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HomeMy WebLinkAboutMoss Adams, LLP 2016-03-04 - Ukiah Waste SolutionsMOSS ADAMS up February 11, 2016 City of Ukiah 300 Seminary Avenue Ukiah, CA 95482 Ukiah Waste Solutions, Inc. 3515 Taylor Drive Ukiah, CA 95482 Re: Review and Nonattest Services Dear Sirs /Madams; WWW.MOSSADAMS.COM ••t F ri 956 -41[, THAT 1OCOUNTS years This engagement letter ( "Engagement Letter ") and the attached Professional Services Agreement, which is incorporated by this reference, confirm our understanding of the terms and objectives of our engagement and limitations of the services that Moss Adams LLP ( "Moss Adams," "we," "us," and "our ") will provide to the City of Ukiah ( "City") and Ukiah Waste Solutions, Inc. ( "Company ") Collectively, the City and Company may be referred to as "you" and "your" throughout this agreement. Scope of Services - Review You have requested that we perform a review engagement on the Company's statement of operations for the year ended December 31, 2015, and related notes to the financial statement (collectively, the "financial statement "), that has been prepared in accordance with accounting standards generally accepted in the United States of America. As a part of our engagement, we will issue a written report that will describe the financial statement to which our report applies, the responsibility for the financial statement is that of Company's management. Our report will also describe our responsibility and our conclusion based on the results of our review. Our report will state that a review report is substantially less in scope than an audit and accordingly, we do not express an opinion on the financial statement. Our report is intended solely for the use of the City and the Company, and should not be used by anyone other than the City and the Company. Accordingly, our report will include a statement to this effect similar to the following: Restriction on Use Our report is intended solely for the information and use of the City of Ukiah and Ukiah Waste Solutions, Inc. and is not intended to be and should not be used by anyone other than these specified parties. Additionally, we cannot provide assurance that our review report will not be further modified or that we will be able to issue a review report. There may be circumstances in which our report may differ City of Ukiah Ukiah Waste Solutions, Inc. February 11, 2016 Page 2 of 5 from its expected form and content, including the need for us to report known departures from the applicable financial reporting framework, add an emphasis -of- matter or other -matter paragraph(s), or withdraw from the engagement. If, for any reason, we are unable to complete our review of the Company's financial statement, we will not issue a report on such financial statement as a result of this engagement. Scope of Services and Limitations - Nonattest We will provide the Company with the following nonattest services: 1. Assist the Company in preparation of the financial statement and related footnotes for the year ended December 31, 2015, as described above. 2. Assist the Company in the preparation of the tax provision with respect to the presentation and disclosure of income taxes in the Company's financial statement and related footnotes for the year ended December 31, 2015. Our professional standards require that we remain independent with respect to our attest clients, including those situations where we also provide nonattest services such as those identified in the preceding paragraphs. As a result, the Company must accept the responsibilities set forth below related to this engagement: • Assume all management responsibilities. • Oversee the service, by designating an individual, preferably within senior management who possesses skill, knowledge, and /or experience to oversee the nonattest services. The individual is not required to possess the expertise to perform or reperform the services. • Evaluate the adequacy and results of the nonattest services performed. • Accept responsibility for the results of the nonattest services performed. It is our understanding that Jack Simmons, Controller has been designated by the Company to oversee the nonattest services and that in the opinion of the Company is qualified to oversee the nonattest services as outlined above. If any issues or concerns in this area arise during the course of our engagement, we will discuss them with the Company prior to continuing with the engagement. Timing Hiromi Young is responsible for supervising the engagement and authorizing the signing of our report. We expect to begin the review fieldwork for this engagement at the Company's office on an agreed upon date and the review engagement plan calls for two to three days of on -site procedures. City of Ukiah Ukiah Waste Solutions, Inc. February 11, 2016 Page 3 of 5 As we reach the conclusion of our engagement, we will coordinate with the Company the date the financial statements will be available for issuance. The Company understands that (1) the Company will be required to consider subsequent events through the date the financial statements are available for issuance, (2) the Company will disclose in the notes to the financial statement the date through which subsequent events have been considered, and (3) the subsequent event date disclosed in the footnotes will not be earlier than the date of the management representation letter and the date of our review report. Our scheduling depends on the Company's completion of the year -end closing and adjusting process prior to our arrival to begin the fieldwork. We may experience delays in completing our services due to the Company's staffs unavailability or delays in the Company's closing and adjusting process. The Company and the City understand our fees are subject to adjustment if we experience these delays in completing our services. Our services will be concluded upon delivery of our report on the Company's financial statement for the year ended December 31, 2015 to the City and the Company. Fees We estimate that our fees for the review services and nonattest services will be in the range of $15,000. The City will be responsible for payment of our invoices. The City will also be billed for