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Vavrinek, Trine, Day & Co LLP 1 _ 1 Professional AuditingAgreementServices between The City of Rancho Palos Verdes •M1}i. 44 N\ CSC Vavrinek, Trine, Day & Co., LLP THIS AGREEMENT ("Agreement") is made and entered into this 18 day of June, 2013 by and between the City of Rancho Palos Verdes (hereinafter referred to as the "CITY") and Vavrinek, Trine, Day & Co., LLP (hereafter referred to as "AUDITOR"). IN CONSIDERATION of the covenants hereinafter set forth, the parties hereto agree as follows: ARTICLE 1 SCOPE OF SERVICES 1.1 Project Description AUDITOR shall perform auditing services and duties that are set forth in Exhibit "A" of this Agreement, which is attached hereto and incorporated herein by this reference. CITY shall notify AUDITOR in writing, whether or not AUDITOR'S services shall include: (a) a single audit of federal financial assistance; (b) preparation of CITY'S State Controller's Reports; and/or (c) preparation of CITY'S State Street Report. Notwithstanding services described above, the CITY may request and AUDITOR may agree to perform other services. The scope of such services and compensation shall be agreed to in writing, signed by both parties and shall become a part of this Agreement. 1.2 Description of Services AUDITOR shall perform all services and duties pursuant to this Agreement in a professional and timely manner, at the direction of the Director of Finance & Information Technology, or his designee. All directives, instructions, or other communications from CITY to AUDITOR shall be through only the Director of Finance & Information Technology, or his designee. 1.3 Schedule of Work Upon receipt of written Notice to Proceed from the CITY, AUDITOR shall perform with due diligence the services requested by the CITY. Time is of the essence in this Agreement. AUDITOR shall not be responsible for delay, nor shall AUDITOR be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of CITY to furnish timely information or to approve or disapprove AUDITOR's work promptly, or delay or faulty performance by CITY, other AUDITORs/contractors, or governmental agencies, or any other delays beyond AUDITOR's control or without AUDITOR's fault. Page 1 of 11 ARTICLE 2 COMPENSATION 2.1 Terms of Compensation CITY shall pay AUDITOR for auditing services rendered and costs incurred pursuant to this Agreement in accordance with the amounts set forth in Exhibit "A". Notwithstanding any and all provisions of this Agreement, in no event shall compensation for the services exceed $43,070 each fiscal year, unless authorized in writing by the CITY and approved by the CITY Council. All payments due AUDITOR shall be paid to: Vavrinek, Trine, Day & Co., LLP 8270 Aspen Street Rancho Cucamonga, CA 91730 AUDITOR will submit invoices monthly for the percentage of work completed in the previous month. CITY agrees to pay all undisputed invoice amounts within thirty (30) days of receipt of the invoice. CITY agrees to use its best efforts to notify AUDITOR of any disputed invoice amounts within ten (10) days of the receipt of each invoice. However, CITY'S failure to timely notify AUDITOR of a disputed amount shall not be deemed a waiver of CITY'S right to dispute such amount or percentage. 2.2 Additional Services CITY may request additional specified work under this Agreement. All such work must be authorized in writing by the CITY's Director of Finance & Information Technology prior to commencement. AUDITOR shall perform such services, and CITY shall pay for such additional services in accordance with AUDITOR's Schedule of Hourly Rates, which is within Exhibit "B." The rates in Exhibit "B" shall be in effect through the end of this Agreement. 2.3 Term of Agreement This Agreement shall commence on June 18, 2013, and shall terminate on June 17, 2016 unless sooner terminated pursuant to Article 4 of this Agreement. Additionally, the City reserves the right to extend the term of the Agreement for two (2) additional one-year terms with the mutual written consent of both parties. Page 2 of 11 . ARTICLE 3 INDEMNIFICATION AND INSURANCE 3.1 Indemnification, Hold Harmless, and Duty to Defend. AUDITOR shall defend, indemnify, and hold the CITY, its officials, officers, employees, agents and independent contractors serving in the role of CITY officials, and volunteers (collectively "Indemnitees") free and harmless from any and all claims, demands, causes of action, costs, expenses, liabilities, losses, damages or injuries, in law or equity, to property or persons, including wrongful death (collectively "Claims"), in any manner arising out of or incident to any acts or omissions of AUDITOR, its officials, officers, employees or agents in connection with the performance of this Agreement., including without limitation the payment of all consequential damages, attorneys' fees, and other related costs and expenses, except for such Claims arising out of the sole negligence or willful misconduct of the Indemnitees. With respect to any and all such Claims, AUDITOR shall defend Indemnitees at AUDITOR's own cost, expense, and risk and shall pay and satisfy any judgment, award, or decree that may be rendered against Indemnitees. AUDITOR shall reimburse Indemnitees for any and all legal expenses and costs incurred by each of them in connection therewith or in enforcing the indemnity herein provided. AUDITOR's obligation to indemnify shall not be restricted to insurance proceeds, if any, received by AUDITOR or Indemnitees. All duties of AUDITOR under this Section shall survive termination of this Agreement. 3.2 General Liability AUDITOR shall at all times during the term of the Agreement carry, maintain, and keep in full force and effect, a policy or policies of Commercial General Liability Insurance, with minimum limits of one million dollars ($1,000,000) for each occurrence and two million dollars ($2,000,000) general aggregate for bodily injury, death, loss or property damage for products or completed operations and any and all other activities undertaken by AUDITOR in the performance of this Agreement. Said policy or policies shall be issued by an insurer admitted to do business in the State of California and rated in A.M. Best's Insurance Guide with a rating of A:VII or better. 3.3 Professional Liability AUDITOR shall at all times during the term of this Agreement, carry, maintain, and keep in full force and effect a policy or policies of professional liability insurance with a minimum limit of one million dollars ($1,000,000) per claim and aggregate for errors and/or omissions of AUDITOR in the performance of this Agreement. Said policy or policies shall be issued by an insurer admitted to do business in the State of California and rated in Best's Insurance Guide with a rating of A:VII or better. Page 3of11 If a "claims made" policy is provided, such policy shall be maintained in effect from the date of performance of work or services on the CITY's behalf until three (3) years after the date of work or services are accepted as completed. Coverage for the post-completion period may be provided by renewal or replacement of the policy for each of the three (3) years or by a three-year extended reporting period endorsement, which reinstates all limits for the extended reporting period. If any such policy and/or policies have a retroactive date, that date shall be no later than the date of first performance of work or services on behalf of the CITY. Renewal or replacement policies shall not allow for any advancement of such retroactive date. 3.4 Automobile Liability AUDITOR shall at all times during the term of this Agreement obtain, maintain, and keep in full force and effect, a policy or policies of Automobile Liability Insurance, with minimum of one million dollars ($1,000,000) per claim and occurrence and two million dollars ($2,000,000) in the aggregate for bodily injuries or death of one person and five hundred thousand dollars ($500,000) for property damage arising from one incident. 3.5 Worker's Compensation AUDITOR agrees to maintain in force at all times during the performance of work under this Agreement worker's compensation insurance as required by the law. AUDITOR shall require any subcontractor similarly to provide such compensation insurance for their respective employees. 3.6 Notice of Cancellation (a) All insurance policies shall provide that the insurance coverage shall not be cancelled by the insurance carrier without thirty (30) days prior written notice to CITY, or ten (10) days notice if cancellation is due to nonpayment of premium. Additionally, AUDITOR shall provide immediate notice to the CITY if it receives a cancellation or policy revision notice from the insurer. AUDITOR agrees that it will not cancel or reduce said insurance coverage. (b) AUDITOR agrees that if it does not keep the aforesaid insurance in full force and effect, CITY may immediately terminate this Agreement. 