RPVCCA_CC_SR_2013_06_18_N_Professional_Indepenent_Audit_ServicesCITY OF
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
REVIEWED:
HONORABLE MAYOR & CITY COUNCIL MEMBERS
DENNIS McLEAN, DIRECTOR OF FINANCE & /~
INFORMATION TECHNOLOGY ~
JUNE 18, 2013
PROFESSIONAL INDEPENDENT AUDIT SERVICES
CAROLYN LEHR, CITY MANAGER o_Q__
Project Managers: Kathryn Downs, Deputy Director of Finance & Information
Technology d
Ryan Mills, Senior Administrative Analyst (r/
RECOMMENDATION
Approve the proposed agreement with Vavrinek, Trine, Day & Co., LLC for general auditing
services for a term of three (3) years with the option for two (2) additional one-year
extensions, for a total of five years.
BACKGROUND
The City has received its independent auditing services from White, Nelson Diehl, Evans
(White Nelson) since 2008. Services included the audit of the City's financial statements, a
Single Audit offed era I financial assistance (when required), preparation of the City's State
Controller's Report, and other minor services related to the City's financial reports. The
agreement with White Nelson was outlined for three (3) years with the option of two (2),
one-year extensions for a total of five years. Upon completion of the contract, Staff began
the formal bidding process to potentially select a new auditing firm.
DISCUSSION
On January 23, 2013, Staff issued a Request for Proposal (RFP) for professional
independent audit services (Attachment 1) to twenty-two (22) different auditing firms that
were listed in the California Society of Municipal Finance Officers (CSMFO) directory
(Attachment 2). Along with posting the RFP on the Finance department's website, the City
also responded to requests from other accounting firms to participate in the bid process.
The details of the Scope of Work can be found in the RFP (Attachment 1 ).
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INDEPENDENT AUDIT SERVICES
June 18, 2013
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At the deadline of February 14, 2013, five (5) proposals were received by Staff which are
listed below (in alphabetical order).
• Brown Armstrong
• Rogers, Anderson, Malody & Scott (RAMS)
• Van Lant & Fankhanel
• Vavrinek, Trine, Day & Co. (VTD)
• White, Nelson, Diehl, Evans (City's current auditors)
All proposals were scored and weighted on the set of qualifying criteria as outlined in the
RFP. Staff recommends VTD to perform the City's auditing services, as they scored the
highest out of the five bids; with confirmation from Staff that VTD is well qualified to
perform th~ City's auditing requirements. VTD served as the City's auditor from 2000-2008
in which Staff was pleased with their services.
As with previous agreements, Staff is recommending an initial three (3) year agreement
with the option for two (2) one-year extensions, for a total of five years.
FISCAL IMPACT
The draft FY13-14 budget document includes an allocation of $44,600 for audit services
(City and Improvement Authority combined). This amount is adequate for the proposed not
to exceed contract amount of $43,070. Actual audit services performed during FY12-13 is
expected to be about $42, 115.
ATTACHMENTS
Attachment 1 -Professional Auditing Services Agreement (PSA) between the City and
VTD (included in the PSA is the Audit RFP)
Attachment 2 -List of Audit Firms that were emailed the Audit RFP from the City.
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ATTACHMENT NO. 1
Professional Auditing Services Agreement
between
The City of Rancho Palos Verdes
&
Vavrinek, Trine, Day & Co., LLP
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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 consultants/contractors, or governmental agencies, or any other delays beyond
AUDITOR's control or without AUDITOR's fault.
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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.
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ARTICLE 3
INDEMNIFICATION AND INSURANCE
3.1 Indemnification, Hold Harmless. and Duty to Defend.
To the maximum extent permitted by law, CONSULTANT 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 "lndemnitees")
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 CONSUL TANT, its officials, officers, employees or agents in connection with
the performance of this Agreement, including without limitation the payment of all
consequeritial damages, attorneys' fees, and other related costs and expenses, except for
such Claims arising out of the sole negligence or willful misconduct of the lndemnitees.
With respect to any and all such Claims, CONSUL TANT shall defend lndemnitees at
CONSUL TANT's own cost, expense, and risk and shall pay and satisfy any judgment,
award, or decree that may be rendered against lndemnitees. CONSULTANT shall
reimburse lndemnitees for any and all legal expenses and costs incurred by each of them
in connection therewith or in enforcing the indemnity herein provided. CONSUL TANT's
obligation to indemnify shall not be restricted to insurance proceeds, if any, received by
CONSUL TANT or lndemnitees. All duties of CONSUL TANT 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.
If a "claims made" policy is provided, such policy shall be maintained in effect
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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.
