Loading...
CC 2014-04-22_08.c. Agreement for Audit ServicesMEMORANDUM TO: CITY COUNCIL FROM: DEBBIE MALICOAT, DIRECTOR OF ADMINISTRATIVE SERVICES ·r SUBJECT: CONSIDERATION OF AGREEMENT FOR CONSUL TANT SERVICES FOR AUDIT SERVICES DATE: APRIL 22, 2014 RECOMMENDATION: It is recommended the City Council award an agreement for consultant services to Moss, Levy & Hartzheim LLP, Certified Public Accountants (MLH) for a period of three years, with an option to extend for two additional one-year periods, and authorize the Mayor to execute all documents. IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: Audit services for the fiscal year are performed in the following fiscal year, when the City's financial results for the year are completed. Therefore costs for the fiscal year ending June 30, 2014 are paid from the FY 2014-15 Budget. The current budget includes approximately $21,400 for this service. The proposed contract amount is not to exceed $19,200 in the first year; therefore no additional budget appropriation will be required. Minimal staff time is required to award the auditing services contract. BACKGROUND: Municipalities are required to hire auditors to produce annual financial statements and to conduct evaluations of the entity's internal controls. The auditor is responsible for determining that the financial statements do not include material misstatements and do not misrepresent the City's financial condition. In the evaluation of internal control, the auditor appraises procedures that could allow collusion, theft, or fraud. The City has contracted with MLH for auditing services since 2001, and has been satisfied with their performance, responsiveness and audit procedures. However, the contract has expired and based on industry best practices, on January 31, 2014, staff issued a Request for Proposals (RFP) for auditing services for Fiscal Years 2013-14, 2014-15 and 2015-16. The RFP included an option for providing ·auditing services to the Five Cities Fire Authority; however, consideration and approval of that contract will be awarded separately by the Authority and is not the subject of this report. Item 8.c. - Page 1 CITY COUNCIL AWARD OF AUDIT SERVICES CONTRACT APRIL 22, 2014 PAGE2 ANALYSIS OF ISSUES: The City received seven responsive proposals and one proposal after the due date of March 14, 2014. The seven proposals were as follows: Firm FY 2013-14 FY 2014-15 FY 2015-16 Badawi & Associates $18,955 $19,524 $20,109 Moss, Levy & Hartzheim $19,200 $19,885 $20,615 Pressley & Associates $19,800 $18,900 $19,400 Patel & Associates $20,707 $20,707 $20,707 Van Lant & Fankhanel $27,100 $27,100 $27,100 Glenn Burdette Attest Company $33,550 $34,250 $34,950 R.J. Ricciardi $35,500 $35,500 $35,500 Proposals were evaluated based on several criteria including: understanding of the work to be performed, the auditor's experience in conducting audits of cities of similar nature, size and complexity, technical experience and professional qualifications of the audit team, the firms' commitment to keeping the same team assigned to the job for each successive year, the ability of the proposed approach to meet the needs of the City, and price. While price was a component of the evaluation process, it was not the most important factor in evaluating the proposals. Based on an evaluation of the proposals, staff recommends awarding the contract to MLH. The firm conducts annual audits for over 30 cities, including Atascadero, Grover Beach, Paso Robles and Santa Maria and demonstrated extensive experience with cities of similar nature, size and complexity. The firm has a history of technical expertise and professionals that specialize in governmental accounting, and total audit fees are competitive. Engaging a new auditor could provide a fresh or different perspective and occasionally having new eyes looking at the City's operations can provide value. Continuing the City's long-standing relationship with MLH does not offer this advantage. However, there are significant advantages to the auditor having a thorough and complete understanding of the City's operations. Staff has discussed this with MLH and believes that potential disadvantages can be overcome during the contract period with additional auditing processes and procedures that will help ensure that neither party has become "too comfortable" with each other. ALTERNATIVES: The following alternatives are provided for City Council consideration: 1. Approve staff recommendation; 2. Do not approve staff recommendation; or 3. Provide direction to staff. Item 8.c. - Page 2 CITY COUNCIL AWARD OF AUDIT SERVICES CONTRACT APRIL 22, 2014 PAGE3 ADVANTAGES: Awarding the agreement to MLH will provide the City with a qualified firm to perform the City's required audits within the approved budget. It also provides advantages of operational familiarity and efficiencies for both City staff and the auditor. DISADVANTAGES: The disadvantage of the recommendation is that other qualified audit firms will not be selected. The City may not benefit from different auditor perspectives or interpretations. ENVIRONMENTAL REVIEW: No environmental review is required for this item. PUBLIC NOTIFICATION AND COMMENTS: The Agenda was posted in front of City Hall on Thursday, April 17, 2014. The Agenda and report were posted on the City's website on Friday, April 18, 2014. No public comments were received. ATTACHMENTS: Agreement for Consultant Services Item 8.c. - Page 3 AGREEMENT FOR CONSULTANT SERVICES This AGREEMENT FOR CONSULTANT SERVICES ("Agreement"), is made and effective as of April 22, 2014, between Moss, Levy & Hartzheim LLP ("Consultant"), and the CITY OF ARROYO GRANDE, a Municipal Corporation ("City"). In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows: 1. TERM This Agreement shall commence on April 22, 2014 and shall remain and continue in effect for a period of three years (the "Initial Term"), or until completion of services as set forth herein, unless sooner terminated pursuant to the provisions of this Agreement. This Agreement may be extended for two additional one-year periods after the Initial Term upon written agreement by City and Consultant. All terms and conditions of this Agreement shall apply to any additional one year terms. 2. SERVICES Consultant shall perform the tasks described and comply with all terms and provisions set forth in the City's Request For Proposals, Exhibit "A", attached hereto and incorporated herein by this reference. 3. PERFORMANCE Consultant shall at all times faithfully, competently and to the best of his/her ability, experience and talent, perform all tasks described herein. Consultant shall employ, at a minimum generally accepted standards and practices utilized by persons engaged in providing similar services as are required of Consultant hereunder in meeting its obligations under this Agreement. 4. AGREEMENT ADMINISTRATION City's Director of Administrative Services shall represent City in all matters pertaining to the administration of this Agreement. Ron A. Levy, CPA shall represent Consultant in all matters pertaining to the administration of this Agreement. 5. PAYMENT The City agrees to pay the Consultant in accordance with the payment rates and terms set forth in Consultant's Proposal, Exhibit "B", attached hereto and incorporated herein by this reference. 6. SUSPENSION OR TERMINATION OF AGREEMENT WITHOUT CAUSE (a) The City may at any time, for any reason, with or without cause, suspend or terminate this Agreement, or any portion hereof, by serving upon the Consultant at Page 1 Item 8.c. - Page 4 least ten (10) days prior written notice. Upon receipt of said notice, the Consultant shall immediately cease all work under this Agreement, unless the notice provides otherwise. If the City suspends or terminates a portion of this Agreement such suspension or termination shall not make void or invalidate the remainder of this Agreement. (b) In the event this Agreement is terminated pursuant to this Section, the City shall pay to Consultant the actual value of the work performed up to the time of termination, provided that the work performed is of value to the City. Upon termination of the Agreement pursuant to this Section, the Consultant will submit an invoice to the City pursuant to Section 5. 7. TERMINATION ON OCCURRENCE OF STATED EVENTS This Agreement shall terminate automatically on the occurrence of any of the following events: (a) Bankruptcy or insolvency of any party; (b) Sale of Consultant's business; or (c) Assignment of this Agreement by Consultant without the consent of City. (d) End of the Agreement Initial Term specified in Section 1, unless otherwise extended. 8. DEFAULT OF CONSULTANT (a) The Consultant's failure to comply with the provisions of this Agreement shall constitute a default. In the event that Consultant is in default for cause under the terms of this Agreement, City shall have no obligation or duty to continue compensating Consultant. for any work performed after the date of default and can terminate this Agreement immediately by written notice to the Consultant. If such failure by the Consultant to make progress in the performance of work hereunder arises out of causes beyond the Consultant's control, and without fault or negligence of the Consultant, it shall not be considered a default. (b) If the City Manager or his/her delegate determines that the Consultant is in default in the performance of any of the terms or conditions of this Agreement, he/she shall cause to be served upon the Consultant a written notice of the default. The Consultant shall have ten (10) days after service upon it of said notice in which to cure the default by rendering a satisfactory performance. In the event that the Consultant fails to cure its default within such period of time, the City shall have the right, notwithstanding any other provision of this Agreement to terminate this Agreement without further notice and without prejudice to any other remedy to which it may be entitled at law, in equity or under this Agreement. 9. LAWS TO BE OBSERVED. Consultant shall: Page2 Item 8.c. - Page 5 (a) Procure all permits and licenses, pay all charges and fees, and give all notices which may be necessary and incidental to the due and lawful prosecution of the services to be performed by Consultant under this Agreement; (b) Keep itself fully informed of all existing and proposed federal, state and local laws, ordinances, regulations, orders, and decrees which may affect those engaged or employed under this Agreement, any materials used in Consultant's performance under this Agreement, or the conduct of the services under this Agreement; (c) At all times observe and comply with, and cause all of its employees to observe and comply with all of said laws, ordinances, regulations, orders, and decrees mentioned above; (d) Immediately report to the City's Contract Manager in writing any discrepancy or inconsistency it discovers in said laws, ordinances, regulations, orders, and decrees mentioned above in relation to any plans, drawings, specifications, or provisions of this Agreement. (e) The City, and its officers, agents and employees, shall not be liable at law or in equity occasioned by failure of the Consultant to comply with this Section. 10. OWNERSHIP OF DOCUMENTS (a) Consultant shall maintain complete and accurate records with respect to sales, costs, expenses, receipts, and other such information required by City that relate to the performance of services under this Agreement. Consultant shall maintain adequate records of services provided in sufficient detail to permit an evaluation of services. All such records shall be maintained in accordance with generally accepted accounting principles and shall be clearly identified and readily accessible. Consultant shall provide free access to the representatives of City or its designees at reasonable times to such books and records; shall give City the right to examine and audit said books and records; shall permit City to make transcripts therefrom as necessary; and shall allow inspection of all work, data, documents, proceedings, and activities related to this Agreement. Such records, together with supporting documents, shall be maintained for a period of five (5) years after receipt of final payment. (b) Upon completion of, or in the event of termination or suspension of this Agreement, all original documents, designs, drawings, maps, models, computer files, surveys, notes, and other documents prepared in the course of providing the services to be performed pursuant to this Agreement shall become the sole property of the City and may be used, reused, or otherwise disposed of by the City without the permission of the Consultant. With respect to computer files, Consultant shall make available to the City, at the Consultant's office and upon reasonable written request by the City, the necessary computer software and hardware for purposes of accessing, compiling, Page 3 Item 8.c. - Page 6 transferring, and printing computer files. Upon request by City, Consultant shall make available all work papers and reports to any successor auditor in a timely manner. 11. INDEMNIFICATION (a) Indemnification for Professional Liabilitv. When the law establishes a professional standard of care for Consultant's Services, to the fullest extent permitted by law, Consultant shall indemnify, protect, defend and hold harmless City and any and all of its officials, employees and agents ("Indemnified Parties") from and against any and all losses, liabilities, damages, costs and expenses, including attorney's fees and costs to the extent same are caused in whole or in part by any negligent or wrongful act, error or omission of Consultant, its officers, agents, employees or subcontractors or any entity or individual that Consultant shall bear the legal liability thereof) in the performance of professional services under this agreement. (b) Indemnification for Other Than Professional Liabilitv. Other than in the performance of professional services and to the full extent permitted by law, Consultant shall indemnify, defend and hold harmless City, and any and all of its employees, officials and agents from and against any liability (including liability for claims, suits, actions, arbitration proceedings, administrative proceedings, regulatory proceedings, losses, expenses or costs of any kind, whether actual, alleged or threatened, including attorneys fees and costs, court costs, interest, defense costs, and expert witness fees), where the same arise out of, are a consequence of, or are in any way attributable to, in whole or in part, the performance of this Agreement by Consultant or by any individual or entity for which Consultant is legally liable, including but not limited to officers, agents, employees or subcontractors of Consultant. (c) General Indemnification Provisions. Consultant agrees to obtain executed indemnity agreements with provisions identical to those set forth here in this section from each and every subcontractor or any other person or entity involved by, for, with or on behalf of Consultant in the performance of this agreement. In the event Consultant fails to obtain such indemnity obligations from others as required here, Consultant agrees to be fully responsible according to the terms of this section. Failure of City to monitor compliance with these requirements imposes no additional obligations on City and will in no way act as a waiver of any rights hereunder. This obligation to indemnify and defend City as set forth here is binding on the successors, assigns or heirs of Consultant and shall survive the termination of this agreement or this section. 