CC SR 20180515 M - Auditing Services White Nelson Diehl Evans, LLP
RANCHO PALOS VERDES CITY COUNCIL MEETING DATE: 05/15/2018
AGENDA REPORT AGENDA HEADING: Consent Calendar
AGENDA DESCRIPTION:
Consideration and possible action to award a Contract Services Agreement to White
Nelson Diehl Evans, LLP for general auditing services for a term of three (3) years with
the option of two (2) additional one-year extensions.
RECOMMENDED COUNCIL ACTION:
(1) Authorize the award of contract with White Nelson Diehl Evans, LLP for
Professional Auditing Services for $52,975 for FY17-18 (Year 1), $52,975 for
FY18-19 (Year 2), $54,040 for FY19-20 (Year 3) with the option of two (2)
additional one-year extensions $55,120 for FY20-21 (Year 4) and $56,225 for
FY21-22 (Year 5).
(2) Authorize the Mayor and City Clerk to execute the Contract Services Agreement
with White Nelson Diehl Evans, LLP in a form approved by the City Attorney.
FISCAL IMPACT: None
Amount Budgeted: $60,000 (FY17-18)
Additional Appropriation: N/A
Account Number(s): 101-400-2110-5101 - $50,200
285-400-0000-5101 - $2,900
701-400-0000-5101 - $4,000
795-400-0000-5101 - $2,900
ORIGINATED BY: Vina Ramos, Accounting Supervisor
REVIEWED BY: Deborah Cullen, Director of Finance
APPROVED BY: Doug Willmore, City Manager
ATTACHED SUPPORTING DOCUMENTS:
A. Contract Services Agreement with Nelson Diehl Evans, LLP (page A-1)
B. City of Rancho Palos Verdes Request for Proposal for Professional
Auditing Services, February 2018 (page B-1)
BACKGROUND AND DISCUSSION:
The City has received its independent auditing services from Vavrinek, Trine, Day & Co.
(VTD) since 2013. The services provided by VTD included the audit of the City’s
financial statements, a Single Audit of federal financial assistance (when required),
preparation of the City’s State Controller’s Report, Comprehensive Financial Annual
Report, and other minor services related to the City’s financial reports. The agreement
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with VTD 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 bidding
process to potentially select a new auditing firm. On February 8 2018, Staff issued a
Request for Proposal (RFP) for professional independent audit services (Attachment B)
to ten (10) different auditing firms from the surrounding area that were listed in the
California Society of Municipal Finance Officers (CSMFO) directory.
The mandatory elements and technical qualifications for the RFP include the following:
• The firm’s independence, license to practice in California, and results of the most
recent peer review;
• Qualifications and related experience of the audit team to serve the City;
• The firm’s experience auditing California Cities;
• References of local government clients;
• Proposed approach to the City’s audit;
• Demonstration of understanding of the objectives and scope of the audit;
• Commitment to conducting the audit in a timely manner;
• Maximum fees to conduct the audit.
At the deadline of February 28, 2018, the City received one (1) proposal from White
Nelson Diehl Evans, LLP (WNDE). The City’s current independent auditor VTD opted
out in the RFP process. WNDE proposed the following:
• $52,975 FY17-18 (Year 1)
• $52,975 FY18-19 (Year 2)
• $54,040 FY19-20 (Year 3)
• $55,120 FY20-21 (Year 4) optional
• $56,225 FY21-22 (Year 5) optional
Background on White Nelson Diehl Evans, LLP (WNDE)
WNDE is a California certified public accounting (CPA) and consulting firm with offices
in Irvine and Carlsbad. WNDE is a full‐service CPA firm including investment policy
compliance reviews, litigation support, dispute resolution services, and consulting on a
wide array of governmental issues. Over the past year, WNDE has provided services to
approximately 100 governmental organizations, and on an annual basis, WNDE issues
over 150 reports on audits of local governmental agencies, including cities, the
successor agencies to redevelopment agencies, special districts, and joint powers
authorities. WNDE’s recent clients include the cities of Palos Verdes Estates, Irvine,
Torrance, Costa Mesa, Newport Beach, Beverly Hills, Lakewood, and Monterey Park.
Additionally, WNDE is actively involved in professional organizations in the
governmental accounting field including AICPA Government Audit Quality Center,
Government Finance Officers Association of the United States and Canada, California
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Society of Municipal Finance Officers, and California Society of Certified Public
Accountants. Both of the firm’s partners, Mr. Robert J. Callanan, CPA and Mr. Nitin
Patel, CPA, are members of the State Governmental Accounting and Auditing
Committee.
In March 2018, Director of Finance Deborah Cullen, Deputy Director of Finance Trang
Nguyen, and Accounting Supervisor Vina Ramos interviewed Mr. Robert J. Callanan,
CPA. During the interview process, Mr. Callanan demonstrated that WNDE is
committed to providing an effective and efficient audit. Mr. Callanan also presented a
very cohesive team that meets the mandatory elements and technical qualifications that
the City is looking for. Additionally, WNDE’s proposed engagement team has extensive
governmental audit experience that are familiar with municipal procedures that will
result in an effective and efficient audit that meets the project timing and deliverables
requirements with minimum disruption to City Staff. Therefore, Staff recommends
awarding the contract to WNDE to perform the City’s auditing services for three (3)
years with the option for two (2) one-year extensions, for a total of up to five (5) years.
ALTERNATIVES:
In addition to the Staff recommendation, the following alternative action is available for
the City Council’s consideration:
1. Discuss and take other action related to this item.
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01203.0007/464459.8 1
CONTRACT SERVICES AGREEMENT
By and Between
CITY OF RANCHO PALOS VERDES
and
WHITE NELSON DIEHL EVANS, LLP
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01203.0007/464459.8
AGREEMENT FOR CONTRACT SERVICES
BETWEEN THE CITY OF RANCHO PALOS VERDES AND
WHITE NELSON DIEHL EVANS, LLP
THIS AGREEMENT FOR CONTRACT SERVICES (herein “Agreement”) is made and
entered into this 15th day of May, 2018 by and between the City of Rancho Palos Verdes, a
California municipal corporation (“City”) and White Nelson Diehl Evans, LLP, a limited liability
partnership (“Consultant”). City and Consultant may be referred to, individually or collectively,
as “Party” or “Parties.”
RECITALS
A. City has sought, by issuance of a Request for Proposals or Invitation for Bids, the
performance of the services defined and described particularly in Article 1 of this Agreement.
B. Consultant, following submission of a proposal or bid for the performance of the
services defined and described particularly in Article 1 of this Agreement, was selected by the
City to perform those services.
C. Pursuant to the City of Rancho Palos Verdes’ Municipal Code, City has authority
to enter into and execute this Agreement.
D. The Parties desire to formalize the selection of Consultant for performance of
those services defined and described particularly in Article 1 of this Agreement and desire that
the terms of that performance be as particularly defined and described herein.
OPERATIVE PROVISIONS
NOW, THEREFORE, in consideration of the mutual promises and covenants made by
the Parties and contained herein and other consideration, the value and adequacy of which are
hereby acknowledged, the parties agree as follows:
ARTICLE 1. SERVICES OF CONSULTANT
1.1 Scope of Services.
In compliance with all terms and conditions of this Agreement, the Consultant shall
provide those services specified in the “Scope of Services” attached hereto as Exhibit “A” and
incorporated herein by this reference, which may be referred to herein as the “services” or
“work” hereunder. As a material inducement to the City entering into this Agreement, Consultant
represents and warrants that it has the qualifications, experience, and facilities necessary to
properly perform the services required under this Agreement in a thorough, competent, and
professional manner, and is experienced in performing the work and services contemplated
herein. Consultant shall at all times faithfully, competently and to the best of its ability,
experience and talent, perform all services described herein. Consultant covenants that it shall
follow the highest professional standards in performing the work and services required hereunder
and that all materials will be both of good quality as well as fit for the purpose intended. For
purposes of this Agreement, the phrase “highest professional standards” shall mean those
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standards of practice recognized by one or more first-class firms performing similar work under
similar circumstances.
1.2 Consultant’s Proposal.
The Scope of Service shall include the Consultant’s scope of work or bid which shall be
incorporated herein by this reference as though fully set forth herein. In the event of any
inconsistency between the terms of such proposal and this Agreement, the terms of this
Agreement shall govern.
1.3 Compliance with Law.
Consultant shall keep itself informed concerning, and shall render all services hereunder
in accordance with, all ordinances, resolutions, statutes, rules, and regulations of the City and any
Federal, State or local governmental entity having jurisdiction in effect at the time service is
rendered.
1.4 California Labor Law.
If the Scope of Services includes any “public work” or “maintenance work,” as those
terms are defined in California Labor Code section 1720 et seq. and California Code of
Regulations, Title 8, Section 16000 et seq., and if the total compensation is $1,000 or more,
Consultant shall pay prevailing wages for such work and comply with the requirements in
California Labor Code section 1770 et seq. and 1810 et seq., and all other applicable laws,
including the following requirements:
(a) Public Work. The Parties acknowledge that some or all of the work to be
performed under this Agreement is a “public work” as defined in Labor Code Section 1720 and
that this Agreement is therefore subject to the requirements of Division 2, Part 7, Chapter 1
(commencing with Section 1720) of the California Labor Code relating to public works contracts
and the rules and regulations established by the Department of Industrial Relations (“DIR”)
implementing such statutes. The work performed under this Agreement is subject to compliance
monitoring and enforcement by the DIR. Contractor shall post job site notices, as prescribed by
regulation.
(b) Prevailing Wages. Contractor shall pay prevailing wages to the extent
required by Labor Code Section 1771. Pursuant to Labor Code Section 1773.2, copies of the
prevailing rate of per diem wages are on file at City Hall and will be made available to any
interested party on request. By initiating any work under this Agreement, Contractor
acknowledges receipt of a copy of the Department of Industrial Relations (DIR) determination of
the prevailing rate of per diem wages, and Contractor shall post a copy of the same at each job
site where work is performed under this Agreement.
(c) Penalty for Failure to Pay Prevailing Wages. Contractor shall comply with
and be bound by the provisions of Labor Code Sections 1774 and 1775 concerning the payment
of prevailing rates of wages to workers and the penalties for failure to pay prevailing wages. The
Contractor shall, as a penalty to the City, forfeit two hundred dollars ($200) for each calendar
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day, or portion thereof, for each worker paid less than the prevailing rates as determined by the
DIR for the work or craft in which the worker is employed for any public work done pursuant to
this Agreement by Contractor or by any subcontractor.
(d) Payroll Records. Contractor shall comply with and be bound by the
provisions of Labor Code Section 1776, which requires Contractor and each subcontractor to:
keep accurate payroll records and verify such records in writing under penalty of perjury, as
specified in Section 1776; certify and make such payroll records available for inspection as
provided by Section 1776; and inform the City of the location of the records.
(e) Apprentices. Contractor shall comply with and be bound by the provisions
of Labor Code Sections 1777.5, 1777.6, and 1777.7 and California Code of Regulations Title 8,
Section 200 et seq. concerning the employment of apprentices on public works projects.
Contractor shall be responsible for compliance with these aforementioned Sections for all
apprenticeable occupations. Prior to commencing work under this Agreement, Contractor shall
provide City with a copy of the information submitted to any applicable apprenticeship program.
Within sixty (60) days after concluding work pursuant to this Agreement, Contractor and each of
its subcontractors shall submit to the City a verified statement of the journeyman and apprentice
hours performed under this Agreement.
(f) Eight-Hour Work Day. Contractor acknowledges that eight (8) hours labor
constitutes a legal day's work. Contractor shall comply with and be bound by Labor Code Section
1810.
(g) Penalties for Excess Hours. Contractor shall comply with and be bound by
the provisions of Labor Code Section 1813 concerning penalties for workers who work excess
hours. The Contractor shall, as a penalty to the City, forfeit twenty-five dollars ($25) for each
worker employed in the performance of this Agreement by the Contractor or by any
subcontractor for each calendar day during which such worker is required or permitted to work
more than eight (8) hours in any one calendar day and forty (40) hours in any one calendar week
in violation of the provisions of Division 2, Part 7, Chapter 1, Article 3 of the Labor Code.
