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Denning, Downey & Associates/Audit ContractDEPARTMENT OF ADMINISTRATION STANDARD AUDIT CONTRACT THIS CONTRACT is made this - 19th ww.. wy ti APR 0 3 2007 ADMINISTRATION LOCA- GOVERNMENT SERVICES BUREAU day of March , 2007 _,by and between DenniLig, Downe Associates CPA's P.C. (Certified or Licensed Public Accountant) hereinafter referred to as the "Contractor", Cit of Kalispell. (Governmental Entity) hereinafter referred to as the "Entity", and the Montana Department of Administration, Local Government Services Bureau, hereinafter referred to as the 'State", acting under the authority of Title 2, Chapter 7, Part 5, of the Montana Code Annotated. It is hereby agreed that: 1. The Contractor will conduct a financial statement audit of the Entity. a. The audit will be made in accordance with generally accepted auditing standards adopted by the American Institute of Certified Public Accountants and -the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. b. The audit will include tests of legal compliance as required by Government Auditing Standards and as required by the Federal Office of Management and Budget's (OMB) Circular A-133, when applicable. C. The audit will determine whether the Entity has complied with all appropriate statutes and regulations, as required by Section 2-7-502, MCA. d. The audit will include tests to determine whether the Entity has complied with the provisions of each of its revenue bond ordinances and indenture agreements. e. The audit will meet the requirements of the Single Audit Act of 1984 (31 U.S.C. 7501-7507), as amended by the Single Audit Act Amendments of 1996 (P.L. 104-156) and the Federal Office of Management and Budget's (OMB) Circular A-133, when applicable. f. The audit scope with regard to federal financial assistance for each fiscal year covered by this audit contract will be as specified in Appendix A, which is attached to this contract and by this reference made a part of this contract. g. For purposes of determining the scope of the audit, the Entity will be considered to be the financial reporting entity as defined by Statement Number 14 of the Governmental Accounting Standards Board, The Financial Reporting Entity. h. The audit of any school district will also include, when applicable, an audit of the extracurricular funds for pupil functions. FORMISAC01 Page 1 of 18 7101 I. V continued: i. The audit of any school district will include tests to verify the accuracy of the school district's enrollment for the fiscal year or years being audited as reported to the Office of Public Instruction in the Fall and Spring enrollment reports. j. As required by Section 17-2-302, MCA, the Contractor will include in an audit of a county, city, or town a determination of whether money is or has been retained in a local charge for services fund contrary to the requirements of Section 17--2-302 or 17-2-303, MCA. A local charge for services fund is defined in. Section 17-2-301 , MCA. The Contractor will include in the report on compliance based on an audit of financial statements performed in accordance with Government Auditin Standards any findings of noncompliance with the provisions of these statutes, regardless of materiality. Instances of noncompliance with these statutes that are required to be reported under Government Auditin Standards will be referenced in the compliance report and included in the accompanying schedule of findings and questioned costs. Immaterial instances of noncompliance with these statutes that do not meet the criteria for reporting specified in Government Auditimr, Standards will be included in a separate letter to management communicating such matters, and that letter will be referenced in the compliance report. k. If the Entity is a school district or associated cooperative, the Contractor will contact the State Office of Public Instruction and the county superintendent of schools prior to or during the audit of the Entity. These contacts will be made to determine whether those offices are aware of potential financial or legal compliance problems relating to the Entity that could affect the scope of the audit. 1. The Contractor will immediately notify the Entity and the State in writing of any material irregularities it discovers. If the Entity is a school district or special education cooperative, the Contractor will also notify the office of Public Instruction. The audit period or periods covered by this contract begins July 1 , 2006 and ends June 30 , 2009 a. In consideration of the faithful performance of this contract, the Entity will pay the Contractor for the audit work on the basis of time and necessary out-of-pocket expenses, which will not exceed: $21,825_ $ 23,825 $ 25,825 for initial (or sole) audit covering 07/01/06 to 06/30/07 for subsequent audit covering 07/01/07 to 06/30/08 for subsequent audit covering 07/01/08 to 06/30/09 The fees are set out in detail in Appendix A, which is attached hereto and by this reference made a part hereof b. where the cost of any subsequent audit is not agreed upon at the time this contract is executed, the cost will be negotiated by the Contractor and the Entity. The results of this negotiation will be set forth in Appendix A and made a part of this contract. The Contractor will provide the State and the Entity with a copy of this Appendix. C. The total cost of the Contract Audit does not include the cost of additional work that may be required in the event the Contractor discovers a defalcation or material irregularity. Any change in the scope of the audit services to be provided under this contract requires a contract amendment. FORMISAC01 Page 2 of 18 7101 2. continued: d. The Contractor may submit interim bills to the Entity each month, based upon the estimated percentage of completion of the contract. The Entity may retain 10 percent of each of these estimates until the Contractor has delivered the final audit report, at which time the Entity will release the amount retained. 