3.7 Certificate of Insurance At all times during the term of this Agreement, AUDITOR shall maintain on file with the CITY Clerk a certificate of insurance showing that the aforesaid policies are in effect in the required amounts. The commercial general liability policy shall contain endorsements naming the CITY, its officers, agents and employees as additional insureds. Page 4 of 11 3.8 Primary Coverage The insurance provided by AUDITOR shall be primary to any coverage available to CITY. The insurance policies (other than workers compensation and professional liability) shall include provisions for waiver of subrogation. ARTICLE 4 TERMINATION 4.1 Termination of Agreement (a) This Agreement may be terminated at any time, with or without cause, by the CITY upon thirty (30) days prior written notice or by AUDITOR upon ninety (90) days prior written notice. Notice shall be deemed served if completed in compliance with Section 6.14. (b) In the event of termination or cancellation of this Agreement by AUDITOR or CITY, due to no fault or failure of performance by AUDITOR, AUDITOR shall be paid compensation for all services performed by AUDITOR, in an amount to be determined as follows: for work satisfactorily done in accordance with all of the terms and provisions of this Agreement, AUDITOR shall be paid an amount equal to the percentage of services performed prior to the effective date of termination or cancellation in accordance with the work items; provided, in no event shall the amount of money paid under the foregoing provisions of this paragraph exceed the amount which would have been paid to AUDITOR for the full performance of the services described in this Agreement. ARTICLE 5 OWNERSHIP OF DOCUMENTS 5.1 Ownership of Documents and Work Product All final documents, plans, specifications, reports, information, data, exhibits, photographs, images, video files and media created or developed by AUDITOR pursuant to this Agreement ("Written Products") shall be and remain the property of the CITY without restriction or limitation upon its use, duplication or dissemination by the CITY. All Written Products shall be considered "works made for hire," and all Written Products and any and all intellectual property rights arising from their creation, including, but not limited to, all copyrights and other proprietary rights, shall be and remain the property of the CITY without restriction or limitation upon their use, duplication or dissemination by the CITY. AUDITOR shall not obtain or attempt to obtain copyright protection as to any Written Products. Page 5of 11 . AUDITOR hereby assigns to the CITY all ownership and any and all intellectual property rights to the Written Products that are not otherwise vested in the CITY pursuant to the paragraph directly above this one. AUDITOR warrants and represents that it has secured all necessary licenses, consents or approvals to use any instrumentality, thing or component as to which any intellectual property right exists, including computer software, used in the rendering of the services and the production of all Written Products produced under this Agreement, and that the CITY has full legal title to and the right to reproduce the Written Products. AUDITOR shall defend, indemnify and hold the CITY, and its elected officials, officers, employees, servants, attorneys, designated volunteers, and agents serving as independent contractors in the role of CITY officials, harmless from any loss, claim or liability in any way related to a claim that CITY's use of any of the Written Products is violating federal, state or local laws, or any contractual provisions, or any laws relating to trade names, licenses, franchises, copyrights, patents or other means of protecting intellectual property rights and/or interests in products or inventions. AUDITOR shall bear all costs arising from the use of patented, copyrighted, trade secret or trademarked documents, materials, equipment, devices or processes in connection with its provision of the services and Written Products produced under this Agreement. In the event the use of any of the Written Products or other deliverables hereunder by the CITY is held to constitute an infringement and the use of any of the same is enjoined, AUDITOR, at its expense, shall: (a) secure for CITY the right to continue using the Written Products and other deliverables by suspension of any injunction, or by procuring a license or licenses for CITY; or (b) modify the Written Products and other deliverables so that they become non-infringing while remaining in compliance with the requirements of this Agreement. This covenant shall survive the termination of this Agreement. Upon termination, abandonment or suspension of the Project, the AUDITOR shall deliver to the CITY all Written Products and other deliverables related to the Project without additional cost or expense to the CITY. If AUDITOR prepares a document on a computer, AUDITOR shall provide CITY with said document both in a printed format and in an electronic format that is acceptable to the CITY. This Article 5 "Ownership of Documents" does not apply to audit documentation or audit working papers. Copies of the audit documentation and audit working papers shall be available to the City even subsequent to the termination of this Agreement, provided such disclosure does not undermine the independence or the validity of the audit process. ARTICLE 6 GENERAL PROVISIONS 6.1 Representation The CITY representative shall be the Director of Finance & Information Technology or his or her designee, and AUDITOR shall notify CITY of AUDITOR's Page 6 of 11 1 • designated representative. These individuals shall be the primary contact persons for the parties regarding performance of this Agreement. 6.2 Fair Employment Practices/Equal Opportunity Acts In the performance of this Agreement, AUDITOR shall comply with all applicable provisions of the California Fair Employment Practices Act (California Government Code Sections 12940-48), the applicable equal employment provisions of the Civil Rights Act of 1964 (42 U.S.C. 200e-217), and the Americans with Disabilities Act of 1992 (42 U.S.C. § 11200, et seq.). 6.3 Personnel AUDITOR represents that it has, or shall secure at its own expense, all personnel required to perform AUDITOR's services under this Agreement AUDITOR shall make reasonable efforts to maintain the continuity of AUDITOR's staff who are assigned to perform the services hereunder and shall obtain the approval of the Director of Finance & Information Technology of all proposed staff members who will perform such services. AUDITOR may associate with or employ associates or subcontractors in the performance of its services under this Agreement, but at all times shall AUDITOR be responsible for its associates and subcontractors' services. 6.4 AUDITOR's Representations AUDITOR represents, covenants and agrees that: a) AUDITOR is licensed, qualified, and capable of furnishing the labor, materials, and expertise necessary to perform the services in accordance with the terms and conditions set forth in this Agreement; b) there are no obligations, commitments, or impediments of any kind that will limit or prevent AUDITOR's full performance under this Agreement; c) to the extent required by the standard of practice, AUDITOR has investigated and considered the scope of services performed, has carefully considered how the services should be performed, and understands the facilities, difficulties and restrictions attending performance of the services under this Agreement. 6.5 Conflicts of Interest AUDITOR agrees not to accept any employment or representation during the term of this Agreement or within twelve (12) months after completion of the work under this Agreement which is or may likely make AUDITOR "financially interested" (as provided in California Government Code Sections 1090 and 87100) in any decisions made by CITY on any matter in connection with which AUDITOR has been retained pursuant to this Agreement. 6.6 Legal Action (a) Should either party to this Agreement bring legal action against the Page 7 of 11 other, the validity, interpretation, and performance of this Agreement shall be controlled by and construed under the laws of the State of California, excluding California's choice of law rules. Venue for any such action relating to this Agreement shall be in the Los Angeles County Superior Court. (b) If any legal action or other proceeding, including action for declaratory relief, is brought for the enforcement of this Agreement or because of an alleged dispute, breach, default or misrepresentation in connection with this Agreement, the prevailing party shall be entitled to recover reasonable attorneys' fees, experts' fees, and other costs, in addition to any other relief to which the party may be entitled. (c) Should any legal action about a project between CITY and a party other than AUDITOR require the testimony of AUDITOR when there is no allegation that AUDITOR was negligent, CITY shall compensate AUDITOR for its testimony and preparation to testify at the hourly rates in effect at the time of such testimony. 