Pursuant to Labor Code section 1815, work performed by employees of Contractor in excess of
eight (8) hours per day, and forty (40) hours during any one week shall be permitted upon public
work upon compensation for all hours worked in excess of 8 hours per day at not less than one
and one-half (1½) times the basic rate of pay.
(h) Workers’ Compensation. California Labor Code Sections 1860 and 3700
provide that every employer will be required to secure the payment of compensation to its
employees if it has employees. In accordance with the provisions of California Labor Code
Section 1861, Contractor certifies as follows:
“I am aware of the provisions of Section 3700 of the Labor Code which require
every employer to be insured against liability for workers' compensation or to
undertake self-insurance in accordance with the provisions of that code, and I will
comply with such provisions before commencing the performance of the work of
this contract.”
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Contractor’s Authorized Initials ________
(i) Contractor’s Responsibility for Subcontractors. For every subcontractor
who will perform work under this Agreement, Contractor shall be responsible for such
subcontractor's compliance with Division 2, Part 7, Chapter 1 (commencing with Section 1720)
of the California Labor Code, and shall make such compliance a requirement in any contract with
any subcontractor for work under this Agreement. Contractor shall be required to take all actions
necessary to enforce such contractual provisions and ensure subcontractor's compliance,
including without limitation, conducting a review of the certified payroll records of the
subcontractor on a periodic basis or upon becoming aware of the failure of the subcontractor to
pay his or her workers the specified prevailing rate of wages. Contractor shall diligently take
corrective action to halt or rectify any such failure by any subcontractor.
1.5 Licenses, Permits, Fees and Assessments.
Consultant shall obtain at its sole cost and expense such licenses, permits and approvals
as may be required by law for the performance of the services required by this Agreement.
Consultant shall have the sole obligation to pay for any fees, assessments and taxes, plus
applicable penalties and interest, which may be imposed by law and arise from or are necessary
for the Consultant’s performance of the services required by this Agreement, and shall
indemnify, defend and hold harmless City, its officers, employees or agents of City, against any
such fees, assessments, taxes, penalties or interest levied, assessed or imposed against City
hereunder.
1.6 Familiarity with Work.
By executing this Agreement, Consultant warrants that Consultant (i) has thoroughly
investigated and considered the scope of services to be performed, (ii) has carefully considered
how the services should be performed, and (iii) fully understands the facilities, difficulties and
restrictions attending performance of the services under this Agreement. If the services involve
work upon any site, Consultant warrants that Consultant has or will investigate the site and is or
will be fully acquainted with the conditions there existing, prior to commencement of services
hereunder. Should the Consultant discover any latent or unknown conditions, which will
materially affect the performance of the services hereunder, Consultant shall immediately inform
the City of such fact and shall not proceed except at Consultant’s risk until written instructions
are received from the Contract Officer.
1.7 Care of Work.
The Consultant shall adopt reasonable methods during the life of the Agreement to
furnish continuous protection to the work, and the equipment, materials, papers, documents,
plans, studies and/or other components thereof to prevent losses or damages, and shall be
responsible for all such damages, to persons or property, until acceptance of the work by City,
except such losses or damages as may be caused by City’s own negligence.
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1.8 Further Responsibilities of Parties.
Both parties agree to use reasonable care and diligence to perform their respective
obligations under this Agreement. Both parties agree to act in good faith to execute all
instruments, prepare all documents and take all actions as may be reasonably necessary to carry
out the purposes of this Agreement. Unless hereafter specified, neither party shall be responsible
for the service of the other.
1.9 Additional Services.
City shall have the right at any time during the performance of the services, without
invalidating this Agreement, to order extra work beyond that specified in the Scope of Services
or make changes by altering, adding to or deducting from said work. No such extra work may be
undertaken unless a written order is first given by the Contract Officer to the Consultant,
incorporating therein any adjustment in (i) the Contract Sum for the actual costs of the extra
work, and/or (ii) the time to perform this Agreement, which said adjustments are subject to the
written approval of the Consultant. Any increase in compensation of up to ten percent (10%) of
the Contract Sum or $25,000, whichever is less; or, in the time to perform of up to one hundred
eighty (180) days, may be approved by the Contract Officer. Any greater increases, taken either
separately or cumulatively, must be approved by the City Council. It is expressly understood by
Consultant that the provisions of this Section shall not apply to services specifically set forth in
the Scope of Services. Consultant hereby acknowledges that it accepts the risk that the services to
be provided pursuant to the Scope of Services may be more costly or time consuming than
Consultant anticipates and that Consultant shall not be entitled to additional compensation
therefor. City may in its sole and absolute discretion have similar work done by other contractors.
No claims for an increase in the Contract Sum or time for performance shall be valid unless the
procedures established in this Section are followed.
1.10 Special Requirements.
Additional terms and conditions of this Agreement, if any, which are made a part hereof
are set forth in the “Special Requirements” attached hereto as Exhibit “B” and incorporated
herein by this reference. In the event of a conflict between the provisions of Exhibit “B” and any
other provisions of this Agreement, the provisions of Exhibit “B” shall govern.
ARTICLE 2. COMPENSATION AND METHOD OF PAYMENT.
2.1 Contract Sum.
Subject to any limitations set forth in this Agreement, City agrees to pay Consultant the
amounts specified in the “Schedule of Compensation” attached hereto as Exhibit “C” and
incorporated herein by this reference. The total compensation, including reimbursement for
actual expenses, shall not exceed Two Hundred Seventy One Thousand Three Hundred
Thirty Five Dollars ($271,335) (the “Contract Sum”), $159,990 of which is designated for the
initial 3-year term of the Agreement through FY 2019-20, with $55,120 and $56,225 designated
for the optional additional one-year extension for FY 2020-21 and FY 2021-22, respectively,
unless additional compensation is approved pursuant to Section 1.9.
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2.2 Method of Compensation.
The method of compensation may include: (i) a lump sum payment upon completion; (ii)
payment in accordance with specified tasks or the percentage of completion of the services, less
contract retention; (iii) payment for time and materials based upon the Consultant’s rates as
specified in the Schedule of Compensation, provided that (a) time estimates are provided for the
performance of sub tasks, (b) contract retention is maintained, and (c) the Contract Sum is not
exceeded; or (iv) such other methods as may be specified in the Schedule of Compensation.
2.3 Reimbursable Expenses.
Compensation may include reimbursement for actual and necessary expenditures for
reproduction costs, telephone expenses, and travel expenses approved by the Contract Officer in
advance, or actual subcontractor expenses of an approved subcontractor pursuant to Section 4.5,
and only if specified in the Schedule of Compensation. The Contract Sum shall include the
attendance of Consultant at all project meetings reasonably deemed necessary by the City.
Coordination of the performance of the work with City is a critical component of the services. If
Consultant is required to attend additional meetings to facilitate such coordination, Consultant
shall not be entitled to any additional compensation for attending said meetings.
2.4 Invoices.
Each month Consultant shall furnish to City an original invoice for all work performed
and expenses incurred during the preceding month in a form approved by City’s Director of
Finance. By submitting an invoice for payment under this Agreement, Consultant is certifying
compliance with all provisions of the Agreement. The invoice shall detail charges for all
necessary and actual expenses by the following categories: labor (by sub-category), travel,
materials, equipment, supplies, and sub-contractor contracts. Sub-contractor charges shall also be
detailed by such categories. Consultant shall not invoice City for any duplicate services
performed by more than one person.
City shall independently review each invoice submitted by the Consultant to determine
whether the work performed and expenses incurred are in compliance with the provisions of this
Agreement. Except as to any charges for work performed or expenses incurred by Consultant
which are disputed by City, or as provided in Section 7.3, City will use its best efforts to cause
Consultant to be paid within forty-five (45) days of receipt of Consultant’s correct and
undisputed invoice; however, Consultant acknowledges and agrees that due to City warrant run
procedures, the City cannot guarantee that payment will occur within this time period. In the
event any charges or expenses are disputed by City, the original invoice shall be returned by City
to Consultant for correction and resubmission. Review and payment by City for any invoice
provided by the Consultant shall not constitute a waiver of any rights or remedies provided
herein or any applicable law.
2.5 Waiver.
Payment to Consultant for work performed pursuant to this Agreement shall not be
deemed to waive any defects in work performed by Consultant.
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ARTICLE 3. PERFORMANCE SCHEDULE
3.1 Time of Essence.
Time is of the essence in the performance of this Agreement.
3.2 Schedule of Performance.
Consultant shall commence the services pursuant to this Agreement upon receipt of a
written notice to proceed and shall perform all services within the time period(s) established in
the “Schedule of Performance” attached hereto as Exhibit “D” and incorporated herein by this
reference. When requested by the Consultant, extensions to the time period(s) specified in the
Schedule of Performance may be approved in writing by the Contract Officer but not exceeding
one hundred eighty (180) days cumulatively.
3.3 Force Majeure.
The time period(s) specified in the Schedule of Performance for performance of the
services rendered pursuant to this Agreement shall be extended because of any delays due to
unforeseeable causes beyond the control and without the fault or negligence of the Consultant,
including, but not restricted to, acts of God or of the public enemy, unusually severe weather,
fires, earthquakes, floods, epidemics, quarantine restrictions, riots, strikes, freight embargoes,
wars, litigation, and/or acts of any governmental agency, including the City, if the Consultant
shall within ten (10) days of the commencement of such delay notify the Contract Officer in
writing of the causes of the delay. The Contract Officer shall ascertain the facts and the extent of
delay, and extend the time for performing the services for the period of the enforced delay when
and if in the judgment of the Contract Officer such delay is justified. The Contract Officer’s
determination shall be final and conclusive upon the parties to this Agreement. In no event shall
Consultant be entitled to recover damages against the City for any delay in the performance of
this Agreement, however caused, Consultant’s sole remedy being extension of the Agreement
pursuant to this Section.
3.4 Term.
Unless earlier terminated in accordance with Article 7 of this Agreement, this Agreement
shall continue in full force and effect until completion of the services but not exceeding one (1)
years from the date hereof, except as otherwise provided in the Schedule of Performance (Exhibit
“D”).
ARTICLE 4. COORDINATION OF WORK
4.1 Representatives and Personnel of Consultant.
The following principals of Consultant (“Principals”) are hereby designated as being the
principals and representatives of Consultant authorized to act in its behalf with respect to the
work specified herein and make all decisions in connection therewith:
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Robert J. Callanan, CPA Engagement Partner
(Name) (Title)
Nitin Patel, CPA Technical Review Partner
(Name) (Title)
It is expressly understood that the experience, knowledge, capability and reputation of the
foregoing principals were a substantial inducement for City to enter into this Agreement.
Therefore, the foregoing principals shall be responsible during the term of this Agreement for
directing all activities of Consultant and devoting sufficient time to personally supervise the
services hereunder. All personnel of Consultant, and any authorized agents, shall at all times be
under the exclusive direction and control of the Principals. For purposes of this Agreement, the
foregoing Principals may not be replaced nor may their responsibilities be substantially reduced
by Consultant without the express written approval of City. Additionally, Consultant shall utilize
only competent personnel to perform services pursuant to this Agreement. Consultant shall make
every reasonable effort to maintain the stability and continuity of Consultant’s staff and
subcontractors, if any, assigned to perform the services required under this Agreement.
Consultant shall notify City of any changes in Consultant’s staff and subcontractors, if any,
assigned to perform the services required under this Agreement, prior to and during any such
performance.
4.2 Status of Consultant.
Consultant shall have no authority to bind City in any manner, or to incur any obligation,
debt or liability of any kind on behalf of or against City, whether by contract or otherwise, unless
such authority is expressly conferred under this Agreement or is otherwise expressly conferred in
writing by City. Consultant shall not at any time or in any manner represent that Consultant or
any of Consultant’s officers, employees, or agents are in any manner officials, officers,
employees or agents of City. Neither Consultant, nor any of Consultant’s officers, employees or
agents, shall obtain any rights to retirement, health care or any other benefits which may
otherwise accrue to City’s employees. Consultant expressly waives any claim Consultant may
have to any such rights.
