HomeMy WebLinkAboutItem 06.d November 2, 2020 Item No.
AUDIT ENGAGEMENT LETTER WITH CLIFTONLARSONALLEN LLP
Proposed Action
Staff recommends adoption of the following motion: Move to approve Audit Engagement Letter
with CliftonLarsonAllen LLP (CLA).
Approval of the Audit Engagement Letter will result in CLA providing the audit services for the
fiscal year ending December 31, 2020.
Overview
On November 21, 2016, the City Council approved a professional services agreement with
CliftonLarsonAllen LLP to provide auditing services for fiscal years 2016-2018. The contract was
amended on October 7, 2019 to provide services for fiscal years 2019-2021. The attached Audit
Engagement Letter defines the audit scope, objectives, management responsibilities, audit
procedures, engagement administration and fees for the coming year.
Primary Issues to Consider
Terms of the Audit Engagement Letter. The terms as described in the Letter are consistent
with those of professional services agreement approved by the City Council in November 2016.
Fees. The audit fees are consistent with those of the professional services agreement ($37,200)
and have been included in the proposed 2021 budget. The single audit fees ($6,000) will also
be included in the proposed 2021 budget.
Supporting Information
Audit Engagement Letter
Financial Impact: $ Budgeted: Y☒ N☐ Source:
Related Documents: (CIP, ERP, etc.):
Envision Lakeville Community Values: Good Value for Public Services
Report Completed by: Jerilyn Erickson, Finance Director
43,200 Various
2021 Budget
CLA (CliftonLarsonAllen LLP)
220 South Sixth Street, Suite 300
Minneapolis, MN 55402-1436
612-376-4500 | fax 612-376-4850
CLAconnect.com
October 28, 2020
Honorable Mayor, Members of the City Council and Management
City of Lakeville
20195 Holyoke Avenue
Lakeville, MN 55044
We are pleased to confirm our understanding of the terms and objectives of our engagement and the nature
and limitations of the audit and nonaudit services CliftonLarsonAllen LLP (“CLA,” “we,” “us,” and “our”) will
provide for the City of Lakeville (“you,” “your,” or “the entity”) for the year ended December 31, 2020.
Christopher G. Knopik, CPA, CFE is responsible for the performance of the audit engagement.
Audit services
We will audit the financial statements of the governmental activities, the business‐type activities, each major
fund, and the aggregate remaining fund information, which collectively comprise the basic financial statements
of the City of Lakeville, as of and for the year ended December 31, 2020, and the related notes to the financial
statements.
The Governmental Accounting Standards Board (GASB) provides for certain required supplementary information
(RSI) to accompany the entity’s basic financial statements. The following RSI will be subjected to certain limited
procedures, but will not be audited.
1. Management’s discussion and analysis.
2. Budgetary comparison schedules.
3. Schedules of proportionate share of net pension liability and employer contributions ‐ PERA.
4. Schedule of changes in net pension liability (assets) and related ratios and employer contributions –
Lakeville Fire Relief Association
5. Schedule of changes in total OPEB liability and related ratios
We will also evaluate and report on the presentation of the following supplementary information other than RSI
accompanying the financial statements in relation to the financial statements as a whole:
1. Schedule of expenditures of federal awards
2. Combining and individual fund financial statements
3. Schedule of changes in bonded indebtedness
4. Schedule of bonded indebtedness and annual interest payable
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5. Combined schedule of bonded indebtedness
The following information other than RSI accompanying the financial statements will not be subjected to the
auditing procedures applied in our audit of the financial statements and our auditors’ report will not provide an
opinion or any assurance on that information:
1. Introductory section
2. Statistical section
Nonaudit services
We will also provide the following nonaudit services:
Preparation of your financial statements, schedule of expenditures of federal awards, and related notes.
