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Home My WebLink About4.5 Auditing Services~~~~ Off' nU~~~ /ii ~ 111 L~~ - ~ ~~~ DATE: TO: FROM: STAFF REPORT CITY COUNCIL CITY CLERK File #600-30 April 17, 2012 Honorable Mayor and City Councilmembers ~~ Joni Pattillo, City Manager ° ~' SUBJECT: Authorization to enter into an agreement with Maze & Associates Accountancy Corporation to provide Auditing Services Prepared by Paul S. Rankin, Administrative Services Director EXECUTIVE SUMMARY: The City's current contract for audit services ended with the completion of the June 30, 2011 financial statements. Following the issuance of a Request for Proposal, Staff received six proposals. A review of the proposals concluded with the recommendation to select the firm of Maze & Associates to provide audit services, and to enter into afive-year agreement for such services. FINANCIAL IMPACT: The total cost of this five year agreement will not exceed $241,894. The initial work will begin in June 2012 and the first year audit costs of $46,560 will be incurred partially in the current year and partially in Fiscal Year 2012-2013. Adequate funds are available for the current year. The Fiscal Year 2012-13 budget and Fiscal Year 2013-14 Budgets will include funding based on the new agreement. RECOMMENDATION: Staff recommends that the City Council adopt the resolution authorizing the City Manager to execute an agreement with Maze & Associates to provide audit services ~'~ ... , ~" M_ °~...,,..... ~ " ~ .. l a,ti~ .......~~ . Submitted By Reviewed By Administrative Services Director Assistant City Manager Page 1 of 4 ITEM NO. 4.5 DESCRIPTION: The audit firm of Caporicci and Larson (C&L), provided audit services to the City of Dublin for the last 8 years. In the last two years the firm underwent changes and is now operated as a subsidiary of Marcum, LLP. Best practices established for public agency finance recommend that agencies periodically review the provision of these professional services. Audit Firm Selection Process A Request for Proposal (RFP) for professional auditing services was issued on January 20, 2012. The proposal was sent to a total of nine firms including C&L, the firm which completed our Fiscal Year 2010/2011 audit.. The City received proposals from six qualified firms which represent a range of size, location, costs, and proposed hours for the engagement. The RFP requested a 5 year proposal in line with the Government Finance Officers Association best practices. The selection process contained three separate elements to evaluate and select the recommended firm. The process included: 1) Evaluation and ranking of written proposals and firm background; 2) Personal interview with representatives of selected firms; and 3) Reference checks with both current and former clients. The review of written proposals took into consideration the following criteria: • Responsiveness of the proposal in clearly stating and understanding of the work to be performed. • Technical experience of the firm and references responses. • Qualification and education of staff. • Size and structure of firms. • Quality and completeness of the proposal. • Proposed hours and costs. Based on the written proposal review three firms were invited to participate in an interview / presentation. Each of the firms selected had extensive experience with municipal audits and a strong regional presence. The following are the firms which attended the interview. Firm Name Assigned Office Maze & Associates Pleasant Hill Vavrinek Trine & Day Pleasanton MGO (Macias Gini & O'Connell) Walnut Creek The interview team included Paul Rankin, Administrative Services Director, Vivian Gong, Finance Manager, and Gary Huisingh, Public Works Director. A significant portion of the grant funds received by the City and subject to special audits involve projects administered by the Public Works Department. Inclusion in the process of Staff outside of Finance was helpful in providing additional perspective. Given that the audit process is a professional service the proposals had differences in the classifications of staff used by each firm and a range of total annual hours. The City requested that firms establish pricing for the five year period. This allows the firms to spread out some of the initial costs incurred with a new audit client. The total hours proposed in the six proposals ranged from 408 hours to 496 hours and the five year costs ranged from $184,000 - $269,750. Page 2 of 4 As stated in publications issued by the Government Finance Officers Association (GFOA), "...price should only enter into the equation once it has been determined that a given firm is fully capable of performing a high quality audit." Overall the cost proposals received were within an expected range. At key milestones the 2011 City Council Ad Hoc Subcommittee (Vice Mayor Kevin Hart and Council Member Eric Swalwell) was informed of the status of the selection process. Recommended Firm -Maze & Associates Based on the complete evaluation process including reference checking, Staff is recommending an agreement with Maze & Associates. The firm is known as a regional "boutique" public agency audit firm. In Alameda County, Maze & Associates currently audit Livermore, Dublin San Ramon Services District, Alameda, Hayward, and San Leandro. In total, they currently have 40 cities as clients as well as special districts and other agencies. Maze & Associates previously served as the City of Dublin's Auditors for a nine year period that ended in 1996. As shown in the attached proposal (Attachment 1), Katherine Yeung is the proposed assigned partner and she has 15 years of experience. Grace Zhang has been with Maze & Associates for 7 years and has been an audit supervisor since 2007, will serve as the lead supervisor in the field. The firm prides itself in specializing in government auditing and the efforts they take to efficiently gather data necessary for preparing the reports. Services To Be Provided As part of the Audit engagement, the following scope of services will be provided on an annual basis: 1. Comprehensive Annual Financial Report (CAFR). As part of the base scope of work, the auditor will be required to prepare the general purpose financial statements and combining statements for the City's Comprehensive Annual Financial Report (CAFR). The auditor will express an opinion on the basic financial statements in accordance with established accounting standards. 2. Single Audit Report In the event that the City has expenditures from Federal sources that exceed $500,000, a Single Audit shall be performed in accordance with the provisions of the Single Audit Act issued by the Federal government. 3. Special Purpose Audit (Alameda County Transportation Commission -ACTC) The Alameda County Transportation Commission (Measure Bhalf-cent transportation sales tax program) requires a separate financial and compliance audit. 4. Annual Appropriation Limit Report. Annually the City must obtain a report prepared based on agreed upon auditing procedures related to the City's Appropriation Limit Calculation. 5. Annual State Controller's Reports Cities Financial Transactions Report The audit firm will prepare and submittal to the State Controller of the "Annual Report of City Financial Transactions" and the "Annual Streets and Highways Report". Page 3 of 4 6. Other Auditor Reports. The auditors will also issue as deemed appropriate a separate "Management Letter" that includes recommendations for improvements in internal control, accounting procedures, and other significant observations that are considered to be non-reportable conditions. Costs Proposed By Maze & Associates Maze & Associates has presented a total "Not To Exceed" cost proposal which begins at $46,560 in the first year and would be $50,234 in the fifth year. The following table displays the components of the fees charged. In the case of the Single Audit, if the City did not have grant expenditures requiring those services the cost would not be incurred. All other work is expected to occur on an annual basis. Fiscal Year Ending June 30th 2012 2013 2014 2015 2016 City Audit and CAFR (Includes $30 465 $31 074 $31 695 $32 329 $32 976 Management Letter) , , , , , Single Audit Report 4,810 4,906 5,004 5,104 5,206 Alameda County Transportation Commission 3,830 3,907 3,985 4,065 4,146 (Measure B) Appropriations Limit 595 607 619 631 644 Calculation State Controller Financial 3 580 3 652 3 725 3 800 3 876 Transactions , , , , , State Controller Street Report 1,280 1,306 1,332 1,359 1,386 Printing and Publication 2 000 2 000 2 000 2 000 2 000 Expenses , , , , , Total For Year $46,560 $47,452 $48,360 $49,288 $50,234 Provided the City Council concurs with the Staff recommendation, it would be appropriate to approve an agreement. Attachment 2 is a Resolution which will authorize the City Manager to execute an agreement with Maze & Associates to provide audit services as described in this report. The Auditors plan to begin their field work on the current year audit in June, with all reports prepared for City Council acceptance by December. As part of their planning for the June 30, 2012 Audit, and in accordance with professional requirements, representatives of the firm will have an opportunity to speak directly with the appointed Audit Ad-Hoc Committee once work is underway. NOTICING REQUIREMENTS/PUBLIC OUTREACH: Copies of this Staff Report will be made available to the six firms that submitted proposals. ATTACHMENTS: 1. Proposal submitted by Maze & Associates Accountancy Corporation dated February 17, 2012 2. 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X71 CITY OF DUBLIN AUDIT PROPOSAL TABLE OF CONTENTS Pane TRANSMI'["I'AL LETTER ............................................................................................................................. 1 LICENSE TO PRACTICE IN CALIFORNIA ............................................................................................. 3 INDEPENDENCE ............................................................................................................................................. 3 BIIS1NE55 LICENSE REQUIRED AT'I"IlE TIME OF CONTRACT AWARD ................................... 3 INSURANCE ..................................................................................................................................................... 3 FIRM QUALII+TCATIONS AND EXPERIENCE ........................................................................................ 4 Overview ..................................................................................................................................................... . 4 Equality and Diversity ................................................................................................................................ . 4 National Recognition .................................................................................................................................. . 4 Reputation ................................................................................................................................................... . 5 Our Municipal Focus .................................................................................................................................. . 6 City Clients .................................................................................................................................................. . 7 Grant and Compliance Audit Experience ................................................................................................... . 8 Large Enterprise Operations ...................................................................................................................... 10 Redevelopment Agency Experience ......................................................................................................... 11 Retirement Plan Experience ...................................................................................................................... 1 I Transportation Experience ......................................................................................................................... I I Long Term Debt Experience ..................................................................................................................... 12 Public Financing Authorities and Mello-Roos Experience ...................................................................... 12 Assistive Resources ................................................................................................................................... I2 Client Training and Professional Development ........................................................................................ 12 Books, Periodicals, News Letters, and Professional Standards ................................................................ 13 Support Services ............................................................................................................................. ....... .... 13 Professional Activity .................................................................................................................................. 14 Internal Quality Assurance Syste~n ........................................................................................................... I5 No Disciplinary Action .............................................................................................................................. 15 Federal or State Field Reviews .................................................................................................................. I S Litigation .................................................................................................................................................... 16 External Quality Control Review .............................................................................................................. 16 Peer Review I,etter ..................................................................................................................................... 17 PARTNER, SUPERVISORY AND STAFF QUALIFICATIONS AND EXPERIENCE ..................... 18 Audit Team .................................................................................................................................................18 Staff Training ............................................................................................................................................. 21 Qualifications and Continuity .................................................................................................................... 22 CITY OF DUBLIN AUDIT PROPOSAL TABLE OF CONTENTS Page SMLAR ENGAGEMENTS WITH OTHER GOVERNMENT EN'EI'I'IES City Client List ........................................................................................................................................... 22 References .................................................................................................................................................. 22 SPECIFIC AUDIT APPROACH .................................................................................................................. 24 Specifc AuditApproach ........................................................................................................................... 24 Specific Audit Strategy-Interim .............................................................................................................. 24 Laws Regulations and Compliance ........................................................................................................... 25 Specilc Audit Strategy -Year End .......................................................................................................... 25 Audit IT Systems and Going Green .......................................................................................................... 26 Turn-Key Financial Statement Dral3s ....................................................................................................... 26 Auditing Large and Complex EDP Systems ............................................................................................. 26 Information System Review ...................................................................................................................... 27 System Controls and Transaction Cycle Processing Verification ............................................................ 27 Profiles, Access & Setup Controls ............................................................................................................ 28 Data Extraction ........................................................................................................................................... 28 Assessing Risks -Interim Phase ............................................................................................................... 28 .Fraud Consideration ................................................................................................................................... 29 Client Tailored Risk Assessment ............................................................................................................... 29 Client Participation in the Risk Assessment Process ................................................................................ 30 Assessing Risks -Final Phase ................................................................................................................... 30 Ability to Provide Services on a Short Notice .......................................................................................... 30 Communication and Coordination ............................................................................................................ 3I Prompt Service and Delivery of Reports ................................................................................................... 31 Audit Schedule ........................................................................................................................................... 32 Proposed Engagement Segments and Budget ........................................................................................... 33 IDENTIFICATION OF ANTICIPATED POTENTIAL AUDIT PROBLEMS .................................... 34 New GASB Implementation ...................................................................................................................... 34 REPORT FORMAT ....................................................................................................................................... 35 /, ~ i ~ /; `~ i ~~ ~~~~~I "~1~ C'~ '_-r~ {$~ F~SSC~Cta"tiT f'ekarxaary 17, 2Q~1 City ofl~azkxi.i.at l..axaa°a.Itta~xrttal, Adaniatista°atlive T"ecitaaiciaaa. It~t~ Civic 1?iaz~t l~talxlat, Cep ^~45~8 l~caa~-M's. ~aaaxattai: aitltraciate tiff%s aiapaa°tunty to staiaaaxut agar prapasai to provide extea-aaai aaxidik services foa- rite C~'ity of L7aabiiaa. 'Vw°`a; aa-ee to audit tits itasie fittaatcial stateatteaats of the City as wail as assist x~ritlx rite ttreparatian oi" rite Corrtpa°eiteaxsive Aaxatual I°'iataatcial TZepaa-t (CAT"IZ.