expenses. Our ability to provide services in accordance with our estimated fees depends on the quality, timeliness, and accuracy of the Company's records, and, for example, the number of general ledger adjustments required as a result of our work. We will also need the Company's accounting staff to be readily available during the engagement to respond in a timely manner to our requests. Lack of preparation, poor records, general ledger adjustments and /or untimely assistance will result in an increase of our fees. Additional Services You may request that we perform additional services not contemplated by this Engagement Letter. If this occurs, we will communicate with the party requesting additional services regarding the scope of the additional services and the estimated fees. It is our practice to issue a separate agreement covering additional services. However, absent such a separate agreement, all services we provide the City and the Company on a collective basis shall be subject to the terms and conditions in the Professional Services Agreement. City of Ukiah Ukiah Waste Solutions, Inc. February 11, 2016 Page 4 of 5 We appreciate the opportunity to be of service to you. If you agree with the terms of our engagement as set forth in this Agreement, please sign the enclosed copy of this letter and return it to us with the Professional Services Agreement. Your sincerely, Christopher L. Paris, Partner, for Moss Adams LLP Enclosures ACCEPTED AND AGREED: This Engagement Letter and the attached Professional Services Agreement set forth the entire understanding of Ukiah Waste Solutions, Inc. and the City of Ukiah with respect to this engagement and the services to be provided by Moss Adams LLP: The City of Ukiah Signature: Print Name: Title: Date: 7 Ukiah Wast lutions, Inc � Signature: /1444 ('?1k((' Print Name: )t4/t % e--1--0 l Title: % /de ytet Date: o9/////6 City of Ukiah Ukiah Waste Solutions, Inc. February 11, 2016 Page 5 of 5 Client: #609398 v.2/04/2016 PROFESSIONAL SERVICES AGREEMENT Review and Nonattest Services This Professional Services Agreement (the "PSA ") together with the Engagement Letter, which is hereby incorporated by reference, represent the entire agreement (the "Agreement ") relating to services that Moss Adams will provide to the Company and the City. Any undefined terms in this PSA shall have the same meaning as set forth in the Engagement Letter. Objective of the Review The objective of our review engagement is to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statement for it to be in accordance with the applicable financial reporting framework, primarily through the performance of inquiry and analytical procedures. We will conduct our engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the American Institute of Certified Public Accountants. Procedures and Limitations A review differs significantly from and is substantially less in scope than an audit of a financial statement, the objective of which is the expression of an opinion regarding the financial statement as a whole. A review engagement includes primarily applying analytical procedures to the Company's financial data and making inquiries of Company management. A review does not contemplate: (a) obtaining an understanding of the Company's internal control, (b) assessing fraud risk, (c) testing accounting records by obtaining sufficient appropriate audit evidence through inspection, observation, confirmation, or the examination of source documents, or (d) other procedures ordinarily performed in an audit engagement. Accordingly, we will not express an opinion on the financial statement. You agree we have no responsibility to identify and communicate significant deficiencies or material weaknesses in the Company's internal control as part of this engagement. Our engagement cannot be relied upon to identify or disclose any financial statement misstatements, including those caused by error or fraud, or to identify or disclose any wrongdoing within the Company or noncompliance with laws and regulations. However, we will inform the appropriate level of Company management of any material errors and any evidence or information that fraud may have occurred should such material errors or fraud come to our attention during the performance of our review procedures. Further, we will report to the Company any evidence or information that comes to our attention during the performance of our review procedures regarding noncompliance with laws and regulations that may have occurred, unless they are clearly inconsequential. You agree we have no responsibility to identify and communicate significant deficiencies or material weaknesses in the Company's internal control as part of this engagement. We may assist Company management in the preparation of the Company's financial statement. Regardless of any assistance we may render, all information included in the financial statement remains the representation of the Company's management. We may issue a preliminary draft of our review report, and /or the Company's financial statement, to the Company for its review. Any preliminary draft of our report, or the Company's financial statement, should not be relied upon, reproduced or otherwise distributed without the written permission of Moss Adams. Management's Responsibility for Financial Statements The Company is responsible for making all financial records and related information, including documents, explanations, and other information, available to us and for the accuracy and completeness of that information, including significant judgments used in the preparation of the Company's financial statement and the selection of the financial reporting framework to be applied in the preparation of the Company's financial statement. The Company is also responsible for the fair presentation of the financial statement in accordance with the applicable financial reporting framework. The Company is responsible for the inclusion of all informative disclosures that are appropriate for the applicable financial reporting framework used to prepare its financial statement. We may advise the Company about appropriate accounting principles and their application and may assist in the preparation of the Company's financial