Loading...
HomeMy WebLinkAboutRES2023-067 Altman Rogers & Co Contract CITY OF SEWARD,ALASKA Sponsored by: Regis RESOLUTION 2023-067 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO A PROFESSIONAL SERVICES AGREEMENT WITH ALTMAN, ROGERS, & CO FOR EXTERNAL AUDIT SERVICES, AND APPROPRIATING FUNDS WHEREAS,The City of Seward issued a Request for Proposals in 2019 to obtain external audit services; and WHEREAS, Of the proposals received at that time, Altman, Rogers & Co. was selected as the most responsive bidder; and WHEREAS,Altman,Rogers&Co.has provided audit services for the City of Seward for the fiscal years 2019, 2020, 2021, and 2022; and WHEREAS, The quality of services provided by Altman, Rogers & Co. has been exemplary; and WHEREAS, The City of Seward desires to continue utilizing the services of Altman, Rogers& Co. for the provision of External Auditing. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA that: Section 1.The City Manager is authorized to enter into a Professional Services Agreement with Altman,Rogers&Co. for the Provision of External Audit Services for the fiscal years ending December 31, 2023, 2024, and 2025, with two one-year options to extend. Section 2. Funding in the amount of$20,700 is appropriated from General Fund reserves account number 01000-0000-3400 to the audit services line item number 01000-1110-7000 in addition to $120,000 previously budgeted. Section 3.This resolution shall take effect upon adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska,this 22nd day of May, 2023. CITY OF SEWARD, ALASKA RESOLUTION 2023-067 THE CITY OF SEWARD, ALASKA Sue McClure, Mayor AYES: Osenga, DeMoss, Calhoon, Wells, Finch, Barnwell, McClure NOES: None ABSENT: None ABSTAIN: None ATTEST: Kris Peck Deputy City Clerk ossisiesil(City Seal) .*t OF SEi1j%*** St? Ap"R4 "O ' • = SEAL • ��-- S�.�'NE 1 �°'.'4i" '• t OF too P.�`�+ City Council Agenda Statement a Meeting Date: May 22, 2023 t! To: City Council From: Norm Regis, Acting City Manager Subject: Resolution 2023-067: Authorizing the City Manager to Enter Into a Professional Services Agreement with Altman, Rogers, & Co for External Audit Services, And Appropriating Funds Background and justification: The City of Seward has utilized Altman, Rogers, & Co as the External Audit Firm since 2019. Prior to 2019, BDO served as the City's External Audit provider. Over the past 4 years, Altman, Rogers, & Co has served the City well and no issues have occurred which would require the City to seek another provider. Altman, Rogers, & Co will audit the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information, including the disclosures, which collectively comprise the basic financial statements, of City of Seward as of and for the fiscal years ending December 31, 2023, 2024, and 2025, with two, one-year options to extend. Accounting standards generally accepted in the United States of America (GAAP) provide for certain required supplementary information (RSI), such as budgetary comparison schedules, to supplement City of Seward's basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Altman, Rogers, & Co is an Alaska based Certified Public Accounting (CPA) firm which provides auditing and accounting services to more dozens of governmental entities in the State of Alaska. The firm has branch locations in Anchorage, Soldotna, and Juneau and has been in practice in Alaska for over 35. They have assisted clients in preparing their Annual Comprehensive Financial Report and receiving this Certificate of Achievement in Excellence in Financial Reporting and as such, they are qualified to perform the City's audit. City Administration has consulted with Carmen Jackson, CPA regarding which firm is best suited to perform audit services for the City of Seward, and Altman, Rogers, & Co was recommended to continue the service. Please see the attached letter from Carmen Jackson. The following is a breakdown of the fees for the services we are proposing for the fiscal years ending December 31, 2023, 2024, and 2025, and two, one-year options to extend. The above fees are inclusive of out-of-pocket costs and include 2 federal and 2 state compliance programs being audited as major programs for compliance purposes. Each additional program will be $2,000. The fee assumes we will assist management with the preparation of the Annual Comprehensive Financial Report. 195 Audit Fieldwork 2023 $ 140,700 2024 $ 148,000 2025 $ 155,500 2026 $ 163,750 2027 $ 172,500 Comprehensive and Strategic Plan Consistency Information This legislation is consistent with (citation listed): Comprehensive Plan: 11.3 City Government and Finances Strategic Plan: Other: Certification of Funds Total amount of funds listed in this legislation: $ This legislation (✓): Creates revenue in the amount of: $ x Creates expenditure in amount of: $ 140,700 Creates a savings in the amount of: $ Has no fiscal impact Funds are (✓): x Budgeted Line item(s): 01000-1110-7000 $120,000 x Not budgeted 01000-1110-7000 $20,700 Not applicable Fund Balance Information Affected Fund (✓): x General SMIC Electric Wastewater Boat Harbor Parking F1 Wat F1 Healthcare Motor Pool Other Note: amounts are unaudited Fund Balance/Net position — unrestricted/unassigned $ 6,697,919 Finance Director Signature: Attorney Review RYes Attorney Signature: Not applicable Comments: Administration Recommendation x Approve Res. Other: 196 Altman, Rogers CoCERTIFIED PUBLIC . ACCOUNTANTS May 10, 2023 Audit Committee or Mayor City of Seward P.O. Box 167 Seward, AK 99664-0167 Dear Audit Committee or Mayor, We are pleased to confirm our understanding of the services we are to provide for the City of Seward for the fiscal years ending December 31, 2023, 2024, and 2025, with two, one year options. Audit Scope and Objectives We will audit