3.8 Primary Coverage
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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.
ARTICLE4
TERMINATION
4.1 Termination of Agreement
(a) This Agreement may be terminated at anytime, 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.
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.
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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.
6.1 Representation
ARTICLE 6
GENERAL PROVISIONS
The CITY representative shall be the Director of Finance & Information
Technology or his or her designee, and AUDITOR shall notify CITY of AUDITOR's
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
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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
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.
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(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' 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.
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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
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
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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:
To AUDITOR:
Responsible Person:
Address:
Dennis Mclean
City of Rancho Palos Verdes
30940 Hawthorne Blvd.
Rancho Palos Verdes, CA 90275
Kevin Pulliam
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: ___________ _
Dated: ------------
VAVRINEK, TRINE, DAY & CO., LLP
("AUDITOR")
By: ____________ ~
Printed Name: ---------
Title:------------
By: ____________ ~
Printed Name: ---------
Title: ___________ _
CITY OF RANCHO PALOS VERDES
("CITY")
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Mayor
ATTEST: APPROVED AS TO FORM:
City Clerk City Attorney
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Exhibit "A":
City's Request For Proposals
Exhibit "A"
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Exhibit "B":
AUDITOR's Proposal and Schedule of Hourly Rates
Exhibit "B"
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Exhibit "A":
City's Request For Proposals
Exhibit "A"
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CITY OF
RANCHO PALOS VERDES
REQUEST FOR PROPOSAL
FOR PROFESSIONAL INDEPENDENT AUDIT
SERVICES
JANUARY 2013
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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
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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
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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 Page4
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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 XlllB 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 Pr9cedures
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
N-22
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 Page6
N-23
engagement. Prior to commencement of audit services, the firm
will be required to provide a certificate of insurance to the City.
Ill. Time Requirements
a. Proposal Calendar
January 23, 2013
February 14, 2013
February 25 -February 28, 2013
March 19, 2013
Request for Proposal issued
Proposals due at 5:00pm
Oral interviews
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
N-24
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
N-25
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
N-26
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
N-27
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
kathrvnd@rpv.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
N-28
Exhibit "B":
AUDITOR's Proposal and Schedule of Hourly Rates
Exhibit "B"
N-29
Section 5 -Cost Proposal
We are firmly committed to providing a superior level of professional services that you
both deserve and require of your auditors. We strive to provide exceptional staff,
. quality, and value. Our rates are competitive, even with our depth of experience and
commitment to quality.
Total Maximum Price
Fhu:a/ FUca/ FUcal FUca/ r .. r:a1·
y.., Year y...,. y.., y..,.
2011-2013 201if-2014 Z0/4-2015 2015-2016• 2016-1017•
PART!
City Audit· in dudes GANN and Management Letter 21700 21,700 21700 22,351 23022
Redcvelopmcnt/Succe1sor Agency .. (not induding a separately issued report) 6140 6140 6140 6324 6~14
Improvement Autbority S610 S610 5610 s 778 5951
Single Audit~ (per major program) 3290 329-0 3,a9-0 3~89 3491
Meetings with Audit Committee 900 900 900 927 955
Total Part I 37,640 37640 37640 38 769 39,933
PART II
City's State Controllers Report 3~80 3~80 3~80 3[!!7 3,798
