HomeMy WebLinkAboutContract 47405 CITY SECPJETARY( —
COWPACT No.
Deloitte Deloitte 5 Touche LLP
Suite 1501
201 Main Street
Fort Worth,TX 76102-3134
USA
December 17, 2015 Tel:+1 817 347 3300
Fax:+1 817 336 2013
www.deloitte.com
David Cooke, City Manager
City of Fort Worth, Texas
1000 Throckmorton
Fort Worth, Texas 76102
Dear Mr. Cooke:
Deloitte& Touche LLP, ("D&T"or"we"or"us")is pleased to serve as independent auditors for Fort
Worth Housing Finance Corporation, (the"HFC"or"you"or"your"). Ms. Reem Samra will be
responsible for the services that we perform for the HFC hereunder,hereafter referred to as the
"engagement".
In addition to the audit services we are engaged to provide under this engagement letter,we would also be
pleased to assist the HFC on issues as they arise throughout the year.Hence,we hope that you will call
Ms. Samra whenever you believe D&T can be of assistance.
The services to be performed by D&T pursuant to this engagement are subject to the terms and conditions
set forth herein and in the accompanying appendices. Such terms and conditions shall be effective as of
the date of the commencement of such services.
Audit of Financial Statements and Other Reporting
Our engagement is to perform an audit in accordance with(1)auditing standards generally accepted in the
United States of America("generally accepted auditing standards"), and(2)the standards applicable to
financial audits contained in Government Auditing Standards,issued by the Comptroller General of the
United States ("generally accepted government auditing standards")(generally accepted auditing
standards and generally accepted government auditing standards are collectively referred to herein as the
"Auditing Standards"). The objectives of an audit conducted in accordance with the Auditing Standards
are to:
• Express an opinion on whether each opinion unit of the HFC's basic financial statements,for the
year ended September 30, 2015 (the"financial statements"), are presented fairly, in all material
respects, in accordance with accounting principles generally accepted in the United States of
America("generally accepted accounting principles").
• Report on the HFC's internal control over financial reporting and on its compliance with certain
provisions of laws,regulations, contracts, and grant agreements and other matters for the year
ended September 30,2015, based on an audit of financial statements performed in accordance
with generally accepted government auditing standards.
Appendix A contains a description of the auditor's responsibilities and the scope of an audit in accordance
with the Auditing Standards.
N
ICIAL RECORDy SECRETARYT.WORTH,TX
Member of
Deloitte Touche Tohmatsu
D&T Reports
We expect to issue written reports upon the completion of our audit.Our ability to express any opinion or
to issue any report as a result of this engagement and the wording thereof will,of course,be dependent on
the facts and circumstances at the date of our reports.If,for any reason,we are unable to complete our
audit or are unable to form or have not formed any opinion,we may decline to express any opinion or
decline to issue any report as a result of this engagement.If we are unable to complete our audit,or if any
report to be issued by D&T as a result of this engagement requires modification,the reasons for this will
be discussed with the Board of Directors,and the HFC's management.
Management's Responsibilities
Appendix B describes management's responsibilities.
Responsibility of Board of Directors
As independent auditors of the HFC,we acknowledge that the Board of Directors is directly responsible
for the appointment,compensation,and oversight of our work,and accordingly,except as otherwise
specifically noted,we will report directly to the Board of Directors. You have advised us that the services
to be performed under this engagement letter,including,where applicable,the use by D&T of affiliates or
related entities as subcontractors in connection with this engagement,have been or will be approved by the
Board of Directors in accordance with the Board of Directors' established preapproval policies and
procedures.
Communications with Board of Directors
Appendix C describes various matters that we are required by the Auditing Standards to communicate
with the Board of Directors and management.
Fees
We estimate that our fees for this engagement will be$40,000,plus expenses.Based on the anticipated
timing of the work as indicated in Appendix F,our fees will be billed in the month of December,2015.
We anticipate sending the invoice according to the above schedule,and the payment is due 30 days from
the date of the invoice.
Our continued service on this engagement is dependent upon payment of our invoices in accordance with
these terms. Our estimated fees are based on certain assumptions,including(1)timely and accurate
completion of the requested HFC participation schedules and additional supporting information,(2)no
inefficiencies during the audit process or changes in scope caused by events that are beyond our control,
(3)the effectiveness of internal control over financial reporting throughout the period under audit,(4)a
minimal level of audit adjustments(recorded or unrecorded),and(5)no changes to the timing or extent of
our work plans. We will notify you promptly of any circumstances we encounter that could significantly
affect our estimate and discuss with you any additional fees,as necessary.
