HomeMy WebLinkAboutPR 23438: APPROVAL OF FY2022 AUDIT ENGAGEMENT WITH PATILLO, BROWN AND HILL, LLPF
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www.PortArthurTx.gov
INTEROFFICE MEMORANDUM
Date: 10/31/2023
To: The Honorable Mayor and City Council
Through: Ron Burton, City Manager
From: Kandy Daniel, Director of Finance
RE: PR No. 23438 Approval of FY2022 audit engagement with Pattillo. Brown and
Hill, LLP
Introduction: Request approval for the City Manager to execute a letter of engagement with
Pattillo, Brown and Hill, LLP to perform auditing services for the City of Port Arthur for the
fiscal year ending 2022.
Background: Article XII, Section 17 of the Charter of the City of Port Arthur requires that a
CPA firm be engaged annually to perform an independent audit of all accounts of the City. The
scope includes the accounts of the Economic Development Corporation. The term of the letter
of engagement is one year and will provide for the audit of the general purpose financial
statements as presented in the Comprehensive Annual Financial Report and the Single Audit
reports in accordance with Federal requirements.
Pattillo, Brown and Hill, LLP was selected through a competitive RFQ process. This firm's
personnel are experienced in governmental audits, and meet all continuing education and
quality review requirements. This will be the second year of the contract. The engagement
letter is attached as exhibit A.
Budget Impact: The contract has a projected budgetary impact of$120, 000 and funds are
available in the Finance Department professional services account no. 001-07-015-5420-00-
10-000.
"Remember,we are here to serve the Citizens of Port Arthur"
P.O.Box 1089 X Port Arthur,Texas 77641-1089 X 409.983.8101 X FAX 409.982.6743
City of
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Texas
www.PortArthurTx.gov
Recommendation: The attached Proposed Resolution No. 23438 authorizes the City Manager
to execute a letter of engagement with Pattillo, Brown and Hill, LLP to perform auditing
services for the City of Port Arthur for the fiscal year ending 2022. We recommend that the
City Council approve it as presented.
"Remember,we are here to serve the Citizens of Port Arthur"
P.O.Box 1089 X Port Arthur,Texas 77641-1089 X 409.983.8101 X FAX 409.982.6743
P. R. NO. 23438
KD 10/31/2023
RESOLUTION NO.
A RESOLUTION AUTHORIZING THE CITY MANAGER
TO EXECUTE A LETTER OF ENGAGEMENT WITH
PATTILLO, BROWN AND HILL, LLP, AS INDEPENDENT
AUDITOR FOR THE CITY OF PORT ARTHUR WITH A
PROJECTED BUDGETARY IMPACT OF$120,000 FOR THE
YEAR ENDING SEPTEMBER 30, 2022. FINANCE
DEPARTMENT ACCOUNT #001-07-015-5420-00-10-000.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR:
THAT the City Manager of the City of Port Arthur is hereby authorized and directed to
execute on behalf of the City of Port Arthur an engagement letter between the City of Port Arthur and
Pattillo,Brown and Hill,LLP,for an independent audit of all accounts of the City and the Port Arthur
Economic Development Corporation for the fiscal year ending September 30, 2022, as described in
Exhibit "A"; and
THAT a copy of said contract is attached hereto and made a part hereof as Exhibit "A"; and,
THAT a copy of the caption of this resolution be spread upon the Minutes of the City
Council.
READ,ADOPTED, AND APPROVED, this day of November, 2023, A.D., at a
Regular Meeting of the City Council of the City of Port Arthur, Texas by the following vote:
AYES: Mayor:
Councilmembers:
NOES:
Thurman"Bill" Bartie, Mayor
ATTEST:
Sherri Bellard, City Secretary
APPROVED AS TO FORM:
/2/a/e
Val Tizeno, City Attorney
APPROVED FOR AVAILABILITY OF FUNDS:
Kandy Danirel, Director of Finance
APPROVED FOR ADMINISTRATION:
Ron Burton, City Manager
EXHIBIT "A"
PATTILLO, BROWN 4x HILL, L.L.P.