Audit objectives
The objective of our audit is the expression of opinions about whether your basic financial statements are fairly
presented, in all material respects, in conformity with accounting principles generally accepted in the United
States of America (U.S. GAAP). Our audit will be conducted in accordance with auditing standards generally
accepted in the United States of America (U.S. GAAS); the standards for financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States; and the audit
requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our audit will include tests of your
accounting records, a determination of major program(s) in accordance with the Uniform Guidance, and other
procedures we consider necessary to enable us to express opinions and render the required reports. We will
apply certain limited procedures to the RSI in accordance with U.S. GAAS. However, we will not express an
opinion or provide any assurance on the RSI because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance. We will also perform procedures to enable us to
express an opinion on whether the supplementary information (as identified above) other than RSI
accompanying the financial statements is fairly stated, in all material respects, in relation to the financial
statements as a whole.
The objectives of our audit also include:
Reporting on internal control over financial reporting and compliance with the provisions of laws,
regulations, contracts, and award agreements, noncompliance with which could have a material effect
on the financial statements in accordance with Government Auditing Standards.
Reporting on internal control over compliance related to major programs and expressing an opinion (or
disclaimer of opinion) on compliance with federal statutes, regulations, and the terms and conditions of
federal awards that could have a direct and material effect on each major program in accordance with
the Uniform Guidance.
The Government Auditing Standards report on internal control over financial reporting and on compliance and
other matters will include a paragraph that states (1) that the purpose of the report is solely to describe the
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scope of our testing of internal control and compliance and the result 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 Uniform Guidance report on internal control over compliance will
include a paragraph that states that the purpose of the report on internal control over compliance is solely to
describe the scope of our testing of internal control over compliance and the result of that testing based on the
requirements of the Uniform Guidance. Both reports will state that the report is not suitable for any other
purpose.
We will issue written reports upon completion of our audit of your financial statements and compliance with
requirements applicable to major programs. We cannot provide assurance that unmodified opinions will be
expressed. Circumstances may arise in which it is necessary for us to modify our opinions, add an emphasis‐of‐
matter or other‐matter paragraph(s), or withdraw from the engagement. If our opinions on the financial
statements or the single audit compliance opinion are 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 or material noncompliance caused by error, fraudulent financial reporting, or misappropriation of
assets, which in our professional judgment prevent us from completing the audit or forming opinions on the
financial statements or an opinion on compliance, we retain the right to take any course of action permitted by
professional standards, including declining to express opinions or issue reports, or withdrawing from the
engagement.
As part of our audit, we will also perform the procedures and provide the report required by the Minnesota
Legal Compliance Audit Guide for Political Subdivisions.
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. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the basic financial statements as a whole are free from material
misstatement, whether due to fraud or error. An audit involves performing procedures to obtain sufficient
appropriate audit evidence about the amounts and disclosures in the basic financial statements. The procedures
selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management, as
well as evaluating the overall presentation of the basic financial statements.
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 or noncompliance may not be detected, even
though the audit is properly planned and performed in accordance with U.S. GAAS, Government Auditing
Standards, and the Uniform Guidance. 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. Because the determination of
waste and abuse is subjective, Government Auditing Standards do not require auditors to perform specific
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procedures to detect waste or abuse in financial audits nor do they expect auditors to provide reasonable
assurance of detecting waste or abuse.
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 or on major programs.
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. We will include such
matters in the reports required for a single audit.
In making our risk assessments, we consider internal control relevant to the entity’s preparation and fair
presentation of the basic financial statements and compliance 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. Tests of controls may be performed to test the effectiveness of certain controls that we
consider relevant to preventing and detecting fraud or errors that are material to the financial statements and
to preventing and detecting misstatements resulting from noncompliance with provisions of laws, regulations,
contracts, and grant agreements that have a material effect on the financial statements. Our tests, if performed,
will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no
opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards.
As required by the Uniform Guidance, we will perform tests of controls over compliance to evaluate the
effectiveness of the design and operation of controls that we consider relevant to preventing or detecting
material noncompliance with the direct and material compliance requirements applicable to each major federal
award program. However, our tests will be less in scope than would be necessary to render an opinion on those
controls and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to the
Uniform Guidance.