6.7 Assignment Neither this Agreement nor any part thereof shall be assigned by AUDITOR without the prior written consent of the CITY. Any such purported assignment without written consent shall be null and void, and AUDITOR shall hold harmless, defend and indemnify the CITY and its officers, officials, employees, agents and representatives with respect to any claim, demand or action arising from any unauthorized assignment. Notwithstanding the above, AUDITOR may use the services of persons and entities not in AUDITOR's direct employ, when it is appropriate and customary to do so. AUDITOR's use of subcontractors for additional services shall not be unreasonably restricted by the CITY provided AUDITOR notifies the CITY in advance. 6.8 Independent Contractor AUDITOR is and shall at all times remain, as to the CITY, a wholly independent contractor. Neither the CITY nor any of its agents shall have control over the conduct of AUDITOR or any of the AUDITOR's employees, except as herein set forth, and AUDITOR is free to dispose of all portions of its time and activities which it is not obligated to devote to the CITY in such a manner and to such persons, firms, or corporations as the AUDITOR wishes except as expressly provided in this Agreement. AUDITOR shall have no power to incur any debt, obligation, or liability on behalf of the CITY or otherwise act on behalf of the CITY as an agent. AUDITOR shall not, at any time or in any manner, represent that it or any of its agents, servants or employees, are in any manner agents, servants or employees of CITY. AUDITOR agrees to pay all required taxes on amounts paid to AUDITOR under this Agreement, and to indemnify and hold the CITY harmless from any and all taxes, assessments, penalties, and interest asserted against the CITY by reason of the independent contractor relationship created by this Agreement. AUDITOR shall fully comply with the workers' Page 8 of 11 compensation law regarding AUDITOR and its employees. AUDITOR further agrees to indemnify and hold the CITY harmless from any failure of AUDITOR to comply with applicable workers' compensation laws. The CITY shall have the right to offset against the amount of any fees due to AUDITOR under this Agreement any amount due to the CITY from AUDITOR as a result of its failure to promptly pay to the CITY any reimbursement or indemnification arising under this Article. 6.9 Titles The titles used in this Agreement are for general reference only and are not part of the Agreement. 6.10 Entire Agreement This Agreement, including any other documents incorporated herein by specific reference, represents the entire and integrated agreement between CITY and AUDITOR and supersedes all prior negotiations, representations or agreements, either written or oral. This Agreement may be modified or amended, or provisions or breach may be waived, only by subsequent written agreement signed by both parties. In order to comply with the AICPA Clarified Standards and Government Auditing Standards, the CITY and AUDITOR agree that an annual engagement letter substantially in the form of Exhibit "C" will be signed. All of the components of the annual engagement letter are incorporated by reference as an attachment to this Agreement. In the event of a conflict between the Agreement and the terms of the annual engagement letter, the Agreement shall take precedence. 6.11 Construction In the event of any asserted ambiguity in, or dispute regarding the interpretation of any matter herein, the interpretation of this Agreement shall not be resolved by any rules of interpretation providing for interpretation against the party who causes the uncertainty to exist or against the party who drafted the Agreement or who drafted that portion of the Agreement. 6.12 Non-Waiver of Terms, Rights and Remedies Waiver by either party of any one or more of the conditions of performance under this Agreement shall not be a waiver of any other condition of performance under this Agreement. In no event shall the making by the CITY of any payment to AUDITOR constitute or be construed as a waiver by the CITY of any breach of covenant, or any default which may then exist on the part of AUDITOR, and the making of any such payment by the CITY shall in no way impair or prejudice any right or remedy available to the CITY with regard to such breach or default. 6.13 Severability Page 9 of 11 If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 6.14 Notice Except as otherwise required by law, any notice or other communication authorized or required by this Agreement shall be in writing and shall be deemed received on (a) the day of delivery if delivered by hand or overnight courier service during AUDITOR's or CITY's regular business hours or (b) on the third business day following deposit in the United States mail, postage prepaid, to the addresses listed below, or at such other address as one party may notify the other: To CITY: Responsible Person: Dennis McLean City of Rancho Palos Verdes 30940 Hawthorne Blvd. Rancho Palos Verdes, CA 90275 To AUDITOR: Responsible Person: Kevin Pulliam Address: 8270 Aspen Street Rancho Cucamonga, CA 91730 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. Dated: VAVRINEK, TRINE, DAY & CO., LLP ("AUDITOR") By: /‹., ,--,,------ Printed Name: /6/1,-. /- /44 Title: a`4)e� By: Printed Name: Page 10 of 11 Title: Dated: CITY OF RANCHO PALOS VERDES ("CITY") By:Cgc-)6E--5-7" J Mayor ATTEST: APPROVED AS TO FORM: By: fir I_ City Clerk City Attorney Page 11 of 11 • r Exhibit "A": City's Request For Proposals Exhibit "A" • .r,�rf rf f• r'S�."f•,1Y'' ` f' TAT'•` `I��"` .,` J'•�'S', rr's• f•r�{ r Jr':.'�r, rrfJ J Yr r r� fJ • ✓✓ • • mmumpanumme4si •'••., .:;�..;;:�:';•—��`''..Ss r: '� �.,•.�' �JJ J rf�f f��•��J��J .�YJ'�; Y � f'F/ ��J,�f rJ:f J/• J y'Jr�jf , J rte'f ✓�j'� }f{� • f ffl •'!`f.�'r•r JJ r>f�� rJJ� fJ� fJ�� r f fJ.�JJ' Y+r J .f t �� •r' ��}l!r ��✓✓J" r��J� 41). :' f J{} ff JJJ,'yfr'ray f�fS'Y �lrr>'rf�f{lam,JJ� }�'i{� �Y fr rF.{•Y ��rr��f ��r✓J J JJ�r'Y r�f��. •f} t r r:'� � �'Y� � rrr. %•..} J J r'�rJ'��r r f�f�r�r:Y��r,!};�'Jfy,�J�r�'ff��J ��f Jr�, �;,;.;:;.;.:�J�r f�rJ ��1,��,r'.y'J��,yfrJ{r' f r�f f}:•%�J r�,l /frrtf �� J`'r'•r r fJJJ •f• r J�,` ��r � J J'r.'!ri• �� J r rr � JJ•J.•J�fJ i.J'J JrJf:J.J.f ,.1•:�::.�• J }��JJYJ••�'J�Jl✓,"•'••�JJ�y r��J•J• 1 '.J� IJ'J•J J�• ..•f �f r � r sJJ./��,��J''rrrr�J. f J rJ��•��J frJ�'J rJ r �t'�rN r{rJffi f J r 1 rlrf:fJ f r f rr,r.r rf• • J yr•��,,{{ r,'� �. ��•r•:,r{;.r,r,J•J,^:J f�rr�f r`J'r{r��JJ'1��f{�>r�%��{�'��,yrrrJ f•r J f'ii}'��J JrY,f• �J�T. Jiv• :f�`f f"fir,'f��r}} : J�✓r �J'r�y'//f Y fr f�J�1J. JJ, • A A • CITY OF • RANCHO PALOS VERDES REQUEST FOR PROPOSAL FOR PROFESSIONAL INDEPENDENT A UDI T SERVICES JANUARY 2013 Please Submit Proposals to: Kathryn Downs, Deputy Director of Finance & IT City of Rancho Palos Verdes, CA Finance & IT Department 30940 Hawthorne Boulevard Rancho Palos Verdes, CA 90275 Deadline for Submittal of Proposals: No later than 5 p.m. on Thursday, February 14, 2013 I. Introduction a. General Information The City of Rancho Palos Verdes (City) is requesting proposals from qualified Certified Public Accounting firms to audit its financial statements for the fiscal years ending June 30, 2013 through June 30, 2015 with the option of auditing its financial statements for each of the two (2) subsequent years as further discussed below. The audits are to be conducted in accordance with generally accepted auditing standards, Government Auditing Standards issued by the Comptroller General of the United States, the provisions of the Federal Single Audit Act, and United States Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. There is no expressed or implied obligation for the City to reimburse responding firms for any expenses incurred in preparing proposals in response to this request. Materials submitted by respondents are subject to public inspection under the California Public Records Act . unless exempt. Any language purporting to render the entire proposal confidential or proprietary will be ineffective and disregarded. During the evaluation process the City reserves the right to request additional information or clarifications from the firm. At the discretion of the City, firms submitting proposals may be requested to make oral presentations as part of the evaluation process. The