statement, but the Company is responsible for its financial statement. The Company is also responsible for the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. The Company is responsible for preventing and detecting fraud and for the safeguarding of assets. The Company is responsible for adjusting the financial statement to correct material misstatements and for confirming to us in the management representation letter Professional Services Agreement Review and Nonattest Services Page 2 of 6 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 statement taken as a whole. The Company is also responsible for identifying and ensuring that the Company complies with applicable laws and regulations. The Company agrees that as a condition of our engagement they will provide us, in a timely and orderly way, with access to all information of which you are aware that is relevant to the preparation and fair presentation of the financial statement. This includes all records, documentation, and other matters, and additional information that we may request from them for the purpose of our engagement, and all such information will be, to the best of their knowledge and belief, truthful and accurate. The Company agrees that they will provide us with unrestricted access to persons within the Company of whom we determine it necessary to make inquiries. Dissemination of Financial Statements Our report on the financial statement must be associated only with the financial statement that was the subject of our engagement. Our report is intended solely for the use of the City and the Company and it should not be used by anyone other than the City and the Company. Our report will include a statement to this effect. You agree not to disseminate our report to anyone outside the City or the Company who will rely on our report as it is not intended for such purposes. You agree not to include or make reference to our report in any document containing the Company's financial statement that indicates we have performed a review engagement on such financial statement without our express written permission. You may make copies of our report, but only if the entire financial statement (including related footnotes, as appropriate) is reproduced and distributed with our report. You agree not to reproduce or associate our report with any other financial statements, or portions thereof, that are not the subject of this engagement. Offering of Securities This Agreement does not contemplate Moss Adams providing any services in connection with the offering of securities, whether registered or exempt from registration, and Moss Adams will charge additional fees to provide any such services. You agree not to incorporate or reference our report in a private placement or other offering of equity or debt securities without our express written permission. You further agree we are under no obligation to re -issue our report or provide written permission for the use of our report at a later date in connection with an offering of securities, the issuance of debt instruments or for any other circumstance. We will determine, at our sole discretion, whether we will reissue our report or provide written permission for the use of our report only after we have conducted any procedures we deem necessary in the circumstances. You agree to provide us with adequate time to review documents where (a) our report is requested to be reissued, (b) our report is included in the offering document or referred to therein, or (c) reference to our firm is expected to be made. If we decide to reissue our report or provide written permission to the use of our report, you agree that Moss Adams will be included on each distribution of draft offering materials and we will receive a complete set of final documents. If we decide not to reissue our report or withhold our written permission to use our report, you may be required to engage another firm to perform an audit or review the financial statement covered by our review report, and that firm will likely bill you for its services. While the successor accountant may request access to our engagement documentation for those periods, we are under no obligation to permit such access. Changes in Professional or Accounting Standards To the extent that future federal, state or professional rule- making activities require modification of our review, procedures, scope of work, etc., we will advise you of such changes and the impact on our fee estimate. If we are unable to agree on the additional fees, if any, that may be required to implement any new accounting and review standards that are required to be adopted and applied as part of our engagement, we may terminate this Agreement as provided herein, regardless of the stage of completion. Representations of Management During the course of our engagement, we may request information and explanations from the Company's management regarding, among other matters, the Company's operations, internal control, future plans, specific transactions, and accounting systems and procedures. At the conclusion of our engagement, we will require, as a precondition to the Professional Services Agreement Review and Nonattest Services Page 3 of 6 issuance of our report, that the Company's management provide us with a written representation letter confirming some or all of the representations made during the engagement. The procedures that we will perform in our engagement will be heavily influenced by the representations that we receive from management. Accordingly, false representations could cause us to expend unnecessary efforts or could cause a material error or a fraud to go undetected by our procedures. In view of the foregoing, you agree that we will not be responsible for any misstatements in the Company's financial statement and supplementary information that we fail to detect as a result of false or misleading representations, whether oral or written, that are made to us by the Company's management. While we may assist the Company's management in the preparation of the representation letter, it is the responsibility of the Company's management to carefully review and understand the representations made therein. In addition, because our failure to detect material