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HomeMy WebLinkAboutItem 4.15 AuditSvcsVavrinekCITY CLERK FILE # 600-30 AGENDA STATEMENT CITY COUNCIL MEETING DATE: (March 20, .2001) SUBJECT: Agreement For Audit Services - Vavrinek, Trine, Day & Co. (VTD) Report Prepared by: Carole A. Perry, Administrative Services Director and Fred Marsh, Finance Manager ATTACHMENTS: Excerpts From Proposal Proposed Agreement Budget Change Form RECOMMENDAT~I. 2. Accept the recommendation of the City Council Audit Subcommittee and authorize the City Manager to execute the Agreement on behalf of the City. Approve Budget Change Form FINANCIAL STATEMENT: The anticipated cost for Audit Services related to Fiscal Year 2000/01 are $33,100. In addition, as part of the proposed agreement, VTD agrees to provide assistance to the City with the implementation of Governmental Accountin~ Standards Board Statement 34 (GASB 34) at a cost not to exceed $30,000. DESCRIPTION: On April 23, 1996 City Council approved a contract with VTD to provide audit services to the City for five years covering the City's Comprehensive Annual Reports (CAFRs) for Fiscal Years 1995-96 through 1999-2000. Staff met with the City Council Audit Subcommittee (Mayor Houston and Councilmember Zika) in December 2000 to go over the most recent audit report and discuss the status of the contract. The Committee felt that VTD had provided quality audit services to the City during the last five fiscal years. They also indicated their desire to continue with the same audit firm to minimize impacts on Staff in lieu of the significant amount of staff time needed for the implementation of GASB 34, as discussed in a subsequent section below. Thus the Subcommittee recommended that Staff enter into negotiations with VTD to extend the contract for an additional three years and bring back the proposed contract to Council for approval. Firm Backl~round Attachment 1 includes excerpts from the proposal submitted by VTD. The ~rm's primary offices are located in Pleasanton and Southern California. VTD has extensive experience performing governmental audits and has provided the City with a variety of professional services during the last five years. The firm has committed to providing highly skilled personnel in the field to meet the City's expectations for the term of the agreement. The firm is proposing to continue with Mr. Kevin Pulliam as Engagement Parmer, Ms. Gail Smith as Audit Manager and Travis Hiekey as Audit Supervisor. Staff has also included language in the proposed agreement to provide for City approval if the audit team is restmctured in future years. COPIES TO:Kevin Pulliam, VTD ITEM NO. ~ G:XAUDITXAgreementsXAgenda for Audit Services Agreement. DOC Scone of Audit Services To Be Performed The scope of work proposed is similar to the audit services provided by VTD in prior Fiscal Years and meets the anticipated needs of the City. The scope is included as Exhibit A in the proposed Agreement in Attachment 2. The scope was broken into two segments: Basic Reports and Optional Reports. The Basic Reports will be required each year and they include the following elements: * Independent Auditor' s Report including General Purpose Financial Statements · Management Letter including findings, statements, or recommendations related to internal control, compliance issues, and/or accounting systems and functions · Alameda Transportation Authority Measure B Compliance Audit · Review of the Annual Gann Appropriations Limit Calculation · State Controllers Report of Financial Transactions · State Controllers Annual Street Report · City Council Audit Summary The need for the preparation of the Optional Reports listed below will be determined by Staff prior to the final stage of the audit for each Fiscal Year. Staff anticipates VTD completing all of the special audits and reports listed below for Fiscal Year 2000-01: · Transient Occupancy Tax audit on one of the City' s Hotels · Single Audit (required if the City receives more than $300,000 in Federal funds in a Fiscal Year) · Metropolitan Transportation Commission GVlTC) Audit (required if the City receives TDA funds for the construction of a Bicycle/Pedestrian projects such as the Iron Horse 'Trail) · State Transportation Improvement Project (STIP) Audit for Dublin Boulevard Widening Project Scone of Additional Consultin~ and Audit Services Related to the Imnlementation of GASB 34 In June 1999, GASB 34, which establishes a new framework for the financial reports and accounting standards of local governments, was approved by the Governmental Accounting Standards Board. GASB 34 represents the biggest single change in the history of governmental accounting. This new standard is supported by a number of users and professional associations such as the Government Finance Officers Association (GFOA) and the Califomia Society of Finance Municipal Officers (CSFMO), as well as credit rating agencies who are one of the primary users of the City's annual audit reports. There are several reasons why it is important for the City to develop a plan to become in compliance with GASB 34, including the following: a, It will allow the City to maintain compliance with Generally Accepted Accounting Procedures (GAAP). If the