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Orange County, North Carolina <br />April 23, 2007 <br />• Page 4 <br />2. The County will establish and monitor the performance of the draft of the County's financial statements and <br />the draft separate financial statements for the SportsPlex Enterprise Fund, propose adjustments to the trial <br />balance and preparafion of schedules of property tax receivables for the Towns of Chapel Hill, Carrboro and <br />Hillsborough to ensure that they meet managements objectives. <br />3. The County will make any decisions that involve management functions related to the draft of the County's <br />financial statements and the draft separate financial statements for the SportsPlex Enterprise Fund, propose <br />adjustments to the trial balance and preparation of schedules of property tax receivables for the Towns of <br />Chapel Hill, Carrboro and Hillsborough and will accept full responsibility for such decisions. <br />4. The County will evaluate the adequacy of services performed and any findings that result. <br />During the course of our engagement, we may accumulate records containing data which should be reflected in your <br />books and records. The County will determine that all such data, if necessary, will be so reflected. Accordingly, the <br />County will not expect us to maintain copies of such records in our possession. <br />From time-to-time and depending upon the circumstances, we may use third-parry service providers to assist us in <br />providing professional services to you. In such circumstances, it may be necessary for us to disclose confidential <br />client information to them. We enter into confidentiality agreements with all third-parry service providers and we are <br />satisfied that they have appropriate procedures in place to prevent the unauthorized release of your confidential <br />information to others. <br />The assistance to be supplied by County personnel, including the preparation of schedules and analyses of <br />• accounts, will be discussed and coordinated with Mr. Ken T. Chavious, Finance Director. The timely completion of <br />this work is an essential condition to our completion of the audit and issuance of our audit report. <br />Our fees are based on the time required by the individuals assigned to the engagement, plus direct expenses. <br />Interim billings will be submitted as work progresses and as expenses are incurred. We will submit our final bill for <br />these services promptly upon delivering the reports. Our fee for the services described in this letter will not exceed <br />$69,000 for the County audit, $5,000 for the SportsPlex audit and $4,500 for the preparation of schedules of property <br />tax receivables for the Towns of Chapel Hill, Carrboro and Hillsborough. If the assistance to which the County has <br />agreed to furnish is not provided, or unexpected conditions are encountered, we will discuss the situation with you <br />before proceeding, if agreed to by the County by an amendment to the Contract. Any services performed in addition <br />to normal audit procedures will be charged at standard rates less 20%. All other provisions of this letter will survive <br />any fee adjustment. Any additional major programs above four (4) major programs will be billed at $4,000 each. <br />Our professional standards require that we perform certain additional procedures, on current and previous years <br />engagements, whenever a partner or professional employee leaves the firm and is subsequently employed by or <br />associated with a client. Accordingly, the County agrees it will compensate McGladrey & Pullen, LLP as a result of <br />the County's employment of a partner or professional employee of McGladrey & Pullen, LLP. <br />In the event we are requested or authorized by the County or are required by government regulation, subpoena, or <br />other legal process to produce our documents or our personnel as witnesses with respect to our engagements for the <br />County, the County will, so long as we are not a parry to the proceeding in which the information is sought, reimburse <br />us for our professional time and expenses, provided that acceptable documentation is provided to the County, the <br />County will pay reasonable fees and expenses of our counsel, incurred in responding to such requests provided that <br />sufficient reasonable documentation is provided to the County. <br />• <br />