SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
September 4, 1998
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Date of Report
(Date of earliest event reported)
Consolidated Eco-System, Inc.
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(Exact name of Registrant as specified in its charter)
Idaho
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(State or other jurisdiction of incorporation)
0-25970 82-0464589
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(Commission file number) (IRS employer identification no.)
3201 West 65th Street
Little Rock, AR 72209
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(Address of principal executive offices) (Zip code)
(501) 570-0356
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(Registrant's telephone number, including area code)
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Item 4. Changes in Registrant's Certifying Accountant.
On September 4, 1998, Consolidated Eco-Systems, Inc. retained Brown,
Rogers & Company, P.A. as its independent auditor on a limited basis. The
engagement requires Brown, Rogers & Company to express an opinion about whether
the financial statements of Consolidated Eco-Systems are fairly presented, in
all material respects, in conformity with generally accepted accounting
principles.
The engagement agreement is limited and prohibits the use of the audited
financial statements with any filing made to the United States Securities and
Exchange Commission. Consolidated Eco-Systems, Inc. retained Brown, Rogers &
Company to conduct an audit due to difficulties in retaining an independent
auditor that was capable of conducting an audit which could then be used for
filing with the United States Securities and Exchange Commission. The Company
believes that an audit by Brown, Rogers & Company will provide a means of
retaining such an auditing firm.
The engagement letter provides that the agreement will not be accepted by
Brown, Rogers & Company unless the number of shareholders of Consolidated
Eco-Systems, Inc. is below the threshold number which would require filing with
the United States Securities & Exchange Commission. Brown, Rogers & Company has
been advised that the Company is required to make filings with the United States
Securities & Exchange Commission. Following this disclosure, Brown, Rogers &
Company began working on the engagement.
The Company again notes that the audit of Brown, Rogers & Company cannot
be used for purposes of making financial disclosures with the United States
Securities and Exchange Commission and is limited as indicated in the engagement
letter. The Company notes that Brown, Rogers & Company is not technically its
certifying accounting for the reasons identified above.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSOLIDATED ECO-SYSTEMS, INC.
/s/ Sam Sexton III
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Sam Sexton III
Executive Vice-President
Date: September 14, 1998
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Exhibit 99. Engagement Letter of Brown, Rogers & Company, P.A.
Brown, Rogers & Company, P.A.
11219 Financial Centre Parkway
Suite 320
Little Rock, AR 72211
501-2253641
FAX 501-225-3699
August 31, 1998
Mr. James J. Connors, Jr.
President and CEO
Consolidated ECO-Systems, Inc.
3201 65 Street
Little Rock, AR 72203
We are pleased to confirm our understanding of the services we are to provide
for Consolidated ECOSystems, Inc. for the year ended December 31, 1997. We will
audit the balance sheet of Consolidated ECO-Systems, Inc. as of December 31,
1997 and the related statements of income, shareholders equity and cash flows
the year then ended.
The objective of our audit is the expression of an opinion about whether your
financial statements are fairly presented, in all material respects, in
conformity with generally accepted accounting principals. Our audit will be
conducted in accordance with generally accepted accounting standards and will
include tests of your accounting records and other procedures we consider
necessary to enable us to express such an opinion. If our opinion is other than
unqualified, 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 an opinion, we may decline to express an opinion or to issue a report as
a result of this engagement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements; therefore, our audit will involve
judgment about the number of transactions to be examined and the areas to be
tested. Also, we will plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatements.
Because of the concept of reasonable assurance and because we will not perform a
detailed examination of all transactions, there is a risk that material errors,
fraud, or other illegal acts may exist and not be detected by us. In addition,
an audit is not designed to detect errors, fraud, or other illegal acts that are
immaterial to financial statements. However, we will also inform you of any
other illegal acts 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.
Our audit will include obtaining an understanding of internal control sufficient
to plan the audit and to determine the nature, timing, and extent of audit
procedures to be performed. An audit is not designed to provide assurance on
internal control or identify reportable conditions, that is, significant
deficiencies in the design or operation of internal control. However, during the
audit, if we become aware or such reportable conditions, we will communicate
them to you.
We understand that you are responsible for making all financial records and
related information available
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to us and that you are responsible for the accuracy and completeness of that
information. We will advise you about appropriate accounting principles and
their application and will assist in the preparation of your financial
statements, but the responsibility for the financial statements remains with
you. This responsibility includes the establishment and maintenance of adequate
records and effective internal controls over financial reporting, the selection
and application of accounting principles, and the safeguarding of assets.
Management is also responsible for identifying and ensuring that the entity
complies with applicable laws and regulations.
Because many computer systems use only two digits to record the year in date
fields, such systems may not be able to accurately process dates including the
year 2000 and after. The effects of this problem will vary from system and may
adversely affect your operations as well as the ability of prepare financial
statements. An audit of financial statements conducted in accordance with
generally accepted auditing standards is not designed to detect whether your
systems are year 2000 compliant. Further, we have no responsibility with regard
to your efforts to make your systems year 2000 address, all of the affected
systems on a timely basis. These are your responsibilities. However, we may
choose to communicate matters that come to our attention relating to the
potential effects of the year 2000 on your computer systems.
We understand that your employees will prepare all cash, accounts receivable,
and other confirmations we request and will locate any documents selected by us
for testing.
As part of our engagement, we will also prepare the federal and state income tax
returns for your company for the year ended December 31, 1997.
The audited financial statement should not be used for filing SEC related
filings. If the corporation plans any reproduction or publication or our report,
or any portion of it, copies of masters' or printers' proof of the entire
document shall be submitted to us in sufficient time for our review.
We estimate that our fees for these services will range from $35,000 to $50,000
for the audit and actual time incurred for the tax return. You will also be
billed for travel and out-of-pocket costs such as report production, typing,
postage, etc. The fee estimate 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 is with you and arrive at a new fee estimate before we incur the
additional costs. Our invoices for these fees will be rendered each week as work
progresses and are payable on presentation. In accordance with our firms
policies, work may be suspended if your account becomes 15 days or more overdue
and will not be resumed until your account is paid in full. If we elect to
terminate our services for nonpayment, 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.
This agreement will not be accepted by Brown, Rogers & Company, P.A. unless the
Company's number of shareholders is below the threshold for SEC filings.
We appreciate the opportunity to be of service to you and believe this letter
accurately summarizes the significant terms of our engagement. If you have any
questions, please let us know. If you agree with the terms of our engagement as
described in this letter, please sign the enclosed copy and return to us.
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Very truly yours,
/s/ Brown, Rogers & Co., P.A.
This letter correctly sets forth the understanding of Consolidated ECO-Systems,
Inc.
/s/ James J. Connors, Jr.
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Office
President/CEO
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Title
9-4-98
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Date
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