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City of Paris August 6, 2002 Page 6 Audit Administration, Fees, and Other (Continued) McClanahan and Holmes, PLLC originated from the public accounting practice opened in Paris in 1952 by Mr. F. I. McClanahan. The firm has grown to a five officer professional limited liability company with operating offices in Paris, Bonham, and Denison. Our firm consists of ten 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 $48,000 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 necessary to complete the required scope of work. Position Rate Hours Officer $ 120 40 In-Charge $ 100 250 Staff $ 48 - 84 550 Clerical $ 32 170 Total 1,010 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 would 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 would expect to deliver our report within ninety days after September 30, 2003, and would bill for the entire engagement after the report is delivered. We would provide as many copies of the report as needed. Government Auditing Standards require that we provide you with a copy of our most recent quality control review report. Our 2000 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. McClanahan and Holmes, PLLC Certified Public Accountants McCLANAHAN AND HOLMES, PLLC