Access to Working Papers by Regulators
We may be requested or required by a regulator of the HFC,including but not limited to the Comptroller
General of the United States,or representatives of the United States Government Accountability Office
(GAO)(each,a"Regulator")to provide access to working papers related to this engagement.In the event
of any such request or requirement,we will notify you prior to providing such access unless applicable
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law or regulation prohibits such notice. The working papers for this engagement are the property of D&T
and constitute D&T's confidential information. We may request confidential treatment of our working
papers.Access to our working papers will be provided under the supervision of D&T's personnel and
upon request we may provide copies of working papers to a Regulator. The HFC hereby consents,where
consent is required,to D&T providing access to working papers and copies thereof to a Regulator. Fees
for professional services relating to such access,plus related expenses,will be billed in addition to the
estimated fees outlined herein. The working papers related to this engagement will be retained by us for a
minimum of three years from the dates of the reports issued,or such longer period as required to satisfy
legal and administrative requirements.
Inclusion of D&T Reports or References to D&T in Other Documents or Electronic Sites
If the HFC intends to publish or otherwise reproduce in any document any report issued as a result of this
engagement, or otherwise make reference to D&T in a document that contains other information in
addition to the audited financial statements(e.g., in a periodic filing with a regulator, in a debt or equity
offering circular,or in a private placement memorandum),thereby associating D&T with such document,
the HFC agrees that its management will provide D&T with a draft of the document to read and obtain
our approval for the inclusion or incorporation by reference of any of our reports, or the reference to
D&T, in such document before the document is printed and distributed. The inclusion or incorporation by
reference of any of our reports in any such document would constitute the reissuance of such reports. The
HFC also agrees that its management will notify us and obtain our approval prior to including any of our
reports on an electronic site.
Our engagement to perform the services described herein does not constitute our agreement to be
associated with any such documents published or reproduced by or on behalf of the HFC.Any request by
the HFC to reissue any report issued as a result of this engagement,to consent to any such report's
inclusion or incorporation by reference in an offering or other document,or to agree to any such report's
inclusion on an electronic site will be considered based on the facts and circumstances existing at the time
of such request. The estimated fees outlined herein do not include any procedures that would need to be
performed in connection with any such request. Should D&T agree to perform such procedures, fees for
such procedures would be subject to the mutual agreement of the HFC and D&T.
Nothing in this engagement letter is intended to restrict the ability of the HFC to distribute to other parties
a complete set of the RFC's financial statements and/or related notes thereto so long as our Independent
Auditor's Report is not included with the HFC's financial statements and as long as there is no reference
to D&T thereby associating D&T with such information.
Notwithstanding the foregoing,D&T understands and acknowledges that the HFC is a public entity under
the laws of the State of Texas, and as such, all documents and data held by the HFC are subject to
disclosure under Chapter 552 of the Texas Government Code,the Texas Public Information Act(the
"Act"). If the HFC is required to disclose any documents that may reveal any D&T proprietary
information to third parties under the Act, or by any other legal process,law,rule or judicial order by a
court of competent jurisdiction,the HFC will,unless otherwise prohibited by law or regulation,notify
D&T prior to disclosure of such documents. The HFC shall not be liable or responsible in any way for
the disclosure of information not clearly marked as "Proprietary/Confidential Information" or if disclosure
is required by the Act or any other applicable law or court order. In the event there is a request for such
information under the Act, it will be the responsibility of D&T to submit reasons objecting to disclosure.
A determination on whether such reasons are sufficient will not be decided by the HFC,but by the Office
of the Attorney General of the State of Texas,or by a court of competent jurisdiction.
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The parties acknowledge and agree that D&T is being engaged under this engagement letter to provide
only the services described herein. Should the HFC request, and should D&T agree to provide, services
(including audit services)beyond those described herein, such services will constitute a separate
engagement and will be governed by a separate engagement letter.
This engagement letter, including Appendices A through G attached hereto and made a part hereof,
constitutes the entire agreement between the parties with respect to this engagement and supersedes any
other prior or contemporaneous agreements or understandings between the parties,whether written or
oral,relating to this engagement.
If the above terms are acceptable and the services described are in accordance with your understanding,
please sign the copy of this engagement letter in the space provided and return it to us.
[Signature Page to Follow]
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Accepted and agreed:
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Deloitte and Touche LLP
Date: December 17,2015
Accepted and agreed to by Fort Worth Housing Finance Corporation:
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cc: Board of Directors of Fort Worth Housing Finance Corporation
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OFFICIAL RECORD
CITY SECRETARY
5 FT.WORM TX
APPENDIX A
AUDITOR'S RESPONSIBILITIES AND SCOPE OF AN AUDIT IN ACCORDANCE WITH THE
AUDITING STANDARDS
This Appendix A is part of the engagement letter dated December 17,2015, between Deloitte&
Touche LLP and the HFC.