3 J. The Entity will prepare its annual financial report or a trial balance of accounts no later than the date specified in Appendix A. If the Entity is unable to prepare its annual financial report or trial balance by the date specified in Appendix A, the Entity will notify the Contractor and the State in writing. 4. The Contractor will begin and complete the field audit work in accordance with the schedule established in Appendix A. within 60 days of completing the field work, the Contractor will deliver the final audit report to the Entity. If the Contractor cannot deliver the audit report on the date specified, the Contractor will notify the Entity and the State in writing of the date on which it will deliver the report. If it is unable to submit the audit report within 90 days of the date specified in Appendix A, the Contractor will request in writing an extension from the State. The State's approval or denial of this request will also be in writing. Pursuant to Section 2--7- 5 03 (3)(a), MCA, all audits must be completed and the reports issued within one year from the close of the last fiscal year covered by the audit. If the audit is conducted in accordance with the provisions of OMB Circular A- 13 3, the Contractor will also complete the audit and issue the audit report within the time period required by that Circular, unless a longer period has been agreed to in advance by the federal cognizant or oversight agency for audit. 5. The final audit report must contain financial statements that are in accordance with financial reporting standards for local governments as established by the Governmental Accounting Standards Board. The financial statements presented should be in accordance with the financial reporting standards in effect for the year or years being audited. If the accounting records or other circumstances will not permit financial statements to comply with these requirements, the Contractor will notify the State of those conditions and describe the financial statements that will be presented. This notification will be in writing. If the audit is a biennial audit covering two years, the Contractor will present complete financial statements as specified above for each year covered by the audit. The audit report must also contain the auditor's reports required by standards established by the American Institute of Certified Public Accountants and by the U.S. General Accounting Office and, in the case of audits conducted in accordance with the federal office of Management and Budget's Circular A-13 3, auditor's reports and other information required by that Circular. a. If the Entity is not yet required to adopt the provisions of Statement Number 34 of the Governmental Accounting Standards Board (GASB), Basic Financial statements - and Management's Discussion and Analysis —for state and Local Governments under the time requirements of that Statement, and if the Entity has not early implemented GASB Statement Number 34, the final audit report must include financial statements conforming with the financial statement format requirements for general purpose financial statements set out in GASB Cod. Section 1900 (as specified in the June 30, 2000, Codification of Governmental Accounting and Financial Reporting Standards), and the appropriate notes to the financial statements. b. If the Entity has implemented the provisions of Statement Number 34 of the Governmental Accounting Standards Board (GASB), Basic Financial statements — and Management's Discussion andanalysis — for state of Local Governments for the year or years being audited, the final audit report must include the minimum requirements for basic financial statements and required supplementary information, as specified in GASB Statement Number 34, as follows: (1) Management's Discussion and Analysis (MD&A), a component of required supplementary information; Fo1M1SAC01 Page 3 of 18 7101 5 . continued: (2) Basic financial statements, which should include: (a) Government -wide financial statements consisting of a statement of net assets and a statement of activities; (b) Fund financial statements for the primary government's governmental, proprietary, and fiduciary funds presented after the goverrirnent-wide statements. which display information about major funds individually and nonmajor funds in the aggregate for governmental and enterprise funds. Fiduciary statements should include financial information for fiduciary funds and similar component units; (c) The fund financial statements must present a summary reconciliation of those financial statements to the government -wide financial statements at the bottom of the fund financial statements or in an accompanying schedule. (3) Required supplementary information other than Management's Discussion and Analysis (MD&A) must include budgetary comparison schedules for the general fund and for each major special revenue fund that has a legally adopted budget, and schedules and disclosures for all eligible infrastructure assets that are reported using the modified approach for reporting infrastructure as specified in GASB Statement Number 34. (4) Notes to the basic financial statements, which are considered an integral part of the basic financial statements. (5) Combining statements for non -major funds are not required, but may be presented as supplementary information. Other supplementary information is required by other provisions within this contract and by OMB Circular A-133. (6) Basic financial statements for special-purpose governments should also follow the specific requirements for such types of governments as specified in GASB Statement Number 34. C. All audit reports will contain the following auditor's reports: (1) An independent auditor's report on the financial statements of the Entity. This report must comply with applicable professional standards in effect for the fiscal year or years being audited. (2) A report on compliance and internal control over financial reporting based on an audit of financial statements performed in accordance with Government Auditing Standards. This report must comply with applicable professional standards in effect for the fiscal year or years being audited. (3) A report disclosing any lack of compliance with State statutes, rules, regulations, or ordinances that would not have a material effect on the financial statements. This report must be referred to in the report required in 5.c.