City decided not to implement GASB 34, the auditors would issue a qualified opinion (as opposed to an unqualified opinion) on the City's financial statements. A qualified opinion could have a negative impact on the City's ability to obtain additional grant funds and long-term financing in the future. b, It will provide summary financial statements that will allow users to quickly obtain the financial positions of the City's major funds, such as its General Fund and Impact Fee funds. In addition, information on the original as well as the final amended budgets will now be included in the City's CAFRo Under GASB 34, the City's CAFR will contain a new section called a management's discussion and analysis (MD&A). This section will provide fmancial report users with a simple narrative introduction, overview and analysis of the basic financial statements, similar to that provided by Fortune 500 companies in their annual reports to their stockholders. It will require the City to account for and develop a plan to systematically maintain and repair its infrastructure obtained on or after 1980 at a condition level predetermined by the City. Previously the City had only expensed any infrastructure related items and had not recorded them as assets on its general ledger. This new requirement will result in the City capitalizing all expenditures for new roads, sidewalks, drainage systems and other related infrastructure expenditures. It will not include the water and sewer systems located in the City, as those have. been created and maintained by other govemmental agencies. The required implementation date for the new standard varies depending on the financial size of the agency. For the City of Dublin, since total revenues for all of its funds were less than $100 million for Fiscal Year 1998-99, the City will be required to implement GASB 34 no later than Fiscal Year 2002-03. However, VTD is'recommending that the City implement GASB 34, including the new reporting requirements and the reporting of all City infrastructure, as part of the City's June 30, 2002 CAFR. VTD recommends early implementation to ensure the availability of all consultants required for the implementation of this new standard (including those needed for the valuation of the City's infrastructure), as it is anticipated that many cities will defer implementing GASB 34 until Fiscal Year 2002-03. In order to assist the City with the implementation of GASB 34, VTD has agreed to provide the following services at a cost not to exceed $30,000 (based upon a total estimate of 240 hours of consulting services): e, Preparation of the City's CAFR in a GASB 34 compliant format (120 hours) Assistance with the preparation of the new MD&A section in the CAFR (24 hours) Assistance with and review of the City's valuation of its infrastructure (64 hours) .Assistance with the development of new accounting policies and procedures required under GASB 34 (24 hours) Review of new format of CAFR with City Council (8 hours) The City will also separately budget for contract engineering services to assist Staff in valuing the City's infrastructure part of its operating budget for Fiscal Year 2001-02. Terms of Enl~al~ement Staff has utilized the standard City Agreement for consultants as shown in Attachment B. The firm has presented a fixed schedule of compensation for each of the three fiscal years covered by the Agreement. The total costs each year will depend on the number of optional reports required by the City. The costs are presented in the schedule attached as Exhibit B of the Agreement, and they provide for an average increase of 5.3% per year. The following is a breakdown of the services recommended to be provided by VTD for Fiscal Year 2000/01: In addition, Staff is proposing to include an additional $30,000 related to the implementation of GASB 34, of which it is anticipated that approximately $5,000 will be spent by June 30, 2001. None of this amount has been included in the City's operating budget for Fiscal Year 2000-01 and has been included in the Attachment 3 as a proposed budget adjustment. Required Reports Transient Occupancy Tax for One Hotel Single Audit STIP Audit ' MTC Audit Total For Fiscal Year 2000-01 Amountfor Amountfor Amount of Fiscal Year FiscalYear Increase over 2000/01 1999/2000 1999/2000 $23,400 $21,610 $1,790 2,500 2,400 100 3,000 2,600 400 2,100 0 2,100 2,100 2,000 100 $33,100 $28,610 $4,490 The current schedule provides for the firm to conduct interim work prior to June 30, 2001.. The costs associated with this work will be expensed in the current year and it is within the adopted 2000/01 City Council Professional Services Budget. Staff will incorporate the cost of services which will be performed after June 30, 2001 in the Preliminary Fiscal Year 2001/02 Budget. Recommendation It is recommended that the City Council authorize the City Manager to execute the proposed agreement with VTD and authorize the budget change form. Vavrinek, Trine, Day & Co., LLP Certified Public Accountants & Consultants VALUE THE DIFFERENCE February 28, 2001 Ms. Carole Perry Administrative Services Director City of Dublin 100 Civic Plaza Dublin, CA 94568 Dear Ms. Perry: We are pleased to confirm our understanding of the services we are to provide the City of Dublin for the years ended June 30, 2001, 2002 and 2003. We will audit the general-purpose financial statements of the City of Dublin as of and for the years ended June 30, 2001, 2002 and 2003. Also, the document we submit to you will include the following additional information that will be subjected to the auditing procedures applied in our audit of the general-purpose financial statements: 1. Schedule of expenditures of federal awards, if applicable. 