An audit is not designed to provide assurance on internal control or to identify deficiencies, significant
deficiencies, or material weaknesses in internal control. However, we will communicate to you in writing
significant deficiencies or material weaknesses in internal control relevant to the audit of the basic financial
statements that we identify during the audit that are required to be communicated under AICPA professional
standards, Government Auditing Standards, and the Uniform Guidance.
As part of obtaining reasonable assurance about whether the financial statements are free of material
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. However, the objective
of our audit will not be to provide an opinion on overall compliance 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.
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The Uniform Guidance requires that we also plan and perform the audit to obtain reasonable assurance about
whether the auditee has complied with federal statutes, regulations, and the terms and conditions of federal
awards that may have a direct and material effect on each of the entity’s major programs. Our procedures will
consist of tests of transactions and other applicable procedures described in the “OMB Compliance Supplement”
for the types of compliance requirements that could have a direct and material effect on each of the entity’s
major programs. The purpose of these procedures will be to express an opinion on the entity’s compliance with
requirements applicable to each of its major programs in our report on compliance issued pursuant to the
Uniform Guidance.
We will evaluate the presentation of the schedule of expenditures of federal awards accompanying the financial
statements in relation to the financial statements as a whole. We will make certain inquiries of management and
evaluate the form, content, and methods of preparing the schedule to determine whether the information
complies with U.S. GAAP and the Uniform Guidance, the method of preparing it has not changed from the prior
period, and the information is appropriate and complete in relation to our audit of the financial statements. We
will compare and reconcile the schedule to the underlying accounting records and other records used to prepare
the financial statements or to the financial statements themselves.
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.
You are responsible for the preparation and fair presentation of the financial statements, RSI, and the schedule
of expenditures of federal awards in accordance with U.S. GAAP. Management is also responsible for identifying
all federal awards received, understanding and complying with the compliance requirements, and for the
preparation of the schedule of expenditures of federal awards (including notes and noncash assistance received)
in accordance with the requirements of the Uniform Guidance.
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 immaterial, both individually and in the aggregate, to the financial statements taken as a whole.
Management is responsible for compliance with applicable laws and regulations and the provisions of contracts
and grant agreements, including compliance with federal statutes, regulations, and the terms and conditions of
federal awards applicable to the entity’s federal programs. Your responsibilities also include identifying
significant contractor relationships in which the contractor has responsibility for program compliance and for
the accuracy and completeness of that information.
You are responsible for the design, implementation, and maintenance of effective internal control, including
internal control over compliance, and for evaluating and monitoring ongoing activities to help ensure that
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appropriate goals and objectives are met relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error; and that there is
reasonable assurance that government programs are administered in compliance with compliance
requirements.
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 (1) 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 informing us of your knowledge of any allegations of fraud or
suspected fraud affecting the entity received in communications from employees, former employees, grantors,
regulators, or others. In addition, you are responsible for implementing systems designed to achieve compliance
with applicable laws and regulations and the provisions of contracts and grant agreements, including compliance
with federal statutes, regulations, and the terms and conditions of federal awards applicable to the entity’s
federal programs; identifying and ensuring that the entity complies with applicable laws, regulations, contracts,
and grant agreements, including compliance with federal statutes, regulations, and the terms and conditions of
federal awards applicable to the entity’s federal programs; and informing us of all instances of identified or
suspected noncompliance whose effects on the financial statements should be considered.
You are responsible for taking timely and appropriate steps to remedy any fraud and noncompliance with
provisions of laws, regulations, contracts, and grant agreements that we may report. Additionally, as required by
the Uniform Guidance, it is management’s responsibility to evaluate and monitor noncompliance with federal
statutes, regulations, and the terms and conditions of federal awards; take prompt action when instances of
noncompliance are identified, including noncompliance identified in audit findings; and to follow up and take
prompt corrective action on reported audit findings and to prepare a summary schedule of prior audit findings
and a corrective action plan. The summary schedule of prior audit findings should be available for our review on
[Date].
You are responsible for ensuring that management is reliable and 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, such as records, documentation, and other matters, and for the accuracy and completeness of that
information, and for ensuring the information is reliable and properly reported; (2) access to personnel,
accounts, books, records, supporting documentation, and other information as needed to perform an audit
under the Uniform Guidance; (3) additional information that we may request for the purpose of the audit; and
(4) 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.
