10.01 - Appoint Consultants for 2008

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October 3,2007 City of Pequot Lakes �.. Page 7 Time limitation The nature of our services makes it difficult, with the passage of time, to bather and present evidence that frilly and fairly establishes the facts underlying any Dispute. We both agree that, notwithstanding any statute or law of limitations that might otherwise apply to a Dispute, any action or legal proceeding by you against us must be commenced within twenty-four(24) months("Limitation Period") after the date when we deliver our final audit report under this agreement to you, regardless of whether we do other services for you relating to the audit report,or you shall be forever barred from commencing a lawsuit or obtaining any legal or equitable relief or recovery. The Limitation Period applies and begins to run even if you have not suffered any damage or loss,or have not become aware of the existence or possible existence of a Dispute. Fees We estimate that our fees for the audit will be$22,295. This fee represents a $3,390 increase from last year's audit fee. The increase is a result of a 3.7% inflationary increase ($700), additional procedures for implementing SAS 104 to SAS 111 ($1,890), a one-time charge to audit the conversion to the new general ledger system($400), and a one-time charge to update the computerized general ledger system documentation due to the City's switch to the CIVIC general ledger system($400), You will also be billed for other out-of- pocket costs as applicable. The fee estimate is based on anticipated cooperation from your personnel and their assistance with preparing confirmations and requested schedules. If unexpected circumstances require significant additional time, we will provide detailed billing information and explanations of additional `-- charges. In addition, you will be billed for any "non-audit" services or consultations at 80% of our standard hourly rates. 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 60 days or more overdue and will not be resumed until your account is paid in frill. 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 costs through the date of termination. Subcontractors LarsonAllen may, at times, use subcontractors to perform services under this agreement and they may have access to your information and records. Any such subcontractors will be subject to the same restrictions on the use of such information and records as apply to LarsonAllen under this agreement. LarsonAllen will be as responsible for any act done by these subcontractors as it is for its personnel under this agreement.