18-PROPOSAL FROM MCCLANAHAN AND HOLMES TO PERFORM INDEPENDENT AUDIT ON CITY'S RECORDS

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City of Paris August 15, 2011 Page 6 Audit Administration, Fees and Other (Continued) McClanahan and Holmes, LLP originated from the public accounting practice opened in Paris in 1952 by Mr. F. I. McClanahan. The firm has grown to a six 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 personnei 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 year ending September 30, 2011, would not exceed $54,000 plus out-of-pocket expenses (such as report reproduction costs, postage, etc). 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 necessaty to complete the required scope of work. For the years ending September 30, 2012 and 2013, we propose to limit increases to the change in the annual average of the consumer price index published by the U.S. Department of Labor (CPI-U). Position Rate Hours Partner $ 180 20 In-Charge $ 140 300 Staff $80 -132 460 Clerical $ 44 66 Total 846 If the City requests additional work or services not within the general scope of this proposal, that work would be billed at our normal rates. Requests for additional work or services beyond the general scope of this proposal must be made in writing before the beginning of field work, and appropriate rates would be negotiated. If engaged, we expect our preliminary work to begin prior to year-end and our final field work to begin shortly after your records are closed out for the year. We will make every effort to deliver our report in time to comply with bond and other reporting requirements, and will bill for the entire engagement after the report is delivered. We will provide as many copies of the report as needed. Government Auditing Standards require that we provide you with a copy of our most recent external peer review report and any letter of comment, and any subsequent peer review reports and letters of comment received during the period of the contract. Our 2009 peer review report accompanies this letter. Should you want additional information or should you want us to appear before the City Council, please let us know. If you agree with the terms of the engagement as described in this proposal, please sign the second copy and return it to us. Yv(Gvt- d4*1/ / eAdr`~' McClanahan and Holmes, LLP - 139