(2) above. This report may be combined with other reports if appropriate, or the findings may be included in a management letter. If included in a management letter, that letter must be included as a part of the audit report. (4) A report on supplemental schedules or information, including the supplemental schedule of school district enrollment required by paragraph. 5.g. and the supplemental schedule of school district extracurricular fund financial activities required by paragraph 51, if any such schedules or information are presented in the audit report. This report must comply with applicable professional standards in effect for the fiscal year or years being audited. (5) A report disclosing the action taken by the Entity to correct any deficiencies or implement any recommendations contained in the prior audit report. This report must be in a format that specifically identifies, by title or summary, each deficiency or recommendation contained in the FORMISAC01 Page 4 of 18 7101 r continued . prior audit report and the action taken by the Entity on each such deficient y or recom=..,ndation. This report is in addition to the summary schedule of prior audit findings required by OMB Circular A-133 and paragraph 5.e, below. (6) A report on fraud, abuse, or illegal acts, or indications of these acts, when discovered. These reports may be s-su d. All audit reports for single audits done in accordance with OMB Circular A-13 3 must also contain the following: (1) A schedule of expenditures of federal awards. (a) As required by OMB Circular A-133, the schedule must: (i) List individual federal programs by federal agency. For federal programs included in a cluster of programs, list individual federal programs within a cluster of programs. (ii) For federal awards received as a subrecipient, include the name of the pass- through entity and identifying number assigned by the pass-through entity. (iii) Provide total federal awards expended for each individual federal program and the CFDA number or other identifying number when the CFDA information is not available. (iv) Include notes that describe the significant accounting policies used in preparing the schedule. (v) To the extent practical, pass-through entities should identify in the schedule the total amount provided to subrecipients from each federal program. (vi) Include, in either the schedule or a note to the schedule, the value of the federal awards expended in the form of non-cash assistance, the amount of insurance in effect during the year, and loans or loan guarantees outstanding at year end. while not required, it is preferable to present this Information in the schedule. (b) In addition, to provide information requested by State pass-through agencies for use in monitoring subrecipients, the schedule must contain: (i) the program or award amount; (ii) the cash balance or fund balance of the program at the beginning of the audit period; (iii) federal receipts or revenues for the program for the audit period; (iv) other receipts or revenues for the program such as program income, snatching funds, or other receipts/ revenues for the audit period; and (v) the cash balance or fund balance of the program at the end of the audit period. (2) A report on the schedule of expenditures of federal awards. This report may be combined with other reports as provided by OMB Circular A-133 and professional standards. This report must comply with applicable professional standards in effect for the fiscal year or years being audited. (3) A report on compliance with requirements applicable to each major program and on internal control over compliance in accordance with OMB Circular A-133. Where applicable, this report should refer to the separate schedule of findings and questioned costs described in paragraph 5.d.(4) of the contract. This report must comply with applicable professional standards in effect for the fiscal year or years being audited. FORM/SACH 1 Page 5 of 18 7/01 5 . continued: (4) A schedule of findings and questioned costs which must include the following three components: (a) A summary of the auditor's results which must include the information required by OMB Circular A-133; (b) Findings relating to the financial statements which are required to be reported in accordance with Government Auditing Standards; (c-}--Fnd-ings--and-questionedz�ast�far-fe er awar s w is must inc u_ e audit_ findings_ as ---------- -- -- - - — - defined in OMB Circular A-133. e. All audit reports for single audits done in accordance with OMB Circular A-133 must. include or be accompanied by the summary schedule of prior audit findings required by OMB Circular A--133. As required by OMB Circular A-13 3, this report is to be prepared by the Entity. This summary schedule of prior audit findings is in addition to the auditor's report disclosing the action taken by the Entity to correct any deficiencies or recommendations contained in the prior audit report that is required to be prepared by the Contractor under paragraph 5.c.