12. INSURANCE Consultant shall maintain prior to the beginning of and for the duration of this Agreement insurance coverage as specified in Exhibit "C" attached hereto and incorporated herein as though set forth in full. Page4 Item 8.c. - Page 7 13. INDEPENDENT CONSUL TANT (a) Consultant is and shall at all times remain as to the City a wholly independent Consultant. The personnel performing the services under this Agreement on behalf of Consultant shall at all times be under Consultant's exclusive direction and control. Neither City nor any of its officers, employees, or agents shall have control over the conduct of Consultant or any of Consultant's officers, employees, or agents, except as set forth in this Agreement. Consultant shall not at any time or in any manner represent that it or any of its officers, employees, or agents are in any manner officers, employees, or agents of the City. Consultant shall not incur or have the power to incur any debt, obligation, or liability whatever against City, or bind City in any manner. (b) No employee benefits shall be available to Consultant in connection with performance of this Agreement. Except for the fees paid to Consultant as provided in the Agreement, City shall not pay salaries, wages, or other compensation to Consultant for performing services hereunder for City. City shall not be liable for compensation or indemnification to Consultant for injury or sickness arising out of performing services hereunder. 14. UNDUEINFLUENCE Consultant declares and warrants that no undue influence or pressure was or is used against or in concert with any officer or employee of the City of Arroyo Grande in connection with the award, terms or implementation of this Agreement, including any method of coercion, confidential financial arrangement, or financial inducement. No officer or employee of the City of Arroyo Grande will receive compensation, directly or indirectly, from Consultant, or from any officer, employee or agent of Consultant, in connection with the award of this Agreement or any work to be conducted as a result of this Agreement. Violation of this Section shall be a material breach of this Agreement entitling the City to any and all remedies at law or in equity. 15. NO BENEFIT TO ARISE TO LOCAL EMPLOYEES No member, officer, or employee of City, or their designees or agents, and no public official who exercises authority over or responsibilities with respect to the project during his/her tenure or for one year thereafter, shall have any interest, direct or indirect, in any agreement or sub-agreement, or the proceeds thereof, for work to be performed in connection with the project performed under this Agreement. 16. RELEASE OF INFORMATION/CONFLICTS OF INTEREST (a) All information gained by Consultant in performance of this Agreement shall be considered confidential and shall not be released by Consultant without City's prior written authorization. Consultant, its officers, employees, agents, or subcontractors, shall not without written authorization from the City Manager or unless requested by the City Attorney, voluntarily provide declarations, letters of support, testimony at Page 5 Item 8.c. - Page 8 depositions, response to interrogatories, or other information concerning the work performed under this Agreement or relating to any project or property located within the City. Response to a subpoena or court order shall not be considered "voluntary" provided Consultant gives City notice of such court order or subpoena. (b) Consultant shall promptly notify City should Consultant, its officers, employees, agents, or subcontractors be served with any summons, complaint, subpoena, notice of deposition, request for documents, interrogatories, request for admissions, or other discovery request, court order, or subpoena from any person or party regarding this Agreement and the work performed thereunder or with respect to any project or property located within the City. City retains the right, but has no obligation, to represent Consultant and/or be present at any deposition, hearing, or similar proceeding. Consultant agrees to cooperate fully with City and to provide the opportunity to review any response to discovery requests provided by Consultant. However, City's right to review any such response does not imply or mean the right by City to control, direct, or rewrite said response. 17. NOTICES Any notice which either party may desire to give to the other party under this Agreement must be in writing and may be given either by (i) personal service, (ii) delivery by a reputable document delivery service, such as but not limited to, Federal Express, which provides a receipt showing date and time of delivery, or (iii) mailing in the United States Mail, certified mail, postage prepaid,· return receipt requested, addressed to the address of the party as set forth below or at any other address as that party may later designate by notice: To City: To Consultant: 18. ASSIGNMENT City of Arroyo Grande Director of Administrative Services 300 E. Branch Street Arroyo Grande, CA 93420 Moss, Levy & Hartzheim, LLP Ron A. Levy, Partner 2400 Professional Pkwy, Ste 205 Santa Maria, CA 93455 The Consultant shall not assign the performance of this Agreement, nor any part thereof, without the prior written consent of the City. 19. GOVERNING LAW Page6 Item 8.c. - Page 9 The City and Consultant understand and agree that the laws of the State of California shall govern the rights, obligations, duties, and liabilities of the parties to this Agreement and also govern the interpretation of this Agreement. Any litigation concerning this Agreement shall take place in the superior or federal district court with jurisdiction over the City of Arroyo Grande. 20. ENTIRE AGREEMENT This Agreement contains the entire understanding between the parties relating to the obligations of the parties described in this Agreement. All prior or contemporaneous agreements, understandings, representations, and statements, or written, are merged into this Agreement and shall be of no further force or effect. Each party is entering into this Agreement based solely upon the representations set forth herein and upon each party's own independent investigation of any and all facts such party deems material. 21. TIME City and Consultant agree that time is of the essence in this Agreement. 22. CONTENTS OF REQUEST FOR PROPOSAL AND PROPOSAL Consultant is bound by the contents of the City's Request for Proposal, Exhibit "A", attached hereto and incorporated herein by this reference, and the contents of the proposal submitted by the Consultant In the event of conflict, the requirements of City's Request for Proposals and this Agreement shall take precedence over those contained in the Consultant's proposals. 23. CONSTRUCTION The parties agree that each has had an opportunity to have their counsel review this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Agreement or any amendments or exhibits thereto. The captions of the sections are for convenience and reference only, and are not intended to be construed to define or limit the provisions to which they relate. 24. AMENDMENTS Amendments to this Agreement shall be in writing and shall be made only with the mutual written consent of all of the parties to this Agreement. 25. AUTHORITY TO EXECUTE THIS AGREEMENT The person or persons executing this Agreement on behalf of Consultant warrants and represents that he/she has the authority to execute this Agreement on Page 7 Item 8.c. - Page 10 behalf of the Consultant and has the authority to bind Consultant to the perfonnance of its obligations hereunder. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. CITY OF ARROYO GRANDE By: __________ _ Tony Ferrara, Mayor Attest: Kelly Wetmore, City Clerk Approved As To Fann: Timothy J. Cannel, City Attorney Page 8 CONSULTANT By: ___________ _ Its: ------------(Title) Item 8.c. - Page 11 EXHIBIT A CITY'S REQUEST FOR PROPOSAL Page9 Item 8.c. - Page 12 .{i~CITV OF f/Mf"~:..· --~.~-=- REQUEST FOR PROPOSAL FOR PROFESSIONAL AUDITING SERVICES DUE DATE: Friday, March 14, 2014 at 3:00 p.m. Exhibit A Item 8.c. - Page 13 City of Arroyo Grande RFP for Professional Auditing Services CITY OF ARROYO GRANDE REQUEST FOR PROPOSAL FOR PROFESSIONAL AUDITING SERVICES I. PROPOSAL INTENT Exhibit A Page I The City of Arroyo Grande is soliciting the services of qualified CPA firms to audit all funds of the City of Arroyo Grande forthe Fiscal Years 2013-14, 2014-15, and 2015-16. These audits are to be performed in accordance with generally accepted auditing standards, the standards set forth for financial audits in the U.S. Government Accountability Office's (GAO) Government Auditing Standards (GAS), the provisions of the Federal Single Audit Act and the U.S. Office of Management and Budget (OMB) Circular A-133, and Governmental Accounting Standards Board (GASB) Pronouncements. We have made every effort to include sufficient information within this Request for Proposal for an auditor to prepare a responsive, comprehensive proposal. In order to achieve an equitable dissemination of information, a pre-proposal teleconference will be held on February 11, 2014 at 2:00 pm to allow all interested CPA firms to ask questions for the mutual benefit of all involved. All questions and correspondence should be directed to Debbie Malicoat, Director of Administrative Services at dmalicoat@arroyogrande.org. The question and answer will then be forwarded to all firms that provide an email address, and posted on the City's website. All questions must be submitted no later than February 7, 2014. Responses will be provided by February 12, 2014. The City's CAFRs from prior fiscal years are located on the City's website at www.arroyogrande.org/departments/administrative-services/annual-financial-reports/. II. BACKGROUND The Citv of Arroyo Grande: The City of Arroyo Grande (the City) is a full-service city, which currently comprises 5.45 square miles and serves approximately 17,400 residents. It is located on the Central Coast of California, halfway between Los Angeles and San Francisco. The City provides full range of services including: police protection, the transmission and distribution of water and wastewater, recreation and cultural events, the construction and maintenance of parks, facilities, streets and highways, as well as, other general government activities. The City provides fire service to its citizen through the Five Cities Fire Authority (FCF A), a joint powers authority between the Cities of Arroyo Grande, Grover Beach and the Oceana Community Services District. The City provides financial services to FCF A. The City is the Successor Agency of the Fonner Arroyo Grande Redevelopment Agency (the Agency). The Agency is included in the City's financial statements as part of the Private Purpose Trust Fund. Item 8.c. - Page 14 City of Arroyo Grande RFP for Professional Auditing Services The Finance Staff: Exhibit A Page2 The Finance department administers the City's operating activities for Treasury, Utility Billing, Business Licenses and Purchasing. The department also administers the financial activities for the General Ledger, Accounts Payable, and Payroll. It also leads the City's budget preparation process and is responsible for the preparation of the Comprehensive Annual Financial Report and special reports as required by law. The City of Arroyo Grande uses Eden lnforum Gold software for general ledger, budget, accounts payable, and payroll accounting. Number of Individual Funds by Type: Governmental Funds: General Fund I Special Revenue Funds 24 Capital Projects Fund 1 Debt Service Funds 2 ------Total Governmental Funds 28 Proprietary Funds: Enterprise Funds 3 ------Total Proprietary Funds 3 ------ Fiduciary Funds: Private-Purpose Trust Fund 1 Agency Funds 2 ------Total Fiduciary Funds 3 ------ Total Funds 34 ====== ill. SCOPE OF WORK The selected audit firm will perform a financial and compliance audit to determine whether the combined financial statements of the City fairly present the financial position and the results of financial operations in accordance with generally accepted accounting principles, and whether the City has complied with laws and regulations that may have a material effect upon the financial statements. The auditors will examine the City's internal accounting controls and accounting procedures and render written reports of their findings and recommendations to the Director of Administrative Services and/or the City Manager. The examination shall be made and reports rendered in accordance with generally accepted government auditing standards. In the required reports on internal controls, the auditor shall communicate any reportable conditions found during the audit. A reportable condition shall be defined as a significant deficiency in the design or operation of the internal control structure, which could adversely affect the organization's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. 