4.3 Contract Officer.
The Contract Officer shall be Deborah Cullen, Director of Finance, or her designee. It
shall be the Consultant’s responsibility to assure that the Contract Officer is kept informed of the
progress of the performance of the services and the Consultant shall refer any decisions which
must be made by City to the Contract Officer. Unless otherwise specified herein, any approval of
City required hereunder shall mean the approval of the Contract Officer. The Contract Officer
shall have authority, if specified in writing by the City Manager, to sign all documents on behalf
of the City required hereunder to carry out the terms of this Agreement.
4.4 Independent Consultant.
Neither the City nor any of its employees shall have any control over the manner, mode or
means by which Consultant, its agents or employees, perform the services required herein, except
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as otherwise set forth herein. City shall have no voice in the selection, discharge, supervision or
control of Consultant’s employees, servants, representatives or agents, or in fixing their number,
compensation or hours of service. Consultant shall perform all services required herein as an
independent contractor of City and shall remain at all times as to City a wholly independent
contractor with only such obligations as are consistent with that role. Consultant shall not at any
time or in any manner represent that it or any of its agents or employees are agents or employees
of City. City shall not in any way or for any purpose become or be deemed to be a partner of
Consultant in its business or otherwise or a joint venturer or a member of any joint enterprise
with Consultant.
4.5 Prohibition Against Subcontracting or Assignment.
The experience, knowledge, capability and reputation of Consultant, its principals and
employees were a substantial inducement for the City to enter into this Agreement. Therefore,
Consultant shall not contract with any other entity to perform in whole or in part the services
required hereunder without the express written approval of the City. In addition, neither this
Agreement nor any interest herein may be transferred, assigned, conveyed, hypothecated or
encumbered voluntarily or by operation of law, whether for the benefit of creditors or otherwise,
without the prior written approval of City. Transfers restricted hereunder shall include the
transfer to any person or group of persons acting in concert of more than twenty five percent
(25%) of the present ownership and/or control of Consultant, taking all transfers into account on
a cumulative basis. In the event of any such unapproved transfer, including any bankruptcy
proceeding, this Agreement shall be void. No approved transfer shall release the Consultant or
any surety of Consultant of any liability hereunder without the express consent of City.
ARTICLE 5. INSURANCE AND INDEMNIFICATION
5.1 Insurance Coverages.
Without limiting Consultant’s indemnification of City, and prior to commencement of
any services under this Agreement, Consultant shall obtain, provide and maintain at its own
expense during the term of this Agreement, policies of insurance of the type and amounts
described below and in a form satisfactory to City.
(a) General liability insurance. Consultant shall maintain commercial general
liability insurance with coverage at least as broad as Insurance Services Office form CG 00 01, in
an amount not less than $1,000,000 per occurrence, $2,000,000 general aggregate, for bodily
injury, personal injury, and property damage. The policy must include contractual liability that
has not been amended. Any endorsement restricting standard ISO “insured contract” language
will not be accepted.
(b) Automobile liability insurance. Consultant shall maintain automobile
insurance at least as broad as Insurance Services Office form CA 00 01 covering bodily injury
and property damage for all activities of the Consultant arising out of or in connection with
Services to be performed under this Agreement, including coverage for any owned, hired, non-
owned or rented vehicles, in an amount not less than $1,000,000 combined single limit for each
accident.
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(c) Professional liability (errors & omissions) insurance. Consultant shall
maintain professional liability insurance that covers the Services to be performed in connection
with this Agreement, in the minimum amount of $1,000,000 per claim and in the aggregate. Any
policy inception date, continuity date, or retroactive date must be before the effective date of this
Agreement and Consultant agrees to maintain continuous coverage through a period no less than
three (3) years after completion of the services required by this Agreement.
(d) Workers’ compensation insurance. Consultant shall maintain Workers’
Compensation Insurance (Statutory Limits) and Employer’s Liability Insurance (with limits of at
least $1,000,000).
(e) Subcontractors. Consultant shall include all subcontractors as insureds
under its policies or shall furnish separate certificates and certified endorsements for each
subcontractor. All coverages for subcontractors shall include all of the requirements stated
herein.
(f) Additional Insurance. Policies of such other insurance, as may be required
in the Special Requirements in Exhibit “B”.
5.2 General Insurance Requirements.
(a) Proof of insurance. Consultant shall provide certificates of insurance to
City as evidence of the insurance coverage required herein, along with a waiver of subrogation
endorsement for workers’ compensation. Insurance certificates and endorsements must be
approved by City’s Risk Manager prior to commencement of performance. Current certification
of insurance shall be kept on file with City at all times during the term of this Agreement. City
reserves the right to require complete, certified copies of all required insurance policies, at any
time.
(b) Duration of coverage. Consultant shall procure and maintain for the
duration of this Agreement insurance against claims for injuries to persons or damages to
property, which may arise from or in connection with the performance of the Services hereunder
by Consultant, its agents, representatives, employees or subconsultants.
(c) Primary/noncontributing. Coverage provided by Consultant shall be
primary and any insurance or self-insurance procured or maintained by City shall not be required
to contribute with it. The limits of insurance required herein may be satisfied by a combination of
primary and umbrella or excess insurance. Any umbrella or excess insurance shall contain or be
endorsed to contain a provision that such coverage shall also apply on a primary and non-
contributory basis for the benefit of City before the City’s own insurance or self-insurance shall
be called upon to protect it as a named insured.
(d) City’s rights of enforcement. In the event any policy of insurance required
under this Agreement does not comply with these specifications or is canceled and not replaced,
City has the right but not the duty to obtain the insurance it deems necessary and any premium
paid by City will be promptly reimbursed by Consultant or City will withhold amounts sufficient
to pay premium from Consultant payments. In the alternative, City may cancel this Agreement.
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(e) Acceptable insurers. All insurance policies shall be issued by an insurance
company currently authorized by the Insurance Commissioner to transact business of insurance
or that is on the List of Approved Surplus Line Insurers in the State of California, with an
assigned policyholders’ Rating of A- (or higher) and Financial Size Category Class VI (or larger)
in accordance with the latest edition of Best’s Key Rating Guide, unless otherwise approved by
the City’s Risk Manager.
(f) Waiver of subrogation. All insurance coverage maintained or procured
pursuant to this agreement shall be endorsed to waive subrogation against City, its elected or
appointed officers, agents, officials, employees and volunteers or shall specifically allow
Consultant or others providing insurance evidence in compliance with these specifications to
waive their right of recovery prior to a loss. Consultant hereby waives its own right of recovery
against City, and shall require similar written express waivers and insurance clauses from each of
its subconsultants.
(g) Enforcement of contract provisions (non-estoppel). Consultant
acknowledges and agrees that any actual or alleged failure on the part of the City to inform
Consultant of non-compliance with any requirement imposes no additional obligations on the
City nor does it waive any rights hereunder.
(h) Requirements not limiting. Requirements of specific coverage features or
limits contained in this section are not intended as a limitation on coverage, limits or other
requirements, or a waiver of any coverage normally provided by any insurance. Specific
reference to a given coverage feature is for purposes of clarification only as it pertains to a given
issue and is not intended by any party or insured to be all inclusive, or to the exclusion of other
coverage, or a waiver of any type. If the Consultant maintains higher limits than the minimums
shown above, the City requires and shall be entitled to coverage for the higher limits maintained
by the Consultant. Any available insurance proceeds in excess of the specified minimum limits of
insurance and coverage shall be available to the City.
(i) Notice of cancellation. Consultant agrees to oblige its insurance agent or
broker and insurers to provide to City with a thirty (30) day notice of cancellation (except for
nonpayment for which a ten (10) day notice is required) or nonrenewal of coverage for each
required coverage.
(j) Additional insured status. General liability policies shall provide or be
endorsed to provide that City and its officers, officials, employees, and agents, and volunteers
shall be additional insureds under such policies. This provision shall also apply to any
excess/umbrella liability policies.
(k) Prohibition of undisclosed coverage limitations. None of the coverages
required herein will be in compliance with these requirements if they include any limiting
endorsement of any kind that has not been first submitted to City and approved of in writing.
(l) Separation of insureds. A severability of interests provision must apply for
all additional insureds ensuring that Consultant’s insurance shall apply separately to each insured
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against whom claim is made or suit is brought, except with respect to the insurer’s limits of
liability. The policy(ies) shall not contain any cross-liability exclusions.
(m) Pass through clause. Consultant agrees to ensure that its subconsultants,
subcontractors, and any other party involved with the project who is brought onto or involved in
the project by Consultant, provide the same minimum insurance coverage and endorsements
required of Consultant. Consultant agrees to monitor and review all such coverage and assumes
all responsibility for ensuring that such coverage is provided in conformity with the requirements
of this section. Consultant agrees that upon request, all agreements with consultants,
subcontractors, and others engaged in the project will be submitted to City for review.
(n) Agency’s right to revise specifications. The City reserves the right at any
time during the term of the contract to change the amounts and types of insurance required by
giving the Consultant ninety (90) days advance written notice of such change. If such change
results in substantial additional cost to the Consultant, the City and Consultant may renegotiate
Consultant’s compensation.
(o) Self-insured retentions. Any self-insured retentions must be declared to
and approved by City. City reserves the right to require that self-insured retentions be eliminated,
lowered, or replaced by a deductible. Self-insurance will not be considered to comply with these
specifications unless approved by City.
(p) Timely notice of claims. Consultant shall give City prompt and timely
notice of claims made or suits instituted that arise out of or result from Consultant’s performance
under this Agreement, and that involve or may involve coverage under any of the required
liability policies.
(q) Additional insurance. Consultant shall also procure and maintain, at its
own cost and expense, any additional kinds of insurance, which in its own judgment may be
necessary for its proper protection and prosecution of the work.
5.3 Indemnification.
To the full extent permitted by law, Consultant agrees to indemnify, defend and hold
harmless the City, its officers, employees and agents (“Indemnified Parties”) against, and will
hold and save them and each of them harmless from, any and all actions, either judicial,
administrative, arbitration or regulatory claims, damages to persons or property, losses, costs,
penalties, obligations, errors, omissions or liabilities whether actual or threatened (herein “claims
or liabilities”) that may be asserted or claimed by any person, firm or entity arising out of or in
connection with the negligent performance of the work, operations or activities provided herein
of Consultant, its officers, employees, agents, subcontractors, or invitees, or any individual or
entity for which Consultant is legally liable (“indemnitors”), or arising from Consultant’s or
indemnitors’ reckless or willful misconduct, or arising from Consultant’s or indemnitors’
negligent performance of or failure to perform any term, provision, covenant or condition of this
Agreement, and in connection therewith:
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(a) Consultant will defend any action or actions filed in connection with any
of said claims or liabilities and will pay all costs and expenses, including legal costs and
attorneys’ fees incurred in connection therewith;
(b) Consultant will promptly pay any judgment rendered against the City, its
officers, agents or employees for any such claims or liabilities arising out of or in connection
with the negligent performance of or failure to perform such work, operations or activities of
Consultant hereunder; and Consultant agrees to save and hold the City, its officers, agents, and
employees harmless therefrom;
(c) In the event the City, its officers, agents or employees is made a party to
any action or proceeding filed or prosecuted against Consultant for such damages or other claims
arising out of or in connection with the negligent performance of or failure to perform the work,
operation or activities of Consultant hereunder, Consultant agrees to pay to the City, its officers,
agents or employees, any and all costs and expenses incurred by the City, its officers, agents or
employees in such action or proceeding, including but not limited to, legal costs and attorneys’
fees.
Consultant shall incorporate similar indemnity agreements with its subcontractors and if
it fails to do so Consultant shall be fully responsible to indemnify City hereunder therefore, and
failure of City to monitor compliance with these provisions shall not be a waiver hereof. This
indemnification includes claims or liabilities arising from any negligent or wrongful act, error or
omission, or reckless or willful misconduct of Consultant in the performance of professional
services hereunder. The provisions of this Section do not apply to claims or liabilities occurring
as a result of City’s sole negligence or willful acts or omissions, but, to the fullest extent
permitted by law, shall apply to claims and liabilities resulting in part from City’s negligence,
except that design professionals’ indemnity hereunder shall be limited to claims and liabilities
arising out of the negligence, recklessness or willful misconduct of the design professional. The
indemnity obligation shall be binding on successors and assigns of Consultant and shall survive
termination of this Agreement.
