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HomeMy WebLinkAboutDeferred Comp Plan RESOLUTION 2025-67 ® ADOPTED DOC ID: 20998 THIS IS TO CERTIFY THAT THE FOLLOWING RESOLUTION NO. 2025-67 WAS ADOPTED AT THE REGULAR MEETING OF THE SOUTHOLD TOWN BOARD ON JANUARY 7,2025: RESOLVED that the Town Board of the Town of Southold hereby accepts the request for proposal and authorizes the execution of an engagement letter with PKF O'Connor Davies, LLP in connection with the audits of the Town of Southold Deferred Compensation Plan as of December 31, 2024, December 31, 2025 and December 31, 2026 at a fee not to exceed $13,000, $13,000 and $14,000, respectively, and that said fee shall be a legal charge to the General Fund Whole Town Independent Auditing and Accounting budget (A.1320.4.500.300), and that said engagement letter is subject to review and approval by the Town Attorney. Denis Noncarrow Southold Town Clerk RESULT: ADOPTED [UNANIMOUS] MOVER: Louisa P. Evans, Justice SECONDER:Greg Doroski, Councilman AYES: Doroski, Mealy, Smith, Krupski Jr, Doherty, Evans 3 Q PKF OCONNOR. D"I ES ACCOUNTANTS AND ADVISORS July 28, 2025 Deferred Compensation Committee Deferred Compensation Plan for Employees of the Town of Southold Southold, New York 11971 This letter sets forth our understanding of the terms and objectives of our engagement, and the nature and scope of the services we will provide to the Deferred Compensation Plan for Employees of the Town of Southold (the"Plan"). Audit Scope and Objectives We will audit the financial statements of the Plan, which comprise the statement of net assets available for benefits as of December 31, 2024 and the related statement of changes in net assets available for benefits for the year then ended and the related notes to the financial statements (collectively, the "financial statements"). 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 issue an auditors' report that includes our opinion about whether your financial statements are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the'United States of America ("GAAP"). 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 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 of a reasonable user made based on the financial statements. Auditors' Responsibilities for the Audit of the Financial Statements We will conduct our audit in accordance with GAAS and will include tests of your accounting records and other procedures we consider necessary to enable us to express such an opinion.As part of an audit in accordance with GARS, we exercise professional judgment and maintain professional skepticism throughout the audit. , We will evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management. We will also evaluate the overall presentation of the financial statements, including the disclosures, and determine whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We will plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether from (1) errors; (2) fraudulent financial reporting; (3) misappropriation of assets; or (4) violations of laws or governmental regulations that are attributable to the Plan or to acts by management or employees acting on behalf of the Plan. PKF O'CONNOR DAVIES LLP 878 Veterans Memorial Highway,Fourth Floor,Hauppauge,NY 11788 1 Tel:631.434.9500 1 Fax:631.434.8518 I www.pkfod.r_om PKF O'Connor Davies LLP is a member firm of the PKF International Limited,network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms. Deferred Compensation Committee Deferred Compensation Plan for Employees of the Town of Southold July 28, 2025 Auditors' Responsibilities for the Audit of the Financial Statements (continued) Because of the inherent limitations of an audit, combined with the inherent limitations of internal control, and because we will not perform a detailed examination of all transactions, there is an unavoidable risk that some material misstatements may exist and not be detected by us even though the audit is properly planned and performed in accordance with GAAS, except as previously noted. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material'effect on the financial statements. However, we will inform the appropriate level of the Plan's management of any material errors, fraudulent financial reporting or misappropriation of assets that comes to our attention and or disagreements with the Plan's management and other serious difficulties encountered in performing the audit. We will also inform the appropriate level of the Plan's management of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors. We will obtain an understanding of.the Plan and its' environment, including the system of internal control, sufficient to identify and assess the risks of material misstatement of the financial statements, whether due to error or fraud, and to design and perform audit procedures responsive to those risks and obtain 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, misrepresentation, or the override of internal control- An audit is not designed to provide assurance on internal control or to identify deficiencies in internal control.Accordingly,we will express no such opinion. However,during the audit, we will communicate to you and those charged with governance internal control related matters that are required to be communicated under professional standards.' We have identified the following significant risks of material misstatement as part of our audit planning: • Revenue Recognition • Plan Management Override of Controls We will also conclude, based on the audit evidence obtained, whether there are conditions or events, considered in the aggregate,that raise substantial doubt about the Plan's ability to continue as a going concern for a reasonable period of time. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts and direct confirmation of investments, and certain other assets and liabilities by correspondence with financial institutions and other third parties. We may also request written representations from your attorneys as part of the engagement. Reporting We will issue a written report upon completion of our audit of the Plan's financial statements. Our report will be addressed to those charged with governance of the Plan. 