(5). f. All audit reports for single audits done in accordance with OMB Circular A-133 must -include or be accompanied by the corrective action plan required by OMB Circular A-13 3 if that plan is available at the time the Contractor files copies of the audit report with the State as provided in paragraph 8.c. If the corrective action plan is not available at that time, it must be submitted by the Entity to the State within 30 days after issuance of the audit report as provided in paragraph 9. g. School district audit reports must contain a supplementary schedule of the district's enrollment as reported to the Office of Public Instruction for the fiscal year or years being audited. The schedule will contain the enrollment both as reported in the Fall and Spring enrollment reports and as documented by the school district's enrollment records. h. In the case of a school district audit, the Contractor will include any extracurricular funds for pupil functions as expendable trust funds in the financial statements of the school district. The Contractor will present a detailed schedule of extracurricular fund financial activities as a supplemental schedule within the school district audit report. i. The final audit report may contain other financial statements and supporting schedules and information as agreed upon by the Entity and Contractor. 1. The final audit report must contain any material findings relative to economy, efficiency or effectiveness in operations that are noted by the Contractor during the audit, along with the Contractor's recommendations for improvement. The report must also contain any other recommendations or comments for improvement that the Contractor deems pertinent. k. The final audit report must contain any other matters agreed to by the Contractor and the State or the Contractor and the Entity. 6. The Contractor must render a single, written report for the Entity audited. The report must include all written reports and letters discussing findings and recommendations from the Contractor to the Entity, including but not limited to the reports and schedules referred to in paragraph 5 above as well as ani management letters. FORM/SAC01 Page 6 of 18 7101 7. Before submitting the final audit report, the Contractor will hold an exit review conference in which the audit results are discussed with appropriate Entity officials and employees. The Contractor further agrees that prior to submitting the final report, it will not discuss the audit findings with anyone other than the Entity or the State. However, once the Contractor delivers the final audit report the report is deemed to be a public record. 8. The Contractor and Entity will file copies of the audit report as specified below. a. The --Contractor- will-proUide tie -Entity urzt the number of copies of the audit report specified in Appendix A, and the cost of those copies is included in the total price for the engagement as set out in paragraph 2.a., above, and in Appendix A. The Contractor will submit one of these copies to the attorney for the Entity. b. Ippon request by the Entity, the Contractor will provide additional copies of the audit report at a price per copy agreed upon by the Entity and Contractor. C. The Contractor will provide the State with four copies of each audit report at no charge. These copies will be sent to the State at the same time the Contractor delivers the final audit report to the Entity. A letter of transmittal will accompany the State's copies which will advise the State as to the date the report was delivered to the Entity, the date of the audit report, the actual number of hours spent by the Contractor in the conduct of the audit, and the total audit fees billed the Entity. If the audit is conducted in accordance with OMB Circular A-133, the copies of the audit report submitted to the State by the Contractor must contain or be accompanied by the summary schedule of prior audit findings required by OMB Circular A-133. If the audit is conducted in accordance with OMB Circular A-133, the copies of the audit report submitted to the State by the Contractor must contain or be accompanied by the corrective action plan required by OMB Circular A-13 3, if the plan has been prepared by the Entity and is available on the date the Contractor submits the audit reports to the State. If the corrective action plan has not been prepared by the Entity and is not available at the time the Contractor submits the audit reports to the State, the Contractor will notify the State of that fact in the letter of transmittal described above. d. If the Entity is a school district or associated cooperative, the Contractor will provide copies of the audit report to the Office of Public Instruction, the county superintendent of schools, and the county attorney. e. If the Entity is a city or town fire department relief association disability and pension fund, the Contractor will provide one copy of the audit report to the city or town clerk. f. If the audit is a single audit conducted in accordance with the provisions of OMB Circular A-133, the Entity will provide copies of the audit report, summary schedule of prior audit findings, corrective action plan, and data collection form to the federal clearinghouse designated by OSB and to all federal, state and other granting and pass-through agencies as required by Circular A-133. 