08 Appointing Auditor to conduct Independent Annual Audit

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City of Paris August 7,2007 Page 5 Audit Administration, Fees, and Other (Continued) during the audit in order to minimize the clerical activities of our professional staff and resulting added cost. If engaged, a list of workpapers will be furnished which can be prepared by your personnel prior to the final field work. At the conclusion of the engagement, we will complete the appropriate sections of and sign the Data Collection Foml that summarizes our audit findings. We will provide copies of our reports to the City; however, it is management's responsi- bility to submit the reporting package (including financial statements, schedule of expenditures of federal awards, summary schedule of prior audit findings, auditors' reports, and a corrective action plan) along with the Data Collection Form to the designated federal clearinghouse and, if appropriate, to pass-through entities. The Data Collection Form and the reporting package must be submitted within the earlier of 30 days after receipt of the auditors' reports or nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audit. At the conclusion of the engagement, we will provide information to management as to where the reporting packages should be submitted and the number to submit. The workpapers for this engagement are the property of McClanahan and Holmes, LLP, and will constitute confidential information. However, pursuant to authority given by law or regulation, we may be requested to make certain workpapers available to a federal or state agency providing direct or indirect funding, or the United States General Accounting Office for purposes of a quality review of the audit, to resolve audit findings, or to carry out oversight responsibilities. We will notify you of any such requests. If requested, access to such workpapers will be provided under the supervision of McClanahan and Holmes, LLP personnel. Furthermore, upon request, we may provide photocopies of selected workpapers to the aforementioned parties. These parties may intend, or decide, to distribute the photocopies or information contained therein to others, including other governmental agencies. The workpapers for this engagement will be retained for a minimum of five years after the date the auditors' report is issued or for any additional period requested by the cognizant or oversight agency for audit or pass-through entity. If we arc aware that a federal awarding agency, pass-through entity, or auditee is contesting an audit finding, we will contact the party(ies) contesting the audit finding for guidance prior to destroying the workpapers. McClanahan and Holmes, LLP originated from the public accounting practice opened in Paris in 1952 by Mr. F. 1. McClanahan. The firm has grown to a five partner limited liability partnership with operating offices in Paris, Bonham, and Denison. Our firm consists of twelve certified public accountants, three professional personnel, and several para- professionals and clerical personnel who have extensive experience. Attachments list current clients for which we provide similar audit services and provide the education and experience of professional audit personnel most likely to be assigned to the audit. Based on our understanding of the audit work required and our evaluation of your books and records, we would estimate that the fee for the engagement would not exceed $49,500 plus out-of-pocket expenses (such as report reproduction costs, postage, ete). As competitive bidding by licensed certified public accountants is not permitted by state law, this is considered a fee estimate and as such, we will not be bound to provide the proposed services for the estimated amount. Our estimated fee for these services is based on the following rates and estimated hours of professional time. It should be noted that this fee is an estimate and the actual fee billed will be based on our standard billing rates and the number of hours necessary to complete the required scope of work. McCLANAHAN AND HOLMES, LLP