Joel Lineberger From: Sent: To: Subject: Joel  Eddie Carrick edeeedocamaepacom: Friday, February 28, 20208:50AM Joel Lineberger RE: Audit service inquiry  Tony Brewer, CPA: said he would prepare financials for $4500 From: Joel Lineberger nevererocameronog, Sent: Monday, February 24, 20208:54AM To: Eddie Carrick Subject: RE: Audit service inquiry  Thank yout for your quick response. Ihave a question arising from the Estimated Date for Preliminary Draft response "Audit TB to Collis By 10-1". Ihave anticipated that Collis & Associates would prepare our financial statements to the point of completion except for the auditor's reports. This would entail the auditor being provided unaudited statements workpapers. Thereafter, any material auditor adjustments would be reflected andi incorporated into the statements along with the auditors reports. There are: some logistical details to be worked out with statement preparation but the Also, your mentioned the possibility of having another CPA that youy work with to perform year end accounting procedures and prepare the financial statements. Can you provide an amount that would be anticipated for this engagement or alternately, have your associate provide a quote directly for that service? This information will enable The town manager hasi indicated that audit services discussion will be placed on the Board of Commissioners agenda for  and our triall balance with adjustments, if any, along with my workpapers and access to any Collis intent was to provide yous statements at some point before or during your field work.  me to develop an apples to apples comparison to other RFP responses.  their next meeting on March 5th.  From: Eddie Carrick malito.eddie@edciecariçkcpa.com, Sent: Saturday, buany2.20201129AM To:. Joel Lineberger melegerecameronore Subject: RE: Audit service inquiry  Joel  See my response attached  Ify you need any further info, please let me know From: Joel Lineberger mevetger@gameronog, Sent: Friday, February 21, 2020.1:06PM Subject: FW: Audit service inquiry This one has the RFP attached.  To: Eddie Carrick  1    From: Joel Lineberger  Sent: Friday, ebnuny21,2020101PMA To: Eddie Carrick <eddie@eddiecarrickcpa.com> Subject: RE: Audit service inquiry  Ihave discussed preliminary accounting services and financial statement preparation fee with Rob Collis and hope to receive a verbal response next week. Ihave a good idea of where he will be. Ihad only one General Fund JE for 6/30/18 being a reclassification between principal andi interest having no overall impact on financial position, and no General Fund. JE's for 6/30/19. He obviously does not have to do much accounting and do provide quite a number of work schedules for his use. Ihave left Grant Revenue computations to him with that journal entry as the only one in our We will most likely require single audit procedures for 6/30/20 as the NC DOT has funded $113,000 this year, still owes us $676,000 plus our $1243,000 Powell Bill distribution. This is dependent upon receipt of DOT receivable being fully Candidly, knowing that accounting services and audit fees expected for 6/30/20 and beyond will exceed prior year's! would hope to maintain ar relationship with Collis. Your mayi include an optional "turnkey" price to include your accountant as well. Iknow there would be some logistical arrangements for accessing the Collis & Associates workpapers as well as mine iny your audit field work. Robi is agreeable to assist in whatever manner deemed most Ita appears that you worked in Bessemer City last year and several years in High Shoals. Ilook forward to receiving your  capital projects over the last two years. He has done the conversion to full accrual each year.  collected before year end.  efficient. response. Joel F. Lineberger, CPA Finance Director Town of Cramerton  From: Eddie Carrick maltoreddieediecarrickcpa.com) Sent: Friday, February 21,202011:04AM To: Joel Lineberger netenerecametondr Subject: RE: Audit service inquiry  Joel  Definitely interested Please send RFP info  Has the former auditor indicated a price to you for preparing the financials?  Ihave another CPA actually in the: same building I am in that is offering financial prep services and other non-attest  services if needed From: Joel Lineberger nevegerocameronog, Sent: Friday, February 21, 2020 10:03AM To: Eddie Carrick Subject: Audit service inquiry  2    Would youl have anyi interest/ availability in providing audit services for the Town of Cramerton? Our current auditor has determined that he cannot meet the independence requirement for audit but would like to continue through Current financial statements 6/30/19 and budgets are online at www.ramerton.org. Ican send RFP information later  financial statement preparation.  todayi ify youwould need same to make at tentative decision.  Joel F. Lineberger, CPA Finance Director Town of Cramerton  ExchangeDetender Message Security: Check Authenticity ExchangeDefender Message Security: Check Authenticity ExchangelDelender Message Security: Check Authenticity  3    EDDIE CARRICK, CPA, PC Certified Public Accountant  February 22, 2020  Joel Lineberger 155 North Main St Cramerton, NC 28032  In response to your request for proposal (RFP) and in response to LGC standard request 1. We will use one partner (Eddie Carrick, CPA) and one other CPA (T Tony 2. Our firm has been involved in the following governmental audits:  for proposal questions, we submit the following:  Brewer, CPA) during our audit work.  Town of Denton Town of Mocksville Town of Cleveland Town of Spencer Town of Bermuda Run Town of Midway Town of Wallburg Town of Cooleemee Town of Green Level Town of Landis Town of Granite Quarry Town of Harmony Town ofl Love Valley Town of East Spencer Town of Oakboro City of! High Shoals Town of Milton Town of Marshville City of Bessemer City Town of Rural Hall  1994 - present 1997 - present 2006 - present 2006 - present 2000 - present 2007 - present 2005 - present 2010 - present 2010 - present 2009 - present 2010 - present 2010 - present 2011 - present 2009 - present 2010 - present 2013 = present 2016 = present 2018 = present 2019 2019  We are also providing audit services under governmental auditing standards for EnergyUnited EMC, NÇ Rural Water Association and Berkeley Electric We have added the following towns for the 6-30-2020 audits so far:  Cooperative (Moncks Corner, SC).  Town of Ranlo Town of Faith  Member oftheA American Insttute ofCertifed Publlc Accountants  151 Young Drive, Lexington, NC27292 336-249-2545, Fax 336-249-4745    3. In addition to financial and compliance audits, we have worked with all our municipalities concerning various issues such as sales taxes, reporting 4. Our firm is in compliance with peer review requirements required by Government Auditing Standards (see attached peer review opinion letter).  requirements, and consultation during the year.  5. Eddie Carrick - Partner  38 years experience doing governmental audits. numerous town and municipal audits. Tony Brewer - CPA  33 years experience as engagement partner and senior auditor over  13 years experience doing governmental audits. Relevant educational backgrounds: 2017 Local Government Conference Accounting and Auditing Update 2018 Local Government Conference Accounting and Auditing Update 2019 Local Government Conference 2019 State Treasurers Conference Accounting and Auditing Update 2017 Local Government Conference 2017 State Treasurers Conference 2018 State Treasurers Conference 2018 Yellow Book Update 2019 State Treasurers Conference Professional experience: Eddie Carrick- CPA Tony Brewer - CPA  6.  Eddie Carrick  Tony Brewer  2018 State Treasures Local Government. Audit Conference 2019 State Treasures Local Government Audit Conference  7.  Various Towns - Engagement partner 33 years. 13 years experience doing governmental audits.    9. You may contact the following individuals for references:  Lynn Prevette - Finance Officer Town of Mocksville 336-751-2259 Cathy Payne - Finance Officer Town of Cleveland 704-278-4777  10. As part of our quality control standards, we require statements of  Independence, as contemplated by the American Institute of Certified Public Accountants (AICPA), from our staff on any client for which we prepare financial statements or perform attest functions. In addition, we require additional statements from any staff providing substantial work on an audit. We are independent concerning the Town of Cramerton as contemplated by the requirements for independence as promulgated by the AICPA. 11. We have liability insurance coverage of $1,000,000 in total, $1,000,000 per claim. Our firm has never had a liability claim since Inception. 12. We are unaware of any regulatory action pending against our firm. There has been no action instituted against our firm since inception.  Sincerely, Eddie Carrick, CPA, PC Eclo Eddie Carrick, Owner    Eddie Carrick, CPA Partner Eddie Carrick, CPA, PC 151 Young Drive Lexington, NC 27292 Educational Background Appalachian State University BSBA In Accounting 1981 CPA certification State of NC June 13, 1983 #14149  Professional / work related experience  38 years experience  33 years as partner Inj public accounting firm Partner in charge of over 150 municipal audits Concentration of experience In Utility audits and standards Not for profit audits and standards  Governmental audits and: standards (including Uniform Guidance audits)    AUDIT SERVICES PROPOSAL TOWN OF CRAMERTON  For  FY'20 /1,000 13,000  FY'21 t.c 1z000  FY'22 f/0.000 h3.000  Base Charge for Financial Audit Base Charge for Compliance Audit Other Anticipated Charges (Itemize)  Total Charges  112.000  +p.ce  fIZCD  Estimated Date for Start of Field Work Auc- SePT A ODMINARp WITIH Yoyi2 STAFF  Estimated Date for Preliminary Draft  AenIT 7 Couis By 16-  Attach the following: (1) Last completed Peer Review Letter  (2) List of Municipal and County audits performed FY'19 (3) List of Municipal and County audits anticipated FY'20 Audits of similar size municipalities will be viewed most favorably  Comments you would have the Fown consider: 6 PER MAJor pnocnAm - IF Neeneo  5EL ATCAHEN)  FIRMI NAME: Eunie CHLICK CPA PCCONTACT EonIE CHELICK  ADDRESS: 157 Yourc DY2  PHONE:_ 336-349-3545  CITY,STATE, ZIP: LEXIN/G7N, NC 27372 E-MAIL: elinealcamcep.ew  AUTHORIZED SIGNATUE:  GlCD  DATE:_ 7-77-30    orC Bernard Robinson & Company, L.L.P.  Report on the Firm's System of Quality Control  September 20, 2018  Tot thel Partner ofEddie Carrick, CPAPC  and thel Peer Review Committee ofthel North Carolina Society ofCPA's  Wel have reviewed the system of quality control for the accounting and auditing practice of Eddie Carrick, CPAPC (the firm) in effect for the year ended March 31, 2018. Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the. American A summary of the nature, objectives, scope, limitations of, and the procedures performed in a System Review as described int the Standards may bet found at wwwatpaogpsummay, The summary also includes an explanation ofl how engagements identified as not performed or reported in conformity with applicable professional standards, if  Institute of Certified Public. Accountants (Standards).  any, are evaluated by ap peer reviewer to determine a peer review rating.  Firm'sResponsibility  The firm is responsible for designing a system of quality control and complying with it to provide the firm with reasonable: assurance of] performing andi reporting in conformity with applicable professional standardsi ina all material respects. The firm is also responsible for evaluating actions to promptly remediate engagements deemed as not performed or reported in conformity with] professional standards, when appropriate, and for remediating weaknesses  ini itss system ofc quality control, ifany. Peer Reviewer's Responsibility therewith based on our review. Required Selections and Considerations including compliance audit under the Single Audit Act. ind determining thei nature and extent of our procedures.  