~. We ~wiii aiso peaMfoa°nt addtoatai sea-vices as sitecificd in the City°~ I~e~tacst fctr 1''a-aitosal,,'avitbiax tlae tiaxte pca-iods established by the City. titre quite certaiZt rvc are tixe angst rtaaiitied fn-tn to be yatn'• iaxcicpeaxcleatt accattaataatts. Iwiaze +~ associates beaaat apes°atin a ryu~rter ctf s c€~aahary ~~e~, srad siarce tia~t tirrac., ewe iaave ri~araaasly etat~layexi caxar txhilasu~ity tlaaat "fie ttre in ~usiaxess to Heip oxaa° Cieatts Sxaccecrl"! {star cliawaxts ator~w fa°ottt cxi~erieatce rve eatxpiay a variety of tcciaatictaaes, tecittaoiaies aaatd strategies to ntaxitatize a~ffe~tivc aaxd eflicieatt audits wtiaatat sitif~ing oxta° r~voa°k aaato our clieatts staff', ""'VVe lxave stataxazxaa~izeci our reasaras beioav aaad expia.uted tlaeatt iax depth in attar proi~asai, °i~'e aquae the best-Ixxxa~vrx x°e~,ianttl ~xlunicipal atatdt ~a•ixx iax 1Vai~tberu. C~iifox~caiaa. trlwer oxtr tweaaky-free year i-istaay, wwe ixave achieved atationcti reca~nitioax~ svitlt tite oaatsisteaxt hit afuality <xt' otar ~vaa°ic and tvitit out ° ieadersiuip oat. issues stitch as izattkrttptcy to°caxds a~axd ia<xx)xlicatticuxs, CA 5taterrteaxt 4'S, ~r~.B tateaneaat 3~i, ~tC., aatd aaxxtcaicipaal itavesta~xeatt losses. A 1Vlxaaaicipai raxaditiax is aua° aaaaxin busiaaess~ 1t1'e Iteiieve x~vc itawe fire axeces;sEtry cltaai ificatioats and as°c yxtxra° hest. choice. ~? V'Je ttntaaiiy aaudit over ~~~ aaxuuiciixaiities iatcictdut~ speoial districts, jahtt pca~wers axatixorties, redeveiopaa-ent a~eaaoies, itotasiaxg gatatharities aaaatl frnaanciaxt; aauthorities, a e cua~reaxtiy have forty-free City ciieaxts raniaa Fiat size fraaxt saatall tvrwaas to lame coaxtixiex cities, iaacltxdiu~ e~iat avitla ladlaaal:ttioaas iat exeess afi" 1tl(I,Q~q, o 'i~'a baxve e~apea"fence aaxaditiaa~ s+evei°atl da~en 1aaa~,~e +~aatea•larise apea°atiaaas, wane open°ated as dcpartrnent,s oa° fiaaxds of our City dents aaxci others alaerateci as staatd-aurae iaxdepu~axciecat special. districts anct autptarities, ca e ~ea~ndaxc~t tha°ee clazerx 'inie ~uclita anxxxaally. o (1Maaa. 1`irm claw not rnaire iba; nu;~^vspaxpers vea°y at"teu, but t~vbeaa it claw., it's 1'aa° dain~ aaaa° job. ~ 'G'Ve curreattiy i~rpare ttte uatnual rcciuired fiiirts far rise Mate Carttraiicrs fl~ice, irac;iudiat the Annual Itelaaa•t afT"inancal "Y'rnnsaxct7ans aatd ttitx°eet l~,epart, ftar anauy of am ttXxtnicipa9 ciients. t 925.93C7.o~U2 Acca~unx~Aa~cycrr~~sr~aalaoa F 925.93Q.ot35 3478 puskirk.gven~ae, Saute 215 ~ irrnzemazeassncfate~,can~ Plta~a~~rrC hddlfi, C,A 94523 „ k~ maaeeeea~~s9ttC~s.cnna~ - Our Partners are actively involved in planning, conducting and completing the audit in our client's offices and our Partners are available when you need them. We resolve issues an the spot while the audit is being performed. - When our Partners communicate with you, the Council and Commit#ees, their knowledge is based on det~ilcd specifics, not information which has been filtered through several layers of review. - We have a long term track record of client re#ention beyond our client's original contract terms because of the quality of our service. Please pay special attention to the client start dates on page 7. - Our audit staff average more than $0 hours of training in municipal auditing and accounting and 1,SOU hours of municipal audit experience each year. This means you do not train our staffl - With our qualified information security stair we have developed and employ a number of technologies to streamline our audit process, ensure open channels of communication and data transfer while securing the confidentiality of client data. These technologies include LANs, a VPN, "Leapfile" data file transfers, "Quarantine" email protection software, paperless audit workpapers, and a major upgrade of our "direct downloads" technique eliminating manual fmancial statement inputs and maximizing easy to use financial rollup reports. - Up to half our total audit time is spent at interim each year, ensuring a smooth year-end audit. Our interim audit includes much of the work other firms postpone to year-end; we even begin the preparation of the financial statements. - We have never been sued over deficient work, although we are proud to say we were sued far doing our work too well! See liirm Qualifications and Experience -Litigation for details. - Our references -indeed, any of our clients, will confirm we are your best choice. As with all our audits, we are committed to providing timely, quality audit services to the City of Dublin. We have no doubt that we are the firm best qualified to perform the services described in the request for proposal. After you have analyzed our proposal and -most important -talked with our references, we are quite confident you will agree. The proposal is a fum and irrevocable offer for a period of sixty days from the date of this proposal. Katherine Yuen, Vice President and Amy Meyer, Vice President are authorized to represent, sign for and contractually obligate Maze & Associates, a ProfessianaI Corporation, located at 3478 Buskirk Avenue, Suite 215, Pleasant Hill, CA, 94523, (925} 930-0902. We lank forward to the opportunity to work with the City! Yours very truly, .lobo Rodriguez JR:It LICENSE TO PRACTICE IN CALIFORNIA Maze & Associates are properly licensed California Certified Public Accountants. We are members of the Governament Finance Officers Association (GFOA) and the California Society of Municipal Finance Officers (CSMFO) as well as the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants. All assigned key professional staff are properly licensed to practice in California. Those staff' that are certified public accountants have current California CPA licenses in the attest function, and have received more than twice the required level of continuing education, including the credits specifically required in the area of governmental audits. Neither our firm nor any of our employees have a record of substandard or unsatisfactory performance, nor have any claims ever been filed with any State Board of Accountancy against our firm or any of our employees. INDEPENDENCE As independent auditors, our rnost valuable asset is our independence. Unlike many firms, we have never allowed our independent audit function to be used to promote consulting or other work. In fact, consulting and related work have never amounted to more than a few percent of our total revenues, while our independent audit work has amounted to aver eighty percent of our revenues. Our firm and all our partners and employees are independent of the City of Dublin and its component units as that term is defined by the General Accountability Office's Standards for Audits of Governmental Organizations, Programs, Activities and Functions, the American Institute of Certified Public Accountants, the California Society of Certified Public Accountants and the California State Board of Accountancy. We have no present or past professional relationships with the City or any of its Council members or employees that would compromise our independence. We will discuss in advance with the City any professional relationships being contemplated during the period of engagement that may present a potential conflict of interest. If the City and we believe any such relationship presents a conflict of Interest, we will not enter into it. BUSINIt'..SS LICENSE REQUIRED AT THE 1~VIE OF CONTRACT AWARD We will possess a City of Dublin business license upon being named the City's new auditors. INSURANCE Maze & Associates maintains professional, general liability, worker's compensation and automobile insurance at limits which minunally will meet those required by the City of Dublin, All insurance will remain in effect through our entire term as the City of Dublin's auditors'. FIRM QUALIFICATIONS AND EXPERIENCE Overview We are a professional services corporation located in Pleasant Hill, California. We presently have a total of forly- six people, including nine shareholders, two Directors, ten Supervisors, seven Senior Associates, twelve Associates and six Office staff. Thirteen of our professional staff are California Certified Public Accountants and two additional staff are in the process of completing their applications far licensure. All of our professional staff comprise our governmental audit staff, as our ftrrri's emphasis is on governmental. auditing and accounting. Several of our professional staff have national accounting firm experience, which we have blended with the more personal approach of a smaller firm. Mast of our clients are cities ar other municipal entities and we do this work twelve months of the year. We limit our practice in other areas and focus on being the best municipal audit fu-m in Northern California. Our clients include several districts similar to the City of Dublin iaa size. Our audit strategy is tailored to municipalities and is quite different from the traditional approach adapted from commercial clients by general practice acraauiting firms. We have focused on municipalities since our inception in 1986. We are active in GFOA, CSMFO and CMTA, and our Parfiers have been speakers at many GFOA, CSMFO and CMTA functions. We are in business to help our clients succeed. We help you use the ever-growing tangle of accounting rules properly, but to your hest advantage, by helping you keep out of trouble and helping you do the right thing. We stay in touch throughout the year to keep you abreast of municipal accounting developments and to help you avoid problems, instead of coming in afterwards to assess the damage, We rotate our audit emphasis based on our planning meetings with you so areas that concern you can be addressed as a normal part of the audit at na extra cost. Er~uality and Diversity Our philosophy is to expect our staff to conduct themselves as intelligent professionals and encourage them to use their best judgment and good sense to treat others as they would themselves be treated. Our basic policy is that others must, at the very least, be treated as equals, with full fairness and without thought of gaining an advantage of any kind or far any reason. This policy applies regardless of sex, job description, or any other factor. Our Human Resource ParMer, Jahn Rodriguez, implements and oversees that philosophy. And our corporate ownership and staff composition reflects dais philosophy. Out of nine shareholders, ftve are women and/or minorities. Out of our eleven supervisors, 90°/a are women and/or minorities. For our staff as a whole, 68% are minorities and/or women. National Recognition We first achieved national recognition among accountants when we identified problems with municipal investments in April of 1994, months before the same problem drove Orange County into bankrup#cy. While others dithered, we prepared our clients for the inevitable questions by alerting them immediately to the problem, working with GASB to address the accounting issues involved, and increasing our clients' financial statement disclosures so that the questions which came later were already answered in the financial statements. We were pleasantly surprised to see that a key disclosure element of GASB 40 is investment maturity data. Same of our client's have included maturity data in their CAFRs since 1994, when we recommended it as a way of reporting liquidity to financial sta#ement users. In early 1999, when most accounting firms were saying #hat Y2K uncer#ainties would affec# their audit opinions, we took a different stance. We said full disclosure of the steps taken to prepare for Y2K was sufficient far us to issue an unqualified opinion. By dais time our national reputation was such that GASl3 used our refusal to follow the majority as leverage in negotiating a compromise on the Y2K Issue with the American Institute of CPAs. 4 FIRM QUALIFICATIONS AND EXPERIENCE {Continued) In the years before the issuance of GASB 34, we developed afull-blown alternative to GASB's heavily criticized Dual Perspective proposal. Our alternative received favorable written comment from aver one hundred and twenty-five cities and prompted many of the major changes made by GASB before they issued GASB 34. We received national recognition for this effort and one of our Partners was named to the GASB 34 Lnplementation Guide Task Force. We have stayed active throughout the years in alerting our clients to potential issues by recognizing important trends and advising our clients of their impacts well before they become effective. We noted years before GASB 45 became effective that advance funding other past employment benefits had sig~alficant long term savings potentials and since 2007, we have emphasized to our clients the need to pay careful attention to the shift in the municipal debt markets from one based on insurance to one based an credit worthiness. Onr work quality and financial statement clarity have earned us a solid national reputation with underwriters, bond counsel, financial advisors and others i~~volved with debt issuances. Our clients have been involved with a broad variety of debt issues and refundings over the years, and the quality of our work has never been an issue. Underwriters have praised our financial statements for being very clear and easy to understand. Reputation We believe quality and an emphasis on doing our job right is far more important than being cheaper than our competitors. Despite the economic pressures faced by municipalities and the need to save money, there are other, more serious concerns to be weighed. Those being perceived or actual audit failures in the municipal audit sector. The City of Bell news, especially the State Controller's Office Report on that City's audit firm is raising serious questions about municipal audit quality. Whether this is justified or not isn't really the issue. What is at issue is the perception of poor quality in municipal audits. We have received a number of inquiries and requests for proposal from that firm's clients who desire a change in auditors. A former client of ours, which rotated to them several years ago, called us and asked if we would propose on the City's work. That Council simply does rat want to expend the energy to defend whether that fnm is providing quality work. We have also received calls from other municipalities with a different audit firm that has not yet released their audit reports for fisca12009-1fl. The reason -the audit firm merged and re-merged in ftsca12009-10 and the new firm has placed a "quality control review" on municipal audits. The end result is that CAFR extensions were needed for 2009-10 and may expire without a GFOA award. These trends indicate that it would unwise to reduce audit effort for any municipal audit. Our commitment to quality and preserving our firm's reputation remains our top priority and serves our clients best. Clients tend to remain with us though tlxeir difficulties. Consider for a moment high risk audit environments, which are Chase entities undergoing fnancial stress, bankruptcy ar fraud. For example, these clients are still clients today: Vallejo - BankruptcylFfinancial Stress (Ongoing) . Richmond - Financial Stress {FYs 2002-OS} ~. Millbrae -- Financial Stress (FYs 2002-fly} We think there are two other clients worthy of comment. ...~._........_...._.. ...~__..~.. _. ~...r.......~-.~..-,.~..~, IkITtM f~ilA.T.a~ti(;,Tinl'~.~1''+~7~ l?:i'1:1211 1~('C; (~rrrrtirrrrerl) I:ar r;ar°ly ~Q!Q', tkre pity of l_.as T3arras rlsc;avererl fraard ar°i~irrally cstirrrated at a0t1,QQQ. This vas flee second erase of cash ~°eceihts frauri ~~ that City tivitHrira flee last fave years. TMre ~a~s Barra ~arancil iarstrarcted staff` to a°e~lace flee i,lrerr audit 1•Ararr ~vitlr a "r:reclilrle au~rlitar" - they hired rrs, After drat t=:ity's far°errsc auarrlitcrr corn~leterl their iarvestiatian, the actual fraud vas revised to ;~1,7 naillian. 4aar rlrrclts revealed rrarrrrerous rrraterial rvealcrresses irr cas9a receipts seed l~illin~ carrtrais, It is clear to tas drat Iire ~rveakrresses Iraq. lreerr larescmt far rrrrrrry year°s aarrl tlraf flee ~veakrresses were al7viaaas, `l"lest City era larr~er° lrel'eves ~ clrezrla audit bras value. I_,astly, eve rrserl to audit flee City of Pacific Caa•ave, ter arra° first audit irr fiscal 20fl3-Q4, eve deterrrrined that. their° Geareral 'urrd cash halarrces were rest sufticierrt seed inclarded our carrrrrrerrks ~in the year errcl atranaer~errt letter. C)arr° firrrr rrrade the local paper. The ariiclc vas titled: "Auditar° `i~'arrrs P. ~. Ccrtarrcil9" We are rraa~el'y In the rrr.rvs, ba.~t ~l°ren eve n~•c, it is far r1©irr araa° drab. ~rrr ~~~ricfprrl l~vca~s ~iJe brave farcuseel rare arrraralcltralities slarc~ ,Harr Srrcelrtimrr laa 19ta. e ar-e active irr aard'~ oaar° Partarers have kaeerr slrcakcr° al +I~PC)~, Gl~+ll;a, C"'iMTl4, areal the ~:al~Pt~ Educrrtarr F'auudatiarr. t)ur pr€uctice crar~ently iarclrades~ thirty-rrlare ci~r ulieaa s seed fart'~y-sere c~i~ty and sl~recial distr~~ict. CthT~d~ awrar~d tivirurers~ ruore city clients seed rr~arc arvarcl tivirrrrcrs tlr<arr any atlrcr 1'+lartlacrnr Califarrria accarrarting fnr°rrr car lnter°rratanal ~rrrr lrracrclr affia:e,lvery rare of tlae rilarave ~Aplts, r,vorr ar~rards frmonr t=i1?bA arrd!`ar ~~Cwl:"C?. Ida sere..' a 3t? a zrr r G'r7 - lOrr . ~a -'~ 8aa ~ ?d. fa17 5Q ~~.. :~~.. ~~_ ra- a {~ I ~~ ~ ~~ ~ ~ ,1,~ ~ ~ ~ i ~ l ~ ~~ ~ ~ ~ °~ ~~ ~ i ~ i ~ ~ F ~ ~~ E ~l rl, ~~~,~ ~ ~ ~ ,~,;~ t ,. , ., _ ~ , r __, _ r t ~~s a,~;~~ ~t ~ ~ ~aaa ~~raz zcra~ zaoa zoars ~ara~ ~aa~a ~oorr znas zoao 6 I~~"I~1'~I ~1i1ALITI~t~,`CI4I~I .AT' Ei'EI" +1°dCI±: (+~"~n,tia~~ai~~~l) C'ef~l (;lac=~rl!f~~ ry~i1~ tata'l' ia~~:ca~w~ suaalta'1~ua~iz,~s atNa` lraost ~'~ccarf ~;x~~rieracc vwitia ~~ac9~ts oaf cities. ~1~ ~a~~ L°~as~7lar~silalc tcrr gall ~al~~s~s e,~` tl>e tv~an°1~ ~ri?I tlfese clicaats„ III aT this r~Naric yep~•esc~~ts a°ec~a~°ri~~ sauluuul ~auiclit s~~1~i >I~el~tcal ~va-°is, nll tl>lis wva~~ic ~ara~i tla~;<~I ia~°+~~cn~te~l i~ tiroe taaiylc rwz~s c~mrta~ictc~l a~~ car^ i~,~t"t-~°~ t6c 91ie1altiline ft•~a>a1f tic ~r°st y+i:~~~ Iistc~l t"aa~ ct~c~a clrcr~t, ~~TI"f111 tT- 1~~1V B'4` 1r1 1i ~' a30T 111,t1ard d69~K1I 1°1Y1"111 C111g,; ' Cid Si1r1 ~ ` .-- A ~. _.T_,- ~ 1 rliY , . - - '~'Iach ,.._ CWI,t Mme ~ 8°1,1o1s C"all"11. ~., ... ~.. ~ " Cr'tl15Cd}I'l~ 19'7 ^/"" ro!`e tl ~ 'N~ +1~ '~ F{a~yVw~rt1 7fb'11 /° ^~" J" J" v'~ / I 4~chmmn~ 71iR;ds w^' ~~" yr ,/ +~' [tos~w~ilfe 117".~~: w"~ ~' v° ~ /` Suranyvwlc 1~1~~d);3 ~ w' v' v'' *'` r-~ ~~r~ ~ , ., r . . ~,r~l~~i.:_.rlCsearycarr 1i,i', / / fi3~ru"cia 'i' ~ 1 ,~ / ,i'' 13eisb~nc 7t91 B v"" J" caavls 1!707"P / ~/ v'` E,e~s~CP~lo~llrr 7(Y{I"7 w'~ v`~ v~ / 1"sl Gerxalc~ 1V7C1'~ ~~' ~/ v` v~' tl^~ / F"nirfia~u ~9alY) Gnll 7(P~I~~'7 w~ ~/' /~ Lai1.,3iWr 19kI w'" „r L'ui9irulp 70111 d"' / Cwiarrdarcz 29iMll /' / / ~9ulgb~rWC 1z~"b'rt ,f 1d' ~/ v~ ~ Cvlul~aUaw 1'J"1F+ w/ wf" r/ rI~ ~` Wit. Vi~cvr 717171 x/" b/ ,t"' /" ~Inpa 7111111 ~~' ~"" / / r/ ~a~kley 7Ctr,i91 ~r'" v'" / v"" ~elnCunrr.~ 2,Cal B v'' +/ ^v~ PY~'x9lmlcxld 7CV177 /" d"Y f. 1'kASbur~; 71111 ~" +,I" v'` N` /" orku9u VaNlcy 797f1+ 12saraefiaCrrr~lcrw.~ 71}{0.) / v"" v'" r%' 8rk 4v-f4C1.~CM5 7.l)1P.~i u~ k'~ S~r^~ L~andep 7411 1 •/" J' / yr rI' T1U14*rl,l~c%1 791117 ~~. Y~ 'S.•IUSUIII{1 d1Vt1C+ 4~ " ~+ y, ~vU11{I71,.i1.1r.C°i ~l «A~IUd'r .?..9791. / 'V 't~ / M / K . Sin 1^rnncis¢°+~ 71;~14~ ~""" ^/' v'"` /' ^J' aferFurd 71Tta-1 w'` w~` / / N,Sacranlerllo 7lflr3 ~ r~° w!" / Vclsx9si~~ BJ').7 *~ i~ F'~I~1adl ~~1t1.I.:~~T~,~"~'I~li~1 ~l'wTTI ~:T'^~~1'~C'E (C'aaatiaalla~ltj As Yara can see fraaa~ the elierrt list aaa t1re l~ceuiaars laaale; True true a uuirar~ira~ caaa~binatiora ila<at hq-us reulteci iaa sh°a~l q~l'~iea~k loyralty sauatl ~~eteultlara. Several elieaLts uvl~o left laarve a•etaaraae~' ar~er seiaa; tlac diffcrcaace betlueeaa agar lzra~a aaatal cur carnctitaa~s. Q3~tlxrs~"g ~aw+o~ r°erarsrincaC caar~~r c.lic-~ats r~fter° coaG~a~~ctirr ~ t"aall-l~lawrr far^tr~p~~ra<l prssr r7tir~st rece~n~t8~ 13reaarivaa~9, BelrtaaaMt ~gaatl Saa~atla ~n4~e'I'altae. Cr°a'rtrd rrrrct ~ar~a~rliaarace.~r,arlil.Gt;~~r°a~e~rr~ +LJrar ~ea~tiaaeaat l'~ara~"frd~rts~aartratiara Siaa~le ~,ra~lit pct exlaer•ieraee is ~i°r~lalred t~ela~,r: ~'r6eaal ~ .:n~~ r~_,_ ~, ~I,~ ~ ~,~q~~„- uK~rrii5c ~ ~~,: I.i ,.,. ~ n! [ ~.~.,~ ~: ~ ~ lii;illli ~s,~; ~,;~,, !Aale~ai art i ! allerucnrq Cz~ny~rn ~~~~ ~13A[} r~ a-~ qr~a ul, fa~lrrrnout u,a ~'~ ~crL7c~ard ~~ u~a Ma ta~,gy ~:iay uqa ma a°;re r-a I~~ ~~a., [3a~w~ era ra u,,q~ ~EaPwfl)~7 &:~ tll%U ~c~a I~~l'o fa14c~ ttv~ u~~ u ~ p„u ~)."~,~'~.~1T9rll. ~%Y... as ~[~ jt C^oar~ Barak wra ~a o G,al't tl%I L,ivcrlttrar; UI~ a~ P~~ ra' q`;E ~vlangcc.a glrA !V~ U~~ Ar(;irtirq~~ ~%itl Lea ~ I`Ail~iq:r~ yid as a%a 'i "CatllrCalrr'Viewv r~ ~'~ ~ Ire ~a~i1 qJ~R Nth a';;V Pali d~atrr ~~ a%~ q,p Ir u ata~~~_I~aCt~rcl~rva aiq t~P~ImlarbN VI~U MI1~ ~ icu ~ G~C~~~:;~~i1~G UIg4a H!!q r+,R ~ Yr2 Si1ETf1 N%~~ Sn:,l a'a~bls~ ~~ ~Saal4Rna`aca ~i~ ata ~Ft'VE'P~ u Sa. I,art~e'r"alage atr~ ~~a a'a ~a I~itr.Sarr a'~`~arrcVscv ~~ a~A &~ ~~ i„ ~LI1SLIf1, ~Ir~' a%~ ~. ~IIiCiEl~!'MklaC a'"%7 aYlr'..., ail as I%a V-~ ii Y0.llrrjo ~~k aifi g!p aaerfard ' wiV ~'r~ y ~~ YT ~+Sa, x`~"aCEa17Y~01a~ q~ ~~ q~d Iv14 ...__~.._.~.w.~.._._.we._ ~~~,4~ ~ ~ ___w__ .___._...___.__..._._,~~ */~~L~..r~~.~ ~~~~.~~~ ~~1 ~ ~ ~ ~~ ~..pF11,1.~'I,T,iI'IPf~~ ~lll' ~~c{~in~:nt. ~i17~;1~ ~r~lc~it 1~k~t c,llti Tlzul;}~~o~ Ua~'~.i~ll ~~.rar~i.~~~~~ael"i~;lt~c~ i~ r~~y~~,~l~ctl fx~lknv .. __ ~Ill'111 _ 1 ~.~" '. ~~ _ 71-I lit t`!I It 1 1 .714 Ilf)1 Ili 1'larulirt~%i2 ('(tlkJil'll i'(III IL _ Ilnntiii .."; QS111 ('.r ,ttt'~rl •~ .oF Ili. ~ %~ ! ~)1 yt`I r-~ _ i ~'. ~.. 11 Ir. >7iit>I7 Ili "di'1 I ~~... 'i ~: .17{ ~~~h~ ~ ~' °rb' ~f~.la3t-f 1G:tlo'1 ~flllq,~"'~a17 ^~` ~~ s~a~l7~'~'~:CD11 T~Cit17C}~CYC '~ ' .,.,a ~^b F~IG~11L'4'JOO~ ~" C~anerereB '~ °'^ '` DsaV'y Ciky ~ ~ '~,: '~' ~, 17avis '0 ^~ >v~~~ ['allo A lCo >t c~1-~i~la ~~e ~~lr ~ Il,arks}aur '~' Il.3vclatlraru '~ 1"~ li.t1~,V"CA J`J "~u Il.cls Helios ",~~' ' C,RJ'~artillea ,~~ ,F~ Mtlpit~us ~ '~ Meac9esio ~~~ "~J^ "~ [Vlcawrlrtaaill Vle+,v ~'" Cd~u~acl ~ ~2^ fl.rk ley " l~all,ca Jq,lto w I"orlcrCn Vru~lcy ~' 1~.fl17C114T ~..`{11'ilQti+fl ~ '~ l~caw~:vill Sala Carr-los ~ ?*" S,hi'~!ITI~eA.7~S ~ SCvS`CTA '~" '~ ',"wH'3"l`A '~" ~SIIIH jykll?iQ ~~ ."~'EIAl l~Ed~Y,l~l '~' '~` So9zalxo `L'rxllas rl,uttLOr'iCy ~' ~'' Scut@a L~rke'1"nhac ^~` "~ SC1LIth Srbca I'r~n.ncisco '~' Su'isunx C~ud'y' Stunrwyunp~: '~ Vc+iVejca ~' ?„ 'I W"U'utcrftrorrA ~" " !1~fesl Gu'~crnuaeutica '~' '~ ~" kTV'~alaal~ic~e ~~~ ^"~ mm,.~,..,~w_ .... ~ . ° _,~ _,_ .~~ m~ ~+"iltC'~ QI-,~-I~l~+IC",ATI(~I~i A1'~I) CI~~IiI~i"~~~ (~`ao~tir~~ae~l} ~:r~r~se ,`rttc~w,~rl.~~~ (I~rer«ni"l,~r'~s c lave ~ v~ir~ety aE~zYtn^rc~ll cl~t~ts o~l~tft}~ city ~~aer~tcc~ ~~ir~~N seta~i-tite ~r~tes-pt°i~~s) ~„whpcN~ a~~.r~it~ lrrr ~~rt~cr~i~is~~„ t~aiay cif t~iein rrls~n 0a~i~tici~~tc ~u~ ctr° ~a~er~ite cast sl~r~i°it ~rr~ii~ei~~ei~t~ s~acl~ .as se~ar•~te JP~1s, cast s1~r~rirl~ c~ntr~cts, ar° t~~c-cr-q^~~y +cat~trticts a~ssc~c~teal With. sc~p~l~isC~ia~hc€t,~a~itii9y fiitao~c+~cl ~rojc'ct~s, viii" ex~jea°icr~cc irtclticf'es tl7c fc~llcr~wiii l~i°ge erat~t°t~a°se a~t;i~iitict~s: _._.____. __ .. ~._ ._.~.W ~. i _ ~ , 1ttlV~i~,' ' 1t,':el[f' ~ i C o f Y ~1 r1'-llt ~ ~' tfil I{1 t)I 111 ~:li I' ~4i1 AI 111~~ AizAirltvti:7 **a* .Aitart«e~I:Y ~''dWCr rrrt~i '1 c:1ecdttt « PAI3.AG « f~eirwtdYAt *w ":> i~erilCiLA « GseiAiv~rer~ C;dtrrot 4'~laxdci° Ltistrir:C «_ ~anstscie Cr7tYnTyT'4Tti?'flter ],ai;~tri4wt *+* C:drYC~carci *m> ~'.otrcdr~i 53rAit~ry Sc~««^e 1° servuces, iI.YIC. + ~c~kAirrt ~"dStEt scriici Wtist~ /~tlti7dC'it~ "w« cdntrr~ ~.d5td1 Writer District ~* •* r~izi~ city ~I ~* + f~arvl's .;a I~eitn 7l%r~Uld Sr4lAitutidn Districi «* *:• i':E,y~St ~3€r+~ P»~i'ulAici~ni W~ri~tcr' I7istricC +." iii N7drnctd irri~xu4idA~u T~istrict ~;~~ *• itry~wturc1 •,;* *w* LivcrcrSdrelA,ttyrr~idr Vsnlley Wtlstervtr,ter .~Su,Ehdrity IC " t+rIIzarlxcc~a *+• I " i~?imnrtiYAez +a° ivYi1brrre *:: «w« MBii}~itar5 "«° " °"o" 1'vtdttititaiea'Vicv~« «>• ~' Nnp~n *~• !iwidrtii Gdast CdAilAty Wauter~ T?sNrict *~4 Pindic °' **** PiitstaaYr~, s *~* I it id Vista itdscviiie °~'°' *w . 'I ~filltlM. C:iarAr a *w Sfrriiza ~irireA "V'nliey WnteA° T~istrict tiw• Si~yine: CduAraty Writer District ~. 