2 Item 8.c. - Page 15 City of Arroyo Grande RFP for Professional Auditing Services Exhibit A Page 3 Reportable conditions that are also material weaknesses shall be identified as such in the report. Non-reportable conditions discovered by auditors shall be reported in a separate letter to management, which shall be referred to in the reports on internal controls. The auditors shall be required to make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which they become aware to the following parties: City Manager; City Attorney; and the Director of Administrative Services. The Director of Administrative Services or designee will be responsible for coordinating the audit process internally. The auditors will meet with the Director of Administrative Services or designee at the end of the fieldwork process to discuss preliminary audit findings and management recommendations. Prior to issuing their final reports, the auditors will meet with the Director of Administrative Services and/or designee. All audit reports will be addressed to the City Council. The auditors may be consulted occasionally throughout the year as an information resource. The auditors may be asked to provide guidance on implementation of GASB requirements and specifics of federal and state regulations as they may affect local government accounting. They may also be asked to assist with the implementation of new pronouncements. Additional Stand Alone Reports: The City generally does not have federal expenditures that exceed $500,000 and therefore is not subject to the single audit requirements. However, in years where the City's federal expenditures exceeded $500,000, there has usually been one major program. If required, the auditors will perform a single audit on the expenditures of federal grants in accordance with OMB Circular A-133 and render the appropriate audit reports on Internal Controls over Financial Reporting based up on the audit of the City's financial statements in accordance with Government Auditing Standards and the appropriate reports on compliance with Requirements Applicable to each Major Program, Internal Control over Compliance and on the Schedule of Expenditures ofFederal Awards in Accordance with OMB Circular A-133. The single audit report will include appropriate schedule of expenditures of federal awards, footnotes, findings and questioned costs, including reportable conditions and material weaknesses, and follow up on prior audit findings where required. In addition, the auditor will be required to submit the report to the federal clearing house. The City receives funding under the Transportation Development Act (TOA) through the San Luis Obispo Council of Governments (SLOCOG). SLOCOG requires a financial and compliance audit of funds received and expended from Section 99400, 99234, and 99260 of the Public Utilities code. The auditors will be required to perform this audit and prepare the required report. As mentioned earlier, the City provides financial services to FCF A. As part of this proposal, the auditors will perform audit services, as well as, provide an opinion on FCF A's basic financial statements. The auditor, subject to an amendment, will prepare any other special purpose audits that may be required during the term of the agreement. 3 Item 8.c. - Page 16 City of Arroyo Grande RFP for Professional Auditing Services City Responsibilities: Exhibit A Page4 The City responsibilities will be to prepare the final closing of the books. The City will provide balance sheets for all funds and groups, statement ofrevenues and expenditures for all funds as well as detailed subsidiary ledgers. The City will prepare a DRAFT CAFR (including schedules, notes and statistics) from the financial system as of June 30th of each fiscal year under contract. (Please note Auditor assistance may be required with certain note disclosures or schedules.) The City will produce the confirmation letters that are mailed by the auditors. The City staff will be available to assist the auditors in locating records or preparing audit schedules. The City will provide the auditor with reasonable workspace, desks, and chairs. The auditors will also be furnished access to telephones, facsimile machines, and photocopying machines. IV. PROPOSAL REQUIREMENTS A. Independence The finn should provide an affirmative statement that it is independent of the City of Arroyo Grande as defined by generally accepted auditing standards. Moreover, the finn must have no conflict of interest with regard to any other work performed for the entity being audited. It is understood that the services performed by the auditors are in the capacity of independent contractors and not as an officer, agent, or employee of the City. B. License to Practice in California An affirmative statement should be included indicating that the finn and all assigned key professional staff are properly licensed to practice in California. C. Finn Qualifications and Experience The proposal should state the size of the firm, the location of the office from which the work on this engagement is to be performed, and the number of the staff that will be assigned to the audit. Indicate the scope of work, date, engagement partners, total hours, and the name and telephone number of the principal client contact. The firm shall provide information on the results of any federal or state desk reviews or field reviews of its audits during the past three (3) years. In addition, the finn shall provide information on the circumstances and status of any disciplinary action taken or pending against the finn during the past three (3) years with state regulatory bodies or professional organizations. For the firm's office that will be assigned responsibility for the audit, list the most significant engagements (maximum 5) performed in the last five years that are similar to the engagement described in this request for proposals. D. Partner. Supervisory and Staff Qualifications and Experience The firm shall identify the principal supervisory and management staff, including engagement 4 Item 8.c. - Page 17 City of Arroyo Grande RFP for Professional Auditing Services Exhibit A Page 5 partners, managers, other supervisors and specialists, who would be assigned to the engagement and indicate whether each such person is licensed to practice as a certified public accountant in the State of California. The firm should also provide information on the staffs governmental auditing experience. The firm should provide as much information as possible, regarding the number, qualifications, experience and training of the specific staff to be assigned to this engagement. The firm should also provide information regarding the processes or procedures it uses to ensure compliance with AB 1345. E. Total All-Inclusive Maximum Price The proposal should contain all pricing information relative to performing the audit engagement as described in this request for proposals. The total all-inclusive maximum price to be proposed is to contain all direct and indirect costs. The proposal should include a schedule of professional fees and expenses, which support the total of the all-inclusive maximum price. The proposal should itemize the maximum price option for 1) performing auditing services and financial statement assistance for the City of Arroyo Grande for all funds; 2) performing auditing services and financial statement assistance for the Five Cities Fire Authority; 3) performing compliance audit for Single Audit requirements, if applicable; and 4) performing compliance audit for the Transportation Development Act, in accordance with the requirements of San Luis Obispo Council of Governments. F. Ownership of City Related Documents All property rights, including publication rights of all reports produced by the selected firm in connection with services performed under this agreement shall be vested in the City of Arroyo Grande. The selected firm shall not publish or release any of the results of its examinations without express written permission from the City. G. Working Paper Retention and Access to Work Papers All work papers must be retained, at the auditor's expense, for a minimum of five (5) years, unless the auditor is notified in writing by the City of the need to reduce this retention period. The auditors will be required to make working papers available to the City and any other third parties authorized by the City. At the completion of this contract, the auditor will make available all work papers and reports to the successor auditor in a timely manner. H. Acceptance of Proposal Contents After auditors are selected by the City, the contents of the submitted proposal will become a contractual obligation. The successful firm will be required to execute a standard consultant agreement with the City, an example of which is included as Attachment I. I. Acceptance or Rejection and Negotiation of Proposals The City reserves the right to reject any or all proposals, to waive non-material irregularities or 5 Item 8.c. - Page 18 City of Arroyo Grande RFP for Professional Auditing Services Exhibit A Page6 information in the request for proposal, and to accept or reject any item or combination ofitems. By requesting proposals, the City is in no way obligated to award a contract or to pay expenses of the proposing firms in connection with the preparation or submission of a proposal. Furthermore, the City reserves the right to reject any and all proposals prior to the execution of the contract(s), with no penalty to the City of Arroyo Grande. V. PROPOSAL FORMAT AND CONTENT Firms desiring to respond shall make their proposals brief and concise, yet with sufficient detail to allow for a thorough evaluation. The purpose is to demonstrate the qualification, competence and capacity of the firms seeking to undertake the independent audit of the City. As such, the substance of the proposals will carry more weight than their form or manner of presentation. Each proposal shall include as a minimum the following information in this format: A. Introduction Present an introduction to the proposal describing the firm's understanding of the desired work. Include a detailed description of the methods by which the consultant intends to perform the work set forth in the Scope of Services. B. Qualifications Include a brief description of the firm's background, experience with similar projects, and resumes of key personnel proposed to work on the project. C. Work Plan Provide a tentative schedule by phase, key task, and proposed compensation for completing the work. This schedule, as modified to be acceptable to the City, will be used as an Exhibit to the Agreement between the City and the successful consultant. D. Costs Submit a cost proposal, which includes a performance and cost schedule for all services necessary to complete this project. The proposal should include a separate all-inclusive cost for each of the three years of the contract. The proposal should specify the major components, the cost breakdown by major component or phase, and the expected time of completion for each component based on the scope of services outlined in the proposal. The proposal should include, a total proposed, "not to exceed" costs of the services, including a fee and rate schedule describing all charges and hourly rates for services. Cost will not be the deciding factor in making the selection. E. References List former clients for whom similar or comparable services have been performed. Include the name, mailing address, and telephone number of the appropriate contact person. VI. SELECTION PROCESS The proposals for the City's audit will be evaluated by the Director of Administrative Services and staff. Evaluation considerations will include the following: A. Responsiveness of the proposal in clearly stating the understanding of the work to be performed and in demonstrating the intention and ability to perform the work. B. Cost. Although a significant factor, other factors will be considered. 6 Item 8.c. - Page 19 City of Arroyo Grande RFP for Professional Auditing Services Exhibit A Page7 C. Auditors' experience in conducting audits of cities of similar nature, size, and complexity, and the auditors' commitment to maintaining technical expertise in the municipal financial environment. D. Technical experience and professional qualifications of the audit team. E. The firms' commitment to keeping the same team assigned to this job for each successive year the auditor is awarded the contract. F. Ability of proposed approach to meet the needs of the City. VII. TENTATIVE SCHEDULE -The timing of the proposal process is subject to change, depending on the needs of the City, but is anticipated as follows: RFP released ...................................................................... January 31, 2014 Pre-Proposal Teleconference ............................................. February 11, 2014 Proposals Due .................................................................... March 14, 2014 Interviews (if requested) .................................................... March 17 -21, 2014 Select Consultant ............................................................... March 24, 2014 Finalize Contract.. .............................................................. April 1, 2014 City Council Consideration ............................................... April 22, 2014 VIII. SUBMITTAL A. Submit a total of2 copies to: Debbie Malicoat Director of Financial Services 300 E. Branch Street Arroyo Grande, CA 93420 B. Show the following information on the outside of the package: • Firm's name and address • Audit Services Proposal C. The proposal must be received at the above address by the closing date and time. Firms mailing or shipping their proposals must allow sufficient delivery time to ensure timely receipt of their proposals by the time specified. Late proposals will not be accepted. D. Closing Date: All proposals must be received by Friday, March 14, 2014 at 3:00 p.m. G. The City reserves the right to reject any or all proposals for any or no reason. H. For more information, please contact Debbie Malicoat at dmalicoat@arroyogrande.org. 7 Item 8.c. - Page 20 City of Arroyo Grande RFP for Professional Auditing Services AGREEMENT FOR CONSUL TANT SERVICES Exhibit A Attachment l This AGREEMENT FOR CONSULTANT SERVICES ("Agreement"), is made and effective as of 2014, between ("Consultanf), and the CITY OF ARROYO GRANDE, a Municipal Corporation ("City"). In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows: 1. TERM This Agreement shall commence on , 2014 and shall remain and continue in effect for a period of three years (the "Initial Term"), or until completion of services as set forth herein, unless sooner terminated pursuant to the provisions of this Agreement. This Agreement may be extended for two additional one-year periods after the Initial Term upon written agreement by City and Consultant. All terms and conditions of this Agreement shall apply to any additional one year terms. 2. SERVICES Consultant shall perform the tasks described and comply with all terms and provisions set forth in the City's Request For Proposals, Exhibit "B", attached hereto and incorporated herein by this reference. 3. PERFORMANCE Consultant shall at all times faithfully, competently and to the best of his/her ability, experience and talent, perform all tasks described herein. Consultant shall employ, at a minimum generally accepted standards and practices utilized by persons engaged in providing similar services as are required of Consultant hereunder in meeting its obligations under this Agreement. 