You agree to include our report on the schedule of expenditures of federal awards in any document that
contains and indicates that we have reported on the schedule of expenditures of federal awards. You also agree
to include the audited financial statements with any presentation of the schedule of expenditures of federal
awards that includes our report thereon or make the audited financial statements readily available to intended
users of the schedule of expenditures of federal awards no later than the date the schedule of expenditures of
federal awards is issued with our report thereon. Your responsibilities include acknowledging to us in the
representation letter that (1) you are responsible for presentation of the schedule of expenditures of federal
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awards in accordance with the Uniform Guidance; (2) you believe the schedule of expenditures of federal
awards, including its form and content, is fairly presented in accordance with the Uniform Guidance; (3) the
methods of measurement or presentation have not changed from those used in the prior period (or, if they have
changed, the reasons for such changes); and (4) you have disclosed to us any significant assumptions or
interpretations underlying the measurement or presentation of the schedule of expenditures of federal awards.
Management is responsible for the preparation and fair presentation of other supplementary information in
accordance with U.S. GAAP. You agree to include our report on the supplementary information in any document
that contains, and indicates that we have reported on, the supplementary information. You also agree to include
the audited financial statements with any presentation of the supplementary information that includes our
report thereon or make the audited financial statements readily available to users of the supplementary
information no later than the date the supplementary information is issued with our report thereon. You agree
to provide us written representations related to the presentation of the supplementary information.
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 and the presentation of the basic financial statements and
RSI. During our engagement, we will request information and explanations from you regarding, among other
matters, the entity’s activities, 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.
Management is responsible for establishing and maintaining a process for tracking the status of audit findings
and recommendations. Management is also responsible for identifying and providing report copies to us of
previous financial audits, attestation engagements, performance audits, or other studies related to the
objectives discussed in the “Audit objectives” section of this letter. This responsibility includes relaying to us
corrective actions taken to address significant findings and recommendations resulting from those audits,
attestation engagements, performance audits, or other engagements or studies. You are also responsible for
providing management’s views on our current findings, conclusions, and recommendations, as well as your
planned corrective actions for the report, and for the timing and format for providing that information.
Responsibilities and limitations related to nonaudit 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.
The responsibilities and limitations related to the nonaudit services performed as part of this engagement are as
follows:
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We will prepare a draft of your financial statements, schedule of expenditures of federal awards, and
related notes in conformity with U.S. GAAP and the Uniform Guidance based on information provided by
you. Since the preparation and fair presentation of the financial statements and schedule of
expenditures of federal awards is your responsibility, you will be required to acknowledge in the
representation letter our assistance with preparation of the financial statements and schedule of
expenditures of federal awards and that you have reviewed and approved the financial statements,
schedule of expenditures of federal awards, and related notes prior to their issuance and have accepted
responsibility for them. You have a responsibility to be in a position in fact and appearance to make an
informed judgment on those financial statements and schedule of expenditures of federal awards.
These nonaudit services do not constitute an audit under Government Auditing Standards and such services will
not be conducted in accordance with Government Auditing Standards.
Use of financial statements
The financial statements and our report thereon are for management’s use. If you intend to reproduce and
publish the financial statements and our report thereon, they must be reproduced in their entirety. Inclusion of
the audited financial statements in a document, such as an annual report or an offering document, should be
done only with our prior approval of the document. You are responsible to provide us the opportunity to review
such documents before issuance.
If the parties (i.e., you and CLA) agree that CLA will not be involved with your official statements related to
municipal securities filings or other offering documents, we will require that any official statements or other
offering documents issued by you with which we are not involved clearly indicate that CLA 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 or distributed.
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.