401 West State Highway 6
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1 9 2 5 2 0 2 3 254 772 4901 pbbcpa.con
November 8, 2023
City of Port Arthur, Texas
444 4th Street
Port Arthur, Texas 77640
City Council and Management:
You have requested that we audit the financial statements of the governmental activities, the
business-type activities, the aggregate discretely presented component units, each major fund, and
the aggregate remaining fund information of the City of Port Arthur, Texas (the "Entity"), as of
September 30, 2022, and for the year then ended, and the related notes to the financial statements,
which collectively comprise the Entity's basic financial statements as listed in the table of contents.
In addition, we will audit the Entity's compliance over major federal and state award programs for
the period ended September 30, 2022. We are pleased to confirm our acceptance and our
understanding of this audit engagement by means of this letter. Our audits will be conducted with
the objectives of our expressing an opinion on each opinion unit and an opinion on compliance
regarding the Entity's major federal and state award programs. The objectives of our audit of the
financial statements 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 the standards applicable
to financial audits contained in Government Auditing Standards, issued by the Comptroller General
of the United States of America will always detect a material misstatement when it exists.
Misstatements, including omissions, 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
ii
made by a reasonable user based on the financial statements.
The objectives of our compliance audit are to obtain sufficient appropriate audit evidence to form an
opinion and report at the level specified in the governmental audit requirement about whether the
Entity complied in all material respects with the applicable compliance requirements and identify
audit and reporting requirements specified in the governmental audit requirement that are
supplementary to GAAS and Government Auditing Standards, if any, and perform procedures to
address those requirements.
OFFICE LOCATIONS
TEXAS "Jaen Temple Hillsboro Houston !' AICPA
NEW MEXICO Albuquerque GAQC Member
City of Port Arthur, Texas November 8, 2023 Page 2
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis, budgetary comparison information, and pension and other
postemployment benefit related information be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required by
Governmental Accounting Standards Board, who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or
historical context. As part of our engagement, we will apply certain limited procedures to the required
supplementary information (RSI) in accordance with auditing standards generally accepted in the
United States of America. These limited procedures will consist primarily of inquiries of management
regarding their methods of measurement and presentation and comparing the information for
consistency with management's responses to our inquiries. We will not express an opinion or provide
any form of assurance on the RSI. The following RSI is required by accounting principles generally
accepted in the United States of America. This RSI will be subjected to certain limited procedures
but will not be audited:
• Management's Discussion and Analysis.
• Budgetary Schedules.
• Schedule of Changes in Net Pension Liability and Related Ratios.
• Schedule of Pension Contributions.
• Schedule of Changes in Net Other Post Employment Benefit (OPEB) Liability and Related
Ratios.
• Schedule of OPEB Contributions.
Supplementary information other than RSI will accompany the Entity's basic financial statements.
We will subject the following supplementary information to the auditing procedures applied in our
audit of the basic financial statements and certain additional procedures, including comparing and
reconciling the supplementary information to the underlying accounting and other records used to
prepare the financial statements or to the financial statements themselves, and additional procedures
in accordance with auditing standards generally accepted in the United States of America. We intend
to provide an opinion on the following supplementary information in relation to the financial
statements as a whole:
• Combining Statements and Schedules.
Also, the document we submit to you will include the following other additional information that will
not be subjected to the auditing procedures applied in our audit of the financial statements:
• Introductory Section.
• Statistical Section.
Schedule of Expenditures of Federal and State Awards
We will subject the schedule of expenditures of federal and state awards to the auditing procedures
applied in our audit of the basic financial statements and certain additional procedures, including
comparing and reconciling the schedule to the underlying accounting and other records used to
prepare the financial statements or to the financial statements themselves, and additional procedures
in accordance with auditing standards generally accepted in the United States of America. We intend
to provide an opinion on whether the schedule of expenditures of federal and state awards is
presented fairly in all material respects in relation to the financial statements as a whole.