4. AGREEMENT ADMINISTRATION City's Director of Administrative Services shall represent City in all matters pertaining to the administration of this Agreement. shall represent Consultant in all matters pertaining to the administration of this Agreement. 5. PAYMENT The City agrees to pay the Consultant in accordance with the payment rates and terms set forth in Consultant's Proposal, Exhibit "8", attached hereto and incorporated herein by this reference. 6. SUSPENSION OR TERMINATION OF AGREEMENT WITHOUT CAUSE Page 1-1 Item 8.c. - Page 21 City of Arroyo Grande RFP for Professional Auditing Services Exhibit A Attachment 1 (a) The City may at any time, for any reason, with or without cause, suspend or terminate this Agreement, or any portion hereof, by serving upon the Consultant at least ten (10) days prior written notice. Upon receipt of said notice, the Consultant shall immediately cease all work under this Agreement, unless the notice provides otherwise. If the City suspends or terminates a portion of this Agreement such suspension or termination shall not make void or invalidate the remainder of this Agreement. (b) In the event this Agreement is terminated pursuant to this Section, the City shall pay to Consultant the actual value of the work performed up to the time of termination, provided that the work performed is of value to the City. Upon termination of the Agreement pursuant to this Section, the Consultant will submit an invoice to the City pursuant to Section 5. 7. TERMINATION ON OCCURRENCE OF STATED EVENTS This Agreement shall terminate automatically on the occurrence of any of the following events: (a) Bankruptcy or insolvency of any party; (b) Sale of Consultant's business; or (c) Assignment of this Agreement by Consultant without the consent of City. (d) End of the Agreement Initial Term specified in Section 1, unless otherwise extended. 8. DEFAULT OF CONSULTANT (a) The Consultant's failure to comply with the provisions of this Agreement shall constitute a default. In the event that Consultant is in default for cause under the terms of this Agreement, City shall have no obligation or duty to continue compensating Consultant for any work performed after the date of default and can terminate this Agreement immediately by written notice to the Consultant. If such failure by the Consultant to make progress in the performance of work hereunder arises out of causes beyond the Consultant's control, and without fault or negligence of the Consultant, it shall not be considered a default. (b) If the City Manager or his/her delegate determines that the Consultant is in default in the performance of any of the terms or conditions of this Agreement, he/she shall cause to be served upon the Consultant a written notice of the default. The Consultant shall have ten (10) days after service upon it of said notice in which to cure the default by rendering a satisfactory performance. In the event that the Consultant fails to cure its default within such period of time, the City shall have the right, notwithstanding any other provision of this Agreement to terminate this Agreement without further notice and without prejudice to any other remedy to which it may be entitled at law, in equity or under this Agreement. 9. LAWS TO BE OBSERVED. Consultant shall: Page 1-2 Item 8.c. - Page 22 City of Arroyo Grande RFP for Professional Auditing Services Exhibit A Attachment 1 (a) Procure all permits and licenses, pay all charges and fees, and give all notices which may be necessary and incidental to the due and lawful prosecution of the services to be performed by Consultant under this Agreement; (b) Keep itself fully informed of all existing and proposed federal, state and local laws, ordinances, regulations, orders, and decrees which may affect those engaged or employed under this Agreement, any materials used in Consultant's performance under this Agreement, or the conduct of the services under this Agreement; (c) At all times observe and comply with, and cause all of its employees to observe and comply with all of said laws, ordinances, regulations, orders, and decrees mentioned above; (d) Immediately report to the City's Contract Manager in writing any discrepancy or inconsistency it discovers in said laws, ordinances, regulations, orders, and decrees mentioned above in relation to any plans, drawings, specifications, or provisions of this Agreement. (e) The City, and its officers, agents and employees, shall not be liable at law or in equity occasioned by failure of the Consultant to comply with this Section. 10. OWNERSHIP OF DOCUMENTS (a) Consultant shall maintain complete and accurate records with respect to sales, costs, expenses, receipts, and other such information required by City that relate to the performance of services under this Agreement. Consultant shall maintain adequate records of services provided in sufficient detail to permit an evaluation of services. All such records shall be maintained in accordance with generally accepted accounting principles and shall be clearly identified and readily accessible. Consultant shall provide free access to the representatives of City or its designees at reasonable times to such books and records; shall give City the right to examine and audit said books and records; shall permit City to make transcripts therefrom as necessary; and shall allow inspection of all work, data, documents, proceedings, and activities related to this Agreement. Such records, together with supporting documents, shall be maintained for a period of five (5) years after receipt of final payment. (b) Upon completion of, or in the event of termination or suspension of this Agreement, all original documents, designs, drawings, maps, models, computer files, surveys, notes, and other documents prepared in the course of providing the services to be performed pursuant to this Agreement shall become the sole property of the City and may be used, reused, or otherwise disposed of by the City without the permission of the Consultant. With respect to computer files, Consultant shall make available to the City, at the Consultant's office and upon reasonable written request by the City, the necessary computer software and hardware for purposes of accessing, compiling, Page 1-3 Item 8.c. - Page 23 City of Arroyo Grande RFP for Professional Auditing Services Exhibit A Attachment 1 transferring, and printing computer files. Upon request by City, Consultant shall make available all work papers and reports to any successor auditor in a timely manner. 11. INDEMNIFICATION (a) Indemnification for Professional Liabilitv. When the law establishes a professional standard of care for Consultant's Services, to the fullest extent permitted by law, Consultant shall indemnify, protect, defend and hold harmless City and any and all of its officials, employees and agents ("Indemnified Parties") from and against any and all losses, liabilities, damages, costs and expenses, including attorney's fees and costs to the extent same are caused in whole or in part by any negligent or wrongful act, error or omission of Consultant, its officers, agents, employees or subcontractors or any entity or individual that Consultant shall bear the legal liability thereof) in the performance of professional services under this agreement. (b) Indemnification for Other Than Professional Liability. Other than in the performance of professional services and to the full extent permitted by law, Consultant shall indemnify, defend and hold harmless City, and any and all of its employees, officials and agents from and against any liability (including liability for claims, suits, actions, arbitration proceedings, administrative proceedings, regulatory proceedings, losses, expenses or costs of any kind, whether actual, alleged or threatened, including attorneys fees and costs, court costs, interest, defense costs, and expert witness fees), where the same arise out of, are a consequence of, or are in any way attributable to, in whole or in part, the performance of this Agreement by Consultant or by any individual or entity for which Consultant is legally liable, including but not limited to officers, agents, employees or subcontractors of Consultant. (c) General Indemnification Provisions. Consultant agrees to obtain executed indemnity agreements with provisions identical to those set forth here in this section from each and every subcontractor or any other person or entity involved by, for, with or on behalf of Consultant in the performance of this agreement. In the event Consultant fails to obtain such indemnity obligations from others as required here, Consultant agrees to be fully responsible according to the terms of this section. Failure of City to monitor compliance with these requirements imposes no additional obligations on City and will in no way act as a waiver of any rights hereunder. This obligation to indemnify and defend City as set forth here is binding on the successors, assigns or heirs of Consultant and shall survive the termination of this agreement or this section. 12. INSURANCE Consultant shall maintain prior to the beginning of and for the duration of this Agreement insurance coverage as specified in Exhibit "C" attached hereto and incorporated herein as though set forth in full. Page 1-4 Item 8.c. - Page 24 City of Arroyo Grande RFP for Professional Auditing Services 13. INDEPENDENT CONSUL TANT Exhibit A Attachment I (a) Consultant is and shall at all times remain as to the City a wholly independent Consultant. The personnel performing the services under this Agreement on behalf of Consultant shall at all times be under Consultant's exclusive direction and control. Neither City nor any of its officers, employees, or agents shall have control over the conduct of Consultant or any of Consultant's officers, employees, or agents, except as set forth in this Agreement. Consultant shall not at any time or in any manner represent that it or any of its officers, employees, or agents are in any manner officers, employees, or agents of the City. Consultant shall not incur or have the power to incur any debt, obligation, or liability whatever against City, or bind City in any manner. (b) No employee benefits shall be available to Consultant in connection with performance of this Agreement. Except for the fees paid to Consultant as provided in the Agreement, City shall not pay salaries, wages, or other compensation to Consultant for performing services hereunder for City. City shall not be liable for compensation or indemnification to Consultant for injury or sickness arising out of performing services hereunder. 14. UNDUEINFLUENCE Consultant declares and warrants that no undue influence or pressure was or is used against or in concert with any officer or employee of the City of Arroyo Grande in connection with the award, terms or implementation of this Agreement, including any method of coercion, confidential financial arrangement, or financial inducement. No officer or employee of the City of Arroyo Grande will receive compensation, directly or indirectly, from Consultant, or from any officer, employee or agent of Consultant, in connection with the award of this Agreement or any work to be conducted as a result of this Agreement. Violation of this Section shall be a material breach of this Agreement entitling the City to any and all remedies at law or in equity. 15. NO BENEFIT TO ARISE TO LOCAL EMPLOYEES No member, officer, or employee of City, or their designees or agents, and no public official who exercises authority over or responsibilities with respect to the project during his/her tenure or for one year thereafter, shall have any interest, direct or indirect, in any agreement or sub-agreement, or the proceeds thereof, for work to be performed in connection with the project performed under this Agreement. 16. RELEASE OF INFORMATION/CONFLICTS OF INTEREST (a) All information gained by Consultant in performance of this Agreement shall be considered confidential and shall not be released by Consultant without City's prior written authorization. Consultant, its officers, employees, agents, or subcontractors, shall not without written authorization from the City Manager or unless requested by the City Attorney, voluntarily provide declarations, letters of support, testimony at Page 1-5 Item 8.c. - Page 25 City of Arroyo Grande RFP for Professional Auditing Services Exhibit A Attachment 1 depositions, response to interrogatories, or other information concerning the work performed under this Agreement or relating to any project or property located within the City. Response to a subpoena or court order shall not be considered "voluntary" provided Consultant gives City notice of such court order or subpoena. (b) Consultant shall promptly notify City should Consultant, its officers, employees, agents, or subcontractors be served with any summons, complaint, subpoena, notice of deposition, request for documents, interrogatories, request for admissions, or other discovery request, court order, or subpoena from any person or party regarding this Agreement and the work performed thereunder or with respect to any project or property located within the City. City retains the right, but has no obligation, to represent Consultant and/or be present at any deposition, hearing, or similar proceeding. Consultant agrees to cooperate fully with City and to provide the opportunity to review any response to discovery requests provided by Consultant. However, City's right to review any such response does not imply or mean the right by City to control, direct, or rewrite said response. 17. NOTICES Any notice which either party may desire to give to the other party under this Agreement must be in writing and may be given either by (i) personal service, (ii) delivery by a reputable document delivery service, such as but not limited to, Federal Express, which provides a receipt showing date and time of delivery, or (iii) mailing in the United States Mail, certified mail, postage prepaid, return receipt requested, addressed to the address of the party as set forth below or at any other address as that party may later designate by notice: To City: To Consultant: 18. ASSIGNMENT City of Arroyo Grande Director of Administrative Services 300 E. Branch Street Arroyo Grande, CA 93420 The Consultant shall not assign the performance of this Agreement, nor any part thereof, without the prior written consent of the City. 19. GOVERNING LAW Page 1-6 Item 8.c. - Page 26 City of Arroyo Grande RFP for Professional Auditing Services Exhibit A Attachment 1 The City and Consultant understand and agree that the laws of the State of California shall govern the rights, obligations, duties, and liabilities of the parties to this Agreement and also govern the interpretation of this Agreement. Any litigation concerning this Agreement shall take place in the superior or federal district court with jurisdiction over the City of Arroyo Grande. 