misstatements could cause others relying upon our review report to incur damages, the Company further agrees to indemnify and hold us harmless from any liability and all costs (including legal fees) that we may incur in connection with claims based upon our failure to detect material misstatements in the Company's financial statement resulting in whole or in part from knowingly false or misleading representations made to us by any member of the Company's management. Fees and Expenses You acknowledge that the following circumstances will result in an increase of our fees: • Failure to prepare for the review as evidenced by accounts and records that have not been subject to normal year -end closing and reconciliation procedures; • Failure to complete the review preparation work by the applicable due dates; • Significant unanticipated transactions, review issues, or other such circumstances; • Delays causing scheduling changes or disruption of fieldwork; • After review or post fieldwork circumstances requiring revisions to work previously completed or delays in resolution of issues that extend the period of time necessary to complete the review; • Issues with the prior accounting firm, prior year account balances or report disclosures that impact the current year engagement; • An excessive number of review adjustments. We will endeavor to advise you in the event these circumstances occur, however we may be unable to determine the impact on the estimated fee until the conclusion of the engagement. We will bill any additional amounts based on the experience of the individuals involved and the amount of work performed. Billings are due upon presentation and become delinquent if not paid within 30 days of the invoice date. Any past due fee under this Agreement shall bear interest at the highest rate allowed by law on any unpaid balance. In addition to fees, you may be billed for expenses and any applicable sales and gross receipts tax. Direct expenses may be charged based on out -of- pocket expenditures, per diem allotments, and mileage reimbursements, depending on the nature of the expense. Indirect expenses, such as processing and copying, are passed through at our estimated clerical and equipment cost and may be charged as a flat fee. If we elect to suspend our engagement for nonpayment, we may not resume our work until the account is paid in full. If we elect to terminate our services for nonpayment, or as otherwise provided in this Agreement, our engagement will be deemed to have been completed upon written notification of termination, even if we have not completed our work. The Company will be obligated to compensate us for fees earned for services rendered and to reimburse us for expenses. You acknowledge and agree that in the event we stop work or terminate this Agreement as a result of the Company's failure to pay on a timely basis for services rendered by Moss Adams as provided in this Agreement, or if we terminate this Agreement for any other reason, we shall not be liable to you for any damages that occur as a result of our ceasing to render services. Limitation on Liability IN NO EVENT WILL MOSS ADAMS BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR OTHERWISE ARISING OUT OF THIS AGREEMENT, EVEN IF YOU ARE ADVISED OF Professional Services Agreement Review and Nonattest Services Page 4 of 6 THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL MOSS ADAMS BE LIABLE FOR EXEMPLARY OR PUNITIVE DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT. Subpoena or Other Release of Documents We may be required or requested to provide information or documents to you or a third -party in connection with governmental regulations or activities, or a legal, arbitration or administrative proceeding (including a grand jury investigation), in which we are not a party. The Company may, within the time permitted for our firm to respond to any request, initiate such legal action as the Company deems appropriate to protect information from discovery. If the Company takes no action within the time permitted for us to respond or if the Company's action does not result in a judicial order protecting us from supplying requested information, we will construe the Company's inaction or failure as consent to comply with the request. Our efforts in complying with such requests or demands will be deemed a part of this engagement and we shall be entitled to additional compensation for our time and reimbursement for our out -of- pocket expenditures (including legal fees) in complying with such request or demand. Document Retention Policy At the conclusion of this engagement, we will return to the Company all original records the Company supplied to us. The Company's records are the primary records for its operations and comprise the backup and support for the results of this engagement. Our records and files, including our engagement documentation whether kept on paper or electronic media, are our property and are not a substitute for the Company's own records. Our firm policy calls for us to destroy our engagement files and all pertinent engagement documentation after a retention period of seven years (or longer, if required by law or regulation), after which time these items will no longer be available. We are under no obligation to notify you regarding the destruction of our records. We reserve the right to modify the retention period without notifying you. Catastrophic events or physical deterioration may result in our firm's records being unavailable before the expiration of the above retention period. Except as set forth above, you agree that Moss Adams may destroy paper originals and copies of any documents, including, without limitation, correspondence, agreements, and representation letters, and retain only digital images thereof. Use of Electronic Communication We may communicate by facsimile transmission or send electronic mail over the Internet. Such communications may include information that is confidential to you. Our firm employs measures in the use of facsimile machines and computer technology designed to provide reasonable assurance that data security is maintained. While we will use our best efforts to keep such communications secure in accordance with our obligations