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At the conclusion of the engagement, we will complete the auditor sections of the electronic Data Collection
Form SF‐SAC and perform the steps to certify the Form SF‐SAC and single audit reporting package. It is
management’s responsibility to complete the auditee sections of the Data Collection Form. We will create the
single audit reporting package PDF file for submission; however, it is management’s responsibility to review for
completeness and accuracy and electronically submit the reporting package (including financial statements,
schedule of expenditures of federal awards, summary schedule of prior audit findings, auditors’ reports, and
corrective action plan) along with the Data Collection Form to the federal audit clearinghouse and, if
appropriate, to pass‐through entities. The Data Collection Form and the reporting package must be
electronically submitted within the earlier of 30 calendar days after receipt of the auditors’ reports or nine
months after the end of the audit period.
We will provide copies of our reports to the entity; however, management is responsible for distribution of the
reports and the 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.
We are available to perform additional procedures with regard to fraud detection and prevention, at your
request, as a separate engagement, subject to completion of our normal engagement acceptance procedures.
The terms and fees of such an engagement would be documented in a separate engagement letter.
The audit documentation for this engagement is the sole and exclusive property of CLA and constitutes
confidential and proprietary information. However, subject to applicable laws and regulations, audit
documentation and appropriate individuals will be made available upon request and in a timely manner to
cognizant or oversight agency, or its designee, a federal agency providing direct or indirect funding, or the U.S.
Government Accountability Office for purposes of a quality review of the audit, to resolve audit findings, or to
carry out oversight responsibilities. We will notify you of any such request. If requested, access to such audit
documentation will be provided under the supervision of CLA personnel. Furthermore, upon request, we may
provide copies of selected audit documentation to the aforementioned parties. These parties may intend, or
decide, to distribute the copies or information contained therein to others, including other governmental
agencies.
The audit documentation for this engagement will be retained for a minimum of seven years after the report
release date or for any additional period requested by the cognizant or oversight agency. If we are aware that a
federal awarding agency, pass‐through entity, or auditee is contesting an audit finding, we will contact the
party(ies) contesting the audit finding for guidance prior to destroying the audit documentation.
Except as permitted by the “Consent” section of this agreement, CLA will not disclose any confidential,
proprietary, or privileged information of the entity to any persons without the authorization of entity
management or unless required by law. This confidentiality provision does not prohibit us from disclosing your
information to one or more of our affiliated companies in order to provide services that you have requested
from us or from any such affiliated company. Any such affiliated company shall be subject to the same
restrictions on the use and disclosure of your information as apply to us.
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
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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 relationship with you is limited to that described in this letter and subject to all provisions of the
Professional Services Agreement dated November 16, 2016. In the event of conflict among the provisions of this
engagement letter and the Professional Services Agreement, the Professional Services Agreement shall have the
highest priority. 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.
Our engagement ends on delivery of our signed report. 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 engagement letter for that service.
Government Auditing Standards require that we make our most recent external peer review report publicly
available. The report is posted on our website at www.CLAconnect.com/Aboutus/.
Mediation
Any disagreement, controversy, or claim (“Dispute”) that may arise out of any aspect of our services or
relationship with you, including this engagement, shall be submitted to non‐binding mediation by written notice
(“Mediation Notice”) to the other party. In mediation, we will work with you to resolve any differences
voluntarily with the aid of an impartial mediator.
The mediation will be conducted as specified by the mediator and agreed upon by the parties. The parties agree
to discuss their differences in good faith and to attempt, with the assistance of the mediator, to reach an
amicable resolution of the Dispute.
Each party will bear its own costs in the mediation. The fees and expenses of the mediator will be shared equally
by the parties.
Any Dispute will be governed by the laws of the state of Minnesota, without giving effect to choice of law
principles.
Time limitation
The nature of our services makes it difficult, with the passage of time, to gather and present evidence that fully
and fairly establishes the facts underlying any Dispute that may arise between the parties. The parties agree
that, notwithstanding any statute or law of limitations that might otherwise apply to a Dispute, including one
arising out of this agreement or the services performed under this agreement, for breach of contract or fiduciary
duty, tort, fraud, misrepresentation or any other cause of action or remedy, any action or legal proceeding by
you against us must be commenced within twenty‐four (24) months (“Limitation Period”) after the date when
we deliver our final audit report under this agreement to you, regardless of whether we do other services for
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you relating to the audit report, or you shall be forever barred from commencing a lawsuit or obtaining any legal
or equitable relief or recovery.