Auditor's Responsibilities
Our responsibilities under the Auditing Standards include forming and expressing opinions and reporting
on certain matters as described in the Audit of Financial Statements and Other Reporting section of this
engagement letter. The audit of the financial statements and our reporting on other matters do not relieve
management or the Board of Directors of their responsibilities.
Scope of an Audit and Other Reporting
The Auditing Standards require that we plan and perform the audit to obtain reasonable,rather than
absolute, assurance about whether each opinion unit of the financial statements are free from material
misstatement,whether caused by fraud or error.However,because of the inherent limitations of an audit,
together with the inherent limitations of internal control, an unavoidable risk exists that some material
misstatements may not be detected, even though the audit is properly planned and performed in
accordance with the Auditing Standards. We have no responsibility to plan and perform the audit to
obtain reasonable assurance that misstatements,whether caused by fraud or error,that are not material to
the financial statements as a whole are detected.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on our judgment, including the assessment of
the risks of material misstatement of the financial statements,whether caused by fraud or error.In making
those risk assessments,we consider internal control relevant to the HFC's preparation and fair
presentation of the financial statements 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 HFC's internal
control.An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management,as well as evaluating the overall
presentation of the financial statements.
An audit also includes tests of the HFC's compliance with certain provisions of laws,regulations,
contracts, and grant agreements. However, our objective is not to provide an opinion on compliance with
those provisions, and accordingly,we will not express such an opinion.
As part of the audit,we will be alert to situations or transactions that could be indicative of abuse as
defined by generally accepted government auditing standards,which involves behavior that is deficient or
improper when compared with behavior that a prudent person would consider reasonable and necessary
business practice given the facts and circumstances.Abuse also includes misuse of authority or position
for personal financial interests or those of an immediate or close family member or business associate.
The determination of abuse is subjective;generally accepted government auditing standards do not
require us to provide reasonable assurance of detecting abuse, and we will not design the audit to detect
abuse.However, if we become aware of abuse that could be quantitatively or qualitatively material to the
financial statements,we will apply procedures specifically directed to ascertain the potential effect on the
financial statements or other financial data significant to the audit objectives. Under generally accepted
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government auditing standards,we may be required to directly report known or likely fraud,
noncompliance with provisions of laws,regulations, contracts or grant agreements, or abuse to outside
parties.
Generally accepted accounting principles provide for certain required supplementary information(RSI),
such as a management's discussion and analysis,to accompany the HFC's financial statements.As part of
the audit,we will apply certain limited procedures to the HFC's RSI,which will consist principally of
inquiries of management about the methods of preparing the information. We will disclaim an opinion on
the RSI,unless (1)some of the RSI is omitted, (2)the measurement or presentation of the RSI departs
materially from the prescribed guidelines, or(3)we have unresolved doubts about whether the RSI is
measured or presented in accordance with prescribed guidelines.
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APPENDIX B
MANAGEMENT'S RESPONSIBILITIES
This Appendix B is part of the engagement letter dated December 17,2015,between Deloitte&
Touche LLP and the HFC.
Financial Statements, Internal Control, and Compliance
Management is responsible for the preparation,fair presentation, and overall accuracy of the financial
statements in accordance with generally accepted accounting principles and all accompanying
information in accordance with prescribed guidelines or applicable criteria.In this regard,management
has the responsibility for, among other things:
• Selecting and applying the accounting policies
• Designing, implementing, and maintaining effective internal control relevant to(1)the
preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error and(2)compliance with laws,regulations, and provisions of
contracts or grant agreements
• Identifying and ensuring that the HFC complies with the laws and regulations applicable to its
activities and the provisions of contracts or grant agreements,and informing us of all instances of
identified or suspected fraud,noncompliance with provisions of laws,regulations, contracts or
grant agreements, or abuse
• Providing us with(1)access to all information of which management is aware that is relevant to
the preparation and fair presentation of the financial statements, and all accompanying
supplementary information, such as records, documentation,and other matters,(2)additional
information that we may request from management for the purpose of our audit, and(3)
unrestricted access to personnel within the HFC from whom we determine it necessary to obtain
audit evidence
• Taking timely and appropriate steps to remedy fraud,noncompliance with provisions of laws,
regulations,contracts or grant agreements, or abuse that we report
• Having a process to track the status of audit findings and recommendations
• Identifying for us previous audits, attestation engagements, and other studies related to the
objectives of our audit and whether related recommendations have been implemented.
Management's Representations
We will make specific inquiries of the HFC's management about the representations(1)embodied in the
financial statements and accompanying information, (2)regarding the effectiveness of internal control,
and(3)regarding the HFC's compliance with laws,regulations,and the provisions of contracts and grant
agreements. In addition,we will request that management provide us with the written representations the
HFC is required to provide to its independent auditors under the Auditing Standards. The responses to
those inquiries and the written representations of management are part of the evidential matter that D&T
will rely on in forming its opinion on the RFC's financial statements and reporting on accompanying
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information. Because of the importance of management's representations,the HFC agrees to release and,
to the extent not prohibited by applicable law, indemnify D&T, its subcontractors, and their respective
personnel from all claims,liabilities, and expenses relating to our services under this engagement letter
attributable to any misrepresentation by management.