ARTICLE 6. RECORDS, REPORTS, AND RELEASE OF INFORMATION
6.1 Records.
Consultant shall keep, and require subcontractors to keep, such ledgers, books of
accounts, invoices, vouchers, canceled checks, reports, studies or other documents relating to the
disbursements charged to City and services performed hereunder (the “books and records”), as
shall be necessary to perform the services required by this Agreement and enable the Contract
Officer to evaluate the performance of such services. Any and all such documents shall be
maintained in accordance with generally accepted accounting principles and shall be complete
and detailed. The Contract Officer shall have full and free access to such books and records at all
times during normal business hours of City, including the right to inspect, copy, audit and make
records and transcripts from such records. Such records shall be maintained for a period of three
(3) years following completion of the services hereunder, and the City shall have access to such
records in the event any audit is required. In the event of dissolution of Consultant’s business,
custody of the books and records may be given to City, and access shall be provided by
Consultant’s successor in interest. Notwithstanding the above, the Consultant shall fully
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cooperate with the City in providing access to the books and records if a public records request is
made and disclosure is required by law including but not limited to the California Public Records
Act.
6.2 Reports.
Consultant shall periodically prepare and submit to the Contract Officer such reports
concerning the performance of the services required by this Agreement as the Contract Officer
shall require. Consultant hereby acknowledges that the City is greatly concerned about the cost of
work and services to be performed pursuant to this Agreement. For this reason, Consultant agrees
that if Consultant becomes aware of any facts, circumstances, techniques, or events that may or
will materially increase or decrease the cost of the work or services contemplated herein or, if
Consultant is providing design services, the cost of the project being designed, Consultant shall
promptly notify the Contract Officer of said fact, circumstance, technique or event and the
estimated increased or decreased cost related thereto and, if Consultant is providing design
services, the estimated increased or decreased cost estimate for the project being designed.
6.3 Ownership of Documents.
All drawings, specifications, maps, designs, photographs, studies, surveys, data, notes,
computer files, reports, records, documents and other materials (the “documents and materials”)
prepared by Consultant, its employees, subcontractors and agents in the performance of this
Agreement shall be the property of City and shall be delivered to City upon request of the
Contract Officer or upon the termination of this Agreement, and Consultant shall have no claim
for further employment or additional compensation as a result of the exercise by City of its full
rights of ownership use, reuse, or assignment of the documents and materials hereunder. Any use,
reuse or assignment of such completed documents for other projects and/or use of uncompleted
documents without specific written authorization by the Consultant will be at the City’s sole risk
and without liability to Consultant, and Consultant’s guarantee and warranties shall not extend to
such use, reuse or assignment. Consultant may retain copies of such documents for its own use.
Consultant shall have the right to use the concepts embodied therein. All subcontractors shall
provide for assignment to City of any documents or materials prepared by them, and in the event
Consultant fails to secure such assignment, Consultant shall indemnify City for all damages
resulting therefrom. Moreover, Consultant with respect to any documents and materials that may
qualify as “works made for hire” as defined in 17 U.S.C. § 101, such documents and materials
are hereby deemed “works made for hire” for the City.
6.4 Confidentiality and Release of Information.
(a) All information gained or work product produced by Consultant in
performance of this Agreement shall be considered confidential, unless such information is in the
public domain or already known to Consultant. Consultant shall not release or disclose any such
information or work product to persons or entities other than City without prior written
authorization from the Contract Officer.
(b) Consultant, its officers, employees, agents or subcontractors, shall not,
without prior written authorization from the Contract Officer or unless requested by the City
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Attorney, voluntarily provide documents, declarations, letters of support, testimony at
depositions, response to interrogatories or other information concerning the work performed
under this Agreement. Response to a subpoena or court order shall not be considered “voluntary”
provided Consultant gives City notice of such court order or subpoena.
(c) If Consultant, or any officer, employee, agent or subcontractor of
Consultant, provides any information or work product in violation of this Agreement, then City
shall have the right to reimbursement and indemnity from Consultant for any damages, costs and
fees, including attorney’s fees, caused by or incurred as a result of Consultant’s conduct.
(d) Consultant shall promptly notify City should Consultant, its officers,
employees, agents or subcontractors be served with any summons, complaint, subpoena, notice
of deposition, request for documents, interrogatories, request for admissions or other discovery
request, court order or subpoena from any party regarding this Agreement and the work
performed there under. City retains the right, but has no obligation, to represent Consultant or be
present at any deposition, hearing or similar proceeding. Consultant agrees to cooperate fully
with City and to provide City with the opportunity to review any response to discovery requests
provided by Consultant. However, this right to review any such response does not imply or mean
the right by City to control, direct, or rewrite said response.
ARTICLE 7. ENFORCEMENT OF AGREEMENT AND TERMINATION
7.1 California Law.
This Agreement shall be interpreted, construed and governed both as to validity and to
performance of the parties in accordance with the laws of the State of California. Legal actions
concerning any dispute, claim or matter arising out of or in relation to this Agreement shall be
instituted in the Superior Court of the County of Los Angeles, State of California, or any other
appropriate court in such county, and Consultant covenants and agrees to submit to the personal
jurisdiction of such court in the event of such action. In the event of litigation in a U.S. District
Court, venue shall lie exclusively in the Central District of California, in the County of Los
Angeles, State of California.
7.2 Disputes; Default.
In the event that Consultant is in default under the terms of this Agreement, the City shall
not have any obligation or duty to continue compensating Consultant for any work performed
after the date of default. Instead, the City may give notice to Consultant of the default and the
reasons for the default. The notice shall include the timeframe in which Consultant may cure the
default. This timeframe is presumptively thirty (30) days, but may be extended, though not
reduced, if circumstances warrant. During the period of time that Consultant is in default, the
City shall hold all invoices and shall, when the default is cured, proceed with payment on the
invoices. In the alternative, the City may, in its sole discretion, elect to pay some or all of the
outstanding invoices during the period of default. If Consultant does not cure the default, the City
may take necessary steps to terminate this Agreement under this Article. Any failure on the part
of the City to give notice of the Consultant’s default shall not be deemed to result in a waiver of
the City’s legal rights or any rights arising out of any provision of this Agreement.
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7.3 Retention of Funds.
Consultant hereby authorizes City to deduct from any amount payable to Consultant
(whether or not arising out of this Agreement) (i) any amounts the payment of which may be in
dispute hereunder or which are necessary to compensate City for any losses, costs, liabilities, or
damages suffered by City, and (ii) all amounts for which City may be liable to third parties, by
reason of Consultant’s acts or omissions in performing or failing to perform Consultant’s
obligation under this Agreement. In the event that any claim is made by a third party, the amount
or validity of which is disputed by Consultant, or any indebtedness shall exist which shall appear
to be the basis for a claim of lien, City may withhold from any payment due, without liability for
interest because of such withholding, an amount sufficient to cover such claim. The failure of
City to exercise such right to deduct or to withhold shall not, however, affect the obligations of
the Consultant to insure, indemnify, and protect City as elsewhere provided herein.
7.4 Waiver.
Waiver by any party to this Agreement of any term, condition, or covenant of this
Agreement shall not constitute a waiver of any other term, condition, or covenant. Waiver by any
party of any breach of the provisions of this Agreement shall not constitute a waiver of any other
provision or a waiver of any subsequent breach or violation of any provision of this Agreement.
Acceptance by City of any work or services by Consultant shall not constitute a waiver of any of
the provisions of this Agreement. No delay or omission in the exercise of any right or remedy by
a non-defaulting party on any default shall impair such right or remedy or be construed as a
waiver. Any waiver by either party of any default must be in writing and shall not be a waiver of
any other default concerning the same or any other provision of this Agreement.
7.5 Rights and Remedies are Cumulative.
Except with respect to rights and remedies expressly declared to be exclusive in this
Agreement, the rights and remedies of the parties are cumulative and the exercise by either party
of one or more of such rights or remedies shall not preclude the exercise by it, at the same or
different times, of any other rights or remedies for the same default or any other default by the
other party.
7.6 Legal Action.
In addition to any other rights or remedies, either party may take legal action, in law or in
equity, to cure, correct or remedy any default, to recover damages for any default, to compel
specific performance of this Agreement, to obtain declaratory or injunctive relief, or to obtain
any other remedy consistent with the purposes of this Agreement. Notwithstanding any contrary
provision herein, Consultant shall file a statutory claim pursuant to Government Code Sections
905 et seq. and 910 et seq., in order to pursue a legal action under this Agreement.
7.7 Liquidated Damages.
Since the determination of actual damages for any delay in performance of this
Agreement would be extremely difficult or impractical to determine in the event of a breach of
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this Agreement, the Contractor and its sureties shall be liable for and shall pay to the City the
sum of ____________________________________ ($___________) as liquidated damages for
each working day of delay in the performance of any service required hereunder. The City may
withhold from any monies payable on account of services performed by the Contractor any
accrued liquidated damages.
7.8 Termination Prior to Expiration of Term.
This Section shall govern any termination of this Contract except as specifically provided
in the following Section for termination for cause. The City reserves the right to terminate this
Contract at any time, with or without cause, upon thirty (30) days’ written notice to Consultant,
except that where termination is due to the fault of the Consultant, the period of notice may be
such shorter time as may be determined by the Contract Officer. In addition, the Consultant
reserves the right to terminate this Contract at any time, with or without cause, upon sixty (60)
days ’ written notice to City, except that where termination is due to the fault of the City, the
period of notice may be such shorter time as the Consultant may determine. Upon receipt of any
notice of termination, Consultant shall immediately cease all services hereunder except such as
may be specifically approved by the Contract Officer. Except where the Consultant has initiated
termination, the Consultant shall be entitled to compensation for all services rendered prior to the
effective date of the notice of termination and for any services authorized by the Contract Officer
thereafter in accordance with the Schedule of Compensation or such as may be approved by the
Contract Officer, except as provided in Section 7.3. In the event the Consultant has initiated
termination, the Consultant shall be entitled to compensation only for the reasonable value of the
work product actually produced hereunder. In the event of termination without cause pursuant to
this Section, the terminating party need not provide the non-terminating party with the
opportunity to cure pursuant to Section 7.2.
7.9 Termination for Default of Consultant.
If termination is due to the failure of the Consultant to fulfill its obligations under this
Agreement, City may, after compliance with the provisions of Section 7.2, take over the work
and prosecute the same to completion by contract or otherwise, and the Consultant shall be liable
to the extent that the total cost for completion of the services required hereunder exceeds the
compensation herein stipulated (provided that the City shall use reasonable efforts to mitigate
such damages), and City may withhold any payments to the Consultant for the purpose of set-off
or partial payment of the amounts owed the City as previously stated.
7.10 Attorneys’ Fees.
If either party to this Agreement is required to initiate or defend or made a party to any
action or proceeding in any way connected with this Agreement, the prevailing party in such
action or proceeding, in addition to any other relief which may be granted, whether legal or
equitable, shall be entitled to reasonable attorney’s fees. Attorney’s fees shall include attorney’s
fees on any appeal, and in addition a party entitled to attorney’s fees shall be entitled to all other
reasonable costs for investigating such action, taking depositions and discovery and all other
necessary costs the court allows which are incurred in such litigation. All such fees shall be
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deemed to have accrued on commencement of such action and shall be enforceable whether or
not such action is prosecuted to judgment.
ARTICLE 8. CITY OFFICERS AND EMPLOYEES: NON-DISCRIMINATION
8.1 Non-liability of City Officers and Employees.
No officer or employee of the City shall be personally liable to the Consultant, or any
successor in interest, in the event of any default or breach by the City or for any amount which
may become due to the Consultant or to its successor, or for breach of any obligation of the terms
of this Agreement.