City reserves the right to retain all proposals submitted and to use any ideas in a proposal regardless of whether the proposal was selected. Submission of a proposal indicates acceptance by the firm of the conditions contained in this Request for Proposal, unless clearly and specifically noted in the proposal submitted and confirmed in the contract between the City and the selected firm. A recommendation and proposed contract will be prepared for review and approval by the City Council at its March 19, 2013 meeting. The City reserves the right to reject any or all proposals. The proposal package shall present all inclusive audit fees for each year of the proposed contract term. City of Rancho Palos Verdes—2013 RFP for Professional Auditing Services Page 3 b. Term Of Engagement It is the intent of the City to contract for the services presented herein for a term of three (3) years. The City reserves the right to extend the term of the contract for two (2) additional one-year terms. c. Description Of Rancho Palos Verdes The City is located on a coastal peninsula overlooking the Pacific Ocean in Los Angeles County, 20 miles south of the City of Los Angeles. The City was incorporated September 7, 1973 as a general law city and operates under a Council/Manager form of government. The City currently has a land area of 13.6 square miles and a population of about 42,000. The City is primarily a "bedroom" community with relatively little commercial activity. The City's fiscal year begins July 1st and ends June 30th. The City has a full-time staff of 58 employees, a part-time staff of about 30 employees, and contracts for most of the City's core services. The City has one enterprise activity, the Water Quality Flood Protection program, to renew the City's aged storm drain system. The enterprise was established in 2005 and is funded by Storm Drain User Fees paid by property owners, which sunsets in 2016. Pursuant to redevelopment agencies being dissolved throughout the State of California, the City of Rancho Palos Verdes established the Successor Agency to the former Rancho Palos Verdes Redevelopment Agency (Successor Agency) on February 1, 2012. The Successor Agency is responsible for the unwinding of the former Redevelopment Agency's (RDA) assets, including land titles and notes receivables. Successor Agency records will be a part of the scope of the audit. The engaged audit firm will report directly to the City Council's ad-hoc audit subcommittee (composed of two council members) formed by the City Council. II. Scope of Services a. Scope Of Work i. Conduct one planning meeting and one exit meeting with the Audit Committee to answer Audit Committee Members' questions and to educate Audit Committee Members regarding the role of the Audit Committee and their personal responsibility as members, including their duty to exercise an appropriate degree of professional skepticism. City of Rancho Palos Verdes—2013 RFP for Professional Auditing Services Page 4 ii. Audit the financial statements of the City as well as the Successor Agency in conformity with general accepted accounting principles and other applicable laws and regulations, and issue an opinion thereon. iii. The auditor will prepare and publish a separate Improvement Authority audit report including separately issued financial statements. iv. Test compliance with the Single Audit Act and applicable laws and regulations. The auditor will prepare and publish a Single Audit Report including the appropriate schedules reports on internal control when federal expenditures meet or exceed the threshold • requiring a Single Audit. v. Test compliance with Article XII16 pertaining to the City's appropriation limit, and prepare a letter to the City Council regarding compliance. vi. Prepare a Management Letter that includes non-reportable recommendations for improvements to internal controls. vii. The firm selected may also be asked to examine or prepare other reports or perform other services as required. b. Reports To Be Issued i. Signed Independent Auditors' Report on auditor letterhead (electronic copy). ii. Independent Auditors' Report On Internal Control Over Financial Reporting And On Compliance And Other Matters Based On An Audit Of Financial Statements Performed In Accordance With Government Auditing Standards (electronic copy). iii. Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit Calculation (electronic copy). iv. Separately issued financial statements for the Authority (10 copies). v. Single Audit Report including appropriate schedules and auditors' reports, if applicable (10 copies). City of Rancho Palos Verdes—2013 RFP for Professional Auditing Services Page 5 vi. A Management Letter addressed to the City Council recommending improvements to the City's internal control that are otherwise non- reportable (electronic copy). vii. The auditor shall communicate in a letter to the Audit Committee, City Manager and the Director of Finance and Information Technology 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. Non-reportable conditions discovered by the auditor shall be communicated in the Management Letter, as noted above. viii. The auditor shall be required to make immediate written notification to the Audit Committee, City Manager, Director of Finance and Information Technology, and City Attorney of all irregularities and illegal acts or indications of illegal acts of which the auditor becomes aware. c. Additional Optional Services The firm may include a proposal to prepare the following reports for the City. The response should be included in a separate section of the proposal and include an outline of the process, as well as the all- inclusive cost for each report. i. Cities Annual Financial Transactions Report. ii. Annual Street Report to the State Controller. The City will consider responses to these additional optional services separate and apart from the responses for professional audit services. The City reserves the right to reject any and all responses to these additional optional services. d. Other Information i. The firm selected must acquire a City business license while conducting any work under the agreement. ii. The selected firm shall maintain minimum insurance coverage of $2,000,000 for professional liability, workers compensation, and comprehensive general liability during the entire term of the City of Rancho Palos Verdes—2013 RFP for Professional Auditing Services Page 6 engagement. Prior to commencement of audit services, the firm will be required to provide a certificate of insurance to the City. III. Time Requirements a. Proposal Calendar January 23, 2013 Request for Proposal issued February 14, 2013 Proposals due at 5:00pm February 25— February 28, 2013 Oral interviews March 19, 2013 Contract awarded by City Council b. Audit Calendar March 28, 2013 Management Staff available to meet for audit planning Mid to late April Records ready for interim review End of September Records ready for final audit Mid December Auditors' reports and separately issued Successor Agency and Authority financial statements due March 31 Single Audit Report due IV. Proposal Requirements a. Submit two (2) hard copies and one electronic copy (PDF) of the proposal to: Kathryn Downs Deputy Director of Finance & Information Technology City of Rancho Palos Verdes 30940 Hawthorne Blvd. Rancho Palos Verdes, CA 90275 No fax proposals will be accepted. Proposals received after February 14, 2013 at 5:00pm will not be considered. b. Technical Proposal Format i. Title Page Show the subject, name of the firm, contact information and date of submission. City of Rancho Palos Verdes—2013 RFP for Professional Auditing Services Page 7 • ii. Table Of Contents Provide a complete identification of materials submitted by section and page number. iii. Transmittal Letter Provide a general introduction, a brief statement of the firm's understanding of the audit services to be performed, a positive commitment to perform the service within the time period specified, and the name and contact information of the person authorized to represent the firm. c. Technical Proposal Contents i. Firm Qualifications 1. Provide general information about the firm, including the size of the firm, the size of the firm's governmental audit staff, the location of the office from which work on this engagement will be performed, and the number of staff to be assigned to this engagement. 2. Include resumes for the Partner, Manager and Senior Auditor that will be assigned to this engagement. Resumes should include all relevant governmental audit experience, education, relevant continuing professional education and an indication whether each person is licensed to practice as a certified public accountant in California. 3. Indicate how the quality and consistency of staff will be assured over the term of the engagement. 