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 further modify our report,add a separate section,or add an emphasis-of-matter or other-matter paragraph to our auditor's report, or if necessary, withdraw from this engagement. If our report will include other modifications, we will discuss the reasons with you in advance. If, for any reason, we are unable to complete the engagement or are unable to form or have not formed an opinion, we may decline to issue a report or withdraw from this engagement. 2 Deferred Compensation Committee Deferred Compensation Plan for Employees of the Town of Southold July 28, 2025 Responsibilities of Plan Management for the Financial Statements Our audit will be conducted on the basis that you acknowledge and understand your responsibility for designing, implementing, and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, including monitoring ongoing activities;for the selection and application of accounting principles; for establishing an accounting and financial reporting process for determining appropriate value measurements; and for the preparation and fair presentation of the financial statements in conformity with GAAP. You are also responsible for reviewing drafts of financial statements, all financial records, and related information available to us and for the accuracy and completeness of that information (including information from outside of the general and subsidiary ledgers). You are also responsible for providing us with (1) access to all information which you are aware of that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, identification of a,l related parties, parties in interest and all related parry and parties in interest' relationships and transactions, and other matters; (2) additional information that we may request for the purpose of the audit; and (3) unrestricted access to persons within the Plan from whom we determine it necessary to obtain audit evidence. You are also responsible for maintaining a current plan instrument, including all plan amendments; and for administering the Plan and determining that the Plan's transactions that are presented and disclosed in the financial statements are in conformity with the Plan's provisions, including maintaining sufficient records with respect to each of the participants to determine the benefits due or which may become due to such participants. At the conclusion of our audit, we will require certain written representations from you about the financial statements and related matters. Your responsibilities include 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 latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. You are responsible for 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 Plan involving (1) Plan management, (2) employees who have significant roles in internal control, and (3) others where the fraud could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of.fraud or suspected fraud affecting the Plan received in communications from employees, former employees, regulators, or others. In addition, you are responsible for identifying and ensuring that the Plan complies with applicable laws and regulations. Plan management is responsible for management decisions and assuming all management responsibilities; for designating an individual with suitable skill, knowledge, and/or experience to oversee any non-attest services PKF O'Connor Davies provides; and for evaluating the adequacy and results of those services and accepting responsibility for them. 3 Deferred Compensation Committee Deferred Compensation Plan for Employees of. the Town of Southold July 28, 2025 Other Services Plan management is responsible for the following non-attest services PKF O'Connor Davies will provide in accordance with the applicable professional standards: • Preparation of the financial statements and related disclosures • Preparation of the supplementary schedules • Assistance with conversion from cash basis to accrual basis of accounting It is expected that all or a majority of the audit will be conducted remotely. Management is responsible for ensuring that all electronically provided documents and records are complete and accurate reproductions of the original documents and records. For any part of the engagement performed on premises, management is responsible for ensuring that all applicable-safeguards are in place in accordance with Centers for Disease Control guidance and any state and local regulations and guidelines. PKF O'Connor Davies holds the right to not perform work onsite if we consider the onsite conditions unsafe for any reason. Management, in coordination with PKF O'Connor Davies, is . responsible to arrange for alternative methods for audit procedures that must be performed on the Plan sponsor's or a third-party's premises. At the conclusion of the engagement, we will request from the Plan's management written confirmation concerning representations made to us in connection with the audit. The representation letter, among other things, will confirm the Plan management's responsibility for: (1)the preparation of the financial statements in conformity with GAAP, (2)the availability of financial records and related data including Plan instruments, trust agreements, insurance contracts, or investment contracts and amendments to such documents entered into during the year, including amendments to comply with applicable laws, prepared for the Plan during the year, and (3)the completeness and availability of all minutes of board meetings. Plan management's representation letter will further confirm that: (1) the effects of any uncorrected misstatements aggregated by us during the engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole, and (2)we have been informed of,or that there were no incidences of,fraud involving the Plan's management or those employees who have significant roles in the Plan's internal control. We