20. ENTIRE AGREEMENT This Agreement contains the entire understanding between the parties relating to the obligations of the parties described in this Agreement. All prior or contemporaneous agreements, understandings, representations, and statements, or written, are merged into this Agreement and shall be of no further force or effect. Each party is entering into this Agreement based solely upon the representations set forth herein and upon each party's own independent investigation of any and all facts such party deems material. 21. TIME City and Consultant agree that time is of the essence in this Agreement. 22. CONTENTS OF REQUEST FOR PROPOSAL AND PROPOSAL Consultant is bound by the contents of the City's Request for Proposal, Exhibit "A", attached hereto and incorporated herein by this reference, and the contents of the proposal submitted by the Consultant In the event of conflict, the requirements of City's Request for Proposals and this Agreement shall take precedence over those contained in the Consultant's proposals. 23. CONSTRUCTION The parties agree that each has had an opportunity to have their counsel review this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Agreement or any amendments or exhibits thereto. The captions of the sections are for convenience and reference only, and are not intended to be construed to define or limit the provisions to which they relate. 24. AMENDMENTS Amendments to this Agreement shall be in writing and shall be made only with the mutual written consent of all of the parties to this Agreement. 25. AUTHORITY TO EXECUTE THIS AGREEMENT The person or persons executing this Agreement on behalf of Consultant warrants and represents that he/she has the authority to execute this Agreement on Page 1-7 Item 8.c. - Page 27 City of Arroyo Grande RFP for Professional Auditing Services Exhibit A Attachment I behalf of the Consultant and has the authority to bind Consultant to the performance of its obligations hereunder. · IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. CITY OF ARROYO GRANDE By: ___________ _ Tony Ferrara, Mayor Attest: Kelly Wetmore, City Clerk Approved As To Form: Timothy J. Carmel, City Attorney CONSULTANT By: ____________ _ Its: -------------(Title) Page 1-8 Item 8.c. - Page 28 EXHIBIT 8 CONSULTANT'S PROPOSAL Page 10 .--.; · ....... : .... • •! .... ,. A •: ,·..._-_;. ,J.a.,~1... • V· j·· '-"~ --··"· Item 8.c. - Page 29 CITY OF ARROYO GRANDE PROPOSAL FOR PROFESSIONAL AUDITING SERVICES For Fiscal Years 2013-14, 2014-15, and 2015-2016 Submitted By: Moss, Levy & Hartzheim LLP 2400 Professional Parkway, Suite 205 Santa Maria, CA 93455 Phone: 805.925.2579 Fax: 805.925.2147 Email: mlhsm@mlhcpas.com Submitted On: March XX, 2014 Contact Person: Ron A. Levy, CPA Exhibit B Item 8.c. - Page 30 CITY OF ARROYO GRANDE AUDIT PROPOSAL TABLE OF CONTENTS Introduction: Exhibit B Letter of Transmittal ............................................................................................. : ..................... 1 Technical Proposal: Qualifications Experience ................................................................... ~ ............................................................. 4 Peer Review ............................................................................................................................... 5 Firm Profile ............................................................. : ................................................................... 5 License to Practice in California ................................................................................................ 6 Standard Hourly Rates ............................................................................................................... 7 Statement of Past Contract Disqualifications ............................................................................ 7 Work Program Tentative Schedule .................................................................................................................... 8 Specific Audit Approach ............................................................................................................. 8 Services or Data to be Provided by the City .............................................................................. 11 Appendices: Appendix A -References ........................................................................................................... 12 Appendix B -Peer Review Report ............... : ............................................................................. 13 Appendix C -Resumes .............................................................................................................. 14 Item 8.c. - Page 31 PARTNERS RONALD A LEVY, CPA CRAIG A HARTZHEIM, CPA HADLEY Y HUI, CPA Debbie Malicoat Director of Fiscal Services City of Arroyo Grande 300 East Branch Street Arroyo Grande, CA 93420 Exhibit B MOSS, LEVY & HARTZHEIM LLP CERTIFIED PUBLIC ACCOUNTANTS 2400 PROFESSIONAL PKWY, STE 205 SANTA MARIA, CA 93455 TEL: 805.925.2579 FAX: 805.925.2147 www.mlhcpas.com We are pleased to respond to the City of Arroyo Grande's Request for Proposal for independent auditing services. We have prepared our proposal to address each specification included in the City of Arroyo Grande's Request for Proposal. After 61 years in public accounting and more than 37 years of performing local governmental audits, it is extremely gratifying to witness the continued growth of Moss, Levy & Hartzheim LLP. The Firm has evolved from a one-person operation to a regional public accounting firm with offices in Beverly Hills, Culver City, and Santa Maria, with clients throughout the State of California, as well as 31 other states. We and the entire staff are pleased with not only the continuing development of the firm, but also the progress and economic health of our clients. We understand that governmental accounting is a specialized industry with its own accounting standards and requirements and that is why we strive to constantly improve the quality of our professional services. This degree of dedication coupled with our ability to inform our clients of any new accounting and auditing issues is paramount to our success. We feel that our size is such that we are large enough to provide a broad spectrum of services and experience backed by an in-house training program, professional development courses, and an extensive professional library, yet not so large as to become impersonal and rigid. Our informal style allows us to be flexible enough to complete our audits in a timely manner that is the most convenient for each client. Also, this style allows us to be more accessible to our clients when our clients have questions or concerns. It is our understanding that we will be responsible for expressing opinions on the City of Arroyo Grande's basic financial statements in conformity with accounting principles generally accepted in the United States of America. In addition to those procedures deemed necessary to express our opinions on the basic financial statements, we understand that we will also be responsible for performing certain limited procedures involving supplementary information required by the Governmental Accounting Standards Board (Managemenf s Discussion and Analysis, Statistical Section, and Supplementary Information). Our audit would be made in accordance with auditing standards generally accepted in the United States of America; Government Auditing Standards, issued by the Comptroller General of the United States; Office of Management and Budget (OMB) Circular A-133, Audits of State, Local Governments, and Nonprofit Organizations; and Guidelines for Compliance Audits of California Redevelopment Agencies issued by the State Controller, Division of Local Government Fiscal OFFICES: BEVERLY HILLS· CULVER CITY· SANTA MARIA MEMBER AMERICAN INSTITUTE OF CPAs · CALIFORNIA SOCIETY OF MUNICIPAL FINANCE OFFICERS · CALIFORNIA ASSOCIATION OF SCHOOL BUSINESS OFFICIALS Item 8.c. - Page 32 Exhibit B Affairs. As part of performing our audits in accordance with these standards, we understand that we will be required to audit the Schedule of Ex_penditures of Federal Awards. It is also our understanding that we will be responsible for issuing the following: 1. Reports on the fair presentation of the financial statements in accordance with auditing standards generally accepted in the United States of America as listed below: a) Basic Financial Statements for the City of Arroyo Grande b) Audit Report for the City of Arroyo Grande in accordance with the Single Audit Act (if applicable) c) Basic Financial Statements for the Five Cities Fire Authority (FCFA) 2. Financial and compliance audit of the Transportation Development Act funds 3. A report based on the auditor's understanding of the internal control structure and assessment of control risk. In this report, we will communicate any reportable conditions found during the audit and indicate whether they are also material weaknesses. 4. A separate report on our analysis of the internal control structure used in the administration of federal financial assistance programs. 5. Test compliance with Proposition 111, Article Xlll.B -Review of Appropriation Limit Calculations 6. A report on the City's compliance with laws and regulations, related to "major" federal awards including an opinion on compliance with specific requirements applicable to "major" federal awards programs. This report on compliance will include all instances of non-compliance (if applicable). 7. A Management Letter addressed to the City Council of the City of Arroyo Grande setting forth recommendations for improvements in the City's accounting systems. 8. We will communicate in a letter to the Mayor, Treasurer, City Manager, and Finance Manager any reportable conditions found during the audit. A reportable condition shall be defined as a significant deficiency in the design or operation of the internal control structure, which could adversely affect the City's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. "Nonreportable conditions" discovered by us will also be communicated in the "Management Letter". 9. We will make immediate, written notification to the City Manager, Finance Manager, and the City Attorney of all irregularities and illegal acts or indications of illegal acts of which we become aware. We will make all communications to the City as required by the audit standards under which the engagement is performed. Those communications include, but are not limited to: 1. The Auditor's responsibility under auditing standards generally accepted in the United States of America. 2. Significant accounting policies. 3. Management's judgment and accounting estimates. 4. Significant audit adjustments. 2 Item 8.c. - Page 33 5. Other information in documents containing audited financial statements. 6. Disagreements with management. 7. Management consultation with other accountants. 8. Major issues discussed with management prior to retention. 9. Difficulties encountered in performing the audit. 10. Errors, irregularities, and illegal acts. We will be available to present our audit plan prior to beginning field work. Exhibit B All work papers and reports will be retained, at our expense, for a minimum of seven years (or the retention timeframe established by the professional standards, whichever is longer) unless the Firm is notified in writing by the City of the need to extend the retention period. The work papers are subject to review by federal and state agencies and other individuals designated by the City. Accordingly, the work papers will be made available upon request. In addition, we will respond to the reasonable inquiries of successor auditors and allow successor auditors to review work papers. All adjusting journal entries made by us will be discussed and explained to the designated Finance Department personnel prior to recording. They will be in a format that shows the lowest level of posting detail needed for data entry in the general ledger systems. Minimal assistance of the City's staff is required during the course of the audit, however, we do ask that the City provide the following: cooperation in answering questions, requested confirmations, bank reconciliations, a general ledger, and other miscellaneous items. Also, with the City's approval, our audit team can pull and file appropriate supporting documents, which includes invoices. We feel this approach minimizes the disruption of the City's routine. This proposal is a firm and irrevocable offer until June 14, 2014. Thank you for your consideration and please do not hesitate to contact the authorized representative listed below with any questions, problems, or concerns. Sincerely, 4.CPA -" Ron A. Levy, CPA Partner 2400 Professional Pkwy, Ste 205 Santa Maria, CA 93455 (805) 925-2579 3 Item 8.c. - Page 34 CITY OF ARROYO GRANDE Technical Proposal QUALIFICATIONS Experience Exhibit B Moss, Levy & Hartzheim LLP has an extensive background in auditing cities with over 37 years of experience in this specialized field. We currently perform over 30 city audits and numerous other governmental audits. · Please see Appendix A -References/Similar Engagements Recent local auditing experience includes the following: 1. CSMFO and GFOA Award Programs The Firm currently audits the following seven cities that participate in either or both of the CSMFO and GFOA Award Programs: (Each city has received the awards it has participated in). City of Bellflower City of Morgan Hill City of Paso Robles City of Tracy 2. OMB Circular A-133 City of Santa Maria City of Watsonville City of Whittier We have performed compliance audits in accordance with the Office of Management and Budget (OMB) Circular A-133, Audits of State, Local Governments and Nonprofit Organizations, for each of our 30 municipal clients. · 3. Special Districts Currently, our Firm audits 62 special districts including recreation districts, utility districts, cemetery districts, community services districts, sanitary districts, water districts, fire districts, an ambulance services district, and an airport district. 4. State Controller's Report and Street Report We have prepared State Controller's reports and street reports for numerous cities, redevelopment agencies, and special districts. We feel this experience allows us to help assist our clients in their preparation of the state controller's reports or prepare the reports as a separate engagement for our clients. 