Our responsibility is to express an opinion on the design of the system of quality control and the firm's compliance  Engagements selected for review included an engagement performed under Government Auditing Standards, Asap part of our peerr review, we considered: reviews by regulatory entities as communicated by thei firm, ifapplicable,  Opinion  In our opinion, the system of quality control for the accounting and auditing practice ofl Eddie Carrick, CPAI APCin effect for the year ended March 31, 2018, has been suitably designed and complied with to provide the firm with reasonable: assurance of performing andi reportingi inc conformity with applicable professional standards. ina allt material respects. Firms can receive a rating ofp pass, pass with deficiency(ies) orfail. Eddie Carrick, CPAI PCI has receiveda  peer review rating ofp pass.  Bunod Rokinsmi Conpeng, & BERNARD ROBINSON & COMPANY,LLP.  1501 Highwoods Blvd., Ste. 300 (27410) PO. Box 19608 I Greensboro, NC27419 P: 336-294-4494 . F: 336-294-4495 brccpa.com    REQUEST FOR PROPOSAL FOR AUDITING SERVICES February 20, 2020  The Board of Commissioners oft the Town of Cramerton invites your firm to submit a proposal for audit services for the fiscal year ending June 30, 2020 with the intent to continue a relationship for a period of no less than three years, Subsequent year continuation willl be subject to annual negotiation and Board approval after completion of the first year contract, however, the Town reserves the right to Iti is anticipated that the Town's current auditor, Collis & Associates, CPAS, LLC (hereafter "Collis") will provide accounting services to the extent necessary resulting in basic financial statements and supplementary Information. The audit will encompass a financial and, compliance examination oft the Town's basic financial statements, supplementary information and compliance reports in accordance with the laws and regulations of the State of North Carolina which include requirements for the minimum scope of the audit. The financial and compliance audit will cover federal, state and local funding sources in accordance with generally accepted auditing standards as well as other state and federal requirements as may be applicable. The audit will meet or exceed all requirements contained Int the standard Local Government Commission Contract to Audit. Accounts as this document will The Finance Director will provide work schedules and Information provided to Collis and other assistance needed for conducting the audit. The timing of audit services should be such that final completion oft the audit, auditor's report and financial statements meets the deadline imposed by the It! Is anticipated that the Finance Director will have completed ample documentation to permit accounting services field work leading to preparation of the basic financial statements and supplementary information work by Collis to begin not later than mid-August. The Town has historically awaited receipt of September 15h Sales & Use Tax and Franchise Tax Distributions to record actual receipts to be accrued for the fiscal year end rather than the use of estimates for these related revenues. I'm not adverse to discussing reasonable estimates to accelerate year end close. The auditor will submit a preliminary draft oft the audit and any required journal entries to the Finance Director upon completion and review off field work. Ten copies of the audit report, management letter, and other applicable reports should be provided for distribution to the Town Board after review and approval by the Local Government Commission. An electronic copy of these items should be provided to the Finance Director as well. The auditor has typically made al brief on-site presentation to the Board covering financial position and highlighting financial results and any specific management comments  request proposals at any time following the first year.  ultimately be used as the audit contract document,  Local Government Commission.  deemed appropriate.    Town of Cramerton Request for Proposal February 20, 2020 Page: 2  The Town financial statements and budgets for past fiscal years can be viewed online at www.cramerton.org within the Finance Department tab. You may want to discuss this request and are invited to contact the Finance Director at 704-824-4337 by phone. Rob Collis of Colllis and Associates CPAS has indicated a willingness to discuss any questions you may have regarding his services and prior town audits conducted by his firm. E-mailed questions to nenegerocameronorg will be entertained as well. We will endeavor to provide any additional Information you may need in formulating your decision to provide audit services and arriving at a proposed fee. Obviously, time is of the essence with respect to obtaining proposals, making a decision and getting an audit contract In place for the fiscal year ending June 30, 2020. Please review this request and provide an e-mail response indicating whether you will or will not submit a proposal. The favor of a response including items listed on the following page and containing your proposal for accounting and auditing services is requested as soon as practicable which will provide the Town Manager and Finance Director time to revlew proposals in advance of presentation to the Board of Commissioners at the Town Board  meeting on Thursday March 5, 2020. Respectfully requested,  Joel F. Lineberger, CPA Finance Director    Town of Cramerton Information Prepared for Auditor  The following information has typically been prepared by Town of Cramerton staff and 1. Working Trial Balance and General Ledger detail prepared on the modified accrual basis of  assembled in ring binders for use by the auditor:  accounting for the following funds having activity In FY'20:  a. General Fund -recurring b. Stormwater Fund -recurring C. Fleet Acqusition Fund -reçurring  d. 29/74 Greenway Capltal Project Fund -to be completed by 6/30/20 e. Community Center Renovation Project Fund -to be completed by 6/30/20 f. Town Hall Building Repair Project Fund -to be completed by 6/30/20 9. Street Repair and Resurfacing Project Fund -on going but inactive  2. Check Register for Concentrated Checking Account 3. Adopted Budget for the fiscal year 4. Budget Amendments 5. Board of Commissioner Meeting Minutes  6. Local Government Employee Retirement System Rate Notice 7. Centralina Council of Governments annual membership invoice 8. Cavanaugh & McDonald Police Separation Allowance actuarial evaluation 9. Cavanaugh & McDonald Other Post Employment Benefits actuarial evaluation  10. Related Party Transactions 11. Subsequent Events schedule 12. Powell Bill Report with copiès of expenditures 13. Gaston County Property Tax Reports  14. Cash Accounts (1 concentrated, 3 add! checking, 2 Mmkt savings, 3 CD's, NC Cap Mgmt)  a. Lead Sheet  b. Monthly Bank Reconcillations for operating accounts C. Schedule of Certificates of Deposit (3 CDARS accounts with BB&T)  15. Tag & Tax revenue documentation 16. Sales & Use Tax revenue documentation 17. Sales & Use Tax Refund Form E-585 18. Schedule of Solid Waste Tax Distribution Receivable 19. Schedule of Funds Held by Gaston County 20. Schedule of Funds Held by Clty of Gastonia 21. Schedule of Funds Held by NC Division of Motor Vehicles 22. Schedule of Franchise Taxes Receivable 23. Schedule of Deposits 24. Schedule of Other Receivables a. Demolition Liens Receivable b. Miscellaneous Other  25. Schedule of Note Recelable-Mayworth School Apartments  26. Schedule of Postage Escrow Receivable 27. Schedule of Prepald Insurance    28. Fixed Asset Schedules a. Lead Sheet  b. Book Asset Detail with depreciation allocation Capital Asset Acquisitions with invoice copies d. Non-Capltal Expenditures with involce coples e. Repairs and Maintenance ledger accounts for review  29. Accounts Payable a. Lead Schedule b. Accounts Payable Batch Detail 30. Quarterly Payroll Tax Reports 31. Accrued Liabilities  a. Reconclliation of Wages Reported to General Ledger a. Schedule of Payroll Wage and Deduction Accruais b. Schedule of Compensatory Time Payable Schedule of Accrued Vacation Payable d. Schedule of Payroll Withholding Liabilities e. Schedule of LGERS Monthly Orbit Reports  Monthly Orbit Reports with detail ii. Details for Note Disclosure f. Schedule of Prudential 401(k) Liabilities i. Detall for Note Disclosure  . Monthly Supplemental Retirement Remittances  g. Schedule of Optional Payroll Deductions liability  32. Escheats Payable schedule 33. Long-Term Debt a. Lead Schedule  b. Schedule of Current and Long-Term maturltes-principal . - Schedule of Current and Long-Term maturties-Interest e, USDA Installment Debt Detail (3 outstanding loans) 35. Schedule of Significant Commitments and Contingencies at fiscal 37. Schedule of Intended Financial Statement distribution  d. Schedule of Long-Term Debt Management Compliance with Statutory and Fiscal  policy  34. Schedule of Contracts New for the Fiscal Year 36. Schedule of Major Fund Analysis  year end  38. Town staff will assist with preparation of confirmations for bank accounts and notes.    Town of Cramerton Accounting Information  Accounting Records  The Town maintains all accounting records at Town Hall located at 155 N. Main St., Cramerton, NC. The açcounting system used for general ledger, accounts orders and miscellaneous receipts is the ICS Systems Inc. Municipal Accounting payable, Software purchase Payroll is processed using the CSI Accounting Plus software which interfaces with the general ledger. Both software packages are currently owned and supported by Harris Governmental.  Accounting Personnel JoelE. Lineberger, CPA, Finance Director  Responsible for financial operations. Prepares significant portion of monthly journal entries and posts ledger. Prepares concentrated account bank reconcillation. Reviews all other bank reconcliations prepared by Accounting Tech. Makes bank deposits after preparation Town Clerk. Reviews preliminary payroll pre-list and approves payroll for final processing. Approves by purchase orders as needed. Assist accounting tech with coding invoices for payment. Prepares monthly financial report distributed to Town Manager and Town Board.  Bellnda Robinson, Accounts Payabe/Accounting Tech  Front desk responsibilities including general office procedures, processes accounts payable invoices, files and performs other tasks, Position shares responsibility for receiving remittances for police reports, zoning permits and miscellaneous fees. In the absence of the Town Clerk enters receipts to Miscellaneous Receipts module. Receives daily mail and provides checks to Town Clerk. Updates receipts module after validated deposit ticket Is returned by Finance Director. Cross trained to assist Town Clerk with payroll processing. Assists with monthly bank reconcliations for all accounts other than concentrated checking  Assist with maintenance of audit notebooks throughout the year. Wilene Cunningham, Town Clerk/Payroll Administrator  Has primary responsibility for preparation of cash deposits. Has primary responsibility for payroll processing and ACH batch transmittals for payroll and tax deposit remittances. Prepares LGERS Orbit monthly reports and Prudential 401(k) bi-weekly reports. Processes payroll report Information for further preparation of quarterly and annual reports Finance  Director.  by  David Pugh, Town Manager  Approves bi-weekly department head timesheets. Approves all personnel pay rate changes. Reviews and signs accounts payable checks after initial review and signature, Finance Director. (Mayor and Mayor Pro-Tempore have check signing authority primarily and are called upon from time to time to provide the second required signature)  by the    Town of Cramerton Other Information  Number of full-time employees 31 Number of part-time employees 44 Number of seasonal employees 20 2019 W-2 Forms issued Payroll frequency Estimated payroll checks/yr. Estimated direct deposits/yr. Estimated vendor checks/yr. Estimated purchase orders/yr. 110 General Fund Operating Departments Governing Board General Government Police Department Fire Department Planning Department Parks & Recreation Capital Outlay Debt Service Balance Sheet Revenue Expenditures  103  26 BI-Weekly plus (1) holiday and (1) Fire Dept. Incentive  40 for holiday payroll 1200  1,625 FY '18 actual 1,589 FY '19 actual  Mayor and five Commissioners Manager, Clerk, Finance Director, Acct. Tech. Chief, (2) Command Staff, (13) Officers (1) Crossing Guard Part-time Chief, (10) Paid Part-time, (22) Volunteers Dept. Head, Code Enforcement Officer Dept. Head, (3) full-time, (4) part-time, (20) seasonal  Public Works Department Dept. Head, (4) Crew members  General Fund Ledger Accounts (active at 10/31/19)  90 63 318    Joel Lineberger From: Sent: To: Subject: Joel,  Rob Collis <rob@colisandassociates.com> Friday, February 28, 2020 2:38 PM Joel Lineberger RE: Accounting Services Fee  Ithink it would be prudent to use ai fee of $9,000.Irealize this is significantly more than the amount allocated to the financials statement preparation ont the previous contract but there were functions that were assigned to the audit side that we will need toi include on the statement preparation side such as calculations under GASB 68 and 75, etc. We may  be al little high on this, but Iwould rather err in that direction for the purposes you need this for.  Rob  From: Joel Lineberger maltojinebergergergcramerton.org, Sent: Thursday, February 27, 2020 11:40AM To: rob@colisandassociates.com Subject: Accounting Services Fee Importance: High  Ineed an amount to include for accounting services through financial statement preparation. This number is necessary top present an apples to apples consideration ofs several alternatives for Board consideration. A response by 3:00p.m.  tomorrow would be most helpful. Don'tr need ai full proposal just the amount for now.  JoelF. Lineberger, CPA Finance Director Town of Cramerton    TOWN OF CRAMERTON NORTH CAROLINA  AUDIT PROPOSAL 2020-2022  MARTIN & STARNES & ASSOCIATES, CPAS, P.A. "A Professional. Association ofCertified Public Accountants and) Management Consultants"    Town of Cramerton, NC Table of Contents  Page 1 2-3 3 3 4 4 5 5 5-6 6 6-7 8-9 9-11 12 13-17 18-28 29-34 35  EXECUTIVESUMMARY/SCOPE TEAMASIONEDTOAUDT CLIENTLISTING ADDITIOMALSERVICES  MQUITSADANSPEN REVIEW ROPESVOMALEPENENCE EDUCATION SPECIALIZED SKILLS INDEPENDENCE  ASSISTANCE. EXPECTEDI FROMTOWNSTAFF TENTATIVE. AUDIT SCHEDULE PROFESSIONAL, FEES-AUDITING. SERVICES ADDITIONAL INFORMATION FINAL CONS/DERATIONS  AttachmentA: Client Lists and. Additional Services Provided Attachment B: Resumes of Senior. Audit Staff  Attachment C: Independence Document and Peer Review. Letter  Supplemental. Information:  Governmental. Entities We Currently. Audit  MARTIN: 4S STARNES &ASSOCIATES, CPAs, P.A.    Town of Cramerton, NC Executive Summary/Scope  Firm Name: Martin Starnes & Associates, CPAS, P.A. 73013th Avenue. Drive SE Hickory, NC 28602  Request for Proposal - Auditing Services Executive Summary/Scope:  Itis our understanding that we will be engaged to perform an audit ofthei financial statements fort the Town ofCramerton, NC, as required by auditing standards generally accepted in the United States of America. We will also audit the Town's compliance with the specific requirements ofi its major Federal and State programs under the guidelines of 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 Single Audit Implementation Act (as required) and its compliance with laws and regulations, and the design ofi its internal control system as required by Generally Accepted Government Auditing Standards (GAGAS "Yellow Book"). Our audit opinion willi include an "ini relation to" paragraph specifically covering the Schedule of Expenditures of Federal and State. Awards (ifrequired). We will conduct the audit in ai timely manner such that all necessary financial and compliance information fora all funds is completed and the audit report, management letter, and other applicable reports arej presented to the Finance Director in a timely manner as outlined in the RFP each engagement year. We will work with the Town of Cramerton to develop a mutually agreed-upon audit calendar that meets the completion dates requested. Wev will conduct periodic conferences during the audit as well as an exit conference prior tot the completion offieldwork. Wewill present the financial statements to thel Board ofCommissioners at Our fees include technical assistance and guidance related to new note disclosures and GASB pronouncements during our audit relationship. The audit contract will conform to thel North Carolina Local Government Commission (LGC) and be approved by the Secretary ofthe Commission or his designee prior toa audit commencement. We will submit our invoices to the LGC for approval prior to submitting our It is our understanding that a third party firm will prepare the financial statements in their entirety unless  ar mutually agreed-upon time during each engagement year.  invoices to the' Town ofCramerton for payment.  the Town decides to accept our feej proposal for providing those services. Our firm is best qualified to perform the audit oft the Town of Cramerton based on our:  Experience in auditing governments in North Carolina Commitment to the governmental. industry Availability to our clients throughout thej year  Record of providing non-traditional. services to our. governmental audit clients Commitment to continued education and training, specifically in the governmental arena  MARTIN 4 STARNES & ASSOCIATES, CPAS, P.A.    Town of Cramerton, NC  II  Audit Proposal  - TEAMASSIGNED TOAUDIT  Your audit team will consist of the following roles in varying degrees depending on the audit issues that arise during the engagement. We view each engagement as a client oft the firm, not a client ofa specific partner or manager; therefore, ifexpertise is needed from within the firm, it is utilized.  Partners, Supervisors, and. Staff  Four members of our firm will conduct the audit engagement. Members to be assigned to the engagement Engagement Partner - The Audit Partner's role ends with signing the opinion letters and approving the issuance of the audited financial statements. It begins with the staff planning meeting, the client planning meeting, approving the assessment of risk in the engagement, and approving the audit plan. At our firm, the Partners are not figureheads! Since our auditors primarily serve governmental clients, the Partners are actively involved in the scheduling, staffing, and review oft the audit engagement. The Partner will also have significant contact with the Town's] Finance Director should there be any concerns regarding the audit, findings that must be addressed, the service level of our staff, and conflicts ofany kind. When a decision An Audit Partner will perform the technical review ofthe audited financial statements. Since the Partners are not directly involved with the day-to-day audit procedures, this functions as an unbiased "forest for the trees" review oft the report. Unusual relationships and fluctuations are sometimes overlooked by the team members directly involved in the engagement due to the magnitude of data they must analyze. The. Audit Partners are charged with the responsibility of pre-issuance review and LGC compliance. Manager - The Manager's role is to manage every aspect oft the engagement which includes: supervising the staff, staying in close contact with the client, monitoring the time budget, monitoring compliance with "on-time" delivery, and resolving differences ofopinion within our staff and between our team and the unit. The Managers review our audit workpapers and agree the financial statements to the workpapers. The Town will know the face and voice of the Manager as he/she will bei intricately involved int the day-to-day Senior Accountant (1) - The Senior is responsible for conducting the audit from scheduling fieldwork to delivery of the audit opinions. They are also responsible for the first review oft the audit workpapers and supervising the staff. The Senior will work directly with your Finance Department personnel. Staff Accountant (1) - Our staff accountants are all full-time employees and perform the support function ofthe engagement. Each of our staffa accountants is dedicated to our governmental auditing niche, and staff are trained from the moment we hire them regarding Yellow Book standards, GASB standards, and our Wel have not submitted specific names for your proposed audit team for two: reasons: (1)the quality ofour staff is interchangeable at each level, and (2) we will design the remainder oft the audit team based on our mutual schedules and our evaluation oft the "best fit" for your staffand your engagement complexities. The  are as follows:  needs to be made, the client is one contact away from a decision maker.  management oft the client relationship and the audit process.  governmental audit approach.  resumes of our Audit Partners and Managers are: at Attachment B.  MARTINA STARNES & ASSOCIATES, CPAS, P.A.  2    Town of Cramerton, NC  IITITT  Audit Proposal  Continuity Is King  Typically, there are at least three people in our firm that are keenly aware oft the operations of any one particular client (al Partner, a Senior Manager or Manager, and a Senior Accountant). This structure ensures the Town continuity of key staff. An unexpected illness or departure from the firm of any one member does not affect the engagement continuity you will comet to expect from) Martin Starnes & Associates. Also, awiderb breadth of people working on the Town'saudit offers a wider perspective from which to draw audit conclusions and offer suggestions for improvement. Approximately 85% of our audit hours are spent serving local governments in North Carolina. We understand thei importance ofs staffcontinuity; and since We experience low turnover of our professional staff compared to the public accounting industry, locally and nationally. We are proud to be recognized in the "Best. Accounting Firms to Work) for 2019" for mid- sized firms by Accounting Today. We havel been recognized as a "Best Accounting Firms to Work For" in 2009,2010,2012, 2013, 2014, and 2019. Wea also feel honored to be recognized as oneofNorth Carolina's Best Employers in 2014, 2015, 2017, 2018 and 2019. Furthermore, we earned recognition by WelIBusiness  we primarily serve onei industry, we do not suffer from having two "busy seasons".  in 2015, 2016, 2017, 2018 and 2019, as well as When Work Works in 2016.   CLIENTLISTING  Please see. Attachment A: fora a listing of our current audit clients ofNorth Carolina counties, municipalities and other governmental entities. For the fiscal year ended June 30, 2019, we audited 21 counties, 38 municipalities, and numerous other governmental agencies (83 total governmental units). We have over 940 years of continuous service with our current clients. We are able to maintain our audit relationships by great service, expertise in the governmental accounting field, low turnover of our staff, internal rotation In addition, we have an impeccable relationship and reputation with the Local Government Commission and the UNC School of Government and encourage you to contact Sharon Edmundson or. Jim Burke at the  ofstaff assigned to continuing engagements, and exceptional value-based fees.  LGC, or Greg Allison at the School of Government, to verify our reputation.  * ADDITIONAL SERVICES  Martin Starnes &. Associates, CPAs, P.A. has been serving clients since 1987. Wej provide: auditing services throughout North Carolina. Our services include: annual audits, cost reporting, preparation of various financial reports required by the Office of Management and Budget and the Local Government Commission, mid-year reviews of financial condition, agreed-upon procedure engagements over specific financial and control functions, and facilitating training, when needed, on new GASB pronouncements. We Our firm is equipped to provide management consulting services and additional services to our Please see our management consulting and additional services provided to clients at. Attachment A.  have been conducting Single Audits and Yellow Book. Audits since 1992.  governmental audit clients as needed.  MARTIN: 4 STARNES & ASSOCIATES, CPAS, P.A.  3    Town of Cramerton, NC  Audit Proposal  1 FIRM QUALITPSTAMDARASPER REVIEW  Our professionals are members oft the American Institute of Certified Public Accountants and the North Carolina Association ofCertified: Public. Accountants. Our firm participates in the Quality Review Program sponsored by the American Institute ofCertified Public Accountants. Membership in the division requires that wel bes subjected to aj peer review by an independent CPA firm. Suchai review assures that the services our clients receive meet the highest standards oft the accounting profession. Due to the large number of governmental audits our firm performs, we have numerous governmental clients reviewed during each of our quality reviews. We received an unqualified opinion (pass) with no letter of comments, which is the best review result issued since our first peer review in 1993 and that includes our most recent review for the year ended December 31,2017. See the copy ofour most recent peer review letter at Attachment C. We have had several engagements submitted for desk review by a cognizant agency, and the reports were AICPA Governmental, Audit Quality Center- The AICPAI has developed the Governmental Audit Quality Center (GAQC). Itisa voluntary membership Center designed to help CPAS meet the challenges of performing quality governmental audits. Martin Starnes & Associates, CPAS, P.A. was a charter member ofthe Center. Our membership in the Center has improved our audit quality through improved training and membership accountability. The GAQC's primary purpose is to promote the importance of quality governmental audits and the value ofs such audits to purchasers of governmental audit services. We strive fore excellencei in the governmental audit industry, and membership in the Centeri is an exampleofourefforts  approved without any exceptions or modifications.  to" "stay ahead oft the curve" in the industry. * PROFESSIONAL EXPERIENCE  As the Town evaluates the qualifications and experience of! Martin Starnes & Associates and compares us to other firms, we would like to remind the Town of the unique composition of our firm's audit practice. Our audit practice is comprised of approximately 85% government auditing hours; therefore, a year of experience with MSA is the equivalent to 2-3 years with the typical firm. Why? The typical auditing firm audits clients from a variety ofi industries and with a variety ofr risks and reporting issues, one of which is governments. At MSA, our staff is working on a government, completing a government, planning for a government, or training for a government 85 of every 100 hours they work. What does this mean to the Town of Cramerton? It means excellence, timeliness, quality at all levels of work, efficient design of procedures, effective evaluation of results, minimal staff turnover, and the highest quality of audit work  with the most cost effective fee.  Experience with Federal and State Single. Audit Acts, including "Yellow. Book"  Martin Starnes & Associates has been conducting Single Audits and Yellow Book audits since 1992. We began with one municipal audit and have grown the practice to one of the largest government auditing practices in North Carolina. Virtually all ofour government clients are subject tot the Generally Accepted Government Auditing Standards contained in the "Yellow Book." Approximately 80% ofour government audit hours in 2019 were on engagements under thej provisions oft the Federal and State Single Audit Acts.  MARTIN: w STARNES &. ASSOCIATES, CPAs, P.A.  4    Town of Cramerton, NC  IIIIITI  Audit Proposal  , EDUCATION  Staffqualityi is assured by our commitment to continuing education int thei field ofg governmental accounting. All of our professional staff receives a minimum of 40 hours per year in continuing education. Governmental audit staffmembers average 321 hours per year in governmental auditing and accounting seminars. We receive our training from the NCGFOA, Governmental Audit Quality Center, Institute of Government at UNC-Chapel Hill, NCACPA, AICPA, self-study courses from the AICPA or other recognized vendors, and in-house developed training. We attend the State Treasurer's Conference and the Local Government Conference annually. In addition, our Audit Partners and Managers attend NCGFOA We develop in-house training courses that are government industry specific as well as training on all new audit pronouncements, FASB, and GASB pronouncements. The. Audit Partners and thel Managers keep the professional staff apprised of all exposure drafts and prepare. responses as deemed necessary. Please see information on the educational background of our audit partners and managers int ther resumes at  conferences annually.  Attachment B.  S SPECIALIZED SKILLS  Paula Hodges, Marcie Spivey, and Erica Brown, Audit Partners, have been reviewers for the GFOA Certificate of Achievement for Excellence in Financial Reporting Program for many years. Paula and Marcie also serve oni the Government Audit and Accounting' Task Force ofthel NCACPA andt thel NCGFOA. Throughout the years, our firm has supported andj participated in the following governmental associations:  Paula has also been a speaker at the NCGFOA conference.  NC Government Finance Officers' Association (GFOA) National GFOA NC City and County Management Association NCI League of Municipalities NC. Association of County Commissioners supporting the industry any way we can. * INDEPENDENCE  The governmental industry has been good to Martin Starnes & Associates, and we are committed to  The firm monitors compliance with professional independence standards in accordance with the firm's quality control document (see. Attachment C). This document requires all employees to notify management ofany potential independence violations and to review the client list annually for possible independence violations. The firm's independence policy also requires a determination ofi independence for eachi new and  recurring audit client as aj part oft the audit planning stage.  MARTIN - 4 STARNES & ASSOCIATES, CPAs, P.A.  5    Town of Cramerton, NC  Audit Proposal  Furthermore, the 2018 revision of Government Auditing Standards ("The Yellow Book") requires auditors to assess independence and how it is affected by the performance of certain non-attest services such as drafting financial statements. Threats to independence that arise from performing certain non-attest services must be evaluated and safeguards must be applied to reduce these threats to an acceptable level. An assessment of these threats will be performed during the planning stage of the annual audit. We are also required by the Yellow Book to determine that management of the governmental entity has designated an individual who possesses suitable skill, knowledge or experience (SKE) to sufficiently In all matters relating to the audit oft the TownofCramerton, North Carolina, Martin Starnes & Associates,  oversee any non-attest services that wei might provide. CPAS, P.A. is independent, in fact and appearance.  ASSISTANCE EXPECTED FROM TOWNSTAFF  To expedite the audit, we need the final trial balance in electronic format (preferably Excel) one week before final fieldwork is scheduled to begin. This allows us to import your trial balance into our audit software and begin identifying our risk areas before fieldwork actually begins. We will also download your interim trial balance for risk assessment and planning purposes as of12/31, ,3/31, and 6/30 (unadjusted). We prefer all of the client assistance outlined in the RFP to be provided in electronic format wherever possible. The Town can expedite the audit process by minimizing immaterial post-final AJE's and Itisouru understanding that at third party will prepare the financial statements and footnotes int their entirety. However, we have provided fees for our firm to provide these services in the event that the Town wishes  providing all items on the "Prepared by Client" list before fieldwork begins.  to engage us to do SO.  * TENTATIVEAUDITSCHEDULE  Audit Planning  Wev work on our government engagements year-round. Wel begin by downloading your 12/31 trial balance in. January or February of each year. We use this data to assess audit risk, plan our interim procedures, perform preliminary analytic review, and gather data about new projects, funds, and departments. We also stay current with the Town by reading the minutes of thel Board's meetings each month. We will meet with the appropriate members of the Finance Department to plan the engagement each year. At this meeting, timetables for our responsibilities and the Town's responsibilities willl be agreed upon.  Interim and Final Fieldwork  Generally, we will perform interim fieldwork at a mutually agreed-upon week from March-June of each year. During interim, we will update our understanding ofi internal controls, test compliance (Federal and State programs, as required), and audit transactions in any capital project funds, special revenue funds, and capital outlay. Our team willl be on site for up to one week. We are planned and prepared when we arrive; therefore, once we come on: site, we will stay until our objectives are completed. Ifweh havei internal control orc compliance findings, we will discuss those withi management at the completionofourinterin, procedures.  MARTINAS STARNES &ASSOCIATES, CPAS, P.A.  6    Town of Cramerton, NC  Audit Proposal  In a typical year, we will perform final fieldwork in July-August. Final fieldwork will last approximately one week on site and several weeks in the office. Before we begin the on-site portion oft the fieldwork, we will have imported final trial balances, planned our procedures, and coordinated with the finance staff any data needed for our procedures. Ourstaff will hit the ground running and complete our procedures timely, efficiently, and withi minimal interruption ofy your staff. We will provide any audit adjustments, compliance  findings, andi internal control findings at the completion of final fieldwork.  Our typical timeline for the Town will be as follows:  March-April - Download interim trial balance and perform preliminary analytic procedures. This procedure allows us to keep informed of changes at the Town before the audit commences. March-April- - Planning meeting with thel Finance Director. At thej planning meeting, we will mutually agree on the fieldwork timetable, client prepared schedules, etc. The purpose oft this meeting is to get Mutually agreed-upon time between March and June - Interim fieldwork (test internal controls and July-August - Import final trial balance; perform analytical procedures; perform compliance testing (if Mutually agreed-upon time between October and December - Presentation to the Board of  your staffand our staff on the same page. grant compliance, as required)  required); perform final risk assessment; perform final fieldwork October-November: - Submission of report to Local Government Commission  Commissioners  MARTIN 4 STARNES & ASSOCIATES, CPAS, P.A.  7    Town of Cramerton, NC  Audit Proposal  : PROFESSIONAL FEES-AUDITING: SERVICES  Thej fees directly below are estimated. based on the assumption that the third party firm will draft  and prepare thej financial. statements and footnotes in their entirety:  AUDITSERVICES PROPOSAL FOR TOWNOFCRAMERTON  FY2020 FY2021 FY2022 27,000 $ 27,825 $ 27,825  Base Charge for Financial Audit Base Charge for Compliance Audit* Other Anticipated Charges (Itemize)**  2,000  2,000  2,000  Total Charges  29,000 $ 29,825 $ 29,825  *Only billedi ifas single audit is required ina a particular year **See discussion ofa additional services below  Thej fees directly below are estimated based on our firm drafting thej financial statements and  footnotes in their entirety:  AUDIT SERVICES PROPOSAL FOR TOWNOF CRAMERTON  FY2020 FY2021 FY2022 27,000 $ 27,825 $ 27,825  Base Charge for Financial Audit Base Charge for Compliance Audit* Other Anticipated Charges (Financial Statement Prep)  2,000 2,000  2,000 2,000  2,000 2,000  Total Charges  31,000 $ 31,825 $ 31,825  *Only billedi ifa single auditi is required ina aj particular year  Audit contracts must be approved annually by the Local Government Commission. For your planning purposes, our estimated fees to provide our services to you in the future are shown in the tables above. These are estimated fees only. Governmental and rule-making boards may add or change their requirements related to our services which may change these estimates. The actual fee agreement will  be set forth in the annual contract signed for thei relevant year.  MARTINA STARNES &A ASSOCIATES, CPAS, P.A.  8    Town of Cramerton, NC  IITITI  Audit Proposal  Basis/Metlhodology of fCost Estimate: At Martin Starnes & Associates:  Estimated fees presented. are generally on a "fixed-fee" basis. Ifa situation occurs that would cause additional fees, wewill discuss the changes with thel Finance Director before the additional fees are incurred by the Town. We will specify the services to bej provided and an estimate oft the related fees. We do not bill for travel costs related to the audit engagement. Ifwe are engaged to provide services outside of the audit engagement, we will negotiate the fees for those services, and they may include reimbursing our firm for travel related expenses. Our hourly rates for such services The fees proposed herein include technical assistance to the Town's staff throughout the year. We are available to serve our government clients twelve months a year. Any assistance that would require supplemental fees willl bei negotiated in advance. Summary: No surprise fees! Our fees also include thej planning meeting; submission ofthei report to thel LGC; printing 10 copies ofthe financial statements and other applicable documents; preparation ofthel Data Collection Form  range from $85-$300.  (as required); and aj presentation to thel Board of Commissioners.  Basis) for Determining Cost Estimate. After First Year: wej provide to you that could affect the average increase. : ADDITIONAL INFORMATION  We estimate an average fee increase of 3-5% per year. However, as you know, there are many governmental and rule-making boards that regularly add or change their requirements related to thes services  We Have A Story To Tell!  We have provided the Town of Cramerton with all of the information requested in the RFP. There is information and perspective that we would like to share about our firm that is difficult to glean from the basic questions in an RFP. Please indulge us as we explain what makes us different from other qualified  firms. History  Our firm's government client list has grown from one small town in Alexander County to one ofthe largest  governmental audit practices in thes state with a simple formula:  Quality + Service + Value = Success  We have grown one client at a time with a focus on client retention. Since 1992, we have lost very few clients during the re-proposal process. We are convinced that Quality +Service + Value=Success works!  MARTIN 4 STARNES & ASSOCIATES, CPAs, P.A.  9    Town of Cramerton, NC  - -  Audit Proposal  Quality  Approximately 85% of our audit practice is dedicated to serving governments inl North Carolina. We are confident no other firm inl North Carolina can maket that claim. Our audit staff does not have a 12/31 busy season. Therefore, they are focused on serving our government clients and only have one busy season. This structure has minimized our turnover andi increased the quality of our audit product throughcontinuity We have three Partners who are reviewers for the GFOA Certificate of Excellence Program. We serve on the NCACPA's Government Auditing and Accounting Task Force. We have been members of the AICPA's Government Audit Quality Center since itsi inception. We are 100% committed toj providing the absolute best quality government audit available in North Carolina. Our audit practice has been subjected to quality reviews since 1992 without a blemish. Inj fact, during a recent review, the Peer. Reviewer asked  on the engagement.  us to provide his firm with training.  Service  "If you fail to plan, you plan to fail". Each or our engagements start with aj plan that is mutually agreed upon by our staff and the client's staff. This includes dates of fieldwork, dates client prepared. schedules Wel have a state-of-the-art technology system that has successfully eliminated geography as a constraint on service. Your staffwill never noticet that our firm isi ink Hickory, and you are: in Cramerton. Ourmost recent enhancement to service is our "SafeSend" electronic document transfer system. Documents can be transmitted to us through a simple email link. This provides secure, fast transmission of data. It is like  are due to us, and dates documents are due from us to the client.  having our ownj private electronic file room with our clients!  Value  Fees do not always reflect value. Our business model from the very beginning was to provide quality service with a highly trained staff. Our model also includes maintaining state-of-the-art hardware and software in our audit practice. An example of this commitment was the conversion to. Knowledge Coach, as discussed herein. We are focused on efficiency and effectiveness in every step ofthea audit process. The end result - we offer much more to the Town than an audit. We add VALUE to the financial reporting Our firm is "lean" in regard to overhead. Each member of management has client responsibilities as well as management responsibilities. This results in lower standard hourly billing rates. Finally, integrity is the  process.  ultimate source of our value-based firm.  MARTINAS STARNES & ASSOCIATES, CPAS, P.A.  10    Town of Cramerton, NC  Audit Proposal  How Do We Complete the Volume of Governmental Audits On' Time?  Wej plan our engagements starting January 2md of each year sO that we can efficiently perform the  engagement and minimize the final fieldwork time required. We use state-of-the-art technology and use it to the fullest extent.  Wel hire and retain the best staff.  We spend morel hours auditing your unit from January-July than our competition. Therefore, we Oura audit staffis leveraged sO that wel haveab balanced ratio ofseniorl leadership, senioraccountants, and staffa accountants. Each senior accountant manages approximately 10 engagements and has the entire staff accountant pool, as well as our firm leadership, at his or her disposal. Any time an engagement incurs problems, it is handed off" "up the ladder" to a manager, rather than drowning Finally, we view our audit practice with a "team" approach. When all of our engagements are completed, then WE are finished. "All hands on deck" takes on a whole new meaning at Martin Wel have grown our audit practice from the ground up, one client at a time, and one staff member at at time. Therefore, our growth has been planned for and managed. Every engagement has a staffing plan that anticipates when the staff will be ready to supervise the engagement, when the senior will be ready for a promotion to audit manager, and when the audit manager will be ready for more complex management requirements. This allows for continuity on the job, continuity with your staff, and maximum efficiency in our procedures. How do we manage turnover? We have made staff retention ai number one priority oft the  are rarely surprised by what we: find at final fieldwork from August-October.  the senior accountant. Starnes & Associates.  firm.  MARTIN 4 STARNES & ASSOCIATES, CPAs, P.A.  11    Town ofCramerton, NC  I  Audit Proposal  FINAL CONSIDERATIONS  Quote from J. Michael Barham, NC Board of CPA Examiners at the 20091 Local Government Update  "Ifyou want t0 improve the quality of Yellow. Book and OMB audits, select) youro auditors based on the following criteria: experience, references, contact thej firm' ' current audit clients, evaluate professional qualifications, evaluate the firm's commitment to CPE, the firm' 's peer review results, and contact the LGC about the firm! 's quality and timeliness;  but most importantly, do not let the price be the driving force. "  Firm Name: Address: City, State, Zip:  Martin Starnes & Associates, CPAS, P.A. Contact:  MarcelaJ.Spivey mplc/@mantinstamscom  73013th Avenue Drive SE Hickory, NC28602  Telephone: (828)327-2727  Email:  Mauk9Spuy  Authorized Signature:  Date:  February 10,2020  MARTIN 4 STARNES &A ASSOCIATES, CPAS, P.A.  12    ATTACHMENTA  (Client Lists and Additional Services Provided)    Current Audit Clients- Municipalities  Our firmj performed audits fort the following municipalities for the year ended. June 30, 2019. Thel listi is not expected to change significantly for the year ending. June 30, 2020.  Years Served 11 19 21 1I 16 11 20 6 9 9 9 13 9 4 13 14 13 2 1 8 12 10 12 12 23 17 14 8 12 13 10 14 12 10 3 28 8 438  Municipality City of Albemarle City ofl Belmont City of Gastonia City ofHavelock City of Hickory City of Kannapolis City of Kings Mountain City ofLexington City of Monroe City of Mount Airy City of! Mount Holly City ofl Newton City of Rocky Mount City of Shelby City of Statesville City ofThomasville City ofv Washington City ofv Wilson Town of Beaufort Town of] Blowing Rock Town of Calabash Town of Chapel Hill Town of Cornelius Town of Elkin Town of Franklin Town ofGranite Falls Town ofHighlands Town of Huntersville Town ofLake Lure Town ofM Maggie Valley Town of Matthews Town ofl Montreat Town of Newport Town of Pine Knoll Shores Town of Pineville Town of Rutherfordton Town ofTaylorsville Town of Wrightsville Beach  13    Current Audit Clients- Counties  Our firm performed audits fort the following counties for the year ended. June 30, 2019. The list is not expectedt to change significantly fort the year ending. June 30, 2020.  Years Served 9 25 16 13 19 14 15 12 14 10 13 13 15 16 20 21 11 14 10 12 7 299  County Alamance County Alexander County Brunswick County Caldwell County Catawba County Chatham County Davidson County Davie County Gaston County Harnett County Henderson County Hoke County Iredell County Lincoln County Macon County Pitt County Rowan County Stokes County Transylvania County Wilkes County Wilson County  14    Current Audit Clients. Other Governmental Entities Our firmj performed audits fort the following other governmental entities for the year ended. June 30, 2019. The list is not expected to change significantly for the year ending June 30, 2020.  Years Served 4 9 9 6 7 6 6 3 16 7 18 15 20 8 8 19 1 3 13 11 8 6 6 1 210  Governmental. Agency  Alamançe County Tourism Development, Authority Brunswick County Airport Commission Brunswick County Tourism Development Authority City of Belmont Tourism Development. Authority City of Kings Mountain Tourism Development Authority City of Monroe Tourism Development Authority City of Mount Holly Tourism Development Authority Davidson County Airport Authority Gastonia Tourism Development. Authority Henderson County Tourism Development Authority Lexington Tourism Authority Lincoln County Airport Authority Macon County Airport Authority Mount Airy Tourism Development Authority Orange County Water & Sewer Authority Pitt County Industrial Development Commission Pitt-Greenville Airport Authority Statesville Convention & Visitors Bureau Stokes County Water & Sewer Authority Thomasville Tourism Commission Tourism Partnership of Surry County Town of Franklin Tourism Development Authority Transylvania County Tourism Development Authority Western Piedmont Council of Governments  15    Additional Services Provided' To Governmental Clients  In addition to the client services listed below, in 2018, we also performed 22 agreed-upon procedures engagements as required by the Office oft the State. Auditor related to County eligibility processes over certain major programs. Conducted' "Agreed Upon Procedures" internal audit engagement on various departments (2 years). Performed a working capital analysis of local ABC Board to determine ability of local Board to  Pitt County:  Assisted client with internal audit function on an annual basis (2 years). increase distributions to the County (1 year). Performed "Agreed Upon Procedures" for ancillary units (16) years).  City ofLexington: procedures (2) years). Alexander County: Finance Officer (1 year). budget shortfalls (1 year). Surry County:  Conducted "Agreed Upon Procedures" engagement on central warehouse inventory Taught a 4-hour seminar on the implementation issues related to GASB: 34.  Conducted "Agreed Upon Procedures" engagement on Landfill and Convenience Centers (1: year). Assisted finance department with monthly closing process during extended illness of Performed mid-year review of finançial condition and recommended a plan ofa action to address  Taught al leadership training course (1 year). accounting system failed (2 years).  Assisted client with posting all property tax revenues for entire year after data conversion from old Conducted' "Agreed Upon Procedures" internal audit engagement on various departments (1s year). Performed mid-year review of financial condition and recommended aj plan of action to  Performed "Agreed Upon Procedures" for ancillary units (15 years).  Northampton County: address budget shortfalls (10 years). Brunswick County: Bessemer City: Catawba County: Davie County: Gaston County: Harnett County:  Assisted client with implementation of new audit software (1 year). Bookkeeping & Audit Preparation. Assistance (1 year). Performed' "Agreed Upon Procedures" for ancillary units (13 years). Performed "Agreed Upon Procedures" for ancillary units (2 years). Performed "Agreed Upon Procedures" for ancillary units (4 years).  Conducted "Agreed Upon Procedures" engagement related to capital assets (1 year). Conducted' "Agreed Upon Procedures" engagement on credit card transactions (I year).  Cleveland County Board of Education:  16    Additional Services Provided To Governmental Clients (continued)  Wel have prepared the AFIR for submission to the Local Government Commission fort the following clients:  Caldwell County City of Albemarle City ofGastonia City ofHickory City ofl Kings Mountain City ofLexington City ofN Mount Holly City ofNewton City of Shelby Harnett County Hoke County Pitt County Town of Chapel Hill Town ofFranklin Town ofLakel Lure Town ofl Newport Town ofPinel Knoll Shores Town ofPineville Town ofRutherfordton Town ofTaylorsville Town of Wrightsville Beach Wilkes County Wilson County  11 years lyear 16 years 8years 9years 4years 9years lyear 9years 7years 7years 18years 2years 5years 4years 10y years 9years 8years 3years 26y years 8years 10years 6years  We have been asked on numerous occasions to perform agreed-upon procedures engagements, in-depth internal control reviews, and litigation support procedures for various sundry purposes. Our welve-months-a-year serviçe model allows us to assist youi in virtually any manner your may request as long as our independence standards are met. As you can see, we are more than the firm who provides your annual audit report; we are your financial consultants  year-round.  17    ATTACHMENTB (Resumes of Senior Audit Staff)    MARTIN & STARNES & ASSOCIATES, CPAS, P.A. Paula Hodges, Audit Partner  Years in Public Accounting: Years with Current Firm: Education Background:  28 20  North Carolina State University Bachelor of Arts in Accounting Certified Public Accountant in) North Carolina governmental accounting and auditing  Continuing Education: Specialized Training and Other) Information:  Minimum of 401 hours per year with an average of3 32 hours in Member of the Special Review Committee of the Government Finance Officers Association's Certificate of Achievement for Excellence in Financial Reporting Program Member of the NCACPA Government Auditing and Accounting Speaker at the North Carolina Government Finance Officers  Committee  Association conferences Member oft the AICPA andl NCACPA Graduate ofl Leadership Catawba Paula was named Audit Partner in 2011. engagements from 2002-2010  Work Experience:  Served as Audit Director on all of our governmental audit Technical review responsibility for various types of audit clients Served as an Audit Senior on counties, municipalities, and public authorities prior to assuming management responsibility Responsibilities include oversight of audit managers, seniors, staff accountants, and technical review of workpapers.  in 2002  18    MARTIN & STARNES & ASSOCIATES, CPAS, P.A. Marcie Spivey, Audit Partner  Years in Public Accounting: Years with Current Firm: Education Background:  24 20  Lenoir-Rhyne College Bachelor of Arts in Accounting  Certified Public Accountant in North Carolina governmental accounting and auditing  Continuing Education: Specialized Training and Other Information:  Minimum of 401 hours per year with an average of3 32 hours in Member of the Special Review Committee oft the Government Finance Officers Association's Certificate of Achievement for Excellence in Financial Reporting Program Member of the NCACPA Government Auditing and Accounting Member oft the Executive Board of Directors of the Actively serving on the Board of Advisors for the  Committee  Women's Resource Center Hickory Young Professionals  Actively involved in Catawba County Chamber of Commerce  Member oft the AICPA and NCACPA Marcie was promoted to Audit Partner in 2013. Served as Audit Director for 50% of our governmental audit Technical review responsibility for various types ofa audit clients Served as Audit Manager from 2005-2010 with management responsibility for approximately halfo of our audit clients Responsibilities include oversight ofaudit managers, seniors, staffaccountants, and technical review of workpapers.  Work Experience:  engagements from 2011-2012  19    MARTIN & STARNES & ASSOCIATES, CPAS, P.A. Erica Brown, Audit Partner  Years in Public Accounting: Years with Current Firm: Education Background:  19 12  Salisbury University Magna Cum Laude  Bachelor of Science in Business Administration in Accounting,  Certified Public Accountant in) North Carolina governmental accounting and auditing  Continuing Education: Specialized Training and Other Information:  Minimum of 401 hours per year with an average of321 hours in Member of the Special Review Committee oft the Government Finance Officers Association's Certificate of Achievement for Excellence  in Financial Reporting Program Member of the AICPA and NCACPA Member of NCACPA Professional Development Advisory Council (PDAC) Previous NCACPA Young CPA Cabinet Member Previous Advisory Board Member for Catawba County Chamber of Commerce Leadership Catawba Program  Graduate ofLeadership Catawba  Recipient of Top 40 Under 401 for 2015 by CPA Practice Advisor Recipient of Hickory Young Professionals Top 10 Under 40 for 2013 Recipient of2018 NCACPA Taking it to the Max Award Erica was named Audit Partner in 2017. municipalities from 2007-2016  Work Experience:  Served as Manager and Senior Manager on several counties and Technical review responsibility for various types of audit clients Responsibilities include oversight of audit managers, seniors, staff accountants, and technical review of workpapers.  20    MARTIN & STARNES & ASSOCIATES, CPAS, P.A. Amber McGhinnis, Senior Manager  Years in Public Accounting: Years with Current Firm: Education Background:  17 17  Appalachian State University Magna Cum Laude Master of Science in Accounting Certified Public Accountant inl North Carolina governmental accounting and auditing Member of the AICPA and NCACPA Leadership Catawba Program Graduate ofLeadership Catawba  Bachelor of Science in Business Administration in Accounting,  Continuing Education: Specialized Training and Other Information:  Minimum of 40 hours per year with an average of32 hours in  Current Advisory Board Member for Catawba County of Commerce  Recipient of Hickory Young Professionals Top 101 Under 40 for2 2013 Recipient of Top 40 Under 40 for 2018 by CPA Practice Advisor Amber currently serves as the project manager for our audit Technical review responsibility for government audit clients Additional responsibilities include oversight of audit managers, seniors, staff accountants, and pre-issuance review of financial statements.  Work Experience:  department.  21    MARTIN & STARNES & ASSOCIATES, CPAS, P.A. Ko Tang Cha-Moses, Senior Manager  Years in Public Accounting: Years with Current Firm: Education Background:  13 12  Gardner-Webb University Bachelor of Science in Accounting Masters of Accountancy  Certified Public Accountant in North Carolina governmental accounting and auditing Member oft the AICPA and NCACPA  Continuing Education: Specialized Training and Other) Information: Work Experience:  Minimum of4 40 hours per year with an average of32 hours in  Ko Tang is currently the Manager for several counties and municipalities, in addition to a few non-profit entities. Responsibilities include oversight ofs seniors, technical review ofaudit procedures performed, and in-charge responsibility of  several complex engagements.  Years Served 5 1 10 7 3  Client Name Alexander County Davidson County Hoke County Town of Pineville Wilson County  Position Held Manager Manager Manager Manager Manager  Please contact us if you would like to see a list of additional prior client experience.  22    MARTIN & STARNES & ASSOCIATES, CPAS, P.A. Matt Braswell, Senior Manager  Years in Public Accounting: Years with Current Firm: Education Background:  11 11  Montreat College  Bachelor of Science in Business Administration Concentration in Accounting, Magna Cum Laude Certified Public Accountant inl North Carolina governmental accounting and auditing Member of the AICPA and NCACPA  Continuing Education: Specialized Training and Other Information: Work Experience:  Minimum of4 401 hours per year with an average of32 hours in  Matt is currently the Manager for several counties and  municipalities.  Responsibilities include oversight of seniors, technical review ofaudit procedures performed, and in-charge responsibility of  several complex engagements.  Years Served 5 8 7 4 6  Client Name Brunswick County Caldwell County City ofHavelock City ofH Kings Mountain Harnett County  Position Held Manager Manager Manager Manager Manager  Please contact us ifyou would like to see a list of additional prior client experience.  23    MARTIN & STARNES & ASSOCIATES, CPAS, P.A.  Kari Dunlap, Manager  Years in Public. Accounting: Years with Current Firm: Education Background:  7 7  UNC Chapel Hill  Bachelor of Science in Management and Sociology Master of Science in Accounting Certified Public Accountant inl North Carolina governmental accounting and auditing Member of the AICPA and NCACPA NCACPA Young CPA Cabinet Alumni  Continuing Education: Specialized Training and Other Information:  Minimum of 40 hours per year with an average of32 hours in  Work Experience:  Kari is currently the Manager for several counties and  municipalities.  Responsibilities include oversight of seniors, technical review ofa audit procedures performed, and in-charge responsibility of  several complex engagements.  Years Served 4 4 5 4 2  Client Name City ofHickory City of Rocky Mount City of Kannapolis Town of Chapel Hill Macon County  Position Held Manager Manager Manager Manager Manager  Please contact us ifyou would like to see a list of additional prior client experience.  24    MARTIN w STARNES & ASSOCIATES, CPAS, P.A.  Elsa Watts, Manager  Years in Public Accounting: Years with Current Firm: Education Background:  8 8  East Carolina University Bachelor of Science in Accounting, Magna Cum Laude Master of Science in Accounting Certified Public Accountant inl North Carolina governmental accounting and auditing  Continuing Education: Specialized Training and Other Information: Work Experience:  Minimum of 401 hours per year with an average of 32 hours in  Member oft the AICPA, NCACPA, and the Young CPA Cabinet Elsa is currently the Manager for several counties and  municipalities.  Responsibilities include oversight of seniors, technical review ofaudit procedures performed, and in-charge responsibility of  several complex engagements.  Years Served 4 4 4 4 4  Client Name Catawba County Lincoln County City ofLexington City ofl Monroe City ofThomasville  Position Held Manager Manager Manager Manager Manager  Please contact us ify you would like to see a list of additional prior client experience.  25    MARTIN & STARNES & ASSOCIATES, CPAS, P.A.  Cassie Wilson, Manager  Years in Public Accounting: Years with Current Firm: Education Background:  15 7  Appalachian State University Bachelor of Science in Accounting Gardner-Webb University Masters of Accountancy  Certified Public Accountant in North Carolina governmental accounting and auditing Member of the AICPA and NCACPA  Continuing Education:  Minimum of 40 hours per year with an average of3 32 hours in  Specialized Training and Other Information: Work Experience:  Cassie is currently the Manager for several municipalities and Responsibilities include oversight ofs seniors, technical review ofaudit procedures performed, and in-charge responsibility of Previously served as Audit Senior for a regional firm  counties.  several complex engagements.  Years Served 8 2 1 1 4  Client Name Iredell County Wilkes County Henderson County City of Albemarle Town ofHuntersville  Position Held Manager/Senior Accountant Manager/Senior Accountant Manager Manager Manager/Senior. Accountant  Please contact us ify you would like to see a list of additional prior client experience.  26    MARTIN & STARNES & ASSOCIATES, CPAS, P.A. Kelly Gooderham, Manager  Years in] Public Accounting: Yearswith Current Firm: Education Background:  6 6  Appalachian State University Bachelor of Science in Accounting Certified Public Accountant inl North Carolina governmental accounting and auditing Member of the AICPA and NCACPA  Continuing Education:  Minimum of 401 hours per year with an average of32 hours in  Specialized Training and Other Information: Work Experience:  Kelly is currently the Manager for several municipalities and Responsibilities include oversight ofs seniors, technical review ofaudit procedures performed, and in-charge responsibility of  counties.  several complex engagements. Previously served as Audit Senior for MSA  Years Served 1 1 1  Client Name Davie County Transylvania County City of Mount Airy Town of Franklin City ofBelmont  Position Held Manager Manager Manager Manager Manager  Please contact us ifyou would like to see a list of additional prior client experience.  27    MARTIN & STARNES & ASSOCIATES, CPAS, P.A.  Justin Allen, Manager  Years in Public Accounting: Years with Current Firm: Education Background:  7 1  Appalachian State University Bachelor of Science in Accounting University ofl North Carolina at Wilmington Master of Science in Accountancy Certified Public Accountant inl North Carolina governmental accounting and auditing Member of the AICPA and NCACPA  Continuing Education:  Minimum of4 40 hours per year with an average of32 hours in  Specialized Training and Other Information: Work Experience:  Justin is currently the Manager for several municipalities and Responsibilities include oversight of seniors, technical review ofaudit procedures performed, and in-charge responsibility of  counties.  several complex engagements. Previously served as Audit Senior for MSA  Years Served 2 2 1 1 1  Client Name Town ofLake Lure City ofNewton City ofThomasville Alamance County Pitt County  Position Held Senior Accountant Senior Accountant Senior Accountant Senior Accountant Senior Accountant  Please contact us ifyou would like to see a list of additional prior client experience.  28    ATTACHMENTC  (Independence Document and Peer Review Letter)    Martin Starnes & Associates, CPAs, P.A. Statement of Policies & Procedures  INDEPENDENCE  Itis the firm's policy that all professional personnel be familiar with and adhere to relevant ethical requirements of the AICPA, contained in the Code of Professional Conduct, the State of North Carolina Board of Accountancy and the State of North Carolina CPA Society in discharging their professional responsibilities. Furthermore, it is the policy of the firm that, for engagements subject to Government Auditing Standards and other applicable regulatory agencies, all professional personnel be familiar with and adhere to the relevant ethical requirements included int those standards, including any that may be more restrictive. Any transaction, event, circumstance, or action that would impair independence or violate the firm's relevant ethical requirements policy on an audit, attestation, review, compilation engagement, or other service subject to the standards of the AICPA Auditing Standards Board or the AICPA Accounting and Review Services Committee as required under the General Standards and Compliance with Standards Rules is prohibited. Additionally, when the firm and its professional personnel encounter situations that raise potential independence threats, but such situations are not specifically addressed by thei independence rules of the AICPA Code of Professional Conduct, the situations will be evaluated by referring to the Conceptual Framework for AICPA Independence Standards and applying professional judgment to determine whethera an independence breach has occurred. Thei firm will take appropriate action to eliminate those threats or mitigate them to an acceptable level by applyingsafeguards. Ifeffective safeguards cannot be applied, the firm will withdraw from the engagement or take other corrective actions as appropriate to Although not necessarily all-inclusive, the following are considered to be prohibited transactions and  eliminate the breach. relationships:  Investments by any partner or professional employee in a client's (or affiliate of a financial statement attest client's) business during the period of a professional engagement, including a commitment to acquire any direct or material indirect financial interest in a client. An investment in an entity or property by any of the following individuals and the attest client or the attest client's officers or directors, an affiliate or any member of firm management who has the ability to exercise significant influence over the client that enables them to control, as defined by  GAAP: for consolidation purposes, the entity or property: Ani individual on an attest engagement team  An individual in a position to influence the attest engagement by doing any of the  following:  Evaluating the performance or recommending the compensation of the attest Directly supervising or managing the attest engagement partner and all of that Consulting with the attest engagement team about technical or industry-related Participating in or overseeing quality control activities, including internal  engagement partner. partner's superiors.  issues specific to the engagement, or  monitoring, with respect to the attest engagement.  29    Martin Starnes & Associates, CPAS, P.A. Statement of Policies & Procedures  o A member of firm management who provides nonattest services to the attest client beginning once he or she provides ten or more hours of nonattest services to the client The firm signs the report on the financial statements for the fiscal year during which those services were provided, or he or she no longer expects to provide ten or more hours of Aj partner int the office in which the lead attest engagement partner primarily practices with  within any fiscal year and ending on the later oft the date:  nonattest services to the attest client on al recurring basis  respect to the attest engagement. The firm and its employee benefit plans.  Borrowing from or loans to an attest client, an affiliate, or attest client's s personnel during the period ofap professional engagement by any oft the individuals listed ini item 2, expect as grandfathered or Accepting or offering gifts or entertainment from or to an attest client unless reasonable in the Certain family relationships between professional personnel and attest client personnel. The firm Notwithstanding the preceding policy and list of prohibited transactions and relationships, at thej partners' discretion, certain prohibitions can be waived ifiti is deemed to bei in the best interest oft the firm. However, in sO doing, the engagement service performed for the client must be limited to that allowed by AICPA  permitted.  circumstances and approved by the firm management.  management will be consulted fora a ruling on such relationships.  professional standards.  The firm ensures compliance with this policy by implementing the following procedures:  All personnel have ready access to the relevant ethical requirements to which the firm is subject. Those requirements include the AICPA Code of Professional Conduct, the State of North Carolina Board of Accountancy, and the State ofNorth Carolina CPA Society ethical requirements. The firm personnel have online access tot those ethiçal requirements. The firm expects its personnel tol be familiar with thoserelevant Thei fim'smanagement emphasizes the concepts ofindependence, integrity, and objectivity inf firmt training sessions, in the acceptance and continuance of clients and engagements, and in the performance of engagements. Because the firm has a concentration of governmental clients and ERISA clients, this also includes discussing the independence requirements for engagements subject to Governmental Auditing Standards and Department of Labor. In addition, all professional personnel are required to sign a representation letter when hired and annually thereafter that acknowledges their familiarity with the firm's relevant ethical requirements policy and procedures, particularly with regard to independence. The representation also lists known circumstances and relationships, ifany that may create a potential threat to independence or violate the firm's relevant ethical requirements policy. Such signed representation letters are also required from part-time, seasonal, and contract professionals and any other individuals who work on accounting and auditing engagements and are required to be independent. Ethics training is provided for professional personnel periodically in firm training sessions. Ethics training is provided to certified firm personnel annually as required by the State of North Carolina Board of Accountancy. Additional training is provided as needed which covers the firm's relevant ethical requirements policy and procedures  ethical requirements.  30    Martin Starnes & Associates, CPAS, P.A. Statement of Policies & Procedures  and the independence and ethical requirements of all applicable regulators. Professional standards, including the AICPA's Conceptual Framework for Independence, Governmental Auditing Standards, Department of Labor independence requirements and advice of the quality partner are consulted if an employee is unsure ifa threat to independence should be reported to firm management. All professional personnel review the firm's current client list in conjunction with completing the representation letter for identification of threats to, or breaches ofi independence. The current client list is maintained in Practice CS by the firm administrator and changes to that list are communicated to all personnel via e-mail on a timely basis from the firm administrator. When hired and annually thereafter, all professional personnel are: required to sign a representation that confirms this responsibility. To ensure that independence is properly addressed at the engagement level, the firm management will consider relevant information about client engagements and evaluate the overall effect, if any, on independence requirements as part of the engagement and acceptance decision. In addition, for audit engagements, the engagement partner forms a conclusion on compliance with independence requirements. Inr making this determination, any familiarity threat related to senior personnel recurring on an audit or attest engagement for a long period oft time, five years or more, will be considered, including any other specific rotation requirements of regulatory agencies or other authorities. Additionally, the work programs and forms in the accounting and auditing manuals used by the firm contain steps requiring an evaluation of independence on each new and recurring engagement. Furthermore, those manuals contain reporting All professional personnel remain alert for any evidence of noncompliance with relevant ethical requirements during the engagement and are required to promptly notify the audit partner of any circumstances or relationships that may create a potential threat to independence such as a potential prohibited transaction or an independence breach, sO that appropriate action can bet taken. Ifa potential threat to independence is identified, firm management accumulates and communicates relevant information to appropriate personnel so firm management and the engagement partner can determine whether they satisfy independence requirements, the engagement partner can take appropriate action to address identified threats to independence, and current independence information can be maintained. For clients ofwhom the firm is not independent, only compilation services are performed, and Ifperforming a group audit, the firm is required to obtain a written representation regarding the significant component auditor'sindependence with respect to the client. The auditing manuals used! by the firm contain examples of representation letters to use in such situations. Furthermore, in a review or attestation engagement, ifanother firm performs work on a segment ofthe engagement, ai representation regarding the other firm's independence is required. The engagement programs in the accounting and auditing manuals The Manager and/or the accountant in charge under the manager's supervision has the primary responsibility for determining ift there are unpaid fees on any of his or her clients that would impair the firm' 's independence. The engagement work programs and standard forms used by the firm contain steps toensure compliance with this procedure. The firm' 's client accounts receivable information in the billing software and the engagement partner's and manager's knowledge of unbilled fees should be considered in making this determination. In addition, the managing partner has secondary responsibility to review the firm's accounts reçeivable listing on a periodic basis to identify potential independence problems.  guidance for the types ofengagements where al lack ofindependence is allowed.  the firm discloses the lack ofindependence in its accountant's report for those clients.  used by the firm contain steps to ensure compliance with this procedure.  31    Martin Starnes & Associates, CPAs, P.A. Statement of Policies & Procedures  The engagement partner has the primary responsibility to identify all nonattest services performed for an attest service client and for determining ifs such nonattest services, individually or in the aggregate, impair independence with respect tot that client. Reviewing nonattest services performed for attest clients includes obtaining and documenting an understanding with the client regarding the client's responsibilities for the nonattest services performed by the firm. The firm will only provide nonattest services to an attest client when the client accepts its responsibilities. Where applicable, this includes determining whether such nonattest services impair independence under the independence rules in Government Auditing Standards or Department of Labor. Firm engagement work programs for all attest and compilation engagements The engagement partner has the primary responsibility for determining whether actual or threatened litigation has an effect ont thei firm'sindependence with respect to the client. The fir'sindependence: could bei impaired by litigation between the client and the firm, with the client company's.securityl holders, and Ifthe firm is engaged as principal auditor to: report on the basic financial statements ofai finançial reporting entity, all professional personnel must be independent of the financial reporting entity. If the firm is engaged as principal auditor to report on a major fund, nonmajor fund, internal service fund, fiduciary fund, or blended component unit oft the financial reporting entity, all professional personnel must bei independent of the fund or entity the firm reports on. The engagement partner has the primary responsibility for determining whether the firm's relationship with entities in the governmental financial statements has an The managing partner has the primary responsibility for determining whether the firm was a party to a The Senior Manager and the accountant in charge under the supervision of senior management are responsible for obtaining the representation letters, reviewing them for completeness, and accumulating relevant information relating to identified threats to relevant ethical requirements matters including questions from the representation letters and those from other sources. In determining a resolution, firm management should consider the AICPA's Code of Professional Conduct, AICPA's Conceptual Framework for AICPA Independence Standards, and when necessary, consult the AICPA or thel NCACPA for assistance in interpreting independence, integrity, and objectivity rules. Documentation of the resolution ofarelevant ethical requirement matter should be filed in the client's permanent workpaper file. Firm management is also responsible for determining actions to be taken when professional personnel violate firm independence policies and procedures. The action for each incident is determined based on its unique circumstances and may include eliminating a personal impairment, requiring additional training, The partners are responsible for monitoring the firm's independence of attest clients at which partners or other senior personnel have been offered management positions or have accepted offers of employment. The independence, integrity, and objectivity questionnaire used by the firm and the client acceptance checklists used by the firm in attest engagements include questions to help ensure compliance with this  include steps to ensure compliance with this procedure.  from other third parties.  effect on independence.  cooperative arrangement with a client that was material to the firm or the client.  drafting a reprimand letter, or even termination.  requirement.  32    Martin Starnes & Associates, CPAs, P.A. Statement of Policies & Procedures  Ifa breach of independence is identified, the firm promptly communicates the breach and the required corrective actions to the engagement partner, who along with the firm has the responsibility to address the breach and other relevant personnel in the firm and those subject to the independence requirements who need to take appropriate action, and those charged with governance at the attest client. The engagement partner confirms to the firm when required corrective actions related to thel breach and noncompliance with At least annually, firm management reviews the firm's ethical requirement policy and procedures to  these policies and procedures has been taken.  determine ifthey are appropriate and operating effectively.  33    KWH  Koonce, Wooter & Haywood,LLP  CEMMESS MLE KCA ACCAS  Report on the Firm's System of Quality Control  To the Shareholders of Martin Starnes & Associates CPAs, P.A. and the Peer Review Committee, North Carolina Association OfCertified Public Accountants  We have reviewed the: system of quality control for the accounting and auditing practice of Martin Starnes & Associates CPAS, P.A. (the firm) ine effect for the year ended December: 31,2017.Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the American Asummary oft the nature, objectives, scope, limitations of, and the procedures performed in a System Review as described in the Standards may be found at wwwaspaogpummare The summary also includes an explanation of how engagements identified as not performed or reported in conformity with applicable professional standards, if any, are  Institute ofCertified Public Accountants (Standards).  evaluated by a peer reviewer to determine aj peer review rating.  Firm's Responsibility  The firm is responsible for designing as system ofquality control and complying with it to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. The firm is also responsible for evaluating actions to promptly remediate engagements deemed as not performed or reported in conformity with professional standards, when appropriate, and for remediating weaknesses ini its system of quality control,  ifany.  Peer Reviewer's Responsibility therewith based on our review. Required Selections and Considerations  Our responsibility is to express an opinion on the design of the system of quality control and the firm's compliance  Engagements selected for review included engagements performed under Government Auditing Slandards, including As part of our peer review, we considered reviews by regulatory entities as communicated by the firm, ifapplicable, in  compliance audits under the Single Audit Act and an audit ofan employee benefit plan.  determining the nature and extent of our procedures.  Opinion  Inc our opinion, thes system of quality control fort the accounting and auditing practice of Martin Starnes & Associates CPAS, P.A. in effect for the year ended December 31, 2017, has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass, pass with deficiency/(ies) or fail. Martin Starnes & Associates CPAs, P.A. has  received a peer review rating of pass.  Komeei Walan + Hoynhy LLP  Koonce, Wooten & Haywood,LLP  May 3, 2018  Raleigh 4060 Barreut Ore Post O:ce Box 17805 Raleigh. Morn Carolra: 27619 9107 7829285 9197 7838937 FAX  Durham 3500 Wesigate Drve Suite. 203 Derhan, Noith Carciina 27707 9193 3542584 34 9194898183FAX  Pittsboro 10 Sanford Road Post Orfice Box 1339 Pntsboro. Nurth Carol: na: 27312 9103425000 019342374FAN    SUPPLEMENTAL INFORMATION    8  a  C  C  De E - e 6 E 1 la  OE C a C  CO E  @  5  e 7  35