9. within 30 days after receiving the audit report the Entity will notify the State in writing as to what action it plans to tale to correct any deficiencies or implement any recommendations identified or contained in the audit report, as required by Section 2-7-515, MCA, and ARM 8.94.4109. This notification will also address any findings and recommendations contained in management letters, which are considered a part of the audit report as prescribed in paragraph b. If the audit is a single audit conducted in accordance with FORMlSAC01 Page 7 of 18 7101 9. continued: OMB Circular A- 13 3, this corrective action plan will also meet the requirements of Circular A-13 3 and contain all information required by that Circular. 10. If requested by the State, the attorney for the Entity will report to the State on the actions taken or the proceedings instituted or to be instituted relating to violations of law and nonperformance of duty as required by Section 2 7 515(41 ��C'A--Th�attr„�„P r�a�i��'rarYnrt-fn 41�P-e+-:� ----•- -.. _ _.-----... ___._ � ecelvingtn�re-t�Cre��• 11. The Contractor will neither arrange for, nor accept, non --auditing work with the Entity which could in any way impair the Contractor's independence in violation of professional standards . 12. The Contractor will be the prime contractor and shall be responsible, in total, for , all work of any subcontractors. The Contractor will obtain the written approval of the Entity and the State prior to engaging correspondent Contractors, consultants, or subcontractors to provide services in connection with this audit. The Contractor shall be responsible to the Entity and the State for the acts and omissions of all correspondent Contractors, consultants, subcontractors, or agents and of persons directly or indirectly employed by such correspondent Contractors, consultants, subcontractors or agents, and for the acts and omissions of persons employed directly by the Contractor. Further, nothing contained within this Contract shall create any contractual relationship between any correspondent Contractor, consultant, or subcontractor and the State. 13. The State may participate in all entrance and exit conferences between the Entity and Contractor, as well as all major conferences dealing with audit exceptions and recommendations regarding accounting or operating procedures, management policies, or internal control changes. 14. The Contractor will give the State and, when required by law, the Montana Legislative Audit Division, access to the Contractor's audit programs, supporting working papers, time records, and all other documents relating to the audit. Access to these documents will be provided at the State's offices in Helena, Montana. Access to working papers includes the right of the State to obtain copies of working papers, as is reasonable and necessary. The Contractor also agrees to make the audit programs and supporting working papers available to the State for use by the State or other public accounting firms as directed by the State in future audits of the Entity. The contractor also agrees to make the audit programs and supporting working papers available to the cognizant or oversight agency for audit or its designee, federal agencies providing direct or indirect funding, or the U.S. General Accounting Office, if requested. Access to working papers includes the right of federal agencies to obtain copies of working papers, as is reasonable and necessary. The Contractor will retain the audit report, audit programs, and audit working papers for a minimum of four years from the date of the audit report, unless the State notifies the Contractor to extend the retention period. 15. As provided by Section 2-7-522, MCA, the State may review the audit report submitted by the Contractor. If the State determines that reporting requirements have not been met, it will notify the Entity and the Contractor of the significant issues of noncompliance. The Contractor must correct the identified deficiencies within 60 days of notification. 16. The Contractor certifies that, as required by generally accepted government auditing standards, it and its principals and employees are independent in all matters with respect to this engagement. 17. The Entity and the State recognize that the Contractor is an independent public accountant, and neither the Entity nor the State will request or require the Contractor to surrender its "independence," as this term is professionally understood and used concerning public accountants. It is understood by the parties to this contract that the Contractor is an independent contractor and that neither its principals nor its employees are FORM/SAC01 Page 8 of 18 7101 17. continued: employees of the State or Entity for purposes of tax, retirement system, or social security (FICA) withholding. 18. The Contractor certifies that it carries workers' Compensation for its employees and that it has either elected Workers' Compensation or has an approved Independent Contractor's Exemption covering the Contractor while performing work under this contract. (Montana Code Annotated, Sections 39-71-120, 39-71-401, and 19. The Contractor agrees to protect, defend, and save the State, its elected and appointed officials, agents, and employees, while acting within the scope of their duties as such, harmless from and against all claims, demands, and causes of action of any kind or character, including the cost of defense thereof, arising in favor of the Contractor's employees or third parties on account of bodily or personal injuries, death, or damage to property arising out of services performed or omissions of services or in any way resulting from the acts or omission of the Contractor and/or its agents, employees, representatives, assigns, subcontractors, except the sole negligence of the State, under this agreement. 