Independence Matters
In connection with our engagement,D&T,management, and the Board of Directors will assume certain
roles and responsibilities in an effort to assist D&T in maintaining independence. D&T will communicate
to its partners,principals, and employees that the HFC is an attest client.Management of the HFC will
ensure that the HFC,together with its subsidiaries and other entities that comprise the HFC for purposes
of the consolidated financial statements,has policies and procedures in place for the purpose of ensuring
that neither the HFC nor any such subsidiary or other HFC will act to engage D&T or accept from D&T
any service that under American Institute of Certified Public Accountants(AICPA), generally accepted
government auditing standards, or other applicable rules would impair D&T's independence.All potential
services are to be discussed with Ms. Samra.
In connection with the foregoing paragraph,the HFC agrees to furnish to D&T and keep D&T updated
with respect to a corporate tree that identifies the legal names of the HFC's affiliates, as defined in
AICPA Code of Professional Conduct Interpretation No. 10 1-18 (e.g.,parents, subsidiaries,investors, or
investees)("HFC Affiliates"),together with the ownership relationship among such entities. Such
information will be maintained in a database accessible by D&T in connection with their compliance with
AICPA or other applicable independence rules.
Management will coordinate with D&T to ensure that D&T's independence is not impaired by hiring
former or current D&T partners,principals,or professional employees in a key position, as defined in the
AICPA Code of Professional Conduct. Management of the HFC will ensure that the HFC,together with
its subsidiaries and other entities that comprise the HFC for purposes of the consolidated financial
statements, also has policies and procedures in place for purposes of ensuring that D&T's independence
will not be impaired by hiring a former or current D&T partner,principal, or professional employee in a
key position that would cause a violation of the AICPA Code of Professional Conduct,generally accepted
government auditing standards, or other applicable independence rules.Any employment opportunities
with the HFC for a former or current D&T partner,principal, or professional employee should be
discussed with Ms. Samra before entering into substantive employment conversations with the former or
current D&T partner,principal, or professional employee.
Equity or Debt Security Issuances
The HFC agrees to furnish to D&T and keep D&T updated with respect to any equity or debt securities of
the HFC and HFC Affiliates(including,without limitation,tax-advantaged debt of such entities that is
issued through governmental authorities)that are registered, issued, listed,or traded outside of the United
States(whether through stock,bond,commodity, futures or similar markets, or equity, debt, or any other
securities offerings),together with related securities identification information(e.g.,ticker symbols or
CUSIP®,ISIN®, or Sedole numbers). The HFC acknowledges and consents that such information may be
treated by D&T as being in the public domain.
For purposes of the preceding sections entitled"Independence Matters"and"Equity or Debt Security
Issuances", "D&T"shall mean Deloitte&Touche LLP and its subsidiaries;Deloitte Touche Tohmatsu
Limited,its member firms,the affiliates of Deloitte&Touche LLP,Deloitte Touche Tohmatsu Limited
and its member firms; and, in all cases, any successor or assignee.
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APPENDIX C
COMMUNICATIONS WITH BOARD OF DIRECTORS
This Appendix C is part of the engagement letter dated December 17,2015,between Deloitte&
Touche LLP and the HFC.
We are responsible for communicating with the Board of Directors significant matters related to the audit
that are,in our professional judgment,relevant to the responsibilities of the Board of Directors in
overseeing the financial reporting process.
In connection with the foregoing,we will communicate to the Board of Directors any fraud we identify or
suspect that involves(1)management,(2)employees of the HFC who have significant roles in internal
control, or(3)other employees of the HFC when the fraud results in a material misstatement of the
financial statements. In addition,we will communicate with the Board of Directors any other matters
related to fraud that are,in our professional judgment,relevant to their responsibilities. We will
communicate to management any fraud perpetrated by lower-level employees of which we become aware
that does not result in a material misstatement of the financial statements; however,we will not
communicate such matters to the Board of Directors,unless otherwise directed by the Board of Directors.
In addition, as required by generally accepted government auditing standards,our report on the HFC's
internal control over financial reporting and on its compliance with certain provisions of laws,
regulations, contracts, and grant agreements and other matters will include any findings of material
noncompliance of such provisions,fraud,and material abuse that we have identified during our audit.
We will also communicate,in writing,to management and the Board of Directors any significant
deficiencies or material weaknesses in internal control(as defined in generally accepted auditing
standards)that we have identified during the audit, including those that were remediated during the audit.