City of Port Arthur, Texas November 8, 2023 Page 3
Data Collection Form
Prior to the completion of our engagement, we will complete the sections of the Data Collection Form
that are our responsibility. The form will summarize our audit findings, amounts and conclusions. It
is management's responsibility to submit a reporting package including financial statements,
schedule of expenditure of federal awards, summary schedule of prior audit findings and corrective
action plan along with the Data Collection Form to the federal audit clearinghouse. The financial
reporting package must be text searchable, unencrypted, and unlocked. Otherwise, the reporting
package will not be accepted by the federal audit clearinghouse. We will assist you in the electronic
submission and certification. You may request from us copies of our report for you to include with
the reporting package submitted to pass-through entities.
The Data Collection Form is required to be submitted within the earlier of 30 days after receipt of our
auditors' reports or nine months after the end of the audit period, unless specifically waived by a
federal cognizant or oversight agency for audits. Data Collection Forms submitted untimely are one
of the factors in assessing programs at a higher risk.
Audit of the Financial Statements
We will conduct our audit in accordance with auditing standards generally accepted in the United
States of America (U.S. GAAS), the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States of America; the audit
requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200 and Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance); and
the audit requirements of the State of Texas Uniform Grant Management Standards (UGMS).
As part of an audit of financial statements in accordance with GAAS and the standards applicable to
financial audits contained in Government Auditing Standards, issued by the Comptroller General of
the United States of America 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, 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. 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 internal control.
• Obtain an understanding of internal control relevant to the audit 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 Entity'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 Entity's ability to continue
as a going concern for a reasonable period of time.
City of Port Arthur, Texas November 8, 2023 Page 4
Because of the inherent limitations of an audit, together with the inherent limitations of internal
control, an unavoidable risk that some material misstatements or noncompliance may not be
detected exists, even though the audit is properly planned and performed in accordance with GAAS
and Government Auditing Standards of the Comptroller General of the United States of America.
Please note that the determination of abuse is subjective, and Government Auditing Standards does
not require auditors to detect abuse.
Our responsibility as auditors is limited to the period covered by our audit and does not extend to
any other periods.
We will issue a written report upon completion of our audit of the Entity's basic financial statements.
Our report will be addressed to those charged with governance of the Entity. 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
opinions, add an emphasis-of-matter or other-matter paragraph(s) to our auditor's report, or if
necessary, withdraw from the engagement. If our opinions on the basic financial statements are
other than unmodified, we will discuss the reasons with you in advance. If, for any reason, we are
unable to complete the audit or are unable to form or have not formed opinions, we may decline to
express opinions or to issue a report as a result of this engagement.
In accordance with the requirements of Government Auditing Standards, we will also issue a written
report describing the scope of our testing over internal control over financial reporting and over
compliance with laws, regulations, and provisions of grants and contracts, including the results of
that testing. However, providing an opinion on internal control and compliance over financial
reporting will not be an objective of the audit and, therefore, no such opinion will be expressed.
Audit of Major Program Compliance
Our audit of the Entity's major federal and state award program(s) compliance will be conducted in
accordance with the requirements of the Single Audit Act, as amended, the Uniform Guidance, and
UGMS which will include tests of accounting records, a determination of major programs in
accordance with the Uniform Guidance and UGMS and other procedures we consider necessary to
enable us to express such an opinion on major federal and state award programs compliance and to
render the required reports. We cannot provide assurance that an unmodified opinion on compliance
will be expressed. Circumstances may arise in which it is necessary for us to modify our opinion or
withdraw from the engagement.
The Uniform Guidance and UGMS requires that we also plan and perform the audit to obtain
reasonable assurance about whether material noncompliance with applicable laws and regulations,
the provisions of contracts and grant agreements applicable to major federal and state award
programs, and the applicable compliance requirements occurred, whether due to fraud or error, and
express an opinion on the Entity's compliance based on the audit. 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 GAAS, Government Auditing Standards, the Uniform Guidance, and
UGMS will always detect material noncompliance when it exists. The risk of not detecting material
noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Noncompliance with the compliance requirements is considered material if there is a substantial
likelihood that, individually or in the aggregate, it would influence the judgment made by a
reasonable user of the report on compliance about the Entity's compliance with the requirements of
the federal and state programs as a whole.
City of Port Arthur, Texas November 8, 2023 Page 5
As part of a compliance audit in accordance with GAAS and Government Auditing Standards of the
Comptroller General of the United States of America, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also identify and assess the risks of material
noncompliance, whether due to fraud or error, and design and perform audit procedures responsive
to those risks.