4dirtnca 1rri~tetidYt 9~istrict ~'blltil ~3>y'~I'',~'tCEi1 ~1Uti1drii..y' + °i* ~"diBtit T'i~FrCCr WAaStC'JW1rtC1° .~f.tltirf)~rlt~j" *" + a* oYYIJ7 ~`£Itl, F`r~rtiCY,sed " ~'dll tlY a~t~Yl .itl«'~.Citl iYro irrtr~atidr~ I7istria«t. a. 4" a Tri-Vriii+ny WYeste+,v~tee'.aGYtitdrity « 4Jnidrr Sutiitue-y DI"strict + "~, VAirieJYa *" Wdddi~nd i ~~ FIRM QUALIFICATI©NS AND EXPERIENCE (Continued} Redevelopment Agency Experience Over 80% of our City clients have Redevelopment Agencies and we have substantial experience auditing these Agencies' fmancial statements and performing tests of their compliance with Guidelines for Compliance Audits of California Redevelopment Agencies. Our Redevelopment Agency clients range from start up Agencies with no adapted plan or project areas to mature multiple project area Agencies with complex development agreements and significant amounts of debt. We have begun conversations with one of our clients about wind down issues as the Agency begins suspending operations. Our fmancial statement disclosure of Redevelopment Agency activities can go well beyond the minimums required by Generally Accepted Accounting Principles, We understand the importance and political impact of Redevelopment Agency activities and our disclosures are designed to enable the reader to understand the economics and benefits of the entire project or transaction, not just the amount of the Agency's contribution. Retirement Plan Experience We have experience on a dozen different retirement plans ranging in complexity from deferned compensation plans to complex sole employer defined benefit plans. We are familiar with the retirement plan complex cash and investment portfolios and how they differ from the typical municipal treasury function, benefit payment calculations and actuarial study analyses, Our largest retirement plan experience as measured by total assets are: - East Bay Municipal Utility District Retirement Plan - $1 Billion - Contra Costa Water District Retirement Plan - $110 million - City of Concord Retirement Plan - $4S million Some of our clients have requested we perform extra services for their retirement operations. For example, we performed a complete recalculation of all retiree benefit payments from retirement date through 2009 to address concerns one client had about the administrator's accuracy. On several occasions we have performed an analysis of proposed actuary studies to determine acceptability and adequacy of ass<~mptions based on accounting standards. We are currently engaged in our second contract with another fix-n as consultants for the largest retirement system in the state. Our part of the engagement is directed towards governmental retirement plan accounting and financial reporting and the interpretation of those requirements. Our work has encompassed technical research on a variety of issues including an analysis of the Governmental Accounting Standards Board's exposure draft oa Pensions. We supplemented our research of the exposure draft with our First hand knowledge gained while participating in the Governmental Accounting Standards Board's round table discussion held in San Francisco prior to the release of the exposure draft. Our latest project concerns the appropriate treatment for Term Asset Backed Securities Loan Program (TALE) transactions. Transportation Experience We have experience on both an international airport, (e.g.} San Francisco and on regional client airports including Hayward, Livermore, South Lake Tahoe, Modesto, and Visalia. Our experience includes important segments such as, concessionaires and lessees, hangar rentals and construction, Federal Transit Assistance programs, fuel farms and assisting in the evaluation and ranking of Airport Operator proposals. Our Transportation experience includes audits of airports, fixed-route transit; paratransit and ferry transit operations funded by State Transit Assistance, Federal Transit Assistance, County voter approved transportation grants and Transportation Development Act grants received under Articles 3.0, 4.0, 4.S and 8.0. We have also audited Article 3.0 projects such as bike paths, wheelchair ramps and trails and Proposition 1B projects. 11 FIRM QUALIFICATIONS AND EXPERIENCE (Continued) Long Term Debt Experience Because of our depth of experience with municipalities we have experience with virtually every debt type and structure. We have experience auditing revenue bands, certificates of participation, special assessment bonds, Marks-Roos bond pools, capital appreciation bonds, variable rate demand bonds, auction rate bonds, bond anticipation notes and bands/swap agreements with synthetic fixed interest rates. Our experience with swaps by client including the total notional amount follows: • Contra Costa Transportation Authority - $300 million {Forward Swap commitment) City ofRichmond - $199 million, including a counter swap ^ City ofPittsburg - $156 million • City ofRaseville - $115 million ^ South Placer Wastewater Authority- $94 million ^ City of Modesto - $62 million City of San Pablo - $36 million Public Financing Authorities and Mello-Roos Experience We have performed audits of Public Facilities Financing Authorities and Me11o-Roos districts and designed financial statements that went beyond required disclosures to include Fnception-to-Date information about capital projects. These disclosures can allow the reader to see and understand the entire scope and cost of capita.! projects, even though they may not remain on the Authority's books after completion. We are familiar with public financing authorities and the accounting and auditing problems that can arise with their use. We have many clients that use financing authorities in issuing debt. We have considerable experience with the "blending" of financing authority funds with other City funds. Assistive Resor~rees Our client support is unmatched by any other fnYn. As a San Francisco Bay Area municipal audit niche firm with six audit partzzers, we are positioned perfectly to provide staff, Council with a wide variety of resources. Support ranges from lum key fmancial statement drafts with linked footnotes and direct download- based fmancial statements to professional continuing education sessions. We are active th professional organizations affecting local government and have a strong presence in neighboring local governments which keeps our knowledge current that we readily share witlf our clients. And we do not charge extra for the five minute phone calls throughout the year. Client Training and Professional Development We can provide you with varying levels of training and professional development resources, We provide our semi- annual continuing education to our staff and have on occasion opened it up to our clients who wish to keep their licensees current. We have also developed and conducted training specifically for our clients. Training can be general theory in nature, semi~ustomized or fully customized training that fits your operations. Theory intensity can be at the beginning, intermediate and advanced levels. On occasion, we have provided our clients with shorter presentations of new pronouncements and other requirements. At the City of Richmond, far example, we developed and taught monthly training sessions on virtually every major finance area to its staff aver a twelve month period. Much of their staff assumed new functions in the aftermath of serious staffing cuts several years ago and their Furance Director was seeking an economical method of enhancing their knowledge base and skill sets. At the City of Livermore, we provided customized training on capital assets to their finance staff and grants management training to several departments as a means of solving coordination weaknesses. 12 FIItM QUALIFICATIONS AND EXPERIENCE (Continued) Books, Periodicals, News Lepers, and Pro}essional Standards We provide our staff and our clients, if they wish, all of the resources they need to complete their work efficiently and effectively. Our resources include all AICPA Professional Standards, AICPA Audit and Accounting Guides, GASB statements, interpretations, implementation guides and concept statements, FASBs, ARBs, APBs, Generally Accepted Government Audit Standards (The "Yellow Book"}, Single Audit Regulations and website links to OMB Circulars, the SF-Sac Data Collection Form acid instructions, website links far CFDA numbers, the Code of Federal Regulations and publications of the Government Accountability Office. We also have GFOA documents such as CAFR Checklists, the Governmental Accounting, Auditing and Financial Reporting Guide (the `Blue Book"), the GAAFR Review, and ACWA and CRA newsletters. We maintain an up-to-date library of guidelines and other documents we use such as Redevelopment guidelines, cash and inveslnient guidelines, and Transportation Development Act regulations and guidelines, Transportation Measures A, B and C guidelines and regulations, And, we attend conferences by CSMFO, CRA, ACWA, AIPCA and the CaICPA )Education Foundation to keep ourselves current. Support Services We also provide a variety of other services which you may need, including: +:• Temporary Accounting Assistance -When we are not limited by independence regulations, we have provided additional accounting help in areas such as: - Construction in Progress Accounting - Capital Assets - Owner Participation Agreement/Disposition and - General Ledger Journal Entries Development Agreement Accounting - Forecasts and Projections - Debt recording - Grant Management - Account analysis and clean up ':* Preparation of Controller's Reports and annual things - We can prepare any of the following whether you are an audit client or not: - State Controller's Reports for: - Anx-ual Street Reports ^ Cities - Statements of Indebtedness ^ Redevelopment Agencies - Information Returns ^ Special Districts, or ^ Transportation Planning Agencies • Training and Continuing Education -Generic or customized to fit your needs! - Governmental Accounting - Beginning, Intermediate and Advanced Levels - Grant Accounting and Management - Bank Reconciliations - Management and Accounting - Cash and Investments - Accounting for Receivables and Revenues - Accounts Payable and Purchasing - Capital Asset Accounting - Debt Accounting and Management - Information System Security and Microsoft training •+' Operational Segment Audits such as: - Cash collection controls and procedures - Loans receivable management - Police evidence room - Cal-Card and Purchasing Card 13 FII2M QUALIFICATIONS AND EXPERIENCE (Continued) •.• Project Length Audits such as Construction in Progress project audits and faint Powers Authority member equity calculations. •:• LeaselFranchise/TOTIIndependent Operator Agreement Audits including rent recalculations, revenue controls, payrolUindependent contractor compliance and more. • Pre-award Operator/Contractor Analysis and Audits, such as - Preaward audits of Engineering Firms funded by CALTRANS - Independent Analysis of Proposed Airport Operators - Independent Analysis for Prospective Fire Service Providers • Information Systems Support customized to fit your needs: - Information System Reviews and Audits - Network Vulnerability Scans - Security and Access Reviews - Security and Microsoft Certified Training - Microsoft Small Business Specialist - Microsoft Professional Accountants Network Professional Activity We are active members of the Government Finance OfFicers Association and the California Society of Municipal Finance Officers as well as the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants. We are also members of the Association of California Water Agencies (ACWA), and the California Redevelopment Association (CRA}. We are frequent speakers at various organizations; some of our pertinent presentations are listed below: In May 2009, Cory Biggs, our company CEO, was a speaker at the annual Governmental Accounting and Auditing Conference hosted by the Education Foundation of the California Society of Certified Public Accountants, This annual conference is held for CPAs for the purpose of keeping CPAs current on issues affecting Governmental Accounting and Auditing. At the conference, Cory presented "The Auditor's Perspective" on auditing municipalities on the verge of, or in bankruptcy. His presentation followed remarks made by the City of Vallejo Assistant Finance Director and the City's bankruptcy attorney. He has been requested to provide an update at this year's conference. Also in 2009, Cory spoke at the semi-annual conference of the California Municipal Treasurer's Association on "Maintaining a Good Relationship with Your Auditor" in which he discussed techniques for treasury staff to use when working with auditors to achieve a meaningful, thorough audit process. This discussion included a heavy focus on cash and investment processes and procedures, compliance, fmancial reporting and disclosures. In August 2007, Cory presented Trust Fund Alternatives for Funding Retiree Health Care Benefits at a symposium sponsored by ABAG. In August 2006, Cory, made two presentations at a Symposium on the Implementation of GASB #45, sponsored by ABAG. One presentation was a summary of the Statement and its impacts on municipalities and the other presentation explored funding options and ramifications of the Statement. In February 2006, Cary presented "Cost Impacts frara Implementing GASB 45, Accauntin of Financial Re ortin b Em to ers for Post-em 1o ment Benefits Other then Pensions" to the San Mateo Finance Officers Group. He was also a speaker at the 2005 CSMFO Annual Conference, on "How to Stay Out of Trouble" regarding identification of adverse fiscal trends in local governments and appropriate responses. 14 FIRM QUALIFICATIONS AND EXPERIENCE (Continued) We attend CSMFO Northern California chapter meetings on a regular basis, and we have served as speakers on various occasions. We all attend the CSMFO Annual Conference, at which our Partners have been speakers. We have also attended the League of California Cities' annual Financial Management Seminars. We also attend the Semi-Annual Conference of ACWA. Internal Quality Assurance,5ystem Every one of our audit and assurance engagements has an Engagement Partner responsible for the successful completion of file work as well as ensuring we maintain quality levels that satisfy professional standards. Our very high Partner to staff ratio of one to six is double that of traditional firms. We specifically structure our work for on-site Engagement Partner participation while the audit is being conducted. This structure is done by design to ensure we have active on the job oversight of staff and timely completion of the work, We have always subjected our audit and assurance engagements to a second Quality Assurance Review. Historically this was performed by a second partner. However, over the past several years audit quality controls standards have been revised and enhanced. Standards issued by the American Institute of Certified Public Accountants and General Accountability Office now form the guidance in deterruining adequate quality controls for audit firms. While not required by the Standards, we believed it would be better to have an independent second review of the work by someone without engagement responsibilities and to have that person report to the shareholders directly as a group rather than any one shareholder. In response to that, we hired Melita l;aw, a Certified Public Accountant, as our Quality Assurance Director. Melita had been a top performing Supervisor with our firm for over ten years before leaving us to move to Hong Kong in 2008. Because of her many years of municipal auditing and accounting experience, she has been a perfect fit and provides a significant strengthening to our quality control. No Disciplinary Action We have no record of substandard or unsatisfactory performance, nor have any claims ever been filed with any State Board of Accountancy against our fu7n or any of our employees. Federal or State Field Reviews We have not been subject to any Federal or State Field Reviews of our audits during the past three years, with two exceptions. During calendar 2008, the Department of Housing and Urban Development (HUD) selected our fnm for a quality assurance review of our housing authority audits. HUD selected four of the five housing authorities we audited in fcscal year 2006 and performed an extensive, thorough review of our reports, filings, workpapers, audit methodologies, and our quality assurance controls. Their team expended approximately forty hours on each audit to determine whether our fum complied with Generally Accepted Auditing Standards as well as Generally Accepted Government Auditing Standards. After HUD's extensive review, they identified only four findings. We carefully reviewed their findings, implemented a few minor changes and communicated these changes to HUD where upon they concluded that no further action was warranted. The State of California selected our largest financing authority audit for a field review covering three fiscal years. The State review team consisted of three individuals and their review lasted less than one week. The State had no findings. 15 F1TtM QUALIFICATIONS AND EXPERIENCE (Continued) Litigation We have not been sued over poor work quality, nor have we paid any such claims out of court in the past five years. But we are proud to say we have been suedl This was an action by a third-party contractor who filed suit to prevent us from issuing a report critical of their operation and their method of determining the amount of revenue they should share with our client. This action was not settled out of court; but went to judgment. In that case the Superior Court of the State of California held in our favor and dismissed us from the proceedings without prejudice. In other wards, the Court decided that our report should be issued without any change. In the words of our insurance representative, "You are the only accounting firm we lmow of that has been sued for doing their work RIGHT!" External Quality Control Review We are members of the Quality Review Program of the AICFA, which means we subject ourselves to a peer review of our workpapers and quality control systems every three years by indepcndent accountants specializing in such work. Our most recent peer review was completed in 20{}8; we again received an ungualifed opinion, the highest level of assurance passible. This peer review included a review of four governmental and non-profit audit engagements. A copy of our most recent peer review opinion is located at the end of this section, 16 ~G~-~ - - ~i A ~ CJ ~ C~RTIFIL~I] PUBLIC ACCOUNTANTS 16380 Monterey Rd., Suite 170 4114© Moorpark Ave., Suite 230 Morgan resit, GA 95037 San Jase_, Ca 951 i 7 Tel: (408) 779-3313 Tel: (4U8) 557-9890 Fax: (408) 776-1555 Fax; (448) 557-9893 October 7, 2008 To the Shazeholders Maze & Associates Accountancy Carparation Pleasant•Hill, California We have reviewed the system of quality control for the accounting and auditing practice of Maze & Associates Accountancy Corporation (the fum) is effect for the year ended May 31, 2008. A system of quality control encompasses the firrm's organizational structure, the policies adapted and procedures established to provide it with reasonable assurance of conforning with professional standards. The elements of quality control arc descnbed in the Statements on Quality Control Standards issued by the American Institute of Certified Public Accountants (AICPAj. The fum is responsible for designing a system of quality control and complying with it t4 provide the frml reasonable assurance of conforming with professional standards in all material respects. Our responsibility is to express an opinion on the design of the system of quality control and the firm's camxpliamce with its system of quality control based on our review. Our review was conducted in accordance with standards established by the Peer Review Board of the AICPA. Ihuing our review, we read required repxesentations from the ~ interviewed firm personnel and obtauted an understanding of the nature of the Turn's accounting and auditing practice, and the design of the firm's system of quality control sufficient to assess the risks implicit in its practice. Rased on our assessments, we selected engagements and administrative files to test foz conformity with professional standards and compliance with the firm's system of quality control The engagarnents selected represented a reasonable crass-section of the fuin,'s accounting and auditing practice with emphasis on higher-risk engagements. The engagements selected included, among others, engagements performed under Government Auditing Standards. Prior to camcluding the review, we reassessed the adequacy of the scope of rho peer review procedures and met with firm management to discuss the results of our review. We believe the procedures we performed provide a reasonable basis far our opinion. In perfarning aus review, we obtained am understanding of the system of quality control for the firm's accounting and auditing practice. In addition, we tested compliance with the firm's quality contras policies and procedures to the extent we considered appropriate. These tests covered the application of the firm's policies and procedures on selected engagements. Our review was based on selected tests therefore it would not necessarily detect all wealmesses in the system of quality control or all instances of noncompliance with it. There are inherent lirmitations in the effectiveness of any system of quality control and therefore noncompliance with the system of quality