20. The Contractor must, in performance of work under this contract, fully comply with all applicable federal, state, or local laws, rules and regulations, including the Montana Human Rights Act, the Civil Rights Act of 1964, the Age Discrimination Act of 1975, the Americans with Disabilities Act of 1990, and Section 504 of the Rehabilitation Act of 1973. Any subletting or subcontracting by the Contractor subjects subcontractors to the same provisions. In accordance with Section 49-3-207, MICA, the Contractor agrees that the hiring of persons to perform the contract will be made on the basis of merit and qualifications and there will be no discrimination based upon race, color, religion, creed, political ideas, sex, age marital status, physical or mental disability, or national origin by the persons performing the Contract. 21. The Entity will provide the Contractor with reasonable space in which to conduct the audit, and respond promptly to requests for information as well as for all necessary books and records. Support for clerical, equipment, and photocopying or reproduction services shall be agreed upon by the Entity and the Contractor as specified in Appendix A. 22. This contract and the attached Appendices contain the entire understanding and agreement of the parties. No modification or amendment of this contract is valid unless it is reduced to writing, signed by the parties, and made a part of this contract. 23. This contract is not effective with respect to any party until it is approved and signed by the State. The Contractor may not begin any audit work until the State gives this approval. If the Contractor begins work before the State has approved the contract and the State subsequently does not approve the contract, the Contractor is not entitled to receive any compensation for the work performed. 24. Either the Contractor or the Entity, with the consent of the State, or the State, may cancel this contract by providing written notice to the other parties prior to the commencement of the audit. The contract may be canceled under this paragraph for cause. Cause includes, but is not limited to, failure of any party to comply with the terms of this contract or with any Administrative Rule adopted by the State under the authority of Title 2, Chapter 7, Part S, of the Montana Code Annotated. In addition, if both the Contractor and the Entity mutually agree to cancel this contract prior to the commencement of the audit, regardless of whether there is cause, the State will consent to cancellation of the contract upon written notification by the Contractor and the Entity of their agreement to cancel this contract. FORM/SACOI Page 9 of 18 7101 ?5. After the audit has corn menced,but before the audit report has been issued, either the Contractor or the Entity, with the consent of the State, or the State, may cancel this contract for failure of any party to comply with the terms of this contract or with any Administrative Rule adopted by the State under the authority of Title 2, Chapter 7, Part 5, of the Montana Code Annotated, or for other cause. If the contract is canceled due to the failure of the Contractor to comply, the Contractor is not entitled to the audit fee set out in this contract. If the contract is canceled due to the failure of the Entity to comply, the Entity will pay the Contractor a pro rata cancellation. In addition, if both the Contractor and the Entity mutually agree to cancel this contract without establishing cause on the part of either party, the State will consent to cancellation of the contract upon written notification by the Contractor and the Entity of their agreement to cancel this contract. 26. The Contractor shall not assign, transfer or subcontract any portion of the contract without the express written consent of the Entity and the State. 7. By signing this contract, the Contractor certifies that it is in compliance with the continuing professional education requirements and the external quality control review requirements as set out in Government Auditing.. Standards, as established by the Comptroller General of the United States. The State may require the Contractor to provide evidence that it has met the above requirements. 28. If the audit is required to meet the requirements of the Single Audit Act of 1984 as amended by the Single Audit Act Amendments of 1996 and OMB Circular A-133, as set out in paragraph I .e. above, the Contractor certifies that neither it nor any of its principals is presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from performing audits by any Federal department or agency. 29. The objective of the audit, under generally accepted auditing standards adopted by the American Institute of Certified Public Accountants, is the expression of an opinion by the Contractor on the financial statements. Under the standards applicable to financial audits contained in Government AuditiM Standards, issued by the Comptroller General of the United States; under the provisions of this standard audit contract; and under the provisions of OMB Circular A-13 3, when applicable; the Contractor has additional auditing and reporting responsibilities related to internal control and compliance matters. The Entity's management is responsible for: a. the Entity's financial statements and for other financial schedules presented in the audit report, including the schedule of expenditures of federal awards required for audits conducted under OMB Circular A-133; b. establishing and maintaining effective internal control over financial reporting; c. identifying and ensuring that the Entity complies with the laws and regulations applicable to its activities. At the conclusion of the audit engagement, the Entity's management will provide the Contractor with a letter that confirms certain representations made during the audit. As specified in paragraph La., the Contractor is responsible for conducting the audit in accordance with generally accepted auditing standards adopted by the American Institute of Certified Public Accountants and the standards applicable to financial audits contained in Government Auditin Standards, issued by the Comptroller General of the United States. Those standards require that the Contractor obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. Accordingly, a material misstatement may remain undetected. Also, an audit is not designed to detect error or fraud that is immaterial to the financial statements. If, for any reason, the Contractor is unable to complete the audit or is unable to form or has not formed an opinion, the FORMISACOI Page 10 of 18 7101 ? 