ORDER NO.29690 OBTAIN PROFESSIONAL ACCOUNTING AND/OR AUDITING SERVICES TO REVIEW AND ANALYZE CURRENT AND PRIOR COUNTY GRADE/STEP PAYROLL SCHEDULES AND OTHER PAYROLL RECORDS Came to be heard this the 17th day of May, 2006, with a motion made by Commissioner Nicholson seconded by Commissioner Letz. The Court unanimously approved by vote of 4-0-0 to: Enter into an Agreement with William J. Beltrone, Certified Public Accounting Firm to conduct an audit of the Kerr County Sheriffs Office payroll going back to 10-01-2003 and authorize the cost of the audit to be no more than $4,300 plus incidental expenses limited to a maximum of $200, authorize County Judge to sign that Agreement, and that we direct the Sheriff and the Treasurer to cooperate in the study to make sure it is done expeditiously. Also, to appoint Commissioner Nicholson to be the representative from the Commissioner's Court, along with the assistance of the County Auditor. The Agreement is subject to the approval, in form, of the County Attorney. William J. Beltrone Certified Public Accountant Green Hills Center 1006 C Junction Hwy. Kerrville, TX 78028 Phone: (830)792-4668 Email: Beltrone@ktc.com Fax: (830) 895-0028 May 16, 2006 Kerr County Commissioner's Kerr County Commissioner's Court 700 E. Main Street Kerrville, Texas 78028 Kerr County Commissioner's: I am pleased to have an opportunity to provide professional services for the Kerr County Commissioner's Court. I am devoted to providing the highest level of professional services at a reasonable cost. We have the experience and the resources needed to provide independent professional services to the Kerr County Commissioner's Court and the Kerr County Sheriff' s Office. FIRM HISTORY William J. Beltrone, CPA (a proprietorship) began in Kerrville in 2002. After leaving the accounting firm of Davidson, Freedle, Espenhover & Overby, P.C. I developed an audit practice based on my relationship with SalmonBeach & Associates, PLLC, (SBA) one of the premier mid-tier Public Accounting firms in Dallas, TX. Our firm continues to enjoy a working affiliation with this firm, a relationship which provides an excellent resource for audit, accounting and tax knowledge as well as hundreds of years of combined experience. Our firm provides accounting, tax and business consulting as well as standard professional tax and accounting services in a variety of industries. We work with a multitude of organizations including community outreach groups and private educational providers. References are available upon request. EXPERIENCE/PERSONNEL William J. Beltrone, CPA I have accumulated over 12 years of public accounting experience since obtaining an Associate degree in accounting from Alvin Community College and a Batchelor of Business Administration degree with an emphasis in accounting from the University of Houston (graduated Cum Laude from both colleges). Kerr County Commissioner's Court Page 2 Afrer, working in public accounting for several yeazs in the Houston azea I moved to Kerrville and became an Accounting Manager and Assistant Controller for Kerrville Bus Company. During that time I managed personnel and over-saw all aspects of accounting operations, including a very detailed union payroll system. Along with my constant growth in the field of public accounting and my experience in the private sector, I have served as Treasurer on Boards of several Kerrville azea not-for- profit organizations. I am a current member of the San Antonio chapter of the Texas Society of Certified Public Accountants. Michael K. Ketterman, CPA Michael Ketterman has a bachelor of business administration degree with an emphasis in accounting from the University of Texas at San Antonio, where he graduated Cum Laude in 2001. He is a Certified Public Accountant with more than five years of public and private sector accounting experience combined, including three yeazs as an internal auditor with Frost National Bank and one yeaz as an internal auditor with the City of San Antonio. Michael and I will provide the agreed upon services for the Kerr County Commissioner's Court and the Kerr County Sheriff's Office. During the course of the procedures, Michael will be adequately supervised by me and I will be personally responsible for all services and work performed for this engagement. QUALITY CONTROL Our firm complies with all AICPA standards for our ofl ce and our profession. Among other industry guides, we utilize Practitioners Publishing Company (PPC) Guides for Quality Control to assist in maintaining high standards and level of quality control. Mr. Ketterman and I exceed all of the continuing professional education (CPE) requirements, required for Certified Public Accountants. Technical CPE is concentrated in the azeas of auditing and taxation. I successfully completed a peer review as required by the Peer Review Board of the American Institute of Certified Public Accountants. Peer reviews ensure that firms have quality control systems in place over their accounting and auditing practices. See attached letter. My office, Mr. Ketterman and I aze all currently licensed in the state of Texas. Kerr County Commissioner's Court Page 3 PROPOSAL We believe we aze well qualified and well positioned to provide professional agreed upon procedures to the Kerr County Commissioner's Court and the citizens of Kerr County. We strive to provide services of a professional quality, which exceed those sometimes associated with sole practitioners and "local" accounting firms. The following letter will provide you with a basic proposal for services. If given the opportunity, we will assist the Court