Our procedures will consist of determining major federal and state programs and, performing the
applicable procedures described in the U.S. Office of Management and Budget OMB Compliance
Supplement and UGMS for the types of compliance requirements that could have a direct and
material effect on each of the Entity's major programs, and performing such other procedures as we
consider necessary in the circumstances. The purpose of those procedures will be to express an
opinion on the Entity's compliance with requirements applicable to each of its major programs in our
report on compliance issued pursuant to the Uniform Guidance and UGMS.
Also, as required by the Uniform Guidance and UGMS, we will obtain an understanding of the Entity's
internal control over compliance relevant to the audit in order to design and perform tests of controls
to evaluate the effectiveness of the design and operation of controls that we consider relevant to
preventing or detecting material noncompliance with compliance requirements applicable to each of
the Entity's major federal and state award programs. Our tests will be less in scope than would be
necessary to render an opinion on these controls and, accordingly, no opinion will be expressed in
our report. However, we will communicate to you, regarding, among other matters, the planned
scope and timing of the audit and any significant deficiencies and material weaknesses in internal
control over compliance that we have identified during the audit.
We will issue a report on compliance that will include an opinion or disclaimer of opinion regarding
the Entity's major federal and state award programs, and a report on internal controls over
compliance that will report any significant deficiencies and material weaknesses identified; however,
such report will not express an opinion on internal control.
Management's Responsibilities
Our audit will be conducted on the basis that management and 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. 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;
3. For identifying, in its accounts, all federal and state awards received and expended during the
period and the federal and state programs under which they were received;
4. For maintaining records that adequately identify the source and application of funds for
federally and state funded activities;
5. For preparing the schedule of expenditures of federal and state awards (including notes and
noncash assistance received) in accordance with the Uniform Guidance and UGMS;
6. For designing, implementing, and maintaining effective internal control over federal and state
awards that provides reasonable assurance that the Entity is managing federal and state
awards in compliance with federal and state statutes, regulations, and the terms and
conditions of the federal and state awards;
City of Port Arthur, Texas November 8, 2023 Page 6
7. For identifying and ensuring that the Entity complies with federal and state laws, statutes,
regulations, rules, provisions of contracts or grant agreements, and the terms and conditions
of federal and state award programs, and implementing systems designed to achieve
compliance with applicable federal and state statutes, regulations, and the terms and
conditions of federal and state award programs;
8. For disclosing accurately, currently, and completely the financial results of each federal and
state award in accordance with the requirements of the award;
9. For identifying and providing report copies of previous audits, attestation engagements, or
other studies that directly relate to the objectives of the audit, including whether related
recommendations have been implemented;
10. For taking prompt action when instances of noncompliance are identified;
11. For addressing the findings and recommendations of auditors, for establishing and
maintaining a process to track the status of such findings and recommendations and taking
corrective action on reported audit findings from prior periods and preparing a summary
schedule of prior audit findings;
12.For following up and taking corrective action on current year audit findings and preparing a
corrective action plan for such findings;
13. For submitting the reporting package and data collection form to the appropriate parties;
14. For making the auditor aware of any significant contractor relationships where the contractor
is responsible for program compliance;
15.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 the disclosures,
and relevant to federal and state award programs, such as records, documentation,
and other matters;
b. Additional information that we may request from management for the purpose of the
audit;
c. Unrestricted access to persons within the Entity from whom we determine it necessary
to obtain audit evidence;
d. A written acknowledgement of all the documents that management expects to issue
that will be included in the annual report and the planned timing and method of
issuance of that annual report, if one is issued. This document would include more
than an annual comprehensive financial report (ACFR) or annual financial report (AFR)
and;
e. If applicable, a final version of the annual report, (including all the documents that,
together, comprise the annual report) in a timely manner prior to the date of the
auditor's report.