We are not required to design procedures for the purpose of identifying other matters to communicate
with the Board of Directors.However,we will communicate to the Board of Directors matters required by
the Auditing Standards.
We may also communicate to management and the Board of Directors on internal control, compliance,or
other matters we observe and possible ways to improve the HFC's operational efficiency and
effectiveness or otherwise improve its internal control or other policies and procedures.
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APPENDIX D
GENERAL BUSINESS TERMS
This Appendix D is part of the engagement letter to which these terms are attached(the engagement
letter, including its appendices,the"engagement letter")dated December 17, 2015,between Deloitte&
Touche LLP and the HFC.
1. Independent Contractor.D&T is an independent contractor and D&T is not, and will not be
considered to be, an agent,partner,fiduciary, or representative of the HFC or the Board of Directors.
D&T shall have exclusive control of and the exclusive right to control,the details of the work
performed hereunder by its employees,officers,personnel and subcontractors, and shall be solely
responsible for the acts and omissions of its employees, officers,personnel and subcontractors.
Nothing herein shall be construed as creating a partnership or joint venture between the HFC and
D&T, and the doctrine of respondeat superior shall have no application as between the HFC and
D&T.
2. Survival.The agreements and undertakings of the HFC contained in the engagement letter will
survive the completion or termination of this engagement.
3. Assignment and Subcontracting. Except as provided below,no party may assign any of its rights
or obligations(including,without limitation, interests or claims)relating to this engagement without
the prior written consent of the other parties. The HFC hereby consents to D&T subcontracting a
portion of its services under this engagement to any affiliate or related entity,whether located within
or outside of the United States. Professional services performed hereunder by any of D&T's
affiliates or related entities shall be invoiced as professional fees,and any related expenses shall be
invoiced as expenses,unless otherwise agreed.
4. Severability. If any term of the engagement letter is unenforceable, such term shall not affect the
other terms,but such unenforceable term shall be deemed modified to the extent necessary to render
it enforceable,preserving to the fullest extent permissible the intent of the parties set forth herein.
5. Force Maieure.No party shall be deemed to be in breach of the engagement letter as a result of any
delays or non-performance directly or indirectly resulting from circumstances or causes beyond its
reasonable control, including,without limitation,fire, epidemic or other casualty,act of God, strike
or labor dispute,war or other violence, or any law,order or requirement of any governmental agency
or authority.
7. Dispute Resolution.Any controversy or claim between the parties arising out of or relating to the
engagement letter or this engagement(a"Dispute")shall be resolved as set forth in the Dispute
Resolution Provision attached hereto as Appendix E and made a part hereof.
Amendments. This engagement letter may not be amended,changed or otherwise modified without
the prior written consent of both parties.
8. Insurance.D&T shall carry insurance in the minimum types and amounts for the duration of this
engagement, including any renewal terms, and furnish certificates of insurance as evidence thereof.
Coverage and Limits: Commercial General Liability-$1,000,000 each occurrence;$2,000,000
aggregate.Automobile Coverage: $1,000,000 each accident on a combined single limit basis.
Automobile coverage shall be on any vehicle used by D&T, its employees, agents,representatives in
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the course of the providing services under this engagement. "Any vehicle"shall be any vehicle
owned,hired and non-owned. Worker's Compensation: statutory limits.Professional Liability
(Errors and Omissions): $1,000,000 each claim limit; $1,000,000 aggregate limit.Professional
Liability coverage may be provided through an endorsement to the Commercial General Liability
(CGL)policy, or a separate policy specific to Professional E&O. Either is acceptable if coverage
meets all other requirements. Professional Liability(Errors and Omissions)Coverage may be
claims-made, and maintained for the duration of the engagement and for two(2)years following
completion of services provided, if commercially available. An annual certificate of insurance shall
be submitted to the HFC to evidence coverage.
Certificates. Certificates of insurance evidencing that D&T has obtained all required insurance shall
be delivered to the HFC prior to D&T proceeding with any work pursuant to this engagement. The
commercial general liability and automobile liability policies shall be endorsed to include the HFC
as an additional insured thereon, as its interests may appear. The term HFC shall include its
employees, officers, officials, agent and volunteers in respect to the contracted services.Any failures
on the part of the HFC to request required insurance documentation shall not constitute a waiver of
the insurance requirement.D&T will endeavor to provide a minimum of thirty (30)days' notice of
cancellation of coverage to the HFC. Ten(10)days' notice shall be acceptable in the event of non-
payment of premium.Notice shall be sent to Fort Worth Housing Finance Corporation,through the
City of Fort Worth, 1000 Throckmorton Street,Fort Worth,Texas,76102 with copies to the City of
Fort Worth Attorney at the same address
9. Termination.The HFC may terminate this engagement if D&T fails to cure a material breach
within thirty(30)calendar days of receipt of written notice being given of such material breach. If
more than thirty(30)calendar days are required to cure such material breach, a reasonable time in
excess of said days may be established,provided both parties agree in writing as to the time period.