control may occur and not be detected. Projection of any evaluation of a system of quality control to future periods is subject to the risk that the system of quality control may become inadequate because of changes in conditions, or because the degree of compliance with the policies or procedures may deteriorate. lri our opinion, the system of quality corttroi for We accounting and auditing practice of Maze & Associates Accotmtancy Corporation in effect for the year ended May 31, 2008, has been designed to meet the requirements of the quality control staridaxds for an accounting and auditing practice established by the AICPA and was complied with during the year then ended to provide file farm with xeasanable assurance of conforming with professional standards. As is customary in a system review, we have issued a letter under this date that sets forth comments that were not considered io be of sufficient sigmiiicanoe to affect the opinion expressed in this report. Nichols, Rick & Company w~vsv,nlchofsrlck. com 17 PARTNER, SUPERVISORY AND STAFF QUALIF)1CATILONS AND EXPERIENCE Audit Team We are proposing to assign Katherine Yuen as Engagement Partner, Amy Meyer as Alternate Partner and Grace Zhang as Supervisor to your audit. We will also have Donald Hester, our Information Technology Director, perform a review of your information system as it relates to our work and our Quality Assurance Director. Melita Law will perform a Quality Assurance Review of all our reports and workpapers. We understand that engagement partners, managers, directors and other supervisory staff may he changed only with the express written permission of the City. We will balance out our resources with our Senior Assaciates and Associates to form fully leveraged teams. All of our audit staff are experienced with Comprehensive Annual Financial Reports, Redevelopment Agencies and related compliance, large enterprise operations, retirement plans, Single Audits, capital assets and infrastructure, long term debt, including swaps and related compliance and continuing disclosures, and all other aspects of municipal accounting and financial reporting. Brief resumes of our prapased team members follow: IGfTHEluNE YUEN, Engagement Partner Katherine joined the fum in 1996 upon receiving her Bachelor of Science degree in Business Administration from the University of California, at Berkeley. She is a Certified Public Accountant in the State of California. She is a member of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants. Katherine has received over #hree hundred hours of continuing education in the past three years as an instructor in-house and participant. Her relevant audit experience includes: City of Alameda Alameda Mayors' Conference Alameda Power and Telecom Alameda Reuse and Redevelopment Authority Association of Bay Area Governments Town of Atherton Bay Area Air Quality Management District City of Belmont City of Campbell Central Contra Costa County Solid Waste Authority City of Daly City City of Davis East Bay Recreation and Park District EI Dorado Irrigation District City of Emeryville Town of Fairfax City of Galt City of Hayward Hindu Culture and Community Center Town of Larkspur Las Trampas, lnc. Livermore Area Recreation and Park District City of Los Altos City of Los Banos Town of Los Gatos City of Manteca City of Martinez City of Millbrae City of Milpitas City of Monterey City of Newark City of Oxnard City of Palo Alto City of Pinole City of Pleasant Hiil City of Roseville City of San Carlos City of San Mateo City of San Rafael City of San Ramon San Ramon Valley Fire Protection Agency Small Cities Organized Risk Effort (SCORE) City of South bake Tahoe South Placer Wastewater Authority City of Tracy City of Walnut Creek City of Waodland Town of Woodside 18 PARTNER, SUPERVISORY AND STAFF QUALIIi'ICATIONS AND EXPERIENCE (Continued) AMY MEYER, Alternate Partner -Amy graduated from the University of the Pacific in 1993 with a B.S. in Accounting and a minor in Information Systems. Amy is a California CPA and is a member of the California Society of CPAs and the American Institute of Certified Public Accountants. Amy has assisted several of our clients with their computer applications and is very comfortable using a variety of systems. She has been involved with a number of accounting and GASB implementation training classes customized to our clients' needs. Amy is also our PC applications expert. She has accumulated three hundred faun hours of continuing education during the last three years as an in-house instructor and participant. She has gained valuable experience on the audits of the following: City of Alameda Alameda Power and Telecom City of Albany City of American Canyon Town of Atherton Association of California Water Agencies Joint Powers Insurance Authority City of Brentwood California Joint Powers Risk Management Authority City of Concord City of Dublin East Bay Regional Park District City of El Cerrito City of Hercules Livermore Area Recreation and Park District City of Livermore Town of Los Gatos City of Manteca City of Martinez City of11+1iIpitas City of Modesto City of Mountain View City of Oakley City of Palo Alto Redwood Empire Municipal Insurance Fund City of Richmond City of Rio Vista City of Rocklin City of Roseville Town of San Ansehno City of San Carlos City of San Pablo City of Santa Clara City of Saratoga South Placer Wastewater Authority City of Tracy City of Waterford West Contra Costa Transportation Advisory Committee City of Woodland GRACE ZHANG, Supervisor -Grace graduated from Assumption University in Bangkok, Thailand, with a BBA in Finance and received her MBA in Finance firm Case Western Reserve University, Ohio, in 2001. She has received over 544 hours of continuing education since joining Maze & Associates in 2005. Grace has been a certified public accountant since 2006, and audit supervisor since 2007 and is a member of the AICPA and California Satiety of CPA's. Grace has participated in the following audits: City of Campbell Contra Costa Water District City of Cupertino City of Daly City City of East Palo Alto City of Hayward City of Livermore Livermore Amador Valley Transportation Authority City of Martinez City of Milpitas City of Mountain View Ciiy of Sunnyvale City of Newark City of Palo Alto City of Piedmont City of Richmond Richmond Housing Authority City of San Carlos City of Sausalito Silicon Valley Animal Control Authority City of South Lake Tahoe City of South San Francisco West Bay Sanitary District Town of Woodside 19 PARTNER, SUPERVlESORY AND STAFF QUALIFICATIONS AND EXPERIENCE (Continued) MELITA LAW, Quality Assrtra>rce Director -Melita graduated from St. Mary's College with a Bachelors of Arts Degree in Business Administration with an emphasis in Accounting and a Minor in Economics. Prior to joining Maze & Associates Melita tutored accounting students. Melita is a Certified Public Accountant and was with our firm for over i0 years as an auditor working exclusively an municipal auditing and accounting where she earned several promotions. Melita was an audit Supervisor for over five years before leaving us to move to Hong Kong in 2008. In 2009, after a one year hiatus, Melita rejoined our firm as our Quality Assurance Director. Because of her many years auditing municipalities, she has been a perfect fit and provides significant strengthening to our Internal Quality Control System. Melita aftends our semi-annual continuing education sessions and is in the process of changing her license to active status. Datong her time as an auditor, Melita participated in the following audits: Alameda Power & Telecom Alameda Reuse and Redevelopment Authority City ofBelmont City ofBenicia City of Campbell City of Concord City of Daly City City of Davis Dublin-San Ramon Services District East Bay Municipal Utility District 1Jast Bay Regional Park District City of Emeryville City of Hayward City of Livermore Town of Los Altos Hills City of Manteca City of Millbrae City of Milpitas City of Monterey City of Mountain View City of Napa City of Palo Alto City of Pleasant Hill RHA Properties Richmond Housing Authority (RHA} City of Roseville Saint Vincent De Paul City of San Carlos City of San Pablo City of Saratoga City of South bake Tahoe City of South San Francisco StanisIaus Waste-to Energy Union Sanitary District City of Vallejo West Contra Costa Transportation Advisory Committee City of Woodland DDNALD E. HESTER, Director-Donald's clients include local municipalities, non-profits, corporations and federal government agencies, specializing in a wide array of compliance programs and security assessments such as PCI, FISMA, COBTT, ITIL and IS027002. He is a guest lecturer and speaker on security tapirs far CMTA, CSMFO, MISAC, CISOA, ISACA and others and he has served on various advisory committees and as a subject matter expert in information technology and security. Donald also teaches IT Audit and Forensics at the University of San Francisco and Microsoft courses for Los Positas College, San Diego City College and for the @One program of the California State Chancellor's office. Donald graduated with honors from the American Military University with a Bachelor's Degree in Security Management with a concentration in Information Security. He has nearly 20 years of experience in the security field. Donald has been with us for ten years now and has received more than 320 hours of continuing education in the past three years and has aver 900 hours of instructional work. His certifications include; CISSP, LISA, CAP, MCT, MCITP, MCTS, MCSE Security, MCSA Security, MCDST, Security+ and CTI'+. Donald is also a Chairman and past Treasurer for the Brentwood Veterans Memorial Building and Commandant and past Treasurer for the Delta Diablo Det. 1155 Marine Corps League. 20 PARTNER, SUPERVISORY AND STAFF QUA1LIl'ICATIONS AND EXPERIENCE (Continued) Staff 7}~aini'ng We believe the Ievel of training we provide is unmatched by any other accounting firm. Our audit staff receives an average of 8U hours of continuing education annually, including an average of aver 4$ Hours of municipal audit and accounting training. These are twice the amount required by professional standards. Our program places heavy emphasis on governmental accou~rting and auditing classes conducted by our own staff, supplemented by courses offered by the Califonria Society of Certified Public Accountants, the American Institute of Certified Public Accountants, the Government Finance OfEcers Association, the California Municipal Finatace Officers Organization and the Association of California Water Agencies. We accomplish this task by reserving a solid week in January yr February and another week in July solely for staff training. Our training is very specific and very participatory; lectures are almost non-existent as people are involved in a continual give-and-take format designed to educate while it helps us improve our services. We deal with specific clients and situations, we solve problems and do ease studies, and we train people for real-life situations through mle-play exercises. Everyone is eyuaI in these exercises and everyone contributes their own experience in the field and the ideas they have formulated from that experience. Suggestions coming ant of staff training sessions are the source of roost of the service improvements and refinements we make each year. A listing of our continuing education courses provided to all our staff, both certified on non-certified, over the past three years is as follows: z oav z o>io zou Area/Course Spring 40 Hrs. Summer 40 Hrs. Spring 40 Hrs. Summer 40 Hrs. Spring 40 Hrs. Munlci al Audit -Practice Anal sis and Review &~ iii ~ (~! ~ Mona in Munici al Audits -Audit Su ervisors ~ ~ Cities in the Mews Quality Control GA~1P:U "dptcs Cash, Debt, and Ca ital Asset Auditin EJpdates 1~ ~ ~ ~ ccounting CASBIFASB U date CASE 34 - Capital Assets and Deferred Revenue ~] aurnat Entry Testing °Com Hance Audits rans ortation Audits -'IAA, STIP and Measures A, B, C RBA Coro Hance ~ ~ Sin le Audit Com Hance Flousin Autitorit Audits and RAC Submissions Prop 1B Testing - _ ~ f .~. z:~f::. Audit Standards U date ~;.. -.:~ ~ ~ New SASS, Risk Assessment and Ito acts on A roach ~ Assessin Internal Control Risks/ Sam !e Sizes doling ourAudit A roach SAS 112/I151Memarandum on Internal Control Workshop Com Rance Anditin SAS 11 'Yellow It ook Update IT/Pa ~rlCSSltlthcr cam Building: Building and Maintainin Effective and Successful Teams CCH Pa erless Audit Software/ Trial Balance F'unttion CT Information Systems Review Updates i~ Professional Liability insurer Loss Prevention Seminar 21 PARTNER, SUPERVISORY AND STAFF QUALIFiCATiONS AND EXPERIENCE (Continued) Qualifications and Continuity Our people accumulate aver ]S00 hours of purely municipal audit and accounting eaperiience annually, far more than in any general service accounting firm. And we keep the same people an the jab, normally for at Ieast three years. We provide our clients continuity while introducing enough new people #o keep our perspective fresh and provide you with the benefits of rotation. We intend to retain all the people assigned to your audit throughout this year's entire engagement. In future years we plan to ro#ate no more than one person an each segment wham we will replace with someone of equal experience. We do everything we can to ensure continuity because it helps you, it helps our staff and it helps us. We schedule the entire year in advance to avoid conflicts, and we give priority to clients who are able to accurately predict the date their books will be closed, sa that the staff on their audit will not be affected if another client's closing or audit is delayed. We attempt to match personalities as well as skills and abilities so that our staff and yours will get along well. SIMILAR ENGAGEMENTS WITH OTHER GOVERNMENT ENTITIES City Client List Please see the listing of all of our city clients on page 7. References City ofAlameda -- A client since 1990 Principal contact -Kevin Kearney, City Auditor (elected) (510) 747-4881 Engagement Partner -Katherine Yuen Total StaffHours -1243 Workscope and reports: Comprehensive Annual Financial Report (GFOA Award winner) Alameda Power and Telecom Community Improvement Commission including Redevelopment Compliance Report Alameda Redevelopment and Reuse Authority Single Audit Report Transportation Development Act including Compliance Report Proposition 1B Compliance Report Alameda County Measure B Compliance Report Police and Fire Pension Pian #1079 Police and Fire Pension Flan #1082 Mastik Senior Conter Memorandum an Internal Controls Agreed 1C7pon Procedures: Gann Limit Agreed Upon Procedures Report Parking citation 22 STMTf,AR ENGAGEMENTS WITH OTHER GOVERNMENT EN'I`I'fiLES (Continued) City of Mountain View - A client since 2001 Engagement Partner -Cory Biggs Principa! contact -Patty ~. Kong, Assistant Finance and Administrative Services Director, (650} 903-6006 Total Staff Hours - 919 Workseape and Reports: Audits: Comprehensive Annual Financial Report Revitalization Authority including Redevelopment Compliance Report Shoreline Regional Park Community Basic Component Unit 1~ inanciaf Statements Single Audit Act Report Transportation Development Act including Compliance Report Memorandum on Internal Controls Agreed Upon Procedures GANN Gatekeeper Program (tests of costs charged to development fees) Golf Course Secret Shopper and Revenue Procures Lessee Revenue and Control Procedures (Michaels) Lessee Revenue and Control Procedures (Silicon Shores} Lessee Revenue and Control Procedures (Livenation) City of Galt - a client since 2009 Engagement Partner -- Katherine Yuen Principal contact~Inez V. Kirin, Finance Director {209} 366-7150 Total Staff Hours - 547 Workscope and reports: Comprehensive Annual Financial Report Memorandum on Internal Control Redevelopment Agency Audit and Compliance Reports Single Audit Act Report Proposition 111 Agreed Upon Procedures Opinion City of EI Cerrito A client since 2005 Engagement Partner -Amy Meyer Principal Contact -Mary Dodge, Finance Director (514} 215-1312 Total StatfHours - 541 Workscope and Reports; Comprehensive Annual Financial Report Redevelopment Agency Report Gann Limit Agreed Upon Procedures Report Financing Authority Report Pension Trust Report Transportation Development Act Audit Single Audit Act Reports Master Installment Sale Agreement Compliance with Bond Covenants for the 2408 Sales Tax Revenue Bonds Memorandum on Internal Control 23 SIl1~III,AR ENGAGEMENTS WITI1 OTHER GOVERNMENT ENTITIES (Continued) San Ramon Valley Fire Protection District - A client from 2000 - 2011 Engagement Partner -Katherine Yuen Principal contact Glorianne Sasser, Finance Supervisor 925-838-6668 Total Staff Hours - 230 Workscope and Reports: Comprehensive Annual Financial Report (Consistent GFOA and CSMFO award wiener} Recommendations for Improvements in Internal Control Proposition 111 Agreed Upon Procedures Opinion SPECIFIC AUDIT APPROACH Specific Audit Approach Our audit strategy is designed specifically for municipalities. We perform half our audit well before year-end so we can identify problems early. Our strategy maximizes our efficiency and lessens the load on our clients. When engaged to prepare the financial statements, we prepare proformas of them for your review, well before year-end and we give you detailed checklists of all the items we will need from you months in advance. We have integrated GASB 34 requirements into our strategy so that there is a seamless transition to the entity-wide statements. We will plan the audit in de#ail and prepare au Audit flan which details the information we will need from you to cctmple#e our in#erim and year-end audits, along with the person responsible for preparing it and the date they will have it ready. We tailor it to refer directly to the schedules you already prepaze. We d© not require special reports or reconciliations just for our audit. We have found that coordinating our #eam and our client's staff works very well because it helps minimize the impact on your staff at year end. This way the Audit Plan includes mos# data we need from you so you and your staff can plan and schedule your work accordingly. Specific Audit Strateg~Inierim Unlike older-style firms, we pcrf©rm most of our important work at interim, well before the end of the fiscal year. We use our interim work to identify and solve problems and plan the year-end closing and audit in detail. Well before we begin our interim work we'll send you a list of the items we need, so you will have time to prepare. We forecast many year-end amounts at interim, so tha# we can limit the amount of work required at year-end and concentrate instead on areas of concern. For example, we normally perform all our cash and investment testing at interim, including sending confnmation letters to depositories and determining financial statement categorizations. Performing these last two steps at interim allows plenty of time to fallow up on confirmations or resolve ques#ions about the proper categorization of an investment without delaying the audit, As another example, we test long-term debt at interim and forecas# year-end balances and transactions for each debt issue. We use remote inquiry as much as possible at in#erim, in order to increase our efliciency and reduce our impact on your staff. We can download Council Minutes and other documents from your Website for review, and have the ability to select transactions for test and analyze accotmts using remote inquiry and read-only features ofyour system. Combining these abilities with our checklists has allowed us to perform larger portions of the audit in our own offices and reduce our questions to writing so tha# you have more time to deal with them. 24 SFECII+'IC AUDIT APPROACH (Continued) Laws, Regulations and Compliance Our audits are designed to ensure that we test transactions for compliance with the Single Audit Act and other applicable laws and regulations, including the California Government Code, provisions of applicable Grant guidelines, California Constitution Gann Limit requirements, requirements of local measures, Transportation Development Act requirements, etc. We identify applicable laws and regulations as part of our audit planning each year. The Califomia Government Coda has many provisions and underlying regulations relating to investments and the investment policy, all of which are tested as part of our audit of cash and investments. That Code and the underlying regulations also farm the basis of our compliance audit tests of Redevelopment Agencies, Child Development Programs, debt and other areas. To the extent possible, we also begin our tests of compliance with laws and regulations at interim, including use of the Guidelines for Compliance Audits of California Redevelopment Agencies, Transportation Development Act regulations, OMB Circular A-133 and the Compliance Supplement and any other applicable compliance guidelines. Even if the work cannot begin until year-end we determine the applicable laws and regulations for our compliance testing so that we may incorporate the necessary information in our year-end closing checklist. Our audit samples for purposes of compliance vary based on the grant or compliance guidelines and are program-specific. The samples are stratified to ensure we test transactions that are representative of the costs charged to grants, Specific Audi! Shaieg~r--Year End At year-end we do not repeat any of the work we performed at interim. Instead, we focus nn the items in your Audit Plan and on the Basic Financial Statements. Our year-end audit Bell-work actually starts in our office, so