4. Include an affirmative statement that the firm is independent of the City, as defined by generally accepted auditing standards. 5. Include sufficient information regarding local government clients and dates served. Note which local governments receive CAFR awards from Government Finance Officers Association (GFOA). Indicate the scope of work, engagement partners, total hours and contact information. 6. Provide a list of at least five local government client references with contact information, including: address, name and telephone number of the audit contact person within the organization. The City reserves the right to contact any or all of City of Rancho Palos Verdes—2013 RFP for Professional Auditing Services Page 8 the listed references regarding the audit services performed by the firm. 7. Submit a copy of the report on the firm's most recent external quality control (peer) review, with a statement about whether that review included specific government engagements. Provide information on the results of any federal or state review of the firm's audits during the past three (3) years. Finally, provide any information regarding any disciplinary action taken or pending against the firm during the past three (3) years with state regulatory bodies or professional organizations. 8. Include information regarding other services provided by the firm. 9. If the firm will be subcontracting any portion of the audit to another individual or firm, the proposal must include a list of all subcontractors to be used. Include the nature and extent of work to be performed by each subcontractor, as well as qualifications. ii. Audit Approach And Timing 1. Provide sufficient detail about the firm's approach to the audit including: audit procedures, the extent of statistical sampling, the use of computers, type and extent of analytical procedures, consideration of laws, approach to understanding the City's internal control structure, assistance required from City Staff, and proposed segmentation of the audit. Segmentation should include hours by staff level required to perform the audit by classification and in total for planning, interim procedures, final audit, financial statement preparation and other report preparation. 2. Provide sufficient information to demonstrate an understanding of the objectives and scope of the engagement. Include the auditing standards to be followed and reports to be issued by the firm. d. Cost Proposal i. The cost proposal should contain all pricing information relative to performing the audit engagement as described in this Request for Proposal. The total all-inclusive maximum price is to contain all direct and indirect costs including all out-of-pocket expenses. City of Rancho Palos Verdes—2013 RFP for Professional Auditing Services Page 9 Include detailed information to support the maximum price including hourly rates and total hours by staff class, as well as incidental expenses for each aspect of the proposal. ii. Provide separate detail for the cost of anticipated meetings with the audit committee. iii. Include the standard hourly rates by staff class for other services requested outside the scope of this engagement, including general consulting and special audits. iv. The City will not be responsible for expenses incurred in preparing and submitting the proposal. Such costs should not be included in the proposal. v. Provide certification that the person signing the proposal is • authorized to represent the firm, empowered to submit the maximum price proposal, and authorized to sign a contract with the City. V. Evaluation Criteria a. Proposals will be evaluated based on the following criteria: i. The firm's independence, license to practice in California, and results of the most recent peer review. ii. Qualifications and related experience of the audit team to serve the City. iii. The firm's experience auditing California Cities iv. References of local government clients. v. Proposed approach to the City's audit. vi. Demonstration of understanding of the objectives and scope of the audit. vii. Commitment to conducting the audit in a timely manner. viii. Maximum fees to conduct the audit. b. Proposal Review City of Rancho Palos Verdes—2013 RFP for Professional Auditing Services Page 10 i. Proposals will be evaluated by City Staff including Dennis McLean, Director of Finance and Information Technology and Kathryn Downs, Deputy Director of Finance and Information Technology. ii. Staff will present its findings to the City Council for firm selection. The City Council will have final authority to award the contract. It is anticipated that a firm will be selected at the March 19, 2013 City Council meeting. VI. Contact Information Firms are encouraged to contact Kathryn Downs, Deputy Director of Finance and Information Technology at (310) 544-5216 or kathryndarpv.com, with any questions regarding this RFP or records maintained by the City. City of Rancho Palos Verdes—2013 RFP for Professional Auditing Services Page 11 Exhibit "B": AUDITOR's Proposal and Schedule of Hourly Rates Exhibit "B" ic4174;f7"/r-.:0;-. . •1 itri":-. ,... ,."//•;:...4,4,.;:,*4;,41{ 9),,,,n.'",„,,,.,,,, ,..„-,.,,,,. ,,,...,,..,,,,,,, ,„...,, :-.0, AA,,,,,//..--.-,e. ..,, r, r f.-;,/,„- .,,,A,v:,-;'0,,,,42,..vo,'.1 ,, • .,, - , :. (4."- .. 4 f-Y•: Section 5 -- Cost Proposal .e.,:▪ r▪.A. (I {/!r'J-/.! / f••,,•/.lr r J,,01.7./r 41/ '!;}nwf r i J.'l !1:444)-(0,9%,} fes/ 1�:! ' 4! `f ,, !: ;'>'V W e are firmly committed to providing a superior level of professional services that you ip. f:,'' 4f, :" both deserve and require ofyour auditors. We strive toprovide ex tional staff'� '..-'1'''''':74,;/;/' ! '�, . �-$ . � � q � f ff f�' =7 �:.4,: 'liii,,,-/r .quality, and value. Our rates are competitive, even With our depth of experience and f' r a y'"f 'r j V.,,,A •! /-. l .r commitment to ualx . iCf ., aft ,!r . , ! , f ?1;� rf �,?a,p -fm`s . '• ''' .0,,,-..,0--„,„,,,, ,,,•;,,y7,, `, .' Total Maximum Price i,„ >,f14�"/,f i%f r .. Fiscal Thad Thou Fiscal face! :W1;44,i. r � ;• ., ,�f' rear roar Poor Poor 1w '1`' f f 2012-2013 2011-2014 2014-.015 2015-016 2016,2017' y;.:,,,,,,,,',/ / . ! i ,s :• y '`�f PART ? •/ !; , / - ,dry. ,.•�. :4.;'2..V. . • Cite Audit-iadada GANN and MwOaneat I.dtcr S 21,700 ...1_____,_21700 $ 21,700 S 22,331, $ 23,022 4,,:.,,,,r' , r of ,,'�'/:' 4' . _ f� f;` r';fir f f'�' , n,,l.,dopmraU3n er A -(not faekdias a scparakiy lifted rt) ...______i_61 40 6,140 6140 6,324 • 6,514 f s• • f ,••'�-� ••.! f• t Authority 5 610 1 10 1610 5 776 5 951 r/ f'` •_ Leepnrelnea q _,..,`—,--,_, •6 ..,_:,�., ?X.-1,'/'; •,��.••- a5?' .t'. r••l 'r r'''op Slagle Audit•(per eaaior Program) 3,290 3,290 3,290 3,319 3,491 • • 955 927900 900 rf. ' ` ? f bleedep wwAudit Committee � :?$';' ' ' ' Total Part t i 37610 $ 37,640 0$ 37S ,. 36769 I 1 39,933r f r }}}}�� . � ie, #!b !i f : ,,;Jp,,,.// •/ PART II './i/,/ r /!'! •, f ,! f City's State Controllers Report 3,510, 3360, 3,510 3,667 3--a-- V.,71, 791 f ! ! , ' 1 4 Street Report 01 _____„_,1130 1,150 1.130 1.906 1,963 rfjej,/,:04 :!r!f r•yr•, ;/ Total Part n S 1430 S 5,430 $ 1,430 $ x,593 1.........d4...." 761 ./.7:, /: • �:� /'�`•; f/, ,a.• r.!�.. ,,,. , ,,,, Grand Total Part 1&Q ,s 43,070 i $ 43,070 $ 43,070 S 44,362 f 43,694 _______ !,...,. f.-,,, // .2_,,,., • �f /, „/ . r r , ,•,,,, ,-, 40FA . :14i:Z'e oc<:. ••yr"#.:0::,`A - . f4:40.` ..,14,.41.) d:0:4.:A i{f% •:,o, ,../.` f/-1,011 .ffeAuditors Standard Hourly Billing Rates;f9jAY ;?"./42) "4 �`�'�K.: �`f '/ f,}} POSITION 2012-2013 2013-2014 2014-2015 ..:,;?. ..:„,„.,,,„.,;,„,,,, :f::::• •f :•r� ::// •, ..„,,,, .7,. „), $ 225 $ 225 $ 225f ,_."-•17„ •� Partner 185185 185• : { ! ! manager f4▪ '�r• . . ^ i ! 165 165 165' f:Yff,:.:1 '.� � Supervisor /� : ` 120 120 120`f .� fYf'zf f =r � Senioralgrente4if0., rrf;g Sta7V 7V7V< 65 65 65 ff •�� rf •• � {f x Para rofessional: t � .rFi!;f� ? 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Section 5 -- Cost Proposal /4.. ,..,,A lila-• , ..,„,-,. ..,-3.0i f r' ' if f• t ,; '--/,s, rrrr.fti- .r ./. pr�rf � ,lf • • • ...r rf•r. ,-:t:rl•-•••Y ,..,: .: ..•.:, iv _. : .:•.f:}Y:T•r:,,.,V:f;�. �: .;fi,:„..•:.•f.:. l : Y,�r:•'' :�.:„:;m• wtinr ........!.....7,......t„.„.;:v � :.:: � ti •�:1�+Yf% � l'Jy'rr•Nr.:-:�1'{• } }•::}lrr:;�S;::.}:4:i:;:.�•tar. f.•f.:,ry:l:rr.r:'r.i},•:}••.:..f rir,t\•t.,.7,r�:::•.�.:.tiu.�j • „yrr • .,lj: vrr''Y•/ ?Trr ••.7l7Y!.XYtrJ r ' v . ' t•..{;r:!;,!• if� L.iw:i...tlifi'r�2tvirv.J 'A ', f' ffG{:u •r : il .d } 4f: 'ar: :•r'l:: hTofr rt? r 0.., Estimatedr ;f,,� Rate per) ff� Hours Total FeeHour0704/.. 0,—A0fr)2j Staff Classiication�; . • ft7•,f, ',eye,i • 7;"rf financial Audit 12 $ 2,700., J..