In the event such material breach is not cured within the specified time,the HFC shall have the right
terminate this engagement immediately upon expiration of the specified time and upon written
notice to D&T. The HFC may terminate this engagement for any reason,with or without cause,upon
ninety(90)days written notice to D&T. In the event that this engagement is terminated prior to the
expiration date,D&T shall immediately discontinue all services or the entering into contracts in
connection with the performance of this engagement and shall return all records of the HFC that
have been submitted to D&T for purposes of completion of the then current audit. The HFC shall
pay D&T for services actually rendered and expenses incurred up to the effective date of termination
and D&T shall continue to provide the HFC with services requested by the HFC and in accordance
with this engagement up to the effective date of termination.D&T shall not be entitled to lost or
anticipated profits should the HFC choose to exercise its option to terminate.
D&T may terminate this engagement at any time, immediately upon written notice to the HFC if
D&T determines that the performance of any part of the services under this engagement letter would
be in conflict with law, or applicable independence or professional rules or standards. In such
case,the HFC shall compensate D&T under the engagement letter for services provided and
expenses incurred up to and including the effective date of termination.
10. Indemnification/Liability.D&T SHALL INDEMNIFY AND HOLD THE HFC AND ITS
OFFICERS,AGENTS AND EMPLOYEES HARMLESS FROM AND AGAINST ALL
LIABILITY,EXPENSE,INCLUDING REASONABLE DEFENSE COSTS AND REASONABLE
LEGAL FEES,AND CLAIMS FOR DAMAGES,IN EACH CASE SOLELY FOR BODILY
INJURY,DEATH OR DAMAGE TO REAL OR TANGIBLE PERSONAL PROPERTY, TO THE
EXTENT DIRECTLY AND PROXIMATELY CAUSED BY THE NEGLIGENCE OR WILLFUL
MISCONDUCT OF D&T WHILE ENGAGED IN THE PERFORMANCE OF SERVICES
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HEREUNDER;PROVIDED,HOWEVER,THAT IF THERE ALSO IS FAULT ON THE PART
OF THE HFC OR ANY ENTITY OR INDIVIDUAL INDEMNIFIED HEREUNDER OR ANY
ENTITY OR INDIVIDUAL ACTING ON THE HFC'S BEHALF,THE FOREGOING
INDEMNIFICATION SHALL BE ON A PROPORTIONATE RESPONSIBILITY BASIS.
ACCORDINGLY,THE HFC SHALL NOTIFY D&T PROMTLY, IN WRITING,OF ANY CLAIM
OR ACTION FOR WHICH INDEMNITY SHALL BE SOUGHT IN CONNECTION WITH THIS
PARAGRAPH 10. ON SUCH NOTIFICATION,D&T SHALL PROMPTLY ASSUME
RESPONBILITY FOR AND DEFEND OR SETTLE ANY AND ALL CLAIMS OR ACTIONS
DESCRIBED ABOVE WITH COUNSEL OF ITS OWN CHOOSING. THE HFC SHALL
COOPERATE IN ALL REASONABLE RESPECTS WITH D&T IN CONNECTIONS WITH ANY
SUCH CLAIM.
11. Disclosure of Conflicts and Confidential Information.D&T hereby represents to the HFC that to
the knowledge of the engagement leader providing services hereunder,it has made full disclosure of
any existing conflicts of interest related to D&T's services under this engagement. In the event that
any conflicts of interest arise after the effective date of the engagement letter,D&T hereby agrees
promptly to make full disclosure to the HFC.D&T further agrees that it shall treat all information
provided to it by the HFC as confidential and shall not disclose any such information to a third party
without the prior written approval of the HFC,using at least the same degree of care as it employs in
maintaining in confidence its own confidential information of a similar nature,but in no event less
than a reasonable degree of care.Notwithstanding the foregoing,the HFC hereby consents to D&T
disclosing such information(1)to its contractors providing administrative, infrastructure and other
support services to D&T and its subcontractors providing services in connection with this
engagement, in each case,whether located within or outside of the United States,provided that such
contractors and subcontractors have agreed to be bound by confidentiality obligations similar to
those in this paragraph;(2) as may be required by law, or regulation or to respond to governmental
inquiries, or in accordance with applicable professional standards or rules,or in connection with
litigation or arbitration pertaining hereto; or(3) to the extent such information(i)is or becomes
publicly available other than as the result of a disclosure in breach hereof,(ii)becomes available to
D&T on a non-confidential basis from a source that D&T believes is not prohibited from disclosing
such information to D&T, (iii)is already known by D&T without any obligation of confidentiality
with respect thereto, or(iv)is developed by D&T independently of any disclosures made to D&T
hereunder. In satisfying its obligations under this paragraph,D&T shall maintain the HFC's trade
secrets and proprietary or confidential information in confidence using at least the same degree of
care as it employs in maintaining in confidence its own trade secrets and proprietary or confidential
information, but in no event less than a reasonable degree of care.