8.2 Conflict of Interest.
Consultant covenants that neither it, nor any officer or principal of its firm, has or shall
acquire any interest, directly or indirectly, which would conflict in any manner with the interests
of City or which would in any way hinder Consultant’s performance of services under this
Agreement. Consultant further covenants that in the performance of this Agreement, no person
having any such interest shall be employed by it as an officer, employee, agent or subcontractor
without the express written consent of the Contract Officer. Consultant agrees to at all times
avoid conflicts of interest or the appearance of any conflicts of interest with the interests of City
in the performance of this Agreement.
No officer or employee of the City shall have any financial interest, direct or indirect, in
this Agreement nor shall any such officer or employee participate in any decision relating to the
Agreement which affects her/his financial interest or the financial interest of any corporation,
partnership or association in which (s)he is, directly or indirectly, interested, in violation of any
State statute or regulation. The Consultant warrants that it has not paid or given and will not pay
or give any third party any money or other consideration for obtaining this Agreement.
8.3 Covenant Against Discrimination.
Consultant covenants that, by and for itself, its heirs, executors, assigns, and all persons
claiming under or through them, that there shall be no discrimination against or segregation of,
any person or group of persons on account of race, color, creed, religion, sex, gender, sexual
orientation, marital status, national origin, ancestry or other protected class in the performance of
this Agreement. Consultant shall take affirmative action to insure that applicants are employed
and that employees are treated during employment without regard to their race, color, creed,
religion, sex, gender, sexual orientation, marital status, national origin, ancestry or other
protected class.
8.4 Unauthorized Aliens.
Consultant hereby promises and agrees to comply with all of the provisions of the Federal
Immigration and Nationality Act, 8 U.S.C. § 1101 et seq., as amended, and in connection
therewith, shall not employ unauthorized aliens as defined therein. Should Consultant so employ
such unauthorized aliens for the performance of work and/or services covered by this Agreement,
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and should any liability or sanctions be imposed against City for such use of unauthorized aliens,
Consultant hereby agrees to and shall reimburse City for the cost of all such liabilities or
sanctions imposed, together with any and all costs, including attorneys’ fees, incurred by City.
ARTICLE 9. MISCELLANEOUS PROVISIONS
9.1 Notices.
Any notice, demand, request, document, consent, approval, or communication either party
desires or is required to give to the other party or any other person shall be in writing and either
served personally or sent by prepaid, first-class mail, in the case of the City, to the City Manager
and to the attention of the Contract Officer (with her/his name and City title), City of Rancho
Palos Verdes, 30940 Hawthorne Blvd., Rancho Palos Verdes, California 90275 and in the case of
the Consultant, to the person(s) at the address designated on the execution page of this
Agreement. Either party may change its address by notifying the other party of the change of
address in writing. Notice shall be deemed communicated at the time personally delivered or in
seventy-two (72) hours from the time of mailing if mailed as provided in this Section.
9.2 Interpretation.
The terms of this Agreement shall be construed in accordance with the meaning of the
language used and shall not be construed for or against either party by reason of the authorship of
this Agreement or any other rule of construction which might otherwise apply.
9.3 Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed to be an
original, and such counterparts shall constitute one and the same instrument.
9.4 Integration; Amendment.
This Agreement including the attachments hereto is the entire, complete and exclusive
expression of the understanding of the parties. It is understood that there are no oral agreements
between the parties hereto affecting this Agreement and this Agreement supersedes and cancels
any and all previous negotiations, arrangements, agreements and understandings, if any, between
the parties, and none shall be used to interpret this Agreement. No amendment to or modification
of this Agreement shall be valid unless made in writing and approved by the Consultant and by
the City Council. The parties agree that this requirement for written modifications cannot be
waived and that any attempted waiver shall be void.
9.5 Severability.
In the event that any one or more of the phrases, sentences, clauses, paragraphs, or
sections contained in this Agreement shall be declared invalid or unenforceable by a valid
judgment or decree of a court of competent jurisdiction, such invalidity or unenforceability shall
not affect any of the remaining phrases, sentences, clauses, paragraphs, or sections of this
Agreement which are hereby declared as severable and shall be interpreted to carry out the intent
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of the parties hereunder unless the invalid provision is so material that its invalidity deprives
either party of the basic benefit of their bargain or renders this Agreement meaningless.
9.6 Warranty & Representation of Non-Collusion.
No official, officer, or employee of City has any financial interest, direct or indirect, in
this Agreement, nor shall any official, officer, or employee of City participate in any decision
relating to this Agreement which may affect his/her financial interest or the financial interest of
any corporation, partnership, or association in which (s)he is directly or indirectly interested, or
in violation of any corporation, partnership, or association in which (s)he is directly or indirectly
interested, or in violation of any State or municipal statute or regulation. The determination of
“financial interest” shall be consistent with State law and shall not include interests found to be
“remote” or “noninterests” pursuant to Government Code Sections 1091 or 1091.5. Consultant
warrants and represents that it has not paid or given, and will not pay or give, to any third party
including, but not limited to, any City official, officer, or employee, any money, consideration, or
other thing of value as a result or consequence of obtaining or being awarded any agreement.
Consultant further warrants and represents that (s)he/it has not engaged in any act(s),
omission(s), or other conduct or collusion that would result in the payment of any money,
consideration, or other thing of value to any third party including, but not limited to, any City
official, officer, or employee, as a result of consequence of obtaining or being awarded any
agreement. Consultant is aware of and understands that any such act(s), omission(s) or other
conduct resulting in such payment of money, consideration, or other thing of value will render
this Agreement void and of no force or effect.
Consultant’s Authorized Initials _______
9.7 Corporate Authority.
The persons executing this Agreement on behalf of the parties hereto warrant that (i) such
party is duly organized and existing, (ii) they are duly authorized to execute and deliver this
Agreement on behalf of said party, (iii) by so executing this Agreement, such party is formally
bound to the provisions of this Agreement, and (iv) that entering into this Agreement does not
violate any provision of any other Agreement to which said party is bound. This Agreement shall
be binding upon the heirs, executors, administrators, successors and assigns of the parties.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date and year first-above written.
CITY:
CITY OF RANCHO PALOS VERDES, a
municipal corporation
Susan Brooks, Mayor
ATTEST:
Emily Colborn, City Clerk
APPROVED AS TO FORM:
ALESHIRE & WYNDER, LLP
William W. Wynder, City Attorney
CONSULTANT:
WHITE, NELSON, DIEHL, EVANS LP
By:
Name:
Title:
By:
Name:
Title:
Address:
Two corporate officer signatures required when Consultant is a corporation, with one signature required
from each of the following groups: 1) Chairman of the Board, President or any Vice President; and 2)
Secretary, any Assistant Secretary, Chief Financial Officer or any Assistant Treasurer. CONSULTANT’S
SIGNATURES SHALL BE DULY NOTARIZED, AND APPROPRIATE ATTESTATIONS SHALL BE
INCLUDED AS MAY BE REQUIRED BY THE BYLAWS, ARTICLES OF INCORPORATION, OR
OTHER RULES OR REGULATIONS APPLICABLE TO CONSULTANT’S BUSINESS ENTITY.
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01203.0007/464459.8
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On __________, 2018 before me, ________________, personally appeared ________________, proved to me on
the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is
true and correct.
WITNESS my hand and official seal.
Signature: _____________________________________
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could
prevent fraudulent reattachment of this form
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
INDIVIDUAL
CORPORATE OFFICER
_______________________________
TITLE(S)
PARTNER(S) LIMITED
GENERAL
ATTORNEY-IN-FACT
TRUSTEE(S)
GUARDIAN/CONSERVATOR
OTHER_______________________________
______________________________________
SIGNER IS REPRESENTING:
(NAME OF PERSON(S) OR ENTITY(IES))
_____________________________________________
_____________________________________________
___________________________________
TITLE OR TYPE OF DOCUMENT
___________________________________
NUMBER OF PAGES
___________________________________
DATE OF DOCUMENT
___________________________________
SIGNER(S) OTHER THAN NAMED ABOVE
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the
document to which this certificate is attached, and not the truthfulness, accuracy or validity of that document.
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01203.0007/464459.8
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On __________, 2018 before me, ________________, personally appeared ________________, proved to me on
the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is
true and correct.
WITNESS my hand and official seal.
Signature: _____________________________________
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could
prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
INDIVIDUAL
CORPORATE OFFICER
_______________________________
TITLE(S)
PARTNER(S) LIMITED
GENERAL
ATTORNEY-IN-FACT
TRUSTEE(S)
GUARDIAN/CONSERVATOR
OTHER_______________________________
______________________________________
SIGNER IS REPRESENTING:
(NAME OF PERSON(S) OR ENTITY(IES))
_____________________________________________
_____________________________________________
___________________________________
TITLE OR TYPE OF DOCUMENT
___________________________________
NUMBER OF PAGES
___________________________________
DATE OF DOCUMENT
___________________________________
SIGNER(S) OTHER THAN NAMED ABOVE
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the
document to which this certificate is attached, and not the truthfulness, accuracy or validity of that document.
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01203.0007/464459.8 A-1
EXHIBIT “A”
SCOPE OF SERVICES
I. Consultant will perform the following Services: Consultant will audit the City’s
financial statements for the fiscal years ending June 30, 2018 through June 30, 2020.
See Exhibit A-1 for additional requirements.
A. Audit Planning Procedures:
1. Hold a preaudit conference with the City to establish process of
communication between the audit team and City staff.
2. Discuss any new accounting pronouncements being implemented in the
current year.
3. Establish scope of work and timing of fieldwork.
B. Interim Fieldwork: Gather information about the City and its environment,
including internal control, as follows:
1. Evaluate the design of internal controls that are relevant to the audit and
determine whether the control, either individually or in combination is
capable of affecting, preventing, or detecting and correcting material
misstatements.
2. Determine that the controls have been implemented, that is, that the
controls exist and that the City is using them.
3. Specific areas to review include:
4. Accounts payable/cash disbursements
5. Accounts receivable/cash receipts
6. Payroll disbursements
7. Utility billing process
8. Investment compliance
9. Property and equipment
10. Review of minutes of City meetings.
11. Review of important contracts and debt agreements.
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12. Perform interim exit conference with the City to review results of interim
fieldwork, including any findings.
C. Audit the financial statements of the City as well as the Successor Agency in
conformity with general accepted auditing standards and other applicable laws and
regulations, and issue an opinion thereon. (See below for further details.)
D. Consultant will prepare and publish a separate Improvement Authority audit
report including separately issued financial statements.
D. Test compliance with the Single Audit Act and applicable laws and regulations.
Consultant 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.
F Test compliance with the Government Appropriations Limit of Article XIIIB of
the California Constitution pertaining to the City’s appropriation limit, and
prepare a letter to the City Council regarding compliance.
G. Prepare a Management Letter that includes non-reportable recommendations for
improvements to internal controls.
H. Annually conduct one exit meeting with the City Council’s Audit Committee to
answer Audit Committee Members’ questions and to educate the 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.
I. Annual audit Presentation to City Council.
J. Consultant will provide the following optional reports solely if requested by City:
1. Comprehensive Financial Annual Report.
2. Cities Annual Financial Transactions Report.
3. Annual Street Report to the State Controller.
4. Independent Accountants’ Report on Agreed-Upon Procedures Performed
with Respect to City Employee Compensation.
K. Consultant will be available for any other professional assistance City requires to
research and answer accounting and reporting problems raised by the City,
regardless of the time of year. Such assistance may include, but is not limited to,
tax questions, the review of bond documents, cost allocation programs, and
employee benefit programs. Consultant has provided several tax opinions to City
audit clients for matters relating to deferred compensation, fringe benefits,
stipends and allowances, and other issues. Consultant also will keep the City
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informed of new developments affecting municipal finance and reporting, changes
in grant rules and regulations, etc.
Noted below is the work required by City staff to assist in the audit.
1. Technical assistance in familiarizing Consultant’ staff with the following:
· The flow of information through the various departments and accounting
systems
· Reports generated by City’s accounting system
· The system of internal controls
· Controls established to monitor compliance with federal grants
2. Preparation of trial balances for all funds, after posting of all year-end journal
entries.