4 Item 8.c. - Page 35 CITY OF ARROYO GRANDE Technical Proposal Exhibit B 5. Federal and State Grant Programs and the Single Audit Each of our municipal clients, the majority of our special district clients, and all of our school district clients receive federal and state grants which require compliance audits. Some of our most commonly audited federal programs are as follows: Municipal Major Programs: Community Development Block Grant Funds (CDBG) HOME Program Airport Improvement Program Federal Emergency Management Act Funds (FEMA) Section 8 Housing Assistance Payments Urban Mass Transportation Act Funds (UMTA) Highway Planning and Construction Other Common Municipal Programs: COPS Fast Grants COPS More Grants Asset Seizure funds Retired Senior Volunteer Program Enterprise Community Grants Economic Development Administration 6. Franchise Audits The Firm has assisted several cities in reviewing franchise financial statements as part of reviewing franchise requests for rate increases. In addition, the Firm has performed transient occupancy audits for five cities and has performed various audits of operating lease charges (such as use of a sewage treatment plant based on percentage of use by our client and actual expenses as recorded by the treatment plant operator). Peer Review Please see Appendix B -Peer Quality Review Report for a copy of our firm's most recent quality review report, which includes a review of local governmental engagements. Firm Profile Moss, Levy & Hartzheim LLP is a minority owned regional firm that performs audits of governmental entities from the Oregon to the Mexican border. The Firm currently employs 33 professionals and has annual gross revenues between 4 and 4.5 million dollars. The Firm has three offices in California: Beverly Hills, Culver City, and Santa Maria. The audit work will be completed by staff from our Santa Maria office. The Santa Maria office is currently staffed by seven certified public accountants (two partners, two managers, and three senior accountants). In addition, the office employs three senior accountants and five staff accountants. The City of Arroyo Grande will have one partner and one alternate partner assigned to the audit at all times. In addition, one manager, one senior accountant, and two or three staff accountants will be assigned on a full-time basis to the audit from the Santa Maria office. The City of Arroyo Grande will also have a computer specialist assigned to the audit on a full-time basis. This individual assists the audit team in documenting the computer system internal control structure. 5 Item 8.c. - Page 36 CITY OF ARROYO GRANDE Technical Proposal License to Practice in California Exhibit B Moss, Levy & Hartzheim LLP is a properly licensed certified public accounting firm in the State of California, license # 5863. All certified public accountants engaged in the audit of the City are licensed to practice in the State of California and have received at least the minimum number of governmental continuing professional education hours required by the State Board of Accountancy to perform a governmental audit. Partner, Supervisory, and Staff Qualifications and Experience It is the firm's policy to have our partners and audit manager involved in the managing function of our governmental audits. Having both the partner and audit manager involved in the engagement allows the City to receive immediate response to questions about accounting and audit topics, concerns, and findings. It is expected that Mr. Ron Levy would be the partner in-charge of the City's audit. Mr. Levy would have primary responsibility for the audit. Mr. Levy would also be responsible for assisting in the preparation of the City's CAFR. Mr. Levy has assisted numerous cities and has prepared award winning CAFRs. Mr. Levy will also be responsible for addressing any City's questions or concerns that arise during the year. It is the firm's policy to have a partner on site for a majority of the field work. This policy enables the partner to become acquainted with the City's daily operations and key personnel. Mr. Craig Hartzheim will be the alternate partner assigned to the audit. As alternate partner, it is his responsibility to be familiar with the City, its staff, the audit, and any special problem areas of the City in the event that Mr. Levy is unavailable. Mr. Hartzheim has assisted numerous cities and prepared award winning CAFRs. Mr. Hartzheim has also assisted cities in preparing the State Controller's reports. Mr. Adam Guise will be the manager assigned to the audit. As manager, Mr. Guise will oversee the day to day operations of the audit and will review all audit areas. Mr. Guise will be at the City for 100% of the fieldwork. He performs in-house training for governmental auditing staff members and is in charge of keeping the firm updated on aspects of governmental accounting and auditing issues. I Mr. Travis Hole will be the senior accountant assigned to the audit. As senior accountant, it will be Mr. Hole's responsibility to oversee the staff accountants, do preliminary reviews of audit sections, and to perform more difficult audit sections. Mr. David Ortiz will be the Information Technology Director assigned to the audit. Mr. Ortiz has extensive knowledge in auditing EDP functions. Mr. Ortiz will also perform the statistical sampling procedures for the audit. Also, he will document and test the internal control structure of the computer systems. Please see Appendix C -Resumes for each individual's resume. In addition to the supervisory staff listed above, two or three staff accountants will be assigned to the audit. All staff accountants have degrees from accredited colleges or universities, have received in- house governmental audit training, and at present have at least one year of governmental auditing experience. All staff accountants will be directly supervised by the senior accountant and/or manager assigned to the audit at all times. All partners, managers, and staff members have worked on numerous governmental engagements together. Consistently working together will provide the 6 Item 8.c. - Page 37 CITY OF ARROYO GRANDE Technical Proposal City with a knowledgeable and efficient audit team. Exhibit B The Firm will maintain staff continuity on the engagement throughout the term of the contract, barring any terminations, illnesses, or other unforeseen circumstances. At the request of the City, any Moss, Levy and Hartzheim LLP employee assigned to the audit can be removed and replaced by another qualified employee. Moss, Levy & Hartzheim LLP has an advantage in that there is relatively low turnover in employees as can be seen on individual resumes and therefore, the Firm will not use the City as a training ground for its employees. Standard Hourly Rates Separate fee schedule based on hourly rates in accordance with the following: Partner $ 130 hour Manager $ 90 hour Senior Accountant $ 70 hour Junior Accountant $ 50 hour Support $ 45 hour Statement of Past Desk Reviews and/or Disciplinary Action The firm has not had any federal or state desk reviews during the past three (3) years. In addition, there has been no disciplinary action taken or pending against the firm during the past three (3) years. 7 Item 8.c. - Page 38 CITY OF ARROYO GRANDE Technical Proposal WORK PROGRAM Tentative Schedule Exhibit B Please see separate Cost Proposal for proposed compensation. Phase Preliminary correspondence Interim fieldwork (on site) Year end fieldwork (on site) Fieldwork wrap up Preparation of financial statements Audit wrap up Specific Audit Approach Activities -Scope & timing of audit -Review any accounting issues -Address the City personnel's concerns about the impending audit -Risk assessment -Communicate with those charged with gowmance -Test of controls -Confirmations mailed -Risk assessment -Analytical procedures -Review confirmations -Review draft management report of audit findings -Finalize any outstanding issues -Submit any adjusting journal entries -Financial statement proofing process -Changes to CAFR to City -Management letter Timeframe May5 June2-6 July 15 Staff Assigned Partner Manager Manager Senior 2-3 Staff Accountants Support September 22-26 Manager September 29- 0ctober 3 October 14-31 Nowmber 1 Senior 2-3 Staff Accountants Partner Manager Senior Manager Support The main extent of our work would be what is required to enable us to express an opinion on the financial statements in accordance with: 1. A/CPA Industry Audit Guide for State and Local Governmental Units 2. A/CPA Audit Standards 3. National Committee on Governmental Accounting, Auditing and Financial Reporting (Amended) Publication 4. Laws of the State of California 5. Requirements of Office of Management and Budget Circular A -133, Audits of State, Local Governments, and Nonprofit Organizations 6. GAO Standards for Audit of Governmental Organizations, Programs, Activities, and Functions, the Guidelines for Financial and Compliance Audits of Federally Assisted Programs 7. Our Firm's own additional standards and procedures The audit will be made in accordance with auditing standards generally accepted in the United States of America. 8 Item 8.c. - Page 39 CITY OF ARROYO GRANDE Technical Proposal Exhibit B The primary purpose of the audit is to express an opinion on the basic financial statements, and such an audit is subject to the inherent risk that material errors or fraud may exist and not be detected by us. If conditions are discovered which lead to the belief that material errors, defalcations, or fraud may exist or if any other circumstances are encountered that require extended services, we will promptly advise the City. Our audit would begin when it is convenient for the City staff. We estimate this to be around June to perform interim work. During May or June each fiscal year, the partner or manager of the firm will contact the Finance Department personnel. The purpose of this contact will be to discuss the scope and timing of the annual audit, to review any accounting issues known at that time, and to address any City personnel's concerns about the impending audit. We will schedule approximately one week of interim work each fiscal year. During the first fiscal year, we will prepare narrative flow charts and other documentation of the internal control structure and of the major systems, such as revenue and cash receipts, purchasing and cash disbursements, payroll and personnel, inventory, property and equipment, grant compliance, in~estment activities, and the budget process. We will gain this information through discussions with appropriate City staff and the review of available documented policies, organizational charts, manuals, programs, and procedures. Once we obtain this information, we will evaluate the systems of internal controls and revise our standard governmental audit programs. During the interim work in subsequent fiscal years, we will note changes in the system, if any. For our first fiscal year of engagement, we will utilize the prior fiscal year's financial statements, the current fiscal year budget and our knowledge of your systems to determine materiality for the different audit sections. Each fiscal year, we will select a sample of transactions to determine to what extent the systems are functioning as described to us. The extent of our sample size will depend upon our assessment of the internal control structure. The selection of transactions for testing will be made using a combination of random, systematic, and haphazard sampling techniques. We will identify the strength of the systems upon which we can rely in planning our substantive tests. Our internal control review will meet all the requirements of the AICPA Statement on Auditing Standards (SAS) No. 55, Consideration of the Internal Control Structure in a Financial Statement Audit, as amended by Statement on Auditing Standards No. 78 and SAS 99 Consideration of Fraud in a Financial Statement Audit. We will also perform preliminary analytical review procedures using prior fiscal years' audited statements and current budget. We will also review the following documents in order to determine compliance with laws and regulations: (a) Minutes of the governing body with special attention to: indications of new revenue sources, including federal and state grants; expenditure authorizations and related appropriations, including any special or restrictive provisions; appropriation transfers; authorization for bank or other debt incurred; awards to successful bidders; authorization for new leases entered into; changes in licenses, fines or fees; authorization for fund balances designations or reservations; and authorization for significant new employees hired (b) New agreements and amendments to new agreements including but not limited to: grant agreements; debt and lease agreements; labor agreements; joint venture agreements; and other miscellaneous agreements (c) Administrative Code (d) Investment Policy 9 Item 8.c. - Page 40 CITY OF ARROYO GRANDE Technical Proposal Exhibit B Before April 1 of each fiscal year, we will contact you to provide our detailed audit plan for the fiscal year end fieldwork. We will also discuss with you any matters that may impact our audit procedures or your financial reporting. Also, we will discuss with you any assistance the City may need witfl the fiscal year-end closing. Our fiscal year-end fieldwork would begin after the City has closed its books which we estimate to be the second week of September. The fiscal year end audit work will begin with an analytical review of all significant balance sheet and revenues and expenditures/expense accounts for each fund group, which includes a comparison of prior fiscal year financial statements and current fiscal year budget to the fiscal year-end trial balance. The primary objective of the fiscal year end audit work is to audit the final numbers that will appear in the City's CAFR. The primary objective of the fiscal year end audit work is to audit the final numbers that will appear in the City's financial statements. Our fieldwork would also consist of procedures required under SAS No. 99, Consideration of Fraud in a Financial Statement Audit. We will also be maintaining compliance with SAS Nos. 103-112, during each fiscal year. These procedures significantly changed the way auditors approach audits and are required for audits with a fiscal year ended beginning after December 31, 2006. This will entail a risk-based audit approach which will significantly increase the time spent between the City's staff and the audit staff. Also, this will require additional meetings with an audit committee or similar governing body representative. We will also perform procedures such as: (a) Confirmations by positive