the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information, including the disclosures, which collectively comprise the basic financial statements,of City of Seward as of and forthe fiscal years ending December 31, 2023, 2024, and 2025, with two, one year options. Accounting standards generally accepted in the United States of America (GAAP) provide for certain required supplementary information (RSI), such as budgetary comparison schedules, to supplement City of Seward's basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. As part of our engagement, we will apply certain limited procedures to City of Seward's RSI in accordance with auditing standards generally accepted in the United States of America (GAAS). These limited procedures will consist of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We will not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient appropriate evidence to express an opinion or provide any assurance. The following RSI is required by GAAP and 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 the net pension and the OPEB liabilities and contributions. 3000 C Street N. Suite 201 Anchorage,Alaska 99503 Phone 907-274-2992 Fax 907-274-2993 Offices in Juneau and Soldotna A Professional Corporation 198 City of Seward Page 2 of 10 We have also been engaged to report on supplementary information other than RSI that accompanies City of Seward's financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with GAAS, and we will provide an opinion on it in relation to the financial statements as a whole in a separate written report accompanying our auditor's report on the financial statements or in a report combined with our auditor's report on the financial statements. 1) Schedule of expenditures of federal awards and related notes. 2) Schedule of state financial assistance and related notes. 3) Additional supplementary information. In connection with our audit of the basic financial statements, we will read the following other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed,we conclude that an uncorrected material misstatement of the other information exists;we are required to describe it in our report. 1) Introductory section. 2) Statistical section. 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 issue an auditor's report that includes our opinions about whether your financial statements are fairly presented, in all material respects, in conformity with GAAP, and report on the fairness of the supplementary information referred to in the second paragraph when considered in relation to the financial statements as a whole. 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 GAAS and Government Auditing Standards will always detect a material misstatement when it exists. Misstatements, including omissions, can arise from fraud or error and are considered material if there is a substantial likelihood that, individually or in the aggregate,they would influence the judgment of a reasonable user made based on the financial statements. The objectives also include reporting on: • Internal control over financial reporting and compliance with 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. • Internal control over compliance related to major programs and an opinion (or disclaimer of opinion) on compliance with federal statutes, regulations, and the terms and conditions of federal and state awards that could have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 1996 and Title 2 U.S. Code of Federal Regulations(CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. 199 City of Seward Page 3 of 10 Auditor's Responsibilities for the Audit of the Financial Statements and Single Audit We will conduct our audit in accordance with GAAS; the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; the provisions of the Uniform Guidance; and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits, and will include tests of accounting records, a determination of major program(s) in accordance with Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits, and other procedures we consider necessary to enable us to express such opinions. As part of an audit in accordance with GAAS and Government Auditing Standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We will evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management. We will also evaluate the overall presentation of the financial statements, including the disclosures, and determine whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We will plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, 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 government or to acts by management or employees acting on behalf of the government. Because the determination of waste and abuse is subjective, Government Auditing Standards do not expect auditors to perform specific procedures to detect waste or abuse in financial audits nor do they expect auditors to provide reasonable assurance of detecting waste or abuse. Because of the inherent limitations of an audit, combined with the inherent limitations of internal control, and because we will not perform a detailed examination of all transactions, there is an unavoidable risk that some material misstatements or noncompliance may not be detected by us, even though the audit is properly planned and performed in accordance with GAAS and Government Auditing Standards. 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 of any material errors, any fraudulent financial reporting, or misappropriation of assets that come to our attention.We will also inform the appropriate level of management 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. 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. We will also conclude, based on the audit evidence obtained, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the government's ability to continue as a going concern for a reasonable period of time. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, tests of the physical existence of inventories, and direct confirmation of receivables and certain assets and liabilities by correspondence with selected individuals, funding sources, creditors, and financial institutions. We will also request written representations from your attorneys as part of the engagement. 200 City of Seward Page 4 of 10 We may, from time to time and depending on the circumstances, use third-party service providers in serving your account. We may share confidential information about you with these service providers but remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures, and safeguards to protect the confidentiality of your personal information. In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information and we will take reasonable precautions to determine that they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others. In the event that we are unable to secure an appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your confidential information with the third-party service provider. Furthermore, we will remain responsible for the work provided by any such third-party service providers. Our audit of financial statements does not relieve you of your responsibilities. Audit Procedures—Internal Control We will obtain an understanding of the government and its environment, including internal control relevant to the audit, sufficient to identify and assess the risks of material misstatement of the financial statements, whether due to error or fraud, and to design and perform audit procedures responsive to those risks and obtain evidence that is sufficient and appropriate to provide a basis for our opinions. 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, misrepresentation, or the override of internal control. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the 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 and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits, 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 compliance requirements applicable to each major federal and state 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 and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. An audit is not designed to provide assurance on internal control or to identify significant deficiencies or material weaknesses. Accordingly, we will express no such opinion. However, during the audit, we will communicate to management and those charged with governance internal control related matters that are required to be communicated under AICPA professional standards, Government Auditing Standards, and the Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Audit Procedures—Compliance As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of City of Seward's compliance with provisions of applicable laws, regulations, contracts, and agreements, including grant agreements. However, the objective of those procedures 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. 201 City of Seward Page 5 of 10 The Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with federal and state statutes, regulations, and the terms and conditions of federal and state awards applicable to 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 City of Seward's major programs. For federal and state programs that are included in the Compliance Supplement, our compliance and internal control procedures will relate to the compliance requirements that the Compliance Supplement identifies as being subject to audit.The purpose of these procedures will be to express an opinion on City of Seward's compliance with requirements applicable to each of its major programs in our report on compliance issued pursuant to the Uniform Guidance and the State ofAlaska Audit Guide and Compliance Supplement for State Single Audits. Other Services We will assist in the preparation of the federal data collection form, financial statements, schedule of expenditures of federal awards, schedule of state financial assistance, and related notes of City of Seward in conformity with accounting principles generally accepted in the United States of America and the Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits based on information provided by you. 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.We will perform the services in accordance with applicable professional standards.The other services are limited to the preparation of the federal data collection form previously defined.We, in our sole professional judgment, reserve the right to refuse to perform any procedure or take any action that could be construed as assuming management responsibilities. You agree to assume all management responsibilities for the preparation of the federal data collection form and any other nonaudit services we provide. You will be required to acknowledge in the management representation letter our assistance with preparation of the federal data collection form, and that you have reviewed and approved the preparation of the federal data collection form and have accepted responsibility for them. Further, you agree to oversee the nonaudit services by designating an individual, preferably from senior management, with suitable skill, knowledge, or experience; evaluate the adequacy and results of those services; and accept responsibility for them. Responsibilities of Management for the Financial Statements and Single Audit Our audit will be conducted on the basis that you acknowledge and understand your responsibility for(1)designing, implementing, establishing, and maintaining effective internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, including internal controls over federal