that when we do arrive in your offtces we are fully prepared and we minimize our impact on your operations. In our aflices, we crass-reference or reconcile your Audit Plan information, reports and schedules. The Engagement Partner performs our detailed Analytical Review and emails oar questlans to you in advance of our arrival in your offices. Our expericnce is that this Analytical Review identifies any issues remaining after our interim work, as well as mast potential audit adjushnents. This gives all of us time to address these items in person while the audit field-work is proceeding, instead of by telephone, fax and a-mail afterward, When we start work in your offices, we will need you to complete your responses to the Analytical Review, but we will not need much of your time and we will not ask for more schedules or reports. Our Engagement Partner will meet with you on the first day of the year-end audit to review the draft financial statements with you and to discuss any remaining unanswered Analytical Review questions. This meeting sets the stage for the year-end audit; by this time the format and content of the financial statements is prefty well set and most audit adjustments have been identified. If we #-md any material adjustments, we will discuss #hem with you immediately and provide you with the journal entries required; we do not propose adjustments that are not material. At the conclusion of our year-end field-work, our Partners and Senior Supervisors will review the final financial statement drafts with you and your staff as part of our exit conference. The fallowing week, our Quality Assurance Duector will perform a "quality assurance review" of the financial statements and workpapers sn that we will be ready to sign the financial statements as soon as the City approves them. We designed this strategy specifically to fit cities and the complications introduced by GASB 34. It requires our Partners to be fully and actively involved in die planning and performance of the work and it allows us to issue final financial statements and reports immediately after we finish our field-work in your offices. You will find our strategy allows you to control the audit process, enables you to spread the work over the year as you wish and greatly reduces the pressure at year end. 25 SFECIF)tC Ai)DIT APPROACH (Continued) Audit IT Syste»ts, Security and Going Green Hand-in-hand with our continuing investment in our people has been our increased investment in systems and hardware support. Eight years ago our systems work was handled by an outside consultant. Today, we have a fiill- time staff of three people who maintain our state-of-the-art systems capabilities and provide i~ucreasing levels of such service #o our clients. Every person on our staff is provided with a Windows XP/VISTA operating system PC networked with other audit team PCs and a printer via our own wireless LAN establish at the start of each audit in our client's office. In 2008, we comple#e!y eliminated hardcopy workpapers by converting to Pro,Systems Jx Lngagemertt paperless audit software published by Commerce Clearing House. We use Word 2003 as our word processor and Excel 2003 for preparation of financial statements and schedules and Outlook 2003 for personal information management. Because of our shift from hardecnpy documentation to softcopy and our obligation under professional standards to maintain confidentiality of client data, we instituted state-of-the-art security protections to ensure client data remains confidential and secure. Far example, many CPAs use email as a method of communicating financial data to and from clients. But emails are not secure communications+. We therefore employ a secure data file transfer system Called "LeapFile" under which we exchange data files with our clients using a secure website. This keeps data Confidential and has the added benefit of permitting downloads of large excel files or Microsoft Office files that may be erroneously rejected by some email scanning software. In the event one of our staff works out of town or telecammutes, they access data via our virtual private network. Our VPN, LANs, and audit software are password protected and encrypted to ensure your data remains confidential and secure. We will also use some type of connection to the Internet during our audit, but coordinate it with our client's IT Staff to ensure there are no breaches insecurity or protocols. Turn-gey Financial Statement Drafts We have moved most of our clients from a manual input of their general ledger data to a fully mechanized computer download of data directly into our Excel-based fnancial statement formats. At the same time, we have added significant numbers of internal data controls to financial statement formats. This strategy has virtually eluninated input errors, increased efficiency, and allowed our clients to spend Iess time reviewing and approving the financial statements. Not only do our templates produce fund-basis financial statements, they produce the entity- wide financial statements and accumulate the data required to calculate Major liunds, produce a complete reconciliation between fiord basis and City-wide formats, and produce ancillary reconciliations and supporting schedules, all for your files. We also employ Excel file linking to use the power of Excel for tables of data included in footnote disclosures. This active linking ensures tables consistently foot, crossfoot and tie to general ledger balances without your staff having to manually re-total and recheck each and every number on each and every draft. This also saves your stafftime. Ar~diting Large and Complex EDP Systems Our approach to auditing EDF systems encompasses information system reviews, system controls and transaction cycle processing, verification and data extraction. 26 SPECLFIC AUDIT APPROACH (Continued) Information System Review Information System Security became an important part of fmancial statement audits and we have performed an Information Systems Review (ISR} with every audit since 2001. Unlike our competitors, we extend our review to not only encompass the fmancial system, •but also the network environment that houses that system.. h'ram our perspective, the internal controls that are present in the overall network environment are critical to understanding the internal controls over the financial system. Unlike financial statements, there are currently no authoritative standards that local governments must employ to ensure that adequate and appropriate IT controls are designed and implemented. We extensively researched this area and concluded it was most appropriate to base our ISR on the certifcatian and accreditation framework developed by the National Institute of Standards and Technology (1VIST} for the Federal Information Security Management Act (FISMA) tivhieh is the minimum security required for federal government agencies information systems. NIST recommends states, local governments and Indian tribes comply with these standards as well. Our reviews include procedures fo determine that your systems are adegnately protected from unauthorized internal access, provide for reasonable measures #o ensure continuation of service, provide for security of data from physical ar network access and have Internet access defenses including hacker prevention, detection and deterrent systems. Our informs#ion systems reviews are performed by qualified information security professionals who bold at least the Information Systems Audit and Control Association's {ISACA) Certified Informmation Systems Auditor (CISA) or the (ISC)2's Certified Information Systems Security Professional {CISSF). Both certifications require continuing professional education. As a value added service we will provide the City with a matrix of the City's maturity as compared with NIST's certification and accreditation framework. Each internal control taken from NIST SI' 500-53Rev1 is ranked in this maturity matrix and an average score is provided to the City to give the City a benchmark, System Controls and Transaction Cycle Processing Verification With any data processing system upon which we intend to rely as a means of reducing substantive testing, we perform a variety of tests to verify the accuracy of transaction processing, the reliability of system control points and authorization controls, appropriateness of profile structures including Super-user rights access, and automated functionality such as sub-ledger integration and auto-journal entry validity and setup controls. Gaining an understanding of the design of relevant procedures, controls and authorization levels is integrated with our risk assessment procedures discussed below under the Client Tailored Risk Assessment section. As part of our risk assessment process we identify those transaction cycles we intend to rely on. Both processing procedures and controls that are to be relied on are tested with our audits. Transaction cycle processing and control tests typically involve sampling techniques. Most of our transaction samples are selected and tested during the interim portion of our work. Each sample will run from thirty to fifty transactions in size. We use interval and judgment sampling techniques with a high degree of stratification. Most municipalities operate more that one major revenue system. Therefore, we typically determine which revenue transactions are processed with common procedures and controls and deem that to be a single population and subject it to a single sample. Other revenue cycles processed with separate controls are tested with their own samples. For example, it is common for separate samples to be selected far governmental receipts and each major enterprise fund. Transaction cycles we sample are dependant on materiality to each client's financial statements but typically include, payroll, disbursements, receipts, loans receivable, investments and budget transactions and in accordance with the requirements of Statement of Auditing Standards #99 we also sample journal entries. Samples from each grant audit or major federal award program are also made. Samples are triple purpose samples and we test for correct recording, compliance with applicable policy or regulation and key control attributes -both manual and automated. This includes verification of sub-ledger integration and auto journal entry validity, if needed. 27 srEClra~lc Aunlcle APPROACIaI (carttinued) Profiles, Access and Setup Controls Despite advances in information technology automation and system control features, classic segregation of duties concepts remain a mainstay for providing adequate internal controls. What has changed, however is the necessity to determine system profile structures and actual system access. We inquire how our clients establish and maintain system profiles for relevant staff with the objective of determining whether controls are in place to provide for adequate segregation of duties and to determine if system profiles are appropriate based on the individual's duties. We also determine haw our clients monitor access and we test access through reviews of access logs, observation and in some extreme cases, with fully observed access attempts. We will also inquire about procedures and controls used to ensure only those system functions and controls assigned to an employee are in fact setup in system profiles. Considerations include Super User Rights, system profile set up, and system authorization functionality such as transaction initiation, review and approval, automated entry setup and pasting. Work typically involves inquiry of staff with Super-User Rights and determining haw the organization provides a check and balance against the possibility that one person with Super- User Rights can intentionally or inadvertently assign unauthorized access. We often review access logs and examine approvals ofprofile changes and review authorization levels. Data Eartraction We employ rather simple data extraction techniques these days since mast modern systems provide easy download capabilities to text or Excel files. We have been utilizing data extraction for aver ten years. We first began data extraction as a means of downloading data from our clients financial systems for upload directly into the financial statements. Then we expanded this to include transaction details, account information and other data contained in our clients systems that we needed for audit. Our Chief Operations.Offtcer, Chris Hunt, oversees our data extraction needs and has successfully worked with all of our clients and their systems to achieve data extractions for our use. We are extremely adept at converting from text, delimited and fixed width files, and with every system used by clients. Assessing Risks -Interim Phase Beginning with fiscal 200'7-2008 audits, a new set of Statements of Auditing Standards became effective and required that most auditors change the way they audit. Much of this new guidance came out of the aftermath of highly publicized audit failures such as Enron, Global Crossings and the like. The Statements make it clear that a generalized one-size-fits all audit approach will not be permitted. An audit must be based on a unique audit strategy customized to fit each client and its industry. The primary objective of these Standards is to require the auditor's application of an audit risk model. The concept is that a set of financial statements should be evaluated for the underlying risks of material misstatement. Then, a customized audit should be tailored to test for misstatements and verify that controls are designed and in place to prevent and detect misstatements. We have consistently employed a risk based concept from our t<irm',s inception in 198b. Our audit checklists and programs were originated by reference to Audits of Local Governments published by the Practioners' Publishing Company {PPC), a third party vendor specializing in producing audit guides for unique industries. But, we have not simply used their guide as our approach. We have customized it further for the simple reason that California municipalities ]rave many unique risks not faced by municipalities in other states. As you know, California state law and applicable regulations cover a wide variety of areas such as cash and investment management, redevelopment compliance, transportation development act programs, and child development programs. Indeed, even revenues of California municipalities are unusual and complex such as the Triple 1~lip and Proposition lA securitization. 28 SPECitFIC AUDIT APPROACH (Continued) Our primary objective in an audit of each client's financial statements is to opine on whether the financial statements, including disclosures, are free of material misstatement. Our opinion must be based on sufficient, appropriate audit evidence that we obtain and this evidence must be documented. To achieve this objective, we further refine our approach to be responsive to each individual audit. We may reduce the scope of our substantive audit tests provided we conclude there are effective specific controls in place which would detect and correct misstatements due to errors or fraud. Fraud Considerations Beginning with our ZO©4 audits, we employed additional audit steps required by Statement of Auditing Standards #99, Consideration of Fraud in a Financial Statement.4udit. SAS #99 requires auditors to consider risk areas that may be susceptible to fraud and to then modify their audit strategy. We have been employing a variation of the SAS #99 concept since the early 1990's, For example, for many of our recurring clients, we visited all of their cash collection sites. We performed cash counts and reviewed cash handling practices and procedures, including security measures employed to limit access to cash. This and our planning meetings with our clients staff have resulted in the inclusion of a variety of special emphasis areas in our audits. We combine our fraud consideration brain storming sessions with our over all risk assessment process discussed below. Client Tailored Risk Assessment Our strategy to assessing risk begins with a brainstorming session of our audit team where they review your prior year financial statements and operations to identify areas of major audit risk. We also incorporate our consideration of other factors such as the risk of fraud, the economy, regulatory complexities or changes, credit market conditions and others into our initial assessment. We may also compare unusual transactions and estimates to those used by other municipalities or to current trends and issues. Since we are a niche firm specializing in California municipalities this is relatively easy. For example, certain development agreements are unique to redevelopment agencies. These agreements usually contain complex financial transactions and legal restrictions. With so much experience in this area we can quickly design an efficient response to these risks. Major audit risks are further evaluated through consideration of relevant assertions to determine inherent risk due to error or fraud. For example, cash on hand has a relative higher inherent risk of loss due to theft than an infrastructure asset. High and medium inherent risk audit areas are further evaluated to determine relevant internal controls needed to prevent, detect and correct errors or fraud. We start our evaluation of your internal controls by interviewing staff and meeting with Department heads as needed. We review policies and procedure manuals and other documentation to determine the design of procedures and controls. As part of our evaluations we document narrative memoranda outlining the duties of each pertinent person as well as our GRID evaluation of the important nexus control points. The GRID is our own design; it is a two-axis chart we use to identify potential conflicts of duties in your controls. We enhance our evaluation by reviewing system profile reports, paying special attention to superTuser rights, This data is then used to determine the presence or absence of compensating controls designed to mitigate conflicts of duties vested in a single individual. We then test to verify that procedures and controls are operating effectively such that they reduce the risk that errors or fraud could actor and go undetected and uncorrected. We use a variety of techniques to verify controls are effective including: sampling, observation, documentation of reviews, examining system access reports and comparisons with other data. 29 SPECIFIC AUDIT APPR©ACH (Continued) After this has been completed, we assess the risk of material misstatement which is determined by the relative inherent risk of an area and the associated control risk to plan our substantive tests. That is, the risk that controls are not in place or are not operating effectively. Areas with a low risk of material misstateme~tt assessment may receive limited substantive procedures while those with a high risk of material misstatement will receive significant substantive procedures. We then design our final phase audit plan to ensure we obtain sufficient appropriate evidence about the financial statements and disclosures. Specific audit procedures are developed and documented in our audit programs and we develop potential internal control points for further evaluation as to significance and communicate those to staff. Client Participation in the Risk Assessment Process Of course, any risk assessment process is incomplete without our clients' active participation. We hold meetings with senior finance staff and internal auditors to discuss their views and assessments of risks affecting the financial statements. Our inquiries are backed up by reviews of the annual budget, mid-year budget revisions, internal audit reports, grantor performance and monitoring correspondence and any other pertinent data we deem relevant. We must also establish two-way eammunication with the Council or Audit Committee which we typically accomplish by meeting to discuss the audit process and timing, management representations and fraud considerations. For those organizations without an Audit Committee, we typically attend a Council meeting or meet with representatives of the Council. Assessing Risks -Final Phase Although the majority of our evaluations and testing of internal controls is completed with our interim testing, it is during the final phase that actual year end balances, transactions and disclosures are known and our substantive procedures are employed. These procedures and data often reveal unusual yr unexpected results that must be considered in the risk assessment process. Risk assessment processes are iterative and cumulative. That is, we must continually re-evaluate our assessments based on information and procedures gathered. It is not uncommon for an initial assessment and the corresponding substantive audit work to be restructured as a result of new data. Indeed it is the intent of current audit standards that the audit be responsive to risks. Our substantive procedures are selected to be responsive to the assessed risk and relevant assertion and typically involve analytical procedures, third-party confirmation, estimation techniques, mini-max tests, trend analyses, recomputations, corroboration with other tests, tests in total, sampling and comparisons to data gathered in other municipal audits, Risk assessment procedures would be incomplete without an evaluation of the adequacy of our evidence obtained including internal control tests, any significant deficiencies or material weaknesses and substantive test results. These factors are considered prior to the release of our opinion in a