and negative circularizations including but not limited to all cash and investment accounts; selected receivable and revenue balances; all bonds, loans, notes payable, and capital leases; all notes receivable; all insurance carriers; all legal firms employed on the City's business; and other miscellaneous confirmations as deemed necessary (b) Physical verifications and observations (c) Analysis and review of evidential materials (d) Interviews and investigative efforts (e) Electronic data processing testing for computer and software reliability (f) Numerous other procedures During the entire engagement, our audit team will be determining the risk assessment of federal programs to be audited in compliance with OMB Circular A-133. We will perform tests of: general requirements; specific requirements; claims for advances and reimbursements; and amounts claimed or used for matching in compliance with the Single Audit Act. Also we will obtain an understanding of the internal control structure of each program tested. The compliance audit will be made in accordance with auditing standards generally accepted in the United States of America and the GAO Standards for Audits of Governmental Organizations, Programs, Activities, and Functions, and the GAO Guidelines for Financial and Compliance Audits of Federally Assisted Programs. The objective in testing transactions for compliance with laws, regulations, the provisions of contracts, and grant agreements is to express an opinion on whether the governmental unit has complied in all material respects, with applicable compliance requirements, noncompliance with which could have a material effect on each major program. In drawing audit samples for purposes of tests of compliance, we will plan our tests to support a low assessed level of control risk. We will select transactions from each program or area which requires testing. The selection of transactions to test would be based on auditor's professional judgment. We use the PPG Guide to Audits of Local Governments and the PPG Guide to Single Audits for guidance in determining the number of transactions to test. JO Item 8.c. - Page 41 CITY OF ARROYO GRANDE Technical Proposal Exhibit B SAS No. 99, Considerations of Fraud in a Financial Statement Audit impacts both the planning and the performance of the audit. In planning, the audit team will discuss how and where the financial statements might be susceptible to material misstatement due to fraud. To determine this we will inquire of management, consider results of analytical procedures, and consider other fraud risk factors. We will review the results of our inquiries and identification of potential fraud areas on a daily basis to achieve a high level of compliance with SAS No. 99. As part of our audit engagements, we issue our clients management letters if we note certain observations or recommendations that we feel need to be disclosed. Our Firm's philosophy regarding the management letter is that the management letter is to help management improve its internal control and accounting procedures and not to criticize the management in charge. This is why we present our management letters to management in draft form for open discussion prior to issuance. The Firm uses PPC audit programs, checklists, and questionnaires in conjunction with client specific audit program procedures. In addition to our PPC checklists, the Firm uses GFOA and CSMFO Award Program Reviewer's Checklists as an additional guide for CAFRs. The Governmental Accounting, Auditing and Financial Reporting (GAAFR), issued by the Government Finance Officers Association (the "Blue Book'1 and other GFOA publications are often used as additional tools when preparing the financial statements of our governmental clients. The Firm has and uses its extensive library of current AICPA, GFOA, and GASB publications and pronouncements. Services or Data to be Provided by the City Minimal assistance of the City's staff is required during the course of the audit, however, we do ask that the City provide the following: cooperation in answering questions, requested confirmations, bank reconciliations, a general ledger, and other miscellaneous items. Also, with the City's approval, our audit team can pull and file appropriate supporting documents, which includes invoices. We feel this approach minimizes the disruption of the City's routine. Respectfully submitted, MOSS, LEVY & HARTZHEIM LLP Ro Ale , CPA Moss, L vy & Hartzheim LLP is an Equal Opportunity Employer II Item 8.c. - Page 42 ExhibitB APPENDICES Item 8.c. - Page 43 Exhibit B CITY OF ARROYO GRANDE. APPENDIX A· REFERENCES/SIMILAR ENGAGEMENTS Reference No. 1 Customer Name City of Santa Maria Contact Individual Rene Vise, Director of Administrative Services Telephone & FAX Number Tel: 805.925.0951 ext. 215 FAX: 805.925.2243 Street Address 110 East Cook Street City, State, Zip Code Santa Maria, CA 93454 Description of services provided -CAFR, Single Audit, TOA, and Redevelopment Agency audits. -Awarded GFOA Reference No. 2 Customer Name City of El Paso de Robles Contact Individual Deanne Purcell, Finance Manager Telephone & FAX Number Tel: 805.227.7276 FAX: 805.237.6565 Street Address 821 Pine Street City, State, Zip Code City of El Paso de Robles, CA 93446 Description of services provided -CAFR, Single Audit, TOA, and Redevelopment Agency audits. -Awarded CSMFO Reference No. 3 Customer Name City of Atascadero Contact Individual Jeri Rangel, Director of Administrative Services Telephone & FAX Number Tel: 805.461.5000 FAX: 805.461.7612 Street Address 6500 Palma Ave City, State, Zip Code Atascadero, CA 93422 Description of services provided -CAFR, Single Audit, TOA, and Redevelopment Agency audits. 12 Item 8.c. - Page 44 Exhibit B PowELL & SPAFFORD. LLD Jessie C. Powell, CPA Patrick D. Spofford, CPA CERTIFIED DUBUC ACCClUNlANTS System Review Report To the Partners of Moss, Levy & Hartzheim, LLP and the Peer Review Committeeofthe California SocietyofCPAs L;...,....J 1., II.. c:,1.1 ... ;, r..-i ,J ~ ...... b ... ,, \i.:nJ-rn ~ ..... ,. l ... tL.1.. .I C. .. hl;.J P .. u ... -'\.. .. _,.,,J, We have reviewed the system of quality control for the accounting and auditing practice of Moss, Levy & Hartzheim., LLP (the firm) in effect for the year ended December 31, 2011. Our review was conducted in accordance with standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public Accountants. The firm is responsible for designing a system of quality control and complying with it to provide the firm with reasonable assurance of performing and reporting 1n conformity with applicable professional standards in all material respects. Our responsibility is to express an opinion on the design of the system of quality control and the firm's compliance therewith based on our review. The nature, objectives, scope, limitations of, and the procedures perfoIJJled in a System Review are descn"bed in the standards at www.aicpa.org/prsnmmary. As required by the standards, engagements selected for review included engagements. perfor3led under Government Auditing Standards and audits of employee benefit plans. In our opinion, the system of quality control for the accounting and auditing practice·of Moo-s,;;Levy & Hartzheim, ll.P in effect for the year ended December 31, 2011, has been suitably designed anilicomplied with to provide the firm with reasonable assurance of performing and reportmg in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass. pass with . deficiency (ies) or/ail. Moss, Levy & Hartzheim, LLP has recei~d a peer review r~ting of pass. July 1-1, 2012 664 W. Bi.Ji Courl • San Bernardino. CA 92410 ° P.O. Be..-.: 8847 • Redlands, CA g43·75 . - Telephone 909-8"35-ml • fox 909-885-7541 Item 8.c. - Page 45 CITY OF ARROYO GRANDE APPENDIX C -RESUMES RON A. LEVY, CPA -PARTNER Exhibit B • California licensed CPA with 37 years of audit experience with governmental entities. • Partner in charge of all governmental audits, currently including 30 municipal audits (including Redevelopment Agency & Single Audits), 28 school district audits, and 62 special district audits. • Has assisted governmental clients with year end closings, key position interviews, preparation of award winning CAFR's, and preparation of State Controller's Reports. • Honored as CPA of the year (2006) by the Santa Barbara Chapter of the California Special Districts Association. • Has met or exceeded all continuing education requirements, including recent courses in: 2013, 2012, and 2011 Governmental Accounting Conferences GASB Statement No.34 Training Conference Compliance Auditing, Audit Sampling and Concluding the Audit Audits of State and Local Governments Governmental Accounting Update The Single Audit Act 2013, 2012, and 2011 School District Conferences Auditor's Reports on Audits of Local Governments Planning a Governmental Audit Engagement • Member of the following: California Society_ of Municipal Finance Officers American Institute of Certified Public Accountants California Society of Certified Public Accountants California Association of School Business Officials Kiwanis Club • A Bachelor of Science degree from Oregon State University conferred in 1977. • Taught accounting courses at a branch of Laverne College and Chapman College. • Knowledgeable about all areas of tax law. 14 Item 8.c. - Page 46 CITY OF ARROYO GRANDE APPENDIX C -RESUMES CRAIG HARTZHEIM, CPA-PARTNER (ALTERNATE) Exhibit B • California licensed CPA with 30 years of audit experience with governmental, non-profit, and commercial entities. • Engagement partner for governmental and non-profit audits (Beverly Hills office), currently including 40 special district audits (including Los Angeles County Flood Control District and the County Sanitation District of Los Angeles County), 12 school districts and related audits, and 17 municipal audits. • Has assisted governmental clients with year end closings, key position interviews, preparation of award winning CAFRs, and preparation of State Controller's Reports. • Has met or exceeded all continuing education requirements, including recent courses in the following: 2013, 2012, and 2011 Governmental Accounting Conferences 2013, 2012, and 2011 School District Conferences Audits of States and Local Gov~mments Preparing Governmental Financial Statements GAAS Guide Other Comprehensive Basis of Accounting (OCBOA) Statements Audit Standards update Implementing SAS No. 112 Implementing SAS No. 114 Auditing update Grants Management • A Bachelor of Science degree in Accounting from Marquette University conferred in 1982. • Member of the following: American Institute of Certified Public Accountants California Society of Certified Public Accountants • Knowledgeable about all areas of tax law including non-profit and payroll tax issues. 15 Item 8.c. - Page 47 CITY OF ARROYO GRANDE APPENDIX C -RESUMES ADAM GUISE -MANAGER Exhibit B • California Licensed CPA with 7 years of audit experience with governmental, non- profit, and commercial entities. • A Bachelor of Science degree in Business Administration with a concentration in public accounting from California Polytechnic State University, San Luis Obispo. • Managing Auditor for 7 Cities, 3 school district audits, and 9 special districts. • Has assisted governmental clients with year end closings, preparation of award winning CAFRs, and preparation of State Controller's Reports. • Has met or exceeded all continuing education requirements, including recent courses in the following: 2013, 2012, and 2011 School District Conferences 2013, 2012, and 2011 Governmental Accounting Conferences Audits of State and Local Governments Single Audits of Governmental Entities ln.ternal Control Over Governmental Financial Reporting California Ethics: Making Ethical Decisions in the Practice of Public Accounting • Previous work experience included 2 years auditing publically traded corporations with an international public accounting firm. TRAVIS HOLE, CPA-SENIOR ACCOUNTANT • California Licensed CPA with 4 years of audit experience with governmental, non- profit, and commercial entities. • A Bachelor of Arts degree in Economics and Business with a concentration in accounting from Westmont College. • Auditor for 4 Cities, 12 school district audits, 10 special districts, 3 non-profits, and 1 commercial business. • Has attended recent courses in the following: 2013, 2012, and 2011 School District Conferences 2013, 2012, and 2011 Governmental Accounting Conferences Government Auditing Standards: Yellowbook California Ethics: Ethical Obligations of California CPAs 16 Item 8.c. - Page 48 CITY OF ARROYO GRANDE APPENDIX C -RESUMES PABLO TORRES, CPA -SENIOR ACCOUNTANT • California Licensed CPA Exhibit B • A Bachelor of Science degree in Business Administration with a concentration in public accounting from California Polytechnic State University, San Luis Obispo. • Auditor for 5 Cities, 10 school district audits, 9 special districts, and 4 non-profits. • Has attended recent courses in the following: 2013, 2012, and 2011 School District Conferences 2013, 2012, and 2011 Governmental Accounting Conferences ALEXANDER HOM, CPA-SENIOR ACCOUNTANT • California Licensed CPA • A Bachelor of Science degree in Business Administration with a concentration in public accounting from California Polytechnic State University, San Luis Obispo. • Auditor for 4 Cities, 11 school district audits, 8 special districts, and 2 non-profits. • Has attended recent courses in the following: 2013, 2012, and 2011 School District Conferences 2013, 2012, and 2011 Governmental Accounting Conferences 17 Item 8.c. - Page 49 CITY OF ARROYO GRANDE DOLLAR COST BID FOR FISCAL YEARS Submitted By: Moss, Levy & Hartzheim LLP 2400 Professional Pkwy, Ste 205 Santa Maria, CA 93455 Phone: 805.925.2579 Fax: 805.925.2147 Email: mlhsm@mlhcpas.com Submitted On: March XX, 2014 Contact Person: Ron A. Levy, CPA Certification: 2013-14, 2014-15 and 2015-16 Exhibit B Ron A. Levy, CPA, is entitled to represent the firm, is empowered to submit the bid, and is authorized to contract with the City of Santa Maria. Item 8.c. - Page 50 CITY OF ARROYO GRANDE Dollar Cost Bid Fees Per Fiscal Year All-Inclusive not to exceed fixed fees Fiscal Year 2014 Audits: City Audit Includes CAFR assistance and proofing, Gann, and Management Letter t:stimatea =ien'""' Hours Hourly Rate Rate Partner 12 $ 100 $ 1,200 Manager 101 $ 75 $ 7,575 Senior Staff 65 $ 65 $ 4,225 Professional Staff 55 s 45 $ 2,475 Administrative Staff 15 $ 35 $ 525 Expenses nla 1,;lty Subtotal: s 16,000 Fiscal Year 2015 Audits: City Audit Includes CAFR assistance and proofing, Gann, and Management Letter t:Sllmetea CJ<"'"""" Hours Hourly Rate Rate Partner 12 $ 100 $ 1,200 Manager 102 $ 75 s 7,650 Senior Staff 70 $ 65 $ 4,550 Professional Staff 57 $ 45 $ 2,565 Administrative Staff 17 $ 35 $ 595 Expenses n/a l.;ity Subtotal: $ 16,560 Fiscal Year 2016 Audits: City Audit Includes CAFR assistance and proofing, Gann, and Management Letter Estlmetea CJ<1enucu Hours Hourly Rate Rate Par!ner 14 $ 100 $ 1,400 Men ager 105 $ 75 $ 7,875 Senior Staff 72 $ 65 $ 4,680 Professional Staff 58 $ 45 s 2,610 Administrative Staff 17 $ 35 $ 595 Expenses nla 1,;lty Subtotal: $ 17,160 Single Audit (if applicable) Includes Management Letter, if needed t:Sllmatea Extenaea Hours Hourly Rate Rate 1 $ 100 $ 100 4 $ 75 $ 300 1 $ 65 $ 65 14 $ 45 s 630 3 s 35 s 105 nla Single Audit Subtotal: $ 1,200 Single Audit (if applicable) Includes Management Letter, if needed t:Sllmetea ex<en.,..., Hours Hourly Rate Rate 1 $ 100 $ 100 4 s 75 $ 300 1 $ 65 $ 65 15 s 45 $ 675 3 $ 35 s 105 nla Single Audit Subtotal: s 1,245 Single Audit {if applicable) Includes Management Letter, if needed t:st1metea CJ<1enucu Hours Hourly Rate Rate 1 $ 100 $ 100 4 $ 75 $ 300 2 $ 65 $ 130 15 $ 45 $ 675 3 $ 35 $ 105 n/a Single Audit Subtotal: $ 1,310 Exhibit B TOA Audit FCFAAudlt Includes Management Letter, if Includes Financial Statement Assistance, needed and Management Letter EStimetea ex<enaea e><1enucu Hours Hourly Rate Rate EStimaled Hours Hourly Rate Rate 2 $ 100 $ 200 4 $ 100 $ 400 8 $ 75 $ 600 22 $ 75 $ 1,650 4 $ 65 $ 260 30 $ 65 $ 1,950 17 $ 45 s 765 39 $ 45 s 1,755 5 s 35 $ 175 7 $ 35 $ 245 nla nla IU" Subtotal: $ 2,000 FCFA Subtotal: $ 6.000 TOA Audit FCFAAudit Includes Management Letter, if Includes Financial Statement Assistance, needed and Management Letter t:Sllmatea t:Xten""" c.