in determining the exact procedures needed to determine the extent of underpayment of employee salaries for the prior three years of service to KCSO. SCOPE OF SERVICES We will perform agreed upon procedures as determined by the responsible parties (Kerr County Commissioner's Court) and interested parties (KCSO) relating to the payroll of the Kerr County Shemfl's Department for the prior three years. Our procedures will be conducted in accordance with agreed-upon procedures (AUP) standazds generally accepted in the United States of America. If, for any reason, I am unable to complete the agreed upon procedures, I will not issue a report as a result of this engagement. My procedures will include tests of documentary evidence supporting the transactions recorded in the payrolls. At the conclusion of the agreed-upon procedures, I may request certain written representations from you if I determined the need for such. An agreed-upon procedure includes performing testing to issue a report of findings based on specific procedures performed on subject matter. Because the scope of review-level and agreed-upon-procedures-level engagements is limited, auditors aze not expected to provide reasonable assurance of detecting fraud, illegal acts, or violations of contract or grant agreements for these types of engagements. However, we will inform you of any material errors and any fraudulent financial reporting or misappropriation of assets that come to my attention. We will also inform you of any violations of laws or governmental regulations that come to our attention, unless cleazly inconsequential. Our responsibility as is limited to the period covered by the AUP and does not extend to any eazlier or later periods for which I am not engaged as auditor. An AUP is not designed to provide assurance on internal control or to identify reportable conditions, that is, significant deficiencies in the design or operation of the internal control. However, during the AUP, if I become awaze of such reportable conditions, I will communicate them to you. Although AICPA standazds require that a report on an engagement to evaluate an assertion based on agreed-upon criteria or on an engagement to apply agreed-upon procedures should contain a statement limiting its use to the parties who have agreed upon such criteria or procedures, such a statement does not require that the report distribution be limited. The availability of the report for public inspection should be documented. Kerr County Commissioner's Court Page 4 You are responsible for making all financial records and related information available to me and for the accuracy and completeness of that information. I will advise you about appropriate accounting principles and their application as necessary for proper completion of the AUP, but the responsibility for the adequacy of the AUP remains with you. This responsibility includes the establishment and maintenance of adequate records and effective internal controls over financial reporting, the selection and application of accounting principles, and the safeguarding of assets. 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 payroll and other information provide to apply the AUP involving (1) management, (2) employees who have significant roles in intemal control, and (3) others where the fraud could have a material effect on the payrolls and the payroll system. You are also responsible for informing us of your knowledge of any allegations of fraud or suspected fraud affecting the azeas to be tested received in communications from employees, former employees, regulators, or others. In addition, you are also responsible for identifying and ensuring the organization complies with applicable laws and regulations. We understand that your employees will prepare all information required by us to perform the AUP and will locate any documents selected by us for testing. We expect to begin our AUP by May 22, 2006 or soon thereafrer and will do our best to complete the AUP no later than June 1 s`, 2006. These dates are contingent upon full availability of the documentation required to perform the AUP as well as the cooperation of all personnel involved. We will bill on an hourly rate based on the time and expertise it takes to complete the agreed upon procedures. I estimate that our fee for the AUP will be $3,800 and will not exceed $4,300. This fee estimate is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the AUP. If significant additional time is necessary, I will discuss it with you and arrive at a new fee estimate before I incur the additional costs. You will also be billed for out-ot= pocket costs, including report production, mileage and incidental expenses. I estimate these costs to be azound $200. My invoice for these fees will be provided as work progresses and aze payable on presentation. I appreciate the opportunity to be of service to you and believe this letter accurately summarizes the significant terms of this proposal for engagement. If you have any questions, please let me know. If you chose me to provide the AUP and you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to me. Please do not hesitate to call if you have any questions regazding this proposal. Sincerely, William J. Beltrone, CPA Kerr County Commissioner's Court Page 5 This letter correctly sets forth the understanding of Kerr County Commissioner's Court: Officer Signature: Title: Date: ~~ AKIN DOHERTY KLEIN $z FEIjGE, P.C. Thomas A. Akin David J. Doherty Howard H. Klein, Jr. Joseph V. Feuge, !I System Review Report Apri126, 2004 To the Owner William J. Beltrone, CPA Certi4ied Public A