Street Report 1850 1850 1850 1906 1963
Total Part II 5430 5430 5430 5 593 s 761
Grand TotaJ Part I & II $ 431070 43,070 43,070 44~62 45,694
Auditors Standard Hou riv Billine: Rates
POSITION 2012-2013 2013-2014 2014-2015
Partner $ 225 $ 225 $ 225
Manager 185 185 185
Supervisor 165 165 165
Senior 120 120 120
Staff 90 90 90
Paraorofessional 65 65 65
33
N-30
Section 5 -Cost Proposal
::111fi1t1~;1e!fi(E«1!ii~i'.l!f(&t:"1t:6'.t:n1m1:};:;:;~;im;::iiit1~ill:l:;:::;rn:::::rn:@J:::M1t~=1I:':::;:::;::1:t:\il:~:'~:1r;;~:::;m::=::i:;m=:,:~
Staff Classification
Financial Audit
Partner
Manager
Supervisor
Senior
Staff
Clerical
Discount
Total Hours and Fee
$
Rate per
Hour
225
185
165
120
90
65
Total
Estimated
Hours
12
16
40
40
40
16
164
Total Fee
$ 2,700
2,960
6,600
4,800
3,600
1,040
$ 21,700
li1t#l.~.i.m&m111riiil\t:11f#.i~:.mifl!lif'!i;1~Nit.~lili':M~fmr1e~1::'1:Etlr%::;%::.::;\m;;::m::,:1rn .. fr:l::;;m1
Total
Rate per Estimated
Staff Classification Hour Hours Total Fee
Partner $ 225 4 $ 900
Manager 185 4 740
Supervisor 165 12 1,980
Senior 120 12 1,440
Staff 90 12 1,080
Clerical 65
Total Hours and Fee 44 $ 6,140
34
N-31
Section 5 -Cost Proposal
Rate per Estimated
Staff Classification Hour Hours Total Fee
Financial Audit
Partner $ 225 4 $ 900
Manager 185 4 740
Supervisor 165 8 1,320
Senior 120 12 1,440
Staff 90 12 1,080
Clerical 65 2 130
Total Hours and Fee 42 $ 5,610
Rate per Estimated
Staff Classification Hour Hours Total Fee
Financial Audit
Partner $ 225 2 $ 450
Manager 185 2 370
Supervisor 165 4 660
Senior 120 8 960
Staff 90 8 720
Clerical 65 2 130
Total Hours and Fee 26 $ 3,290
35
N-32
Section 5 -Cost Proposal
fl .. \'m!t1iB?t11.~•tfljjlli:;:;::;:t;:I::;Mrn1:;;m:11;;;;1;:::t~::1;:::1:110f:t;I:::rntfil:l\ffi:f!;\:m:::'::im:;::ii\ii.:1;~1:1@Nt:n::M0:~:1.@@::rn~~m:i:::;1::;::::r,:;
Total
Rate per Estimated
Staff Classification Hour Hours Total Fee
Financial Audit
Partner $ 225 4 $ 900
Manager 185 0
Supervisor 165 0
Senior 120 0
Staff 90 0
Clerical 65 0
Total Hours and Fee 4 $ 900
;111.tt111(;g;.41.11.J.11:111n;;:1::=@:~,:·:,::;:,:1;:;fg;:::1r:i!;@11i;;j:::;::i 1;11mrn::1:;:;:;):m1;:J!WM::1h1:·;;;;;r;;1:,;i1@%~J,1;w:r;:::~ri::01:\1Jlt1:=r:i'n:rn;:;;jii\,::::'ml.n
Total
Rate per Estimated
Staff Classification Hour Hours Total Fee
Financial Audit
Partner $ 225 2 $ 450
Manager 185 8 1,480
Supervisor 165 10 1,650
Senior 120
Staff 90
Clerical 65
Total Hours and Fee 20 $ 3,580
36
N-33
Section 5 -Cost Proposal
Staff Classification
Financial Audit
Partner
Manager
Supervisor
Senior
Staff
Clerical
Total Hours and Fee (per major program)
$
Rate per
Hour
225
185
165
120
90
65
Total
Estimated
Hours
2
4
4
10
Total Fee
$
$
450
740
660
1,850
37
N-34
Exhibit "C":
Annual Engagement Letter
Exhibit "C"
N-35
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 conducteq 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 offederal 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 auditing standards generally
accepted in the United States of America. We intend to provide an opinion on whether the schedule of
Exhibit "C"
N-36
expenditures offederal 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"
N-37
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-13 3, 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"
N-38
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 offederal 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
Document internal control and preliminary tests June 2013
Mail confirmations July 2013
Perform year-end audit procedures ( onsite fieldwork to be September 2013
completed in September)
Complete
July 2013
October 2013
December 2013 Issue audit reports* November 2013
~~~~~~~~'--~~~~~~-
*Single Audit March 31 81
•
Exhibit "C"
N-39
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 dqcumentation 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 ofVavrinek, 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"
N-40
• 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"
N-41
Attachment #2
Auditor List for Audit RFP
1/23/2013
Company
Capital Accounting Partners
Charles Z. Fedak & Co. CPA's
Christy White Accountancy Corporation
Eadie & Payne LLC, CPA's
Kevin W. Harper CPA & Associates
Lance, Soll, Lunghard, CPA's LLP
Lopez & Co., LLP
Macias, Gini & O'Connell LLP
Mann, Urrutia, Nelson CPA's
Mayer Hoffmann Mccann P.C.
Maze & Associates
Moreland & Associates
Price, Paige & Company
Pun & McGeady, LLP
Reznick Group
Rogers, Anderson, Malady & Scott, LLP
Tahim & Associates
Teaman, Ramirez & Smith, Inc.
Thornton & Fathy, LLP
Vavrinek, Trine, Day & Co., LLP
Moss, Levy & Hartzeheim, LLP
White, Nelson, Diehl, Evans LLP
N-42