3. Preparation of schedules supporting all major balance sheet accounts, and selected
revenue and expenditure accounts.
4. The typing of all confirmation requests.
5. The pulling and refiling of all supporting documents required for audit
verification.
6. Preparation of the schedule of expenditures of federal awards for Single Audit
purposes.
7. Preparation of the Comprehensive Annual Financial Report, unless the City elects
to use Consultant’s proposed optional services.
II. As part of the Services, Consultant will prepare and deliver the following tangible
work products to the City. If all books and records, schedules, and documents
are made available to Consultant by the middle of October of the fiscal year
following the one being audited (e.g., October 2018 for FY17-18), Consultant will
provide all reports by the due dates specified in Exhibit “D”, Schedule of
Performance.
A. Signed Independent Auditors’ Report on Consultant’s letterhead (electronic copy).
B. 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).
C. Independent Accountants’ Report on Agreed-Upon Procedures Applied to
Appropriations Limit Calculation (electronic copy).
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D. Separately issued financial statements for the Rancho Palos Verdes Joint Powers
Improvement Authority (10 copies).
E. Single Audit Report including appropriate schedules and auditors’ reports, if
applicable (10 copies).
F. A Management Letter addressed to the City Council recommending
improvements to the City’s internal control that are otherwise non-reportable
(electronic copy).
G. Consultant shall communicate in a letter to the Audit Committee, City Manager
and the Director of Finance 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 Consultant shall be communicated in the Management Letter, as
noted above.
H. Consultant shall be required to make immediate written notification to the Audit
Committee, City Manager, Director of Finance and City Attorney of all
irregularities and illegal acts or indications of illegal acts of which Consultant
becomes aware.
III. In addition to the requirements of Section 6.2, during performance of the Services,
Consultant will keep the City appraised of the status of performance by delivering
the following status reports:
A. Periodic reports on status of audit, as requested by City.
IV. All work product is subject to review and acceptance by the City, and must be
revised by the Consultant without additional charge to the City until found
satisfactory and accepted by City.
V. Consultant will utilize the following personnel to accomplish the Services:
A. Mr. Robert J. Callanan, CPA, Engagement Partner
B. Mr. Nitin Patel, CPA, Technical Review Partner
C. Mr. Robert Perl, CPA, audit manager
D. Ms. Brittany Mello, CPA, audit supervisor
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EXHIBIT A-1
SCOPE OF SERVICES/ ADDITIONAL REQUIREMENTS
AUDITS TO BE IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING
STANDARDS (GAAS) AND OTHER REQUIREMENTS.
Consultant will audit the financial statements of the City and the component units noted
in the Scope of Services. The financial statements of all entities where the City exercises
oversight will be combined with the City’s financial statements in accordance with
Government Accounting Standards Board (GASB) requirements. Consultant’s audit will
be in accordance with auditing standards generally accepted in the United States of
America (GAAS), as set forth by the American Institute of Certified Public Accountants
(AICPA), and will include such auditing procedures as Consultant considers necessary
under the circumstances. Consultant will apply certain limited procedures, which consist
principally of inquiries of management regarding methods of measurement and
presentation of required supplementary information. However, Consultant will not audit
such information and will not express an opinion on it. Any supplemental financial
statements will be subjected to auditing procedures as Consultant considers necessary in
relation to the financial statements taken as a whole. The scope of Consultant’s audit will
not include any statistical information, and Consultant will not express an opinion
concerning it.
Consultant’s audits will conform to the guidelines set forth in the AICPA’s Industry
Audit Guide, Audits of State and Local Governmental Units. Also, each examination will
comply with the standards for financial and compliance audits contained in the
Government Auditing Standards, issued by the US General Accounting Office, the
provisions of the Single Audit Act, and the provisions of Title 2 US Code of Federal
Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirement for Federal Awards (Uniform Guidance).
Also, Consultant will perform an agreed-upon procedures review of the City’s Gann
Spending Limitation Computation as required by Section 1.5 of Article XIIIB of the
California Constitution. Consultant’s review will be performed in conformance with the
provision of the “League of California Cities Uniform Guidelines.”
AUDIT APPROACH.
• Consultant will assign experienced staff auditors, including the in-charge field
auditor, having at least three years of experience. For first-year engagements, all other
staff will have at least one year of experience. City will not spend time training
Consultant’s auditors.
• Whenever possible, Consultant will use the same format for audit supporting
schedules used in prior years for the current-year audit. This will reduce time spent by
City staff in dealing with the audit when a different audit firm is chosen.
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• Throughout the year, Consultant is available as a resource to City in researching
technical questions, dealing with new pronouncements, reviewing complex financial
entries, and helping with any other issues as they arise.
• The workpapers will be reviewed by Consultant’s manager or partner as fieldwork is
being completed to minimize additional questions after the fieldwork is completed.
• Consultant’s firm uses a governmental audit program that will be modified to the
City’s operations to accommodate specific client circumstances. Consultant’s audit
programs are organized by the financial statement approach and general procedures.
The requirements by the standards for assessing risk are utilized to modify the audit
programs to focus on the higher risk areas of the financial statements.
FINAL AUDIT WORK.
During the final audit work, Consultant will assess “risk” of material
misstatement based on an understanding of the City’s audit environment,
including its internal control, to identify account balances. Consultant’s audit
programs will be specifically tailored to address any significant risks identified.
The Prepared by Client list will be provided at least one month in advance of
fieldwork. Consultant’s work may include the following:
• Confirm cash and investments balances and testing of bank
reconciliations.
• Confirm significant receivable balances or review subsequent cash receipts
to verify receivable balance.
• Search for unrecorded liabilities.
• Test interfund balances and transfers.
• Test capital asset additions and depreciation expense.
• Confirm long-term debt balances and review the accounting treatment of
debt issued or refunded.
• Test support for other significant assets or liabilities.
• Perform analytical procedures on the balance sheet and revenue and
expenditure accounts to evaluate and explain unusual fluctuations from
prior-year balances or current-year budgeted amounts.
• Review attorney letters for significant legal matters affecting the City’s
financial position.
• Conduct an exit conference to review any significant adjustments or
findings.
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01203.0007/464459.8 B-3
• The audit workpapers will be reviewed by Consultant’s management team
as the work is being performed in the field so that at the conclusion of the
fieldwork Consultant is able to report any adjustments or findings.
AUDIT APPROACH REDEVELOPMENT AGENCY/SUCCESSOR AGENCY.
Recent legislation related to the dissolution of Redevelopment Agencies will impact
Consultant’s audit approach. Consultant’s procedures will include the following:
• Audit the balances reported for cash, investments, receivables, payables,
capital assets, and long-term liabilities as of end of the year.
• Review the activity reported on the Recognized Obligation Payments
Schedule.
• Review the activities of the Successor Agency to ensure compliance with
Assembly Bills 26 and 1484, Senate Bill 107, and other relevant
legislation enacted.
APPROACH TO INTERNAL CONTROL.
Consultant’s audit will include obtaining an understanding of the entity and its
environment, including internal control, sufficient to assess the risks of material
misstatement of the financial statements and to design the nature, timing, and extent of
further audit procedures. Consultant’s understanding of the internal controls will be
completed by completing narratives and checklists for various processes related to
internal control. Tests of controls may be performed to test the effectiveness of certain
controls that Consultant considers relevant to preventing and detecting errors and fraud
that are material to the financial statements and to preventing and detecting misstatements
resulting from illegal acts and other noncompliance matters that have a direct and
material effect on the financial statements. Consultant’s tests, if performed, will be less in
scope than would be necessary to render an opinion on internal control, and accordingly,
no opinion will be expressed in Consultant’s report on internal control issued pursuant to
Government Auditing Standards.
As required by Title 2 US Code of Federal Regulations Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirement for Federal Awards (Uniform
Guidance), Consultant will perform tests of controls over compliance to evaluate the
effectiveness of the design and operation of controls that Consultant considers relevant to
preventing or detecting material noncompliance with compliance requirements applicable
to each major federal award program. However, Consultant’s tests will be less in scope
than would be necessary to render an opinion on those controls, and accordingly, no
opinion will be expressed in Consultant’s report on internal control issued pursuant to the
Uniform Guidance.
An audit is not designed to provide assurance on internal control or to identify significant
deficiencies. However, during the audit, Consultant will communicate to management
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and those charged with governance internal control related matters that are required to be
communicated under AICPA professional standards, Government Auditing Standards,
and the Uniform Guidance.
SINGLE AUDIT APPROACH.
• The single audit will be performed in accordance with all the requirements of the
Single Audit Act, the Uniform Guidance, and Government Auditing Standards issued
by the GAO (the Yellow Book) for cities that expend greater than $750,000 in federal
awards in a fiscal year.
• Consultant will identify the major and nonmajor federal programs of the City through
the risk-based approach required by the Uniform Guidance. This approach includes
consideration of current and prior audit experience, oversight by federal agencies and
pass-through entities, and the inherent risk of the federal program.
• Consultant will review all federal and industry-specific publications and guidance and
inform the City of any recent changes.
• Consultant will perform tests of controls to evaluate the effectiveness of the design
and operation of controls that Consultant considers relevant to preventing or detecting
material noncompliance with applicable compliance requirements. If weaknesses in
the internal controls are noted, Consultant will modify our audit program as needed.
• Our audit will include tests of transactions related to major federal award programs
for compliance with applicable compliance requirements and certain provisions of
laws, regulations, contracts, and grant agreements.
• Our procedures will consist of the applicable procedures described in the Uniform
Guidance for the types of compliance requirements that could have a direct and
material effect on each of the City’s major programs. The purpose of those procedures
will be to express an opinion on the City’s compliance with requirements applicable
to major programs in our report on compliance issued pursuant to the Uniform
Guidance.
• Consultant will assist the City in completing and filing the Data Collection Form.
DETERMINING LAWS AND REGULATIONS SUBJECT TO AUDIT.
Under provisions of AICPA auditing standards, management of the City is responsible for
identifying to its outside auditors any laws and regulations that could have a significant
effect on the audit. This would include federal laws (such as federal grant regulations),
state laws (such as permitted investments under the California Government Code), and
local laws (such as restrictions on special revenues levied by the City). After Consultant’s
selection as auditors, Consultant will consult with City officials regarding these matters to
determine what laws and regulations need to be evaluated in connection with
Consultant’s audit. If a City is not able to identify specific laws and regulations that affect
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it, Consultant has references (California Government Code and Health and Safety Code)
to the more common laws, rules, and regulations in Consultant’s standard audit programs
for the usual activities of a California City or Successor Agency to the Redevelopment
Agency that will assist us in identifying laws and regulations to review in the audit.
METHOD OF SAMPLING.
Consultant’s approach is to utilize random sampling based on Consultant’s testing of the
internal control systems related to cash receipts, cash disbursements, payroll, and utility
billings. Based on a statistical conclusion used by the firm Consultant’s sample sizes can
range from 25 to 60 transactions for each system. A random sample selection allows each
item in the population an equal chance of being selected. In addition, for disbursements,
Consultant may select a stratified sample of all transactions over a specified dollar
amount for review.
ANALYTICAL PROCEDURES.
Analytical procedures are used in the planning and final stages of the audit. In the
planning phase, Consultant will use analytical procedures to identify unusual financial
transactions and compare relationships to expected results. Consultant will compare
current-year information to the prior years for balance sheet items, revenues, and
expenditures. In addition, revenues and expenditures are compared to budgets to identify
unexpected results. In the final stages of the audit, the financial statements are reviewed
to identify expected relationships, such as comparing debt paid to expenditures recorded
on governmental funds, transfers between funds, depreciation expense, etc. For all
significant relationships identified, explanations are obtained as to why the situation
occurred and additional audit procedures are applied to resolve any concerns.
MANAGEMENT LETTERS.