12. Richt to Review.D&T agrees that the HFC shall,until the expiration of three(3)years after
conclusion of any audit commenced during the said three years,have access to and the right to
examine at reasonable times any directly pertinent books and records of D&T involving transactions
relating to this engagement at no additional cost to the HFC. D&T agrees to provide the HFC with
copies of all such documentation at D&T's sole cost and expense. The HFC shall give D&T
reasonable advance notice of intended reviews. The HFC's right above shall be limited only to those
books and records that are necessary to substantiate D&T's invoices hereunder and D&T shall have
the right to redact such books and records to the extent it deems necessary to protect its proprietary
and confidential information and address any privacy concerns.
13. Compliance with Laws.D&T agrees that in the performance of its obligations hereunder, it will
comply with all applicable federal, state and local laws, ordinances,rules and regulations and that
any work it produces in connection with this engagement will also comply with all applicable
federal, state and local laws,ordinances,rules and regulations.
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14. Non-discrimination Covenant. D&T agrees that in the performance of its duties and obligations
hereunder, it shall not discriminate in the treatment or employment of any individual or group of
individuals on any basis prohibited by law.
15. Notices.Notices required pursuant to the provisions of this engagement shall be conclusively
determined to have been delivered when(1)hand-delivered to the other party, its agents, employees,
servants or representatives, (2)delivered by facsimile with electronic confirmation of the
transmission,or(3)received by the other party by United States Mail,registered,return receipt
requested,addressed as follows:
Fort Worth Housing Finance Corporation Deloitte and Touche LLP
Attn:Henry Day Attn:Reem Samra
1000 Throckmorton 201 Main Street
Fort Worth TX 76102 Fort Worth TX 76102
Facsimile: (817)392-8966 Facsimile: (214) 880-5376
16. Governing Law/Venue. This engagement shall be construed in accordance with the laws of the
State of Texas. In the event that the parties do not agree to resolve a Dispute through binding
arbitration,venue for any action,whether real or asserted, at law or in equity,brought pursuant to
this engagement shall lie in state courts located in Tarrant County,Texas or the United States
District Court for the Northern District of Texas,Fort Worth Division.
17. Review of Counsel.The parties acknowledge that each party and its counsel have reviewed and
revised this engagement letter and that the normal rules of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed in the interpretation
of this engagement letter or exhibits hereto.
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APPENDIX E
DISPUTE RESOLUTION PROVISION
This Appendix E is part of the engagement letter dated December 17,2015, between Deloitte&
Touche LLP and the HFC.
This Dispute Resolution Provision sets forth the dispute resolution process and procedures applicable to
the resolution of Disputes and shall apply to the fullest extent of the law,whether in contract, statute,tort
(such as negligence), or otherwise.
Mediation: All Disputes shall be first submitted to nonbinding confidential mediation by written notice
to the parties, and shall be treated as compromise and settlement negotiations under the standards set forth
in the Federal Rules of Evidence and all applicable state counterparts,together with any applicable
statutes protecting the confidentiality of mediations or settlement discussions.Mediation shall be held in
Tarrant County, Texas, and the parties shall make a good faith effort to agree on a mediator. If the parties
cannot agree on a mediator,the International Institute for Conflict Prevention and Resolution("CPR"),at
the written request of a party, shall designate a mediator.
Arbitration Procedures: If a Dispute has not been resolved within 90 days after the effective date of the
written notice beginning the mediation process(or such longer period, if the parties so agree in writing),
the mediation shall terminate, and upon written consent of an authorized representative of each of the
parties,the Dispute shall be settled by binding arbitration to be held in Tarrant County,Texas. The
arbitration shall be solely between the parties and shall be conducted in accordance with the CPR Rules
for Non-Administered Arbitration that are in effect at the time of the commencement of the arbitration,
except to the extent modified by this Dispute Resolution Provision(the"Rules").
The arbitration shall be conducted before a panel of three arbitrators.Each of the HFC and Deloitte&
Touche LLP shall designate one arbitrator in accordance with the"screened"appointment procedure
provided in the Rules and the two party-designated arbitrators shall jointly select the third in accordance
with the Rules.No arbitrator may serve on the panel unless he or she has agreed in writing to enforce the
terms of the engagement letter(including its appendices)to which this Dispute Resolution Provision is
attached and to abide by the terms of this Dispute Resolution Provision. Except with respect to the
interpretation and enforcement of these arbitration procedures(which shall be governed by the Federal
Arbitration Act),the arbitrators shall apply the laws of the State of Texas(without giving effect to its
choice of law principles)in connection with the Dispute. The arbitrators shall have no power to award
punitive,exemplary or other damages not based on a parry's actual damages(and the parties expressly
waive their right to receive such damages). The arbitrators may render a summary disposition relative to
all or some of the issues,provided that the responding party has had an adequate opportunity to respond
to any such application for such disposition.Discovery shall be conducted in accordance with the Rules.