16. For adjusting the financial statements to correct material misstatements and confirming to us
in the management representation letter that the effects of any uncorrected misstatements
aggregated by us during the current engagement and pertaining to the current year period(s)
under audit are immaterial, both individually and in the aggregate, to the financial statements
as a whole;
City of Port Arthur, Texas November 8, 2023 Page 7
17. For acceptance of non-attest services, including identifying the proper party to oversee non-
attest work;
18. For maintaining adequate records, selecting and applying accounting principles, and
safeguarding assets;
19. For informing us of any known or suspected fraud affecting the Entity involving management,
employees with significant role in internal control and others where fraud could have a
material effect on compliance;
20. For the accuracy and completeness of all information provided;
21. For taking reasonable measures to safeguard protected personally identifiable and other
sensitive information; and
22. For confirming your understanding of your responsibilities as defined in this letter to us in
your management representation letter.
With regard to the supplementary information referred to above, you acknowledge and understand
your responsibility: (a) for the preparation of the supplementary information in accordance with the
applicable criteria; (b) to provide us with the appropriate written representations regarding
supplementary information; (c) to include our report on the supplementary information in any
document that contains the supplementary information and that indicates that we have reported on
such supplementary information; and (d) to present the supplementary information with the audited
basic financial statements, or if the supplementary information will not be presented with the audited
basic financial statements, to make the audited basic financial statements readily available to the
intended users of the supplementary information no later than the date of issuance by you of the
supplementary information and our report thereon.
With regard to the schedule of expenditures of federal and state awards referred to above, you
acknowledge and understand your responsibility (a) for the preparation of the schedule of
expenditures of federal and state awards in accordance with the Uniform Guidance and UGMS, (b)
to provide us with the appropriate written representations regarding the schedule of expenditures of
federal and state awards, (c) to include our report on the schedule of expenditures of federal and
state awards in any document that contains the schedule of expenditures of federal and state awards
and that indicates that we have reported on such schedule, and (d) to present the schedule of
expenditures of federal and state awards with the audited financial statements, or if the schedule
will not be presented with the audited financial statements, to make the audited financial statements
readily available to the intended users of the schedule of expenditures of federal and state awards
no later than the date of issuance by you of the schedule and our report thereon.
As part of our audit process, we will request from management, written confirmation concerning
representations made to us in connection with the audit.
We understand that your employees will prepare all confirmations we request and will locate any
documents or invoices selected by us for testing.
If you intend to publish or otherwise reproduce the financial statements and make reference to our
firm, you agree to provide us with printers' proofs or masters for our review and approval before
printing. You also agree to provide us with a copy of the final reproduced material for our approval
before it is distributed.
City of Port Arthur, Texas November 8, 2023 Page 8
Non-attest Services
We will also assist in preparing the financial statements, schedule of expenditures of federal and
state awards, and related notes of the Entity in conformity with U.S. generally accepted accounting
principles, the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance), and UGMS based on information provided by you. These non-audit services do not
constitute an audit under Government Auditing Standards and such services will not be conducted in
accordance with Government Auditing Standards. These services are limited to preparing the
financial statements, schedule of expenditures of federal and state awards, and related notes of the
Entity as previously outlined.
We will not assume management responsibilities on behalf of the Entity. However, we will provide
advice and recommendations to assist management of the Entity in performing its responsibilities.
The Entity's management is responsible for (a) making all management decisions and performing all
management functions; (b) assigning a competent individual to oversee the services; (c) evaluating
the adequacy of the services performed; (d) evaluating and accepting responsibility for the results
of the services performed; and (e) establishing and maintaining internal controls, including
monitoring ongoing activities.
Our responsibilities and limitations of the engagement is limited to our preparation of the financial
statements and related note disclosures and the schedule of expenditures of federal and state awards
previously outlined. Our firm in its sole professional judgment, reserves the right to do any procedure
or take any action that could be construed as making management decisions or assuming
management responsibilities, including determining account coding and approving journal entries.
Our firm will advise with regard to financial reporting, but the Entity must make all decisions with
regard to those matters.
Government Auditing Standards require that we document an assessment of the skills, knowledge,
and experience of management, should we participate in any form of preparation of the basic financial
statements and related schedules or disclosures as these actions are deemed a non-audit service.
