HomeMy Public PortalAbout12) 7I Approval of an Amendment to the Consultant Services Agreement with Vasquez Company for Accounting Auditing ServicesAGENDA
ITEM 7.1.
ADMINISTRATIVE SERVICES DEPARTMENT
MEMORANDUM
DATE: April 7 , 2015
TO: The Honorable City Council
FROM: Bryan Cook , City Manager
By : Tracey L. Hause , Administrative Services Director
SUBJECT: APPROVAL OF AN AMENDMENT TO THE CONSULTANT SERVICES
AGREEMENT WITH VASQUEZ & COMPANY, LLP FOR ACCOUNTING
AND AUDITING SERVICES
RECOMMENDATION:
It is recommended, th e City Council accept the Aud it Standing Committee 's
recommendation and approve an amendment to the Consultant Services Agreement
(Attachment "A ") with Vasquez & Company, LLP for the second , one year extension
providing for accounting and auditing services for Fiscal Year (FY) 2014-15 .
BACKGROUND :
1. On August 2 , 2011 , th e City Counci l approved a Consultant Services Agreement
(Attachment "B") with Vasquez & Company, LLP for accounting and auditing
services and authorized the City Manager to execute the Consultant Services
Agreement.
2 . On June 17 , 2014 , the City Council approved the First Amendment to the
Consultant Services Agreement with Vasquez & Company , LLP for a one year
extens ion providing for accounting and auditing services for FY 2013-14.
3. On July 15, 2014 , the City Council dissolved the Audit Ad Hoc Committee,
appointed an Audit Standing Committee (i.e ., Chairperson Steven Curran , Vice
Chairperson Councilmember Yu and Mayor Pro Tem Chavez) and adopted an
Audit Standing Committee Charter (Attachment "C").
4 . On February 5 , 2015 , the Audit Standing Committee took action to recommend to
the City Council an amendment to the Consultant Services Agreement with
Vasquez & Company, LLP , for a second , one year extension providing for
accounting and audi t ing services for FY 2014-15 .
City Council
April 7, 2015
Page 2 of 2
ANALYSIS:
Consistent with the City Council 's directive during the FY 2010-11 City Budget
deliberations , staff completed the formal RFP process for the City's accounting and
auditing services . A Consultant Services Agreement with Vasquez & Company was
approved by the City Council and executed by the City Manager. The cons ultant
services agreement had an initial term of three years with two , one year extensions .
As a result of the 2012-2013 Civi l Grand Jury Report, the Audit Standing Committee
was established . Along with overseeing the performance of the Vasquez & Company,
LLP during the audit process in the fall of 20 14 , the Audit Standing Committee also
recommended that the City Council approve the second , one year extension with
Vasquez & Company, LLP for auditing services for FY 2014-1 5 .
Since this will be the fifth year that Vasquez & Company LLP has completed accounting
and auditing services for the City , and in order to maintain best practices as
recommended by the 2012-2 013 CGJ Report , the City will request proposals for
accounting and auditing serv ice s for the FY 2015-16 , in the spring of 2016 .
CONCLUSION:
As a result of Vasquez & Company's continued satisfactory auditing services , and since
the initial Consultant Services Agreement included two , one year extensions after the
initial three year term , it is recommended the City Council accept the Audit Standing
Committee 's recommendation and approve the second , one year extension with
Vasquez & Company, LLP for accounting auditi ng services fo r the period ending June
30, 2015. In keeping with the vision of the City 's Strategic Plan, this action will ensure
good governance .
FISCAL IMPACT:
The cost proposed for auditing services by Vasquez & Company , LLP for the FY 2014-
15 is $58 ,000 . An appropriation for this amount will be included in the FY 2015-16 City
Budget.
ATTACHMENTS:
A. Second Amendment to Consultant Services Agreement between the City of
Temple City and Vasquez and Company , LLP
B. Consultant Services Agreement between the City of Temple City and Vasquez and
Company , LLP
C. Staff Report-Dissolution of the Audit Ad Hoc Committee , Establishment of an Audit
Standing Committee and Adoption of an Audit Standing Committee Charter
ATTACHMENT A
SECOND AMENDMENT TO
CONSULTANT SERVICES AGREEMENT
by and between
the
CITY OF TEMPLE CITY
and
VASQUEZ & COMPANY, LLP
Dated Apri l 7 , 2014
RIV #4840-1328-2 571 vi
SECOND AMENDMENT TO CONSULTANT SERVICE AGREEMEN T
This second A mendment to Consultan t Services Agreement ("Second
Amendment"), which is dated for reference as indicated on the cover page , is hereby
entered into by and between the CITY OF TEMPLE C ITY , a Ca l ifornia charter city
("City"), and Vasquez & Company , a LLP ("Consu ltant "), as follows :
RECI T ALS
A. Ci ty and Cons ultant entered in a Consu ltant Services Agreemen t on July 28 ,
2011 ("Agree ment"). The Agreement provides that Consu ltant will perform
accounting and auditing services for Fiscal Year (FY ) 2010-11 , 2011-12 and
2012-13 .
B . Exhibit A of Secti on 2 of the Ag reement provided this Agreement provides for an
op t ion to re new for two (2) add it iona l years .
C . T he City Cou nci l approved a Firs t Amendment t o the Agreement on June 17 ,
2014 for accou nti ng and audit ing services for FY 2013-14
D. T he City des ires to execute a Second Ame ndm en t for accounting and auditing
services for FY 2014-15 .
OPE RATIVE PROVISIONS
NOW, THEREFORE , in considera t ion of the promises made and recited he rein ,
the parties do he reby e nter into this Seco nd Amendment which modifies and amends
the Agreement as fo ll ows :
1. AMENDMENT. The Agreement is hereby modified and amended as follows :
1.1 Term of Agreement. Section 1, prior Exhibit "A " is being replaced
with new Exhibit "A ".
1.2 Scope of Agreement. Sect ion 2 , prior Exhibit "A " is being
replaced with new Exhibit "A ".
1.3 Compensation . Section 4 prior Exhibit "B" is be ing replaced with
new Exhibit "8 ". The total compensation shall not exceed Fifty Eight Thousand
dollars ($58 ,000) for FY 2014-15 .
2. GENERAL PROVISIONS .
2 .1 Re mainder Unchanged . Except as specifically modified and
amended in this Second Amendment, t he Agreement remains in full force and effect
a nd binding upon t he parties .
RIV #4840-1 328-2 57 1 vi -2-
2 .2 Integration . This Second Amendment consists of pages 1 through
8 inclusive, which constitute the entire understanding and agreement of the parties and
supersedes all negotiations or previous agreements between the parties with respect to
all or any part of the transaction discussed in this Second Amendment.
2 .3 Effective Date . This Se c ond Amendment shall not become
effective until the date it has been formally approved by the City Council and e xecuted
by the appropriate authorities of the City and Consultant.
2.4 Applicable Law. The laws of the State of Ca lifornia shall govern
the interpretation and enforcement of this Second Amendment.
2 .5 References . All references to the Agreement include all their
respective terms and prov isions . All defined terms utilized in this Second Amendment
have the same meaning as provided in the Agreement , unless ex pressly stated to the
contrary in th is Second Amendment.
IN WITNESS WHEREOF , the parties hereto have e xecuted this Second
Amendment to the Agreement on the date and year first written above.
CITY:
THE CITY OF TEMPLE CITY
By :-=----=-____,--::=-:-:--=-=--------Bryan Cook , C ity Manager
ATIEST:
Peggy Kuo , City Clerk
APPROVED AS TO FORM
Eric S . Vail , City Attorney
RIV #4840-1328-25 7 1 vi -3 -
CONSULTANT:
By : _____________ _
Name : -------------------------
Title: ------------------------
By : ______________ __
Name: _______________________ _
T itle: _______________________ _
RIY #4840-1328-2571 vi -4-
68 76 vl
EXHIBIT "A"
SCOPE OF SERVICES
I. Consultant shall provide all services necessary to accomplish the tasks listed
below for the fiscal year 2015 .
(i) City of Temple City. Consultant will audit the financial statements of the
governmental activities , the business-type activities , each major fund , and
the aggregate remaining fund information of the City of Temple City , and
prepare the City 's Comprehensive Annual Financial Report (CAFR). The
CAFR will be in full compliance with GASB 34 . The audit firm will render
the report on the basic financial statements , which will include both
Government-Wide Financial Statements, and Major Fund Financial
Statements . Consultant will also apply limited audit procedures to
Management's Discussion and Analysis (MD&A) and required
supplementary information pertaining to the General Fund and each major
fund of the City .
(ii) Temple City Redevelopment Agency. Consultant will conduct a
financial and compliance audit of the Successor Agency to the Temple
City Redevelopment Agency (Successor Agency), as a Private-Purpose
Trust Fund of the City . The financial statements of the Successor Agency
will be incorporated into the City 's CAFR. The audit shall include a GASB
34 compliant component unit financial statement.
(iii) Federal Grants. Consultant will perform a single audit of the
expenditures of federal grants in accordance with OMB Circular A-133
and render the appropriate audit reports on Internal Control over Financial
Reporting based upon the audit of the City 's financial statements in
accordance with Government Auditing Standards and the appropriate
reports on compliance with Requirements Applicable to each Major
Program, Internal Control over Compliance and on the Schedule of
Expenditures of Federal Awards in Accordance with OMS Circular A-133.
The single audit report will include appropriate schedule of expenditures
of federal awards , footnotes , findings and questioned costs , including
reportable conditions and material weaknesses , and follow up on prior
audit findings where required.
(iv) Gann Limit. Consultant shall perform agreed-upon procedures pertaining
to the City 's GANN Limit (Appropriations Limit) and prepare a letter
regarding the City 's compliance with the GANN Limit.
(v) Management Letter. Consultant shall issue a separate "management
letter" that includes any recommendations for improvements in internal
RI V #48 38-6958 -3880 vI
A-I
6876 v l
control , accounting procedures and other significant observations that are
considered to be non-reportable conditions . Management letters shall be
addressed to the City Manager.
(vi ) Controller's Reports. Consultant shall prepare the Annual State
Controller's Reports for the City of Temple City and the Temple City
Financing Authority . Consultant will also prepare the Annual Street report .
(vi i) Irregularities and Illegal Acts. Consultant will make an immediate ,
written report of all irregularities and illegal acts or indications of i llegal
acts of which they become aware to the following parties : City Manager;
City Attorney ; and the Administrative Services Director.
II. As part of the Services, Consultant will prepare and deliver the following
tangible work products to the City:
i. Report on the CAFR -December 31 , 2015
11. Single Audit Report-March 31 , 2016
iii. Management Letter Comment -December 31 , 2015
iv. Agreed -upon Procedures Report on GANN Limit Calculation -December
31,2011
v. State Controller's Reports-deadline set by the State
v1. Street Gas Ta x Report-deadline set by the State
Ill. During performance of the Services, Consultant will keep the City appraised of
the status of performance by delivering the following status reports:
i. Audit Status Report
IV. The tangible work products and status reports will be delivered to the City
pursuant to the following schedule:
See above .
V. Consultant will utilize the following subcontractors to accomplish the
Services :
Not applicable
R IV #4838 -6958-3880 vi
A -2
68 7 6 v l
VI. AMENDMENT
The Scope of Services , includ ing services, work products, and personnel , are subject to
change by mutual Agreement. In the absence of mutual Agreement regarding the need
to change any aspects of performance , Consultant shall comply with the Scope of
Services as indicated above .
RI V 114838-6958-3880 vI
A-3
EXHIBIT "8"
COMPENSATION
I. City shall pay Consultant the sum of $58 ,000 for all services provided in connection
with the FY 2014-15 audit.
II. For services outside of the scope of services as defined in Exhibit A , Consultant
shall use the following rates of pay in the performance of the Services :
Personnel Category 2011 2012 2013 2014 2015
Partner/Principal
Manager
Supervisor
Senior Auditor
RIV #483 8-6958-3880 v i
$
$
$
$
250
160
140
12 0
257
165
144
124
B-1
265
170
148
128
273
175
152
132
281
180
156
136
ATTACHrv1Ef\JT 8
DATE:
TO :
FROM:
ADMINISTRATIVE SERVICES DEPARTMENT
MEMORANDUM
August 2, 2011
The Honorable City Council
Jose E. Pulido, City Manager I Interim Administrative Services Manager~
By: Lee Ma, Accountant \l}
SUBJECT : PROFESSIONAL SERVICES AGREEMENT WITH VASQUEZ &
COMPANY, LLP
r . r .
RECOMMENDATION:
The City Council is requested to:
a) Approve the Professional Services Agreement with Vasquez & Company,LLP for
auditing and accounting services; and
b) Authorize the City Manager to execute the Professional Services Agreement with
Vasquez & Company , LLP in an amount not to exceed $45,000 .
BACKGROUND:
1. Since 1994, the City has contracted with Conrad and Associates LLP for auditing
services .
2. In 2006, Conrad and Associates LLP became Mayer Hoffman McCann PC and the
City continued to have them prepare the year end audits .
3. During the Fiscal Year (FY) 2010 -11 City Budget approval process, the City Council
directed City staff to issue requests for proposals for all City contracts, including
aud iting and accounting serv ices .
4. On April 18, 2011, staff i ssued a Request for Proposal (RFP) for the City's auditing
and accounting services .
5 . On May 13, 2011, the RFP deadline closed and the City received two proposa ls (i.e.,
Mayer Hoffman McCann PC, and Vasquez & Company LLP).
6 . On June 28, 2011, the City Council approved the FY 2011-12 City Budget which
included a $50,000 funding appropriation for auditing and accounting services
associated with the FY 2010-11 year-end process.
' . .
City Council
August 2, 2011
Page 2
7 . On Ju ly 15, 2011, the City Manager/Interim Administrative Services Director and the
City 's Accountant conducted an interview meeting with Vasquez & Company, LLP
representatives.
ANALYSIS:
Cons istent with the City Council's directive during the FY 2010-11 City Budget
deliberations, staff prepared an RFP for the City's auditin g and accounting services
earlier this year. By the May 13, 2011 RFP deadline, the C ity had rece ived two
responses, one from the City 's current auditing firm and one from Vasquez & Company,
LLP .
After meet ing with representatives of Vasquez & Company, LLP , the City
Manager/I nteri m Administrat ive Services Director and the City's Accountant agreed that
th is firm could help the City undertake a comprehensive overview of the City 's f inances
and management best practices . Moreover, we were confident that they cou ld in light of
the short time frame, successfully prepare the C ity's FY 2010-11 year audits . Over the
past 40 years Vasquez & Company, LLP has built a solid clientele who have provided
them with very favorable reference checks. The proposed term for the agreement with
Vasquez & Company, LLP is three years with two one-year options . Vasquez &
Company, L LP will also be required to prepare the C ity 's Comprehensive Annual
Financial Report (CAFR), which is normally prepared on an annual basis by other cit ies,
however, one has not been done for the City since 1998 .
The initial annual cost for the auditing and accounting services will be $45,000 and this
agreement amount wil l increase annually based on the consumer price index (CPI) for
each year thereafter.
CONCLUSION:
Staff is requesting that the City Council rev iew and approve the Profess ional Services
Agreement with Vasquez & Company, LLP to conduct annual audits of the City 's
f in ancial statements for the next three years with two one-year options. Approva l of th is
agreement will ensure that City 's year-end financ ials are prepared on a timely bas is by
Vasquez & Company and submitted to the various agencies by December 31, 2011 .
FISCAL IMPACT:
The City Council approved a $50 ,000 appropriation i n the FY 2011-12 C ity Budget for
auditing and accounting servi ces associated with the FY 2010-11 year-end process . If
this $45 ,000 contract is approved, it will result in a $5 ,000 savings from the original
budgeted amount.
City Council
August 2 , 2011
Page 3
ATTACHMENTS
A. Proposal for Auditing and Accounting Services subm itted by Vasquez and
Company,LLP
B. Agreement for Professional Services between the City of Temple City and Vasquez
and Company, LLP
ATTACHMENT A
PROPOSAL FOR AUDITING AND ACCOUNTING SERVICES
CITY OF TEMPLE CITY
Submitted by
~&~VASQUEZ W~ & COMPANY LLP SEIDMAN fBDCf
Ail Independent Me'llber ol the BOO Se td man Allianc e ALUANC£
Members AI CPA Division of Firms Center for Public Company Audit Firms • Associate member Government Finance
Officers Association • Member of AssociaUon of Local Government Auditors
801 S. Grand Avenue, Suite 400, Los Angeles, CA 90017-4646
Tel: (213) 629-9094 • Fax; (213) 489-2995 Web; www.vasguezcpa.com
Contact: Mr. Gilbert Vasquez, CPA • Dated: May 13, 2011
TABLE OF CONTENTS
TABLE OF CO NTENTS ................................................................................................................................................. 2
TRANSMITIAL LETIER ................................................................................................................................................ 3
PROFILE OF THE ORGAN IZATION, TECHNICAL QUALIFICATIONS AND APPROACH ............................................. 6
SUMMARY OF THE PROPOSER 'S INDIVIDUAL AUDIT STAFF TECHNICAL QUALIF ICATIONS ............................. 24
BASIS FOR INCREASES/DECREASES ...................................................................................................................... 32
SCO PE ........................................................................................................................................................................ 34
INSURAN CE REQUIREMENTS ................................................................................................................................... 35
INDEMNIFI CATION ..................................................................................................................................................... 36
FEES ............................................................................................................................................................................ 37
fJRVASQUEZ D~ & COMPANY LLP
Cun n£0 PUBL IC. ACCOUNf A t-:~ AND a USU«..SS CONSULTAHn
BO I South Grand Avenue, Suite 400 • l05 Angeles, CA 90017·4646 • Ph . (213) 629·9094 • Fax (213) 996-4242 • www.vuque.zcpa..com
TRANSMITTAL LETTER
May 13 , 2011
Jose E. Pulido
City Manager
9701 Las Tunas Drive
Temple City, CA 91780-2249
RE: Request for Proposals for Auditing and Accounting Services
Dear Mr. Pulido:
Vasquez & Company LLP (Firm) is please to respond to the City of Temple City, the Temple City
Redevelopment Agency and the Temple City Financing Authority (collectively the City) request for
proposal to provide auditing and accounting services for a three year and five year period starting with
fiscal year 2010-11 . Our years of experience in serving governmental entities and our hands-on
commitment to superior service, integrity and knowledge make us particularly qualified to provide the
professional services requested by the City.
For Vasquez & Company LLP there is only one measure of success: "Client Satisfaction ." This is one of
our primary objectives, and drives our firm-wide customer service philosophy and focus :
• Reliability: Vasquez & Company LLP has a long history of service , dependability and reliable
expertise in service to the government sector. It is a history of accumulated skills and experience
we apply to help our clients reach their goals.
• Knowledge: We have become trusted advisors to clients based on our knowledge of their
indus try and our specialized expertise. Vasquez & Company LLP professionals are trusted
advisors to our clients' decision-making teams because they value our professional judgment.
• Responsiveness: Vasquez & Company LLP professionals, trained to listen to our clients, have
a well -earned reputation for devising innovative and creative solutions to today's complex
business challenges.
Your selection of an independent auditor for this engagement is an important decision . Our proposal will
demonstrate that as a full service firm, including audit, tax and management consulting services , we are
well qualified to serve the City on this engagement.
Firm's Understanding
We understand that we will provide an auditing service to the City. Our audit approach is tailored to meet
all technical requirements while mainta ining professional skepticism without forgetti ng that we provide a
service. We are able to achieve this by partner involvement in all phases of the audit and assigning
experienced governmental audit staff to the engagement. Partner involvement will result in decisions
being made on a timely basis and experienced staff will minimize disruption to your staff. For a detailed
description of our understanding of the scope of servi ce please see Scope section on page 31 .
Best Qualified to Perform the Engagement
Our Firm is uniquely qualified to provide services to the City because of our size, resources , the level of
professional expertise of our personnel and experience with similar engagements . We are well qualified to
review and work with the City to ensure that the City's Comprehensive Annual Financial Report (CAFR) is
consistent with the audited financial statements; in compliance with the Government Finance Officers
Association (GFOA) certificate of achievement program requirements and that the report is completed and
submitted within the specified timeframe. Our knowledge of the GFOA requirements is demonstrated by the
fact that our staff has worked hand-in-hand with our clients i n achieving their certif~cate awards . Ms .
II www . vasquezcpa.com
Proposal for Auditing and Accounting Services 4
Margaret McBride, Vasquez & Company LLP Government Practice Leader served as a reviewer for the
GFOA's Certi1icate of Achievement for Excellence in Financial Reporting program. Also, Mr. Federico
Quinto, Jr., Vasquez & Company LLP SEC/Government Practice Principal served on the Californ ia Board of
Accountancy Report Quality Monitoring Committee .
Our Firm has performed over 7,500 financial and compliance audits or governmental entities and nonprofit
organizations in it's over 40-year untarnished history -a statement that cannot be made by many other
firms. We have worked extensively with governmental entiti es and have the expertise to conduct quality
audits in this area. In 2006 we completed our term as auditors for the 17 major programs compris in g the
Single Audit of the County of Los Angeles the largest single audit in the western United States. This audit
was performed thoroughly, efficiently and on-time .
• City of Ba ldwin Pari< • Valley County Water District
• City of Carson • Los Angeles County Metropolitan Transportation
• City of Cudahy Authority Consolidated Audit
• City of El Monte • San Gabriel Valley Council of Governments
• City Notwalk • Southern California Association of Governments
• City of Hun tington Pari< • Coast Community College District
• City of Pico Rivera • Los Angeles Community College Distri ct
• City of Lynwood • Rio Hondo Community College District
• City of San Fernando • Bassett Unified School District
• City of Gardena • Compton Unified School District
• City of San Bernard ino • El Monte Union High School District
• City of South Gate • Los Angeles Unified School District
• City of Needles Public Utility Authority • Alhambra Unified School District
• City of Los Angeles , Dept of Public Works, Bureau of • Centinela Valley Union High School District
Sanitation • Community Dt>velopment Commission of the County of
• City of Los Angeles , Dept. of Recreation and Parks Los Angeles
• City of Pomona, Public Wor1<s Department • County of Los Angeles (Subcontractor to KPMG)
• Central Basin Municipal Water District • County of Los Angeles , Dept. of Auditor-Controller
• Upper San Gabriel Valley Municipal Water D istrict • Port of LA (Subcontractor to KPMG)
• Water Replenishment District of Southern California • Alameda Corridor Transportation Authority
• Walnut Valley Water D istrict • Alameda Corridor East Construction Authority
Because of our expertise and experience in providing assurance services to the public sector, Vasquez &
Company LLP is uniquely qualified to perform a quality compliance audit that will 1) properly assess risk,
2) determine effectiveness of internal control over the adm in istration of major federal programs, 3)
determine compliance with OMB Circular A-133 requirements as it relates to major programs , 4) report on
significant deficiencies and/or material weaknesses as appropriate.