All aspects of the arbitration shall be treated as confidential, as provided in the Rules.Before making any
disclosure permitted by the Rules, a party shall give written notice to all other parties and afford such
parties a reasonable opportunity to protect their interests.Further,judgment on the arbitrators' award may
be entered in any court having jurisdiction.
Costs: Each party shall bear its own costs in both the mediation and the arbitration;however,the parties
shall share the fees and expenses of both the mediators and the arbitrators equally.
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APPENDIX F
COORDINATION OF THE ENGAGEMENT
This Appendix F is part of the engagement letter dated December 17,2015,between Deloitte&
Touche LLP and the HFC.
We will plan the performance of our audit in accordance with the following estimated timetable:
Estimated Targeted for
to Begin Completion
Audit Performance Schedule:
November2 December
Planning 015 2015
Audit procedures November January 2015
2015
Board of Directors Communications:
Report on the basic financial statements March 2016
Report on the RFC's internal control over financial reporting
and on compliance and other matters based on an audit of March 2016
financial statements performed in accordance with
government auditing standards
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APPENDIX G
CIRCUMSTANCES AFFECTING TIMING AND FEE ESTIMATE
This Appendix G is part of the engagement letter dated December 17,2015, between Deloitte&
Touche LLP and the HFC.
The fees quoted for the engagement are based on certain assumptions. Circumstances may arise during
the engagement that may significantly affect the targeted completion dates or our fee estimate. As a result,
changes to the fees may be necessary. Such circumstances include but are not limited to the following:
Facilitation of the Engagement
1. Changes to the timing of the engagement at the HFC's request. Changes to the timing of the
engagement usually require reassignment of personnel used by D&T in the performance of services
hereunder.However, because it is often difficult to reassign individuals to other engagements, D&T
may incur significant unanticipated costs.
2. All requested information, including documentation of the Company's internal control over financial
reporting, is not(a)provided by the HFC on the date requested, (b)completed in a format acceptable
to D&T, (c)mathematically correct, or(d)in agreement with the appropriate Company records(e.g.,
general ledger accounts,completed trial balance). D&T will provide the Company with a separate
listing of required schedules,information requests, and the dates such items are needed.
3. Significant delays in responding to our requests for information, such as [reconciling variances,
providing requested supporting documentation(e.g.,invoices,contracts, and other documents), or
responding to our inquiries of HFC management.
4. Deterioration in the quality of the RFC's accounting records during the current-year engagement in
comparison with the prior-year engagement.
5. A completed trial balance,referenced to the supporting analyses and schedules and financial
statements [and interim financial information, is not provided timely by the HFC's personnel.
6. Draft financial statements with appropriate supporting documentation are not prepared accurately and
timely by the HFC's personnel.
7. Electronic files in an appropriate format and containing the information requested are not provided by
the HFC on the date requested for our use in performing file interrogation.D&T will provide the HFC
with a separate listing of the required files and the dates the files are needed.
8. The engagement team,while performing work on the HFC's premises, is not provided with high-
speed access to the Internet for purposes of conducting the engagement.
Significant Issues or Changes
9. Significant deficiencies or material weaknesses in the design or operating effectiveness of the HFC's
internal control over financial reporting are identified during our audit that result in an expansion of
our audit procedures on the related financial statement accounts.
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10. A significant level of proposed audit adjustments is identified during our engagement.
11. A significant number of drafts of the financial statements are submitted for our review, or we identify
a significant level of deficiencies in the draft financial statements
12. Significant new issues or changes as follows:
a. Significant new accounting issues.
b. Significant changes in accounting policies or practices from those used in prior years.
c. Significant events or transactions not contemplated in our budgets.
d. Significant changes in the RFC's financial reporting process or Information Technology systems.
e. Significant changes in the HFC's accounting personnel,their responsibilities, or their availability.
f. Significant changes in auditing standards
g. Significant changes in the Company's use of specialists, or the specialists or their work product
does not meet the qualifications required by generally accepted auditing standards,generally
accepted government auditing standards,the AICPA standards for our reliance upon their work.
13. The procedures necessary to adopt any new Statements of Government Accounting Standards have
not been completed by the HFC's personnel.
14. Changes in audit scope caused by events that are beyond our control.
Payment for Services Rendered
15. Without limiting its rights or remedies,D&T may halt or terminate its services entirely if payment is
not received within 30 days of the date of the invoice.
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