Engagement Administration, Fees and Timing
We will schedule the engagement based in part on deadlines, working condition, and the availability
of your key personnel. We will plan the engagement based on the assumption that your personnel
will cooperate and provide assistance by performing tasks such as preparing requested schedules,
retrieving supporting documents, and preparing confirmations. If for whatever reason your personnel
are unavailable to provide the necessary assistance in a timely manner, it may substantially increase
the work we have to do to complete the engagement within the established deadlines, resulting in
an increase in fees over our original fee estimate.
The timing of our audit will be scheduled for performance and completion as follows:
Document internal control and preliminary tests TBD
Mail confirmations TBD
Perform year-end audit procedures TBD
Issue audit reports TBD
City of Port Arthur, Texas November 8, 2023 Page 9
Paula Lowe is the engagement partner for the audit services specified in this letter. Her
responsibilities include supervising Pattillo, Brown & Hill, LLP's services performed as part of this
engagement and signing or authorizing another qualified firm representative to sign the audit report.
Our fees for these services will be at our standard hourly rates plus out-of-pocket cost (such as
reports reproduction, word processing, postage, travel, copies, telephone, etc.) except that we agree
that our gross fee, including expenses, will not exceed $120,000. Our standard hourly rates vary
according to the degree of responsibility involved and the experience level of the personnel assigned
to your audit. Our invoices for these fees will be rendered each month as work progresses and are
payable on presentation. In accordance with our firm policies, work may be suspended if your account
becomes 30 days or more overdue and may not be resumed until your account is paid in full. If we
elect to terminate our services for nonpayment, our engagement will be deemed to have been
completed upon written notification of termination, even if we have not completed our report(s). You
will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket
costs through the date of termination. The above fee is based on anticipated cooperation from your
personnel and the assumption that unexpected circumstances will not be encountered during the
audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee
estimate before we incur the additional cost.
Other Matters
During the course of the engagement, we may communicate with you or your personnel via fax or
email, and you should be aware that communication in those mediums contains a risk of misdirected
or intercepted communications. In addition to fax and email, our firm also exchanges date over the
Internet using other methods (such as portals) or store electronic data via software applications
hosted remotely through a third-party vendor's secured portal and/or cloud.
Regarding the electronic dissemination of audited financial statements, including financial statements
published electronically on your Internet website, you understand that electronic sites are a means
to distribute information and, therefore, we are not required to read the information contained in
these sites or to consider the consistency of other information in the electronic site with the original
document.
Professional standards prohibit us from being the sole host and/or the sole storage for your financial
and non-financial data. As such, it is your responsibility to maintain your original data and records
and we cannot be responsible to maintain such original information. By signing this engagement
letter, you affirm that you have all the data and records required to make your books and records
complete.
Our firm may transmit confidential information that you provided us to third parties in order to
facilitate delivering our services to you. For example, such transmissions might include, but not be
limited to investment information to verify valuation. We have obtained confidentiality agreements
with all our service providers to maintain the confidentiality of your information and we will take
reasonable precautions to determine that they have the appropriate procedures in place to prevent
the unauthorized release of confidential information to others. We will remain responsible for the
work provided by any third-party service providers used under this agreement. By your signature
below, you consent to having confidential information transmitted to entities outside the firm. Please
feel free to inquire if you would like additional information regarding the transmission of confidential
information to entities outside the firm.
City of Port Arthur, Texas November 8, 2023 Page 10
The audit documentation for this engagement is the property of Pattillo, Brown & Hill, LLP and
constitutes confidential information. However, we may be requested to make certain audit
documentation available to federal or state agencies and the U.S. Government Accountability Office
pursuant to authority given to it by law or regulation, or to peer reviewers. If requested, access to
such audit documentation will be provided under the supervision of Pattillo, Brown & Hill's personnel.
Furthermore, upon request, we may provide copies of selected audit documentation to these agencies
and regulators. The regulators and agencies may intend, or decide, to distribute the copies of
information contained therein to others, including other governmental agencies.
Further, we will be available during the year to consult with you on financial management and
accounting matters of a routine nature.
During the course of the audit, we may observe opportunities for economy in, or improved controls
over, your operations. We will bring such matters to the attention of the appropriate level of
management, either orally or in writing.