>nenQt:a Hours Hourly Rate Rate Estimated Hours Hourly Rate Rate 2 $ 100 $ 200 4 $ 100 $ 400 8 $ 75 $ 600 22 $ 75 $ 1,650 4 $ 65 $ 260 32 $ 65 $ 2,080 18 s 45 $ 810 41 $ 45 $ 1,845 6 $ 35 $ 210 7 s 35 $ 245 nla nla JU" Subtotal: s 2,080 FCFA Subtotal: s 6,220 TOA Audit FCFAAudit Includes Management Letter, if Includes Financial Statement Assistance. needed and Management Letter t:Stimatea ex<ended Extenaea Hours Hourly Rate Rate Estimated Hours Hourly Rate Rate 2 $ 100 s 200 4 s 100 $ 400 8 $ 75 $ 600 23 $ 75 $ 1,725 5 $ 65 $ 325 32 $ 65 s 2,080 18 $ 45 s 810 43 $ 45 s 1,935 6 $ 35 $ 210 8 $ 35 s 280 nla nla JU" Subtotal: $ 2,145 FCFA Subtotal: s 6,420 Item 8.c. - Page 51 CITY OF ARROYO GRANDE Exhibit B Dollar Cost Bid Summary of Fees Per Fiscal Year Fiscal Year CitvAudit Simile Audit TOA FCFA Total 2014 $ 16,000 $ 1,200 $ 2,000 $ 6,000 $ 25,200 2015 $ 16,560 $ 1,245 $ 2,080 $ 6,220 $ 26,105 2016 $ 17,160 $ 1,310 $ 2,145 $ 6.420 $ 27,035 Item 8.c. - Page 52 EXHIBIT C INSURANCE REQUIREMENTS Prior to the beginning of and throughout the duration of the Work, Consultant will maintain insurance in conformance with the requirements set forth below. Consultant will use existing coverage to comply with these requirements. If that existing coverage does not meet the requirements set forth here, Consultant agrees to amend, supplement or endorse the existing coverage to do so. Consultant acknowledges that the insurance coverage and policy limits set forth in this section constitute the minimum amount of coverage required. Any insurance proceeds available to City in excess of the limits and coverage required in this agreement and which is applicable to a given loss, will be available to City. Consultant shall provide the following types and amounts of insurance: Commercial General Liability Insurance using Insurance Services Office "Commercial General Liability" policy from CG 00 01 or the exact equivalent. Defense costs must be paid in addition to limits. There shall be no cross liability exclusion for claims or suits by one insured against another. Limits are subject to review but in no event less than $1,000,000 per occurrence. Business Auto Coverage on ISO Business Auto Coverage from CA 00 01 including symbol 1 (Any Auto) or the exact equivalent. Limits are subject to review, but in no event to be less than $1,000,000 per accident. If Consultant owns no vehicles, this requirement may be satisfied by a non-owned auto endorsement to the general liability policy described above. If Consultant or Consultant's employees will use personal autos in any way on this project, Consultant shall provide evidence of personal auto liability coverage for each such person. Workers Compensation on a state-approved policy form providing statutory benefits as required by law with employer's liability limits no less than $1,000,000 per accident or disease. Excess or Umbrella Liability Insurance (Over Primary) if used to meet limit requirements, shall provide coverage at least as broad as specified for the underlying coverages. Any such coverage provided under an umbrella liability policy shall include a drop down provision providing primary coverage above a maximum $25,000 self- insured retention for liability not covered by primary but covered by the umbrella. Coverage shall be provided on a "pay on behalF basis, with defense costs payable in addition to policy limits. Policy shall contain a provision obligating insurer at the time insured's liability is determined, not requiring actual payment by the insured first. There shall be no cross liability exclusion precluding coverage for claims or suits by one insured against another. Coverage shall be applicable to City for injury to employees of Consultant, subcontractors or others involved in the Work. The scope of coverage Page 1 Item 8.c. - Page 53 provided is subject to approval of City following receipt of proof of insurance as required herein. Limits are subject to review but in no event less than $1,000,000 per occurrence. Professional Liability or Errors and Omissions Insurance as appropriate shall be written on a policy form coverage specifically designated to protect against acts, errors or omissions of the Consultant and "Covered Professional Services" as designated in the policy must specifically include work performed under this agreement. The policy limit shall be no less than $1,000,000 per claim and in the aggregate. The policy must "pay on behalf or the insured and must include a provision establishing the insurer's duty to defend. The policy retroactive date shall be on or before the effective date of this agreement. Insurance procured pursuant to these requirements shall be written by insurer that are admitted carriers in the state California and with an A.M. Bests rating of A-or better and a minimum financial size VII. General conditions pertaining to provision of insurance coverage by Consultant. Consultant and City agree to the following with respect to insurance provided by Consultant: 1. Consultant agrees to have its insurer endorse the third party general liability coverage required herein to include as additional insureds City, its officials employees and agents, using standard ISO endorsement No. CG 2010. Consultant also agrees to require all Consultants, and subcontractors to do likewise. 2. No liability insurance coverage provided to comply with this Agreement shall prohibit Consultant, or Consultant's employees, or agents, from waiving the right of subrogation prior to a loss. Consultant agrees to waive subrogation rights against City regardless of the applicability of any insurance proceeds, and to require all Consultants and subcontractors to do likewise. 3. All insurance coverage and limits provided by Consultant and available or applicable to this agreement are intended to apply to the full extent of the policies. Nothing contained in this Agreement or any other agreement relating to the City or its operations limits the application of such insurance coverage. 4. None of the coverages required herein will be in compliance with these requirements if they include any limiting endorsement of any kind that has not been first submitted to City and approved of in writing. 5. No liability policy shall contain any provision or definition that would serve to eliminate so-called "third party action over" claims, including any exclusion for bodily injury to an employee of the insured or of any Consultant or subcontractor. Page2 Item 8.c. - Page 54 6. All coverage types and limits required are subject to approval, modification and additional requirements by the City, as the need arises. Consultant shall not make any reductions in scope of coverage (e.g. elimination of contractual liability or reduction of discovery period) that may affect City's protection without City's prior written consent. 7. Proof of compliance with these insurance requirements, consisting of certificates of insurance evidencing all of the coverages required and an additional insured endorsement to Consultant's general liability policy, shall be delivered to City at or prior to the execution of this Agreement. In the event such proof of any insurance is not delivered as required, or in the event such insurance is canceled at any time and no replacement coverage is provided, City has the right, but not the duty, to obtain any insurance it deems necessary to protect its interests under this or any other agreement and to pay the premium. Any premium so paid by City shall be charged to and promptly paid by Consultant or deducted from sums due Consultant, at City option. 8. The insurer will provide 30 days notice to City of any cancellation of coverage. 9. It is acknowledged by the parties of this agreement that all insurance coverage required to be provided by Consultant or any subcontractor, is intended to apply first and on a primary, noncontributing basis in relation to any other insurance or self insurance available to City. 10. Consultant agrees to ensure that subcontractors, and any other party involved with the project who is brought onto or involved in the project by Consultant, provide the same minimum insurance coverage required of Consultant. Consultant agrees to monitor and review all such coverage and assumes all responsibility for ensuring that such coverage is provided in conformity with the requirements of this section. Consultant agrees that upon request, all agreements with subcontractors and others engaged in the project will be submitted to City for review. 11. Consultant agrees not to self-insure or to use any self-insured retentions or deductibles on any portion of the insurance required herein and further agrees that it will not allow any Consultant, subcontractor, Architect, Engineer or other entity or person in any way involved in the performance of work on the project contemplated by this agreement to self-insure its obligations to City. If Consultant's existing coverage includes a deductible or self-insured retention, the deductible or self-insured retention must be declared to the City. At the time the City shall review options with the Consultant, which may include reduction or elimination of the deductible or self-insured retention, substitution of other coverage, or other solutions. 12. The City reserves the right at any time during the term of the contract to change the amounts and types of insurance required by giving the Consultant ninety (90) days advance written notice of such change. If such change results in substantial additional cost to the Consultant, the City will negotiate additional compensation proportional to the increase benefit to City. Page 3 Item 8.c. - Page 55 13. For purposes of applying insurance coverage only, this Agreement will be deemed to have been executed immediately upon any party hereto taking any steps that can be deemed to be in furtherance of or towards performance of this Agreement. 14. Consultant acknowledges and agrees that any actual or alleged failure on the part of City to inform Consultant of non-compliance with any insurance requirements in no way imposes any additional obligations on City nor does it waive any rights hereunder in this or any other regard. 15. Consultant will renew the required coverage annually as long as City, or its employees or agents face an exposure from operations of any type pursuant to this agreement. This obligation applies whether or not the agreement is canceled or terminated for any reason. Termination of this obligation is not effective until City executes a written statement to that effect. 16. Consultant shall provide proof that policies of insurance required herein expiring during the term of this Agreement have been renewed or replaced with other policies providing at least the same coverage. Proof that such coverage has been ordered shall be submitted prior to expiration. A coverage binder or letter from Consultant's insurance agent to this effect is acceptable. A certificate of insurance and/or additional insured endorsement as required in these specifications applicable to the renewing or new coverage must be provided to City within five days of the expiration of the coverages. 17. The provisions of any workers' compensation or similar act will not limit the obligations of Consultant under this agreement. Consultant expressly agrees not to use any statutory immunity defenses under such laws with respect to City, its employees, officials and agents. 18. Requirements of specific coverage features or limits contained in this section are not intended as limitations on coverage, limits or other requirements nor as a waiver of any coverage normally provided by any given policy. Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue, and is not intended by any party or insured to be limiting or all-inclusive. 19. These insurance requirements are intended to be separate and distinct from any other provision in this agreement and are intended by the parties here to be interpreted as such. 20. The requirements in this Section supersede all other sections and provisions of this Agreement to the extent that any other section or provision conflicts with or impairs the provisions of this Section. 21. Consultant agrees to be responsible for ensuring that no contract used by any party involved in any way with the project reserves the right to charge City or Page4 Item 8.c. - Page 56 Consultant for the cost of additional insurance coverage required by this agreement. Any such provisions are to be deleted with reference to City. It is not the intent of City to reimburse any third party for the cost of complying with these requirements. There shall be no recourse against City for payment of premiums or other amounts with respect thereto. 22. Consultant agrees to provide immediate notice to City of any claim or loss against Consultant arising out of the work performed under this agreement. City assumes no obligation or liability by such notice, but has the right (but not the duty) to monitor the handling of any such claim or claims if they are likely to involve City. Pages _ _J Item 8.c. - Page 57 THIS PAGE INTENTIONALLY LEFT BLANK Item 8.c. - Page 58