Loading...
CC 2020-07-14_08b Agreement for Auditing ServicesMEMORANDUM TO: CITY COUNCIL BY: MICHAEL STEVENS, ADMINISTRATIVE SERVICES DIRECTOR SUBJECT: CONSIDERATION OF AGREEMENT FOR AUDITING SERVICES DATE: JULY 14, 2020 SUMMARY OF ACTION: Approve an agreement for consulting services with Moss, Levi & Hartzheim LLP to provide auditing services. IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: The FY 2020-21 Budget included $34,000 for auditing services to perform the City’s FY 2019-20 annual financial audit and statutory reporting. Moss, Levi & Hartzheim’s maximum cost to perform the FY 2019-20 audit in the current fiscal year is $28,080. Audit services for Five City Fire Authority (FCFA) are also included in this agreement; however, the cost for these services are solely the responsibility of the FCFA. RECOMMENDATION: It is recommended the City Council approve an agreement for auditing services with Moss, Levi & Hartzheim LLP, Certified Public Accountants, for a period of three years with an option to extend for two additional one-year periods, and authorize the Mayor to execute the Agreement. BACKGROUND: Municipalities are required to hire external auditors to audit their financial statements annually and to conduct evaluations of the entity’s internal controls. The auditor is responsible for determining that the City’s financial statements do not include material misstatements and do not misrepresent its financial condition. In addition, auditors evaluate the City’s internal controls and procedures to reduce the risk of collusion, theft, or fraud. On March 5, 2020, the Administrative Services Department issued a Request for Proposals (RFP) for auditing services to Certified Public Accounting (CPA) firms. Five proposals were received by the RFP closing date of April 16, 2020. The selection process was performed by the City’s audit selection team and was based on a set of scoring criteria. The results of that scoring recommend awarding the City’s auditing services to Moss, Levi & Hartzheim LLP (MLH). Item 8.b. - Page 1 CITY COUNCIL CONSIDERATION OF AGREEMENT FOR AUDITING SERVICES JULY 14, 2020 PAGE 2 The City’s previous agreement for audit services, which happens to be with MLH, expired on June 30, 2020. In the past, the City has been satisfied with MLH’s performance, responsiveness and audit procedures. ANALYSIS OF ISSUES: As discussed, the City audit selection team is recommending approval of a three-year audit service agreement with MLH, with an additional two one-year extensions based on satisfactory performance. The City audit selection team evaluated the various CPA firm proposals 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 criteria, it was not the most important factor in evaluating the proposals. The table below reflects the vendor’s pricing proposals. Firm FY 2019-20 FY 2020-21 FY 2021-22 Glenn Burdette Attest Company $40,100 $41,080 $42,180 Moss, Levi & Hartzheim $28,080 $28,080 $28,935 JJAPC $39,500 $39,500 $39,500 Rogers, Anderson, Malody & Scott $41,795 $41,795 $41,795 Vasquez & Company $27,000 $27,800 $28,600 One other factor influencing the decision to recommend MLH is that they are a local firm based out of Santa Maria. In addition, they have more than 42 years of experience performing nonprofit and governmental audits. They demonstrate extensive experience with cities of similar nature, size and complexity and currently provide audit services to the cities of Atascadero, Grover Beach, Buellton, Goleta and Santa Maria. The firm has a history of technical experience and CPA professionals that specialize in governmental accounting and at a cost that is competitive. Based on Government Code section 12410.6.(b), which requires that the audit partner with primary responsibility for the audit should be rotated after six consecutive years of leading the audit, the City will request that a new MLH audit partner is assigned to lead the City’s audit work in order to meet Government Code, to get a different perspective, and to ensure objectivity. ALTERNATIVES: 1. Approve the agreement with MLH; 2. Do not approve the agreement with MLH and contract with one of the other CPA firms; or 3. Provide direction to staff. Item 8.b. - Page 2 CITY COUNCIL CONSIDERATION OF AGREEMENT FOR AUDITING SERVICES JULY 14, 2020 PAGE 2 ADVANTAGES: Awarding the agreement to MLH will provide the City with a qualified accounting firm to perform the City’s required audit and reporting requirements and within the approved budget. Contracting with MLH also provides advantages of operational familiarity and efficiencies for both City and MLH staff. DISADVANTAGES: The disadvantage of the recommendation is that other qualified audit firms will not be selected. The City may not benefit from a different audit firm’s perspective, interpretations and audit process. ENVIRONMENTAL REVIEW: No environmental review is required for this item. PUBLIC NOTIFICATION AND COMMENTS: The Agenda was posted at City Hall and on the City’s website in accordance with Government Code Section 54954.2. Item 8.b. - Page 3 Page 1 AGREEMENT FOR CONSULTANT SERVICES This AGREEMENT FOR CONSULTANT SERVICES (“Agreement”), is made and effective as of July 14, 2020, 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 July 1, 2020 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 least Item 8.b. - Page 4 Page 2 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. Item 8.b. - Page 5 Page 3 9. LAWS TO BE OBSERVED. Consultant shall: (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, transferring, and Item 8.b. - Page 6 Page 4 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 Liability. 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. Item 8.b. - Page 7 Page 5 13. INDEPENDENT CONSULTANT (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. UNDUE INFLUENCE 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 depositions, Item 8.b. - Page 8 Page 6 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: City of Arroyo Grande Director of Administrative Services 300 E. Branch Street Arroyo Grande, CA 93420 To Consultant: Moss, Levy & Hartzheim, LLP Ron A. Levy, Partner 2400 Professional Pkwy, Ste 205 Santa Maria, CA 93455 18. ASSIGNMENT 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 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 Item 8.b. - Page 9 Page 7 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 behalf of the Consultant and has the authority to bind Consultant to the performance of its obligations hereunder. Item 8.b. - Page 10 Page 8 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. CITY OF ARROYO GRANDE CONSULTANT By:__________________________ By:____________________________ Caren Ray Russom, Mayor Its:____________________________ Attest: (Title) ____________________________ Kelly Wetmore, City Clerk Approved As To Form: _____________________________ Timothy J. Carmel, City Attorney Item 8.b. - Page 11 Page 9 EXHIBIT A CITY’S REQUEST FOR PROPOSAL REQUEST FOR PROPOSALS FOR PROFESSIONAL AUDITING SERVICES DUE DATE: Thursday, April 16, 2020 at 3:00 p.m Item 8.b. - Page 12 Page 10 CITY OF ARROYO GRANDE REQUEST FOR PROPOSALS FOR PROFESSIONAL AUDITING SERVICES I. PROPOSAL INTENT The City of Arroyo Grande is soliciting the services of qualified CPA firms to audit all funds of the City of Arroyo Grande for a period of three years, with an option to extend for two additional one-year periods. 