• r,rf ff $ 225:0:/ye,r/ •r /� 'r Partner 16 2,960185,:„) ,r, .rW.,;,.1, f/ f � �r rr r' /, Manager • 40 6,600 r. „5,55t „4.,/./. ,/' ,/ / 165r � j `Jfr � ,f $ff ' Supervisor 120 40 4,800 r;,/ • 3,600 f Senior 90 40` Iif1,040/'f•� f, Staff 1665� ; �rf , . r} ;f ',/.� flClerical . •• af � 1 ../--1",. ,,. ,,;�rt} 4ffr 1 • $ 21 700 rf „'"",/,_,,,,,,7i, f ___=__________ Discount 164/ f r � Total Hours and Fee f fr • 17,/,,,,,,,,, rf J ....5.:4 ,,,,*, ,,,,,,47,:-...,:, r ,-,6,;:-', r '. r ,, ! .J�I• .f . � f � •i f ,.-:,5,,,,..,„,,f,,,:::.,,,,,..,..;; , ... ''' •„. y: .:• •? .:�rY. <::{ :::•.; i::{: • y :i :q¢ ..S•:f. � :ti �ma . :.►?r?1.•:r. :!•::4,..."/./.../;:::///.'".-:i, ..,,,,,,,./,„7,. ..,,,/,.,{ ;:� r •{ 1 } 'fyr ♦ •J:Jll... Tota ,..!::*,..1,..,,,',.. ;�• rJ ••�:r '',\••1 •i .. r.••.f.{ •.�r.- .:?n• : Yw :' : Yr,nrf •.vi.�.• r.•iii..,%.••Y�ii.r .•vlJ::;:::,JrJ•••. ..firr.\ .:• 1,70: r101ri�1 - Rate per Estimated y 04-.V.,c,;c • _ Total Feer • Hour HoursJ•. , f Staff Classification } ''''.4i'7' Jf ,_ •{ •¢f „7, r4 r if: ,: fp/A/ • $ 142 $r 225,�t��%%Jr� 740Partner 4 •• ' .(.45',.::,I % 185tffYJ ,,f,,,./., rl /,'.. • • a• i•r.rrr rf,,ir� '0f manager ger 165'fr :.= r▪f� � rfi,f.•:'f•` Supervisor 12frr � irfF 120 11,49908000 iiiiiftif }'rrfi, ff• Senor12 1,080,ti::frvi.. :fFr rff90• frf {fi' J/ /1 �� 65: : • f .� r % fti ffr r• rr ;1440 Clerical 1•,:gvrrfr ` 'f71t.44G�fr� / ,f,frf:/fr♦' ;f/ • :}r�� ff � rfr % � 44 $ 6140ff�0r��e• � 6 r . ` es� rN.00W-$414..0•0400.0:11,0 r -firilr; l {f':: Total Hours and Fee ':ti:f:=v'+r.::r:,. .irr}•. i%;'i.,•K:i,v v' ff r :fr: j lvi%'rVi ••f,,,',rr „.;i.r,;,rrr i•, f ; ff:trnr Y}fr r;::40. f�: ;',..0.,:: fi'f�A: v : .:4f•:./ /, ! .:•;1::114:0404%011.41, }.•.r:IV.�}}{;fir.r, v.•rj.ir•�<•f.•:•.:}r.:•i r {:•'•X} }f•f•?f;Yfr:}r. r r}:.rid r'•! 0140.talidgiOtTRIM f ''�v r: i,7':'4:fI.,::'f.•S, A4:r''rr:ti..g:;r.•ir:': ,r;Mr.':.r.•r.��vr rrJ.•.•.• •I•.•.•.•r .::;::r♦r.r::f?':r::;;.:r::.::•7+.'.:••::$::$:}%r::'•: ::r:f<:,{i✓::%:%r�C;:�}<• ;:;i.;:ff.•.:$j:�:•i��+fJ.4r�L•:v. 't}:;! :f•.:r•Y.}.f l:{- ., f1'.;:.%err..�•.•. f:.;v:•}:; �v,'rr. }ti ti :r'Jr.:} :i .:.ti;v F/.%f ti•":>.'f..;r, /s•:�••▪r.+•r:�'r�;., •;:1 i:•Y:•.Jf y!:yr•%.:vti;• .;••'•Y Y.• VIriY r :�:•:•:; :r}.•r:.::a��. f/�•rr'r.jrr :%♦•:i•:•r:•: %i i{iY'r':r'/iii?f�:ii:•irf}1Jri ji lf��'i'rY}r'i •.'r. J v.•..vr.:r.•.::v:.:•.\}' rirfr.�;�.f iir: r ..}:f:fiir:;.�.•.•;I.y,.;:f v;�.fII f t.rY.v.• :r }:},: ti. ;?:.i{:•.•}<ff f .if v;f'• •. ':. �}; l%. :%fir:ti'+i,'�,.}•:;:�▪ :f:::v.•: }}fir::: :;i,:; :is%ti:•{r!y r i v:, ::} .: 34 • Og:;::14**/:;,..''.) fiF'� f•L�r�r�� ,,',.,..4 f fr:r�J: SrrJ�{f{{�Y�r�f j 44-,,,, ff,:*,,,: rr4741j ::*ttAKA-...,"../.;,,,r,,,,,? RI: %,?-:, i ::;: r1}or; rf!.: Section 5 - dostPro osal f �:fAr• !/ppcj ;;:•O t 'r: % <"r::t:.:r..rri . rr::r:%�:3 ti 1. • ;✓Ys:-:•♦rYi�• 7;. . : irrrr:.i•.:{rr: r6»i'r:�4 •fti•:r.:Y:•i.•v•:rr•.;.r+}:..jr i•rf J,r}:r;.•e. :{.i. ,;{;i:r,!i aJ +r.�f...;Jh .v• {•::•:.,1::kir:rR%:A.f ? .:',♦i{•..:l.rt,{r{i•.::l♦r:tivrw• r } ri,. i.:•-iir .r..f7}- ::}. r•J3rrwr.ry:' Av:ri.•:..r JS. r1 � . :.ry }.r.4f : \.;:...:•:.•a.:•i:,::::::: Total! •rti 'f'•}v:rv• .¢ 1 : �'' •rf.vrtY.f:v{•.r.•.L�:i:0.*.u: Estimated Total FeeJ .:gf! 43 Hours 1111::$11",,,',`",/,51,1, ;:,:;,'',.', rfr r✓ ,•, wr y vlJ •Y:wrif1tii Y�. Y6i' }: {F.S:; . .:.,r•r:.•.rr:}::,1!r 1fiis � rrr: �fff �� f�f ��,:,,,rfrte /"...../11, r, ',fiq:•i ` • /,,,, ._ -; 4":. : r .frfStaff Classification RaHtoeuprer iii L•V:31.450;`;. / r `� ` 900r" �! 4 $ki,.:.):„.0) ,/ fi�,rff f: $ 2254 740: rrr,' 185 1,320 • 8FParinannecrial Audit 1,440 -f � f'j , , r .i f fu. f�•,;$1 : '..57:.;;>, . 165 12 -1 1r rr ! Manager 1,080!r j ' •` . ;4, 120 12 r ▪ r Supervisor r r' 90 130• f r 4 2 f � � � r Senlorf ./,,,,,,,j,/,'„,/,2,4 ! 65fv• fi , fJ Staff'' ff / r Clerical 5,610 ig !fir ' .' ,� 42 $4ff .••,, $ Jrf �7_��,fffi ; y{ rrr 'rfit��. fr :N fr: • �////1'> Total Hours and Fee � Fr � r ��. . • ' . . :. 4 i : •}•r.•:: {.:•: ',., ;3r ,.ti.ti..:.:..:..xf,4 /�. �r.f n•{V;��iP�ivY w:•.^ Fr�na ::•:::;rf f •,� • � '•� r:Y.•'.Y.? ri ? Y ��:rr..�i.;:S%• !tlL4Y.••.:'vr.::.Vo.•. • r4. : r,��ti . v�:v.}%i:::fi;.. ,.;.::: t•.:�? � • r. :•} }.' :•.v.. :ih „ar ..;,y..t.•s./ lf• .rfir!f � Y •:{. • .re. ♦! r �,:•YrL.•r♦n}iTotal�ll� f �Y' !r v :t : hL •;�.r: vr:..yGff r fff • ii � :%:•R••: %4.•:::rr .. Estimated:rfY rr ;/,lr • iRate per Total Fee- HoursHour.,.,:-...‘4.7, / ;r • j • <:: lr. �Jr�"':•-,-/P5,0,0"..2;f4. • Staff Classification 450rf� • r�!� r- 2 $xv` r▪ r 1r $ 225 3702<;_f'f '� r r ' Fi660 • iiii >417/(0.;.,•4/7"1-4 r ';/% 7 /4 185 4Soe,,,y. rrr Par' Audit ' 165 960: r ' manager 8i' �• 1fir120 720 v•;r3f' ••;}{1. � ifv r.}•}:: 8:� .' ` � Sruerviso• • � 1302% { 7 • Senior 65f}Nf .� avva Stafff`;yrClerical`' - 3270f: � 26 $xflr! : •• .f�/f.:**:::,4::;•40;-:-:,,,,,,s-�� f �.":tyC;ivf , va t. fi fir fijTotal Hours and Fee} �r f ! r ff .^ f $1{Sri ,r,ii:%v. !}:i �:041r• J•;r: rY, .rr �� }v'i: Y; �fl�l�1!liO: lrh•ill :r J1{}vv •:•:v' v • f- :r5r.i ::i : :: fil:w�.f . , r:y}firfY:::,,,r: h Nr r•rl�{{ } /•ff � y/ • :• yv yi , ;•• :• ':{''v:'r•... i� ri ..•:::•S} tir•;',, :.f4: rrtr. iiiiiKii YLfi5T• %;} . • : . n • ;ti :0: : r :: r!.. • •r '• tiiI :• f••fff' l'r; !{frr1mr �i: r•iYrY.;. v ::rr ��!ti'�r�Nt = � ;{Jfr1:04111411020.111 35 .......„,,......,....,...t......„$.,...,... .......,,,,::,:::,:.,::::::::::,„::::::::::::::,14:w:::::,, ......,..,...„,..:.„,...,.x.,5.,,..50„..,:......::::...: i: :.„...::::r:%:::::':vti;:;�5::::ii:ff:} ::::r,':S'f': . ter:...., ..• .�:{rr.. :{{{rr:.i.J:,.,;:.,•.:r::f • ��r Flr}}r//•-a#711"..7..,f40):#1,4• r,,ere / 1 . , � f/f ijS .1t,;',-;/",.. f f •,/ •lir rr • l" ryo ,i., ii f` Section -- Cost Proposal rfi.0%• : f f/•r ..,.rJ • '..1.4 •: r iYY : ;1/4.44,00 ;."- ::•: ::.s' f ,rp . :••:tv,•r:^.}r:•:.•...{iv::...{:;i {'!ir .mo}r•.: t ;•.: {{ !f:{ . �':. •...Ir:••.�rr....f* - �� ,,ff • r� ::3::: }:r^':�}-Y..y:• n� :r.Y .. ':i?.:.t!:i'::•S.v)Yaa.l:CiY4` fffi0n s./ i .•a ti{:vry.x:Y..,,,,:+.,::... :::..{..i.},,1.✓y•/vr4.r :y } '. . i...: {fir•r:.v.v:.:•}':.r{•f.r��.r•.r0:041i, f .• y ` .x::•.�.:ir:{•;:;..{.:r. :r.". :i:rir:r. :vi�......•.•t.:.�.:r•L. Total :�.: o�rr:•':} Z: r :•rliiif:p}.:!Jr�1S: r011rf��!11i� wrookvo..... :.!}. K• vr .• . .Y ..,.}r• r.}'r:f•}' /,.,::,,,,:.,/,/ fr .C': 4:4 {•f Cl�1:�J.� :L}� Estimated�ff ..iYr �a �CAr3 • hateper Total Feev } F �• r' r.trb S}a:�r .. • Hours '`r . 7 ,/<,i2,.,,,-...--:„...5- j / • vfl Staff Hourf, •.`f- A ,,,‘0/ `�.F;;''///'''/ ' ; . Clasification 900' { �'�*, 4 $�: . -r/ 1 225 0 • or •f, 4f • A Financial Audit $ 0{� 7.,f 185r •f - f;' wfa {. Partner 1650 �f . � 5/r r,flr.•4rf.}/+.Y.•:r!fy�r. ff fi�r � ' �:•: :. S. :ti•. •.. : ::� ;":•:.;:;.:1. .7�.:••.,.0••tr 4. • :..0, ' � � f � Manager 1201 � � �� ;rf •. fr.,.- :::•,),(:,:,/ 0r � � ��°-� Supervisor 90 via ti,"� fxr Seior65-• fj ff 'fl/ rrStaff p_ `f f1ffClerical $ 900:,;(,.1...,;:::,,, ,,),`�rfF24'. ./;:/;/,4-.02*..1, Sigr f and Fee/` • , • Total Hours f /i: .,r 27A,!' 40,,,oy.. ...:-/-1; r. :ri � v :.{:•,::;¢•.r ?i .;�fYh.. ..v;::�:r ::f}• :.;•;:i:• }};,: ::: IA*7 /elk ':...-"o-f.. ./,'0• ":„ 1f {•} , rr,.:r..,r••;$: n•v.:~,:r:t. v:y,::_.,)11;M;::-i:�?::•.vr.•r! r *$•:.:,:.kr,S:.::.:2:i:a::.•_.,.r}/1/e.0',,,,,/�i i �♦ •�r } h:. . r,,.rf:::.•Z::.::;{� �.•:•.,�vtirav'.::,: •;rb:':Y••:P•�': r:'•:,•{. {.{r. �.5r .:y�:f` r:J:.In:.,}•.T :•�..t7 ;.a .r•. :: •C..��: } .....C��:{•}::ir•tir•:\:: ti•r.•. i •r.w. r{v:v.:'•:t}k{.w.,,,„......41,..," M.' .....:,.:4....,....„......,.,...,..i„.,..„...:..r f� •� ��/ .f. :' :'Y•'•:rr:.��....::�r �M :•.... V�•'. ^••r,r:rr !: : ..•.•.'a�•i:jr'�•4a•:.rEstimated/ f rrr,l •.}': :it�r.i•.{..: r:. rTotal FeeRate per(.• •:� ' r ti�.a : rJ . Fours.w ..``{. ! ',,-.fr 1ff�YHourh.fiti*re*el.rg,:iqff1/41 Total s '1i{i,/f/ r.: � Y; {r ',1:r1'{'Yif . fr f Classification 450:; iagr: f:rrf `. 2 $�Yf {:rfi/ff� f� r 1,480} :��•_rd/: $ 225 •8. Atitif al Audit 1,650r ' 1'' •. Financi185 10,:.ff1 r � Partner q4f* J120` { rorSupervi{ r � r f ...,..-v 4: }f1 .�f�:� f��, � „; Senior r 65• fr1 , fig / Staff, 3,580/ 7 ClVi1CQl $Sf:, f/i• riff 20lf. : -,4,kic1Ise;%/{/ifr/• , fr1/f%fr/ r1irffF�lf;l .•ffA'ff m �j/ 1 ;::: /ik:,}rir:}W.AM/41.4:-AgyOR:::;4:,1 4 .f .}• .fe1,,,fY'. �r./fr '.?i •�.,. ,, ,: { r ~: t4 ;:'YIr :iy :,.:i'}rf 4:::;i w rii.* ,_ rrrr . :• Total Hours and Fee : •r{4.47,*/! Si Sr,:•:'f:::▪.V !, --/.. is•}r•i:::://lit.•.j'.w•.}',. ,• } •r,•/%,.: k::::{•I.: i.fY/:/i•. f .:M}'if:r.: Y.'{ti;:r'�{::' �•}:i. v;•/:::•:}f:1i`:rrfv{% ' •:r :• ":,_::,:),;.410,43:4:•4� 'r:,ff�/fr•r .r�/4�ri.;f}rrYrirrr •l/Yf:.rs{'r : /''f::��{l;.:: r}:•1r/}/:•''ry;;} i:f:;r ikiti{ :r ti - ▪ ••ri}▪r}••}til:•r r ,`% i. },r•�:r '!1•i I�, :,•} iY Y•yr /rY:% '▪i�fF-::i•fgafff?fY ▪ } vvri. •iY // rYf �� iinlift?"Itmt,.:::::x0.:ak:+:-.e:03 r1 :�▪ ,ii: .•:•vf:x1f i f l.�; • ti•r:..•:�:f fi . :./:t. :. . {•'J/�t•'alf�:{r.i.'t{rC•Ii �:;:}r::I▪'1..