In connection with each audit, a complete review of internal controls will be made of all
significant accounting procedures. Consultant’s firm uses an internal control
questionnaire, computer systems questionnaire, and narration to gain an understanding of
the internal control process as part of Consultant’s audit. Consultant will identify
weaknesses, and after discussion with the appropriate City staff, Consultant will submit a
management letter that will identify weaknesses observed during these reviews and
throughout the audit. The management letter will also assess the effect of the
management letter comments on the financial reporting process and recommend steps
toward eliminating the weaknesses.
POTENTIAL AUDIT PROBLEMS.
Consultant does not anticipate any significant potential audit problems. If any potential
audit problems are identified, Consultant will immediately discuss them with the City’s
management. Consultant’s approach is to coordinate the resolution of any problems with
the City’s management. Considering Consultant’s experience with auditing governmental
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entities, Consultant expects minimal disruption to the City’s management in resolving
any identified audit problems.
RETENTION OF AND ACCESS TO AUDIT WORKPAPERS.
In accordance with provisions of the Uniform Guidance, GAO requirements, and the
California Board of Accountancy, Consultant’s audit workpapers will be maintained for
at least seven years after the date of the report. These workpapers will be made available
as necessary to City’s cognizant audit agency (or its designee), to GAO representatives, or
to any other federal or state agency needing access to the workpapers. Also, Consultant’s
firm will respond to any reasonable inquiries of successor auditors, and Consultant will
allow any successor auditors to review Consultant’s workpapers.
IRREGULARITIES AND ILLEGAL ACTS.
Consultant will make an immediate written report of all irregularities, illegal acts, or
indications of illegal acts of which Consultant becomes aware to the following parties:
the City Council of the City of Rancho Palos Verdes, the City Manager, the City
Attorney, and the Director of Finance.
DISCUSSION OF RELEVANT ACCOUNTING ISSUES
GASB STATEMENT NO. 75
GASB Statement No. 75, Accounting and Financial Reporting for Postemployment
Benefits Other Than Pensions, is effective for periods beginning after June 15, 2017. The
scope of this statement addresses accounting and financial reporting for post-employment
benefits other than pension (other post-employment benefits or OPEB) that are provided
to the employees of state and local governmental employers. This statement establishes
standards for recognizing and measuring liabilities, deferred outflows of resources,
deferred inflows of resources, and expense/expenditures for defined benefit and defined
contribution plans.
GASB STATEMENT NO. 81
GASB Statement No. 81, Irrevocable Split-Interest Agreements, is effective for periods
beginning after December 15, 2016. This statement requires that a government that
receives resources pursuant to an irrevocable split-interest agreement recognize assets,
liabilities, and deferred inflows of resources at the inception of the agreement. It also
requires that a government recognize assets representing its beneficial interest in
irrevocable split-interest agreements that are administered by a third party if the
government controls the present service capacity of the beneficial interests, and that a
government recognizes revenue when the resources become applicable to the reporting
period.
GASB STATEMENT NO. 82
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GASB Statement No. 82, Pension Issues an Amendment of GASB Statements No. 67,
No. 68, and No. 73, is effective for periods beginning after June 15, 2016, except for
certain provisions on selection of assumptions, which are effective in the first reporting
period in which the measurement date of the pension liability is on or after June 15, 2017.
For the selection of assumptions, this statement clarifies that a deviation, as the term is
used in Actuarial Standards of Practices issued by the Actuarial Standards Board, from
the guidance in an Actuarial Standard of Practice is not considered to be in conformity
with the requirements of Statement No. 67, Statement No. 68, or Statement No. 73 for the
selection of assumptions used in determining the total pension liability and related
measures.
GASB STATEMENT NO. 83
GASB Statement No. 83, Certain Asset Retirement Obligations, is effective for periods
beginning after June 15, 2018.
This statement addresses accounting and financial reporting for certain asset retirement
obligations (AROs). An ARO is a legally enforceable liability associated with the
retirement of a tangible capital asset. A government that has legal obligations to perform
future asset retirement activities related to its tangible capital assets should recognize a
liability based on the guidance in this statement.
GASB STATEMENT NO. 84
GASB Statement No. 84, Fiduciary Activities, is effective for reporting periods beginning
after December 15, 2018 (earlier application is encouraged).
This statement establishes criteria for identifying activities of all states and local
governments. The focus of the criteria generally is on (1) whether a government is
controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a
fiduciary relationship exists. This statement describes four fiduciary funds that should be
reported, if applicable: (1) pension (and other post-employment benefit) trust funds, (2)
investment trust funds, (3) private-purpose trust funds, and (4) custodial funds. Activities
meeting the criteria should be reported in a fiduciary fund in the basic financial
statements.
GASB STATEMENT NO. 85
GASB Statement No. 85, Omnibus 2017, is effective for reporting periods beginning after
June 15, 2017 (earlier application is encouraged).
This statement addresses practice issues that have been identified during implementation
and application of certain GASB Statements. This statement addresses a variety of topics
including issues related to blending component units, goodwill, fair value measurement
and application, and post-employment benefits (pensions and other post-employment
benefits).
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GASB STATEMENT NO. 86
GASB Statement No. 86, Certain Debt Extinguishment Issues, is effective for reporting
periods beginning after June 15, 2017 (earlier application is encouraged).
This statement provides guidance for transactions in which cash and other monetary
assets acquired with only existing resources - resources other than the proceeds of
refunding debt - are placed in an irrevocable trust for the sole purpose of extinguishing
debt. This statement also improves accounting and financial reporting for prepaid
insurance on debt that is extinguished and notes to financial statements for debt that is
defeased in substance.
GASB STATEMENT NO. 87
GASB Statement No. 87, Leases, is effective for reporting periods beginning after
December 15, 2019 (earlier application is encouraged).
This statement establishes a single model for lease accounting based on the foundational
principle that leases are financings of the right to use an underlying asset. Under this
statement, a lessee is required to recognize a lease liability and an intangible right-to-use
lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow
of resources, thereby enhancing the relevance and consistency of information about a
government’s leasing activities.
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01203.0007/464459.8 B-1
EXHIBIT “B”
SPECIAL REQUIREMENTS
(Superseding Contract Boilerplate)
Section 3.4, Term, is amended as follows:
3.4 Term.
Unless earlier terminated in accordance with Article 7 of this Agreement, this Agreement shall
continue in full force and effect until completion of the services but not exceeding one (1)(3)
three years from the date hereof, except as otherwise provided in the Schedule of Performance
(Exhibit “D”). Consultant will audit the City’s financial records for the fiscal years ending
June 30, 2018 through June 30, 2020, with the option at City’s sole discretion, to extend the
contract for two (2) additional one-year terms for the fiscal years ending on June 30, 2021 and
June 30, 2022.
Section 6.3, Ownership of Documents, is amended as follows:
6.3 Ownership of Documents.
All drawings, specifications, maps, designs, photographs, studies, surveys, data, notes, computer
files, reports, records, documents and other materials, except for those items constituting audit
working papers, (the “documents and materials”) prepared by Consultant, its employees,
subcontractors and agents in the performance of this Agreement shall be the property of City and
shall be delivered to City upon request of the Contract Officer or upon the termination of this
Agreement, and Consultant shall have no claim for further employment or additional
compensation as a result of the exercise by City of its full rights of ownership use, reuse, or
assignment of the documents and materials hereunder. Any use, reuse or assignment of such
completed documents for other projects and/or use of uncompleted documents without specific
written authorization by the Consultant will be at the City’s sole risk and without liability to
Consultant, and Consultant’s guarantee and warranties shall not extend to such use, reuse or
assignment. Consultant may retain copies of such documents for its own use. Consultant shall
have the right to use the concepts embodied therein. All subcontractors shall provide for
assignment to City of any documents or materials prepared by them, and in the event Consultant
fails to secure such assignment, Consultant shall indemnify City for all damages resulting
therefrom. Moreover, Consultant with respect to any documents and materials that may qualify as
“works made for hire” as defined in 17 U.S.C. § 101, such documents and materials are hereby
deemed “works made for hire” for the City.
Section 7.7, Liquidated Damages, is deleted in its entirety.
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EXHIBIT “C”
SCHEDULE OF COMPENSATION
I. Consultant shall perform the following tasks at the following rates:
MAXIMUM PRICE SUMMARY
2017‐18 2018‐19 2019‐20 2020‐21 2021‐22
City Audit (1)
$30,125
$30,125
$30,730
$31,345
$31,975
Improvement
Authority Audit
$4,670
$4,670
$4,765
$4,860
$4,955
Single Audit (2) $3,650 $3,650 $3,720 $3,795 $3,870
Gann Limit Review
Report $485
$485
$495
$505
$515
Subtotal $38,930 $38,930 $39,710 $40,505 $41,315
Optional Services:
City:
Preparation of CAFR $4,745 $4,745 $4,840 $4,935 $5,035
State Controller's
Report
$4,415 $4,415 $4,505 $4,595 $4,690
Street Report $2,145 $2,145 $2,190 $2,235 $2,280
Agreed‐upon
procedures related to
City employee
compensation
$2,740
$2,740
$2,795
$2,850
$2,905
Total all‐inclusive
maximum price
$52,975
$ 52,975
$54,040
$55,120
$56,225
(1) Included in the City audit price is 6 hours of partner time related to attendance
at a City Council meeting and two meetings with the audit committee.
(2) The price of the Single Audit contemplates compliance testing for only one major
program. Should it be determined that the City has more than one major program in
any given year, there would be an additional charge of $1,500 for each additional major
program.
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01203.0007/464459.8 C-2
DETAILED COST BREAKDOWNS FOR THE INDIVIDUAL TASKS:
CITY AUDIT
Standard
Hourly
Quoted
Hourly
Hours Rates Rates Total
Partners 20 $ 400 $ 240 $ 4,800
Manager 26 250 175 4,550
Supervisory Staff 82 165 130 10,660
Staff 90 110 95 8,550
Clerical 3 90 55 165
Subtotal 221 28,725
Out‐of‐pocket expenses:
Transportation 1,400
Total all‐inclusive maximum price for City Audit $ 30,125
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01203.0007/464459.8 C-3
IMPROVEMENT AUTHORITY AUDIT
Standard
Hourly
Quoted
Hourly
Hours Rates Rates Total
Partners 1 $ 400 $ 240 $ 240
Manager 2 250 175 350
Supervisory Staff 6 165 130 780
Staff 33 110 95 3,135
Clerical _ 3 90 55 165
Subtotal 45 4,670
Out‐of‐pocket expenses:
Transportation ____________
Total all‐inclusive maximum price for $ 4,670_
for the Improvement Authority Audit
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01203.0007/464459.8 C-4
SINGLE AUDIT
Standard
Hourly
Quoted
Hourly
Hours Rates Rates Total
Partners 2 $ 400 $ 240 $ 480
Manager 3 250 175 525
Supervisory Staff 6 165 130 780
Staff 17 110 95 1,615
Clerical 2 90 55 110
Subtotal 30 3,510
Out‐of‐pocket expenses:
Transportation _______140_
Total all‐inclusive maximum price for $ 3,650_
the Single Audit
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01203.0007/464459.8 C-5
GANN LIMIT REVIEW REPORT
Standard
Hourly
Quoted
Hourly
Hours Rates Rates Total
Partners 1 $ 400 $ 240 $ 240
Manager _ 250 175 _
Supervisory Staff _ 165 130 _
Staff 2 110 95 190
Clerical 1 90 55 55
Subtotal 4 485
Out‐of‐pocket expenses:
Transportation _________‐_
Total all‐inclusive maximum price for $ _485_
the Gann Limit Review Report
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01203.0007/464459.8 C-6
PREPARATION OF COMPREHENSIVE ANNUAL FINANCIAL REPORT
Standard
Hourly
Quoted
Hourly
Hours Rates Rates Total
Partners 1 $ 400 $ 240 $ 240
Manager 2 250 175 350
Supervisory Staff 6 165 130 780
Staff 28 110 95 2,660
Clerical 13 90 55 715
Subtotal 50 4,745
Out‐of‐pocket expenses:
Transportation _________‐_
Total all‐inclusive maximum price for $______4,745_
the City’s Comprehensive Annual Financial Report
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01203.0007/464459.8 C-7
CITY’S STATE CONTROLLER’S REPORT
Standard
Hourly
Quoted
Hourly
Hours Rates Rates Total
Partners 1 $ 400 $ 240 $ 240
Manager 2 250 175 350
Supervisory Staff 10 165 130 1,300
Staff 26 110 95 2,470
Clerical 1 90 55 55
Subtotal 40 4,415
Out‐of‐pocket expenses:
Transportation _________‐_
Total all‐inclusive maximum price for $______4,415_
City’s State Controller’s Report
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01203.0007/464459.8 C-8
CITY’S STREET REPORT
Standard
Hourly
Quoted
Hourly
Hours Rates Rates Total
Partners 1 $ 400 $ 240 $ 240
Manager ‐ 250 175 ‐
Supervisory Staff 4 165 130 520
Staff 14 110 95 1,330
Clerical 1 90 55 55_
Subtotal 20 2,145
Out‐of‐pocket expenses:
Transportation ________‐__
Total all‐inclusive maximum price for $______2,145_
The City’s Street Report
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01203.0007/464459.8 C-9
AGREED‐UPON PROCEDURES RELATED TO CITY EMPLOYEE COMPENSATION
Standard
Hourly
Quoted
Hourly
Hours Rates Rates Total
Partners 1 $ 400 $ 240 $ 240
Manager 2 250 175 350
Supervisory Staff 4 165 130 520
Staff 16 110 95 1,520
Clerical 2 90 55 110
Subtotal 25 2,740
Out‐of‐pocket expenses:
Transportation _________N/A
Total all‐inclusive maximum price for $ 2,740
City’s Agreed Upon Procedures Related to
City Employee Compensation
II. A retention of ten percent (10%) shall be held from each payment as a contract
retention to be paid as part of the final payment upon satisfactory completion of
services. NOT APPLICABLE.
III. Within the budgeted amounts for each Task, and with the approval of the Contract
Officer, funds may be shifted from one Task subbudget to another so long as the
Contract Sum is not exceeded per Section 2.1, unless Additional Services are
approved per Section 1.9.
IV. The City will compensate Consultant for the Services performed upon submission of
a valid invoice. Each invoice is to include:
A. Line items for all personnel describing the work performed, the number of hours
worked, and the hourly rate.
B. Line items for all materials and equipment properly charged to the Services.
C. Line items for all other approved reimbursable expenses claimed, with supporting
documentation.
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01203.0007/464459.8 C-10
D. Line items for all approved subcontractor labor, supplies, equipment, materials,
and travel properly charged to the Services.
V. The total compensation for the Services shall not exceed the Contract Sum as
provided in Section 2.1 of this Agreement.
VI. The Consultant’s billing rates for additional services are attached as Exhibit C-1.
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01203.0007/464459.8 C-11
EXHIBIT C-1
HOURLY RATES FOR ADDITIONAL PROFESSIONAL SERVICES
City will provide a written request to Consultant for any optional consulting or other services
outside the scope of the services described. The following hourly rates for these services during
each year under the basic contract will be as follows:
Option Periods
2017‐18 2018‐19 2019‐20 2020‐21 2021‐22
Robert J. Callanan, CPA
Engagement Partner
$ 240
$ 247
$ 255
$ 262
$ 270
Nitin P. Patel, ‐ CPA
Technical Review Partner 240 247 255 262 270
Managers 175 180 186 191 197
Supervisory Staff 130 134 138 142 146
Staff 95 98 101 104 107
Clerical 55 57 58 60 62
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01203.0007/464459.8 D-1
EXHIBIT “D”
SCHEDULE OF PERFORMANCE
I. Consultant shall perform all Services timely as provided:
REPORTS TO BE ISSUED AND DUE DATES
Draft Final
Due Dates Due Dates
City of Rancho Palos Verdes:
Independent Auditors’ Report (electronic copy) November 15 November 30
Management Letter (electronic copy) November 30 December 15
Audit Committee Letter (electronic copy) November 30 December 15
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 November 30 December 15
Report on Compliance with Article XIIIB Appropriation
Limit (electronic copy) November 30 December 15
Rancho Palos Verdes Joint Powers Improvement Authority:
Independent Auditors’ Report and basic financial
Statements (10 copies) November 30 December 15
Single Audit Report (10 copies):
Independent Auditors’ Report on Compliance for Each
Major Program and on Internal Control over
Compliance Required by the Uniform Guidance and on
the Schedule of Expenditures of Federal Awards November 30 December 15
AUDIT TIMING
Assuming that the City’s books are closed and ready for examination and that all necessary schedules and
documents are available for our use by mid-October each year, the suggested time schedule for the various phases
of the audit would be approximately as follows:
Completed By
Entrance conference with audit committee and key City staff;
discussion of any prior audit concerns and the performance of
interim work April 30
Interim audit fieldwork and management review June 30
Final audit fieldwork and management review November 15
Exit conference with the audit committee and management December 15
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01203.0007/464459.8 D-2
Segmentation of the audit hours by partner and staff level
City of Rancho Palos Verdes:
Partners Manager
Supervisory
Staff Staff Clerical Total
Audit and Related Audit Letters 20 26 82 90 3 221
Improvement Authority:
Audit and Report Preparation 1 2 6 33 3 45
Single Audit and
Related Reports 2 3 6 17 2 30
GANN Limit Review Report 1 - - 2 1 4
Subtotal - Requested Services 24 31 94 142 9 300
Optional Services:
CAFR Preparation 1 2 6 28 13 50
State Controller's Report - City 1 2 10 26 1 40
Street Report 1 - 4 14 1 20
AUP - Employee Compensation 1 2 4 16 2 25
Subtotal - Optional Services 4 6 24 84 17 135
Total Hours 28 37 118 226 26 435
SEGMENTATION OF THE AUDIT HOURS BY PHASES OF THE AUDIT
Partners Manager
Supervisory
Staff Staff Clerical Total
Planning 3 12 4 4 2 25
Interim Fieldwork 2 4 26 28 - 60
Final Fieldwork and Review 19 15 64 110 7 215
Total Hours 24 31 94 142 9 300
II. Consultant shall deliver the following tangible work products to the City by the
following dates.
A. See I., above.
III. The Contract Officer may approve extensions for performance of the services in
accordance with Section 3.2.
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CITY OF
RANCHO PALOS VERDES
REQUEST FOR PROPOSAL
FOR PROFESSIONAL AUDITING SERVICES
FEBRUARY 2018
Proposals due by February 28, 2018 by 5:00 PM
Trang Nguyen, Deputy Director of Finance
City of Rancho Palos Verdes
Finance Department
30940 Hawthorne Boulevard
Rancho Palos Verdes, CA 90275
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TABLE OF CONTENTS
I. INTRODUCTION 1
A. General Information 1
B. Term of Engagement 1
C. Description of Rancho Palos Verdes 2
II. SCOPE OF SERVICES 2
A. Scope Of Work 2
B. Reports To Be Issued 3
C. Additional Optional Services 4
D. Other information 5
Ill. TIME REQUIREMENTS 5
A. Proposal Calendar 5
B. Audit Calendar 5
IV. PROPOSAL REQUIREMENTS 6
A. Submission Information 6
B. Technical Proposal Format 6
C. Technical Proposal Contents 6
D. Cost Proposal 8
V. EVALUATION CRITERIA 9
A. Criteria 9
B. Proposal Review 10
VI. CONTACT INFORMATION 10
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City of Rancho Palos Verdes – 2018 RFP for Professional Auditing Services Page | 1
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, 2018 through June 30,
2020 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 April 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.
B. Term Of Engagement
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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 total of 70 authorized full-time employees and about 68 of part-time
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 was not renewed after 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
1. 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.
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2. 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.
3. The auditor will prepare and publish a separate Improvement
Authority audit report including separately issued financial
statements.
4. 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.
5. Test compliance with Article XIIIB pertaining to the City’s
appropriation limit, and prepare a letter to the City Council
regarding compliance.
6. Prepare a Management Letter that includes non-reportable
recommendations for improvements to internal controls.
7. The firm selected may also be asked to examine or prepare
other reports or perform other services as required.
8. Audit Presentation to City Council.
B. Reports To Be Issued
1. Signed Independent Auditors’ Report on auditor letterhead
(electronic copy).
2. 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).
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3. Independent Accountants’ Report on Agreed-Upon
Procedures Applied to Appropriations Limit Calculation
(electronic copy).
4. Separately issued financial statements for the Authority (10
copies).
5. Single Audit Report including appropriate schedules and
auditors’ reports, if applicable (10 copies).
6. A Management Letter addressed to the City Council
recommending improvements to the City’s internal control
that are otherwise non-reportable (electronic copy).
7. The auditor shall communicate in a letter to the Audit
Committee, City Manager and the Director of Finance 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.
8. The auditor shall be required to make immediate written
notification to the Audit Committee, City Manager, Director of
Finance 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.
1. Comprehensive Financial Annual Report.
2. Cities Annual Financial Transactions Report.
3. Annual Street Report to the State Controller.
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City of Rancho Palos Verdes – 2018 RFP for Professional Auditing Services Page | 5
4. Independent Accountants’ Report on Agreed-Upon
Procedures Performed with Respect to City Employee
Compensation.
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
1. The firm selected must acquire a City business license while
conducting any work under the agreement.
2. 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 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
February 08, 2018 Request for Proposal issued
February 28, 2018 Proposals due at 5:00pm
March 5-9, 2018 Oral interviews
April 17, 2018 Contract awarded by City Council
B. Audit Calendar
March Management Staff available to meet for
audit planning.
March 31 Single Audit Report due.
March-April Agreed Upon Procedures (AUP) for
Employee Compensation Report.
April-May Records ready for interim review.
Mid October-November Records ready for final audit.
Mid December Auditors’ reports and separately issued
Successor Agency and Authority
financial statements due.
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IV. Proposal Requirements
A. Submit two (2) hard copies and one electronic copy (PDF) of
the proposal to:
Trang Nguyen
Deputy Director of Finance
City of Rancho Palos Verdes
30940 Hawthorne Blvd.
Rancho Palos Verdes, CA 90275
Email: tnguyen@rpvca.gov
No fax proposals will be accepted. Proposals received after February
28, 2018 at 5:00pm will not be considered.
B. Technical Proposal Format
1. Title Page
Show the subject, name of the firm, contact information and
date of submission.
2. Table Of Contents
Provide a complete identification of materials submitted by
section and page number.
3. 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
1. Firm Qualifications
a) 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.
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b) 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.
c) Indicate how the quality and consistency of staff will
be assured over the term of the engagement.
d) Include an affirmative statement that the firm is
independent of the City, as defined by generally
accepted auditing standards.
e) 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.
f) 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 the listed
references regarding the audit services performed by
the firm.
g) 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.
h) Include information regarding other services provided
by the firm.
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i) 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.
2. Audit Approach and Timing
a) 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.
b) 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
1. 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. 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.
2. Provide separate detail for the cost of anticipated meetings
with the audit committee.
3. Include the standard hourly rates by staff class for other
services requested outside the scope of this engagement,
including general consulting and special audits.
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4. The City will not be responsible for expenses incurred in
preparing and submitting the proposal. Such costs should
not be included in the proposal.
5. 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:
1. The firm’s independence, license to practice in California,
and results of the most recent peer review.
2. Qualifications and related experience of the audit team to
serve the City.
3. The firm’s experience auditing California Cities
4. References of local government clients.
5. Proposed approach to the City’s audit.
6. Demonstration of understanding of the objectives and scope
of the audit.
7. Commitment to conducting the audit in a timely manner.
8. Maximum fees to conduct the audit.
B. Proposal Review
1. Proposals will be evaluated by City Staff including Deborah
Cullen, Director of Finance and Trang Nguyen, Deputy
Director of Finance.
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City of Rancho Palos Verdes – 2018 RFP for Professional Auditing Services Page | 10
2. 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 April 17, 2018 City Council meeting.
VI. Contact Information
Firms are encouraged to contact Vina Ramos, Accounting Supervisor at (310)
544-5210 or vramos@rpvca.gov with any questions regarding this RFP or
records maintained by the City.
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