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 Proposals 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 March 26, 2020 at 2:00 pm to allow all interested CPA firms to ask questions for the mutual benefit of all involved. All questions and correspondence must be directed to Nicole Valentine, Accounting Manager at nvalentine@arroyogrande.org no later than March 19, 2020. The questions and answers will then be forwarded to all firms that provide an email address, and posted on the City’s website, no later than March 31, 2020. The City’s Comprehensive Annual Financial Report (CAFR) from prior fiscal years are located on the City’s website at: www.arroyogrande.org/departments/administrative-services/annual-financial-reports/. BACKGROUND The City 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 17,900 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 citizens through the Five Cities Fire Authority (FCFA), a Joint Powers Authority between the Cities of Arroyo Grande, Grover Beach and the Oceano Community Services District. The City provides financial services to FCFA. The City is the Successor Agency of the Dissolved 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.b. - Page 13 Page 11 The Finance Staff: The Administrative Services 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 Inforum Gold software for general ledger, budget, accounts payable, and payroll accounting. Number of Individual Funds by Type: Governmental Funds: General Fund 1 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 III. 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 Item 8.b. - Page 14 Page 12 affect the organization’s ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. 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. The Auditor will prepare a DRAFT CAFR (including schedules, notes and statistics) from the financial system as of June 30th of each fiscal year under contract. 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 $750,000 and therefore is not subject to the single audit requirements. However, in years where the City’s federal expenditures exceeded $750,000, 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 of Federal 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 (TDA) 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. Item 8.b. - Page 15 Page 13 As mentioned earlier, the City provides financial services to FCFA. As part of this proposal, the auditors will perform audit services, as well as, provide an opinion on FCFA’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. City Responsibilities: 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 of revenues and expenditures for all funds as well as detailed subsidiary ledgers. 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 Independence The firm should provide an affirmative statement that it is independent of the City of Arroyo Grande as defined by generally accepted auditing standards. Moreover, the firm 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. License to Practice in California An affirmative statement should be included indicating that the firm and all assigned key professional staff are properly licensed to practice in California. Firm 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 firm shall provide information on the circumstances and status of any disciplinary action taken or pending against the firm during the past three (3) years with state regulatory bodies or professional organizations. Item 8.b. - Page 16 Page 14 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. Partner, Supervisory and Staff Qualifications and Experience The firm shall identify the principal supervisory and management staff, including engagement 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 staff’s 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. 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. 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. 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. Item 8.b. - Page 17 Page 15 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 1. Acceptance or Rejection and Negotiation of Proposals The City reserves the right to reject any or all proposals, to waive non-material irregularities or information in the request for proposal, and to accept or reject any item or combination of items. 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 Item 8.b. - Page 18 Page 16 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. 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 firm’s 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. Item 8.b. - Page 19 Page 17 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 March 5, 2020 ............................................................................................. Pre-Proposal Teleconference March 26, 2020 ............................................................................................. Proposals Due April 16, 2020 Interviews (if requested) ............................................ April 20 – 23, 2020 Select Consultant ...................................................... April 27, 2020 Finalize Agreement ................................................... May 7, 2020 City Council Consideration ........................................ May 12, 2020 VIII. SUBMITTAL A. Submit a total of 2 hard copies and one electronic copy to: Nicole Valentine Accounting Manager 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, April 16, 2020 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 Nicole Valentine at nvalentine@arroyogrande.org. Item 8.b. - Page 20 Page 18 EXHIBIT B CONSULTANT’S PROPOSAL The following cost schedule is a total all-inclusive maximum cost per year of the contract: Audit Service  Fixed Term   FY 2019‐20   Fixed Term  FY 2020‐21   Fixed Term  FY 2021‐22   Option Year  FY 2022‐23   Option Year  FY 2023‐24  City Audit 20,080$        20,080$        20,785$        21,510$        22,260$         CAFR prepearation 4,500            4,500            4,650            4,810            4,975             TDA audits 2,000            2,000            2,000            2,000            2,000             Single  Audit Act Report (if required) 1,500            1,500            1,500            1,500            1,500             Total  City Cost 28,080$        28,080$        28,935$        29,820$        30,735$         FCFA audit and financial statements 7,125$          7,125$          7,375$          7,635$          7,900$           Total  Maximum  All‐Inclusive Price 35,205$        35,205$        36,310$        37,455$        38,635$         Item 8.b. - Page 21 Page 19 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 provided is subject to approval of Item 8.b. - Page 22 Page 20 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 of” 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. 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 Item 8.b. - Page 23 Page 21 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. Item 8.b. - Page 24 Page 22 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 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 Item 8.b. - Page 25 Page 23 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. Item 8.b. - Page 26