awards, and for evaluating and monitoring ongoing activities to help ensure that appropriate goals and objectives are met; (2) following laws and regulations; (3) ensuring that there is reasonable assurance that government programs are administered in compliance with compliance requirements; and (4) ensuring that management and financial information is reliable and properly reported. Management is also responsible for implementing systems designed to achieve compliance with applicable laws, regulations, contracts, and grant agreements. You are also responsible for the selection and application of accounting principles; for the preparation and fair presentation of the financial statements, schedule of expenditures of federal awards, and schedule of state financial assistance, and all accompanying information in conformity with accounting principles generally accepted in the United States of America; and for compliance with applicable laws and regulations (including federal and state statutes), rules, and the provisions of contracts and grant agreements (including award agreements).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. 202 City of Seward Page 6 of 10 You are also responsible for making drafts of financial statements, schedule of expenditures of federal awards, schedule of state financial assistance, all financial records, and related information available to us and for the accuracy and completeness of that information (including information from outside of the general and subsidiary ledgers). You are also 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, such as records, documentation, identification of all related parties and all related-party relationships and transactions, and other matters; (2) access to personnel, accounts, books, records, supporting documentation, and other information as needed to perform an audit underthe Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits; (3) additional information that we may request for the purpose of the audit; and (4) unrestricted access to persons within the government from whom we determine it necessary to obtain audit evidence. At the conclusion of our audit, we will require certain written representations from you about the financial statements; schedule of expenditures of federal awards; schedule of state financial assistance, federal and state award programs; compliance with laws, regulations, contracts, and grant agreements; and related matters. Your responsibilities include 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 of each opinion unit taken as a whole. You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud affecting the government 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 government received in communications from employees, former employees, grantors, regulators, or others. In addition, you are responsible for identifying and ensuring that the government complies with applicable laws, regulations, contracts, agreements, and grants. You are also responsible for taking timely and appropriate steps to remedy fraud and noncompliance with provisions of laws, regulations, contracts, and grant agreements that we report. Additionally, as required by the Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits, it is management's responsibility to evaluate and monitor noncompliance with federal and state 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; promptly follow up and take corrective action on reported audit findings; and prepare a summary schedule of prior audit findings and a separate corrective action plan. The summary schedule of prior audit findings should be available at the start of our audit. 203 City of Seward Page 7 of 10 You are responsible for identifying all federal and state awards received and understanding and complying with the compliance requirements and for the preparation of the schedule of expenditures of federal awards schedule of state financial assistance (including notes and noncash assistance received, and COVID-19-related concepts,such as lost revenues, if applicable) in conformity with the Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. You agree to include our report on the schedule of expenditures of federal awards, schedule of state financial assistance in any document that contains, and indicates that we have reported on, the schedule of expenditures of federal awards, and schedule of state financial assistance. You also agree to include the audited financial statements with any presentation of the schedule of expenditures of federal awards, and schedule of state financial assistance that includes our report thereon or make the audited financial statements readily available to intended users of the schedule of expenditures of federal awards, and schedule of state financial assistance no later than the date the schedule of expenditures of federal awards, and schedule of state financial assistance is issued with our report thereon. Your responsibilities include acknowledging to us in the written representation letter that (1) you are responsible for presentation of the schedule of expenditures of federal awards and schedule of state financial assistance in accordance with the Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits; (2) you believe the schedule of expenditures of federal awards and schedule of state financial assistance, including its form and content, is stated fairly in accordance with the Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits; (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 and schedule of state financial assistance. You are also responsible for the preparation of the other supplementary information, which we have been engaged to report on, in conformity with U.S. generally accepted accounting principles (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.Your responsibilities include acknowledging to us in the written representation letter that(1) you are responsible for presentation of the supplementary information in accordance with GAAP; (2) you believe the supplementary information, including its form and content, is fairly presented in accordance with GAAP; (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 supplementary information. 