New GASB Pronouncement Experience
Our team has assisted our clients in the adoption of applicable Governmental Accounting Standards
Board ("GASB ") statements. In recent years, several standards were monumental in that they established
new financial reporting requirements for state and local governments throughout the United States and
restructured much of the information that had been presented in the past. Our firm responded to those
standards and worked with several municipalities , community colleges, and school districts as their GASB
im plementation consultants. We assisted these clients in assessing their read iness to implement the new
standard as well as guiding them through the actual implementation. Members of our team have been
participants in the GFOA CAFR review program and are able to bring insight and expertise and value to
our client base.
www . vasquezcpa.com
Proposal for Auditing and Accounting Services 5
We take a very proactive approach in helping our clients understand GASB activities from e xposure drafts
to implementation of new standards. We accomplish this through our collaborations with GASB , GFOA,
AICPA Government Audit Quality Center, through our Government Advantage quarterly publication, and
more importantly by taking the time to sit down with clients to discuss and plan for the impact of new
GASB standards .
We thank yo u for this opportunity to present our Firm and its professiona l qualifications to the City. We trust
that you will find Vasquez & Company LLP uniquely qualified to provide the City w ith professional aud iting
services . Mr. G il bert R. Vasquez, Managing Partner of Vasquez & Company LLP , with offices located at
801 S. Grand Avenue, Suite 400, Los Angeles, CA 90017-4646, is authorized to represent and negotiate on
behalf of our Firm . This proposal is a firm and irrevocable offer for a minimum of three months from the date
of this proposal subm ission. Should you have any questions or desire further assistance, please ca ll Mr.
Gilbert R. Vasquez, Managing Partner, at (213) 629-9094 extension 200.
Sincerely ,
VASQUEZ & COMPANY LLP
Gil::i. ~CPA
Managing Partner
www.vasquezcpa .com
Proposal fo r Auditing and Accountin g Services
PROFILE OF THE ORGANIZATION, TECHNICAL
QUALIFICATIONS AND APPROACH
6
Vasquez & Company LLP is a full service Certified Public Accounting firm comprised of 43 professionals
and administrative staff. Founded in 1967, the Firm has over 40 years experience in performin g financial
and complian ce audits for all types of governmental entities, nonprofit organizations, privately held and
publicly traded companies . As a local firm , we are ab le to offer t imely, personalized attention . Our
professionals deliver innovative yet practical solutions that help clients gain competitive advantage. The
following represents a partial list of benefits that would accrue to the City as a cli ent of the F irm :
• Specialty and expertise in the gov ernment sector
• Knowledge of Government "best practices"
• Extensive partner involvement
• Keeping up with current trends
• Routine consultation
• Cutting-edge technology utilized to minimize audi ts costs to you
• Quality assurance
OUR STRATEGIES TO ADDRESS YOUR NEEDS
Our approach to your audit wi ll take into account the follow ing strategiE::s outlined below and descri bed in
more detail in the sections to follow:
• Communication throughout the year
• Advanced planning of the audit process to ensure there are no surprises
• Detailed examination of your internal controls
• Well planned and executed aud i t fie ldwork
• Fu ll understanding of local go vernment issues
• Extens ive quality control procedures
As a client of Vasquez & Company LLP you will have unlimit ed access to the many res ourc es our Firm
has to offer. Your complete client service team is availab le to consult w ith the City throughout the year ,
wh enever questions or issues arise. Day-to-day contact between the staff at the City and Vasquez &
Company LLP ensures that the aud it is efficient, focused appropriately on risk areas, and functioning to
kee p management well informed .
PERSONNEL RESOURCES
The Firm consists of 43 profess ionals and administrative staff as follows :
Partners
Princi pals
Managers
Supervisors
Auditors
Professionals
Administrators
4
4
7
5
14
34
9
Total 43 _ __,;..;....
Our people are our most important resources. They have developed the ir skill s and ha ve accumu lated their
experience through the successfu l performance of work for numero us cli ents and th roug h our
comprehensive and formal p rofess iona l staff training programs.
www . vasquezcpa .com
-----·----------
Proposal for Aud itin g and Accounting Services 7
GOVERNMENT PRACTICE GROUP
Vasquez & Company LLP has been providing professional services to governmental entities for over 40
years. Our government practice includes local municipalities, redevelopment agencies, utilities i ncluding
water districts, K-12 local education agencies, community college districts, transportation authorities , joint
powers authorities and other special districts. For the City engagement the number of professionals on a
full-time basis will be four (4). Our Government Practice Group is structured as follows :
Gilbert Vasquez, CPA
Managi ng Partner
Lee Waddle, CPA
Quality Control Partner
Federico Quinto, CPA r-Margaret McB ri de , CPA
Engagement Principal Engagement Princ ipal
Ai leen Hermosa, CPA --Cristy Canieda , CPA
Sen ior Manager Sen ior Manager
I
Isidro Conde , CPA Clarinda Bareng, CPA Susan Garcia , CP A
Supervisor Supervisor Supervisor
Stephen Kibui, CPA Lorena Vilano, CPA
Supervisor Supervisor
1
Mark Mendoza Christine Ambos, CPA Arlene Pingul
Sen ior Auditor Senior Auditor Sen ior Aud itor
Antonette Tan Derrett Lambey Nympha Magkamit
Senior Auditor Senior Auditor Senior Aud itor
Eliza Devera Philip Padua, CIA Arcel ita Peran
Senior Auditor Senior Auditor Senior Auditor
OFFICE LOCATION
The location of the office from which the work on th is engagement w ill be performed is at 801 S. Gr and
Avenue, Suite 400 , Los Angeles, CA 9001 7.
www . v asquezcpa .com
Proposal for Auditing and Accounting Services 8
RANGE OF SERVICES
Our Firm provides audit, consulting , tax, financial advisory , review and compilation services . Our aud it
services include financial statement audits of companies in private and publ ic sectors , audits of federal
grants under OMB A-133, compliance examination audits, solid waste hauler compliance audits ,
overhead rate audits under FAR Part 31 for private companies or OMB A-122 for not-for-profit
organizations . In addition , we provide internal audit services to augment the staffing needs of interna l
audit departments. Our Firm offers accounting services such as: detail ed account ing transactions ,
handling receipts and bank deposits , personal bill paying, acco unts receivab les , busin ess consulting and
payroll preparation and reporting . Our financial advisory services include: management advisory services,
pension plan design , business management and estate planning. Our tax services encompass tax return
preparation for not-for-profit organizations, individuals, corpo rations and partnerships, sales and use tax
review, business tax planning and consulting . The Firm provides complete technology assurance services
for your information technology infrastructure. Our consultants can augment or provide your internal audit
function for technology related matters ; implement security strategies that enable your business; offer
sound and practical advice that includes process control enhancements ; or provide you r organization with
an appropriate technology control strategy. The Firm provides cost segregation services for commercial
real estate owners. Our cost segregation services provide an independent third-party ana lysis of project
costs that can prov ide a federal and in some cases , state tax advantage . In addition, we prov ide fraud
examinations , IRS collections and procedures consulting and human resources consulting .
GOVERNMENT AUDIT CLIENTS
Vasquez & Company LLP has perform ed numerous audits of governmental organizations subject to
financial and compliance audits. These audits were performed in accordan ce with auditing standards
generally accepted in the United States, Government Auditing Standards , OMB Circular A-133 and its
Compliance Supplement (when applicable), and the Office of the State Con troller's Minimum Audit
Requirements and Reporting Guide lines for California Special Districts (when applicable). A list of current
and recently completed engagements is as follows :
Gllti:Ia$1l,rt9P'.ilW1tf!~
City of Norwalk
Ms. Jana Stuard
Director of FinaACe
12700 Norwalk Boulevard,
Norwalk, CA 90650
(562) 929-5700
City of Baldwin Park
Ms. Lorena-Quijano
IRte~m Finance Director
14403 E. Pacific Avenue
Baldwin Parit, CA 91706
(626) 960-4011
City oftfuntlngton Part<
Elba Padilla
Director of Finance/City
Treas~:~rer
6550 Miles Aven~:Je #116
HuntiRgtOI1 Parit, CA 90255
(323) 582-6161
... --. L!!lll.H-= HI-I 111• I' .,....._.
Anr:tual financial, compliance iR accordance with GAGAS
aRd reporting in conformance witl:l the GASB 34, SlAgle
Audit (OMB A-133), Redeve lopment AgeRC} Audit, Norwalk
Facilities FiRancing Authority , Norwalk Transit System Fund,
1-5 Consortium, and AQMO audits, calculation of GANN
Appropriations Limit, State Controller's Report, (PBA).
GFOAAward.
Annual fiAaRCial, compliance audit for lnclusiOR in tt.1e City's
CAFR prepared 4n conformance with tt.le GASB 34
req~:JiremeRts and Single Atidit (OMB A-133), and the
Redevelopment Agej:lcy Audit, Transient OccupaAcy Tax
Aljdit. GFOA Award.
Annual fiRancial, compliance audit for inclus iOR in tl-le City's
CAFR prepared in confo~mance wiU. tl<le GASB 34
requiremer:~ts and Single Audit (OMB A-133), Huntington
Paf:k Community Development Commlssior:~ At1dit,
calculation of GANN Appropriations limit, State CoRtroller's
Report. GFOA Award
www.vasquezcpa .com
....
\:Lin£• <FII
:lir.i •
2008to
present
2000to
present
2008 to
present
'l-;.
Proposal for Aud iting and Accounting Services
City of Carson
Ms. Jacquelyn Acosta
Finance Director
701 E. Carson Street
CarsoR, CA 90745
City of Plco Rivera
Mr. John f-ier.rera
Finance Director
6615 Passons Boulevard
Pico Rivera , CA 90660
(562) 801-4392
City of lynwood
Mr. Robelt ToR"ez
Assistant City Maf'.laQer
1 $330 Bullis Road
Lynwood, CA 90262
(31 0) 603-0220
City of Gardena
Mr. Mit~elf lansdale
City Manager
1700 West 16t"" Street
Gardena, CA 90247
(310) 217-9500
County of Los Angeles
Ms. Connie Yee
Cl:lief, Accounting Division
Office of the Controller
500 West Temple Street,
St1lte 603
Los Angeles , CA 90012
(21 3) 974-8321
Community Development
Commission of Los
Angeles County (CDC)
Mr. David Cl:\ang , Accotmting
Manager
2 Coral Cirde
Monterey Pa~. CA 91 755
(310) 233-7480
Southern California
Association of
Govemmenta (SCAG)
Mr. Wayne Moore
Cl:l lef Financial Officer
818 West Seventh Street,
12111 Floor
Los Angeles , CA 90017-
3435
(213) 236-1804
II
Annual financial, compliance in accordance witt:! GAGAS 2010 to
and reportiAQ In conformaACe with-the GASB 34, SiRgle present
A~dit (OMB A -133), Redevelo pment Agency Aooit,
FiRarlcing Authority, calculatiOR of GANN Appropriations
Umit, State Co nt roller's Report. GFOA Award
Ann~:~al financial , compliance lA accordance wittl GAGAS 2008 to
and reporti119 in conformance with the GASB 34, Single present
Attdit (OMB A-133). Redevelopment Agency A lid it,
FIRancing Autl:loRty, Audit Housir:1g Agency Audit, Water
Authority, Audit, Transient Occupancy Tax, Audit,
calct:llatio n of GANN Appropnations Limit, State Contro ller's
Report. GFOA Award
Annual fiAaACial , compliance audit for inclusiOR in the City's 2009 to
CAFR prepared ill conformance with tt:te GASB 34 present
reql:lirements and Single Audit (O Me A-1 33), and the
Redevelopment Agency Attdit , GAN N Appropriation limit,
State Controller's Report GFOA Award
Annual fiASncial, compliance atJdit for incltJslon in the City's 1998 to 2006
CAFR prepared in COAformance with the GASB 34
requirements aAd Single Audit (OMB A-133), '98 to 04
GFOA and CSMFO Awards
Annual fiACUlcial and compliance audits, Single Audit (OMB 1992 to 2005
CiroAar A-1 33), GFOA Award. Subcontractor to t<PMG.
Audit of the 17 major programs comprising the Single Audit 2006
of the County of Los Angeles (OMB A-133)
Annual financia l, compliance audit for iRdtJsion in the CDC
CAFR prepared in conformance with tl:le GASB 34
reqtJ irements, Sl Agle AI:Jdit (OMB A-133), ReAtat Hotising
Construction Programs audit, CDC Foundation ai:Jd it, Cannon
Apaltments Project atldit, IAtra County Housing Corporation
atldit
2005 to current
2005 to 2007
2010 to
present
Annual financial , compliance al:ldit for inclusion in the SCAG 2006 to 2009
CAF~ prepared In conformance with the GASB 34
requirements aRd Single Audit (OMB A -133), GFOA Award
2006 to current
www . vasquezcpa .com
9
Proposal for Auditing and Accounting Services 10
DESCRIPTION OF SPECIALIZED AUDIT SERVICES
Vasquez & Company LLP has extensive knowledge and experience in contract compliance, tax recovery
and performance audit services for various municipalities and agencies, such as the Los Angeles Unified
School District, Los Angeles County Metropolitan Transportation Authority, the Alameda Corridor
Transportation Authority, the City of Los Angeles Department of Recreation and Parks and the City of Los
Angeles, Department of Public Works, Bureau of Sanitation among others . Our CPAs and accountants
have the technical expertise and experience to analyze complex situations , assist with d iscovery, and
point out areas requiring attention . Our Firm 's hands-on approach, coupled with our extensive knowledge
and experience for serving governmental clients , allows us to anticipate and address potential issues
before they become a concern . Our CPAs and accountants have the experience to provide you with the
superior professional service in the areas of:
• Waste Hauler audits
• Transient Occupancy Tax audits
• Franchise Fee audits
• Performance audits
• Contract Compliance audits
• Program audits
• Overhead Rate audits
• Cost Incurred audits
• Pre-award audits
• Post-award audits
• Change Order audits
Los Angeles County Metropolitan
Transportation Authority (Metro)
One Gateway Plaza
Los Angeles , CA 90053
Ms. Kathy Knox, Director of At1dits
T) 213-922-3663
~) 213-922-3883
E) knoxk@metro.net
Mr. Carlos Vendiola , Project Manager
T) 213-922-4527
F) 213-922-3883
E) vej:ldiolac@metro .net
City of Los Angeles, Dept. of Public
Wort<e, Bureau of Sanitation, Sollct
Wasta Recyclln9 Division
Mr. Daniel Meyers, Pro~ect Manager
1149 S. Broadway, 10 Floor
Los Angeles , CA 90015
(213) 485-3774
II
Finar:telal af'.ld compllaAce audits of Prop A, C and 2009-201-0
TDA Articles 3 & 8, Measure R Local Retum, Transit
System FttAds , LADOT services , SCRRA Metrolink
Program, Immediate Needs, Rider Relief
Transportation and SHO~e Subsidies Programs of
the 89 jurisdictions, transit operators and other
transportation program recipieAts In LA County.
IRcurred-cost and overhead rate of 6arrio Planners,
lAC. CoAtract No . PS2S-25t0-15-17A 2002-2005
Incurred cost and-close oot attdits of approximately
19 contractoJ:S . Contract No. 1!>501-2511-15-13. Pre-2000-2003
awaFd audits/ Analysis of Cost-Price of
approximately 70 contractors
Performance audits iA accordaRce with Government 2006 -present
Auditing Standards of approximately 17 waste
haulers tmder the AB939 Program . Contr:act No . C-
107806
www.vasquezcpa .com
Proposal for Auditing and Accou nting Se rvices 11
l.os Angeles Unified School Olstr1ct
Office of tl:le Inspector Gene ral
333 S . Beaudry Avenue , 1ih Fl oor
Los Angeles , CA 90017
Mr. Austin 0 Awualu
(213) 241 -7750
City of t.os Angeles
Department of Recreation and Parks
Ms. Putthac hart Yip, At:Jdit DivisioR
1200 W. 7th Street, StJite 748
Los Ange les. CA 90017
(213) 928-9343
Community Redevelopment Agency for
the City of Los Angeles
Mr. Gordon Seaberg
Diredor of Audit aRd Compliar.~ee
354 S . Spr.iRg St., StJite 500
Los Ange les , CalifoA'1ia 90013
(213) 977-1600
Bassett Unified School District
Mr. James 0 . Ballard
Superintendent
904 North Willow Avenue
La Puer:~te, CA 91746
(626) 931-3000
Department of Auditor-Controller,
County of Los Angeles
350 S Fig ueroa Street , 811\. Ftoor
Los ARgeles , CA 9007 1-1101
Mr. Don Chadwick, DivisioA Chief
(213) 251-5321
Alameda Corridor Transportation
Authority (ACT A)
One Civic Plaza , St1ite 350
Carson , CA 90745
Mr. James Preusch, CFO
l) 31 0-233-7 480
F) 310-847-1723
E) j preust.l@acta .org
IAcurred cost and close-out audits, ovemead rate 2003-present
ai:Jdits, chaRge order audits, pre-award audits in
accordance with auditing standards geRerally
accepted in the Un ited States of America , Generally
Accepted Government Auditing Sta l'l dards, and the
crite ria prescribed by St:Jbpart 31 .2 of the Federal
Acquis ition Regtllatiol'l (FAR) aAd in conformaACe
with the Cost AccouRling StaRdards Board
Pronouncements .
Agreed-upon procedures to assist t he DepartmeAt of 2009
Recr.ealioR and Parb in deteFminiRQ recreation
facilities compliance with the MRP aRd applicable
Cash HandliRg procedures s1:1ch that all collections
were properl y accounted for and deposited timely
into the City's account
A1:1dits, reviews, and speclai 4Rt•estigatlol=ls in the form 2005 -prese~t
of agreed-upo~ procedures to assist with stJch
matters as residual receipts calculalioAs, and
procureme nt guidelines comp liance.
Agreed:-t:tpon Procedtnes to assist the District in the 2010
review and evaluation of Bassett's USD's 'Humar:1
Re so~rce Depar:tmeAt and Personnel CommissioR in
accordance with attestation standards established by
the Amer:ican 1nstittlte of Certified Publ ic
Accountants.
Califomia Eme rge ncy Management Age ncy's 2009 to
(CaiSMA) Sub-recipient Monitoring Fi nancial and present
Compliance Audit for Grant Year 2006 to provide
reasor.~able asst1rance that the 42 S ub -rec ip ients that
receive Call:MA grant ftlooing comp li ed with CaiEMA
GraAt reqt:tiremeRts .
Ensure tbat the Sub-recipients corrected areas of
~OR-compliance Acted ill prior monitoring report.
lncurred-<:Ost, close-ot:t l and ovemead rate audits of 2001 -preser:~t
approximately 50 professional service and
coRstructiOA contradors with multiple-year audits.
Contract No. C0754
www .vasqu ezcpa.com
Proposal for Auditing and Accounting Services 12
DESCRIPTION OF ANY REGULATORY ACTIONS TAKEN AGAINST THE FIRM OR LOCAL OFFICE
Vasquez & Company LLP has maintained a perfect services record throughout its over 40-year h istory of
professional service and we state with pride that our Firm has:
• Never had any complaints filed against it with the California State Board of Accountancy for
substandard work or for any other reason ,
• Never been requested to res ign from any engagement,
• Never received a negative desk or field review from any of our clients' cogn izant agencies
regarding any of our audits, and
• Never been involved in or settle any potential litigation
PEER REVIEW REPORT
Vasquez & Company LLP's commitment to quality is exemplified by its external peer review report. Our
firm is a member of the American Institute of Certified Public Accountants (AICPA) Divis ion of Firms and
received a peer review rating of Pass without comment on its peer review report dated July 13 , 2010 This
review covered several government engagements, including a city comparable in size and audit scope to
the City . A copy of the peer review opinion follows .
II www . vasquezcpa .com
Proposal for Aud iting and Accounti ng Services
II
AJCPA Peer ReMew Program
Adulli li;ltt wd by the
Nll!lcnaJ "-1'1•"'-CommiltM
Oaobu 29,:!010
Gllben R . V~z , CPA
V~z &: Company,ll.J'
&0 1 s Grand Ave S re 400
Los~. CA 90017
De;u Mr. Vuqu.ez.:
Ir ls my plusun 10 uo!Uy you !lw on October 20, 2010 !:be NuiotW .l'ur ~ Comminee
~.C~Cepted tbe report on me ID0$1 rearu S}'S't.m peer revie'l.' of fOUI finn.. Tbe due we tor your
llUl rmew is 1une 30, 201.3. This is the dire by which Ul l'f\'iew docmnt.n.tl ~ould be
co~red mcS submined ro the ldm.tnlsrertng entity.
As y on mow, r:be report bad 1 peer review mi.Dg ot ~s.s. Tite Com.mine t illsDd ~ ro COliVey illl
rongn rul.a.Iion.s ro the firm.
S inoerely ,
R.oben Rohweder
Cha.ir-Na.Iionall'RC
Dpi~cpa.mg919 40:!-4SOZ
cc.: Bun on Armslrong, CPA
Firm !\umber: 10138115 R.eviev• !\umber: 305778
-uo ~ ~ Cet ut'oo<l ~ "<<DIU'III
ZIO 1."'9 f..-, >t.I.IN-Nir-NC 17707 • t~I.J cal·A!iOO • , .. :t111J ~50!> • --.<tr~ ---
~-··• 1 -... ···•· • ·r1 . •
www.vasquezcpa.com
13
Proposal for Aud it ing and Accounting Services
,.,~~.
5nDJ.~~ ..
Clnlol.~(Jl'. Hill flit
Pllll[
moumm
8lk K. XII\ a, .&
~LH&k~JCST
·~ .
... ~(;7;..
SYSTEM REVUW REPORT
July 13 ,2010
To the Partners
ViJSC.!uc:z .t Cnmplln )', LL f>
and the: National Pe er Rev iew Comminu
We have reviewed the 1ystem of qua li ty control far the acc ou nt ins and aud ll mp. practke of Vasquez &
Company, LLP (!he fum) appl ica ble to non·SEC IS$\ICT1 In ~ for tbc yar e nded Dooember 31, 2009 .
Our pe er rev iew wu conduc:led in ~c wilb the Stllldlrd:s fur ~i A& and Reporting on Peer
Reviews cStabJisbcd by the Peer Review Board o(the American lnstiMe of Certified Pub!X: Accountanu.
The flrm I' rt:Spoo siblc for design in&• S)'lkm of quality coab'OI and complying with it to provide the
flnn with reasonable anurance of perform ing and reporting ill confonuity with applicable profmional
~s In all material r esve~:ts . Our responsibility is to expas 1.11 op in ion on the dctlan of die 3Y*m
of qua lity control and the li nn '~ complianu tbcn:w ith baed on our rnicw . The Mture, objective~
1eupe, limitatioru of, IDC1 the proc:cd~ peri"omleld in • System Review are de:Kribc:d in the standards lit
www.aicpa.orafprsummary.
M required by the standards. cngn gcmcnts selected for review included ettgaaements performed &mder
~ffl Awiiliftg SICJ1td.wds t~nd audits of enployee benefit plans .
In our opin ion, the system of qwality control ror the accouniing and audit ing pr~Ktlcc of Vasquez &
Compan)'. LLr app li cab le 10 non-S EC i~ in cffc:c.t for the )Uf ~:ndcd IJcccml>cr 3 1, 2009, lw been
su itA bly designed and ~:o rn pl i c:d with to provide the fun. with ~blc as.~u~ o f perform in& and
reporting in conformity wu h a pplicable profeu l001l ~ndards In allllnlterie l resporu. Firms can receive
a ,_.ina of ~1. pass -..iJJr d eficieJ•c;(tt'r). or fail. Vasquez & Company, LLP hu rece ived a peer review
l"llting of pas.s.
BROWN ARMSTRONG
ACCOUNTANCY CORPORATION
~~·
By : BllrtOr\ H. Armstrong
W'NW .vasquezcpa.com
14
..
Proposal for Au diting a nd Accoun ting Services 15
DESCRIPTION OF AUDIT APPROACH
We know from our prior expe r ience with other similar entities, coup le d wit h our un ique approach to auditing ,
our approach will result in a timely, efficient a nd cost-effective audit for the C ity . Our audit will be conducted
with a minimum of disruption to ongoing day-to-day operations . The implementation of our audit appro ach
to the City and its relat ed entities will be divided into the following ph ases :
Phase I
• Familiarize ourselves
with operating
environment
• Perform risk
assessment
procedures
• Perform preliminary
analytical review
• Identify major
prog rams for Single
A udit testi ng
• Develop Audit Plan
• Discuss and agree o n
financial statement
format
• Reevaluate the
progress of the aud it
and make any
changes on aud it
approach and
procedures , if
necessary.
I I
Phase II
• Assess internal control
environment
• Perform SAS 99
(Fraud evaluation)
procedures
• Identify internal control
strengths and
weaknesses
• Evaluate design and
implementation of
selected controls
• T est controls ove r
financial re porti ng and
administration of
federal funds
• Understand accounting
and reporting activities
• Draft internal cont rol
management letter
comments
Phase Ill
• Plan and perform
substantive audit
procedures
• Perform substantive
compliance aud it
tests over federal
programs
• Conduct final
analytical review
• Consider Audit
Eviden ce
Sufficiency
• Condude on critical
accou nting matters
www . vasquezcpa .com
Phase IV
• Perform completion
procedures
• Draft CAFR. Perform overall
evaluation of the financial
statements and disclosures
• Review financia l statements
in accordance with GFOA
Award criteria
• Draft management lette r
• Draft auditors' reports on
federal and state compliance
• Conduct Exit Conference with
management, induding
d iscussion of proposed audit
adjustments, internal control
and compliance find ings and
management letter
• Issue aud itors' reports and
management letter
Proposal for Auditing and Accounting Services 16
Phase 1-Audit Plann ing
The planning phase lays the foundation for the d irection of our aud it efforts . With the implementation of the
new Statement on Auditing Standards (SASs), planning is no longer a separate audit phase, but continues
throughout the audit. We will perform risk assessment duri ng the planning phase of the audit and develop
our audit approach based on the resu lts of our assessment. It encompasses the following steps:
Gaining and Documenting an Understand in g of the City 's Internal Control by :
D Conducting entrance conferences with the appropriate City officials . The agenda would includ e , but
need not be limited to, the following:
• The application of generally accepted accountin g principles
• Concerns of the City management
• Report requ irements , refinements and deadlines
• Initial aud it report and timing schedule
• Assistance by the City personnel
• Establishment of principal contacts
• Progress reports process
• New Single Audit Requirements and Other Compliance Issues
• Consideration of Fraud in a Financial Statement Audit
• The auditors' responsibility for fraud detection
• Management's responsibility in fraud prevention
• Scheduling inqu iri es of management and others (including non-accounting personnel)
about the risk of fraud
0 Expanding our understanding of the City and its Operating Environments . We will accompli sh th is by
familiarizing ourselves and updating our knowledge of applicable background information pertinent to
the City, its grants and funding structure through our review of the fullowing :
• Applicable state legislation
• Organizational structure
• M inutes of the City Council and other related entities
• City charters, ordinances and bond covenants
• Policies and procedures manuals, adm ini strative codes , rules and regu lation s
• Long-range plans of the City and other related entities
• Operational and capital budgets
• Description of the City 's financial and other information systems
• Recent financial statements and key operating stat istics
• Contracts and major commitments
• Grant agreements
• Cost allocation plans
• Possible effects on the City of the actions of regulatory agencies
• Fraud Risk Assessment Process
0 Through our background knowledge of the City and its related entities, and as a result of our fact-finding
process, we will conduct ri sk assessment procedures and develop an in-de pth understand ing of the
areas of concern . We will be in a position to meet with the City management to d iscu ss areas that
might have a significant impact on timing and completion of the aud its or that may be of special concern
to management. We will review such areas in~epth to obtain an ear ly understand ing and resolution of
any "problem " areas that may imped e our progress and to develop our overall approach so that th e C ity
will have sufficient time to develop the data necessary for completicn of the audit w ith min imum amou nt
of disruption of the day-to-day routine. We will gather information needed to identify fraud risks.
D Our planning process will also include a specific rev iew of computer activities performed by the City
personnel.
II www.vasquez cpa .com
Proposal for Aud iting and Accounting Services 17
Phase II -Risk Assessment and Internal Control Documentation
The steps included in this phase are as follows:
0 Our systems evaluation approach enables us to obtain a better understand in g of the various transaction
cycles and sub-cycles and how they relate to each other. By us in g narrative and flowcharting
techniques for each cycle , we will identify the critical points in the flow of financial information. Our
basic technique begins with information contained in the financial statements and traces such
information back to source data . This process is infinitely better than the traditional tedious method of
going from source data to financial statements.
Cl We will identify the strengths and weaknesses in each of the transaction sub-cycles and sub-aud it areas
that have a bearing on the audit objectives. Th is identification of internal control strengths and
weaknesses will enable the audit team to detennine the emphasis to be placed on audit testing . It will
also serve as a basis for the development of conclusions and recommendations regard ing weaknesses
in the systems of internal accounting control and opportunities for improving efficiency and
effectiveness .
0 We will test tran saction cycles using statistical and judgmental sampling methodologies to determine
whe th er the necessary control procedures are prescribed and followed satisfactorily. The sample size
will range from 25 items to 60 items, depending on how we assess control audit risk and audit detection
risk. In addition , if there are any deviations in our sample selection, we will expand the sample size and
if the additional sample confirms the deviation problem , we will use statistical techniques to extrapolate
the dollar value of the deviation .
0 We will inquire of management and others (including non-accounting personnel) to identify fraud risk s.
Cl Our engagement team will discuss and consider the susceptibility of financial statements to fraud and to
emphasize professional skepticism. We will obtain infonnation necessary to identify risks of material
misstatement due to fraud . We will identify risks that may result in material misstatement due to fraud .
We will assess the identified risks after considering an evaluation of the antifraud programs and
controls. We will respond to the identified risks .
0 We will provide periodic written progress reports on the planning and test work performed during the
plann in g and interim fieldwork phases and disc uss the schedule to complete the aud its in the most
economical manner.
0 Single Audit -As part of in terna l control testing , we will perform tests of controls to evaluate the
effectiveness of the design and operation of controls that we consider relevant to preventing or
detecting material noncompliance with compliance requ irements applicable to each major federal
award program . However, our 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 our report on internal
control issued pursuant to OMB Circular A-133 .
Cl Our engagement service team will prepare a tailored aud it program unique to the City based upon
applicable single audit guidelines and the identification of internal control strengths. Our audit programs
are tailored into a unique , efficient and effective document addressing the audit objectives, issues, and
systems of the City.
www . vasquezcpa .com
Proposal for Auditing and Accounting Services 18
Phase Ill -Substantive Testing
The third phase of our audits w i ll be the testing or traditional fieldwork phase. The steps involved in this
phase are as follows :
a Substantive Testing -The purpose of the substantive tests is to provide reasonable assurance of the
validity of the information produced by the accounting system . These tests will include various detail
tests and analytical procedures , including ratio analysis , comparisons of actual-to-budget information
and other procedures.
a Analytical Review Procedures -Analytical review procedures, consisting of statistical, ratio, and trend
analyses are performed during ev ery phase of the audit, from the p lanning phase to reporting phase.
These analytical testing techniques provide feedback on potential areas of audit concern as well as
provide comfort concerning the overall reasonableness of the financial statements .
a We will assess identified fraud risks and respond to the fraud risk assessment.
0 We w ill d iscuss all adjusting journal entries proposed by our auditors and e xplain them to the C ity
personnel prior to recording . It is our practice to discuss issues and proposed audit entries with the
program manager or management personnel immediately responsible for the program to ensure that we
have not m isunderstood that part icular situation . This will ensure that the proposed entry or
management comment and recommendation are accepted by the immediate manager in charge, and
will ensure that the recommendation is feasible and makes business sense. It is also our policy to
address issues and resolve them as they arise, and not wait until the end of the process and surprise
management with a long list of issues that need to be addressed . In short, there w ill not be any
surprises to anyone.
The final element in our work plan is the reporting to the City officials ov~rseeing the audit in order to apprise
them of our progress. We obviously believe communication is vital. We have stressed the importance of
continuous close relationships throughout this proposal and have indicated the va r ious po ints where we will
meet for specific discussions and decision .
Thus , we believe we should have regular progress meetings between our top engagement personnel and
the C ity officia ls . It is our intent to use these meetings to report:
0 Accomplishments
a Outlook
Q Problems that have to be resolved .
It is also our practice to work closely w i th the State Controller's office. Accord ingly, we are ava ilable to meet
with represen tative of the State Controller's office, C ity management, and grant program at any time
throughout the engagement to ensure the efficient completion of the various audits and the acceptabil ity of
the related reports . Further, it is the strict pledge of the Firm to update the appropriate City personnel on a
regular basis .
Phase IV -Reporting
The last phase of our audit involves preparation of Independent Auditors' Reports, Single Audit Reports,
find ings and our management letter comments . Because of our emphasis on ear ly problem resolution in the
planning phase of the examination and extensive interim test work, our final audit fieldwork w ill be mainly
concerned w ith reviewing the fair presentation of the fina l numbers that w ill appear in the annual financial
reports . Throughout the final phase , Mr. Waddle will monitor and review the work. The critical audit areas
of each fund audited w ill be reviewed in the field by the engagement manager.
We will evaluate the audit evidence and communicate instances of possible fraud to the proper level of
authority.
We will work closely w ith the City personne l to prepare the annual financial statements. Prior to the signing
of our accountants' reports, a "cold " review of the draft reports and other documents will be performed, in
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Proposal for Auditing and Accounting Services 19
order to evaluate the professional excellence of the examination . Mr. Waddle will then give his concurrence
as to the propriety of the accountants' reports . Every effort will be made for early delivery of the reports to
ensure prompt and satisfactory professional service . Our Approach to the Preparation of Management
Letter
0 A mean ingful management letter does not just appear at the end of an audit; its preparation is a
continuing process throughout the course of the audit. Indeed, to be most beneficial, the letter to
management should be issued while the audit is in process , not well after the fac~ as is often the case.
We emphasize the importance of the management letter with the entire audit team and believe this
continual awareness encourages the audit team to view audit situations in terms of constructive
management letter comments.
We believe that management letters are of equal importance with our opinion on the financial
statements; accordingly, we devote considerable attention to developing meaningful comments to
management. As auditors for the City, we will be interested in the City's overall success as an efficient,
properly controlled and cost-effective unit of local government. Therefore, you can expect us to offer
constructive suggestions regarding your operations. Indeed, while the profit motive is not the
paramount objective of municipal government, this does not lessen the need to view the City as a
business , and one that should be effectively and efficiently operated. Thus, we prefer to view
management letters as more than a vehicle for citing and eliminating weaknesses in the system of
internal accounting control. Our management letters place heavy emphasis on the operational side of
the governmental unit, and our suggestions for improvements are designed to improve overall
management and result in a better use of resources.
0 Conduct Entrance and Exit Conferences with the City officials -We will meet with management at the
outset of final fieldwork to discuss our approach to the final fieldwork and to update ourselves on any
developments subsequent to interim fieldwork. We will also meet with the appropriate City officials at
the completion of final fieldwork to summarize the results of the audits and discuss any significant
findings before our comments are finalized in writing .
D At the conclusion of our audits we will make a presentation to the City Council and the Agency's
Board and/or the appropriate Audit Committee, during which we will discuss our audit approach ,
scope and results . We pride ourselves on our ability to convey complex information in an informative
fashion , free of bias, such that the City can evaluate the significance of the information and determine
action plans as may be appropriate.
Consideration of Fraud
We will consider the risks of material misstatement of the financial statements due to fraud and design the
audit to provide reasonable assurance of detecting fraud that results in the financial statements being
materially misstated in accordance with SAS No. 99, Consideration of Fraud in a Financial Statement Audit.
The consideration of fraud is not separate from the consideration of audit risk but is integrated into the
overall risk assessment process. The procedures presented in fraud consideration may be performed
concurrently with other procedures and the evaluation of fraud risks will occur continuously throughout the
audit.
Risk Assessment
We will also perform risk assessment procedures in accordance with SAS No . 109, Understanding the
Entity and Its Environment and Assessing the Risks of Material Misstatement sufficient to obtain an
understanding of the entity and its environment, including its internal control to establish a frame of
reference to determine whether any of the assessed risks are significant risks that require special audit
consideration or risks for which substantive procedures alone will not provide sufficient appropriate audit
evidence.
Based on the understanding obtained from our SAS No . 109 procedures, we will design and perform audit
procedures in response to the assessed risks identified and audit evidence obtained in accordance with
SAS No. 110.
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Proposal for Auditing and Accounting Services 20
Sample size and the extent to which statistical sampling is to be used in the engagement
We will test transaction cycles using statistical and judgmental sampling methodologies to determine
whether the necessary control procedures as prescribed are followed satisfactorily. The sample size will
range from 25 items to 60 items, depend ing on how we assess control audit risk and audit detection risk . In
addition, if there are any deviations in our sample selection , we w ill expand the sample size and if the
additional sample confirms the deviation problem , we will use statistical techniques to extrapolate the dollar
value of the deviation .
Extent of use of EDP software in the engagement
Computer Audit capabilities -All members of our staff are skilled at auditing in an e lectronic data processing
(EDP) environment and have extensive experience with microcomputers and software applications . Our
audit personnel have a wealth of experience in evaluating complex computerized accounting systems of
governmental units . They are proficient at analyzing deta iled financial records , wh ich are computerized with
automated subsystems.
We use computer-assisted audit techniques and various tests through and around the computer to audit
large and /o r complex EDP systems. Members of our engagement team have additional knowledge and
training with computer auditing . All of our staff auditors carry to the field w ith them, "laptop" computers so
the use of electronic spreadsheets and specialized aud it software packages are used extensively by our
staff, making the audit process move faster .
Our audit staff generates all fund trial balances , lead sheets and detail working papers on laptop computers
through either downloads or input of individual fund general ledger information . This process significantly
reduces the amount of time City personnel must spend preparing audit schedules.
Type and extent of analytical procedures to be used in this engagement
The audit team will use our analytica l review techniques to identify other areas that might require attention.
Until the year-end account balances are finalized , our review will focus on budgets compared to
actual/projected in formation . We can thus , identify certain sensitive areas to determine whether they are
indeed areas requiring extra attention. We will also focus on unusual flu ctu at ions occurring w ithin individual
funds to identify accounts and areas which merit further investigation.
Based on our understanding of the City's operating environment, thro,Jgh our analytical review and other
planning procedures , we will meet with the City personnel to highlight areas to be emphasized during the
audit. We will concentrate our efforts on the identified areas of audit concern and areas we know are
important to the City Officials. Some of our preliminary audit concerns are elaborated as follows :
• Compliance with applicable laws , regulations and reporting requirements
• All matters of compliance with GASB statements and interpretations
• Receipt of all revenue to which the City is entitled
• Purchases are authorized and within budgetary limitations
• Encumbrances and liabilities are recorded and charged to proper budgetary accounts
• Proper accounting for fixed assets incl ud ing in fras tructure assets
• Proper recording of outstanding obligations.
Approach to be taken to gain and docum ent an understanding of the City 's internal control structure
In order to gain and document an understanding of the City's internal control structure, we will review the
City's policies and procedures, meet with appropriate management personnel to ascertain actual operation
of policies and procedures and carry out compliance tests to document internal control strengths and
weaknesses. In reviewing controls over EDP systems emphasis would be placed on the following :
• Determ ination of the organizational and operational controls over the data being processed
includ i ng but not limited to , system development and maintenance controls , hardware controls, and
access controls
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Proposal for Aud itin g and Accounti ng Services
• Evaluat ion of th e degree of "control consciousness " among personne l
• Determ ination of the potential impact of general control strengths and weaknesses
• Consideration of the possibility of management override of controls
Approach to be taken in determining laws and regulations that will be subject to audit test work
W it h regard to pla nnin g for single aud it requirements, we will perform the following :
21
• The City will be asked to prepare a schedule that lists each grant program it administered during the
audit period . The grants should be categorized by grantor agency and grant numbers. The
compliance requirements to be tested will be identified for all major grant programs received by the
City. The compliance requ irements for the major grants w ill be extracted from "Major Compliance
Fea tures of Programs Adm inistered by State and Local Governments" for grants covered in that
document.
• Compliance with Laws and Regulations -The purpose of testing compliance with laws and
regulations is to determine whether the City is complying with laws and regulations , spec ifteally as
they appl y to state and federal financial assistance. Compliance procedures will include rev iewing
state and federal grant requirements , applicab le laws and re~ulations , allowable costs , eligibility,
sub-recipient monitoring , and other specific agen cy requirements .
Approach to be taken in drawin g aud it samples for purooses of test of complia nc e
The Firm also utilizes statistical sampli ng whenever possible to reduce the number of test items se lected
and to increase the reliability of our testing procedures. The decision whether or not to utilize statistical
sampling , in many in stances , depends upon the degree of reliance to be placed on internal accounting
controls. The stronger the internal controls, the more likely statistical sampling can and will be used .
Statistical sampling is most often employed in our compliance testing procedu res during the Single Audit
SINGLE AUDIT APPROACH
The Vasquez & Company LLP audit team has significant experience with approximately 100 s ingle audit
clients. During the audits, we have worked closely with a variety of federa l agencies including the
departments of Agriculture, Education , Labor, Transportation, Health and Human Services, Housing and
Urban Development, and the Env ironmental Protection Agency .
We will beg in our single aud it procedures and program specific grant procedures by developing a
comprehensive understanding of the laws and regulations that have a direct, material effect on the
determination of amounts in your financ ial statements . This understanding will be based on :
• Identification of federal/state award programs and total federal/state expenditures;
• Determ inat ion of major federal award programs;
• Discussions with City staff;
• Rev iew of Board minutes; prior audits , grants and contractual agre~ments ; and
• Review of relevant federa l program requirements from the Office of Management and Budget (O MB)
Circular A-133 Compliance Supplement and the Catalog of Federal Domestic Assistance .
Vasquez & Company LLP's single audit approach is based on guidance available in OMB Circular A-133
and Government Auditing Standards issued by the Comptroller General of the United States. When
testing your major federal/state programs , we follow the suggested audit procedures inclu ding the
Compliance Supplement. For federal or state programs for which guidance is not ava il able, we will
establish programs using applicable grant agreements and federal regu lat ions .
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Proposal for Auditing and Accounting Services 22
KEY ELEMENTS OF THE SINGLE AUDIT PROCESS
Vasquez & Company LLP's au dit te am will work closely with City management through the entire single
audit process . The elements will include , but not be limited to the following :
Phase I-Planning
• Gain an understanding of the City's major internal control systems and environment related to your
major federal/state grants ;
• Review your administrative systems for federal and other grant programs ;
• Assess risk related to federal programs;
• Conduct a brainstorming session in accordance with SAS 99, including federal and other grant
program administration;
• Obtain the "Schedule of Expenditures of Federal Awards" (SE FA);
• Review your prior year SEFA and "Schedule of F indings and Questioned Costs";
• Prepare an analysis of federal programs according to type (i.e. Type A or Type 8 program ):
• Determine major programs by type based on the audit risk analysis in the assessment performed ,
and
• Determ ine the reliance to be placed on the City's systems of internal control for federal and other
grant programs through documentation and control testing .
Phase II -Fieldwork
• Review audit prog rams from the Compliance Supplement to determine the adequacy of the
programs ;
• Review and document the requirements of the programs to be tested ;
• Revise programs as necessary based on program requirements ;
• Interview staff, management, counsel, and officials based on planning ;
• Determine sample selection methodology and the types of procedures that will be performed us ing
selected transactions and documents ;
• Select the transactions and documents for testing ;
• Perform the aud it procedures as documented in the audit programs ;
• Document testing results; and
• Evaluate the results of test ing and determine areas that require further examination .
Phase Ill-Review of Testing Results
• Establish the review protocol for evaluation of results ;
• Review potential findings and questioned costs and communicate with City management;
• Review compliance requirements and compare expected results to the exceptions noted to evaluate
materiality ; and
• Draft a summary of the testing results.
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Proposal for Aud iti ng and Accounting Services 23
Phase IV -Reporting
• Re vi ew federa l, state, and other grant reporting requ irements;
• Determi ne whic h i nternal co ntro l fi nd ings are significant deficiencies or materia l weaknesses ;
• Prepare findings and draft the auditors' reports ;
• Rev iew draft reports with C ity management; and
• Evaluate management feedback and pro posed co rrec t ive actions, mak e revisio ns as necessary, and
finalize the report
ASSISTANCE FROM THE CllY
Our audit approach assumes that representatives o f the C ity staff w ill fu ll y participate in the p lanning ,
fieldwork, and completion of the aud it process. Full participation means that the C ity w ill provide the
resources necessary to allow Vasquez & Company LLP to complete the aud it in a timel y and effective
manner whil e meettn g your deadlines. We anticipate that t he management and staff of the C ity w ill
participate and assist in the follow ing areas :
• Participating in aud it planni ng sessio ns to provide perspecti ve on risk areas in the aud it;
• Assisting in the documentation of internal controls ov er processes ;
• Providing information such as ex penditure reports , general ledge r prior to commenci ng year end
fieldwork ;
• Partic ipation i n fact find ing i nterviews with various C ity staff and consultants , as necessary;
• Encouraging the free exchange of information between the City staff and Vasquez staff;
• Committi ng to a year round aud it approach and interaction w ith the aud itors;
• Prov id ing open access to the C ity management and other personnel ;
• T imely responses to information requests and audit resolution issues.
HOURS BY STAFF LEVEL
-Sta~ II•IJ·II -State
Contro11er~s
Reports
Tax. Form Total -. I
Level·
~ --_ -
PartRers/Principal 19
Manager 60
Supervisor 90
Senior Auditors 168
Totat 337
II
-..... .
5 5 2
8 6 1
12 6 2
20 40 0
45 59 5
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0
6
44
0
50
Returns ssoo . Hours
2
4
0
0
6
2
8
0
0
10
27
49
61
185
512
Proposal for Auditing and Accounting Services
SUMMARY OF THE PROPOSER'S INDIVIDUAL AUDIT
STAFF TECHNICAL QUALIFICATIONS
24
Vasquez & Company LLP is able to assemble and manage multi-disciplinary teams of highly qualified and
experienced professionals, drawing upon audit staff resources and the complementary capabilities of
technical advisory groups . Based on our many years of experience , we are able to integrate the ro les
and functions of professional , administrative, and supporting staff into a common effort.
In our practice, we employ a team approach . Over time , we have found that our team concept is the most
effective way in which to serve a client's diverse needs. Each member of our proposed team possesses a
level of experience that is d irectly re lated to the tasks that he/she will perform . Our aud it admin istration
structure provides for a depth of experi ence and techn ica l s kill s from our management personne l. This
ensures that the City personnel will have continuous access to an appropriate, knowledgeable
representative of the engagement team . Our Firm and all assigned key professional staff are properly
licensed to practice as Certified Public Accountants in California.
COMMITMENT TO STAFF CONTINUITY
Our commitment to achieve long-term engagement continuity is accomplished through early plann in g and
thorough management which increases audit efficiency and streamlines the audit process for the City.
The selection of personnel we propose for assignment to th is engagement has been based on the above
criteria . The Firm covenants that it w ill not replace any of the "key management personnel" unless
circumstances beyond our control occur (e .g . personne l leave the Firm). Each person to be ass igned to
the engagement has been chosen for his or her ability to repeat on future years' engagements.
The success of any audit engagement depends on the people selected to actually conduct the audit. We
consider it imperative that the selected engagement team :
•!• Possess and demonstrate the necessary technical skills to perfo rm their ass ign ed tasks in an
efficient manner,
•!• Establish a "track record" of effective coordination among each other and with the client in
order to meet the stated audit objective, and
•!• Establish continu ity of effort from year to ye ar and among each other in order to avo id
"ret ra inin g" our personnel in subsequent years.
The engagement team we propose for the City's audits has been chosen based on the above criteria and
their prior experience on similar engagements . A synopsis of the team members and their respective
roles followed by their resumes is as follows :
Gilbert R. Vasquez, CPA
Coor-dinating Partner
II
Gilbert R. Vasque;z:; Managing Partner of Vasque;z: & CompaRy LLP
and a Past-pFesident of the California Board of Accountancy with
over 40 years of public accounting experience will have the
responsibility and authority for the audit engagement and act as the
liaison between the City and the Firm . He will assist in tRe
monitoring, review in g and evaluating the engagement In addition,
he will consult with management on issues relevant to the
engagement.
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Proposa l for Auditing and Accounting Services
Lee C. Waddle, CPA
Quality Control Partner
Margaret J. McBride, CPA
Principal·
Crlsty Canieda, CPA
Senior Manager
Clarinda Bareng, CPA
Supervisor
II
Lee Waddle; Vasquez & Company LLP Qua li ty Control Partner and
former Ernst & Young, Quality Control Senior Manager with over 40
years of public and private accounting experience. He will have the
responsibility of concurring partner for the City engagement He will
be the primary profess ional standards fevlewer of reports ~ssued
and will work closely with the Engagement Principal In planning,
reviewing and evaluating the fieldwork.
Margaret McBride; Vasquez & Company LLP Government Practice
Leader and former KPMG partner on numerous municipal aud it
engagements and partner-in-char-ge of government advisory
services for the western reg ion , former Assistant Director of Finance
for the City of Columbia, Missouri, former State eoard of Directors
for the Cal ifo rn ia Society of CPAs and former AICPA in structor on
government auditing and accounting with over thirty (30) years of
public accotmting experience focused primarily on the government
sector will be responsible for planning , directing, and supervising our
services to the City. She will develop the engagement strategy,
provide on-site direction to our team, work closely with C ity
management and will be ava ilable throughout the year to ensure
proactive Issue identification and service delivery.
Cristy Canieda; Vasquez & Company lLP Government Practice
Group Senior Manager w ith sixteen (16) years of public accounting
experience focused primari ly on the public sector will be responsible
for managing the aud it team for the City engagement She wi ll work
with the engagement principa l on audit strategy and planning efforts
and work closely with the City to ensure proactive issue
identificat ion and resolution. She will oversee the operations of the
fieldwork and prov ide gu idance on audit procedures, reporting and
pr-esentations.
Ms. Bareng , Supervisor with the Government Sector Practice Group
with our Firm with ten (10) years of audit and' accoun ti ng experience
focused primarily on the government sector will supervise aud itor in
the field and have direct participation lo audit procedures and r-eport
pr-eparation .
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25
Proposal for Auditing and Accounting Services
Areas of Expertise
GILBERT R. VASQUEZ, CPA
Managing Partner
Gilbert Vasquez, Managing Partner of Vasquez & Company LLP and
Past-President of the Ca li forn ia Board of Accountancy with over 40
years of public accounting experience w ill have the respons ib ility and
authority for the engagement and act as the li aison between the City
and the Firm . He will assist in the monitoring, reviewing and
evaluating the engagement. In addition, he will consult with
m anagement on issues relevant to the engagement.
Mr. Vasquez area of expertise is focused on accounting , taxation, financial , and compliance aud its,
internal control review of local municipalities, special distr icts , redevelopment agencies. financin g
authorities and other local governmental component un its. nonprofit organizations , privately held
co mpanies and publ icly traded companies.
Standards
Mr. Vasquez is familiar with conductin g audits in accordance with the following standards and
provis ions:
• Generally Accepted Aud iting Standards
• Single Audit Act Amendment of 1996
• OMB Circular A-133
• OMB C ircular A-122
Representation of Experience
• Generally Accepted Government Aud iting
Standards
• Federal Acquisition Regulations
• Standards of the Public Company
Accounting Overs ight Board
Mr. Vasquez's experience includes his involvement in the following engagements :
• C ity of Baldwin Park
• C ity of Carson
• C ity of Cudahy
• City of El Monte
• City of Norwalk
• City of Huntington Park
• City of Pico Rivera
• City of Lynwood
• City of Gardena
• City of San Fernando
• C ity of Needles Public Utility Authority
Educational Background
• Centra l Bas in Municipal Water Distr ict
• Upp er San Gabriel Valley Municipal Water District
• Water Replenishment District of Southern Cal iforn ia
• Valley County Water District
• Walnut Valley Water District
• Southern California Association of Governments
• San Gabri el Valley Council of Governments
• Alameda Corridor East Construction Authority
• Alameda Corridor Transportation Authority
• Los Angeles County Metropolitan Transportation
Authority Consolidated Aud it
Mr. Vasquez rece ived his Bachelor of Science in Business Administration, with an emphasis in
Accounting from California State University , Los Angeles . He is also a credentialed Professor of
Accounting.
Professional Affiliations
Mr. Vasquez was a member of the 1984 Olymp ic Organ izing Executive Committee and currently
serves on the Board of Directors of its successor organ izat ion , the LA84 Foundation . Mr. Vasquez
continues his membership on several Boards including Manufacturers Bank, Promerica Bank,
Entrav ision Commun ication Corporation and Green Dot Publ ic Schools. Mr. Vasquez meets the Firm
and profess iona l CPE requ i rements .
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Proposal for Auditing and Accounti ng Services 27
Areas of Expertise
LEE WADDLE , CPA
Quality Control Partner
Mr. Waddle is the Qual ity Control Partner with our F irm and former Quality
Control Senior Manager with Ernst & Young -Orange County with over
forty (40 ) years of ex perience in private and public accounting . Mr. Waddle
will have the respons ib ility of co ncurring partner for the City engagement.
He will be the primary professional sta ndard s reviewer of reports issued
and will work closely with the Engagement Pri ncipal in planning , reviewing
and evaluating the fieldwork.
Mr. Waddle area of expertise is focused on accounting, taxation , financial, and compliance audits, internal
co ntrol reviews of local mun icipalities , specia l districts, redevelopment agencies, financing authorities and
other local governmental component units , nonprofit organizations, privately held compan ies and publicly
traded companies .
Standards
Mr. Waddle's is familiar with con du cting audits in accordance with the following standards and provisions:
• Generally Accepted Aud iting Standards
• Single Audit Act Amendment of 1996
• OMB Circular A-133
• OMB Circular A-122
Representation of Experience
• Genera lly Accepted Government Auditing
Standards
• Federa l Acquisition Regulations
• Standards of the Public Company Account ing
Oversight Board
Mr. Waddle's experience in this area includes his involvement in the follow ing engagements:
• City of Baldwin Park • Central Basin Municipal Water District
• City of Carson • Upper San Ga briel Valley Municipal Wate r District
• City of Cudahy • Water Replenishment District of Southern California
• City of El Monte • Valley County Water D istrict
• City of Norwalk • Walnut Valley Wate r District
• City of Huntington Park • Southern California Association of Governments
• City of Pico Rivera • San Gabriel Va ll ey Council of Governments
• City of Lynwood • Alameda Corri dor East Construction Author ity
• City of Gardena • Alameda Corridor Transportation Authority
• City of San Fernando
• City of Needles Public Utility Authority
• Los Ange le s County M etropolitan Tran sportation
Authority Consolidated Audit
Professional Background
Prior to joining the Firm , Mr. Waddle served as Director of Internal Auditing for Ti ger International and as
Assistant Director of Internal Auditing for Whitaker Corporation. Mr. W addl e was a senior audit manager in
charge of quality control for Ernst & Young , LLP in its Orange Cou nty office.
Educational Background
Mr. Waddle received his Bachelor of Science in Business Administration, with an emphasis in Accounting,
from the California State University of Los Angeles. He is a member of the California Society of Certified
Publi c Accountants . Mr. Wadd le meets the Firm and professional CPE requirements.
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Proposa l for Auditing and Accounting Services 28
Areas of Expertise
MARGARET J. MCBRIDE, CPA
Engagement Principal
Margaret McBride ; Vasquez & Company LLP Government Practice Leader
with thirty (30) years of public accounting experience ; former KPMG
Partner or Concurring Partner on numerous government aud its and former
KPMG Partner-in-charge of government Jdvisory serv ices for the western
reg ion will serve as the Engagement Principal responsible for planning ,
directing , and supervising our services to the City. She will develop the
engagement strategy, provide on -site direction to our team , work c losely
with C ity management and w ill be available th roughout the year to ensure
proactive issue identifiCat ion and service delivery.
Ms . McBride is a Certified Public Accountant and former partner with the international accounting firm
of KPMG . Ms. McBride has focused on providing organizat ional ana lys is, business process re-
eng ineering , cost accounting , performance auditing and fi nancial account ing and aud iti ng services
throughout her 30 -year career. She has worked pri ncipa ll y in the governmental (federa l, state ,
munic ipa l, special d istrict including water districts and primary and secondary education districts, publi c
colleges and universities) and not-for-profit industries (foundations, private schools and universities,
health and welfare and arts organ izations).
Representative projects in wh ich she has part ic ipa ted incl ude:
Financial and Compliance Audits -Conducted numerous management, financial and compl iance
audits of various local governmental, higher education and not -for-profit entities . Representations of
governmental clients are listed on the following page.
Information Technology -Revi ew of practices and processes relevant to the i mplementation of a
new finan ci al management system . The engagement inc luded cons ideration of modifications , both to
the system software and to manual processes , impacts on efficienr.y and internal controls , and next
steps to promote and enhance efficiencies and effectiveness .
Cost Accounting -Review of cost ing methodologies and assisted in the implementation of internal
serv ice funds for use in centra li zin g certa in County-wide support operations , capturing the re lated costs
and charg ing user departments for serv ices . The engagement included cons ideration of customer
needs , practica l methods for accumulating of cost and charge data , calcu l ation of appropr iate user
charge rates , and development of performance measurement and quality control mechanisms .
Organizational Analysis -Rev iew of the organ izational structure , systems , staffing and strateg ic
focus for th is community developmen t departmen t. Results included a proposed re-ass ignment of
respons ibili ties to more effective ly accomplish the department's m ission , an alternative organizat ion
chart , recommendations for improved efficiency and effectiveness , and assistance in develop ing a
strategic plann ing process .
Performance Measures and User Fee Study -Study wh ich encompassed the development of
performance measures , an updated schedule of fees and user charges , act iv ity based costing , and
benchmarking of se lected performance data. The resu lts of this study were used to support rev ised
fees and user charges and the adoption of a performance-based budget.
Construction Management Study -Performance an operat ional revi ew of the construction contract
management processes and the pol ic ies , systems and procedures related to developer-requested or
developer-financed construction . Proj ect recommendat ions addressed opportunities to improve
efficiency and enhance customer service .
Staffing Study -Staffing study and compensation review of a transit operator. The project included
performing job analyses, assessing comparable positions by conducting a benchmark survey and
analys is, and address ing staffing leve ls.
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Proposal for Auditing and Accounting Services
Representation of Experience
Following is a representative sample of
• City of Anaheim
City of Baldwin Park
• City of Brea
• City of Carson
City of Colton
• City of Corona
• City of Compton
• City of Dana Point
• City of El Monte
City of Encinitas
City of Huntington Beach
• City of Huntington Park
• City of Irvine
• City of Laguna Beach
City of Long Beach
• City of Los Angeles
• City of Lynwood
• City of Newport Beach
• City of Norwalk
City of Orange
• City of Pasadena
• City of Pica Riv era
• City of Redlands
City of Santa Ana
County of Los Angeles
PRIOR EXPERIENCE
•
•
•
•
•
•
•
•
•
•
•
•
County of Riv ers ide
County of Orange
County of San Bernardino
County of San Diego
County of Santa Barbara
Port of San Diego
Port of Oakland
Orange County Transportation Authority
Los Angeles County Metropolitan
Transportation Authority
North Orange County Transit District
San Diego Transit Company
California State University System
Central Basin Mun icipal Water District
Water Replenishment District of Southern
California
Mun ici pa l Water District of Orange
Riverside Flood Control District
California State University System
Bassett Unified School District
Compton Un ifi ed School District
Compton Commun ity College District
Los Angeles Unified School District
Los Angeles Community College District
Rio Hondo Commun ity College District
29
Ms . McBride served as the Assistant Director of Finance for the City of Co lumbia , Missouri prior to j oining
KPMG . In that capacity she participated in the implementation of a financ ial accounting system ,
supervised the municipal accounting and reporting functions , implemented the City 's cash and investment
management program , and developed and implemented debt management strategies .
ACTIVmES AND EDUCATION
Ms . McBride is a Certified Public Accountant. She has served on the State Board of Directors of the
Californ ia Society of Certified Pub lic Accountants and as the Chairperson of its Aud it Committee , as well
as President of its Orange/Long Beach Chapter, and as a member of the Society's Governmental
Accounting and Auditing Committee . She has also served as a review for the Government Finance
Officers Association (GFOA)'s Certificate of Achievement for Excellence in Financia l Reporti ng program.
She has published articles on the subj ects of cash management and the Single Audit process and has
served as a speaker to professional organizations on subjects including Performance Budgeting ,
Detection of F raud , Governmental Accounting, Total Quality Management, Internal Controls , Sarbanes-
Oxley Compliance , Performance Budgeting , Cash Management, Fixed Asset Systems and GASB 34
Requirements , and the Single Audit Act.
Ms . McBride received her Bachelor of Business Administrat io n degree from th e Un iversity of Missouri-
Columbia .
www .vasquezcpa .com
Proposal for Aud iting and Accounting Services 31
CLARINDA U. BARENG, CPA
Supervisor
Clarinda Bareng ; Supervisor with the Vasquez & Company LLP
Government Practice Group with ten (1 0) years of pub li c accounting and
auditing experience will work closely with the engagement management in
plann ing , budgeting and designing ta ilored aud it programs for the City
engagement. She will have direct partic ipation i n performing aud it
procedures and report preparation as well as provide guidance to audit
staff in the field .
Areas of Expertise
Ms. Bareng 's practice is focused primarily on financial and compliance aud its of local government and
special districts, nonprofit organizations and employee benefit plans. Her experience encompasses
preparation of Comprehensive Annua l Financial Reports (C AFR), and State Controller's Reports . She
perfonns compliance reviews of various redevelopment agencies. She also has extensive experience in
performing single audits of federally funded programs in accordance with OMB Circular A-133. Her
experience i ncludes agreed-upon procedures reviews of various so li d waste haulers (Waste Management
of Orange County, Direct Disposal, Federal Disposal, CR&R and Rainbow Disposal}. These reviews
included AB 939 compliance examinations of waste haulers .
Standards
Ms . Bareng is well versed in conducting audits in accordance with tht! following standards/prov is ions:
• OMB Circular A-110
• OMB Circular A-122
• OMB Circular A-133
• Single Aud it Act Amendment of 1996
Representation of Experience
• C ity of Ba ldwin Park
• City of Carson
• City of Hunt ington Park
• City of Norwalk
• City of Pico Rivera
• Bassett Unified School District
• El Camino College Foundation
• Water Replen ishment District of S. Cal
• Generally Accepted Government Auditing
Standards
• Generally Accepted Auditing Standards
• Cal ifornia K-12 Local Educational Agencies
Aud it Guide
• Los Angeles County Community Development Commission
• Alameda Corridor East Construction Authority
Professional Affiliations
Ms . Bareng earned a Bachelors of Science in Accountancy (Cum Laude) from Polytechn ic University of
the Ph ili pp ines . Subsequent to that time, she has attended 'lumerous courses, seminars , and
conferences related to accounting and general financial bus i ness activi ties. Ms . Bareng is a Certified
Public Accountant licensed to pract ice in the State of Cal ifornia . Ms . Bareng meets the F irm 's and the
p ro fessional CPE requirements .
II www.vasquezcpa .com
Proposal for Auditing and Accounting Services 32
BASIS FOR INCREASES/DECREASES
There are various matters that can cause us to perform worl< in excess of that contemplated by our fee
estimate. The following explains the matters that arise most frequently .
Changing requirements
Today , there are numerous governmental or rule-mak ing bod ies that regularly add or change various
requirements. Although we attempt to plan our work to anticipate the requirements that will affect our
engagement, three types of situations make this difficult. Sometimes , these new requirements are not
communicated in time for us to anticipate their effects in our preliminary planning . Secondly , in spite of
our anticipation and planning , the work necessary to comply with new requirements may be
underestimated . Finally, in some instances, you may decide that it is advantageous to you to have them
applied imm ediately .
Incorrect accounting applications or errors in your records
We generall y form our fee est imates on the expectatio ns that your accounting records are in good order
so that our work can be completed based upon our normal testing and other procedures. However,
should we find numerous errors, incomplete records or disorganized bookkeeping methods, we will have
to do additional work to determine that the necessary corrections have been made and properly reflected
in the finan cial statements.
Lack of aud it facilitation or timely preparation
To minimize your costs, we plan the means by wh ich your personnel can facilitate the audit (e .g . what
schedules they will prepare, how to prepare them, the supporting documents that need to be provided,
etc). We also discuss matters such as availability of your key personnel, deadlines and working
conditions . Indeed , the information concerning these matters that you furnish to us is a key element in
our fee quotation. Therefore, if your personnel are unable, for whatever reason , to provide these
materials on a timely basis, it may substantially increase the work we must do to com plete the
engagement within the established deadlines. Moreover, in some circumstances this may require a staff
withdrawal , as disc ussed in the follow ing paragraph .
Staff withdrawal
A staff withdrawal consists of our removing one or all staff because the condi tion of your records or the
inability of your personnel to provide agreed upon materials within the established timetable makes it
impossible for us to perform our work in a timely, efficient manner, as established by our engagement
plan . Sometimes, a complete staff withdrawa l is necessary to permit an orderly audit approa ch. A staff
withdrawal is not necessarily an adverse reflection on your personnel. However, it involves additional
costs , as we must reschedule our personnel ; incur additional start-up costs , etc., to prevent total
engagement costs from increasing sig nificantly.
Unforeseen events
Even though we co mmunicate frequently with clients and plan our engagement with management and
their staff, unforeseen events can occur. Examples include : accounting problems , litigation , changes in
your busines s or business environment, contractual or other difficulties with suppliers, third -party service
providers , or customers, etc. When those circumstances occur, additional time is needed to provide you
with assistan ce and complete our engagement in accordance with professional standards.
Adjustments in the Scope of Service
Fees for the services are calculated based upon our estimates of the time n eeded to complete the project
at our standard hourly rates . Therefore , if there are c hanges in the scope of service we would discuss the
new scope of service, prepare a budget, and come to an agreement with the City on a new fee structure .
www . va squezcpa.com
Proposal for Auditing and Accounting Services 33
Again, we emphasize that we str ive to give you optimum valu e for our professional services. Fee
quotations are provided based upon the facts and circumstances that you descri be to us . However,
unl ike the sa le of products , the performance of professional services is affected by many va ri ables, such
as the forego ing , which may cause fee estimates to change.
We want you to receive the maximum value for our professional service s and to perceive that our fees
are reasonable and fair we therefore commit to inform you in advance of any need to revis it fee
estimates .
II www. vasquezcpa.com
Proposal for Auditing and Accounting Services 34
SCOPE
We understand that we will provide an auditing service to the City. Our audit approach is tailored to meet
all technical requirements while maintaining professiona l skepticism vJithout forgetting that we provide a
service. We are able to achieve this by partner involvement in all phases of the audit and assigning
experienced governmental audit staff to the engagement. Partner involvement will result in decisions
being made on a timely basis and experienced staff will minimize disruption to your staff.
The scope of our services for the fiscal years ending June 30 , 2011 through June 30, 2013 would be as
follows :
• Perform an audit of all funds of the City of Temple City in accordance with auditing standards
generally accepted in the United States of America and Government Auditing Standards, issued
by the Comptroller General of the United States. As a part of our audit we will identify and
eva lu ate the City's internal control over financ ial report in g and report i n writing to the City Council
any control deficiencies found during the aud it that are cons idered significant deficiencies and /or
material weaknesses based on the standards and guidelines established by Statement on
Auditing Standards SAS 115 Communicating Internal Control Related Matters and communicate
with the City Council matters related to the financial statement audit relevant to the governing
body in accordance with Statement on Auditing Standards No. 114 The Auditor's Communication
to Those Charged with Governance.
• Prepare and word process the City's Comprehensive Annual Fin ancial Report (CAFR ) and
ren der an auditors' report on the basic financ ial statements to inclu de both Government-Wide
Financial Statements and Fund Financial Statements.
• Perform a financial and compliance aud it of the Temple City Redevelopment Agency in
accordance with Government Auditing Standards, (includin~ the provisions contained in the
Guidelines for Compliance audits of Californ ia Redevelopment Agencies issued the State
Controller).
• Perform a sin gle audit on the expenditure of federal grants in accordance with OMB Circular A-
133 , Audits of States, Local Governments and Nonprofit Organizations, and render an opinion on
the Internal Control over Financial Reporting based upon the aud it of the City's financial
statements in accordance with Government Auditin g standards and on compliance with
requirements applicable to each Major Program , In terna l Control over Compli an ce on the
Schedule of Expenditures of Federal Awards .
• Perform agreed-upon procedures pertaining to the City's GANN Limit (Appropriations Limit ) and
render a letter annually to the City regard in g compliance.
• Is sue a separate "management letter" addressed to the City Manager that incl udes
recommendations for improvements in internal control, accounting procedures , and other
significant observations that are considered to be non-reportable conditions .
• Provide guidance on the impl ementation of new GASB and SAS requirements and spec ifics of
Federal and State of Ca li forn ia regulations as they pertain to local government accounting .
At the co nclusion of our audits we will be pleased to make a presentation to the City Council and the
Agency's Board and/or the appropriate Audit Committee, during which we will discuss our audit approach ,
scope and results. We pride ourselves on our ab ility to convey complex information in an informative
fashion, free of bi as , such that Management can evalu ate the sign ifica nce of the information and
determine action plans as may be appropriate.
City Management can be assured that our audits will be conducted in accordance w ith aud itin g standards
generally accepted in the United States of America as set forth by the Ame rica n Institute of Certified
Public Accountants, the standards for financial audits set forth in the U.S. General Accountin g Office's
Government Auditing Standards (19 94 revision), the provisions of the Federal Sin gle Audit Act of 1996, in
accordance with the U. S. Office of Management and Budget C ircul ar A-133 , Audits of State, Local
Governments, and Nonprofit Organizations, and commit to perform the work within the agreed ti me
period.
II www.vasquezcpa .com
Proposal for Auditing and Accounting Services 35
INSURANCE REQUIREMENTS
Vasquez & Company LLP agrees to procure and maintain for the duration of the contract insurance
against claims for injuries to persons or damages to property which may arise from or in connection with
the performance of the work described in this p roposal by the Firm, its agents, representatives or
employees .
Vasquez & Company LLP agrees to maintain insurance limits of no less than :
1. General Liability : $1 ,000,000 .00 per occurrence for bodily injury, personal injury and property.
2. Automobile Liability : $1 ,000,000.00 per accident for bodily injury and property damage.
3. Errors and Omissions liability: $1,000,000 .00 per occurrence.
4 . Worker's Compensation insurance per the requ irements of the State of California.
We further agree to place our in surance poli cies w ith insurers which are "admitted " in the State of
Californ ia and have a current A.M . Best rating of no less than A:VII.
II www . vasquezcpa.com
Proposal for Auditing and Accounting Services 37
FEES
Our fees for the services outlined in this proposal are based on our estimates of the time needed to
complete the project at our standard hou rly rates . You acknowledge that any fee estimates we have
furnished are onl y our good faith estimates based on our understanding of the engagement assumptions
and the facts and circumstances we are aware of at this time. If the bases of our estimates are
inaccurate, the fees and expenses may be different from those we each anticipate . If sign ificant
additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur
the additional costs. Our standard hourly rates vary according to the degree of responsibility involved and
the experience level of the personnel assigned to your audi t. The fees are based on anticipated
coo peration from your personnel and the assumption that unexpected circums tan ces will not be
encountered during the audit.
FY 2010-2011 through FY 2012-2013
2012 2013
CAFR s 25,137 26,394 27,713
RDA (Includ ing SOl) 7,471 7,844 8 ,236
Single audit 4 ,658 4 ,891 5,136
State Controller's Report (City, RDA, Financing Authority) 4 ,395 4 ,614 4,645
Street Report 1,582 1,661 1,744
Tax re turns 1,406 1,477 1,550
GANN 352 369 388
Proposed audit fee $ 45,000 47 ,250 49,613
FY 2010-2011 through FY 2014-2015
Fee
2011 2012 2013 2014 2015
CAFR $ 25,137 26 ,394 27 ,713 29,099 30,554
RDA (lncludif19 SOl) 7 ,471 7,844 8,236 8,648 9 ,081
Single audit 4 ,658 4,891 5,136 5 ,392 5,662
Slate Controller's Report (City, RDA , Finan ci ng Au thority) 4,395 4,614 4,845 5,08 7 5,342
Street Report 1,582 1,661 1,744 1,631 1,923
Tax returns 1,406 1,477 1,550 1,628 1,709
GANN 352 369 386 407 427
Proposed aud it fee $ 45 ,000 47,250 49 .613 52 .093 54 ,698
II www.vasquezcpa .com
Proposa l for Audit ing and Account ing Service s
Schedule of Hourly Rates by Staff Level
Personnel Category · 2011 2012 :2013 · _ 2014 2015 '
Partner/Principa l
Manager
Supervisor
Senior Aud itor
II
$
$
$
$
250
1'-60
1-40
120
257
165
144
124
265
170
148
128
273
175
152
132
www . vasquezcpa.com
281
180
156
136
38
RIV ~-l838-fl•J58-38RO' I
ATTACHMENT 8
CONSULTANT SERVICES AGREEMENT
By and Between
THE CITY OF TEMPLE CITY,
a municipal corporation
and
VASQUEZ & COMPANY LLP
_,_
AGREEMENT FOR CONSULTANT SERVICES
BETWEEN
THE CITY OF TEMPLE CITY, CALIFORNIA
AND
V AQUEZ & COMPANY LLP
This Agreement for Consultant Services (''Agreement") is entered into as of this ~~ay
of~~-·-· 201 I by and between the City of TEMPLE CITY, a municipal corporation
("City'i"~d Vasquez & Compan y, LLP, a California limited liability partnership (··consultant'').
City and Consultant are sometimes hereinafter individually referred to ns .. Party" and hereinafter
collec tivel y referred to us the ·'Parties .''
RECITALS
A. Ci ty has sought, by issuance of a Request for Proposals or Invitation for Bids, the
performance of the services defined and described particularl y in Section 2 of this Agreement.
B. Consultant, following s ubmission of a propo sal or bid for the performance of the
services defined and described parti cularly in Section 2 of this Agreement, was selected by the
City to perform those services.
C . Pursuant to the City of Temp le City's Municipal Code, C it y has authority to enter
into this Consul tant Services Agreement and the City Manager has authority to execute thi s
Agreement.
D. The Parties desire to formalize the se lection of Consultant for performance of
those services defined and described particularly in Section 2 of this Agreement and desire that
the terms of that perfom1ance be as particularly defined and described herein.
OPERATIVE PROVISIONS
NOW, THEREFORE, in cons ideration of the mutual promises and covenants made by
the Parties and contained here and other consideration, the va.I-Je and adequacy of which arc
hereby acknowledged, the parties agree as follows :
SECTION 1. TERM OF AGREEMENT.
Subject to the provisions of Section 20 "Tennination of Agreement" of this Agreement,
the sco pe of services set forth in Exhibit "A" "Scope of Services" s hall be com pleted pursuant to
the schedul e specified in Exhibit "A." Should the scope of serv ices not be t:o mpleted pursuant to
that schedule, lhe Consultant shall be deemed to be in Default of this Agreement pursuant to
Section 21 of thi s Agreement. The City, in its sole discretion, may choose not to enfo rce the
Default provisions of this Agreement and may instead allow Consultant to continue perfonning
the sco pe of services until such services arc complete .
RIV II./~3R ·611 5 K -3 KI\U ~I -I -
SECTION 2. SCOPE OF SERVICES.
Consultant agrees to perform the services set for th in E~ibit "A" "Scope of Services''
and made a part of thi s Agreement.
SECTlON 3. ADDITIONAL SERVICES.
Consultant shall not be compensated tor any servic es rendered in connection with its
performance of this Agreement which are in addition to or outside of those set forth i n this
Agreement or listed in Exhibit "A" "Scope of Services," \lnless such additionul services are
authorized in advance and in writing by th e City Counci l or City Manager of City. Consultant
shall be compensated fo r any such additio na l services in the amounts and in the manner agreed to
by the City Counci l or City Manager.
SECTION 4. COMPENSATION AND METHOD OF PAYMENT.
(a) Subject to any limitatio ns set forth in thi s Agreement, City agree s to pay
Consultant the amounts specified in Exh i bi t "B" "Co mpensation " and made a part of this
Agreement. The tot a l co mp ensation sha ll not exceed Forty Five Thousand dollars ($45.000) for
the fiscal year 20 10-201 1 aud it, exclusive of re imbursement fo r actual expen ses , unless
addition al compensation is approved in v.'Iiting by the City Cmmcil or City Manager.
{b) Each month Consultant shall furnish to City an original invoice for all work
pe rfo rmed and expenses incurred during the preceding month . The invoice shall detail charges
by the fol low ing catego ries : labor (by sub-category), trave l, materials, equipment, supplies, and
sub-co nsultant contracts . Sub-consultant charges shall be detailed by the following categories :
labor , travel, materials, equipment and supplies . City shall independently review each invoice
subm itted by the Consulta nt to de termine whether the wor k performed and expenses incurr ed are
in compliance with the pro visio ns of this Agreemen t. In the event that no c harges or expen ses
are disputed, the invoic e shall be approved and paid acc ording to the terms set forth in subsection
(c). In th e event any charges or expenses are disputed by Ci ty, the origi nal invoice sha ll be
returned by City to Consultant for correction and resubmission.
{c) Exce pt as to a ny charges for work performed or expe nses incurred by Consultant
which are disputed by City, City will use its best efforts to ca use Consultant to be paid wi thin
forty -tivc (45) days or receip t of Co nsultant's correc t and undisputed invoic e.
(d) Payment to Consultant fo r wo rk performed pursuan t to this Agreement shall not
be deemed to waive any defects in work perfo rmed by Consullant.
SECTION 5. ENGAGEMENT LETTER.
The standard engagement Jetter which contains the a udit objectives, management
responsibilities , audit pr ocedures and audit adm inistration is attached as Exhibit 0 to this
co ntract. In the event of any inco nsi stency between Scope o f Servi ces and Engagement Letter ,
Scope of Services sha ll have priori ty .
RIV 11·18311-6951!-3880 vi -2 -
SECTION 6. INSPECTION AND FINAL ACCEPTANCE.
City may inspect and accept or reject any of Consul tant's work under this Agreement,
either during performance or when comp leted . Ci ty shall reject or finally accept Consultant's
work within sixty (60) days after sub mitted to City. City shall reject wo rk by a timely written
explanation. otherwise Consultant's work shall be deemed to have been accepted . City's
acceptance shall be conclusive as to such work except with respect to latent defects, fraud and
such gro ss mistakes as amount to fraud. Acceptance of any of Consultant's work by City shall
not constitute a waiver of any of the provisions of this Agreement including , but not limi ted to ,
sections 16 and 17, pertaining to indemnification and insurance, respectively.
SECTION 7. OWNERSHIP OF DOCUMENTS.
All original maps, models , designs, drawings, photographs, studies, surveys , reports, data ,
notes, computer files, files and o ther documents prepared, developed or discovered by Consultant
in the course of providing any services pursuant to this Agreement shaJl become the sole property
of City and may be used, reused or ot herwi se disposed of by City without the penniss io n of the
Consultant. Upon completion, expiration or tennination of this Agreement. Consullant shall turn
over to City all such original maps, models, designs, drawings, photographs, studies, surveys,
reports, data, notes, computer files, files and other documents .
If and to the extent th at City utilizes for any purpose not related to this Agreement any
maps, models, designs, drawings, photographs, stud ies, surveys, reports, data, notes , comp uter
files, til es or other documents prepared, developtd or discovered by Consultant in the cou rse of
providing any services pursuant to th is Agreement, Consultant's guarantees and wmants re lated
to Standard of Performance and found in Sec(ion 9 of this Agreemen t shall not extend to such
usc of the maps, models, designs , drawings, photographs , studies, surveys, reports, dotEl , not es .
compu ter files, files or other documents .
SECTION 8. CONSULTANT'S BOOKS AND RECORDS.
(a) Consultant shall maintain any and all documents and records demonstrating or
relating to Consulta nt 's performance of services pursuant to this Agreement. Consultant shall
maintain any and all ledgers , b ooks of account, invoices, vouchers, canceled checks , or other
docume nt s or records evidencing or relating to work, services, expenditures and disbursements
charged to City pursuant to this Agreement. Any and all such documents or records shall be
maintained in accordance with generally accepted accounting principles and shall be sufficientl y
complete and detailed so as to permit an accurate evaluation of the services provided by
Consu lt ant pursuant to this Agreement. Any and all such documents or records shall be
maintained for three years from the date of execution of this Agreement and to the exten t
required by laws relating to audits of public agencies and their expenditures.
(b) Any and all records or documents required to be maintained pursuant to this
section shall be made available for inspection, aud it and copying, at any time during regu la r
business hours, upon request by City or its designated representative . Copies of such documents
or records shall be provided directl y to the City for inspecti on. audit and copying when it is
RIV M~II3S·6958 ·3880 v i -3 .
--------------
practical to do so; otherwise , unless an alternative is mutually agreed upon, such documents and
records shall be made available at Consultant's address indicated for receipt of notices in this
Agreement.
(c) Where City has reason to believe that any of the documents or records required to
be mainta ined pursuant to this section may be lost or discarded due to dissolution or tennination
of Consultant's business, City may, by written request, require that custody of such documents or
records be given to the City and that such documents and records be maintained by the requesting
party. Access to such documents and records shall be granted to City, as well as to its
successors-in-interest and authorized representatives .
SECTION 9. STATUS OF CONSULTANT.
(a) Consultant is and shall at all times remain a wholly independent contractor and
not an officer. employee or agent of City. Consultant shall have no authority to bind City in any
manner, nor 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 otheJv.'ise expressl y conferred in writing by City.
(b) The personnel performing the services under t his Agreement on behalf of
Consultant shall at all times be tmder Consultant's exclusive direction and control. Neither City,
nor any elected or appointed boards, officers, officials, employees or agents of City, shall have
control over the conduct of Consultant or any of Consultant's officers, employees, or agents
except as set forth in this Agreement. Consultant shall not at any time or in any manner represent
that Consultant or any of Consultant 's officers. emp loyees, or agents arc in any manner officials,
ofticers, empl oyees or agent s ofCity.
(c) Neither Consultant , nor any of Consultant's onicers, 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.
SECTION 10. STANDARD OF PERFORMANCE.
Consultant represents and warrants that it has the qualifications, experience and facilities
necessary to properly perfom1 the services required under this Agreement in a thorough,
competent and professional manner. Consultant shall at all times faithfully, competently and to
the best of its ability, experience and talent, perform all services described herein. ln meeting its
obligations under this Agreement , Consultant shall employ, at a minimum, generally accepted
standards and practices utilized by persons engaged in proviciing services similar to those
required of Consultant under this Agreement.
If and to the extent that City utilizes for any purpose not related to this Agreement any
maps , models, designs, drawings , photographs, studies, surveys, reports. data, notes, computer
fil es, files or other documents prepared, developed or discovered by Consultant in the course of
providing an y servi ces pursuant to this Agreement, Co nsultant 's guarantees and warranties
related to Standard of Performance shall not extend to such use of the maps , models, designs,
RIV 1148J8-69 Sll-38 ll 0 v i -4 -
drawings, photographs, studies , surveys, reports, data, notes, computer files, files or other
documents.
SECTION 11. COMPLIANCE WITH APPLICABLE LAWS ; PERMITS AND
LICENSES.
Consultant shall keep itself informed of and comply with all applicable federal, state and
local laws. statutes, codes, ordinances, regulations and rules in effect during the term of this
Agreement. Consultan t shall obtain any and all licenses, pennits ~nd authorizations necessary to
perform the services set forth in lhis Agreement. Neither City, nor any elected or appointed
boards , onicers , officials, employees or agents of City, shall be liable, at law or in equity , as a
result of any failure of Consultant to comply with this section .
SECTION 12. PREVAILING WAGE LAWS
It is the understanding of City and Consultant that California prevailing wage laws do not
apply to thi s Agreement bec~use the Agreement does not involve any of the following services
subjec t to prevailing wage rates pursuant to the California Labor Code or regulations
promulgated thereunder : Construction. alteration, demolition, installation, or repair work
performed on public bui ld ings, facilities, streets or sewers done under contract and paid for in
whole or in part out of public funds. In this context, ·'construrtion " includes work performed
duri ng the design and prcconstruction phases of construction inc luding, but not limited to,
inspect ion and land surveying work.
SECTION 13. NONDISCRIMINATION.
Consultant s hall not discriminate , in any way, against any person on lhe basis of race ,
color, religious creed, national origin, ancestry, sex, age, physical handicap, medical condition or
marital status in connection \vit.h or re lated to the performance of this Agreement.
SECTION 14. UNAUTHORIZED ALIENS.
Consultant hereby prom ises and agrees to comply with all of the provisions of the Fe deral
Immigration and Nationality Act , 8 U.S.C.A. §§ 1 t 01, et seq ., as amended, and in connection
therewith, shall not employ unauthorized a liens as defined therein. Should Consultant so employ
such unauthorized uliens for the performance of work and/or services cove red by this Agreement,
and should the any liability or sanctions be imposed against City for such use of unauthorized
a liens, Consultant hereby agrees to and shall reimburse City for the cost of all s uch liabilities or
sanctions imposed, together with any and all costs, inclu din g attorneys' fees, incurred by City.
SECTION 15. CONFLICTS OF INTEREST.
{a) Consultant covenants that neither it, nor any officer or principal of its firm , has or
sha ll acquire any interest, directl y 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 cove nants that in the performance of this Agreement, no
person having any such interest shall be employed by it as an officer, employee , agent or
subcontrCl ctor without the express written consent of the City Manager. Consullan t agrees to at all
Rl\' N·1S3i-6Q.S8-.ll!BO vI -5 -
times avoid conflicts of interest or the appearance of any conflicts or interest with the in terests of
City in the performance of this Agreement.
(b) City understands and acknowledges that Consultant is. as of the date of execution
of this Agreement, independently involved in the perfomumce of non -related services for other
goverrunen tal agencies and private parties. Consultant is unaware of any stated posi tion of City
relative to such projects. Any future posit ion of City on such projects shall not be considered a
conflict of interest for purp oses of this section.
(c) City understands and acknowledges that Consultant will, perform non-related
services for other governmental agencies and private parties following the completion of the
scope of wo rk under this Agreement. Any such future service shall not be co nsidered a cont1ict
of interest for purposes of this section .
SECTION 16 . CONFIDENTIAL INFORMATION; RELEASE OF INFORMATION.
(a) All information gained or work product produced by Consultant in perfonnance of
this Agreement shall be considered con fidential , unle ss such information is in the public domain
or already known to Consultant. Cons ultant shall not release or d isclose any such information or
work product to persons or entities ot her than City without prior written authorization from the
City Manager, except as may be required by law .
(b) Consultant, it s officers, employees, agents or subcontractors , shall not, without
prior \'vTittcn author iza tion from th e City Manager or unless requested by the City Attomey of
City, voluntarily provide declarations, letters of support, testimony at depositions, response to
interrogatories or other information co ncerning the work pe rform ed under thi s Agreement.
Response to a subpoena or court order sha ll not be considered "vo lunt ary" provided Consu lt ant
gives City notice of such court ord er o r s ubpoen a.
(c) Jf Consultant, or any officer, employee, agent or s ubcontractor of Consultant,
provides any information or work product in violation of this Agreement, then City shal I have the
right to reimbursement a nd indemnity from Consultant for any damages, costs and fees,
including attorneys fees, caused by or incu rred as a result of Co nsultan t 's cond uct.
(d) Cons ultant shall promptly noti fy City should Consultant , its offlcers, employees,
agents or subcontrac tor s be served with any summons. complaint, subpoe na, notice of deposition ,
request for documents, inte rrogatories, request for admissions or other discovery reques l, cou rt
order or subpoena from any party regarding this Agreement and the work performed thereunder.
City retains Lhe right. but has no ob ligation, to represent Consultant or be pre sent at any
deposition, hearing or similar proceed in g. Consultant agrees to cooperate fully with City and to
provide City with the opportunity to review any res pon se to discovery requests provided by
Consultant. However, this ri gh t to review any such response docs not imp ly or mean the right by
City to control, direc t, or rewri te said response.
SECTION 17. INDEMNJFICA TION.
(a) Indemnification for Professional Liability . Where the law· establishes a
professional standard o r care for Consu lta nt 's Services, to the f.Jilest exten t permitted by Jaw ,
R IV ~4 93R·(t9$11 ·3li8 U v I -6 -
Consultant shall indemnify, protect, defend and bold harmless City and any and all of its
officials, employees and agents (''Indemnified Parties") from and against any and all losses,
liabilities, damages , costs and expenses, including attorney's fees and costs to the extent same are
caused in whole or in part by any negligent or wrongful act, error or omission of Consultant, its
ofricers, agents , employees or sub-consultants (or any entity or individual that Consultant shall
bear the legal liability thereof) in the perfonnance of professional services under this Agreement.
(b) Indemnification for Other than Professional Liability . Other than in the
perfonnance of professional services and lo the full extent permitted by law, Consultant shall
indemnify . pr otect, defend and hold harmless City, and any and all of its employees, officials and
agents from and against any liability (including liability for claims , suits, actions, arbitration
proceedings. administrative proceedings, regulatory proceedings, losses, expenses or costs of any
kind, whether actual, alleged or threatened , including attorneys fees and costs, court costs,
interest, defense costs , and ex perl witness fees), where the same arise out of, are a consequence
of, or arc in any way attributable to, in whole or in part, the perfonnance of tills Ag reement by
C onsultant or by any individual or entity for which Consultant is legally liable , including but not
limited to officers, agents. employee s or sub-contractors of Consultant.
(c) General Indemnification Provisions . ConsultJnt agrees to obtain execu ted
indemnity Agreements with provisions identical to those set forth here in this section from each
and every sub-contractor or an y other person or entity involved by , for, with or on behalf of
Consulta nt in the performance of this Agreement. Tn the event Consultant fails to obtain such
indemnity obligations from others as required here, Consultant agrees to be fully responsible
according to the terms of thi s section. Failure of City to mon itor compliance with these
requirement s imposes no additional obligations on Cily and will in no way act as a wa iver of any
right s hereunder . This obligation to indemnify and defend City as set forth here is binding on the
successors , assi gns or heirs of Consultant and shall survive the termination of this Agreement or
this section .
(d ) Limitation of Indemnification . Notwith standing any provision of th is Se ction 16
[lndemnification] to the contrary , design profess ionals ure required to defend and indemnify the
City only to the extent perm itt ed by Civil Code Section 2782 .8, which limits the liability of a
desi gn professional to claims, suits , actions, arbitration proceedings, administrative proceedings ,
regulatory proceedings, losses , ex penses or costs that arise out of, perta in to, or relate to the
negl igence , recklessness, or willfu l misconduct of the design professional. The term "design
professional ," as defined in Section 2782 .8, is limited to licensed architects, licensed landscape
architect s, registered professional engineers, professional land surveyors , and the business
entities that offer such services in ac cordance with the applicable provisions of the California
Business and Professions Code.
(c) The provisions of this section do not apply to claims occurring as a result of City's
sole negl igence. The provisions of this section shall not release City from liability arising from
gross negligence or willful ac ts or om issions of Cit y or any and all of its officials, employee s and
agents .
SECTION 18. fNSURANCE.
R!V ~4838-6958-JSR O vi - 7 -
Consultant agrees to obtrun and maintain in full force and effect during the term of this
Agreement the insurance policies set forth in Exhib it "C" "Insurance" and made a part of this
Agreement. All insurance policies shall be subject to approval by City as to form and content.
These requirements are subject to amendment or waiver if so approved in writing by the City
Manager. Consultant agrees to provide City with copies of required policies upon request .
SECTION 19. ASSIGNMENT.
The expertise and experience of Consultant are material considerations for this
Agreement. City has an interest in the qualifications of and capabiJity of the persons und entities
who will ful fi II the duties and obligations imposed upon Consultant under this Agreement. In
re cognition of that interest , Consultant shall not assign or transfer this Agreement or any portion
o f this Agreement or the performance of any of Consultant's duties or obligations under this
Agreement without the prior written consent of the City Council. Any attempted assignment
shall be ineffective , null and void , and shall constitute a material breach of this Agreement
entitling City to any and all remedies at Jaw or in equity . including summary termination of this
Agreement. City acknowledges, however, that Consultant, in the performance of its duties
pursuant to this Agreement, may utilize subcontractors .
SECTfON 20. CONTINUITY OF PERSONNEL.
Consultant shall make every reasonable effort to maintain the stability and continuity of
Consultant's staff and subcontrac tors , if any, assigned to perform the services required under this
Agreement. Consultant shaJl notify City of any changes in Consultant's staff and subcontractors,
i r any , nssigned lo perform the services required under this Agreement, prior to and during any
su c h performance .
SECTION 21. TERMINATJON OF AGREEMENT.
(a) City may terminate this Agreement, with or \V:ithout cause, at any time by giving
thirty (30) days written notice of termination to Consultant. ln the event such notice is given,
Consultant shall cease immediately all work in progress.
(b) Consultant may term inate this Agreement for cause at any lime upon thirty (30)
days v.rritlen notice of termination to City .
(c) If either Consultant or City fail to perform any material obligation under this
Agreement. then , in addition to any other remedies, either Consultant, or City may terminate this
Agreement immediately upon written notice.
(d) Upon tem1ination of this Agreement by either Consultant or City, all property
belonging exclusively to City which is in Consultant's possession shall be returned to City.
ConsultanL shall furnish to City a final invoice for work performed and expenses incurred by
Consultant. prepared as set forth in Section 4 of this Agreement. This final invoice shall be
reviewed and paid in the same manner as set forth in Section 4 of this Agreement .
RIV 1t411 38·69 5l!-388fl vi -8 -
SECTION 22. 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 co ntinue compensating Consultant for any work performed
afte r 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 ma y cure the
default. This timcframc is presumptively thirty (30) days, but may be extended, th ough not
reduced, if ci rcumstances 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 . ln the alternative, the City may, in its sole discretion, elect to p ay some or all of the
outstanding invoices during the period of default . If Consultant does not cure the default, the
Ci ty ma y take ne cessary steps to terminate this Agreement Wider Section 20. Any failure on the
part of the City to give notice of the Consultant's default shaJI not be deemed to result in a wa iver
of the City's legal rights or any right s arising out of any provisicn of this Agreement.
SECTION 23. EXCUSABLE DELAYS.
Consultant shall not be liable for damages, includ ing liquidated damage s, if an y, caused
by delay in perfo rmance or failure to perform due to causes bey ond the control of Co nsu lta nt.
Such causes include, but are not limited to, acts of God , acts of the public enemy, acts of federal,
state or local governments, acts of City , court orders, fire s, floods , epidemics, strikes. embargoes .
and unusu ally severe weather. The term and pri ce of this Agreement shall be equitably adjusted
lor any dela ys due to s uch causes.
SECTION 24. COOPERATION BY CITY.
AJI public information, data, reports, records , and maps as are ex isting an d available to
City as public re cords, and which are necessary for carrying out the work as outlined in the
Exhibit ''A" "Scope of Services," shall be furnished to Consultant in every reasona ble way to
facilitate , without undue de lay, the work to be perfo rmed under th=s Agreement .
SECTION 25. NOTICES.
All notices required or permitted to be given under this Agreement shall be in vvriting and
sha ll be personally delivered, or sent by telecop ier or certi tied mail , pos tage prepaid and return
receipt requested, addressed as follows:
To City:
To Consultant :
RIV 1148.38-695 8-.31!&0 vi
City ofTemple City
Attn: City Manager
970 l Las Tunas Dr.
Temple City. CA 91780
Gilbert Vasq ue:t.
Vasquez & co. LL P
801 S. Grand Avenue Suite 400
Los Angeles, CA 900 l 7
-9-
Notice shall be deemed effective on the date personally d ell vered or transmitted by
facsimile or, if mailed, three (3) days after depo sit ofthe same in the custody of the Unite d States
Postal Servi ce.
SECTION 26 . AUTH ORJTY TO EXECUTE.
The person or persons executing this Agreement on behalf of Consultant represents and
warrant s that he/she/they has/have the authority to so execute this Agreement and to bind
Consultant to the performance of its obligations hereunder .
SECTION 27. ADMINlSTRATION AND IMPLEMENTATION.
This Agreement shall be admi nistered and executed by the City Manager or his or her
designated representative, following approval of this Agreement by the City Council. The City
Manager shall have the authority to issue interpretations and to make minor amendments to this
Agreement on behalf of the City so long as such acti ons do not materially change the Agreement
or make a commitment of additional funds of the City. All other changes , modifications , and
amendments shall require the prior app roval of the City Council.
SECTION 28. BINDING EFFECT.
This Agree ment shall be binding upon th e he irs, executors, administrators, successors and
assigns or lhe parties.
SECTION 29. MOniFICATION OF AGREEMENT.
No amendment to or moditication or th is Agreement shall be valid unless mad e in Vv'Titing
and approved by the Consultant and b y the City Council. The parties agree that this requirement
for written modifications cannot be waived and that any attempted waiver shall be void .
SECTION 30. WAIVER
Waiver by any party to this Agreement of any term , cond ition, or covenant of this
Agreement shall not co nstitute a waiver of any other term, condition, or cove nant. Wniver by
any party or any breac h of the provisio ns of this Agreement shall not constitute a waiver of any
other provisio n nor a waiver of <my subsequent breach or violation of any provi sion of this
Agreement. Acceptance by City of any work or services by Consultant shall not constitute a
waiver of any or the provisions of this Agreement.
SECTION 31. LAW TO GOVERN; VENUE.
lbis Agreement shall be interpreted, construed and governed according to the laws of the
State of Califo rnia . ln the event of litigation between the parties, venue in s(ate trial co urt s s hall
lie exclusively in the County of Los Angeles, Ca liforni a. In the even t of litigation in a U.S.
District Coun , venue s hall lie exclusively in the Central District of California, in Los Angeles .
SECTION 32. ATTORNEYS FEES, COSTS AND EXPENSES.
RlV il~li38..095 H·3l!SO I' I -10 -
In the event litigation or ot her proceeding is required to enforce or interpret any provision
of this Agreement, the prevailing party in such litigation or other proceeding shall be entitled to
an award of reasonable attorney's fees, costs and expe nses, in addition to any other relief to
which it may be entitled.
SECTION 33 . ENTIRE AGREEMENT.
This Agreement, including the attached Exhibits "A" through "0", is the entire , comp lete,
tina) and exclusive expression of the parties with respect to the matters addressed therein and
supersedes all other Agreements or understandings, whether oral or written, or entered int o
between Consul tant and City prior to the execution of this Agreement. No statements ,
representations or other Agreements, whether ora l or written, made by any party which arc not
embodied herein shall be valid and binding. No amendment to this Agreement shall be valid and
binding unless in writing duly executed by the parties or the ir authorized representatives .
SECTION 34. SEVERABILITY.
If any term, condition or covenant of thi s Agreement is declared or determined by any
court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions of
this Agret!ment shall not be affected thereby and the Agreement shall be read and construed
without the inva lid , void or unenforceable provisi on(s).
IN WITNESS WHEREOF, the parties hereto have executed lhis Agreement on the date
and year first -above written .
ATTEST:
~~~i~
Ci ty Clerk
RJV ~4838·69~8·3880 vi -ll -
C ITY OF TEMPLE CITY
By {1;?=:
Jose E. lido
City Manager
By:
Eri c S . Va il
City Attorney
By : ___________ _
Its : ----------
NOTE : CONSULTANT'S SIGNATURES SHALL BE DULY NOTARIZED, AND
APPROPRIAT E ATTESTATIONS SHALL BE INCLUDED AS MAY BE
REQUIRED BY THE BYLAWS , ARTICLES OF INCORPORATION, OR
OTHER RULES OR REGULATIONS APPLICABLE TO DEVELOPER'S
BUSINESS ENTITY.
Rl V 11 -1 !13 11 ·6951!·3880 ~I -12.
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
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who p rove d to me on th e basis of satisfact ory evidence to
be the pers on(s) whose name(s ) is/are sub scribed to the
wi thi n instrument and acknow ledged to me that
he/she/they executed th e same in hi s/her/t heir auth orized
capaci ty(ie s), and th at by his/he r/th ei r signatu re(s) on th e
instrum ent th e p erson(s), o r the ent ity up on beh alf of
wh ich th e pe rs on (s ) acted, executed the instrum ent.
Though the i nfo rmation bel ow is not required by la w, it may prove va luable to persons relying on the document
and could prevent fraudulent removal a nd reattach ment of this form to another d ocument.
Description of Attached Aocument
Title or Type of Document: (in.JJ..~ J2.~ ~00 tifu ~ 0~ {T~c f.; f0Ja r wu~
Doc ume nt Date: \l!t!-t; ?f, )Of(
Signer(s) Ot he r Than Na med Above :
Capacity(ies) Claimed by Signer(s)
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0 Oth er: ________ _
Signer ts Repres ent ing: ___ _
RIGHTTHUMBPAINT
OF SIGNER
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Number of Pages : ________ _
Signe r's Name : ______________ _
C Ind ividual
C Co rporate Officer-T itle (s): ---------
C Partner -C: Limit ed C Gene ral
0 A ttorney in Fac t
C Tr ustee
C. G ua rdian or Con servator
C Other : _________ _
Signe r Is Represe r.ting: ____ _
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6876 v l
EXHIBIT "A"
SCOPE OF SERVICES
J. Consultan t sha ll provide all services necessary to accompl ish the tusks listed below for
the Fiscal years 2010-11 , 2011-12 and 2012-13 fiscal years with option to renew fo r
additional two (2) years.
(i) City of Temple City. Consultant will audit of all funds of the City of Temple
City and prepare the City's Comprehensive Annual Financial Report (CAFR). The
CAFR will be in full compliance wi th GASB 34. The audit tirm will render the
report on the basic financial statements, which will inclu de both Government-
Wide Financial Statements, and Fund Fi nancial Sratements. Consultant will also
apply limited audit procedures to Management's Discussion and Ana lys is
(MD&A) and required supplementary information pertaining lo the General Fund
and euc h major fund of the City.
(ii} Temple City Redevelopment Agency. Consultant will cond uct a financial an d
compliance audit of the Temple City Redevelopment Agency . The compliance
audit shall include th e provisions of laws and regu lations identified in the
Guidelines for Compliance Audits of Cali fornia Redevelopment Agencies, issued
by the State Controller. The audit shall include a GASB 34 compliant component
unit linuncial statement.
(iii) Federal Grants. Consultant will perform a single audit of the expenditures of
federal grants in accordance with OMB Circular A-133 and render the appropriate
audit reports on Internal Control over Financial Reporting based upon the audit of
the C ity 's financ ial statements in accordance with Government Audiling
Standards and the appropriate reports on compliance with Requirements
Applicable to each Major Program, [ntemal Control over Compliance and on the
Schedule of Expenditures of Federal Awards in Accordance with OMB Circular
A-13 3. Th e si ngle audit report will include appropriate schedule of expenditures
of federal awards, footnotes, findings and questioned costs, including rep ortab le
conditions and material weaknesses , and follow up on prior audit findings whe re
required.
(iv ) Gann Limit. Consultant shall perform agreed-upon procedures pertaining to the
Ci ty's GANN Limit (A ppropri ations Limit) and prepare a letter regarding the
City's compliance with the GANN Lim it.
(v) Management Letter. Consultnnt shall issue a separate "manage ment letter'' that
includes rec omme ndations for im provements in internal con tro l, accounting
procedures and other signiticant observations that a rc considered to be non-
RlV ~483B-6YS~-3880 v J
A-1
6 8 7 6 v l
reportable conditions . Management letters shall be addressed to the City
Manager.
(vi) Controller's Reports . Consultant shall prepare the Annual State Controller's
Reports for the City of Temple City, the Temple City Redevelopment Agency and
the Temple City Financing Authority . Consultant will also prepare the Annua l
Street report .
(vii) Irregularities and Illegal Acts. Consultant will make an immediate, written
report of all irregularities and illegal acts or indications of illegal acts of which
they become aware to the following parties : City Manager; City Attorney; and the
Director of Finance .
U. As part of the Services, Consultant wilJ prepare and deliver the following tangible work
products to the City:
1. Report on the CAFR-December 31 . 201 1
11. Report on the RDA financial statements -December 31, 2011
iii. Single audit Report-March 31, 2012
1v. Management Letter Comment-March 31. 2012
v. Agreed-upon Pr oc edures Report on GANN Limit Calcul ation -December 31 ,
2011
v1. State Controller's Reports -deadline set by the State
vn . Street Gas Tax Repo rt-deadline set by the State
vu1. RDA Statement of Indebtedness -September 30, 2011
III. During performance of the Services, Consulhtnt will keep the City appraised of the
status of performance by delivering the following status reports:
1. Audit Status Report
IV. The tangible work products and status reports will be delivered to the City pursuant to
the following schedule:
See above .
RIV tt~838-(o9S 8-388 0 vi
A-2
V. Consultant will utilize the following personnel to accomplish the Services:
Refer to the proposal.
VI. Consultant will utilize the following subcontractors to accomplish the Services:
Nol applicable
6816 •Jl
R IV n•l 838-69S8-J880 '
A-3
6876 vl
VII. AMENDMENT
The Scope of Services, including se rvi ces, work products. and personnel, are subject to
change by mutual Agreement. In the absence of mutual Agreement regarding tre need to change
any aspects of performance. Consultant shall comply with the Scope of S ervices us indicated
above.
RJV N4R38-6958 -3 880 v i
A-4
EXHIBIT "B"
COMPENSATION
I. City shall pay Consultant the sum of $45,000 for all services provided in connection with the
2010-11 fiscal year audit. For al l services provided in connection with the 2011-12 and
2012-2013 fiscal years audit, the fee is subject to an annual increase based on actual CPI to
be determined by the City.
II. For services outside of the scope of services as defined in Exhibit A, Consultant shall usc the
following rates of pay in the performance of the Services :
Personnel Category i!-..;._~2011 S: :~12012 :, ; 2013 ~2014 " · 20151 ...
Partner/Principal
Manager
Supervisor
Senior Auditor
HI V 114R3R ·IIY58·3 880 ' 1
$
$
$
$
250
160
140
120
257
165
144
124
B-1
265
HO
148
128
273
175
152
132
261
160
156
136
EXHIBIT "C''
INSURANCE
A. Insurance Requirements . Consultant shall provide and maintain insurance.
acceptable to the City Manager or City Counsel, in full force and effect throughout the tenn or
this Agreement , against claims for injuries to persons or damages to property which may arise
from or in connection with the performance or the work hereunder by Consultant, its agents,
representatives or employees . Insurance is to be placed with insurers with a current A.M. Best's
rating of no less than A:VII . Consultant shall provide the following scope and limits of
msurance :
I . Minimum Scope oflnsurance. Coverage shall be at least as broad as :
(I) Insurance Services Office form Commercial General Liability
co verage (Occurrence Form CG 0001 ).
(2) Insurance Services Office form number CA 0001 (Ed . 1/87)
covering Automobile Liabili ty, including code l "any auto" and endorsement CA 0025, or
equivalent forms subject to the written approval of the City.
(3) Workers ' Compensation insurance as required by the Labor Code
of State of California and Employer's Liability insurance and covering all person s provi ding
services on behalf of the Con s ultant and all risks to such persons under this Agreement.
(4) Professional liability insurance appropriate to the Consultant's
profession. This coverage may be written on a "cla ims made" basis, and must include coverage
for contractual li ability . The professional liability insurance required by this Agreement mu st be
endorsed to be applicable to claims based upon , arising out of or related to services performed
under this Agreement. The insurance must be maintained for at least 3 consecutive years
following the completion of Consultant's services or the termination of this Agreement. During
this additional 3-ycar peri od, Consultant shall annually and upon request of the City submit
written evidence of this continuous coverage.
2 . Minimum Li mits of Insurance . Consultant shull maintain lim its of
ins urance no less than :
( 1) General Liability: $1,000,000 general aggregate for bodi ly injury,
personal inj ury and property damage.
(2) Automobile Liability: $1,000,000 per accident for bod ily injury
and property damage. A combined single limit policy with aggn~gate limits in an amount of nol
Jess than $2,000 ,000 shall be considered equivalent to the said required minimum limits se t forth
above.
Rl V 114838-6958-3880 v l
(3) Workers' Compensation and Employer's Liability : Workers'
Compensa tion as required by the Labor Code of the State of Californ ia and Employers Liability
limits or not less than $1,000,000 per accident.
(4) Professional Liability : $1 ,000 ,000 per occurrence .
B. Qthcr Provisions. Insurance policies required by this Agreement shall contain the
following provisions:
I . All Policies. Each insurance policy required by this Agreement shall be
endorsed and state the coverage shall not be suspended , voided , cancelled by the insurer or either
party to thi s Agreement, reduced in coverage or in limits except after 30 days' prior v.Tittcn notice
by Ccrlified mail, return receipt requested, has been given to City.
2. Genera l Liability and Automobile Liability Coverages.
( 1) City, and its respect ive elected and appointed officers , officials,
and employees and volunteers are to be covered as additional insureds us respects : liability
arising oul of activities Consultant performs; products and completed operations of Consultant;
pn:mises owned. occupied or used by Consultant ; or automob iles owned , leased . hired or
borrowed by Consultant. The coverage shall contain no special limitations on the scope of
protection al1'ordcd to City. and their respective elected and appointed officers. officials. or
employees .
(2) Consultant's insurance coverage shall be primary insurance with
respect to City, and its respective elected and appointed, its oflicers, officials, employees and
vo lunteers . Any insurance or self insurance maintained by City, and its respective elected and
appointed officers, officials , employees or volunteers, shaJJ apply in excess of, and not contribute
with. Consultant's insurance .
(3) ConsultanL ' s insurance shall apply separately to each insured
against whom claim is made or suit is brought , except with respect lo the limits of the insurer's
liability .
( 4) Any failure to comply with the reporting or other provisions of the
policies including breaches of warranties shall not affect coverage provided to City . and its
respective elected and appointed ol'ficers, officials, employees or volunteers.
3. Workers ' Compensation and Employer's Liabilitv Coverage. Unless the
City Manager otherwise agrees in writing, the insurer shall agree to waive all rights of
subrogati on against City, and its respective elected and appointed ofticers, officials, employees
and agents for losses arising from work performed by Consultant.
KJV II·IKJl<-6 1158-3880 vi
C-2
C. Other Requirement s. Co nsultant agrees to deposit with City, at or before the
effectiv e date of this contract, certificates of insurance necessary to satisfy City that the insurance
provisions of this contract ha ve been complied with . The City Attorn ey may require that
Consultant furnish City with copies of o riginal endorsements effectin g coverage requ ired by thi s
Section. The certificates and endorsements arc to be signe d by a perso n nuth01ized by tha t
insurer to bind coverage on its behalf. City reserves the right to ins pec t complete . certified
copies of a ll required insur ance policies. at an y tim e.
I . Consultant shall furnish ce rtificate s and endo rse ments from each
subcontractor identical to tho se Consul tant pro vides .
2. Any d cdu ctibles or se lf-in sured retentions mu st be declared to and
app rove d by City . At the option of City, either the insurer shal l redu ce or eliminate such
dcductiblcs or se lf-insured rete nt io ns as respect s Ci ty or its respec tive elec ted or appointed
office rs, oflicials, employees an d vo lunteers or th e Consultant shall proc ure a bond guaranteeing
puyment of losses and related investigations, claim administration, defense expenses and claims .
3. The p rocu ring of s uch required policy or policies of insurance shall not be
const rued to limit Co nsu ltant 's liab ility hereunder nor to fulfill the indemnification prov isions
a nd requirements of this Agreement.
RIV 114838·6~58-3880' I
C-3
"EXHIBIT D"
July 21, 2011
To the Honorable members of City Council
City of Temple C ity
9701 Las Tunas Or.
Temple City, CA 91780
We are pleased to confirm our understanding of the services we are to provide City of Temple
City {City) for the year ending June 30 , 2011 We will audit the City 's basic financial statements
as of and for the year ending June 30, 2011 Accounting standards generally accepted in the
United Sta tes provide for certain required supplementary information (RSI), such as
Management's Discussion and Analysis (MD&A), to accompa,,y the City's basic financial
statements . Such information. although not a part of the basic finaf'lcial statements, is required by
the Governmental Accounting Standards Board who considers it to be an essential part of
financial reporting for plac ing the basic financial statements in an appropriate operational ,
economic, or historical conte)(t. As part of our engagement, we will apply certain limited
procedures lo the City's RSI In accordance with aud itin g standards generally accepted in the
United States of America . These limited procedures will consist of inqu i ries of management
regard i ng the methods of preparing the information and comparin g the informat ion for
consistency with manag ement's responses to our inquiries, the bas ic financia l statements, and
other knowledge we obtained during our audit of the basic financial statements. We wil l not
express an opinion or provide any assurance on the information because the limited procedures
do not provide us with sufficient evidence to express an opinion or prov ide any assurance . The
foll owing RSI is required by generally accepted accounting princ iples and will be subjected to
certain lim it ed procedures, but will not be audited :
1) Management's Discussion and Ana lysis (MD&A)
2) Budgetary Comparison Schedules
3) Requ ired Supplementary Information
4) Statistical Section
Supplementary information other than RSI also accompanies the City's basic financial
statements . We will subject the following supplementary information to the auditing procedu res
applied in our audit of the basic financial statements and certain additional procedures, including
comparing and reconciling such in formation directly to the underlying accounting and other
records used to prepare the financial statements or to the financial statements themselves, and
other additional procedures in accordance with audit ing standards generally accepted in the
United States of America and will provide an opinion on it in relation to the basic financial
statements :
1) Schedu l e of Expenditures of Federal Awards
2) Statement of Agency Funds
3) Combi ning nonmajor fund finan cial statements
The following additional info rmation accompanying the basic financial statements will not be
subjected Ia the auditing procedures applied in our audit of the financial statements, and for
which our auditor's report will not provide an opinion or any assurance.
1) Schedu le of Funding Progress for PERS and OPEB
City of Temple City
July 21, 2011
Page 2
Audit Objectives
The objective of our audit is the expression of opin ions as to whether your basic financial
statements are fairly presented, in all material respects . in conformity with U.S . genera ll y
accepted accounting prin qiples and to report on the fa irness of the additional information referred
to in the second paragraph when considered in relation to the bas ic financial statements taken as
a who le . The objective also includes reporting on:
• Internal control related to the financ ia l statements and compliance with the provisions of
applicable laws, regulations, contracts, agreements, and grants . noncompliance with
which could have a material effect on the financial statements in accordance with
Government Auditing Standards .
• Internal control related to major programs and an opinion {or disclaimer of op inion) on
compliance with laws, regulations, and the provisions of contracts or grant agreements
that could have a direct and material effect on each maj or program in accordance with
the Single Audit Act Amendments of 1996 and OMB Circular A-133, Audits of States,
Local Governments, and Non-Profit Of!Janizations.
The reports on internal control and compliance will each Include a statemen t that the rep ort is
intended solely for the information and use of the aud it committee , management, specific
legis lative or regulatory bodies , federal awarding agencies, and if applicable, pass-through
entities and Is not intended to be and should not be used by anyone other than these specified
parties .
Our audit will be conducted in accordance with U.S. generally accepted auditing standards ; the
standards for financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the Un ited States; the Single Audit Act Amendments of 1996; and the
provisions of OMB C ircular A-133, and will include tests of accounting records, a determination of
major program{s) in accordance with Circular A-133 , and other procedures we consider
necessary to enable us to express such opinions and to render the required reports . If our
opinions on the financial statements or the Single Aud it compliance opinions are other than
unqualified, we will fully discuss the reasons with you In advance. If, for any reason , we are
unable to complete the audit or are unable to form or have not formed opinions, we may decline
to exp re ss op inions or to issue a report as a result of this engagement.
Management Responsibilities
Management i s responsible for the basic financial statements and all accompanying information
as well as all representations conta ine d therein . Management is also responsible for ident ify ing
government award programs and understanding and complying wi th the compliance
requirements, and for preparation of the schedule of expenditures of federal awards in
accordance with th e requirements of OMB Circular A-133. As part of the audit, we will assist with
prepara tion of your financial statements, schedule of expenditures or federal awards, and related
noles. You are resp onsible for making all management decisions and performing all management
functions relat ing to the financial statements, schedule of expenditures of federal awards, and
related notes stnd for accepting full responsibility for such decisions. You will be required to
acknowledge in the management representat ion letter our assistance with the preparation of the
financial statements and the schedu le of expend itures of federal awards and that you have
reviewed and approved the financial statements, schedule of expenditures of federal awards , and
related notes prior to their issuance and have accepted responsibility for them . Further. you are
required to designate a managemen t-level individual with s uitable skill, knowledge, or experience
to oversee the bookkeeping, tax services and any other nonattest services we provide; and for
evaluating the adequacy and re sults of those services and accepting responsibility for them .
City of Temple City
Jufy21 ,2011
Page 3
Management is responsible for establishing and ma intaining effective internal controls, includ ing
internal contro ls over compliance, and for eva luating and monitoring ongoing activities, to help
ensure that appropriate goals and objectives are met and that there is reasonable assurance that
government p ro grams are administered In compliance w i th compliance requirements. You are
also respons ib le for the selection and application of accounting principles; for the fair presentation
in the financial statements of the respective financial position of the governmental activities, the
business-type activities, the aggregate discretely presented component units, each major fund,
and the aggregate remaining fund information of the City and the respective changes in financial
position and, where applicable, cash nows In conformity with U.S. generally accepted accounting
principles; and for compliance with applicable laws and regulations and the provisions of
contracts and grant agreements. Management is also responsible for making all financial records
and re lated information available to us and for ensuring that management and financial
information Is reliable and properly recorded. Your responsibilities also include identifying
sign ificant vendor relationships in which the vendor has responsibility for program compliance
and for the accuracy and completeness of that information . Your responsibilities include adjusting
the financial statements to correct material misstatements and confirming to us In the
representation letter that the effects of any uncorrected misstatements aggregated by us during
the current engagement and pertaining to the latest period presented are immaterial , bo th
Individually and in the aggregate , to the financial statements taken as a whole.
You are responsib le for the design and Implementation of programs and controls to prevent and
detect fraud , and for informing us about all known or suspected fraud or Illegal acts affecting the
government Involving (1) management, (2) employees who have significant roles in internal
control , and (3) others where the fraud or illega l acts could have a material effect on the financial
statements. Your responsibilities include informing us of your knowledge of any allegations of
fraud or suspected fraud affecting the government received in commun ications from employees,
former employees. grantors, regulators, or others. In addition. you are responsible for identifying
and ensuring that the entity complies with applicable laws, regulations, contracts, agreements ,
and grants . Additionally, as required by OMS Circular A-133, it is management's responsibility to
follow up and take corrective action on reported audit findings and to prepare a summary
schedule of prior audit findings and a corrective action plan. The summary schedule of prior audit
findings should be available for our review . You are responsible for the preparation of the
supplementary information in conform ity with U.S. generally accepted accounting princip les . You
agree to include our report on the supplementary information in an y document that conta ins and
Indicates that we have reported on the su pple mentary information . '{au also agree to present the
supplementary information with the audited fin ancia l statements or make the audited financial
statements readily available to users of the supplementary information no later than lhe date the
supplementary information is issued with our report thereon .
Management is responsible for establishing and maintaining a process for tracking the status of
audit findings and recommendations. Management is also responsible for Identifying for us
previous financial audits, attestation engagements. performance audits or other studies related to
the objectives discussed in the Audit Objectives section of this letter. This responsibility includes
relaying to us corrective actions taken to address significant findings and recommendations
resulting from those audits, attestation engagements , performance audits or other studies. You
are also responsible for providing managemenrs views on our current findings, conclusions , and
recommendations, as well as your planned corrective actions, for the report , and for the timing
and format for providing that i nform ation .
With regard to the electronic dissemination of aud i ted financial statements, includi ng financial
statements published electronically on your website , you understand that electronic sit es are a
means to distribute information and, therefo re, we are not required to read the information
contained in these sites or to consider the consistency of other Information in the electronic site
with the original document.
City of Temple City
July 21, 20 11
Page 4
Audit Procedures-General
An audit includes examining, on a test basis , evidence supporting the amounts and disclosures in
the financial statements; therefore, our audit will Involve judgment about the number of
transactions to be examined and the areas to be tested . We will plan and perform the aud it to
obtain reasonable rather than absolute assurance about whether the financial statemen ts are free
of material misstatement, whether from (1) errors, (2) fraudu lent financial reporti ng , (3)
misappropriation of assets, or (4) violations of laws or governmenta l regulations that are
attributable to the entity or to acts by management or employees acting on behalf of the entity.
Because the determi nation of abuse is subjective, Government Auditing Standards do not expect
auditors to provide reasonable assurance of detecting abuse.
Because an audit is designed to provide reasonable, but not absolute assurance and because we
will not perform a detailed examination of all transactions, there Is a risk that material
misstatements or noncompliance may exist and not be detected by us . In addition , an audit is not
designed to detect immaterial misstatements or violations of laws or governmental regulations
that do not have a direct and material effect on the financial statements or major programs.
However, we will inform you of any material errors and any fraudulent financial reporting or
misappropriation of assets that come to our attention. We will also inform you of any violations of
laws or governmental regulations that come to our attention, unless clearly Inconsequential, and
of any materia l abuse that comes to our attention . We will include such matters in the reports
required for a Sing le Audit. Our respons ibility as auditors is limited to the period covered by our
aud it and does not extend to any l ater periods for wh ich we are not engaged as auditors.
Our proced ure s w il l include tests of documentary ev idence supporting the transactions recorded
in the accounts, and may incl ude tests of the physical existence of inventories, and direct
confirmation of receivables and certain other assets and liabilities by correspondence with
selected individuals. cred itors , funding sources, and financial Institutions . We will request written
representations from your attorneys as part of the engagement, and they may bill you for
respond ing to this inquiry. At the conclusion of our audit, we will also require certain written
representations from you about the financial statements and related matters .
Audit Procedures-Internal Controls
Our aud it will include obtaining an understanding of th e entity and its environment, including
Internal controls, sufficient to assess the risks of material misstatement of the financial statements
and to design the nature, timing, and extent of further audit procedures. Tests of controls may be
performed to test the effectiveness of certain controls that we consider relevant to preventing and
detecting errors and fr aud tha t are material to the financial statements and to preventing and
dete c ti ng misstatements resulting from illegal acts and other noncompfl ance matters that have a
direct and material effect on the fin ancial statements . Our tests, if performed , will be less in scope
than would be necessary to render an opinion on internal controls and, accordingly, no opinion
will be expressed in our report on internal controls Issued pursuant to Government Auditing
Standards .
As required by OMB Circular A-133, we will perform tests of con trols over compliance to evaluate
the effectiveness of the design and operation of controls that we consider relevant to preve nti ng
or detecting material noncompliance with compliance requirements app licable to each major
federal awa rd program. However, ou r tests will be less in scope than would be necessary to
re nder an op inion on those co ntrols and , accordingly , no opinion will be expressed in our report
on internal contro ls issued pursuant to OMB C ircular A-133.
An audit is not designed to provide assurance on internal controls or to identify significant
deficien cies. Howe ver, during the audit, we will communicate to management and those charged
with governance internal control rel ated matters that are re quired to be commun ic ated under
professional sta nda rds, Government Auditing Standards, and OMB Circ ular A-133.
City of Temple City
July 21 , 2011
Page 5
Audit Procedures-Compliance
As part o f obtaining reasonable assurance about whether the financia l statements are free of
materia l m isstatement, we will perform tests of the City's compliance with applicable laws and
regu lations and the provisions of contracts and agreements, Including grant agreements .
However, the objective of those procedures will not be to provide an opinion on overall
compliance and we will not express such an opinion in our report on compliance Issued pursuant
to Government Auditing Standards.
OMB C ircular A-133 requires that we also plan and perform the audit to obtain reasonable
assurance about whether the auditee has complied with applicable laws and regulations and the
prov isions of contracts and grant agreements applicable to major programs . Our procedures will
consist of tests of transactions and other applicable procedures described in the OMB Circular A-
133 Compliance Supplement for the types of compliance requ irements that could have a direct
and material effect on each of the City's major programs . The purpose of those procedures wi ll be
to express an opini on on the C ity's compliance with requirements applicable to each of its major
programs i n our report on compli ance issued pursuant to OMB Circular A-133 .
E-mail Communication
In con nection with this engagement, we may communicate with you or others via e-mail
transmiss ion . As e-matls may be intercepted and read , disc~osed, or otherwise used or
communicated by an unintended third party, or may not be delivered to each of the parties to
whom they are directed and only to such parties, we cannot guarantee or warrant that e-mails
from us will be properly delivered and read only by the addressee . Therefore, we specifically
disclaim and waive any liability or responsibility whatsoever for interception or unintentional
disclosu re or communication of e-mail transmissions, or for the unauthorized use or failed
delivery of e-mails transmitted by us in connection with the performance of this engagement. In
that regard , you agree that we shall have no liability for any loss or damage to any person or
entity result ing from the use of e-mail transmissions , includ ing any consequential, incidental,
d irect, indirec t, or special damages, such as loss of revenues or anticipated profits, or disclosure
or communication of confidential or proprietary Information.
Ownership of Audit Documentation
The aud it documentation for this engagement is the property of Vasquez & Company LLP and
constitutes confidential information . However, pursuant to authority g iven by law or regulation ,
we may be requested to make certain audit documentaUon available to a Cognizant or Oversight
Agency for Audit or its designee, a federal agency providing direct or indirect funding, or the U.S.
Government Accountability Office for purposes of a quality r eview of the audit, to resolve audit
findings, or to carry out oversight responsibilities . We will notify you of any such reques t. tf
reques ted, access to such audit documentation wi ll be provided under the supervision of Vasquez
& Company LLP personnel. Furthermore, upon request, we may provide copies of selected audi t
documentation to the aforementioned parties . These parties may intend, or decide, to distribute
the copies or information contained therein to others, including other governmental agencies . The
audit documentation for this engagement will be retained for a mi nimum of seven years after the
report re lease date or for any addi tional period reques ted by the Cognizant Agency, Oversight
Agency for Audit, or Pass-lhrough Entity. If we are aware that a federal awarding agency, Pass-
through Entity, or auditee is contesting an audit fin d ing , we will contact the party(ies) contesting
the audit fin di ng for guidance prior to destroying the a udi t documentation.
City of Temple City
July 21 ,2011
Page 6
Independence
Professional and certain regulatory standards require us to be independent, in both fact and
appearance, with respect to your organization in the performance of our services . Any
discussions that you have with personnel of our firm regarding employment could pose a threat to
our independence. Therefore, we request that you inform us immediately prior to any suc h
discussions so that we can implement appropriate safeguards to mainta i n our independence.
Dispute Resolution Procedure
If any dispute, controversy, or claim arises out of, relates to, or results from the performance or
breach of th is engagement, excluding claims for non-monetary or equitable relief (collectively, the
"Dispute"), either party may , upon written notice to the other party, request non-binding
mediation . A recipient party of such notice may waive its option tv resolve such Dispute by non-
binding mediation by prov iding written notice to the party requesting mediation and then such
parties hereto shall resolve such Dispute by binding arbitration as described below. Such
mediation shall be assisted by a neutral mediator acceptable to both parties and shall require the
commercially reasonable efforts of the parties to discuss with each other in good faith their
respective positions and different interests to finally reso lve such Dispute . If the parties are
unable to agree on a mediator within twenty (20) days rrom delivery of the written notice, either
party may invoke the mediation service of the American Arbitration Association (the "AAA").
Each party may disclose any facts to the other party or to the mediator that It, ln good faith,
considers reasonably necessary to resolve the Dispute. However, all such disclosures shall be
deemed in furtherance of settlement efforts and shall not be admissible in any subsequent
proceeding aga inst the disclosing party . Except as agreed to in writing by both parties, the
mediator shall keep confidential all information disclosed during mediation . The mediator shall
not act as a witness for either party in any subsequent proceeding between the parties .
Unless wa ived, such mediation shall conclude af1er the parties have engaged in good faith
settleme nt negotiations, but nonetheless are unable to reso lve the Dispute through the mediation
process. The attorneys· fees and costs incurred by each party in such mediation shall be borne
solely by such party, except that the fees and expenses of the mediator, if any, shall be borne
equally by the parties.
Any Dispute not resolved first by mediation between the parties (or if the mediation process is
waived as provided herein) shall be decided by bind ing arbitration . The arbitration proceeding
shall take place in the city in which the Vasquez & Company, LLP office providing the majority of
services involved exists, unless the parties agree In writing to a different locate. The arbitration
shall be governed by the provisions of the laws of the state in which the arbitration is to take place
(except if there is no applicable state law providing for such arbitration , then the Federal
Arbitration Act shall apply) and the substantive law of such state shall be applied without
reference to conflicts of law rules . In any arbitration Instituted hereunder, the proceedings shall
proceed in accordance with the then current Arbitration Rules for Professional Accounting and
Related Disputes of the AAA, except that the Arbitration Panel (as defined be low) shall permit
discovery that is consistent with the scope of discovery typically permitted by the Federal Rules of
Civil Procedure and/or is otherwise customary in li ght of the complexity of the Dispute and the
amount in co ntroversy. Any Dispute regarding discovery, or the relevance or scope thereof, shall
be determined by the Arbitration Panel (as defined below).
City of Temple City
July 21 , 2011
Page 7
The arbit ration shall be conducted before a panel of three persons , one sel ected by each party.
and the third selected by the two party-selected arbitrators (the "1\rb ltration Panel"). The party-
selected arbitrators shall be treated as neutrals. The Arbitration Panel shall have no auth o r ity to
award non-monetary or equitable relier, but nothing here in shall be construed as a pro hib itio n
against a party from pursuing non-monetary or equitable relief in a state or federal court . The
parties also waive the right to punitive damages and the arbitrators shall h ave no authority to
award such damages or an y other damages that are not strictly compensatory in nature. In
rendering their award, the Arbitratio n Panel shall issue in writing fin d i ngs of fact and conclus ions
of law. The Arb itration Panel shall not have au thority to grant an award that is not supported by
substantial evidence or that is based on an error of law, and such absence of substantial
evidence or such error of law may be reviewed on appeal to vacate an award based on the
standard of review otherwise applicable in the Federal Appellate Court responsible for the
jurisdiction in which the arbitration is venued, and without regard to any heightened standard of
review otherwise applicable to an arbitration decision rendered by the AAA . The confidentiality
provisions applicable to mediation shall also apply to arbitration. The award issued by the
Arbitration Panel may be confirmed In a j ud gment by any federal or state court of competen t
jurisdichon . No payment of any award or po sting of any bond of any kind whatsoever is requ ired
to be made or posted until such Dispute is finally determined.
In no event shall a demand for arbitration be made after the date on which the initiation of the
legal or equ itable proceeding on the same Dispute would be barred by the applicable statute o f
limitations or repose. For the purposes of appl yi ng the statute of lim itations or repose , receipt of
a writte n demand for arbitration by the AAA sh a ll be deemed the initia tion of the legal or equ it ab le
proceeding based on such Dispute .
Audit Administration, Fees, and Other
We ma y from time to time, and depending on the circumstances, une third -party service providers
in se rv icin g your account. We may share confidential information about you with these serv ice
providers , but remain committed to maintaining the confidentiality and security of you r
information . Accordingly, we maintain internal policies , procedures, and safeguards to protect the
confidentiality of your personal information. In addition , we will secure confidentiality ag reements
with all service providers to maintain the confidentiality of your information and we will take
reasonable precautions to determine that they have appropriate procedures i n pl ace to prevent
the unauthorized release of your confidential information to others . In the event that we are
unable to secure an appropriate co nfidentia l it y agreement, you will be asked to provide you r
consent prior to the sharing of your confiden ti al information with the th ird-party service provider.
Furthermore, we will remain responsible for the work provided by any such th ird-party service
providers.
We understand that your employees wiU prepare all cash, accounts receivable , and o th er
confirmations we request and will locate any d ocu me nts selected by us for testing .
Ms. Margaret J. McBride is the engagement partner and is responsible for supervising the
engagement. Gilbert Vasqu e z is responsible for sig n in g the audit report.
At the conc lusion of the engagement, we will complete the appropriate sections of and sign the
Data Collection Form that summarizes our audit findings . We wi ll provide copies of our reports to
the City; however, It is management's responsibility to submit the reporting package (inc luding
financial statements, schedule of expenditures of federal awards , summary schedule of prior
audit findings , auditor's reports , and corrective action plan) along with the Data Collection Form to
the designated federal clearinghouse and, if appropriate, to Pass-through Entities. The Data
Collection Form and the reporting package must be submitted wltt".in the earlier of 30 days after
receipt of the auditor's reports or nine months after the end of the audit pe riod , unless a longer
period is agreed to in advance by the Cognizant or Oversight Agency for Audit. We will provide
information to management as to where the reporting packages should be submitted and the
number to submit.
City of Temp le City
July 21 20 11
Page 8
We ex pe ct to be gi n our audi t on approximately Se p tembe r 15, 20 11, to perfo rm early tests of
contro ls and to issue our reports no later tha n Decembe r 31, 2011 . Ou r audit engageme nt ends
on delivery of our audit report. Any follow·up services that might be req uired will be a sepa rate,
new engagement. The terms and conditions or that new engagement wi ll be governed by a new ,
specific engagement letter fo r that service .
Our fees for the services outlined in this engagement letter are based on ou r estimates of the
tim e needed to complete the project at our standard hourly rates . You acknowledge that any fee
est im ates we have furnished are only our good faith estima tes based on our understanding of the
engagement assumptions and the facts and circumstances we are aware of at this t ime . If the
bases of our est imates are in accurate, the fees and expenses may be different from those we
each anticipate. If significan t add iti ona l ti me is necessary, we w ill discuss it with you and arrive at
a new fe e estimate before we incur the addi ti onal costs .
Our standard hour1y rates vary according to the degree of respons i bi lity involved and the
experience level of the personne l assigned to your audll The fees are based on anticipated
cooperation from your personnel and the assumption that unexpected circumstances w il l not be
encountered du ri ng the aud it.
Ou r invoi ces for these fees w ill be rendered in accordance with the le rm s se t in our contract and
are payab le within 30 days of receipt. In accordance with our firm po lici es , work may be
suspended if your account becomes thirty days or more overdue and w ill not be resumed unti l
your accou n t is paid in full. If we elect to terminate our services for nonpay ment, our engagemen t
will be deemed to have bee n completed upon written notice of term in ation, even if we have no t
iss ued a report . You will be ob liged to compensate us for all time expended and to reimburse us
for all oul--of·pocket expend i tures through the date of termi nation . Invoices aged ove r thirty days
may be subj ect to a 10 % late c harge .
Other Services
We are alw ays available to mee t with you and/or other executives at various limes throughout the
year to discuss current business , operations, accoun ti ng , and aud iti ng matters affecting yo ur
organization . Whenever you feel such meetings are desirable, please le t us know. We are also
prepared to p rovide services to assist you in any of th ese areas .
You may request tha t we perform add itional services not addressed in this engageme nt lette r. If
this occurs , we will communica te w ith you the scope of the addit ional services and estima ted
fees. We also may issue a separate engagement letter covering the add itiona l services. In the
absence of any other written communication from us documenting such additional services, our
serv ic es w ill continue to be governed by the terms of this engagement letter.
Government Aud itin g Standa rds require that we provide you with a copy of our most recen t
externa l peer rev iew report and any letter of comment, and any subsequent peer rev iew reports
and letters of comment received during the period of th e contract. O ur 2009 pee r r evi ew report
accompani es this lette r.
In accordance with Section 5079(a)(5) of the Californ i a Accountancy Act , we hereby disdose that
William Vasquez is a nonlicensee owne r and he will not be involved in the engagement.
Section 5063 (b)(1) of the California Accountancy Act requ ires us to report to the California Board
of Acco untancy, within 30 days of the date that we have knowledge of any restatement of a
financial statement and related disclosures by an audit client.
We appreciate the opportun ity to be or service to you and believe this letter accurately
summarizes the sign incant terms of our engagement. If you have any questions , please le t us
know . If you agree with the terms of our engageme nt as described in th is letter, p lease sign th e
enclosed copy and return it to us .
C ity of Temple City
July 21, 20 11
Page 9
Very truly yours ,
VASQUEZ & COMPANY LLP
Gilbert R. Vasquez
!~a naging Pa~~n_e_r ____________________________________________________ __
RESPONSE:
Th is letter correctly sets forth the unders tanding of the City of Temple C ity.
Officer Sign a tu re : -------------------------------------
Tille:---------------------------------------
Date: ________________________________________ __
ATTACH~I1F.NT C
ADMINISTRATIVE SERVICES DEPARTMENT
MEMORANDUM
DATE : July 15, 20 14
TO: The Ho nora bl e City Counc il
FROM: Don ald E. Penman , In terim City Manager
By: Tra cey L. Ha use, Ad min istra tive Services Director
SUBJECT: DISSOLUTION OF THE AUD IT AD HOC COMMITTEE,
ESTABLISHMENT OF AN AUDIT STANDING COMMITTEE AND
ADOPTION OF AN AUDIT STANDING COMMIITEE CHARTER
RECOMMENDATION :
Th e City Cou ncil is requ est ed :
a) Dissolve the A ud it Ad Hoc Committ ee;
b) Appoint an A ud it Standing Committee including a Chairma n and Vice Chairman ; and
c) Adopt an Audit St an di ng Co mmittee Charter (Attachm en t "A").
BACKGROUND:
1. The 2011-20 12 Los Ange les Co unty Civi l Grand Jury (CGJ) expressed co n cern
about the pote ntial for abuse of c harter cities in Ca lifornia as they are given greater
au t ho rity an d fl exibil ity , by Cal ifo rn ia law, th an gene ral law cities over thei r respective
m un icipal affa irs.
2 . On January 24, 2012 , the City of Temple City (City) received a questionnaire
developed by t he CG J to gather info rmat ion regardi ng current practices of the charter
ci ti es in t he a reas of: Fina ncia l Heal th ; Governance Practices ; Financial
Manageme nt Practices; Con tr acti ng a nd Proc u rement ; and Employee
Compe nsatio n.
3. On February 9, 201 2 , the City re turn ed the completed q uestionnaire and supporting
docume ntat ion and forwarded a copy of th e City 's Fiscal Year (FY) 2009-2010 Bas ic
Financial Stateme nts to t he CG J as req uested .
4 . On June 26 , 20 12, the City received a copy of the 2011 -2012 Los Angeles County
C ivil Grand Ju ry Report.
City Council
July 15, 2014
Page 2 of 4
5. On September 18 , 2012 , staff brought forward to the City Council the CGJ Report
and a draft letter responding to the recommendat io ns .
6 . In mid-June 20 13 , th e portion of the 2012-20 13 Los Angeles Count y Ci vil Grand Jury
Report (2012-2013 CGJ Report) entitled "CIT IES OF LOS ANGELES COU NTY
Fi sca l Health, Governance , Management and Compensation " was de liv ered to City
Ha ll .
7 . On November 13,2013, staff res ponded to the 20 12 -2 013 CGJ Report .
8. On January 21, 2014, afte r receiving a report on the formation of an Audit Committee
from Adm inistra tiv e Services Director Ha use , City Councilmember Chavez made a
motion to establish an Aud it Ad Hoc Committee (Committee) to determine the
structure and scope of work for the Audit Standing Committee . T he Co mmittee was
d irect ed to report back to full City Council withi n the next six months .
Councilmember Yu and Councilmember Chavez we re appointed to the Committee .
9 . On Febru ary 4, 2014 , Co u nci lmemb e r Yu reques ted Mayor Sternq uist and City
Counci l to cons id er appointing Pla nning Commi ss ioner Curran to th e City Council
Comm ittee . Mr. Curran is a Certified Pub li c Accou ntant (CPA). Mayo r Sternqu ist
made the appo intm ent.
10 . On April 3 and May 30, 2014 , the Committee met t o consi der a Audi t Sta nding
Committee Charter, (i.e., Mayor Pro-Tem Chaves, Councilmember Yu and Steve
Curran). Mayor Pro Tem Chavez did not attend the May 30 , 20 14 , Committee
meet ing .
ANALYSIS:
The main function of the Civi l Grand J ury is to in vestigate co unty, city , a nd joint-powe r
agen cies . The Gra nd Jury acts in a "watch-dog " capacity , by examin ing carefully and
completely, the ope ratio ns of vario u s government agencies within Los A ngeles County .
The Civil G rand Jury cannot investig at e state or federa l agencies , which lie outside their
jurisd iction . Part of the investigation of governmental agencies includes the abil ity to
audit operations , accounts and re cords of officers and departments within the agency
unde r inves t igati on . Th e C ivi l G rand Jury is further cha rged with inv es tigating ind ivi dua l
complaints f rom citizens .
Due to p rob lems in th e last couple of years in th e citi es of Bell and Vernon , and fears of
bankruptcy in other cities in Ca li fo rnia , th e Grand Jury und ertook the "Charter Cities
Fi scal Hea lth , Governance and Management Practices" investigation and issued a
repo rt dated June 26, 20 12 . Of the 25 charter cities with in Los Ange le s County , 23
Charte r Ci ties we re chosen because their great er auto nomy all ows for great e r potentia l
fo r abus e . Non e of the 63 "Genera l Law" cit ies with in Los Ange les County were
invest igated in last year's report. The 2012 -2013 CG J Report decided to e xpand the
City Council
Ju ly 15 , 2014
Page 3 of 4
i nvestigation to all 88 cities within Los Angeles County including all Charter and General
Law cities as the economy has Increased the risk of bankruptcies .
Temple City f a ired rather well in the Grand Jury's inv estigation in light of actions by
o ther cities within Los Angeles County. For greater transparency and accountab ility,
one recommendation made in the 2012-13 CGJ Report is that ci ties should forma lly
establish a City Council aud it co mmittee, making it d irect ly responsible for the work of
the independent auditor. Temple City is one of the 59 out of 88 cities. in Los Angeles
County , that received th is recommendat ion .
Recommended best practice aud it committees structures fr om the Government F inance
Officers Association (GFOA) inc lude:
• The governing body of every state and local government should establish an
audit committee or its equ ivalent;
• The aud it committee should be formally esta b lished by charter, enabling
resolution of other appropriate lega l means and made d irect ly respons ible for the
appointment, compe nsa ti o n , retention and oversight of the work of any
independent accountants engaged for the purpose of preparing or issuing an
independent audit report or performing other independent audit, re view or attest
services;
• The aud it comm ittee should be established in such a manner that all accountants
thus engaged report directly to the aud it committee . T he written documentation
establishing the aud it committee should prescribe the scope of the comm ittee 's
responsibilit ies , as well as its structure , processes , a nd membership
requirements ; and
• Th e aud it committee shou ld itself period ically review such documentation , no
less than once every five years, to assess its con t inue adequacy .
Other structures of audit committees in Cal if ornia also exist , including f inance and /o r
budget committees , similar to the prev ious Budg et Ad Hoc Committees in T e mple City ,
that assume the recommended audit co mmittees ' duties and responsibilities .
Options fo r structure were discussed by the Comm ittee and they recommended that a
Audit Standing Committee be establis hed and their duties be more "traditional" and
incl ude the recom mened best practices by GFOA as described above . Further , the
Committee developed a Charter that is recommended for adoption as part of th is act ion .
The responsib il ities of the Audit Standing Committee wi ll include :
• Ass isting the City Council in m o nit ori ng , overseeing , and assessing the City's.
;..-Accou nting and f i nancia l reporting processes ;
City Council
July 15, 2014
Page 4 of 4
~ T he qualit y and integrity of the City's financ ia l statements , i ncluding audits
of the financial statements ;
~ The qua lifications, i ndependence and performance of the inde pendent
auditor;
~ Compliance with applicable legal and regulatory financial accounting
requirements ; and
~ Management's ability to evaluate adequacy of inte rnal controls and
capably identify and con t rol risks posed by its current and planned
activities.
• Provide an avenue for communication among the independe nt aud itors , City
management and the City Co uncil. The Committee shall have such other duties
as se t forth in this charter and as directed by the City Counc il.
As directed by the City Council , the Committee has me t and is returning to the City
Co uncil with a reco m mendation for the st ructure and scope of work for the Audit
Standing Committee.
CONCLUS ION :
It is recommended the City Council disband the Committee, app oi nt an Aud it Stand ing
Committee , including a Chairman and Vice Cha i rman , and adopt an Audit Committee
C harter. A standing committee is recommended as the purpose and dut ie s of th is
committee are on -going , over multi fiscal years .
FISCAL IMPACT :
This action would have no fisca l im pac t to t he Fiscal Yea r (FY) 2014 -15 City Budget.
ATTACHMENT:
A. Audit Committee Charter
ATIACHMENTA
CITY OF TEMPLE CITY
AUDIT C OMMITTEE CHARTER
Organizational F unctiona l Area C i ty o f Temple City
C harte r For: Audit Committee
C ity Council Approved: July 15, 2014
Last Revision D ate : N/ A
Res ponsible Person for Maintaining/Updating·C b a rte r : C hairman of Audit Co mmittee
(. Purpose
The purpose of the Audit Comm itt ee (the "Committee") of the Ci ty Council ("Council") (the
"City") is to (a) assist the Council in monitoring, overseeing, and asses s ing (i) the City's accounting
and financial reporting processes ; (ii) the quality and integrity of the City's frnancial statements,
including audits of the financial s tatements; (iii) the qualifications, independence and perfo rmance of
the independent auditor; (iv) compliance with applicable legal and regu latory financial accounting
requirements; and (v) management 's ability to evaluate adequacy of internal controls and capably
identify and control risks posed by it s current and planned activ ities; and (b) provide a n avenue for
comm uni cation among the independent aud itors, City managem ent a nd th e Council. The Committee
shall have such other duties as set fo rth in thi s charter and as directed by the Council.
II . Compos iti o n of the Committee
The Committee shall be comprised of at least three members but no more than fi ve, two of
whjch must be Councilmembers, each of whom s ha ll be determined by the Counci l to meet the
independence requirements of applicable governmental or regulatory authorit ies. The Committee shall
a lso meet any applicable exper ience, expertise, finan cial literacy or other regulatory requirements .
The members of the Committee shall be appointed by the Mayo r wi th concurrence fr o m the
Mayo r Pro Tern and o ther Councilmembers. The Counci l shall designate a Chairman and a Vice
Chairman of the Comm ittee. If the Comm ittee Chairman is not present at a meeting ofthe Comminee,
the Vice Chairman shall pres id e .
Ill. Committee Meetings
The Committee shall meet three t imes a year or as rea sona bl y necessary to accom pli sh the work o f the
Committee as set forth in Sections I, Ill & TV of the Charter to:
• Discuss the scope of the planned engagement with the auditors at the beginning of their
field work;
I:".
" M o n i t o r p r e l i m i n a r y r e s u l t s w i t h t h e a u c t i t o r s a t t h e e n d o f t h e i r f i e l d w o r k ;
" R e v i e w f i n a l i z e d d r a f t o f t h e C o m p r e h e n s i v e A n n u a l F i n a n c i a l R e p o r t ( C A F R ) ; a n d
" T o c o m p l e t e t h e b u s i n e s s o f w o r k o f t h e C o m m i t t e e a s s e t f o r t h i n S e c t i o n s I , l i i & r v .
A m a j o r i t y o f t h e m e m b e r s o f t h e C o m m i t t e e s h a l l c o n s t i t u t e a q u o r u m .
T h e C o m m i t t e e C b a i n n a n , i n c o n s u l t a t i o n w i t h m a n a g e m e n t a n d o t h e r m e m b e r s o f t h e C o m m i t t e e ,
s h a l l p r e p a r e a n d / o r a p p r o v e a n a g e n d a i n a d v a n c e o f e a c h m e e t i n g . M a t e r i a l s r e l a t e d t o a g e n d a i t e m s
s h a l l b e p r o v i d e d t o t h e C o m m i t t e e m e m b e r s s u f f i c i e n t l y i n a d v a n c e o f t h e m e e t i n g w h e r e n e c e s s a r y t o
a l l o w t h e m e m b e r s t o p r e p a r e f o r d i s c u s s i o n o f t h e i t e m s a t t h e m e e t i n g . T h e C o m m i t t e e s h a l l m a i n t a i n
w r i t t e n m i n u t e s o f i t s m e e t i n g s , w h i c h s h a l l b e m a i n t a i n e d w i t h t h e b o o k s a n d r e c o r d s o f t h e C i t y . T h e
C o m m i t t e e s h a l l r e p o r t i t s a c t i v i t i e s r e g u l a r l y a n d d i r e c t l y t o t h e C o u n c i l a n d s h a J I m a k e
r e c o m m e n d a t i o n s t h a t t h e C o m m i t t e e d e e m s a d v i s a b l e .
T h e C o m m i t t e e m a y r e q u e s t t h a t a n y m e m b e r o f t h e C o u n c i l , o f f i c e r o r s t a f f o f t h e C i t y , o r o t h e r
p e r s o n s w h o s e a d v i c e a n d c o u n s e l a r e s o u g h t b y t h e C o m m i t t e e , a t t e n d a n y m e e t i n g o f t h e C o m m i t t e e
t o p r o v i d e s u c h p e r t i n e n t i n f o r m a t i o n a s t h e C o m m i t t e e r e q u e s t s .
I V . A u t h o r i t y a n d R e s p o n s i b i l i t i e s
A . G e n e r a l
1 . T h e C o m m i t t e e s h a l l m o n i t o r t h e c o m p l e t i o n o f t h e C i t y p r e p a r e d f i n a n c i a l r e p 0 1 1 s
r e q u i r e d b y t h e r e g u l a t o r y a u t h o r i t i e s , i n c l u d i n g t h e r e v i e w o f f i n a n c i a l s t a t e m e n t s w i t h
m a n a g e m e n t , r e v i e w o f S A S 1 1 4 w i t h t h e i n d e p e n d e n t a u d i t o r , a n d r e v i e w o f t h e w r i t t e n
d i s c l o s u r e s a n d t h e l e t t e r f r o m t h e i n d e p e n d e n t a u d i t o r .
2 . T h e C o m m i t t e e s h a l l h a v e r e a s o n a b l e a c c e s s t o t h e A d m i n i s t r a t i v e S e r v i c e s D i r e c t o r ,
a s s t a f f s u p p o r t a n d d o c u m e n t s a s n e c e s s a r y ' i n a c c o r d a n c e w i t h t h e i r s c o p e o f w o r k . I t i s
e s t i m a t e d t h e s t a f f s u p p o r t t o t h e C o m m i t t e e w i l l n o t e x c e e d 3 0 h o u r s p e r f i s c a l y e a r . 3 . T h e
C o r n n i l t t e e s h a l l h a v e t h e a u t h o r i t y t o ' r e c o m m e n d t o t h e C i t y C o u n c i l t h e e n g a g e m e n t o f
i n d e p e n d e n t c o u n s e l a n d o t h e r a d v i s o r s , a s i t d e t e r m i n e s n e c e s s a r y t o c a r r y o u t i t s d u t i e s . I f t h e
C i t y C o u n c i l d e e m s t h e h i r i n g o f a n i n d e p e n d e n t c o u n s e l o r o t h e r a d v i s o r s , t h e C i t y s h a l l s o l i c i t
t h e R e q u e s t f o r Q u a l i f i c a t i o n s ( R F Q ) o r R e q u e s t f o r P r o p o s a l s ( R F P ) . a n d p r o v i d e f o r
a p p r o p r i a t e f u n d i n g , a s d e t e r m i n e d b y t h e C i t y C o u n c i l , f o r p a y m e n t o f ( a ) c o m p e n s a t i o n t o t h e
i n d e p e n d e n t a u d i t o r e n g a g e d f o r t h e p u r p o s e o f p r e p a r i n g o r i s s u i n g a n a u d i t r e p o r t o r
p e r f o r m i n g o t h e r a u d i t , r e v i e w o r a t t e s t s e r v i c e s f o r t h e C i t y ; ( b ) c o m p e n s a t i o n t o a n y a d v i s o r s
e m p l o y e d b y t h e C i t y C o u n c i l ; a n d ( c ) t h e C o m m i t t e e s h a l l r e v i e w a n d r e a s s e s s a t l e a s t
a n n u a l l y t h e a d e q u a c y o f t h l s C h a r t e r a n d r e c o m m e n d a n y p r o p o s e d c h a n g e s t o t h e C o u n c i l f o r
a p p r o v a l . T h e C o u n c i l s h a l l a n n u a l l y r e v i e w t h e C o m m i t t e e ' s p e r f o r m a n c e .
B . Q u a l i t y a n d I n t e g r i t y o f F i n a n c i a l S t a t e m e n t s
P a g e 2
·'
1. The Co mmittee shall review and discuss with management, and the independent
auditor the City's annual financial report prior to December 15 th of each fiscal year and prior to
i ts filing with the r egulatory a uthorities-included in the City's Comprehensive A nnua l Financial
Report, the disclosures contained therein including management's di scussion and analysis of
financial condition and r esults of o perations, and any certifi cation, report, opinio n or review
rendered by management, o r the independent auditor in connection with the foregoing . The
finalized draft is sent to all audit committee members for review and the Chairman will hold a
formal meeting with committee members, Managem e nt and outsi d e financial auditors prior to
the required ft lin g date to d iscu ss any issues th ey may have about the report 's financ ial
information.
2 . The Committ ee shall, in a review and d iscuss ion with the C ity Manager and o ther
members of management, request them to address any significant financial reporting issues and
judgments made in connection with the preparation of the C it y's fmancial statements, including
any signi fi cant c han ges in the City's selec t ion or application of accounting principles , any
special steps adopted in light of any material control defic iencies identified and the effect of
chan ges in law, regulati ons or accountin g standards on the City's operati o ns or financial
stat ements. Regarding th e audited financ ial s tatement s , in accordance with the matters required
to be d iscussed by Statement of Aud iting St andards No. 114, the Committee will review and
discuss with the independent a uditor the auditor 's j udgments as to the qual i ty, n o t j ust the
acceptabi lity, of the accountin g princip les, th e reasonableness of significant judgme nts, the
clarity o r disclosures in the finan c ial statements, and any o ther matters that are requ ired to be
di scussed with the Committee under generall y accepted auditing standards .
C. Internal Controls and Procedures
1. The Committee shall, in consultation with management, the inde pendent auditor,
review and discuss th e adequacy and effectiveness of t he City's (a) internal controls, (b)
management risk assessment evaluati on process including its ongoing m o nitorin g and periodic
reporting and (c) di sclosure contro ls and processes, and management reports thereon .
2. T he Committee sha ll review an y di sc losures m ade to the Committee by the City
Martager and Admirti strati ve Services Director (i .e., Management Letter) during their required
certification process regardi ng any significant deficienci es in the d esign o r oper ation of int ernal
contro ls or mater ia l weaknesses there in and any fraud in vo lving manage ment or other staff who
have a significant role in the City's internal contro ls as appr opriate given the protection and
pri vacy of certain P ersonne l matters. ·
D. Independent Auditor's Qualifications and Independence
I . The Committee shall be responsible for recommending to the City Council the
appointment, compensation, retention and oversight of the work of the independent audi tor
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engaged (including resoluti on of any di sagreements betwee n managemen t and th e independent
au ditor regarding fi nan cial reporting) for the purpose of preparing or issuing an audi t report or
perfo rming other audit, review or attes t services for the City, and each such ind ependent aud itor
mus t report direct ly to th e Committee.
2. The Committee shall re view the ann ua l rete ntion of the independent auditor, the
a udi t engagement letters, the scope of a ud it services , moni tori ng of audit results and re view of
t he independent auditor's performance and services. T he Committee may recommend to the
C ity Council the appointment or replacement of the independent audito r , as th e Committee
deems necessary or appropri ate.
3. The Committee shall verify that the City does not engage, or otherwise permit the
City to engage, the independent auditor to pro vide any n on-audit ser vices prohibited such as (a)
bookkeeping or other serv ices related to the acco unti ng recor ds or financial statements of the
audit cli e nt , (b) finan cia l information sys tem s design and implementation, (c) appraisal or
va lu ation se rvices, fa irness o pinions, or contribution-i n-kind reports, (d) ac tuarial serv ices, (e)
internal audit outso urcing services, (f) manageme nt functions or human resources, (g ) broker or
d ealer, investment adviser, or investment banking services , (h) legal services and expert
serv ices unrelated to th e audit , and (i) any othe r service , which was estab li shed under Sec tion
I 0 I of the Sarbancs-Oxl ey Ac t of 2002 , determines, by r egulati on, is impermi ssi ble).
4. The Committee shal l annually eva lu ate the qu al ifications, performance and
independence of the ind ependent auditor. The Committee shall (a) receive written disclosures
and a written statement fr om th e indepe nd ent auditor delineating all relationsrups between the
auditor and the City, consistent with Ind ependence Standards Board Standard 1, (b) di scuss
with the in dependent au d itor any disclosed relationships o r services that might impact the
auditor's obj ect ivity and indepe nd ence ~d (c) take, or recommend that the Council take ,
appropria te actio n, if warranted, to mai nta iQ the independe nce of the outsi de audito r.
5. The Committee shall ve rify that the ind ependent auditor 's lead audit partner hav ing
primary responsibility for the audi t and the audit partner responsi bl e fo r reviewi ng the audit are
rotated as requ ire d by law.
6. The Committee shall verify that the City maintai ns written hiring pol ici es for current
and fo rmer e mpl oyees of the independ ent auditor in accordance with regulatory requirements
und e r Section 206 of t he Sarbanes Ox ley Ac t re latin g to Co nfli ct s of Interest.
E. I n dependent Auditor 's Au d it
1. T he Committee shall annually rev iew and discu ss with the independent auditors the
matters required to be di scussed by Statement of Auditing Standard s No. I14 including, (a) its
aud it plans and audit procedures , in c ludin g the scope, (b) the results of the ann ual audit
examination and accompanying management letters; and (c) the results of the independent
auditor's procedures with respect to any interim.'periods aud it work performed .
Pa ge 4
2 . The Committee s h all, review and discuss re p orts from the inde pendent audi to r on (a)
all critical accounting polic ies and practices to be u sed; (b) aU al ternative treatments of
fi n ancial info rmation within gene rally accept ed acco unting princ ipl es that have been discussed
with managem e nt, rami fications of the use of s uch al t e rna tive d isclosures and tr eatments, and
th e treatment preferred by the inde pende nt audito r ; and (c) other material wri tten
communications between the independent audito r and m anagement, such as any management
le tter or schedule of unadjusted d iffere nces.
3. The Committee s hall review the City's aud ited financial state m e n ts and r ecommend
to the Cou ncil that the a udi ted statements be included in the City's Annual Report.
4. The Committee sh all inquire into a ny accounting adjustments that were noted o r
proposed by the inde p e ndent auditor but were not recorded in the Comprehensive Annual
Financial Report .
F. Compliance with Laws and Regulations
I. The Committee shall re v i ew s ignifi cant findings reported by regulators,
management's related responses and monitor corrective actions o n any maj or deficiencies
noted .
2. T he Committee shall, at least annually, review w ith the City's counsel any legal
m a tters that could h ave a significant impact on the City's financia l statements, the City's
com p liance with applicable laws and regu la ti ons, and any inquiries received from regulato rs o r
governmental agen cies.
3. The Committee s hall review all "related party transact ions" for po tential conflicts of
in te rest situatio ns o n an ongoing basis. For purposes hereof, "related party tran sactions" shall
mean any transaction required to be di sclosed by the City pursuant to regul atio n s or best
practices. If t he Committee has co ncerns with an y "related p arty transactions", a fo rmal report
will be made to the C ity Council.
4 . The Committee sh a ll ensure the City m ai nta ins procedures for (a) the receipt,
r e tention, and treatment of complaints r e c eived by the C ity regarding account ing, internal
accounting contro ls, or a uditi ng matters; a nd (b) the confide ntial , anonymous submission by
employees of the Ci ty of con cerns regarding questionable account ing or auditing m atters .
T he Committ ee shall a lso unde rtake s uch addit ional activities within the scope of its primary funct io n
as the City Counci l or the Committee may from time t o time determine or as may otherwi se be req uired
by law, the C ity Council's o r City's by-laws or charter .
T h e duties and responsibi liti es of a member of the Committee are, w h e re applicable, in addition to
those duties set out for a m e m ber o f the City Co uncil. Whl le the Comm ittee has t he r espon sibilities
and powers set forth by this c h arter, it is not the duty of the Commi ttee to p lan or conduct a ud its o r to
Page 5
detennine that the City's financial statements are complete and accurate in accordance with general ly
accept ed accounting princi ples. This is the respo ns ibi lity of management.
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