final re-assessment process that includes our qualify assurance review. Ability to Provide Services on a Short Notice We are always ready to provide our clients with the services they need. Depending on the amount of work involved we can adjust our calendar to accommodate smaller projects at any time. Larger projects can be problematic during our peak busy season which Iasts from mid-September through December. During Chase months, our approach to providing services on a short notice is predicated on the principle that we must satisfy our existing obligations before accepting new work. In the rare instance that we are unavailable due to existing commitments, we have a number of recommended consultants that can assist the City. 34 SPECIFIC AUDIT APPROACR (Continued) Communication and Coordination We will meet with you at the start of each phase of work and conduct an exit conference at the end of each phase of work. Tbis will ensure you know everything we do, with plenty of time to address any issues. Two key objectives for a well run audit are to ensure timely communication of the audit results and to provide for seamless coordination of the external auditors with City staff. We noted in your request for proposal that you wish us to prepare an Audit Plan detailing what we need and when. The concept is virtually identical to our Accounting Issues Memorandum and detailed Closing Checklists that we typically prepare for our clients. The Accounting Issues Memorandum concept was originated by one of our staff over a decade ago to function as a partner's brief of an engagement's status. It worked so well we expanded it to all our audits and share it with our clients. It has proven to be an indispensable communication and coordination tool ever since. This informal memo condenses and summarizes the audit status and issues as of the end of our interim work. It includes housekeeping matters, major and minor potential findings, scheduled audit fieldwork start and finish dates, etc. We produce this memo right in your office before the conclusion of our interim work, so you have an idea of what we've found so far and whether there are areas that need work. Our Memorandum on Internal Control is drafted at year-end and may include significant issues raised with our interim phase Accounting Issues Memorandum as well as issues arising from our year-end work. We review a draft with you, so that you will have plenty of time to consider the facts and discuss our findings before the audit results are presented to the Council and Committees. Prompi,5'ervrce and Delivery ojReports Financial information, like fish, must be as fresh as possible and this is an important part of our service. We have always focused on reducing financial statement turn-around time and we have never missed a deadline. We normally complete the fnal draft of the financial statements on the last day of our field-work in our clients' offices or within two weeks thereafter. Our audit strategy emphasizes detail planning and coordination of our staff and client staff to complete the audit as efficiently as possible. We have found that completing all our work and our reports as part of our field-work dramatically reduces the time required to issue final reports to our clients. Our strategy allows our clients ample time to review all report drafts before issuance, white ensuring that all reports are issued timely. Many clients have been able to advance the date an which their reports are presented to Council. 31 SPECIFIC AUDIT APPROACH (Continued) Audit Schedule We have timed our audit to complete alt your reports so that they are ready to print by your deadlines. Of course, our timetable may be adjusted to fit your needs. We will start our work as soon as you appoint us your auditors, with an entrance conference as soon as possible. Please see the proposed segmentation of the engagement on the schedule following this timeline. Our proposed timeline follows: April 2012: Final Award, execute contract Septe~bcr 24 ~ 28; il~load general ledger data Pei-torm ~iruicipal #cvel a~talytical review of (inaiicia[ st;~tentents October 1 ~ 5• Review find reconcile atrnual closurg checklist infonr3atign Sfat#~prep~ues responses to analytictal review.©f financial Stateerie•nts '' October 8 -12: Tinal ph~.sc entra~icc conferer~ee, start ofycar-und #ielcl-work in the C;ity's otlice II _-'.-i Discus., results of Analytical review Ci~ncluct year-etrd a2idit tests [1!teet with `st;if2 as needed about status issues _ !, hiuvembcr 12 -15: Gfln~plete qu;rlity assuraEice revietivs of repx~rts Review comments with City l.ssue f`mal:reports acid recomrnendations 32 City of Dublin Proposed Engagement Segments and Budget Bndgefed Roan Pirlaei7 SfxR Aadif Atiiridef Pag^gmeat Revise Ilircdon Sppetrisor Axwclatea Adwlaistralire 'Ford Hinnia & bud etlCoofirawlCbaldbW 1.00 4.00 2.00 7.OD Feed AueatmmE -SAS 699 200 2.09 Mipuleo-rewlWloai 6.60 6.00 Re rt 8.00 14.00 2E.00 Sa lodrxriew 1200 200 200 30.00 46,00 Cpalrnetti & mtetia 2.00 4.00 b.00 Mwaw esunlteller 200 2.Op 200 6.00 Atcopnlin Ii~pa Memo 1.00 200 3.60 4.00 And inlreriew 2.00 2.00 Ad'aitmeati 206 7,09 GAID -lafend Caahnl livduatioe 12.00 12.00 Ia toraxUiow 5 less Review 200 2.00 C:sb & I+rest~enli 32.00 s2.00 Revraadltecwatdei 24.00 24,00 Iateriaads ]6.00 1G.Op Ca 1tilAssw 24.00 24.00 Attoe.t~Pa abk 24.00 24,00 Pa 1VAeuvrd Ifabilitlte 24.06 74.00 PERS 4.00 4.Ob GASB 45- OPlill 4.06 {,p0 1?and Lilana & oel ai1Ns 4.00 4.00 RiskTlww coral 6.00 6.00 Bnd q - 9.06 4.00 Subtotal -Basic Financtsl Statements (C'.A1+R) & Alaaa ement LeBtr 20.00 2,00 4.00 60.00 178.Od 19.00 3$3.00 Additional Services: Sln AadilandRrlafedRt rig erTested 4.06 1.00 4.00 62.00 2,00 47.00 S Pe Aadit awd Railed Re mere B 7,00 1.00 4,00 2{,00 ],00 }1,09 GAN1iI,lait 6.25 1.00 4,00 I,Oti 425 Aaapit51w1eCoattaGer Re 4.00 2800 32.00 Aaand State I:AairoBer Strcel H 7.00 8.00 10.06 GI2AiVD TOTAL 27.25 10.00 4.00 69.00 274,00 24.00 408.25 ~~ IDENTIFICATION OF ANTICIPATED POTEN I`IAL AUDIT PROBLEMS New GASB Implementation We will provide the City with what ever support it needs with regard to gaining an understanding of new pronouncements affecting the financial statements and our audits. Our consistent approach is to provide our clients with advance identification of new GASBs as they are issued. With every audit, we provide overviews of new pronouncements including effective dates and we review these with staff. In the year of implementation we proforma new disclosures and add on additional data requests to our interim and closing checklists. Far complex rules, we prepare course materials and conduct training and education sessions during interim for finance and other affected City staff to ensure they understand the requirements. We include the new GASB provisions as well as any additional resources such as implementation guides, practical application examples and additional technical resources and contacts. After staff has had a chance to think about the City's operations we conduct afollow-up conference to determine the potential impact to the financial statements and audit, in unusual cases we will schedule additional field work before year end to ensure the new rules do not affect year end timing. 34 REPORT FORMAT INDEPENDENT AUDITORS' OPINION Honorable Mayor and City Council City of Example, California We have audited the basic financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Example as of and for the year ended June 30, 2011 as listed in the Table of Contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted nur audit in accordance with generally accepted auditing standards in the United States of America and the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance as #o whether the financial statements are free of material misstatement. An audit includes examining on a test basis evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the basic financial statements referred to above present fairly in all material respects the respective financial position of governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the City of Example at June 30, 2011 and the results of its operations and the cash flows of its proprietary funds and the respective budgetary comparisons listed as part of the basic financial statements for the year then ended, in conformity with generally accepted accounting principles in the United States of America. As disclosed in Note 16, the State of California adopted ABxl 26 on June 28, 2011, which suspends all new redevelopment activities except for limited specified activities as of that date and dissolves redevelopment agencies effective Oc#ober 1, 2011. The State simultaneously adopted ABxI 27 which allows redevelopment agencies to avoid dissolution by opting into an "alternative voluntary redevelopment program" requiring specified substantial annual contributions to loco! schools and special districts. These conditions raise substantial doubt about the ability of the Redevelopment Agency of the City of Example, a component unit of the City, to continue as a going concern. However, an August l 1, 2011, the California Supreme Court issued a partial stay of ABxl 26 and a fall stay of ABxI 27, but the partial stay did not include the section of ABx126 that suspends all new redevelopment activities. As a result, the accompanying financial statements have been prepared assuming that the Redevelopment Agency of the City of Example will continue as a going concern, The activities of the Redevelopment Agency of the City of Example are included in the Redevelopment Agency Capital Projects Fund, Redevelopment Agency Low and Moderate Income Housing Special Revenue Fund and Redevelopment Agency Debt Service Fund of the accompanying financial statements. The financial statements da not include any adjustments that might result from the outcome of this uncertainty. 35 REPORT )FORMAT (Continued) In accordance with Government Auditing Standards, we have also issued our report dated on our consideration of the City of Example's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control aver financial reporting and compliance and the results of that testing, and riot to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. As of July 1, 2010, the City adopted the provisions of Governmental Accounting Standards Board Statement Number S4 {GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions. As discussed in Note 9 to the financia! statements, the provisions of this statement affect the classification of fund balances reported in the financial statements. Management's Discussion and Analysis and Required Supplemental Information are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However we did not audit the information and express no opinion on it. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information listed in the Table of Contents are presented for purposes of additional analysis and are not a required part of the basic finaucial statements of the City of Example. Such information has been subjected to the auditing procedures applied in our audits of the basic financial statements, and in our opinion is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The statistical section listed in the Table of Contents was not audited by us and we do not express an opinion on this information. DATE 36 REPORT FORMAT (Continued) AGREED UPON PROCEDURES REPORT ON COMPLIANCE WITH THE PROPOSITION 11i 2010-20I1 APPROPRIATIONS LIMIT' INCREMENT Honorable Mayor and Members of the City Council City of Example, California We have applied the procedures below to the Appropriations Limit Computation Worksheet for the City of Example for the year ended June 30, 2011. These procedures, which were suggested by the League of Califoraia Cities and presented in their Article XIILI3 Appropriations Limitation Uniform Guidelines, were performed solely to assist you in rneeting the requirements of Section 1.5 of Article X1Tffi of the California Constitution. Our procedures were performed in accordance with standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the specified users of this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose far which this report has been requested or for any ether purpose. This report is intended for the information of management and the City Council; however, this restriction is not intended to limit the distribution of this report, which is a matter of public record. The procedures you requested us to perform and our findings were as follows: A. We obtained the Worksheet and determined that the annual adjustment factors were adopted by resolution of the City Council. The 2010-2011 Appropriations Limit adopted by City Council amounted to $160,818,675. B. For the Worksheet, we recomputed the 2010-2011 Appropriations Limit by multiplying the 2009-10 Appropriations Limit by the Total Growth Factor. We recomputed the Total Growth Factor by multiplying the Inflation Factor by the Population Factor. For the Worksheet, we agreed the Per Capita Income, County and City Population Factors to California State Department of Finance Worksheets. We agreed the percentage change in the local assessment roll to the Appropriation Limitation Computation Worksheet. C. We agreed the 2010-2011 Appropriations Limit to a resolution adopted by the City Council. These agreed-upon procedures are substantially less in scope than an audit, the objective of which is the expression of an opinion on the Worksheet. Accordingly, we do not express such an opinion. Had we performed additional procedures or lead we made an audit of the Worksheet and the other completed worksheets described above, matters might have come to our attention, which would have been reported to you. DATE 37 REPORT FORMAT (Contiqued) INDEPENDENT AUDIT'OR'S REPORT Honorable Mayor, IVlembers of the City Council City of Example, California We have audited the financial statements of the Alameda County Transportation Improvement Authority -Measure B 200D Funds (Measure B Funds of the City of Example, California} as of and for the year ended June 30, 2011 as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized uiformation has been derived from the fiscal 2010 financial statements, and in our report dated , we expressed an unqualified opinion on those financial statements. Wo caaductcd our audit in accordance with generally accepted auditing standards in the United States of America and the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free of material misstatement. An audit includes examining on a test basis evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As discussed in Note 1 to the financial statements, the financial statements referred to above present only the Measure B Funds and are not intended to present fairly the financial position of the City and the results of its operations in conformity with generally accepted accounting principles. In our opinion, the financial statements referred to above present fairly in all material respects the financial position of the Measure B Funds at Jung 30, 201 i and the results of operations and changes in fund balance for the year then ended, in conformity with generally accepted accounting principles th the United States of America. As of July 1, 2010, the City adopted the provisions of Governmental Accounting Standards Board Statement Nurnber 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions. In accordance with Government Auditing Standards, we have also issued our report dated on our consideration of the City of Example's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. DATE 38 REPORT FORMAT {Continued) INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor and City Council of the City of Example, California We have audited the financial statements of the City of Example as of and for the year ended, June 30, 2011 and have issued our report thereon dated . We conducted our audit in accordance with generally accepted auditing standards in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United Stakes. Internal Control over Financial Reporting In planning and performing our audit, we considered the City's internal control over £inanaial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over funaacial reporting. A deficiency in internal control exists when the design ar operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we cozrsider to be material weaknesses, as defined above. However, we identified certain deficiencies in internal control over financial reporting, described in our separately issued Merrtorandum on Internal Control dated December 21, 2010 which is an integral part of our audits and should be read in conjunction with this report. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged wit}t governance. 39 REPDRT FORMAT {Continued} Compliance and Other Matters As part of obtaining reasonable assurance about the whether Gty financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. 'I`he results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We have also issued a separate Memorandum on Internal Control dated Decennber 21, 2010 which is an integral part of our audits and should be read in conjunction with this report. The City's response to the findings identified in our audit is described in the accompanying schedule of fmdings and questioned costs. We did not audit the City's response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of City Council, management, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. DATE 40 REPORT FORMAT (Continued} INDEPENDENT AUDITOR'S REPORT ON COMPI: iANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER C©MPLIANCE IN ACCORDANCE WTI'II OMB CIRCULAR A-133 Honorable Mayor and City Council of the City of Example, California Co»zpliance We have audited City of Example's compliance with the types of compliance requirements described in the 011 Circular A-133 Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended Tune 30, 2011. The City's major federal programs are identifeed in the summary of auditoz's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of City's management. Our responsibility is to express an opinion on the City's compliance based on our audit. We conducted our audit of compliance iu accordance with auditing standards generally accepted th the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types nl' compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for nur opinion. Our audit does not provide a legal determination of the City of )Jxample's compliance with those requirements. In our opinion, the City of Example complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2010. However, the results of our auditing procedures disclosed instances of noncompliance with those requirements, which are required to be reported th accordance with OMB Circular A-133 and which are described in the accompanying schedule of findings and questioned costs as items 2010-01, 2010-02, 2014-03, and 2010-04. 41 REPORT )FORMAT (Continued} 1"nternal Control Dver Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. hn planning and performing our audit, we considered the City's internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control aver compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency In internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis, Our consideration of internal control aver compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, we identified certain deficiencies in internal control over compliance that we consider to be significant def ciencies as described in the accompanying schedule of findings and questioned costs as items 2010-01, 2010-02, 2010-03, and 2010-04. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Schedule of Expenditures of Federal Awards We have audited the financial statements of the City as of and for the year ended June 30, 2010, and have issued our report thereon dated December 21, 2010. Our audit was performed for the purpose of forming our opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying schedule of expenditures of federal awards is presented far purposes of additional analysis as required by OMB Circular A-133 attd is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whale. The City's responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned casts. We did not audit the City's responses and, accordingly, we express na opinion on the responses. This report is intended solely for the information and use of management,. City Council, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. DATE 42 SEALED DOLLAR COST BID PROPOSAL FOR THE CITY OF DUBLIN FOR PROFESSIONAL AUDTTING SERVICES FEBRUARY 17, 2012 Submitted By MAZE & ASSOCIATES 3478 Buskirk Avenue, Suite 215 PIeasan! Hill, CA 94523 (925) 930-0902 Contact Persons Katherine Yuen, CPA --katheriney a[~1 nazeassociates.com Amy L. Meyer, CPA - amyrn@inazeassaciates.com CITY OF DUBLIN Audit Work Cost Proposal Form PRICING PROPOSAL Certifrcation Katherine Yuen and Amy Meyer are authorized to submit #his proposal and negotiate and sign a contract with the City of Dublin. Our offer is #irm and irrevocable for a period of ninety days from the date of this proposal. Total Cost ofAudit Our Total All-Inclusive Maximum Prices for the services specified in the Request for Proposal for the fiscal year ending June 30, 2012 through June 30, 2016 are detailed at the end of this section. Our Total All-inclusive Maximum Prices for the services specified in the RPP are firm fixed fees. Our policy is to attempt to keep our clients fees constant after inflation. Therefore, the fees for years subsequent to 2012 have been adjusted by 2.0% per year. Additional Services Any additional services will be performed and billed only on the City's prior authorization at our standard billing rates. Fees and Billings Our fees are firm faced prices. In determining our fees, we understand that the City's records will be in condition to be audited; that is, transactions will be properly recorded in the general ledger and subsidiary records, these accounting records and the original source documents will be readily available fo use, we will be furnished with copies of bank reconciliations and other reconciliationsand analyses prepared by the City and City personnel will be reasonably available to explain procedures, prepare audit correspondence and obtain files and records. We do not post separate rate structures for municipal audit work. We view this work as being every bit as important and valuable as the work we perform for other clients and we put our best people on it. Any consulting work you request will be performed at the same rates as our audit work. CITY OF L)UBLIN AUL)IT WORK COST PROPOSAL. FORM Base Service FY2012 FY2013 FY2014 FY2015 FY2016 City Audit and Related Reports (Includes Management Letter} $30,465 $31,074 $37,695 $32,329 $32,976 Single Audit and Reiated Reports (Per Tested Program} $4,610 $4,90fi $5,004 $5,104 $5,206 Special Purposes Audit and Reiated Reports (Measure L3) 3,830 3,907 3,965 4,065 4,146 GANN Limit Review Re art 595 807 679 631 844 State Controller City Financial Transactions Report 3,580 3,852 3,725 3,800 3,876 State Controller Street Reports 1,280 1,306 7,332 1,359 7,386 Cost to Produce and Print Ali Reports (Includes WetrReady PDF} 2,000 2,000 2,000 2,000 2,000 Total for Fiscal Year not-to-exceed $46,56U $47,452 $~48,3fi0 $49,268 S50 234 CERTIFICATION i, the undersigned, certify that I am duly authorized to represent Maze & Associates and am empowered to submit this bid. in addition, I certify I am authorized to contract with the City of Dublin on behalf of Maze & Associates. Print Name To HN Ro AR I ~ u r~ ~ Signature Title r!I G ~ P&ir SIDENT Date ~ ~ 1 6_ ~ a`(_O I °Z_ h10TES: (1)Out-af-pocket expenses are included in our total all-inclusive maximum price above. (2) Our policy is to attempt to keep our client's fees constant after inflation. Therefore, the fees for years subsequent to 2072 have been adjusted for the 2071 CPI increase of 2.0°~ for the Services Sector of the U.S. Department of Labor, Bureau of Lobar Statistics for the San Francisco-Oakland Area. CITY aF bUBLIN ~srliulAr~ of casT Position # Hours FY2012 Rate FY2413 Rate FY2414 Rate FY2015 Rate FY2016 Rate Partner 37.25 $11,175 $11,399 $11,625 $11,860 $12,098 Director 4.00 600 612 624 636 649 Su NiSUr 69.0 7,935 8,094 8,256 8,42'! 6,583 Associates 274.0 23,290 23,756 24,231 24,716 25,210 Administrative Staff 24.00 1,560 1,591 9,623 1,655 1 688 Subtotal 408.26 44,560 45,452 46,360 47,268 48,234 Cast to Produce and Print All Re its {includes Web-Ready PDF 2,000 2,400 2,000 2,000 2,000 Total for Fiscal Year (not-to- exceed $46,664 $47,452 $48,364 $49 288 $50 234 Print Name ~ToIIN +ea+~R1'6 V~~ Signatu Title~rCE PIF;ESrDE-NT Dat of I aO1 RESOLUTION NO. xx - 12 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT WITH MAZE ASSOCIATES ACCOUNTANCY CORPORATION TO PROVIDE AUDIT SERVICES WHEREAS, the City desires to annually have an independent audit of its financial reports; and WHEREAS, the best practices in municipal finance recommend that periodically agencies should evaluate options available for the provision of audit services; and WHEREAS, the City Staff issued a Request for Proposals and received six responses; and WHEREAS, City Staff evaluated the responses and determined that the proposed scope of work and approach to the provision of audit services and preparation of financial reports presented by Maze & Associates Accountancy Corporation most closely related to the City's needs; and WHEREAS, Maze & Associates has extensive experience providing Audit Services to cities and other public agencies; and WHEREAS, Maze & Associates provided anot-to-exceed fee proposal to complete City Audits and specified financial reporting for a five year period. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does hereby authorize the City Manager to execute the agreement with Maze & Associates Accountancy Corporation, to conduct City Audits (attached hereto as Exhibit A), in a contract amount not to exceed $241,894, which will be paid as annual increments as described in Exhibit A. PASSED, APPROVED AND ADOPTED this17th day of April, 2012, by the following vote: AYES: NOES: ABSENT: ABSTAIN: Mayor ATTEST: ATTACHMENT 2 City Clerk ATTACHMENT 2 CONSULTING SERVICES AGREEMENT BETWEEN THE CITY OF DUBLIN AND MAZE & ASSOCIATES ACCOUNTANCY CORPORATION THIS AGREEMENT for consulting services is made by and between the City of Dublin ("City") and Maze & Associates Accountancy Corporation ("Consultant") as of April 17, 2012. Section 1. SERVICES. Subject to the terms and conditions set forth in this Agreement, Consultant shall provide to City the services described in the Scope of Work attached as Exhibit A at the time and place and in the manner specified therein. In the event of a conflict in or inconsistency between the terms of this Agreement and Exhibit A, the Agreement shall prevail. 1.1 Term of Services. The term of this Agreement shall provide Audit Services for a five year period. The Agreement shall begin on the date first noted above and shall end on the date of completion of the Audit for the reporting period ending June 30, 2016. Typically this will be completed by January 1, 2017. Consultant shall complete the work described in Exhibit A prior to that date, unless the term of the Agreement is otherwise terminated or extended, as provided for in Section 8. The time provided to Consultant to complete the services required by this Agreement shall not affect the City's right to terminate the Agreement, as provided for in Section 8. 1.2 Standard of Performance. Consultant shall perform all services required pursuant to this Agreement in the manner and according to the standards observed by a competent practitioner of the profession in which Consultant is engaged in the geographical area in which Consultant practices its profession. Consultant shall prepare all work products required by this Agreement in a substantial, first-class manner and shall conform to the standards of quality normally observed by a person practicing in Consultant's profession. 1.3 Assignment of Personnel. Consultant shall assign only competent personnel to perform services pursuant to this Agreement. In the event that City, in its sole discretion, at any time during the term of this Agreement, desires the reassignment of any such persons, Consultant shall, immediately upon receiving notice from City of such desire of City, reassign such person or persons. 1.4 Time. Consultant shall devote such time to the performance of services pursuant to this Agreement as may be reasonably necessary to meet the standard of performance provided in Section 1.1 above and to satisfy Consultant's obligations hereunder. Section 2. COMPENSATION. City hereby agrees to pay Consultant a sum not to exceed $241,894 for the completion of Audit Services covering notwithstanding any contrary indications that may be contained in Consultant's proposal, for services to be performed and reimbursable costs incurred under this Agreement. Exhibit B, contains a breakdown of the costs to be incurred for each year of the Agreement. City shall pay Consultant for services rendered pursuant to this Agreement at the time and in the manner set forth herein. The payments specified below shall be the only payments from City to Consultant for services rendered pursuant to this Agreement. Consultant shall submit all invoices to City in the manner specified herein. Except as specifically authorized by City, Consultant shall not bill City for duplicate services performed by more than one person. Consulting Services Agreement between April 17, 2012 City of Dublin and Maze and Associates Page 1 of 15 Consultant and City acknowledge and agree that compensation paid by City to Consultant under this Agreement is based upon Consultant's estimated costs of providing the services required hereunder, including salaries and benefits of employees and subcontractors of Consultant. Consequently, the parties further agree that compensation hereunder is intended to include the costs of contributions to any pensions and/or annuities to which Consultant and its employees, agents, and subcontractors may be eligible. City therefore has no responsibility for such contributions beyond compensation required under this Agreement. 2.1 Invoices. Consultant shall submit invoices, not more often than once a month during the term of this Agreement, based on the cost for services performed and reimbursable costs incurred prior to the invoice date and in conformance with the stated costs in Exhibit B. Consultant shall inform City in writing when the total number of hours of work by Consultant and any individual employee, agent, or subcontractor of Consultant in a fiscal year reaches or exceeds 800 hours. 2.2 Monthly Payment. City shall make monthly payments, based on invoices received, for services satisfactorily performed, and for authorized reimbursable costs incurred. City shall have 30 days from the receipt of an invoice that complies with all of the requirements above to pay Consultant. 2.3 Final Payment. City shall pay the last 10% of the total sum for each year of services, as shown in Exhibit B, pursuant to this Agreement within sixty (60) days after completion of the services for that fiscal year and submittal to City of a final invoice, if all services required have been satisfactorily performed. 2.4 Total Payment. City shall pay for the services to be rendered by Consultant pursuant to this Agreement. City shall not pay any additional sum for any expense or cost whatsoever incurred by Consultant in rendering services pursuant to this Agreement. City shall make no payment for any extra, further, or additional service pursuant to this Agreement. In no event shall Consultant submit any invoice for an amount in excess of the maximum amount of compensation provided above either for a task or for the entire Agreement, unless the Agreement is modified prior to the submission of such an invoice by a properly executed change order or amendment. 2.5 Hourly Fees. Fees for work performed by Consultant on an hourly basis shall not exceed the amounts shown in Exhibit B. 2.6 Reimbursable Expenses. Reimbursable expenses are specified in Exhibit B. Expenses not listed in Exhibit B are not chargeable to City. Reimbursable expenses are included in the total amount of compensation provided under this Agreement that shall not be exceeded. 2.7 Payment of Taxes. Consultant is solely responsible for the payment of employment taxes incurred under this Agreement and any similar federal or state taxes. Consulting Services Agreement between April 17, 2012 City of Dublin and Maze and Associates Page 2 of 15 2.8 Payment upon Termination. In the event that the City or Consultant terminates this Agreement pursuant to Section 8, the City shall compensate the Consultant for all outstanding costs and reimbursable expenses incurred for work satisfactorily completed as of the date of written notice of termination. Consultant shall maintain adequate logs and timesheets in order to verify costs incurred to that date. 2.9 Authorization to Perform Services. The Consultant is not authorized to perform any services or incur any costs whatsoever under the terms of this Agreement until receipt of authorization from the Contract Administrator. Section 3. FACILITIES AND EQUIPMENT. Except as set forth herein, Consultant shall, at its sole cost and expense, provide all facilities and equipment that may be necessary to perform the services required by this Agreement. City shall make available to Consultant only the facilities and equipment listed in this section, and only under the terms and conditions set forth herein. City shall furnish physical facilities such as desks, filing cabinets, and conference space, as may be reasonably necessary for Consultant's use while consulting with City employees and reviewing records and the information in possession of the City. The location, quantity, and time of furnishing those facilities shall be in the sole discretion of City. In no event shall City be obligated to furnish any facility that may involve incurring any direct expense, including but not limited to computer, long-distance telephone or other communication charges, vehicles, and reproduction facilities. Section 4. INSURANCE REQUIREMENTS. Before beginning any work under this Agreement, Consultant, at its own cost and expense, shall procure "occurrence coverage" insurance against claims for injuries to persons or damages to property that may arise from or in connection with the performance of the work hereunder by the Consultant and its agents, representatives, employees, and subcontractors. Consultant shall provide proof satisfactory to City of such insurance that meets the requirements of this section and under forms of insurance satisfactory in all respects to the City. Consultant shall maintain the insurance policies required by this section throughout the term of this Agreement. The cost of such insurance shall be included in the Consultant's bid. Consultant shall not allow any subcontractor to commence work on any subcontract until Consultant has obtained all insurance required herein for the subcontractor(s) and provided evidence thereof to City. Verification of the required insurance shall be submitted and made part of this Agreement prior to execution. 4.1 Workers' Compensation. Consultant shall, at its sole cost and expense, maintain Statutory Workers' Compensation Insurance and Employer's Liability Insurance for any and all persons employed directly or indirectly by Consultant. The Statutory Workers' Compensation Insurance and Employer's Liability Insurance shall be provided with limits of not less than ONE MILLION DOLLARS ($1,000,000.00) per accident. In the alternative, Consultant may rely on aself-insurance program to meet those requirements, but only if the program of self-insurance complies fully with the provisions of the California Labor Code. Determination of whether aself-insurance program meets the standards of the Labor Code shall be solely in the discretion of the Contract Administrator. The insurer, if insurance is provided, or the Consultant, if a program of self-insurance is provided, shall waive all rights of subrogation against the City and its officers, officials, employees, and volunteers for loss arising from work performed under this Agreement. Consulting Services Agreement between April 17, 2012 City of Dublin and Maze and Associates Page 3 of 15 An endorsement shall state that coverage shall not be canceled except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to the City. Consultant shall notify City within 14 days of notification from Consultant's insurer if such coverage is suspended, voided or reduced in coverage or in limits. 4.2 Commercial General and Automobile Liability Insurance. 4.2.1 General requirements. Consultant, at its own cost and expense, shall maintain commercial general and automobile liability insurance for the term of this Agreement in an amount not less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence, combined single limit coverage for risks associated with the work contemplated by this Agreement. If a Commercial General Liability Insurance or an Automobile Liability form or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement or the general aggregate limit shall be at least twice the required occurrence limit. Such coverage shall include but shall not be limited to, protection against claims arising from bodily and personal injury, including death resulting therefrom, and damage to property resulting from activities contemplated under this Agreement, including the use of owned and non- owned automobiles. 4.2.2 Minimum scope of coverage. Commercial general coverage shall be at least as broad as Insurance Services Office Commercial General Liability occurrence form CG 0001 (ed. 11/88) or Insurance Services Office form number GL 0002 (ed. 1/73) covering comprehensive General Liability and Insurance Services Office form number GL 0404 covering Broad Form Comprehensive General Liability. Automobile coverage shall be at least as broad as Insurance Services Office Automobile Liability form CA 0001 (ed. 12/90) Code 8 and 9 ("any auto"). No endorsement shall be attached limiting the coverage. 4.2.3 Additional requirements. Each of the following shall be included in the insurance coverage or added as an endorsement to the policy: City and its officers, employees, agents, and volunteers shall be covered as additional insureds with respect to each of the following: liability arising out of activities performed by or on behalf of Consultant, including the insured's general supervision of Consultant; products and completed operations of Consultant; premises owned, occupied, or used by Consultant; and automobiles owned, leased, or used by the Consultant. The coverage shall contain no special limitations on the scope of protection afforded to City or its officers, employees, agents, or volunteers. The insurance shall cover on an occurrence or an accident basis, and not on a claims-made basis. Consulting Services Agreement between April 17, 2012 City of Dublin and Maze and Associates Page 4 of 15 c. An endorsement must state that coverage is primary insurance with respect to the City and its officers, officials, employees and volunteers, and that no insurance or self-insurance maintained by the City shall be called upon to contribute to a loss under the coverage. Any failure of CONSULTANT to comply with reporting provisions of the policy shall not affect coverage provided to CITY and its officers, employees, agents, and volunteers. e. An endorsement shall state that coverage shall not be canceled except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to the City. Consultant shall notify City within 14 days of notification from Consultant's insurer if such coverage is suspended, voided or reduced in coverage or in limits. 4.3 Professional Liability Insurance. Consultant, at its own cost and expense, shall maintain for the period covered by this Agreement professional liability insurance for licensed professionals performing work pursuant to this Agreement in an amount not less than ONE MILLION DOLLARS ($1,000,000) covering the licensed professionals' errors and omissions. 4.3.1 Any deductible orself-insured retention shall not exceed $150,000 per claim. 4.3.2 An endorsement shall state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits, except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to the City. 4.3.3 The policy must contain a cross liability or severability of interest clause. 4.3.4 The following provisions shall apply if the professional liability coverages are written on a claims-made form: a. The retroactive date of the policy must be shown and must be before the date of the Agreement. b. Insurance must be maintained and evidence of insurance must be provided for at least five years after completion of the Agreement or the work, so long as commercially available at reasonable rates. c. If coverage is canceled or not renewed and it is not replaced with another claims-made policy form with a retroactive date that precedes the date of this Agreement, Consultant must provide extended reporting coverage for a minimum of five years after completion of the Agreement or the work. The City shall have the right to exercise, at the Consultant's sole cost and expense, any extended reporting provisions of the policy, if the Consultant cancels or does not renew the coverage. d. A copy of the claim reporting requirements must be submitted to the City prior to the commencement of any work under this Agreement. Consulting Services Agreement between April 17, 2012 City of Dublin and Maze and Associates Page 5 of 15 4.4 All Policies Requirements. 4.4.1 Acceptability of insurers. All insurance required by this section is to be placed with insurers with a Bests' rating of no less than A:VII. 4.4.2 Verification of coverage. Prior to beginning any work under this Agreement, Consultant shall furnish City with certificates of insurance and with original endorsements effecting coverage required herein. The certificates and endorsements for each insurance policy are to be signed by a person authorized by that insurer to bind coverage on its behalf. The City reserves the right to require complete, certified copies of all required insurance policies, at any time. 4.4.3 Subcontractors. Consultant shall include all subcontractors as insureds under its policies or shall furnish separate certificates and endorsements for each subcontractor. All coverages for subcontractors shall be subject to all of the requirements stated herein. 4.4.4 Variation. The City may approve a variation in the foregoing insurance requirements, upon a determination that the coverages, scope, limits, and forms of such insurance are either not commercially available, or that the City's interests are otherwise fully protected. 