9 . continued: Contractor may decline to express an opinion or decline to issue a report as a result of the engagement. .An audit includes obtaining an understanding of internal control sufficient to plan the audit and to determine the nature, timing, and extent of audit procedures to be performed. An audit is not designed to provide assurance on internal control or to identify reportable conditions. However, the Contractor is responsible for - F T.- - - - s- e governing body, are aware of any reportable conditions which come to the Contractor's attention. Such conditions shall be reported in accordance with the standards prescribed in this contract. Management is responsible for adjusting the financial statements to correct material misstatements and for affirming to the auditor in the representation letter that the effects of any uncorrected misstatements aggregated by the auditor 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. 30. This Contract is governed by the laws of Montana. The parties agree that any litigation concerning this Contract in which the State is named as a party must be brought in the First Judicial District in and for the County of Lewis and Clark, State of Montana, and each party shall pay its own costs and attorney fees. The parties also agree that any litigation concerning this Contract in which the State is not named as a party must be brought in the Judicial District in and for the County in which the Entity is located, and each party shall pay its own costs and attorney fees. IN WITNESS WHEREOF, Contractor, Entity, and State have executed this Standard Audit Contract on the date first above written: Certified or Licensed Public Accountant DeunIrik' Dowsney..&,Associa es, M's P.C. ' 'rm ISI e By: Date: Authorized Representative Governmental Entity City ofKalis ell Name By: Date. Authorized Representative Montana Department of Administration, Local Government Services Bureau By: Date: '� c�� 01 - Author* e Representative FORMISAC01 Page 1 I of 18 7101 This page intentionally left blank. FOR M/SACO I Page 12 of 18 7101 APPENDIX A Initial or Sole Audit Under This Contract GOVERNMENTAL ENTITY (ENTITY): City of Kalis ell Telephone: Address: . (406) 758-7755 Contact Person(s): P.O. Box -1997 (Street Address or P.Q. Box) Kalispell , MT 59901 (City/Town) (Zip Code) Am Robertson Finance .Director PUBLIC ACCOUNTANTIACCOUNTING FIRM (CONTRACTOR): Dennin Downe & Associates CPA's P.C. Telephone: (406.) 756-6879 Contact Person(s): Address: 1740 US H 93 S . S uite 1.01 (Street Address or P.O. Box) (City/Town) Kalispell , MT 59901 Kim M. Downe CPA CGFM or Robert K. Denning, CPA CGFM I . Audit Period and Dates of Engagement: A. This audit will cover the fiscal year(s) ending June 30 , 2007 (and �. (Month & Day) (Year) (Year) B . Date to commence audit work: December 31, 2007 C. Date to complete audit work: January 31, 2008 D. Date .to submit final audit report to Entity and State: March 31 2008 2. Time and Price for Engagement: F (s) Ending June 30 , 2007 an (Afonth & Day) (Year) (Yeah A. Total elan hours 485 B. Price for audit personnel $ 211.825 Price for Travel Price for typing, clerical and report preparation Total price for this engagement $ 2U25 3. Date Annual Financial Report or a trial balance will be available: August 3I, 2007 4. Number of copies of audit report Contractor will provide to Entity: Three (3) (Zip Code) FORM/SAC01 Page 13 of 18 7101 5 . The Entity will provide clerical, equipment, and photocopying or reproduction services to the Contractor as follows: Photocopier 6. The audit scope with regard to federal financial assistance received by the Entity for the above fiscal year(s) ---------- will be as�di�at�d_belcz�:------------------------------------ � __ .._ u(1) The audit will be a single audit conducted in accordance with the provisions of the Single Audit Act of 1984 as amended by the Single Audit Act Amendments of 1996 and the Federal Office of Management and Budget's (OMB) Circular A-133 because the Entity expended a total amount of federal awards equal to or in excess of $500,000 during the fiscal year(s). OR (2) The audit will not be a single audit conducted in accordance with the provisions of the Single Audit Act of 1984 as amended by the Single Audit Act Amendments of 1996 and the Federal Office of Management and Budget's (OMB) Circular A--133, and will not include audit coverage of any federal financial assistance in accordance with requirements concerning financial audits contained in federal statutes and regulations governing programs under which such federal awards are provided to the Entity, because the Entity expended a total amount of federal awards of less than $5045400 during the fiscal year(s). IN WITNESS WHEREOF: Certified or Licensed Public Accountant Denrfrn Dvwne & Assoc PA's P.C. �irm a B - � ��---�� ..