The Limitation Period applies and begins to run even if you have not suffered any damage or loss, or have not
become aware of the existence or possible existence of a Dispute.
Fees
We estimate that our professional fees will be $37,200 for the City’s basic financial statements ($32,300 for the
audit of the basic financial statements and $4,900 for drafting the CAFR). In addition for the City will be billed
for the audit of federal awards in accordance with the Uniform Guidance and for entering the information in the
Data Collection Form SF‐SAC and creating the single audit reporting package, the fees for this service will be
$3,000 ‐ $6,000. These fees include travel and other costs such as report production, word processing, postage,
etc., and internal and administrative charges. These fees are in accordance with our quote dated July 2, 2019
and our contract date November 16, 2016. These estimates are based on anticipated cooperation from your
personnel and their assistance with preparing confirmations and 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. If unexpected
circumstances require significant additional time, we will advise you before undertaking work that would require
a substantial increase in the fee and expense estimates. Our invoices, will be rendered each month as work
progresses and are payable on presentation. In accordance with our firm policies, work may be suspended if
your account becomes 60 days or more overdue and will not be resumed until your account is paid in full. If we
elect to terminate our services for nonpayment, our engagement will be deemed to have been completed even
if we have not issued our reports. You will be obligated to compensate us for all time expended and related fees
and to reimburse us for all out‐of‐pocket expenditures through the date of termination.
Unanticipated services
We do not anticipate encountering the need to perform additional services beyond those described in this
letter. Below are listings of services considered to be outside the scope of our engagement. If any such service
needs to be completed before the audit can proceed in an efficient manner, we will determine whether we can
provide the service and maintain our independence. If appropriate, we will notify you and provide a fair and
reasonable price for providing the service. We will bill you for the service at periodic dates after the additional
service has been performed.
Other fees
You also agree to compensate us for any time and expenses, including time and expenses of legal counsel, we
may incur in responding to discovery requests or participating as a witness or otherwise in any legal, regulatory,
or other proceedings that we are asked to respond to on your behalf, except for legal actions where we are a
party to the action.
Finance charges and collection expenses
You agree that if any statement is not paid within 60 days from its billing date, the unpaid balance shall accrue
interest at the monthly rate of one and one‐quarter percent (1.25%), which is an annual percentage rate of 15%.
In the event that any collection action is required to collect unpaid balances due us, reasonable attorney fees
and expenses shall be recoverable.
October 28, 2020
City of Lakeville
Page 12
Consent
Consent to use financial information
Annually, we assemble a variety of benchmarking analyses using client data obtained through our audit and
other engagements. Some of this benchmarking information is published and released publicly. However, the
information that we obtain is confidential, as required by the AICPA Code of Professional Conduct. Your
acceptance of this engagement letter will serve as your consent to use of the City of Lakevile’s information in
these cost comparison, performance indicator, and/or benchmarking reports.
Subcontractors
CLA may, at times, use subcontractors to perform services under this agreement, and they may have access to
your information and records. Any such subcontractors will be subject to the same restrictions on the use of
such information and records as apply to CLA under this agreement.
Agreement
We appreciate the opportunity to be of service to you and believe this letter accurately summarizes the
significant terms of our engagement. This letter constitutes the entire agreement regarding these services and
supersedes all prior agreements (whether oral or written), understandings, negotiations, and discussions
between you and CLA. If you have any questions, please let us know. Please sign, date, and return the enclosed
copy of this letter 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.
Sincerely,
CliftonLarsonAllen LLP
Christopher G. Knopik, CPA, CFE
Principal
612‐397‐3266
christopher.knopik@CLAconnect.com
Enclosures
October 28, 2020
City of Lakeville
Page 13
Response:
This letter correctly sets forth the understanding of the City of Lakeville.
Authorized governance signature:
Title:
Date:
Authorized management signature:
Title:
Date: