HomeMy WebLinkAbout#05 - Auditing Services
DATE: December 20, 2022
CONSENT
TO: Mayor and City Council
FROM: Kristina Handt, City Administrator
AGENDA ITEM: Approve Selection of Audit Firm
BACKGROUND: Last summer our current auditing firm, Redpath, notified us they would not be able to provide services next year due to a staffing shortage. Council authorized the issuance of a Request for Proposals from auditing firms at the October 18th meeting. Proposals were due on November 10th. We received proposals from two firms: Abdo and Schlenner Wenner & Co.
ISSUE BEFORE COUNCIL: Should the Council approve the selection of Schlenner Wenner as the city’s auditing firm for fiscal years 2022-2026?
PROPOSAL DETAILS/ANALYSIS: The proposals were reviewed by the City Administrator and Ehlers Financial Consultant and we are recommending the Council select Schlenner Wenner & Co to provide auditing services for the next 5 years. They have made a five year offer to provide services at a cost less than the other firm.
The arrangement letter has been reviewed by staff and city consultants. A copy is included in your packet along with the proposal. FISCAL IMPACT: The proposed fee schedule is included in the proposal. These are not to exceed amounts but the
actual costs will be adjusted each year based upon inflation. The 2023 budget provides funding to
cover the proposed 2023 rates.
OPTIONS: 1) Approve the arrangement letter with Schlenner Wenner for auditing services for fiscal years 2022-2026. 2) Do not approve the arrangement letter with Schlenner Wenner for auditing services for fiscal years 2022-2026 RECOMMENDATION: If removed from consent agenda:
“Motion to approve the arrangement letter with Schlenner Wenner for auditing services for fiscal years 2022-2026.” ATTACHMENTS:
• December 8, 2022 Arrangement Letter • Schlenner Wenner Proposal
An Independently Owned Member, RSM US Alliance
RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member
firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International.
www.schlennerwenner.cpa
December 8, 2022
Members of Governance
City of Lake Elmo, MN
Attention: City Council
The Objective and Scope of the Audit of the Financial Statements
You have requested that we audit the City of Lake Elmo’s (the City) governmental activities, business-type
activities, each major fund, aggregate remaining fund information, and certain supplementary information as of and
for the years ending December 31, 2022, 2023, 2024, 2025, and 2026 which collectively comprise the basic financial
statements. We are pleased to confirm our acceptance and our understanding of this audit engagement by means of
this letter (“Arrangement Letter”).
The objectives of our audit are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a
guarantee that an audit conducted in accordance with auditing standards generally accepted in the United States of
America (GAAS) and Government Auditing Standards issued by the Comptroller General of the United States
(GAS) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence
the judgment made by a reasonable user based on the financial statements. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of controls.
When required, you have also requested that we perform the audit of the City of Lake Elmo as of December 31,
2022, 2023, 2024, 2025, and 2026 to satisfy the audit requirements imposed by the Single Audit Act and Subpart F
of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles,
and Audit Requirements for Federal Awards (the Uniform Guidance).
The Responsibilities of the Auditor
We will conduct our audit in accordance with GAAS, GAS, the Uniform Guidance (when required), and the U.S.
Office of Management and Budget’s (OMB) Compliance Supplement (when required). Those standards,
regulations, or supplements require that we comply with applicable ethical requirements. As part of an audit in
accordance with GAAS, GAS, and the Uniform Guidance (if required), we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, based on an understanding of the entity and its environment, the applicable financial reporting
framework, and the entity’s system of internal control, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion.
Consider the entity’s system of internal control in order to design audit procedures that are appropriate
in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the City’s
internal control. However, we will communicate to you in writing concerning any significant
deficiencies or material weaknesses in internal control relevant to the audit of the financial statements
that we have identified during the audit.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the financial
statements, including the disclosures, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Conclude, based on the audit evidence obtained, whether there are conditions or events, considered in
the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a
reasonable period of time.
Because of the inherent limitations of an audit, together with the inherent limitations of internal control, an
unavoidable risk that some material misstatements may not be detected exists, even though the audit is properly
planned and performed in accordance with GAAS and GAS. Because the determination of waste or abuse is
subjective, GAS does not require auditors to perform specific procedures to detect waste or abuse in financial
statement audits.
We will also communicate to the Members of Governance (a) any fraud involving senior management and fraud
(whether caused by senior management or other employees) that causes a material misstatement of the financial
statements that becomes known to us during the audit, and (b) any instances of noncompliance with laws and
regulations that we become aware of during the audit (unless they are clearly inconsequential).
In the event of a Single Audit, we are responsible for the compliance audit of major programs under the Uniform
Guidance, including the determination of major programs, the consideration of internal control over compliance,
and reporting responsibilities.
Our report(s) on internal control over financial reporting and over compliance for major programs will include any
significant deficiencies and material weaknesses in internal control over financial reporting and over compliance
for major programs of which we become aware as a result of obtaining an understanding of internal control and
performing tests of internal control over financial reporting and over compliance for major programs consistent
with requirements of the standards and regulations identified above. Our report(s) on compliance matters will
address material errors, fraud, violations of compliance obligations, and other responsibilities imposed by state and
federal statutes and regulations or assumed by contracts; and any state or federal grant, entitlement or loan program
questioned costs of which we become aware, consistent with requirements of the standards and regulations
identified above.
We will maintain our independence in accordance with the standards of the American Institute of Certified Public
Accountants and GAS.
The Responsibilities of Management and Identification of the Applicable Financial Reporting Framework
Management is responsible for:
1. Identifying and ensuring that the City complies with the laws and regulations applicable to its activities,
and for informing us about all known violations of such laws or regulations, other than those that are clearly
inconsequential;
2. The design and implementation of programs and controls to prevent and detect fraud, and for informing us
about all known or suspected fraud affecting the City involving management, employees who have
significant roles in internal control, and others where the fraud could have a material effect on the financial
statements; and
3. Informing us of its knowledge of any allegations of fraud or suspected fraud affecting the City received in
communications from employees, former employees, analysts, regulators, short sellers, vendors, customers
or others.
Management is responsible for the preparation of the required supplementary information (“RSI”) which accounting
principles generally accepted in the United States of America (“U.S. GAAP”) require to be presented to supplement
the basic financial statements. Management is also responsible for the preparation of the supplementary information
in accordance with U.S. GAAP. Management agrees to include the auditor’s report on the supplementary
information in any document that contains the supplementary information and indicates that the auditor has reported
on such supplementary information. Management also agrees to present the supplementary information with the
audited financial statements or, if the supplementary information will not be presented with audited financial
statements, to make the audited financial statements readily available to the intended users of the supplementary
information no later than the date of issuance of the supplementary information and the auditor’s report thereon.
The Members of Governance are responsible for informing us of its views about the risks of fraud, waste or abuse
within the City, and its knowledge of any fraud, waste or abuse or suspected fraud, waste or abuse affecting the
City.
Our audit will be conducted on the basis that management and, when appropriate, those charged with governance
acknowledge and understand that they have responsibility:
1. For the preparation and fair presentation of the financial statements in accordance with accounting principles
generally accepted in the United States of America;
2. To evaluate subsequent events through the date the financial statements are issued or available to be issued,
and to disclose the date through which subsequent events were evaluated in the financial statements.
Management also agrees that it will not conclude on subsequent events earlier than the date of the management
representation letter referred to below;
3. For the design, implementation and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or error;
4. For report distribution; and
5. To provide us with:
a. Access to all information of which management is aware that is relevant to the preparation and fair
presentation of the financial statements including information relevant to disclosures;
b. Draft financial statements, including information relevant to their preparation and fair presentation, when
needed, to allow for the completion of the audit in accordance with the proposed timeline;
c. Additional information that we may request from management for the purpose of the audit; and
d. Unrestricted access to persons within the City from whom we determine it necessary to obtain audit
evidence.
The City’s Introductory Section and Statistical Section as contained in the Annual Report will be issued in
conjunction with the issuance of the Annual Comprehensive Financial Report. These documents will be provided
to Schlenner Wenner & Co. prior to the issuance of the documents and prior to the issuance of the auditor’s report.
As part of our audit process, we will request from management and, when appropriate, those charged with
governance written confirmation concerning representations made to us in connection with the audit, including
among other items:
1. That management has fulfilled its responsibilities as set out in the terms of this Arrangement Letter; and
2. That it believes the effects of any uncorrected misstatements aggregated by us during the current engagement
and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the
financial statements taken as a whole.
Because the audit will be performed in accordance with the Single Audit Act and the Uniform Guidance (when
required), management is responsible for (a) identifying all federal awards received and expended; (b) preparing
and the fair presentation of the schedule of expenditures of federal awards (including notes and noncash assistance
received) in accordance with Uniform Guidance requirements; (c) internal control over compliance; (d) compliance
with federal statutes, regulations, and the terms and conditions of federal awards; (e) making us aware of significant
vendor relationships where the vendor is responsible for program compliance; (f) following up and taking corrective
action on audit findings, including the preparation of a summary schedule of prior audit findings and a corrective
action plan; (g) timely and accurate completion of the data collection form and (h) submitting the reporting package
and data collection form.
Reporting
We will issue a written report upon completion of our audit of the City of Lake Elmo’s financial statements. Our
report will be addressed to the Members of Governance of the City of Lake Elmo. Circumstances may arise in
which our report may differ from its expected form and content based on the results of our audit. Depending on the
nature of these circumstances, it may be necessary for us to modify our opinion or add an emphasis-of-matter
paragraph or other-matter paragraph to our auditor’s report.
If circumstances arise relating to the condition of the City’s records, the availability of appropriate audit evidence
or indications of a significant risk of material misstatement of the financial statements because of error, fraudulent
financial reporting or misappropriation of assets which, in our professional judgment, prevent us from completing
the audit or forming an opinion, we retain the unilateral right to take any course of action permitted by professional
standards, including, but not limited to, declining to express an opinion or issue a report, or withdrawing from the
engagement.
In addition to our report on the City of Lake Elmo’s financial statements, we will also issue the following reports:
1. A report on the fairness of the presentation of the City of Lake Elmo’s schedule of expenditures of federal
awards for the years ending December 31, 2022, 2023, 2024, 2025, and 2026 (when required);
2. Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit
of Financial Statements Performed in Accordance with GAS;
3. Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance
Required by the Uniform Guidance (when required); and
4. An accompanying schedule of findings and questioned costs (if required).
In connection with our audit of the financial statements, our responsibility is to read the other information and
consider whether a material inconsistency exists between the other information and the financial statements, or the
other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that
an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
Records and Assistance
During the course of our engagement, we may accumulate records containing data that should be reflected in the
City’s books and records. The City will determine that all such data, if necessary, will be so reflected. Accordingly,
the City will not expect us to maintain copies of such records in our possession.
The assistance to be supplied by City personnel, including the preparation of schedules and analyses of accounts,
has been discussed and coordinated with Wayne Oberg, Finance Director. The timely and accurate completion of
this work is an essential condition to our completion of the audit and issuance of our audit report.
Non-audit Services
In connection with our audit, you have requested us to perform certain non-audit services:
1. Preparation of the Financial Section of the City’s Annual Comprehensive Financial Report, and related
GASB 34 conversion entries. This includes the preparation of entries related to GASB 68 (Pensions) and
GASB 75 (OPEB), as well as the corresponding workpapers and required supplementary schedules.
2. Preparation and submission of the Annual Reporting Form for the Office of the State Auditor, as well as
the annual publication of the local newspaper (if requested; billed separately).
3. Maintenance of the City’s capital asset depreciation records (if requested; billed separately).
4. Review of lease agreements and preparation of GASB 87 (Leases) workpapers and related journal entries
(if requested; billed separately).
GAS independence standards require that the auditor maintain independence so that opinions, findings, conclusions,
judgments and recommendations will be impartial and viewed as impartial by reasonable and informed third parties.
Before we agree to provide a non-audit service to the City of Lake Elmo, we determine whether providing such a
service would create a significant threat to our independence for GAS audit purposes, either by itself or in aggregate
with other non-audit services provided. A critical component of our determination is consideration of management’s
ability to effectively oversee the non-audit services to be performed. The City of Lake Elmo has agreed that Wayne
Oberg, Finance Director, possesses suitable skill, knowledge or experience and that the individual understands the
non-audit services to be performed sufficiently to oversee them. Accordingly, the management of the City of Lake
Elmo agrees to the following:
1. The City of Lake Elmo has designated Wayne Oberg, Finance Director, as a senior member of management
who possesses suitable skill, knowledge, and experience to oversee the services;
2. Wayne Oberg, Finance Director, will assume all management responsibilities for subject matter and scope
of the non-audit services described above;
3. The City of Lake Elmo will evaluate the adequacy and results of the services performed; and
4. The City of Lake Elmo accepts responsibility for the results and ultimate use of the services.
GAS further requires that we establish an understanding with the City of Lake Elmo’s management and those
charged with governance of the objectives of the non-audit services, the services to be performed, the City’s
acceptance of its responsibilities, the auditor’s responsibilities and any limitations of the non-audit services. We
believe this letter documents that understanding.
Parties’ Understandings Concerning Situation Around COVID-19
To the extent any of the services described herein require a party to visit (“Visiting Party”) the other party’s facilities
(“Host Party”) in person, the Visiting Party agrees to comply with the Host Party’s rules and regulations regarding
COVID-19 safety protocols while on the Host Party’s premises, provided the Visiting Party is made aware of such
rules and regulations. Further, in the event any of the services described herein need to be suspended and/or
rescheduled by a party due to the ongoing situation surrounding COVID-19, the party requesting the suspension or
rescheduling of the services will provide the other party with prompt written notice of the foregoing. To the extent
such suspension and/or rescheduling of the services impacts either the cost of the services or the ability of either
party to meet any deadlines or timeframes set forth herein, or both, the parties will document this in a written
agreement mutually agreed upon and executed by both parties.
Other Relevant Information
In accordance with GAS, a copy of our most recent peer review report has been provided to you for your
information.
Fees and Costs
Our fees for the services described above are based upon the value of the services performed and the time required
by the individuals assigned to the engagement, plus direct expenses. Our fee estimates and completion of our work
are based upon the following criteria:
1. Anticipated cooperation from City personnel
2. Timely responses to our inquiries
3. Timely completion and delivery of client assistance requests
4. Timely communication of all significant accounting and financial reporting matters
5. The assumption that unexpected circumstances will not be encountered during the engagement
If any of the aforementioned criteria are not met, then fees may increase. Interim billings will be submitted as work
progresses and as expenses are incurred. We will submit our bill for these services promptly upon rendering the
report. Billings are due upon submission.
Precluding any fees resulting from matters discussed above, audit fees will not exceed the following:
For Year Ending
December 31,
Audit Fee
(ACFR included)
Single Audit
(If Required)*
Total**
2022 $32,900 $3,000 $35,900
2023 $36,190 $3,300 $39,490
2024 $39,800 $3,630 $43,430
2025 $43,780 $3,990 $47,770
2026 $48,160 $4,390 $52,550
* The proposed Single Audit fees above are under the assumption that only one Federal Program will require testing each year.
Should additional Federal programs require testing, an additional fee of $3,000 - $5,000 per program is anticipated.
** Annual increases noted above are projected at a maximum rate. Actual increases will be based on the inflation rate as of
December of the preceding year, if such rate renders an increase less than noted above for that year. Such rates will be obtained
from the U.S. Bureau of Labor Statistics website (https://www.bls.gov/data/inflation_calculator.htm).
You have informed us that you intend to prepare an annual comprehensive financial report (“Annual Report”) and
submit it for evaluation by the Government Finance Officers Association’s Certificate of Achievement for
Excellence in Financial Reporting. Our association with the Annual Report is to consist of preparing the Financial
Section of the Annual Report. Information contained within the Introductory Section and Statistical Section of the
Annual Report is to be prepared and provided by the City, for inclusion in the Annual Report.
Use of Third-Party Products
We may provide services to you using certain third-party hardware, software, software services, managed services
(including, but not limited to, web hosting, data security, data back-up, email security, or similar services subject
to direct end-user or subscription agreements), applications, and equipment (collectively, “Third-Party Products”).
You acknowledge that your or our use of a Third-Party Product may involve the processing, input, disclosure,
movement, transfer, and storage of information provided by you to us, including Personal Information and
Confidential Information, within the Third-Party Product’s infrastructure and not ours, and that the terms of use and
service set forth in the end-user license, subscription, or other agreement with the licensor of such Third-Party
Product, including, but not limited to, applicable laws, will govern all obligations of such licensor relating to data
privacy, storage, recovery, security, and processing within such Third-Party Product’s infrastructure, as well as, the
service levels associated with such Third-Party Product. You hereby consent to the disclosure of your information,
including your Confidential Information and Personal Information, to the licensors of such Third-Party Products
for the purpose described herein.
You acknowledge that your or our use of Third-Party Products may be subject to limitations, delays, interruptions,
errors, and other problems which are beyond our control, including, without limitation, internet outage or lack of
availability related to updates, upgrades, patches, fixes, maintenance, or other issues. We will not be liable for any
delays, delivery failures, or other losses or damages resulting from such issues. Nor will we be held responsible or
liable for any loss, or unauthorized use or disclosure, of any information or data provided by you, including, without
limitation, Personal Information provided by you, resulting from your or our use of a Third-Party Product.
Use and Ownership; Access to Audit Documentation
The Audit Documentation for this engagement is the property of Schlenner Wenner & Co. For the purposes of this
Arrangement Letter, the term “Audit Documentation” shall mean the confidential and proprietary records of
Schlenner Wenner & Co.’s audit procedures performed, relevant audit evidence obtained, other audit-related
workpapers, and conclusions reached. Audit Documentation shall not include custom-developed documents, data,
reports, analyses, recommendations, and deliverables authored or prepared by Schlenner Wenner & Co. for the City
under this Arrangement Letter, or any documents belonging to the City or furnished to Schlenner Wenner & Co. by
the City.
Review of Audit Documentation by a successor auditor or as part of due diligence is subject to applicable Schlenner
Wenner & Co. policies, and will be agreed to, accounted for and billed separately. Any such access to our Audit
Documentation is subject to a successor auditor signing an Access & Release Letter substantially in Schlenner
Wenner & Co.’s form. Schlenner Wenner & Co. reserves the right to decline a successor auditor’s request to review
our workpapers.
In the event we are required by government regulation, subpoena or other legal process to produce our documents
or our personnel as witnesses with respect to our engagement for the City of Lake Elmo, the City of Lake Elmo
will, so long as we are not a party to the proceeding in which the information is sought, reimburse us for our
professional time and expenses, as well as the fees and expenses of our counsel, incurred in responding to such
requests.
You acknowledge and grant your assent that representatives of the cognizant or oversight agency or their designee,
other government audit staffs, and the U.S. Government Accountability Office shall have access to the audit
documentation upon their request and that we shall maintain the audit documentation for a period of at least six
years after the date of the report, or for a longer period if we are requested to do so by the cognizant or oversight
agency. Access to the requested documentation will be provided under the supervision of Schlenner Wenner & Co.
audit personnel and at a location designated by our firm.
Data provided, produced, or obtained under this engagement shall be administered in accordance with the Minnesota
Government Data Practices Act, Minnesota Statutes, Chapter 13. We agree that we will immediately report to the
City any requests from third parties for information relating to this Agreement. We agree to promptly respond to
inquiries from the City concerning data requests.
Indemnification, Limitation of Liability, and Claim Resolution
Because Schlenner Wenner & Co. will rely on the City of Lake Elmo and its management and Members of
Governance to discharge the foregoing responsibilities, the City of Lake Elmo agrees to indemnify, hold harmless
and release Schlenner Wenner & Co. and its partners, principals, officers, directors, employees, affiliates,
subsidiaries, contractors, subcontractors, agents, representatives, successors, or assigns from all claims, liabilities,
losses and costs arising in circumstances where there has been a knowing misrepresentation by a member of the
City of Lake Elmo’s management.
We, on behalf of ourselves and our subcontractors, shall indemnify, defend, and hold harmless the City and its
officials, employees, contractors and agents from claims, losses, liabilities, and expenses (including reasonable
attorneys’ fees and expenses of litigation) caused by any negligent act or omission by us in the performance of the
services pursuant to this engagement.
The City of Lake Elmo and Schlenner Wenner & Co. agree that no claim arising out, from, or relating to the services
rendered pursuant to this arrangement letter shall be filed more than six years after the date of the audit report issued
by Schlenner Wenner & Co. or the date of this arrangement letter if no report has been issued. In no event shall
Schlenner Wenner & Co. or the City of Lake Elmo, or any of their respective partners, principals, officers, directors,
employees, affiliates, subsidiaries, contractors, subcontractors, agents, representatives, successors, or assigns
(collectively, the “covered parties” and each individually, a “covered party”) be liable for the interruption or loss of
business, any lost profits, savings, revenue, goodwill, software, hardware, or data, or the loss of use thereof
(regardless of whether such losses are deemed direct damages), or incidental, indirect, punitive, consequential,
special, exemplary, or similar such damages, even if advised of the possibility of such damages. To the fullest extent
permitted by law, the total aggregate liability of the covered parties arising out of, from, or relating to this
arrangement letter, or the report issued or services provided hereunder, regardless of the circumstances or nature or
type of claim, including, without limitation, claims arising from a covered party’s negligence or breach of contract
or warranty, or relating to or arising from a government, regulatory or enforcement action, investigation,
proceeding, or fine, will not exceed the total amount of the fees paid by the City of Lake Elmo to Schlenner Wenner
& Co. under this arrangement letter. Notwithstanding the foregoing, nothing in this limitation of liability provision
shall, or shall be interpreted or construed to, relieve the City of Lake Elmo of its payment obligations to Schlenner
Wenner & Co. under this arrangement letter.
Confidentiality
Schlenner Wenner & Co. and the City of Lake Elmo may, from time to time, disclose Confidential Information (as
defined below) to one another. Accordingly, Schlenner Wenner & Co. and the City of Lake Elmo agree as the
recipient of such Confidential Information (the “Receiving Party”) to keep strictly confidential all Confidential
Information provided to it by the disclosing party (the “Disclosing Party”) and use, modify, store, and copy such
Confidential Information only as necessary to perform its obligations and exercise its rights under this arrangement
letter and for no other purpose or use. Except as otherwise set forth herein, the Receiving Party may only disclose
the Confidential Information of the Disclosing Party to its personnel, agents, and representatives who are subject to
obligations of confidentiality at least as restrictive as those set forth herein and only for the purpose of exercising
its rights and fulfilling its obligations hereunder. To avoid any doubt, Schlenner Wenner & Co. is permitted to
disclose the City of Lake Elmo’s Confidential Information to Schlenner Wenner & Co.’s personnel, agents, and
representatives for the purpose of maintaining compliance with applicable laws and professional, regulatory, and/or
ethical standards.
As used herein, “Confidential Information” means, information in any form, oral, graphic, written, electronic,
machine-readable or hard copy consisting of: (i) any nonpublic information provided by the Disclosing Party,
including, but not limited to, all of its inventions, designs, data, source and object code, programs, program
interfaces, know-how, trade secrets, techniques, ideas, discoveries, marketing and business plans, pricing, profit
margins and/or similar information; (ii) any information that the Disclosing Party identifies as confidential; or (iii)
any information that, by its very nature, a person in the same or similar circumstances would understand should be
treated as confidential, including, but not limited to, this Arrangement Letter.
As used herein, the term “Confidential Information” will not include information that: (i) is publicly available at
the time of disclosure by the Disclosing Party; (ii) becomes publicly available by publication or otherwise after
disclosure by the Disclosing Party, other than by breach of the confidentiality obligations set forth herein by the
Receiving Party; (iii) was lawfully in the Receiving Party’s possession, without restriction as to confidentiality or
use, at the time of disclosure by the Disclosing Party; (iv) is provided to the Receiving Party without restriction as
to confidentiality or use by a third party without violation of any obligation to the Disclosing Party; or (v) is
independently developed by employees or agents of the Receiving Party who did not access or use the Confidential
Information.
The Receiving Party will treat the Disclosing Party’s Confidential Information with the same degree of care as the
Receiving Party treats its own confidential and proprietary information, but in no event will such standard of care
be less than a reasonable standard of care. The Receiving Party will promptly notify the Disclosing Party if it
becomes aware that any of the Confidential Information of the Disclosing Party has been used or disclosed in
violation of this Arrangement Letter.
Notwithstanding the foregoing, in the event that the Receiving Party becomes legally compelled to disclose any of
the Confidential Information of the Disclosing Party, or as may be required by applicable regulations or professional
standards, the Receiving Party will use commercially reasonable efforts to provide the Disclosing Party with notice
prior to disclosure, to the extent permitted by law.
Preexisting Nondisclosure Agreements
In the event that the parties have executed a separate nondisclosure agreement and such agreement does not
automatically terminate or expire upon execution of this Arrangement Letter, such agreement shall be terminated
as of the effective date of this Arrangement Letter.
Data Protection Compliance
Schlenner Wenner & Co. and the City of Lake Elmo acknowledge and agree that they may correspond or convey
information and documentation, including Confidential Information and Personal Information, via various forms of
electronic transmission, including, but not limited to, Third-Party Products, such as, email, FTP and cloud-based
sharing and hosting applications (e.g., portals, data analytics tools, and helpdesk and support ticketing applications),
and that neither party has control over the performance, operation, reliability, availability, or security of these
electronic transmissions methods. Therefore, neither party will be liable for any loss, damage, expense, harm,
disclosure or inconvenience resulting from the loss, delay, interception, corruption, unauthorized disclosure, or
alteration of any electronic transmission where the party has used commercially reasonable efforts to protect such
information. We offer our clients various platforms for the exchange of information. You hereby agree that you
shall be bound by and comply with any and all user terms and conditions made available (whether by link, click-
through, or otherwise) with respect to such platforms.
Personal Information
As used herein, the term “Personal Information” means any personal information that directly or indirectly identifies
a natural person as may be defined by applicable privacy, data protection or cybersecurity laws, and includes, but
is not limited to, nonpublic, personally identifiable information such as Social Security numbers, Social Insurance
numbers, driver’s license numbers or state- or province-issued identification card numbers, credit or debit card
numbers with or without any required security code, number or passwords, health information, and other personal
information as defined by applicable laws, whether of the City or the City’s customers or other third parties.
Each party agrees to transmit Personal Information consistent with applicable laws and any other obligations the
respective party may have. In the event you transmit to us Personal Information in an unencrypted format or via
unencrypted means, you agree that we have no obligation to notify you of the foregoing.
You represent and warrant that you have provided all notices and obtained all consents required under applicable
data protection laws prior to your collection, use and disclosure to us of such Personal Information and shall take
reasonable steps to ensure that such Personal Information does not include irrelevant or unnecessary information
about individuals.
We are permitted to use all such Personal Information to perform our obligations and exercise our rights under this
Arrangement Letter. The parties agree that as part of the performance of the services as described in this
Arrangement Letter, and as part of the direct business relationship between the parties, we may use the Personal
Information to improve and develop services and for other similar internal and business purposes. We agree to
maintain appropriate security measures to protect such Personal Information in accordance with applicable laws.
If we become aware of an unauthorized acquisition or use of City-provided Personal Information, we will promptly
inform you of such unauthorized acquisition or use as required by applicable laws and, upon your written request,
reasonably cooperate with you at your sole cost in support of any breach notification requirements as imposed upon
you by applicable laws.
Retention of Records
We will return to you all original records you provide to us in connection with this engagement. Further, in addition
to providing you with those deliverables set forth in this Arrangement Letter, we will provide to you a copy of any
records we prepare or accumulate in connection with such deliverables which are not otherwise reflected in your
books and records without which your books and records would be incomplete. You have the sole responsibility
for retaining and maintaining in your possession or custody all of your financial and nonfinancial records related to
this engagement. We will not host, and will not accept responsibility to host, any of your records. We, however,
may maintain a copy of any records of yours necessary for us to comply with applicable law and/or professional
standards. Any such records retained by us will be subject to the confidentiality obligations set forth herein and
destroyed in accordance with our record retention policies.
Termination
Your failure to make full payment of any and all undisputed amounts invoiced in a timely manner constitutes a
material breach for which we may refuse to provide deliverables and/or, upon written notice, suspend or terminate
our services under this Arrangement Letter. We will not be liable to you for any resulting loss, damage or expense
connected with the suspension or termination of our services due to your failure to make full payment of undisputed
amounts invoiced in a timely manner.
You may terminate this engagement at any time by providing us with 60 days written notice. In the event you
terminate this engagement, you will pay us for all services rendered (including deliverables and products delivered),
expenses incurred, and noncancelable commitments made by us on your behalf through the effective date of
termination.
We will not be responsible for any delay or failure in our performance resulting from acts beyond our reasonable
control or unforeseen or unexpected circumstances, such as, but not limited to, acts of God, government or war,
riots or strikes, disasters, fires, floods, epidemics, pandemics or outbreaks of communicable disease, cyberattacks,
and internet or other system or network outages.
When an engagement has been suspended at the request of management or those charged with governance and work
on that engagement has not recommenced within 120 days of the request to suspend our work, we may, at our sole
discretion, terminate this Arrangement Letter without further obligation to you. Resumption of our work following
termination may be subject to our client acceptance procedures and, if resumed, will require additional procedures
not contemplated in this Arrangement Letter. Accordingly, the scope, timing and fee arrangement discussed in this
Arrangement Letter will no longer apply. In order for us to recommence work, the execution of a new Arrangement
Letter will be required.
We may terminate this Arrangement Letter if we determine that our continued performance would result in a
violation of law, regulatory requirements, applicable professional or ethical standards, or our client acceptance or
retention standards. Should we wish to terminate this engagement for any of these reasons, we will provide the
City with 60 days written notice so that the City may have an opportunity to cure the default. Should we terminate
the engagement under these circumstances, we will not be liable to you for any resulting loss, damage, or expense
connected with the suspension or termination of our service.
The parties agree that those provisions of this Arrangement Letter which, by their context, are intended to survive,
including, but not limited to, payment, limitations on liability, claim resolution, use and ownership, and
confidentiality obligations, shall survive the termination of this Arrangement Letter.
Miscellaneous
We may mention your name and provide a general description of the engagement in our client lists and marketing
materials. Notwithstanding anything stated to the contrary in this Arrangement Letter, the City acknowledges and
consents that we also may utilize Confidential Information and Personal Information that you have provided to us
in connection with this engagement to develop, enhance, modify and improve technologies, tools, methodologies,
services and offerings and/or for development or performance of data analysis, business analytics or insights, or
other insight generation. Information developed in connection with these purposes may be used or disclosed to you
or current or prospective clients to provide them services or offerings. We will not use or disclose such Confidential
Information or Personal Information in a way that would permit the City or an individual to be identified by third
parties without your prior written consent.
The City of Lake Elmo agrees that it will not associate us with any public or private securities offering without first
obtaining our consent. Therefore, the City of Lake Elmo agrees to contact us before it includes our reports, or
otherwise makes reference to us, in any public or private securities offering. Our association with an official
statement is a matter for which separate arrangements may be necessary. The City of Lake Elmo agrees to provide
us with printer’s proofs or masters of such offering documents for our review and approval before printing, and
with a copy of the final reproduced material for our approval before it is distributed. If, based on our review, we
identify no material inconsistencies with our audit, or other misstatements of fact, we will promptly communicate
in writing to the City that we do not object to the inclusion of our report in the offering documents. In the event our
auditor/client relationship has been terminated when the City seeks such consent, we will be under no obligation to
grant such consent or approval.
Our professional standards require that we perform certain additional procedures, on current and previous years’
engagements, whenever a partner or professional employee leaves the firm and is subsequently employed by or
associated with a client in a key position. Accordingly, you agree to compensate us for any additional costs incurred
as a result of your employment of one of our partners, principals or employees.
We agree to maintain, at our expense, statutory workers’ compensation insurance coverage. We also agree to
maintain, at our expense, general commercial liability insurance coverage insuring ourselves against claims for
bodily injury, death, or property damage arising out of our general business activities (including automobile
use). The general commercial liability insurance policy shall provide coverage for each occurrence in the minimum
amount of $1,500,000. We also agree to maintain professional liability insurance in the minimum amount of
$1,500,000. Upon request of the City, we will provide the City with certificates of insurance, showing evidence of
the required coverage and listing the City as an additional insured with respect to the general commercial liability
insurance policy.
All services provided pursuant to this Agreement shall be provided by us as an independent contractor and not as
an employee of the City for any purpose. Any and all of our officers, employees, subcontractors, and agents, or
any other person engaged by us in the performance of the services pursuant to this engagement, shall not be
considered employees of the City. Any and all actions which arise as a consequence of any act or omission on the
part of us, our employees, subcontractors, or agents, or other persons engaged by us in the performance of services
pursuant to this engagement, shall not be the obligation or responsibility of the City. We shall not be entitled to
any of the rights, privileges, or benefits of the City’s employees, except as otherwise stated in this engagement.
Notices
Unless otherwise expressly agreed upon by the parties in this Arrangement Letter, all notices required to be given
hereunder will be in writing and addressed to the party at the business address provided in this Arrangement Letter,
or such other address as such party may indicate by a notice delivered to the other party. A copy of any legal notice
(e.g., any claimed breach or termination of this Arrangement Letter) sent by the City to Schlenner Wenner & Co.
shall also be sent to the following address: Schlenner Wenner & Co., 630 Roosevelt Rd. Ste. 201, P.O. Box 1496,
St. Cloud, MN 56302. Except as otherwise expressly provided in this Arrangement Letter, notices hereunder will
be deemed given and effective: (i) if personally delivered, upon delivery; (ii) if sent by registered or certified mail
or by overnight courier service with tracking capabilities, upon receipt; and, (iii) if sent by electronic mail (without
indication of delivery failure), at such time as the party that sent the notice receives confirmation of receipt, whether
by read-receipt confirmation or otherwise.
Governing Law
This Arrangement Letter, including, without limitation, its validity, interpretation, construction, and enforceability,
and any dispute, litigation, suit, action, claim, or other legal proceeding arising out of, from, or relating in any way
to this Arrangement Letter, any provisions herein, a report issued or the services provided hereunder, will be
governed and construed in accordance with the laws of the State of Minnesota, without regard to its conflict of law
principles, and applicable U.S. federal law.
Entire Agreement
This Arrangement Letter constitutes the complete and exclusive statement of agreement between Schlenner Wenner
& Co. and the City of Lake Elmo, and supersedes all prior agreements, understandings, and proposals, whether
oral or written, relating to the subject matter of this Arrangement Letter.
If any term or provision of this Arrangement Letter is determined to be invalid or unenforceable, such term or
provision will be deemed stricken, and all other terms and provisions will remain in full force and effect.
This Arrangement Letter may be amended or modified only by a written instrument executed by both parties.
Electronic Signatures and Counterparts
Each party hereto agrees that any electronic signature of a party to this Agreement Letter or any electronic signature
to a document contemplated hereby (including any representation letter) is intended to authenticate such writing
and shall be as valid, and have the same force and effect, as a manual signature. Any such electronically signed
document shall be deemed (a) to be "written" or "in writing," (b) to have been signed and (c) to constitute a record
established and maintained in the ordinary course of business and an original written record when printed from
electronic files. Each party hereto also agrees that electronic delivery of a signature to any such document (via email
or otherwise) shall be as effective as manual delivery of a manual signature. For purposes hereof, “electronic
signature” includes, but is not limited to, (a) a scanned copy (as a "pdf" (portable document format) or other
replicating image) of a manual ink signature, (b) an electronic copy of a traditional signature affixed to a document,
(c) a signature incorporated into a document utilizing touchscreen capabilities or (d) a digital signature. This
Arrangement Letter may be executed in one or more counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement. Paper copies or "printouts,” of such
documents if introduced as evidence in any judicial, arbitral, mediation or administrative proceeding, will be
admissible as between the parties to the same extent and under the same conditions as other original business records
created and maintained in documentary form. Neither party shall contest the admissibility of true and accurate
copies of electronically signed documents on the basis of the best evidence rule or as not satisfying the business
records exception to the hearsay rule.
Please sign and return a copy of this Arrangement Letter to indicate your acknowledgment of, and agreement with,
the arrangements for our audit of the financial statements, including our respective responsibilities.
Acknowledgement and Acceptance
Each party acknowledges that it has read and agrees to all of the terms and conditions contained herein. Each party
and its signatory below represents that said signatory is a duly authorized representative of such party and has the
requisite power and authority to bind such party to the undertakings and obligations contained herein.
AGREED TO AND ACKNOWLEDGED BY:
SCHLENNER WENNER & CO
Ryan J. Schmidt, CPA
Partner
Confirmed on behalf of the City of Lake Elmo:
____________________________________________________ ___________________________
Signature Date
____________________________________________________
Name/Title (Printed)
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2675 Long Lake Road | Roseville, Minnesota | 55113-1117 | 651-483-4521 | 651-483-2467 FAX
300 Prairie Center Drive, Suite 300 | Eden Prairie, Minnesota | 55344-7908 | 952-941-9242 | 952-941-0577 FAX otcpas.com
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PROPOSAL
To Provide Financial Audit Services to:
City of Lake Elmo
630 Roosevelt Road, Suite 201
P.O. Box 1496
St. Cloud, MN 56301
(320) 251-0286 | schlennerwenner.cpa
PREPARED FOR:
Kristina Handt, Administrator
3800 Laverne Ave. N.
Lake Elmo, MN 55042
(651) 747-3905
PREPARED BY:
Ryan Schmidt, CPA
rschmidt@schlennerwenner.cpa
Office: (320) 251-0286 | Direct: (320) 258-0871
November 4, 2022
Table of Contents
Transmittal Letter 2
Who We Are 3
Our Values 4
Our Di erence 5
Our Services 5
Required Firm Information 6
Firm Quali cations 7
GFOA Certi cate of Achievement 7
Team Quali cations 8
Our Service Team 8
Ryan Schmidt, CPA 9
Jon Archer, CPA 10
Ashley Meagher, CPA 11
Prior Experience and Client References 12
Audit Approach 13
Engagement Segmentation 15
Level of Sta & Hours Assigned by Segment 16
Identi cation of Anticipated Potential Audit Problems 16
Engagement Schedule 16
Estimated Fees 17
Executive Summary 18
Appendix A - Proposer Guarantees and Warranties 19
Appendix B - Dollar Cost Proposal 20
Appendix C - Peer Review Letter 21
Working with people, not just numb3rs.
Financial Audit Services Proposal | 1
Transmittal Letter
Kristina Handt
Administrator
3800 Laverne Ave. N.
Lake Elmo, MN 55042
We are pleased to submit this proposal to provide audit services for the City of Lake Elmo (the City) for the years ended
December 31, 2022 through 2026. It is our understanding that the audit is to be conducted in accordance with generally
accepted auditing standards as set forth by the American Institute of Certi ed Public Accountants, Government Auditing
Standards established by the General Accounting O ce (GAO), the legal provisions of the Minnesota Legal Compliance
Audit Guide, and potentially the audit requirements of Title 2 U.S. CFR Part 200, Uniform Administrative Requirements,
Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (when required). This proposal is a
commitment to perform the work within the time period outlined in your City’s request for proposal, and is an irrevocable
o er for the ve year period.
Schlenner Wenner & Co. provides a comprehensive range of auditing, accounting, outsourcing, consulting, and management
services to governmental entities throughout Minnesota. Through the use of a team dedicated entirely to governmental and
not-for-pro t services, we are well quali ed to serve your City. Additionally, our rm specializes in auditing cities that
approximate the size and structure of Lake Elmo, which means we would consider your City to be an ideal client to whom we
would prioritize our resources.
At Schlenner Wenner & Co., we pride ourselves in providing quality and timely professional services. Our rm maintains a
close relationship with our clients allowing us to keep abreast of our client’s issues and questions. We pride ourselves in
maintaining contact with our clients throughout the year. This relationship assists in a smooth and e cient reporting
process.
Thank you for the opportunity to submit this proposal. Please feel free to contact us should you have any questions about
our rm or the services we provide. Also, please visit our website at www.schlennerwenner.cpa . We look forward to serving
you.
Very truly yours,
Ryan Schmidt, CPA
Partner
Financial Audit Services Proposal | 2
Who We Are
Schlenner Wenner & Co. began as a sole-proprietorship in 1964,
and has since grown to be a regional accounting rm with a
reputation of maintaining lasting relationships while providing
quality work and innovative solutions.
Through planned, steady growth, we have expanded to a sta of over sixty
professionals, over 35 of whom are certi ed public accountants. Throughout this
growth, we have worked diligently to develop and maintain a reputation as one of
the most responsive, service-based CPA rms in the area. Our main o ce is
located at 630 Roosevelt Road, Suite 201, St. Cloud, Minnesota. In addition, we
maintain o ces in Albany, Little Falls, Monticello, and Maple Lake, Minnesota.
14
Partners
60+
Professionals
35+
CPAs
“Working with people, not just numb3rs” is not just our “tagline,” it’s our way of thinking.
We strive to provide all of our clients with timely service of the highest quality. Each client has one partner who is personally
responsible for their professional needs. This policy helps to ensure that an open line of communication is maintained
between our clients and our rm.
Financial Audit Services Proposal | 3
Our Values
ETHICAL
We do the right thing.
CLIENT MOTIVATED
We establish and maintain trusted relationships with our clients.
COMMUNITY-MINDED
We actively participate in improving our communities.
FAMILY ORIENTED
We support the well-being of our employees and their families. Our
employees are our most important resource.
DYNAMIC WORKPLACE
We embrace change and innovation. We continuously learn and evolve.
Financial Audit Services Proposal | 4
Our Difference
At Schlenner Wenner & Co., we strongly believe that exceptional quality starts with our rm’s culture.
We only hire top-quality people, develop them fully, evaluate them regularly, and encourage continued education and
specialization. We strive to develop each employee’s professional abilities to the maximum. What this means to you is that your
City will be served by the best accountants and advisors available.
Three things set us apart in the marketplace:
Our Culture We strive to make our government audit engagements an enjoyable experience for everyone
involved and create a positive atmosphere during the audit. Of course a lot of time and e ort is
involved with preparing for an audit, but this does not mean the audit has to be a stressful and
worrisome a air. We strongly believe in developing working relationships with our clients,
keeping open and responsive lines of communication, and providing the assistance and
education necessary as we work through the audit process together.
Specialization Our industry team, down to the newest sta member, is dedicated entirely to providing
services to governmental entities, as well as servicing various non-pro t organizations. This
helps us bring value to the Cities we audit, and eliminates much of the “learning curve” you
may encounter when dealing with sta at other rms.
We Listen At Schlenner Wenner & Co., we take the time to listen to our clients and learn not only their
current operations, but also what their future aspirations are and what needs to happen for
them to achieve their goals. This allows us to provide meaningful advice throughout the year
instead of just issuing the typical controls-focused audit management letter.
Our Services
Schlenner Wenner & Co. provides a full range of services to governmental entities.
AUDITING MANAGEMENT CONSULTING
ACCOUNTING WEALTH MANAGEMENT
OUTSOURCING PAYROLL SERVICES
Financial Audit Services Proposal | 5
Required Firm Information
Independence
Schlenner Wenner & Co. is independent of the City of
Lake Elmo, including all of its agencies and component
units, as de ned by auditing standards generally accepted
in the United States of America and the U.S. General
Accounting O ces’ Governmental Auditing Standards.
Further, our rm has not had any past professional
relationships with the City of Lake Elmo or any of its
agencies or component units in the past ve years. We
agree to notify you of any such relationships that arise
during the engagement period.
License to Practice
Both Schlenner Wenner & Co. and its professional sta are
licensed to practice public accounting in the State of
Minnesota. In addition, our rm and many of our
professional sta are licensed to practice public accounting
in multiple other states throughout the United States.
Results of Desk Reviews & Disciplinary
Action
Neither our rm, nor any of its partners, has been the
subject of any federal or state desk reviews of its audits for
the past three years. Further, such have not been subject
to any disciplinary action, pending or outstanding, with
any state regulatory bodies or professional organizations
for the past three years.
Use of Consultants or Sub-Vendors
Schlenner Wenner & Co. generally does not utilize the
assistance of consultants or sub-vendors in its audit practice.
Further, the rm does not anticipate the use of such in its
audit of the City of Lake Elmo. We understand that no
subcontracting will be allowed without the express prior
written consent of the City.
Financial Audit Services Proposal | 6
Firm Qualifications
Schlenner Wenner & Co. is a growing progressive rm that prides itself on providing clients with
personalized, quality, and timely service. We are able to provide this service through investing time
and resources in the following:
● RSM US Alliance
● American Institute of Certi ed Public
Accountants (AICPA)
● Minnesota Society of Certi ed Public
Accountants
● AICPA’s Government Audit Quality
Center
● AICPA’s Employee Bene ts Audit
Quality Center
● Private Companies Practice Section of
the American Institute of Certi ed
Public Accountants
● Various Business Organizations
● Continuing Professional Education
Seminars
● In-House Training
● Current Professional and Business
Publications
● Certi ed Fraud Training
● Vast Library of Professional Publication
and Reference Materials
As a member of the Private Companies Practice Section of The
American Institute of Certi ed Public Accountants, our rm
undergoes a voluntary peer review every three years. This process
involves an examination of our policies, procedures, and practices by
specially trained independent certi ed public accountants to ensure
that our policies, procedures, and practices are maintained at the
highest quality. A copy of our most recent pass peer review letter is
included in Appendix C for your review. This peer review included a
review of speci c city engagements.
All professional sta at Schlenner Wenner & Co. are required to
obtain a minimum of forty hours of continuing education annually.
This standard of continuing education strengthens our technical skills
and assists us in keeping abreast of the changes in our profession. In
addition, many of our partners and sta receive additional, specialized
education in several areas including: government auditing, business
valuation, estate planning, fraud examination, litigation support, and
peer review services. All governmental audit sta are required to
obtain twenty-four hours of governmental related continuing
education every two-year period. These courses cover topics such as:
government accounting principles, budgeting, procurement and
contracting, legislative policies and procedures, relevant laws and
regulations, single audit act, and government auditing standards.
GFOA Certificate of Achievement
The partners, managers, and supervisory sta of our governmental services team are active members of the Government
Finance O cers Association (GFOA) and have strong familiarity with the Certificate of Achievement for Excellence in
Financial Reporting Program (CAFR Program). However, we currently do not have any clients that have elected to include in
their nancial statements the statistical information associated with a full CAFR, and none of our clients have submitted their
reports for consideration for this award.
We have full con dence in our ability to assist the City with obtaining this award, considering the depth of our governmental
experience and quali cations.
Financial Audit Services Proposal | 7
Team Qualifications
General Staff Information
Part-time executives and sta will be utilized on your
engagement on an as-needed basis. Schlenner Wenner &
Co. follows strict hiring and training guidelines to ensure
the sta assigned to your engagement are of the highest
possible quality. Further, all of our professional sta , as
well as our rm, are properly licensed to practice in the
state of Minnesota. We anticipate using three to four
professional sta employed on this engagement on a
full-time basis, one employed on a part-time basis, and no
sta employed on a temporary basis. The proposing o ce
is our St. Cloud o ce.
Staff Continuity and Turnover
We recognize our sta as important members of each team.
In the past several years, we have grown our governmental
services team signi cantly and have experienced little sta
turnover relative to industry averages. More importantly, we
have a strong emphasis and commitment to sta continuity
for our clients. We understand that engagement partners,
other supervisory sta , and specialists may be changed if
those personnel leave the rm, are promoted, or are assigned
to another o ce. These personnel may also be changed for
other reasons with the express prior written permission of
the City. Other audit personnel may be changed at the
discretion of the rm provided that replacements have
substantially the same or better quali cations or experience.
OUR GOVERNMENTAL SERVICES TEAM
Position Governmental Auditors
Partner 3
Senior Manager/Manager 1
Supervisory Staff 2
Staff 5
Our Service Team
We believe the key to establishing an excellent professional relationship between your City and our
rm is the client service team.
The team we have assigned to serve you combines technical expertise and the proven ability to work e ectively with our
clients' personnel. Our client service team, led by Ryan Schmidt, CPA, Partner, and Jon Archer, CPA, Partner includes
individuals who have extensive experience with auditing and consulting related to governmental entities. This commitment
will ensure your City will receive quality service backed by the full resources of our rm.
Biographical sketches for the engagement team leaders proposed for your City are as follows:
Financial Audit Services Proposal | 8
Ryan Schmidt, CPA
CPA, Partner
Direct: (320) 258-0871
rschmidt@schlennerwenner.cpa
As long as he can remember, Ryan has had an aptitude for problem solving
and working with numbers. However, it wasn’t until he had the opportunity
to work closely with his clients at Schlenner Wenner & Co., that he realized
his true passion. Ryan enjoys building long-term relationships with his clients
and derives a great sense of professional ful llment when he knows that he
has truly helped a client, or eased the pain they have historically associated
with the audit process. He takes pride in the responsiveness, consistency, and
the overall dedication that he provides to his clients on a year-round basis.
Ryan strives to deliver value to his clients, and he sees each audit as an
opportunity for him and the client to collaborate and learn from each other.
In his free time, Ryan enjoys spending time with his family, hunting, shing,
and hiking with his dogs.
Professional History and Education
● Over 12 years of experience in public accounting
● Bachelor of Science degree in Accounting, St. Cloud State University,
Summa Cum Laude
● Advanced Single Audit Certi cation - AICPA
● Meets Yellow Book CPE requirements for the past three years
Professional Memberships
● Minnesota Government Finance O cers Association
● Minnesota Association of School Business O cials
● Minnesota Society of Certi ed Public Accountants
● American Institute of Certi ed Public Accountants
Speci c Industries
● Local governments including:
○ Cities
○ School Districts
○ Townships
○ Special Districts
Concentrations
● Audit and assurance services
○ Subject to government auditing standards (yellowbook)
○ Uniform guidance/single audit
● Accounting assistance
● Consulting and outsourcing
Financial Audit Services Proposal | 9
Jon Archer, CPA
CPA, Concurring Partner
Direct: (320) 258-5936
jarcher@schlennerwenner.cpa
Partner Jon Archer has always had an interest in business operations, but it
wasn’t until his rst college accounting course that he realized that he has
found his calling. Today, he enjoys the opportunity to build personal and
professional relationships with clients, and is con dent his career move was
the right one. Jon believes that while the numbers are important, it’s the
people behind them that really matter and he keeps that mentality when
helping clients obtain their personal and nancial goals.
Professional History and Education
● Over 16 years of experience in public accounting
● Bachelor of Science degree in Accounting, St. Cloud State University
● Meets Yellow Book CPE requirements for the past three years
Professional Memberships
● Minnesota Government Finance O cers Association
● Minnesota Association of School Business O cials
● Minnesota Society of Certi ed Public Accountants
○ Audits of Local Governments Conference planning task force
● American Institute of Certi ed Public Accountants
Speci c Industries
● Local governments including:
○ Cities
○ School Districts
○ Townships
○ Fire Relief Associations
○ Special Districts
● Not-for-pro t organizations
Concentrations
● Audit and assurance services
○ Subject to government auditing standards (yellowbook)
○ Uniform guidance/single audit
● Accounting assistance
● Consulting and outsourcing
● Internal control review
Financial Audit Services Proposal | 10
Ashley Meagher, CPA
CPA, Manager
Direct: (320) 774-1720
ameagher@schlennerwenner.cpa
Ashley’s interest in business started early on in helping both her father and
grandfather with their family’s auction and real estate business. Because of
this early exposure to both accounting and small business, Ashley found her
way towards the accounting program at the College of Saint Benedict. She
loved her time at St. Ben’s and growing up in the small town of Avon,
Minnesota; because of this, she knew she wanted to end up at an accounting
rm that had that same small-town, family-like atmosphere. At Schlenner
Wenner & Co. she’s found just that and has been able to expand her
knowledge of accounting and business through helping her clients to both
learn and grow.
Professional History and Education
● Over 7 years of experience in public accounting
● 3 ½ years of experience in corporate accounting
● Bachelor of Arts degree in Accounting, College of Saint Benedict
● Intermediate Single Audit Certi cation - AICPA
● Meets Yellow Book CPE requirements for the past three years
Professional Memberships
● Minnesota Government Finance O cers Association
● Minnesota Society of Certi ed Public Accountants
● American Institute of Certi ed Public Accountants
Speci c Industries
● Local governments including:
○ Cities
○ School Districts
○ Townships
● Not-for-pro t organizations
Concentrations
● Audit and assurance services
○ Subject to government auditing standards (yellowbook)
○ Uniform guidance/single audit
● Accounting assistance
● Consulting and outsourcing
Financial Audit Services Proposal | 11
Prior Experience and Client
References
Our rm understands the unique climate that Cities operate in, and has built strong relationships
with many cities throughout Minnesota.
Since our rm’s inception we have grown to more than 7,500 clients, including over 30 Minnesota Cities and 25 Minnesota
Schools. While we have been fortunate to achieve such a high growth rate, we attribute this to our keen sense of customer
service and our commitment to our people. But don’t take our word for it-call anyone you want and hear what they say about
us. We hope you do, because we want you to feel secure with your decision and trust that what we’ve said we’ll do, we will do.
Below is a list of Cities audited by our rm, along with contact information for our primary audit contact on these
engagements that you may use as references:
Name Contact Phone Partner Scope of Work Total Hours
City of Paynesville Belinda Ludwig (320) 243-3714 Ryan Schmidt Financial Audit
& Single Audit
220
City of Little Falls Hannah Kurkowski (320) 616-5500 Jon Archer Financial Audit
& Single Audit
240
City of International Falls Brad Ettestad (218) 283-9484 Ryan Schmidt Financial Audit 200
City of Scandia Colleen Firkus (651) 433-2274 Ryan Schmidt Financial Audit 185
City of Foley Sarah Brunn (320) 968-7260 Jon Archer Financial Audit 180
None of the cities detailed above submit their reports for consideration of the GFOA Certi cate of Achievement. Please see
further discussion related to this matter in the Firm Quali cations section.
Financial Audit Services Proposal | 12
Audit Approach
Our tailored audit approach focuses on meeting
your needs in a timely manner.
We place emphasis on early planning to assist in identifying
those areas of signi cance. Our process focuses on gaining
an understanding of your City and how it functions. We also
focus on identifying constructive advice for your
consideration. The goal of our audit process is to provide an
independent, quality audit that is performed by the most
experienced and dedicated professionals. Several steps in
planning the audit and assisting you throughout the audit
process include:
● We emphasize an open line of communication with our clients throughout the year
● We suggest management submit minutes to us on a regular basis so we can provide timely advice
● We review nancial analysis and detail at various interim dates each year
● We provide our clients with a detailed list of items to prepare for the audit (and update the list each year), and
● We educate our clients as to issues pertinent to their operations and current accounting issues and trends.
Financial Audit Services Proposal | 13
Speci c audit methodology utilized when performing your audit will consist of the following:
● Review of budget to actual data and trends, as well as capital improvement plans and projections
● Obtaining a basic understanding of the City and its environment, including the City’s organizational charts,
operating manuals, and internal controls over both entity level and speci c account transactions (including obtaining
an understanding of the City’s nancial and management information systems)
● Analytical procedures will be performed consisting of trend and ratio analysis performed during the planning, testing
and nal review stages of the audit. For cities, examples of these analytical procedures could consist of a comparison
between budget and actual by funds or an analysis of utility revenues based on non nancial factors such as
consumption
● Substantive testing on speci c account cycles. We use statistical sampling to assist us in our substantive procedures.
Sample sizes are determined based upon our assessed risk of the area being audited, population size, and assessed
materiality levels by fund. We use IDEA data analysis software to assist in our sample selections, ensuring that we
make a truly random sample selection when appropriate to do so
● Determining compliance with laws and regulations. We will follow the legal compliance guide published by the
Minnesota O ce of the State Auditor, as well as review transactions for compliance with other statutes and
requirements. We use statistical sampling to assist us in selecting transactions to review for compliance with laws and
regulations
The above audit service approach encompasses any compliance portions of the audit, including audits of Minnesota Legal
Compliance and the Single Audit Act. Schlenner Wenner & Co. uses IDEA data analysis software in its audits of Cities and
has a fully paperless audit process. We streamline the audit process through the use of an interactive portal, which helps us
seamlessly exchange information and stay organized as we move through the audit.
Our commitment to quality service and concern for our clients assists in containing our clients' cost through awareness of
their unique situations, addressing their concerns throughout the year, and providing education to their accounting sta .
Financial Audit Services Proposal | 14
Engagement Segmentation
Our audit approach provides continuous involvement throughout the year with you, which we
have summarized in four phases. Brie y, the phases are:
PHASE ONE
Initial Planning
During this phase, we will work with your personnel to become familiar with all facets of your City. We will
interview your key people and assess the external and internal environmental conditions that may in uence our
audit scope. We will obtain your nancial reports and perform overall analytical review procedures including
ratio analysis and comparison of your City’s activity to our expectations. Based on this work, we will prepare an
initial audit plan and review it with management.
PHASE TWO
Program Development
We will begin our identi cation of speci c control objectives by documenting major nancial reporting systems.
We will also perform certain detailed analytical reviews to prepare for the current year’s upcoming audit so your
personnel can complete the items we need prior to the audit, which results in a less disruptive audit eldwork.
PHASE THREE
Program Execution
This phase will include our auditing of year-end account balances and we will place particular emphasis on the
audit of the signi cant balance sheet accounts, as well as their relationship to the City’s revenues and
expenditures. In working with numerous similar clients we would anticipate the areas of primary emphasis to be
the receivable and revenue cycle, the purchases and accounts payable cycle, the payroll cycle, and compliance with
laws and regulations. We will, of course, prepare our audit report, comprehensive management letter and other
reports, and meet with management to review them. We anticipate spending four to ve days on this phase of the
audit, most of which will occur at City Hall. All other phases of the audit are completed remotely from our
o ces.
PHASE FOUR
Post Audit Critique
After the completion of the audit, we will meet with management to review and critique the audit process and
make preliminary plans for the next year. The preliminary plans may include periodic visits during the year with
you to ensure that we are kept current on developments and changes that may a ect nancial operations. We
educate our clients as to issues pertinent to their business and current accounting issues and trends.
Financial Audit Services Proposal | 15
Level of Staff & Hours Assigned by Segment
The following table summarizes our proposed engagement segmentation by level of sta and
hours assigned to the segment:
HOURS
Segment Partner Manager Senior Staff Total
Preliminary Fieldwork/Planning 5.00 8.00 16.00 14.00 43.00
Fieldwork 7.00 18.00 49.00 39.00 113.00
Report Preparation/Review 6.00 11.00 10.00 6.00 33.00
Exit Conference and Draft
Discussion 2.00 2.00 - - 4.00
Presentation to City Council 1.00 1.00 - - 2.00
Total Hours 21.00 40.00 75.00 59.00 195.00
Identification of Anticipated Potential Audit Problems
Per review of the nancial reports for the City of Lake Elmo for the year ended December 31, 2021 and based on
knowledge our rm has obtained during past projects completed with comparable cities, we do not anticipate any
potential audit problems at this time. We will clearly identify and resolve any such issues noted in the future directly with
the appropriate level of management as soon as such issues are known.
While the coronavirus pandemic presented many challenges, it also provided our Firm with a unique opportunity to
reassess our audit approach and implement technology that has helped us streamline our procedures and enhance data
security. Through the extensive use of virtual meeting technology and an interactive portal that utilizes multi-factor
authentication and integrates with our audit software platform, we have the ability to make a seamless transition to a fully
remote audit approach, should it become necessary (or simply desired by the City) throughout the course of our
engagements.
Engagement Schedule
We understand that audit eldwork is to be performed no later than April 30th each year. Additionally, we understand
that draft audit reports and ndings shall be completed and provided to the City by the end of May, and we acknowledge
that the presentation to City Council shall occur at a regular council meeting before June 30 (with drafts to be delivered
on the Wednesday prior to the meeting). We do not anticipate any di culties adhering to this schedule.
Financial Audit Services Proposal | 16
Estimated Fees
This proposal covers the following services:
● Audit of the nancial statements in accordance with generally accepted auditing standards as set forth by the
American Institute of Certi ed Public Accountants, Government Auditing Standards established by the General
Accounting O ce (GAO), the legal provisions of the Minnesota Legal Compliance Audit Guide, and the audit
requirements of Title 2 U.S. CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (Uniform Guidance) (when required)
● Preparation of internal control letter(s) as required or warranted
● Preparation of Single Audit Data Collection Form (if applicable), and
● Presentation of nancial statements and preparation of management letter and related board materials
We absorb the rst-year hours we incur to gather historical information, to build permanent les and to fully understand your
accounting system and objectives. We consider these startup costs to be our investment in building a relationship with you.
Our fees are based on hourly rates, determined by each professional’s level of experience. Our
estimated fees to perform the services requested by you are included in Appendix B.
We do not bill for responses to client questions that require no signi cant investment of research time or other costs.
However, we do bill for special request meetings, research, assistance with accounting issues, or other matters that involve
signi cant investment of our time. In all cases, we will thoroughly discuss the scope of the services to be provided with you
and achieve a mutually agreeable decision as to estimated services and fees to be rendered. Such additional services shall be
performed only if set forth in an addendum to the contract between the City and the rm. Any such additional work agreed to
between the City and the rm shall be performed at the same rates set forth in the schedule of fees and expenses included in
the dollar cost bid.
Payments will be made on the basis of hours of work completed during the course of the engagement, in accordance with the
dollar cost proposal (Appendix B). Interim billing shall cover a period of not less than a calendar month.
Although fees are important, they should not, in our view, be the determining factor in the selection of an accounting rm for
your City. The choice of independent accountants and business advisors should be made primarily on the basis of
quali cations, capabilities, and commitment. We will spare no e ort - now or in the future - to nd a common ground for
providing the level of services your City requires, at a reasonable cost.
Financial Audit Services Proposal | 17
Executive Summary
This proposal summarizes how we will serve you and re ects our commitment to full-service.
Tailoring our services to your speci c needs and situations allows you to obtain maximum bene ts. Five areas distinguish the
services Schlenner Wenner & Co. can o er your City:
● Our full service approach to providing responsive and timely service throughout the year, backed by our vested
interest in the success of the City in which we operate
● Our commitment of an experienced sta , led by Ryan Schmidt and Jon Archer
● Our use of creative, nonintrusive, and innovative approaches in all phases of the audit process
● Our rm is a recognized leader in providing audit, accounting, and consulting services to Minnesota Cities, and we
have the depth and resources to provide you with the entire array of services your City will need
● Our fee structure, like that of other CPA rms, is based on our operating costs. We stress outstanding professional
service at reasonable costs. To do this, we seek only outstanding professional sta and train them to use innovative
techniques, which enable us to control and minimize audit time and fees.
The proposing o ce is our St. Cloud o ce. Pertinent addresses and phone numbers for the professionals noted previously
who are available to address any questions you may have are as follows:
Address:
630 Roosevelt Road, Suite 201
St. Cloud, MN 56301
Telephone:
(320) 251-0286
Email:
rschmidt@schlennerwenner.cpa
jarcher@schlennerwenner.cpa
Financial Audit Services Proposal | 18
Appendix A - Proposer
Guarantees and Warranties
1. The proposer certi es it can and will provide, as a minimum, all services set forth in the proposal.
2. Proposer warrants that it does not have any undisclosed con icts of interest with the City of Lake Elmo, its
management sta , or its elected o cials.
3. Proposer warrants that the rm and all assigned key professional sta are properly licensed to practice in the state of
Minnesota.
4. Proposer warrants that it is willing to and able to obtain an errors and omissions insurance policy providing a prudent
amount of coverage for the willful or negligent acts, or omissions of any o cers, employees, or agents thereof.
5. Proposer warrants that it will not delegate or subcontract its responsibilities under an agreement without the prior
written permission of the City of Lake Elmo.
6. Proposer warrants that all information provided by it in connection with this proposal is true and accurate.
Signature of O cial: _______________________________
Name (Typed): Ryan J. Schmidt
Title: CPA, Partner
Firm: Schlenner Wenner & Co.
Date: November 4, 2022
Financial Audit Services Proposal | 19
Appendix B - Dollar Cost Proposal
Schedule of Professional Fees and Expenses
AUDIT OF THE 2022 FINANCIAL STATEMENTS
Position Hours Standard Hourly
Rates
Proposed Hourly
Rates Total
Partners 21 350 295 6,195
Managers 40 250 210 8,400
Senior/Supervisory Staff 75 175 150 11,250
Staff 59 140 120 7,080
Subtotal 32,925
Out of Pocket Expenses, Meals/Lodging, Transportation, etc.
Subtotal - 2022 City Audit ( Rounded )
N/A (All Inclusive)
32,900
Hours Average Rate Total
Single Audit 20 150 3,000*
SUMMARY SCHEDULE OF ALL-INCLUSIVE AUDIT COSTS
For Year Ending
December 31,
Audit Fee Total
All-Inclusive Maximum
Price (ACFR included)
Single Audit Cost,
if required* Total All-Inclusive Cost**
2022 32,900 3,000 35,900
2023 36,190 3,300 39,490
2024 39,800 3,630 43,430
2025 43,780 3,990 47,770
2026 48,160 4,390 52,550
Grand Totals** 200,830 18,310 219,140
*The proposed Single Audit fees above are under the assumption that only one Federal Program will require testing
each year. Should additional Federal programs require testing, an additional fee of $3,000 - $5,000 per program is
anticipated.
** Annual increases noted above are projected at a maximum rate. Actual increases will be based on the inflation rate
as of December of the preceding year, if such rate renders an increase less than noted above for that year. Such rates
will be obtained from the U.S. Bureau of Labor Statistics website ( https://www.bls.gov/data/inflation_calculator.htm ).
Financial Audit Services Proposal | 20
Appendix C - Peer Review Letter
(Includes a review of speci c government engagements)
Financial Audit Services Proposal | 21