We agree to retain our audit documentation or work papers for a period of at least five years from
the date of our report.
You agree to inform us of facts that may affect the financial statements of which you may become
aware during the period from the date of the auditor's report to the date the financial statements are
issued.
At the conclusion of our audit engagement, we will communicate to management and those charged
with governance the following significant findings from the audit:
• Our view about the qualitative aspects of the Entity's significant accounting practices;
• Significant difficulties, if any, encountered during the audit;
• Uncorrected misstatements, other than those we believe are trivial, if any;
• Disagreements with management, if any;
• Other findings or issues, if any, arising from the audit that are, in our professional judgment,
significant and relevant to those charged with governance regarding their oversight of the
financial reporting process;
• Material, corrected misstatements that were brought to the attention of management as a
result of our audit procedures;
• Representations we requested from management;
• Management's consultations with other accountants, if any; and
• Significant issues, if any, arising from the audit that were discussed, or the subject of
correspondence, with management.
In accordance with the requirements of Government Auditing Standards, we have attached a copy
of our latest external peer review report of our firm for your consideration and files.
Please sign and return the attached copy of this letter to indicate your acknowledgment of, and
agreement with, the arrangements for our audit of the financial statements, compliance over major
federal and state award programs including our respective responsibilities.
We appreciate the opportunity to be your financial statement auditors and look forward to working
with you and your staff.
City of Port Arthur, Texas November 8, 2023 Page 11
Respectfully,
Pattillo, Brown & Hill, L.L.P.
PC)-A/`—Q4k- ktVt-
Paula Lowe, CPA
Waco, Texas
RESPONSE:
This letter correctly sets forth our understanding.
Acknowledged and agreed on behalf of the City of Port Arthur, Texas by:
Name:
Title:
Date:
ERICKSEN KRENTEL
Report on the Firm's System of Quality Control
December 9, 2022
To the Partners of Pattillo Brown&Hill, LLP
and the National Peer Review Committee
We have reviewed the system of quality control for the accounting and auditing practice of Pattillo Brown&Hill,
LLP(the firm)in effect for the year ended May 31,2022. Our peer review was conducted in accordance with the
Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the American
Institute of Certified Public Accountants(Standards).
A summary of the nature,objectives, scope,limitations of,and the procedures performed in a System Review as
described in the Standards may be found at www.aicpa.org/prsummary. The summary also includes an
explanation of how engagements identified as not performed or reported on in conformity with applicable
professional standards, if any,are evaluated by a peer reviewer to determine a peer review rating.
Firm's Responsibility
The firm is responsible for designing and complying with a system of quality control to provide the firm with
reasonable assurance of performing and reporting in conformity with the requirements of applicable professional
standards in all material respects.The firm is also responsible for evaluating actions to promptly remediate
engagements deemed as not performed or reported on in conformity with the requirements of applicable
professional standards,when appropriate,and for remediating weaknesses in its system of quality control, if any.
Peer Reviewer's Responsibility
Our responsibility is to express an opinion on the design of and compliance with the firm's system of quality
control based on our review.
Required Selections and Considerations
Engagements selected for review included engagements performed under Government Auditing Standards,
including compliance audits under the Single Audit Act;an audit of an employee benefit; and an audit performed
under FDICIA.
As a part of our peer review,we considered reviews by regulatory entities as communicated by the firm, if
applicable, in determining the nature and extent of our procedures.
Opinion
In our opinion,the system of quality control for the accounting and auditing practice of Pattillo Brown&Hill, LLP in
effect for the year ended May 31,2022, has been suitably designed and complied with to provide the firm with
reasonable assurance of performing and reporting in conformity with applicable professional standards in all
material respects. Firms can receive a rating of pass,pass with deficiency(ies)or fail. Pattillo Brown&Hill, LLP has
received a peer review rating of pass.
EricksewKrente,14 LLP
Certified Public Accountants
4227 Canal Street Ericksen Krentel LLP 2895 Highway 190, Ste 213
New Orleans, LA 70119 www. EricksenKrentel.corn Mandeville, LA 70471
P. (504)486-7275 F (504)482-2516 P.(985)727-0777 F.(985)727-6701