� Dade:'horized Repre en Governmental Entity Ci of Kalispell Entity Name Authorized Representative Montana Department of Administration, Local Government Services Bureau By; Aut , ri ed Representative Date: � d Date: ^f oo/0-7 FORMISAC01 Page 14 of 18 7101 APPENDIX A Subsequent Audit Under This Contract GOVERNMENTAL ENTITY (ENTITY): City of Kalispell. Telephone: Address: (406) 758-7755 Contact Person(s): P.Q. Box 1.9.97 (Street Address or P.Q. Box) Balis ell , MT 59901 (City/Town) (Zip Code) Am Robertson Finance Director PUBLIC ACCOUNTANT/ACCOUNTING FARM (CONTRACTOR): Dennin , Downe & Associates CPA's P.C. Telephone: (406) 756-6579 Contact Person(s): Address: 1740 US H 93 S . Suite 141 (Street Address or P.Q. Box) Kalispell , MT 5990„1 (City/Town) (Zip Code) Kim M. Downey,CPA CGFM or Robert K. Denning,..CPA CGFM I. Audit Period and Dates of Engagement.- A. ngagement: A. This audit will cover the fiscal year(s) ending June 30 2008 [and ]. (Month & .Day) (Year) (Year) B. Date to commence audit work: December 31 2008 C. Date to complete audit work: Januar 31 2009 D. Date to submit final audit report to Entity and State: March 3 1,_2009 2. Time and Price for Engagement: FY(s) Ending June 30 , 2008 _(and _ __ [and } (Month & Day) (Year) (Year) A. Total Aman hours - 530 B. Price for audit personnel $ 23 825 Price for Travel Price for typing, clerical and report preparation Total price for this engagement $ 23=1=825 3. Date Annual Financial Report or a trial balance will be available: August 31, 2005 4. Number of copies of audit report Contractor will provide to Entity: Three L3) - FORM/SAC01 Page 15 of 18 7101 5. The Entity will provide clerical, equipment, and photocopying or reproduction services to the Contractor as follows: Photocopier 6. The audit scope with regard to federal financial assistance received by the Entity for the above fiscal year(s) will be as jadicat d -w• __ (1) The audit will be a single audit conducted in accordance with the provisions of the Single Audit Act of 1984 as amended by the Single Audit Act Amendments of 1996 and the Federal Office of Management and Budget's (OMB) Circular A-133 because the Entity expended a total amount of federal awards equal to or in excess of $500,000 during the fiscal year(s). OR ❑ (2) The audit will not be a single audit conducted in accordance with the provisions of the Single Audit Act of 1984 as amended by the Single Audit Act Amendments of 1996 and the Federal Office of Management and Budget's (OMB) Circular A-133, and will not include audit coverage of any federal financial assistance in accordance with requirements concerning financial audits contained in federal statutes and regulations governing programs under which such federal awards are provided to the Entity, because the Entity expended a total amount of federal awards of less than $500,000 during the fiscal year(s). IN WITNESS WHEREOF: Certified or Licensed Public Accountant De zna. Dow` v & Aswczatos CPA t f Na' e By: -� .Date: Authorized R es tatz Governmental Entity City of Kalispell Entity Name By: Date: cc C' AAV�. Authorized Representative Montana Department of Administration, Local Government Services Bureau r t By: - --- Date: .: Au or ed Representative FORM/SACOI Page 16 of 18 7/01 APPENDIX A. Subsequent Audit Under This Contract GO VLRNM[ENTAL ENTITY (ENTITY) : Cily of Kal i s el l Telephone: Address: X406} 758--7755 Contact Person(s): P.O. Box 199.7 (Street Address or P.O. Box) Kalispell , MT 59901 (City/Town) (Zip Code) Am Robertson Finance Director PUBLIC ACCOUNTANTIACCOUNTING FIRM (CONTRACTOR): Denning,Downe & Associates CPA's P.C. Telephone: (406) 756-6879 Contact Person(s): Address: 1740 US Hwy 93 S. Suite 10 (Street Address or P.Q. Box) Kalispell ,NIT 59901 (City/Town) (Zip Code) Kim M. Downe CPA CCFM or Robert K. Denning, CPA CGFM I . Audit Period and Dates of Engagement: A. This audit will cover the fiscal year(s) ending June 30 2009 (and ). (Month & Day) (Year) (Year) B. Date to commence audit work: December 31, 2009 C. Date to complete audit work: January 31, 20 10 D. Date to submit final audit report to Entity and State: March 3j, 2 0I0 2. Time and Price for Engagement: FY(s) Ending June 30 , 2009 (and (Month & Day) (Year) (Year) A. Total man hours - 575 B. Price for audit personnel $ 25,525 Price for Travel Price for typing, clerical and report preparation Total price for this engagement $ 25.82 3. Date Annual Financial Report or a trial balance will be available: August 31 0 4. Number of copies of audit report Contractor will provide to Entity: Three Q.). FORMISAC01 Page 17 of 18 7101 5. The Entity will provide clerical, equipment, and photocopying or reproduction services to the Contractor as follows: Photoco,oier 6. The audit scope with regard to federal financial assistance received by the Entity for the above fiscal years) will be as indicated 1) The audit will be a single audit conducted in accordance with the provisions of the Single Audit Act of 1984 as amended by the Single Audit Act Amendments of 1996 and the Federal office of Management and Budget's (OMB) Circular A-133 because the Entity expended a total amount of federal awards equal to or in excess of $500,000 during the fiscal year(s). OR (2) The audit will not be a single audit conducted in accordance with the provisions of the Single Audit Act of 1984 as amended by the Single Audit Act Amendments of 1996 and the Federal office of Management and Budget's (OMB) Circular A-133, and will not include audit coverage of any federal financial assistance in accordance with requirements concerning financial audits contained in federal statutes and regulations governing programs under which such federal awards are provided to the Entity, because the Entity expended a total amount of federal awards of less than $500,000 during the fiscal year(s). IN WITNESS WHEREOF: Certified or Licensed Public Accountant De in , Down &-,isocia ^ CP 's P.C. F' m m By: j Date: .7� c A Authorized Rep a Governmental Entity City of Kalispell Entity Name c-' Authorized Representative Montana Department of Administration, Local Government Services Bureau Date r� q By: r . Avr� A thorized Representative FORMISAC01 Page 18 of 18 7101