will place reliance on these representations in issuing our report. In the event that we become obligated to pay any cost, settlement, judgment, fine, penalty, or similar award or sanction as a result of a claim, investigation, or other proceeding instituted by any third party, as a direct or indirect result of an intentional, knowing or reckless misrepresentation or provision to us of inaccurate or incomplete information by the Plan's management or any director, officer or employee thereof in connection with this engagement, and not any failure on our part to comply with professional standards, you agree to indemnify us against such obligations. To the best of your knowledge, the Plan's management is unaware of any facts which might impair our independence with respect to this engagement. The financial statements are the property of the Plan and can be reproduced and distributed as the Plan's management desires. However, you must notify us in advance and obtain our approval if you intend to make reference to our firm in a document that includes our auditors' report on the financial statements. 4 Deferred Compensation Committee Deferred Compensation Plan for Employees of the Town of Southold July 28, 2025 Other Services (continued) Because our engagement does not contemplate the foregoing, there may be an additional fee in connection with our review of any such documents. In the event our auditor/client relationship has been terminated when the Plan seeks such consent, we will be under no ,obligation to grant such consent or approval. With regard to the electronic dissemination of audited financial statements, including financial statements published electronically on the Plan sponsor's website, the Plan's management understands 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. We understand that the Plan's management will assist us to the extent practicable in completing the audit. They will provide us with detailed trial balances, supporting schedules, and other information we deem necessary.A list of these schedules and other items of information will be furnished to you shortly before we begin the audit. The timely and accurate completion of this information is an essential condition to our completion of the audit and the issuance of the audit report. We keep documents related to this engagement in accordance with our records retention policy and applicable regulations. However, we do not keep any original client records, so we will return those to ` the Plan's management at the completion of the services rendered under this engagement. When records are returned to you, it is the Plan's responsibility to retain and protect your records for possible future use, including potential examination by any government or regulatory agencies. Non-Reliance on Oral Advice It is our policy to put all advice on which a client intends to rely in writing. We believe that is necessary to avoid confusion and to make clear the specific nature and limitations of our advice. The Plan's management should not rely on any advice that has not been put in writing by our firm after a full supervisory review. Electronic and Other Communication During the course of the engagement, we may communicate with the Plan's management or with its personnel via e-mail or other electronic means. The Plan's management should be aware that communication in those media may be unsafe to use and present a risk of misdirection and/or interception by unintended third parties, or failed delivery or receipt. In that regard, the Plan's management agrees that we shall have no responsibility for any,loss or damage to any person or entity resulting from the use of e-mail or other electronic transmissions, including any consequential, incidental, direct, indirect or special damages. Access to Working Papers During the course of this engagement,we will develop files of various documents, schedules and other related engagement information known as our working papers. As we are sure you can appreciate, these working papers may contain confidential information and our firm's proprietary data. 5 Deferred Compensation Committee Deferred Compensation Plan for Employees of the Town of Southold July 28, 2025 Access to Working Papers (continued) The Plan's management understands and agrees that these working papers are, and will remain, ou,r exclusive property. Except as discussed below, any requests for access to our working papers will be discussed with the Plan's management before making them available to requesting parties: (1) Our firm, as well as other accounting firms, participates in a peer review program covering our audit and accounting practices. This program requires that once every three years we subject our system of quality control to an examination by another accounting firm. As part of this process,the other firm will review a sample of our work. It is possible that the work we perform for you may be selected for review. If it is, the other firm is bound by professional standards to keep all information confidential. (2) We may be requested to make certain working papers available to regulators pursuant to authority given to them by law, regulation or subpoena. If requested, access to such working papers will be provided under the supervision of our personnel. Furthermore, upon request, we may provide photocopies of selected working papers to them. The regulator may intend, or decide, to distribute the photocopies or information contained therein to others, including other government agencies. Fees and Billing Our fees are based on actual time expended at our standard hourly rates, plus travel and other out- of-pocket costs.We estimate that our fee for these services will be$13,000. In addition,if the condition of the accounting records is such that it would require excessive time on our part, we will consult with you beforehand regarding any possible additional charge for the time involved. In accordance with our firm policies, work may be suspended if your account becomes overdue and will 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 