• :, '*Yfi .:•r,:-:*:^rrrY }rrr. Cr :•:: :r:r:••f'r•. • 36 {ri:'•:r:'}ti7r:ti▪r,:•`�'}•'%'r'':':f�S?'fii r r�i; i}:/r:;rf'r}f{.;:{r{f?:;1;i:f 1 x:.,K,;riii,.{}r.; f , •• _ ! !r }r/ y 301117,7:0;i:'("0,:111-4 •:0:.�� f " 414,ff• �Yr •i,k, 1:44 .fr • ii. !r , (((e.„;'''': Section 5 - Cost Pr o ti•or:. sal /fE � � 'r '/.fifrF3; r } ffr • ! /r•„rekf �.62,/. . ..,p,-7,41 ..v./10' 'A: ,,://ez �r v • v: r.nnrr.• d•:.r.y:ws •.rrt.vn}}'.'r.v{?vr.vr..v}.+v}:r.•..rf;.r : vd.ikv ::;:v.3 .� .vv:r•::V};� i� +..P'1;Y•A:F�r:r•yi rwi'•.}.::. r}wvti.:w i:•v'r.�:i}:w t=r•.�w:n..wY..•✓r : .r r.. ,,,,,,,/,‘” . 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Exhibit "C": Annual Engagement Letter Date: Dear Mr.McLean: You have requested that Vavrinek, Trine, Day & Co., LLP (hereafter known as "we," "us" and "our") audit the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Rancho Palos Verdes (hereafter known as the"City," "entity," "you," "your," and "Management"), as of June 30, 2013, and for the year then ended, and the related notes to the financial statements, which collectively comprise the City's basic financial statements. In addition, we will audit the City's compliance over major federal award programs for the period ended June 30,2013. Also,we will perform agreed-upon procedures with respect to the City's calculation of the GANN Limit. We are pleased to confirm our acceptance and our understanding of this audit engagement by means of this letter. Our audit will be conducted with the objective of our expressing an opinion on each opinion unit. Accounting principles generally accepted in the United States of America require that certain required supplementary information (RSI), such as management's discussion and analysis (MD&A) be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. As part of our engagement, we will apply certain limited procedures to the required supplementary information (RSI) in accordance with auditing standards generally accepted in the United States of America. These limited procedures will consist primarily of inquiries of management regarding their methods of measurement and presentation, and comparing the information for consistency with management's responses to our inquiries. We will not express an opinion or provide any form of assurance on the RSI. The following RSI is required by accounting principles generally accepted in the United States of America. This RSI will be subjected to certain limited procedures but will not be audited: 1) Management's Discussion and Analysis Supplementary information other than RSI will accompany the City's basic financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the basic financial statements and certain additional procedures, including comparing and reconciling the supplementary information to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and additional procedures in accordance with auditing standards generally accepted in the United States of America. We intend to provide an opinion on the following supplementary information in relation to the financial statements as a whole: 1) Combining and Individual Fund Statements and Schedules 2) Schedule of Expenditures of Federal Awards Schedule of Expenditures of Federal Awards We will subject the schedule of expenditures of federal awards to the auditing procedures applied in our audit of the basic financial statements and certain additional procedures, including comparing and reconciling the schedule to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and additional procedures in accordance with Exhibit "C" auditing standards generally accepted in the United States of America. We intend to provide an opinion on whether the schedule of expenditures of federal awards is presented fairly in all material respects in relation to the financial statements as a whole. Also,the document we submit to you will include the following other additional information that will not be subjected to the auditing procedures applied in our audit of the financial statements: 1) Introductory Section 2) Statistical Section Audit of the Financial Statements We will conduct our audit in accordance with auditing standards generally accepted in the United States of America(U.S. GAAS) and Government Auditing Standards of the Comptroller General of the United States of America; the Single Audit Act Amendments of 1996; and the provisions of OMB Circular A- 133. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to error, fraudulent financial reporting, misappropriation of assets, or violations of laws, governmental regulations, grant agreements, or contractual agreements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Because of the inherent limitations of an audit, together with the inherent limitations of internal control, an unavoidable risk that some material misstatements may not be detected exists, even though the audit is properly planned and performed in accordance with U.S. GAAS and Government Auditing Standards of the Comptroller General of the United States of America;the Single Audit Act Amendments of 1996; and the provisions of OMB Circular A-133. In making our risk assessments, we consider internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. However, we will communicate to you in writing concerning any significant deficiencies or material weaknesses in internal control relevant to the audit of the financial statements that we have identified during the audit. We will issue a written report upon completion of our audit of the City's basic financial statements. Our report will be addressed to the governing body of the City. We cannot provide assurance that unmodified opinions will be expressed. Circumstances may arise in which it is necessary for us to modify our opinions,add an emphasis-of-matter or other-matter paragraph(s),or withdraw from the engagement. In accordance with the requirements of Government Auditing Standards, we will also issue a written report describing the scope of our testing over internal control over financial reporting and over compliance with laws, regulations, and provisions of grants and contracts, including the results of that testing. However, providing an opinion on internal control and compliance over financial reporting will not be an objective of the audit and,therefore,no such opinion will be expressed. Exhibit "C" Audit of Major Program Compliance Our audit of the City's major federal award program(s) compliance will be made in accordance with the requirements of the Single Audit Act, as amended; and the provisions of U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations; and will include tests of accounting records, a determination of major programs in accordance with Circular A- 133,and other procedures we consider necessary to enable us to express such an opinion on major federal award program compliance and to render the required reports. We cannot provide assurance that an unmodified opinion on compliance will be expressed. Circumstances may arise in which it is necessary for us to modify our opinion or withdraw from the engagement. Circular A-133 requires that we also plan and perform the audit to obtain reasonable assurance about whether the entity has complied with applicable laws and regulations and the provisions of contracts and grant agreements applicable to major federal award programs. Our procedures will consist of determining major federal programs and performing the applicable procedures described in the U.S. Office of Management and Budget Circular A-133 Compliance Supplement for the types of compliance requirements that could have a direct and material effect on each of the entity's major programs. The purpose of those procedures will be to express an opinion on the entity's compliance with requirements applicable to each of its major programs in our report on compliance issued pursuant to Circular A-133. Also,as required by Circular A-133, we will perform tests of controls to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements applicable to each of the entity's major federal award programs. However,our tests will be less in scope than would be necessary to render an opinion on these controls and,accordingly,no opinion will be expressed in our report. We will issue a report on compliance that will include an opinion or disclaimer of opinion regarding the entity's major federal award programs, and a report on internal controls over compliance that will report any significant deficiencies and material weaknesses identified; however, such report will not express an opinion on internal control. Management's Responsibilities Our audit will be conducted on the basis that management acknowledge and understand that they have responsibility: 1. For the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; 2. For the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to error