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 of previous financial audits, attestation engagements, performance audits, or other studies related to the objectives discussed in the Audit Scope and 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 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. Engagement Administration, Fees, and Other We understand that your employees will prepare all cash, accounts receivable, or other confirmations we request and will locate any documents selected by us for testing. 204 City of Seward Page 8 of 10 At the conclusion of the engagement, we will complete the appropriate sections of the Data Collection Form that summarizes our audit findings. It is management's responsibility to electronically submit the reporting package (including financial statements, schedule of expenditures of federal awards, summary schedule of prior audit findings, auditor's reports, and corrective action plan) along with the Data Collection Form to the federal audit clearinghouse. We will coordinate with you the electronic submission and certification. The Data Collection Form and the reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor's reports or nine months after the end of the audit period. We will provide copies of our reports to governing body of City of Seward; however, management is responsible for distribution of the reports and the financial statements. Unless restricted by law or regulation, or containing privileged and confidential information, copies of our reports are to be made available for public inspection. The audit documentation for this engagement is the property of Altman, Rogers & Co. and constitutes confidential 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 the governing body of City of Seward 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 Altman, Rogers & Co. 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 five years after the report release date or for any additional period requested by the Cognizant Agency, Oversight Agency for Audit, or Pass-through Entity. If we are aware that a federal and state 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. Grant Todd is the engagement partner and is responsible for supervising the engagement and signing the reports or authorizing another individual to sign them. The following is a breakdown of the fees for the services we are proposing for the fiscal years ending December 31, 2023, 2024, and 2025, and two, one year options: Audit Fieldwork 2023 $ 140,700 2024 $ 148,000 2025 $ 155,500 2026 $ 163,750 2027 $ 172,500 The above fees are inclusive of out-of-pocket costs and include 2 federal and 2 state compliance programs being audited as major programs for compliance purposes. Each additional program will be $2,000. The fee assumes we will assist management with the preparation of the Annual Comprehensive Financial Report (ACFR). 205 City of Seward Page 9 of 10 Our fee for these services will be at our standard hourly rates including out-of-pocket costs (such as report reproduction, word processing, postage, travel, copies, telephone, etc.) will not exceed the amounts listed on the previous page. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. Our invoices for these fees 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 30 days or more overdue and may 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 upon written notification of termination, even if we have not completed our report(s). You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket costs through the date of termination. The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the engagement. If significant additional time is necessary,we will keep you informed of any problems we encounter and our fees will be adjusted accordingly. Reporting We will issue written reports upon completion of our Single Audit. Our reports will be addressed to governing body of City of Seward. 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 opinions, add a separate section, or add an emphasis-of-matter or other-matter paragraph to our auditor's report, or if necessary, withdraw from this engagement. If our opinions are other than unmodified, we will discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed opinions, we may decline to express opinions or issue reports, or we may withdraw from this engagement. The Government Auditing Standards report on internal control over financial reporting and on compliance and other matters will state that (1) the purpose of the report is solely to describe the scope of 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)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 and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits report on internal control over compliance will state that the purpose of the report on internal control over compliance is solely to describe the scope of testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Both reports will state that the report is not suitable for any other purpose. We appreciate the opportunity to be of service to City of Seward and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the attached copy and return it to us. Very truly yours, ALTMAN, ROGERS & CO. Grant Todd, CPA Principal 206 City of Seward Page 10 of 10 RESPONSE: This letter correctly sets forth the understanding of City of Seward. Management signature: Title: Date: 207