even if we have not issued our report. You will be obligated to compensate us for all time expended and to reimburse us for all out- of-pocket expenditures through the date of termination. Insurance We will throughout the term continuously maintain in force insurance adequate to cover our contractual obligations under this Agreement, which will in no event be less than the following: (a) claims-made Professional Liability errors and omissions insurance coverage, that provides coverage for Company and HUSA in a minimum amount of ten million dollars (US$10,000,000.00); (b) occurrence-based Commercial General Liability insurance coverage bodily injury and property damage with minimum limits of at least one million dollars (US$1,000,000.00)for any claim arising out of a single occurrence and two million dollars (US$2,000,000.00)for all claims in the aggregate; (c) Worker's Compensation insurance coverage adequate to comply with all statutory requirements covering all persons employed by Company hereunder, and Employer's Liability with minimum limits of at least one million dollars (US$1,000,000.00); (d) Comprehensive Automotive Liability insurance with bodily injury limits of at least five hundred thousand dollars (US$500,000.00) per incident, and property damage with a minimum limit of no less than fifty thousand dollars (US$50,000.00) per incident; and (e) umbrella liability insurance of at least five million dollars (US$5,000,000.00) in the aggregate above the coverages referenced in (a), (b), (c), and (d) above. 6 Deferred Compensation Committee Deferred Compensation Plan for Employees of, the Town of Southold July 28, 2025 Insurance (continued) Upon request, we shall provide the Town certificates of insurance evidencing such coverage and an endorsement including a Waiver of Subrogation in favor of the Town, and naming the Town as an additional insured on all such policies (excluding Workers' Compensation). All insurance policies referred to above will be maintained with insurance companies that are rated A-or better by AM Best. Liability Our firm's maximum liability to the Plan for any reason relating to the services under this letter shall be limited to six times the fees paid to the firm for the services or work product giving rise to liability, except to the extent it is finally determined that such liability resulted from the willful or intentional misconduct or fraudulent behavior of the firm. In no event shall the firm be liable to the Plan, whether, a claim be in tort, contract or otherwise, for any consequential, special, indirect, lost profit or similar damages. Reimbursement You agree to reimburse our firm, its partners, principals and employees,to the fullest extent permitted by law for any expense, including compensation for our time at our standard billing rates and reimbursement for our out-of-pocket expenses and reasonable attorneys' fees incurred in complying with or responding to any request (by subpoena or otherwise) for testimony, documents or other information concerning the Plan by any governmental agency or investigative body or by a party in any litigation or dispute other than litigation or disputes involving claims by the Plan against the firm. This agreement will survive termination of this engagement. Dispute Resolution Any claim or controversy("dispute")arising out of or relating to this engagement,the services provided thereunder, or any other services provided by or on behalf of the firm or any of its subcontractors or agents to the Plan or at its request (including any dispute involving any person or entity for whose benefit the services in question are or were provided), except any claim by our firm seeking payment of our fees and disbursements, shall first be submitted in good faith for mediation administered by the American Arbitration Association ("AAA") under its Mediation Rules. Each party shall bear its own costs in the mediation. Absent an agreement to the contrary, the fees and expenses of the mediator shall be shared equally by the parties. If the dispute is not resolved by mediation within 90 days of its submission to the mediator, then, and only then, the parties shall submit the dispute for arbitration administered by the American Arbitration Association under its Professional Accounting and Related Services Dispute Resolution Rules (the "Rules"). The arbitration will be conducted before a single arbitrator selected from the AAA's Panel of Accounting Professionals and Attorneys and shall take place in New York, New York. Any discovery sought in connection with the arbitration must be expressly approved by the arbitrator upon a showing of substantial need by the party seeking discovery. All aspects of the arbitration shall be treated as confidential. The parties and the arbitrator may disclose the existence, content or result of the arbitration only as expressly provided by the Rules. 7 Deferred Compensation Committee Deferred Compensation Plan for Employees of The Town of Southold July 28, 2025 Dispute Resolution (continued) The arbitrator shall issue his or her final award in a written and-reasoned decision to be provided to each party. In his or her decision, the arbitrator will declare one party the prevailing party.The arbitrator shall have the power to award to the prevailing party reasonable legal fees associated with the arbitration and prior mediation. The arbitrator shall have no authority to award non-monetary or equitable relief of any sort. The arbitrator shall not have authority to award damages that are punitive in nature, or that are not measured by the prevailing party's actual compensatory loss. The award reached as a result of the arbitration will be binding on the parties and confirmation of the arbitration award may be sought in any court having jurisdiction. Any claim by our firm seeking payment of our fees and disbursements related to this engagement and the services provided hereunder shall be brought in a federal or state court of appropriate jurisdiction sitting without a jury. YOU AND OUR FIRM IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED TO NON-PAYMENT OF ANY OF OUR FEES AND DISBURSEMENTS. This engagement will be governed by the laws of the State of New York, without giving effect to any provisions relating to conflict of laws that would require the laws of another jurisdiction to apply. Hosting Services In order to maintain our independence in accordance with the AICPA's Code of Professional Conduct, we cannot host or maintain any client information. You are expected to retain all financial and non- financial information including anything you upload to a portal and are responsible for downloading and retaining anything we upload in a timely manner. Portals are only meant as a method of transferring data, are not intended for the storage of client information, and may be deleted at any time. You are expected to maintain control over your accounting systems to include the licensing of applications and the hosting of said applications and data. We do not provide electronic security or back-up services for any of your data or records. Giving us access to your accounting system does not make us hosts of information contained within. Corporate Transparency Act/Beneficial Ownership Reporting Assisting you with your future, potential compliance requirements with the Corporate Transparency Act("CTA"), including beneficial ownership information ("801")reporting, is not within the scope of this engagement.You have sole responsibility for your compliance with the CTA, including its 801 reporting requirements and the collection of relevant ownership information. However, currently, CTA enforcement is suspended. The scope and implications of this suspension are subject to change as legal proceedings continue. Despite this development, businesses may still have compliance obligations once the legal status is clarified. Information regarding the 801 reporting requirements can be found at https://www:f!ncen.00v/boi. Consider consulting with legal counsel if you have questions regarding the applicability of the CTA's reporting requirements and issues surrounding the collection of relevant ownership information. 8 Deferred Compensation Committee Deferred Compensation Plan for Employees of The Town of Southold July 28, 2025 Employment of Firm Partner or Professional Employee Plan management acknowledges that hiring current or former PKF O'Connor Davies personnel participating in the engagement may be perceived as compromising our objectivity, and depending on the applicable professional standards, impairing our independence in certain circumstances. Accordingly, prior to entering into any employment discussions, with such known individuals, you agree to discuss the potential employment, including any applicable independence ramifications, with the engagement partner responsible for the services. In addition, during the term of this Engagement Letter and for a period of one (1)year after the services are completed, we both agree not to solicit, directly or indirectly, or hire the other's personnel participating in the engagement without express written consent. If this provision is violated, the violating party will pay the other party,a fee equal to the hired person's annual salary in effect at the time of the violation to reimburse the estimated costs of hiring and training replacement personnel. Confirmation John Shillingsford is the account relationship partner and Domenick Saglimbeni is the technical partner who is responsible for supervising the engagement and signing the report or authorizing another individual to sign it.We expect to begin our audit as soon as administratively feasible or when the audit package becomes available from your vendor. Our audit engagement as of and for the year ended December 31, 2024 ends on delivery of our audit report. Requests for services other than those included in this engagement letter will be agreed upon separately. PKF O'Connor Davies LLP ("LLP") and PKF O'Connor Davies Advisory LLC ("Advisory") practice in an alternative practice structure in accordance with applicable law, regulations and professional standards. LLP provides attest services to its clients. Advisory is not a registered CPA firm and does not provide audit or attest services. LLP has a contractual arrangement with Advisory, whereby Advisory provides LLP with professional and support personnel to perform professional services on behalf of LLP. In connection with our services,we may share information that we currently have and/or receive in the future between LLP and Advisory_ Unless you indicate otherwise, your acceptance of the terms of this engagement shall be understood by us as your consent for LLP, Advisory and its employees to share confidential information between LLP and Advisory. LLP and Advisory have policies in place that require their employees to maintain as confidential all client information that is not otherwise publicly available. All rights and obligations set forth herein shall become the rights and obligations of any successor firm to PKF O'Connor Davies, LLP by way of merger, acquisition or otherwise. If this letter correctly expresses your understanding of the terms of our engagement, including our respective responsibilities, please sign the enclosed copy where indicated and return it to us. 9 Deferred Compensation Committee Deferred Compensation Plan for Employees of the Town of Southold July 28, 2025 We are pleased to have this opportunity to serve you. Very truly yours, PKF" �� �, ZP PKF O'Connor Davies, LLP The services and terms described in the foregoing letter are in accordance with our requirements and are acceptable to us. DEFERRED COMPENSATION PLAN FOR EMPLOYEES OF THE TOWN OF SOUTHOLD BY: TITLE: 1, PKF O'Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms. 10 COVER SHEET FOR DOCUMENTS el<� SENT TO: Ow� Sent By: TOWN ATTORNEY, PAUL M. DECHANCE DEPUTY T/A, JACK SQUICCIARINI ASSISTANT T/A, JULIE M. MCGIVNEY ASSISTANT T/A, BENJAMIN JOHNSON CONFIDENTIAL SECRETARY, AMY SCHLACHTER Type of Agreement Nature of Contract/Agreement �"o. C VE SEP 1 5 2025 Southold Town Cecrlk