fraudulent financial reporting, misappropriation of assets, or violations of laws,governmental regulations,grant agreements,or contractual agreements; 3. For safeguarding assets; 4. For identifying all federal awards expended during the period; 5. For identifying and ensuring that the entity complies with laws, regulations, grants, and contracts applicable to its activities and its federal award programs;and 6. To provide us with: a. Access to all information of which [management] is aware that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation,and other matters; b. Additional information that we may request from [management] for the purpose of the audit;and Exhibit "C" c. Unrestricted access to persons within the entity from whom we determine it necessary to obtain audit evidence. With regard to the supplementary information referred to above, you acknowledge and understand your responsibility (a) for the preparation of the supplementary information in accordance with the applicable criteria, (b) to provide us with the appropriate written representations regarding supplementary information,(c)to include our report on the supplementary information in any document that contains the supplementary information and that indicates that we have reported on such supplementary information, and (d) to present the supplementary information with the audited financial statements, or if the supplementary information will not be presented with the audited financial statements, to make the audited financial statements readily available to the intended users of the supplementary information no later than the date of issuance by you of the supplementary information and our report thereon. In addition, as required by Circular A-133, it is management's responsibility to prepare the schedule of expenditures of federal awards in accordance with Circular A-133 requirements, follow up and take corrective action on reported audit findings from prior periods and to prepare a summary schedule of prior audit findings, and follow up on current year audit findings and prepare a corrective action plan for such findings. Management is also responsible for submitting the reporting package and data collection form to the appropriate parties. Management will also make the auditor aware of any significant vendor relationships where the vendor is responsible for program compliance. You agree that you will confirm your understanding of your responsibilities as defined in this letter to us in your management representation letter. As part of our audit process, we will request from management, written confirmation concerning representations made to us in connection with the audit. We understand that your employees will prepare all confirmations we request and will locate any documents or invoices selected by us for testing. If you intend to publish or otherwise reproduce the financial statements and make reference to our firm, you agree to provide us with printers' proofs or masters for our review and approval before printing. You also agree to provide us with a copy of the final reproduced material for our approval before it is distributed. Vavrinek, Trine, Day & Co., LLP has owners that are not licensed as certified public accountants as permitted under Section 5079 of the California Business and Professions Code. It is not anticipated that any of the non-licensee owners will be performing audit services for the City, except in connection with the preparation of the State Controller's Report. Fees and Timing The timing of our audit will be scheduled for performance and completion as follows: Begin Complete Document internal control and preliminary tests June 2013 July 2013 Mail confirmations July 2013 Perform year-end audit procedures (onsite fieldwork to be September 2013 October 2013 completed in September) Issue audit reports* November 2013 December 2013 Exhibit "C" *Single Audit March 31St. Kevin Pulliam is the engagement partner for the audit services specified in this letter. His responsibilities include supervising Vavrinek, Trine, Day & Co., LLP's services performed as part of this engagement and signing or authorizing another qualified firm representative to sign the audit report. Our fees are based on the amount of time required at various levels of responsibility in accordance with our proposal and are defined in the Audit the Agreement. Invoices will be rendered each month as work progresses and are payable upon presentation. We will notify you immediately of any circumstances we encounter that could significantly affect our fee estimate. Whenever possible, we will attempt to use the City's personnel to assist in the preparation of schedules and analyses of accounts. This effort could substantially reduce our time requirements and facilitate the timely conclusion of the audit. Other Matters During the course of the engagement,we may communicate with you or your personnel via fax or e-mail, and you should be aware that communication in those mediums contains a risk of misdirected or intercepted communications. The audit documentation for this engagement is the property of Vavrinek, Trine, Day & Co., LLP and constitutes confidential information. However, we may be requested to make certain audit documentation available to a regulator or its designee, a federal agency providing direct or indirect funding, or the U.S. Government Accountability Office pursuant to authority given to it by law or regulation, or to peer reviewers. If requested, access to such audit documentation will be provided under the supervision of Vavrinek, Trine, Day & Co., LLP's personnel. Furthermore, upon request, we may provide copies of selected audit documentation to these agencies and regulators. The regulators and agencies may intend, or decide,to distribute the copies of information contained therein to others, including other governmental agencies. We agree to retain our audit documentation or work papers for a period of at least seven years from the date of our report. Further,we will be available during the year to consult with you on financial management and accounting matters of a routine nature. With respect to any nonattest services we perform, the City's management is responsible for(a) making all management decisions and performing all management functions; (b)assigning a competent individual to oversee the services; (c) evaluating the adequacy of the services performed; (d) evaluating and accepting responsibility for the results of the services performed; and (e) establishing and maintaining internal controls, including monitoring ongoing activities. During the course of the audit, we may observe opportunities for economy in, or improved controls over, your operations. We will bring such matters to the attention of the appropriate level of management, either orally or in writing. We agree to retain our audit documentation or work papers for a period of at least seven years from the date of our report. At the conclusion of our audit engagement,we will communicate to the Finance and Audit Committee the following significant findings from the audit: • Our view about the qualitative aspects of the entity's significant accounting practices; • Significant difficulties, if any,encountered during the audit; • Uncorrected misstatements,other than those we believe are trivial, if any; • Disagreements with management, if any; Exhibit "C" + ,. w • Other findings or issues, if any, arising from the audit that are, in our professional judgment, significant and relevant to those charged with governance regarding their oversight of the financial reporting process; • Material, corrected misstatements that were brought to the attention of management as a result of our audit procedures; • Representations we requested from management; • Management's consultations with other accountants, if any;and • Significant issues, if any, arising from the audit that were discussed, or the subject of correspondence,with management. In accordance with the requirements of Government Auditing Standards, we have attached a copy of our latest external peer review report of our firm for your consideration and files. Please sign and return the attached copy of this letter to indicate your acknowledgment of, and agreement with, the arrangements for our audit of the financial statements compliance over major federal award programs including our respective responsibilities. We appreciate the opportunity to be your financial statement auditors and look forward to working with you and your staff. Respectfully, Kevin Pulliam Vavrinek,Trine,Day&Co.,LLP RA:gbl 130223 Attachment RESPONSE: This letter correctly sets forth our understanding. City of Rancho Palos Verdes Acknowledged and agreed on behalf of City of Rancho Palos Verdes By: Title: Date: Exhibit "C"