4.4.5 Deductibles and Self-Insured Retentions. Consultant shall disclose to and obtain the approval of City for the self-insured retentions and deductibles before beginning any of the services or work called for by any term of this Agreement. During the period covered by this Agreement, only upon the prior express written authorization of Contract Administrator, Consultant may increase such deductibles or self-insured retentions with respect to City, its officers, employees, agents, and volunteers. The Contract Administrator may condition approval of an increase in deductible or self-insured retention levels with a requirement that Consultant procure a bond, guaranteeing payment of losses and related investigations, claim administration, and defense expenses that is satisfactory in all respects to each of them. 4.4.6 Notice of Reduction in Coverage. In the event that any coverage required by this section is reduced, limited, or materially affected in any other manner, Consultant shall provide written notice to City at Consultant's earliest possible opportunity and in no case later than five days after Consultant is notified of the change in coverage. Consulting Services Agreement between April 17, 2012 City of Dublin and Maze and Associates Page 6 of 15 4.5 Remedies. In addition to any other remedies City may have if Consultant fails to provide or maintain any insurance policies or policy endorsements to the extent and within the time herein required, City may, at its sole option exercise any of the following remedies, which are alternatives to other remedies City may have and are not the exclusive remedy for Consultant's breach: ^ Obtain such insurance and deduct and retain the amount of the premiums for such insurance from any sums due under the Agreement; Order Consultant to stop work under this Agreement or withhold any payment that becomes due to Consultant hereunder, or both stop work and withhold any payment, until Consultant demonstrates compliance with the requirements hereof; and/or ^ Terminate this Agreement. Section 5. INDEMNIFICATION AND CONSULTANT'S RESPONSIBILITIES. Consultant shall indemnify, defend with counsel selected by the City, and hold harmless the City and its officials, officers, employees, agents, and volunteers from and against any and all losses, liability, claims, suits, actions, damages, and causes of action arising out of any personal injury, bodily injury, loss of life, or damage to property, or any violation of any federal, state, or municipal law or ordinance, to the extent caused, in whole or in part, by the willful misconduct or negligent acts or omissions of Consultant or its employees, subcontractors, or agents, by acts for which they could be held strictly liable, or by the quality or character of their work. The foregoing obligation of Consultant shall not apply when (1) the injury, loss of life, damage to property, or violation of law arises wholly from the negligence or willful misconduct of the City or its officers, employees, agents, or volunteers and (2) the actions of Consultant or its employees, subcontractor, or agents have contributed in no part to the injury, loss of life, damage to property, or violation of law. It is understood that the duty of Consultant to indemnify and hold harmless includes the duty to defend as set forth in Section 2778 of the California Civil Code. Acceptance by City of insurance certificates and endorsements required under this Agreement does not relieve Consultant from liability under this indemnification and hold harmless clause. This indemnification and hold harmless clause shall apply to any damages or claims for damages whether or not such insurance policies shall have been determined to apply. By execution of this Agreement, Consultant acknowledges and agrees to the provisions of this Section and that it is a material element of consideration. In the event that Consultant or any employee, agent, or subcontractor of Consultant providing services under this Agreement is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of City, Consultant shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Consultant or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City. Consulting Services Agreement between April 17, 2012 City of Dublin and Maze and Associates Page 7 of 15 Section 6. STATUS OF CONSULTANT. 6.1 Independent Contractor. At all times during the term of this Agreement, Consultant shall be an independent contractor and shall not be an employee of City. City shall have the right to control Consultant only insofar as the results of Consultant's services rendered pursuant to this Agreement and assignment of personnel pursuant to Subparagraph 1.3; however, otherwise City shall not have the right to control the means by which Consultant accomplishes services rendered pursuant to this Agreement. Notwithstanding any other City, state, or federal policy, rule, regulation, law, or ordinance to the contrary, Consultant and any of its employees, agents, and subcontractors providing services under this Agreement shall not qualify for or become entitled to, and hereby agree to waive any and all claims to, any compensation, benefit, or any incident of employment by City, including but not limited to eligibility to enroll in the California Public Employees Retirement System (PERS) as an employee of City and entitlement to any contribution to be paid by City for employer contributions and/or employee contributions for PERS benefits. 6.2 Consultant No Agent. Except as City may specify in writing, Consultant shall have no authority, express or implied, to act on behalf of City in any capacity whatsoever as an agent. Consultant shall have no authority, express or implied, pursuant to this Agreement to bind City to any obligation whatsoever. Section 7. LEGAL REQUIREMENTS. 7.1 Governing Law. The laws of the State of California shall govern this Agreement. 7.2 Compliance with Applicable Laws. Consultant and any subcontractors shall comply with all laws applicable to the performance of the work hereunder. 7.3 Other Governmental Regulations. To the extent that this Agreement may be funded by fiscal assistance from another governmental entity, Consultant and any subcontractors shall comply with all applicable rules and regulations to which City is bound by the terms of such fiscal assistance program. 7.4 Licenses and Permits. Consultant represents and warrants to City that Consultant and its employees, agents, and any subcontractors have all licenses, permits, qualifications, and approvals of whatsoever nature that are legally required to practice their respective professions. Consultant represents and warrants to City that Consultant and its employees, agents, any subcontractors shall, at their sole cost and expense, keep in effect at all times during the term of this Agreement any licenses, permits, and approvals that are legally required to practice their respective professions. In addition to the foregoing, Consultant and any subcontractors shall obtain and maintain during the term of this Agreement valid Business Licenses from City. Consulting Services Agreement between April 17, 2012 City of Dublin and Maze and Associates Page 8 of 15 7.5 Nondiscrimination and Equal Opportunity. Consultant shall not discriminate, on the basis of a person's race, religion, color, national origin, age, physical or mental handicap or disability, medical condition, marital status, sex, or sexual orientation, against any employee, applicant for employment, subcontractor, bidder for a subcontract, or participant in, recipient of, or applicant for any services or programs provided by Consultant under this Agreement. Consultant shall comply with all applicable federal, state, and local laws, policies, rules, and requirements related to equal opportunity and nondiscrimination in employment, contracting, and the provision of any services that are the subject of this Agreement, including but not limited to the satisfaction of any positive obligations required of Consultant thereby. Consultant shall include the provisions of this Subsection in any subcontract approved by the Contract Administrator or this Agreement. Section 8. TERMINATION AND MODIFICATION. 8.1 Termination. City may cancel this Agreement at any time and without cause upon written notification to Consultant. Consultant may cancel this Agreement upon thirty (30) days' written notice to City and shall include in such notice the reasons for cancellation. In the event of termination, Consultant shall be entitled to compensation for services performed to the effective date of termination; City, however, may condition payment of such compensation upon Consultant delivering to City any or all documents, photographs, computer software, video and audio tapes, and other materials provided to Consultant or prepared by or for Consultant or the City in connection with this Agreement. 8.2 Extension. City may, in its sole and exclusive discretion, extend the end date of this Agreement beyond that provided for in Subsection 1.1. Any such extension shall require a written amendment to this Agreement, as provided for herein. Consultant understands and agrees that, if City grants such an extension, City shall have no obligation to provide Consultant with compensation beyond the maximum amount provided for in this Agreement. Similarly, unless authorized by the Contract Administrator, City shall have no obligation to reimburse Consultant for any otherwise reimbursable expenses incurred during the extension period. 8.3 Amendments. The parties may amend this Agreement only by a writing signed by all the parties. 8.4 Assignment and Subcontracting City and Consultant recognize and agree that this Agreement contemplates personal performance by Consultant and is based upon a determination of Consultant's unique personal competence, experience, and specialized personal knowledge. Moreover, a substantial inducement to City for entering into this Agreement was and is the professional reputation and competence of Consultant. Consultant may not assign this Agreement or any interest therein without the prior written approval of the Contract Administrator. Consultant shall not subcontract any portion of the performance contemplated and provided for herein, other than to the subcontractors noted in the proposal, without prior written approval of the Contract Administrator. Consulting Services Agreement between April 17, 2012 City of Dublin and Maze and Associates Page 9 of 15 8.5 Survival. All obligations arising prior to the termination of this Agreement and all provisions of this Agreement allocating liability between City and Consultant shall survive the termination of this Agreement. 8.6 Options upon Breach by Consultant. If Consultant materially breaches any of the terms of this Agreement, City's remedies shall include, but not be limited to, the following: 8.6.1 Immediately terminate the Agreement; 8.6.2 Retain the plans, specifications, drawings, reports, design documents, and any other work product prepared by Consultant pursuant to this Agreement; 8.6.3 Retain a different consultant to complete the work described in Exhibit A not finished by Consultant; or 8.6.4 Charge Consultant the difference between the cost to complete the work described in Exhibit A that is unfinished at the time of breach and the amount that City would have paid Consultant pursuant to Section 2 if Consultant had completed the work. Section 9. KEEPING AND STATUS OF RECORDS. 9.1 Records Created as Part of Consultant's Performance. All reports, data, maps, models, charts, studies, surveys, photographs, memoranda, plans, studies, specifications, records, files, or any other documents or materials, in electronic or any other form, that Consultant prepares or obtains pursuant to this Agreement and that relate to the matters covered hereunder shall be the property of the Consultant. It is understood and agreed that the documents and other materials, including but not limited to those described above, prepared pursuant to this Agreement are prepared specifically for the City and are not necessarily suitable for any future or other use. City shall have access and rights to make copies of documents created by Consultant, including audit work papers, in accordance with professional standards. City and Consultant agree that, until final approval by City, all data, plans, specifications, reports and other documents are confidential and will not be released to third parties without prior written consent of both parties. 9.2 Consultant's Books and Records. Consultant shall maintain any and all ledgers, books of account, invoices, vouchers, canceled checks, and other records or documents evidencing or relating to charges for services or expenditures and disbursements charged to the City under this Agreement for a minimum of three (3) years, or for any longer period required bylaw, from the date of final payment to the Consultant to this Agreement. Consulting Services Agreement between April 17, 2012 City of Dublin and Maze and Associates Page 10 of 15 9.3 Inspection and Audit of Records. Any records or documents that Section 9.2 of this Agreement requires Consultant to maintain shall be made available for inspection, audit, and/or copying at any time during regular business hours, upon oral or written request of the City. Under California Government Code Section 8546.7, if the amount of public funds expended under this Agreement exceeds TEN THOUSAND DOLLARS ($10,000.00), the Agreement shall be subject to the examination and audit of the State Auditor, at the request of City or as part of any audit of the City, for a period of three (3) years after final payment under the Agreement. Section 10 MISCELLANEOUS PROVISIONS. 10.1 Attorneys' Fees. If a party to this Agreement brings any action, including an action for declaratory relief, to enforce or interpret the provision of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees in addition to any other relief to which that party may be entitled. The court may set such fees in the same action or in a separate action brought for that purpose. 10.2 Venue. In the event that either party brings any action against the other under this Agreement, the parties agree that trial of such action shall be vested exclusively in the state courts of California in the County of Alameda or in the United States District Court for the Northern District of California. 10.3 Severability. If a court of competent jurisdiction finds or rules that any provision of this Agreement is invalid, void, or unenforceable, the provisions of this Agreement not so adjudged shall remain in full force and effect. The invalidity in whole or in part of any provision of this Agreement shall not void or affect the validity of any other provision of this Agreement. 10.4 No Implied Waiver of Breach. The waiver of any breach of a specific provision of this Agreement does not constitute a waiver of any other breach of that term or any other term of this Agreement. 10.5 Successors and Assigns. The provisions of this Agreement shall inure to the benefit of and shall apply to and bind the successors and assigns of the parties. 10.6 Use of Recycled Products. Consultant shall prepare and submit all reports, written studies and other printed material on recycled paper to the extent it is available at equal or less cost than virgin paper. 10.7 Conflict of Interest. Consultant may serve other clients, but none whose activities within the corporate limits of City or whose business, regardless of location, would place Consultant in a "conflict of interest," as that term is defined in the Political Reform Act, codified at California Government Code Section 81000 et seq. Consulting Services Agreement between April 17, 2012 City of Dublin and Maze and Associates Page 11 of 15 Consultant shall not employ any City ofFcial in the work performed pursuant to this Agreement. No ofFcer or employee of City shall have any financial interest in this Agreement that would violate California Government Code Sections 1090 et seq. Consultant hereby warrants that it is not now, nor has it been in the previous twelve (12) months, an employee, agent, appointee, or ofFcial of the City. If Consultant was an employee, agent, appointee, or ofFcial of the City in the previous twelve months, Consultant warrants that it did not participate in any manner in the forming of this Agreement. Consultant understands that, if this Agreement is made in violation of Government Code §1090 et.seq., the entire Agreement is void and Consultant will not be entitled to any compensation for services performed pursuant to this Agreement, including reimbursement of expenses, and Consultant will be required to reimburse the City for any sums paid to the Consultant. Consultant understands that, in addition to the foregoing, it may be subject to criminal prosecution for a violation of Government Code § 1090 and, if applicable, will be disqualified from holding public office in the State of California. 10.8 Solicitation. Consultant agrees not to solicit business at any meeting, focus group, or interview related to this Agreement, either orally or through any written materials. 10.9 Contract Administration. This Agreement shall be administered by: Paul S. Rankin, Administrative Services Director ("Contract Administrator"). All correspondence shall be directed to or through the Contract Administrator or his or her designee. 10.10 Notices. Any written notice to Consultant shall be sent to: John Rodriquez, Vice President Maze & Associates Accountancy Corporation 3478 Buskirk Avenue, Suite 215 Pleasant Hill, California 94523 Any written notice to City shall be sent to: Attn: City Manager City of Dublin 100 Civic Plaza Dublin, CA 94568 Consulting Services Agreement between April 17, 2012 City of Dublin and Maze and Associates Page 12 of 15 10.12 Integration. This Agreement, including the scope of work attached hereto and incorporated herein as Exhibit A, represents the entire and integrated agreement between City and Consultant and supersedes all prior negotiations, representations, or agreements, either written or oral. CITY OF DUBLIN Joni Pattillo, City Manager Attest: Caroline P. Soto, City Clerk CONSULTANT Print Name 1 Title: Consulting Services Agreement between April 17, 2012 City of Dublin and Maze and Associates Page 13 of 15 EXHIBIT A SCOPE OF SERVICES As presented in the response to the Request For Proposal submitted by Maze & Associates Accountancy Corporation and dated February 17, 2012, Maze and Associates shall provide annually the following services at the fixed not-to exceed price shown in Exhibit B: 1. Comprehensive Annual Financial Report (CAFR). As part of the base scope of work, the auditor will be required to prepare the general purpose financial statements and combining statements for the City's Comprehensive Annual Financial Report (CAFR). The auditor will express an opinion on the basic financial statements in accordance with established accounting standards. 2. Single Audit Report In the event that the City has expenditures from Federal sources that exceed $500,000 a Single Audit, shall be performed in accordance with the provisions of the Single Audit Act issued by the Federal government. 3. Special Purpose Audit (Alameda County Transportation Commission (ACTC) The Alameda County Transportation Commission (Measure Bhalf-cent transportation sales tax program), requires a separate financial and compliance audit. 4. Annual Appropriation Limit Report. Annually the City must obtain a report prepared based on agreed upon auditing procedures related to the City's Appropriation Limit Calculation. 5. Annual State Controller's Reports Cities Financial Transactions Report The audit firm will prepare and submittal to the State Controller of the "Annual Report of City Financial Transactions" and the "Annual Streets and Highways Report". i. Other Auditor Reports. The auditors will also issue as deemed appropriate a separate "Management Letter" that includes recommendations for improvements in internal control, accounting procedures, and other significant observations that are considered to be non-reportable conditions. The full response made by Maze & Associates to the Request For Proposal shall be incorporated by reference in fully describing the work schedule and performance of tasks by the Consultant. The scope of the work is for Auditing and financial report preparation over a five year period. The first year will include reports for the year ending June 30, 2012 and the final year of this agreement shall be for the financial reports covering the period ending June 30, 2016, unless the term is amended in writing. Consulting Services Agreement between April 17, 2012 City of Dublin and Maze and Associates Page 14 of 15 EXHIBIT B COMPENSATION SCHEDULE The following is the not-to-exceed compensation by scheduled task to be performed annually as described in the Scope of Services. ANNUAL COST BY TASK Fiscal Year Ending June 30th 2012 2013 2014 2015 2016 City Audit and CAFR $30,465 $31,074 $31,695 $32,329 $32,976 (Includes Management Letter) Single Audit Report 4,810 4,906 5,004 5,104 5,206 Alameda County 3,830 3,907 3,985 4,065 4,146 Transportation Commission (Measure B) Appropriations Limit 595 607 619 631 644 Calculation State Controller Financial 3,580 3,652 3,725 3,800 3,876 Transactions State Controller Street 1,280 1,306 1,332 1,359 1,386 Report Printing Publication 2,000 2,000 2,000 2,000 2,000 Reimbursable Expenses Total For Year $46,560 $47,452 $48,360 $49,288 $50,234 Hourly Rates These rates are applicable should the City require additional services that are agreed to in writing prior to being performed and are beyond the fixed price scope of services above. Consultant agrees to use the following hourly rates, which may be adjusted during the term of this agreement by a maximum of 2 percent each July 1St beginning July 1, 2013. Partner $300.00 Director $150.00 Supervisor $115.00 Associates $ 85.00 Administrative Staff $ 65.00 Consulting Services Agreement between April 17, 2012 City of Dublin and Maze and Associates Page 15 of 15