraud or error to go undetected by our procedures.In view of the foregoing,you agree that we shall not be responsible for any misstatements in the entity's financial statements that we may fail to detect as a result of misrepresentations made to us by you. Responsibilities and limitations related to nonattest services For all nonaudit services we may provide to you,management agrees to assume all management responsibilities; oversee the services by designating an individual,preferably within senior management, who possesses suitable skill,knowledge,and/or experience to understand and oversee the services;evaluate the adequacy and results of the services; and accept responsibility for the results of the services. Management is also responsible for ensuring that your data and records are complete and that you have received sufficient information to oversee the services. Use of financial statements Should you decide to include or incorporate by reference these financial statements and our auditors' report(s)thereon in a future private placement or public offering of debt securities,including,in either such case,tax and revenue anticipation notes,we agree,at your request,to re-issue our report or provide consent for your use of our report in such private placement or public offering document,including any official statement(collectively"public offering documents"), provided that we may perform certain procedures including,but not limited,to(a)reading other information incorporated by reference in the private placement or public offering documents,and(b)subsequent event procedures,and we will bill you separately at reasonable rates for all such work.If we are to re-issue our report or consent to the use of our report in such instances,you agree that we will be included on each distribution of draft private placement or Page 5 of 8 AGREEMENT NUMBER P-25-059 Clifton Larson Allen LLP public offering documents and we will receive a complete set of final documents related thereto. If you do not involve CIA with your future private placement or public offering of debt securities,including,in either such case,tax and revenue anticipation notes,but you decide to include or incorporate by reference these financial statements and our auditors'report(s)thereon in such private placement or public offering, we will require that any official statements or other offering documents issued by you with which we are not involved clearly indicate that CIA is not involved with the contents of such documents. Such disclosure should read as follows: CliftonLarsonAllen LLP, our independent auditor,has not been engaged to perform and has not performed,since the date of its report included herein,any procedures on the financial statements addressed in that report.CliftonLarsonAllen LLP also has not performed any procedures relating to this offering document. With regard to the electronic dissemination of audited financial statements,including financial statements published electronically on your website or submitted on a regulator website,you understand that electronic sites are a means to distribute information and,therefore,we are not required to read the information contained in those sites or to consider the consistency of other information in the electronic site with the original document. We may issue preliminary draft financial statements to you for your review.Any preliminary draft financial statements should not be relied on. Engagement administration and other matters We understand that your employees will prepare all confirmations,account analyses,and audit schedules we request and will locate any documents or invoices selected by us for testing.A list of information we expect to need for our audit and the dates required will be provided in a separate communication. Professional standards require us to be independent with respect to you in the performance of these services.Any discussion that you have with our personnel regarding potential employment with you could impair our independence with respect to this engagement.Therefore,we request that you inform us prior to any such discussions so that we can implement appropriate safeguards to maintain our independence and objectivity.Further,any employment offers to any staff members working on this engagement without our prior knowledge may require substantial additional procedures to ensure our independence.You will be responsible for any additional costs incurred to perform these procedures. Our audit engagement ends on the BSCC's and the SPWB's acceptance of the final audit report under the Amended BSCC Construction Agreement.Any additional services that might be requested will be a separate, new engagement.The terms and conditions of that new engagement will be governed by a new,specific SOW for that service. GovernmentAuditing Standards require that we make our most recent peer review report publicly available. The report is posted on our website at www.CLAconnect.com/AboutusZ. Page 6 of 8 AGREEMENT NUMBER P-25-059 Clifton Larson Allen LLP We will provide copies of our reports to the entity;however,management is responsible for the distribution of the reports and financial statements.Unless restricted by law or regulation,or containing confidential or sensitive information,copies of our reports are to be made available for public inspection. Fees Our professional fees will not exceed$28,980.00. We will also bill for expenses including travel,internal and administrative charges plus a technology and client support fee of five percent(5%)of all professional fees billed,all of which is included in the not-to- exceed fees listed above.This fee is based on anticipated cooperation from your personnel and their assistance with locating requested documents and preparing requested schedules. If the requested items are not available on the dates required or are not accurate,the fees and expenses will likely be higher. We will submit invoices each month for services performed as work progresses. Unexpected circumstances We will advise you if unexpected circumstances require significant additional procedures resulting in a substantial increase in these fees. Changes in accounting and audit standards Standard setters and regulators continue to evaluate and modify standards.Such changes may result in new or revised financial reporting and disclosure requirements or expand the nature,timing,and scope of the activities we are required to perform.To the extent that the amount of time required to provide the services described in the SOW increases due to such changes,our fee may need to be adjusted.We will discuss such circumstances with you prior to performing the additional work. Agreement We appreciate the opportunity to provide to you the services described in this SOW under the MSA and believe this SOW accurately summarizes the significant terms of our audit engagement.This SOW and the MSA constitute the entire agreement regarding these services and supersedes all prior agreements(whether oral or written),understandings,negotiations, and discussions between you and CLA related to audit services.If you have any questions,please let us know.Please sign,date,and return this SOW to us to indicate your acknowledgment and understanding of,and agreement with,the arrangements for our audit of your financial statements including the terms of our engagement and the parties'respective responsibilities. [Signature page follows] Page 7 of 8 AGREEMENT NUMBER P-25-059 Clifton Larson Allen LLP Sincerely, CliftonLarsonAllen LLP Response: This letter correctly sets forth the understanding of County of Fresno. CIA Client CLA County of Fresno Riley Digitally signed by Riley Blackburn Date: 2025.02.21 SIGN: SIGN:B l a c k b u rn 12:39:52 -08'00' Rich Gonzalez, CPA, Principal Riley Blackburn, County Purchasing Manager DATE: 2/7/25 DATE: Page 8 of 8