under applicable laws and professional standards, you recognize and accept that we have no control over the unauthorized interception of these communications once they have been sent. Unless you issue specific instructions to do otherwise, we will assume that you consent to our use of facsimile transmissions to your representatives and other use of these electronic devices during this engagement as we deem appropriate. Enforceability In the event that any portion of this Agreement is deemed invalid or unenforceable, said finding shall not operate to invalidate the remainder of this Agreement. Entire Agreement This Professional Services Agreement and Engagement Letter constitute the entire agreement and understanding between Moss Adams, the City and the Company. You agree that in entering into this Agreement you are not relying and have not relied upon any oral or other representations, promise or statement made by anyone which is not set forth herein. Professional Services Agreement Review and Nonattest Services Page 5 of 6 Use of Moss Adams' Name You may not use any of Moss Adams' name, trademarks, service marks or logo in connection with the services contemplated by this Agreement or otherwise without the prior written permission of Moss Adams, which permission may be withheld for any or no reason and may be subject to certain conditions. Use of Third -Party Service Providers We may use third -party service providers in serving you, including software and data storage providers. You understand that Moss Adams does not control the providers' networks, security or availability of services. Use of Nonlicensed Personnel Certain engagement personnel who are not licensed as certified public accountants may provide services during this engagement. Dispute Resolution Procedure and Venue This Agreement shall be governed by the laws of the state of Washington, without giving effect to any conflicts of laws principles. If a dispute arises out of or relates to the engagement described herein, and if the dispute cannot be settled through negotiations, the parties agree first to try in good faith to settle the dispute by mediation using an agreed upon mediator. If the parties are unable to agree on a mediator, the parties shall petition the state court that would have jurisdiction over this matter if litigation were to ensue and request the appointment of a mediator, and such appointment shall be binding on the parties. Each party shall be responsible for its own mediation expenses, and shall share equally in the mediator's fees and expenses. If the claim or dispute cannot be settled through mediation, each party hereby irrevocably (a) consents to the exclusive jurisdiction and venue of the appropriate state or federal court located in King County, state of Washington, in connection with any dispute hereunder or the enforcement of any right or obligation hereunder, and (b) WAIVES ITS RIGHT TO A JURY TRIAL. EACH PARTY FURTHER AGREES THAT ANY SUIT ARISING OUT OF OR RELATED TO THIS AGREEMENT MUST BE FILED WITHIN ONE (1) YEAR AFTER THE CAUSE OF ACTION ARISES. Termination This Agreement may be terminated by any of the parties, with or without cause, upon ten (10) days' written notice. In such event, we will stop providing services hereunder except on work, mutually agreed upon in writing, necessary to carry out such termination. In the event of termination: (a) the Company shall pay us for services provided and expenses incurred through the effective date of termination, (b) we will provide you with all finished reports that we have prepared pursuant to this Agreement, (c) none of the parties shall be liable to the other parties for any damages that occur as a result of our ceasing to render services, and (d) we will require any new accounting firm that you may retain to execute access letters satisfactory to Moss Adams prior to such accounting firm reviewing our files. Income Tax Provision With respect to the preparation of the tax provision regarding the presentation and disclosure of income taxes in the Company's financial statement, we will not provide tax advice related to all tax positions due to the risk -based approach used in the income tax provision preparation process. The tax provision workpapers and templates are instruments of service and Moss Adams shall retain the copyright, trademark, patent, and all other intellectual property rights, whether or not the workpapers or templates are completed. It is not anticipated that Moss Adams will provide the City with access to tax provision workpapers, and any access to tax provision workpapers by the Company may be limited. In the event Moss Adams provides the Company with access to tax provision workpapers, Moss Adams grants the Company an irrevocable, non - exclusive, royalty-free license to use the completed workpapers and templates only for its use as set forth herein. The Company may not modify the tax provision workpapers or templates, or attempt to apply the tax provision workpapers or templates to generate calculations outside of those produced by Moss Adams. Professional Services Agreement Review and Nonattest Services Page 6 of 6 You may not distribute, discuss or otherwise disclose any tax provision workpapers or templates to any other party ( "Third Party") without our prior written consent. This does not apply to any tax provision information that may be contained in our review report regarding the Company's financial statement. Regulatory Access to Documentation The documents created or incorporated into our documentation for this engagement are the property of Moss Adams and constitute confidential information. However, we may be requested to make certain engagement related documents available to regulatory agencies pursuant to authority given to them by law or regulation. If requested and in our opinion a response is required by law, access to such engagement related documents will be provided under the supervision of Moss Adams personnel. Furthermore, upon request, we may provide photocopies of selected engagement related documents to regulatory agencies. The regulatory agencies may intend or decide to distribute the photocopies or information contained therein to others, including other government agencies.