2. The combining individual fund and account group financial statements, schedule, and any other information. In addition, we will prepare the reports as detailed on the attached schedule and, if needed, a management letter. Audit Objectives The objective of our audit is the expression of an opinion as to whether your general-purpose financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles and to report on the fairness of the additional information referred to in the first paragraph when considered in relation to the general-purpose financial statements taken as a whole. The objective also includes reporting on: Internal control related to the financial statements and compliance with laws, regulations, and the provisions of contracts or grant agreements, noncompliance with which could have a material effect on the financial statements in accordance with Government Auditing Standards. Internal control related to major programs and an opinion (or disclaimer of opinion) on compliance with laws,; regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 1996 and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. The reports on internal control and compliance will each include a statement that the report is intended for the information and use of the audit committee, management, specific legislative orregulatory bodies, federal awarding agencies, and if applicable, pass-through entities. 8270 Aspen Street Rancho Cucamonga, CA 91730 Tel: 909.466.4410 Fax: 909.466.4431 ranchinfo@vtdcpa.corn www. vtdcpa.com FRESNO · LAGUNA HILLS · PLEASANTON · RANCHO CUCAMONGA SACRAMENTO * SAN JOSE City of Dublin Engagement Letter February 28, 2001 Page 2 Our audit will be conducted in accordance with generally accepted auditing standards; the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; and the provisions of OMB Circular A-133, and will include tests of accounting records, a determination of major program(s) in accordance with Circular A-133, and other procedures we consider necessary to enable us to express such an opinion and to render the required reports. If our opinion on the general-purpose financial statements or the Single Audit compliance opinion is other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit 'or are unable to form or have not formed an opinion, we may decline to express an opinion or to issue a report as a result of this engagement. Management Responsibilities Management is responsible for establishing and maintaining internal control and for compliance with the provisions of contracts, agreements, and grants. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of the controls. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executedin accordance with management's authorizations and recorded properly to permit the preparation of general-purpose financial statements in accordance with generally accepted accounting principles, and that federal award programs are managed in compliance with applicable laws and regulations and the provisions of contracts and grant agreements. Management is responsible for making all financial records and related information available to us. We understand that you will provide us with such information required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, including the schedule of expenditures of federal awards, but the responsibility for the financial statements remains with you. That responsibility includes the establishment and maintenance of adequate records and effective internal control over financial reporting and compliance, the selection and application of accounting principles, and the safeguarding of assets. Additionally, as required by OMB Circular A-133, it is management's responsibility to follow up and take corrective action on reported audit findings an&to prepare a summary schedule of prior audit findings and a corrective action plan. The summary schedule of prior audit findings should be available for our review. Management is responsible for adjusting the financial statements to correct material misstatements and for affirming to the auditor in the representation letter that the effect of any uncorrected misstatements aggregated by the auditor during the current period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. City of Dublin Engagement Letter FebmaW 28, 2001 Page 3 Audit Procedures - General An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. As required by the Single Audit Act Amendments of 1996 and OMB Circular A-!33, pur audit will include test of tranSactions related to major federal award programs for compliance with applicable laws and regulations and the provisions of contracts and grant agreements. Because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions, there is a risk that material errors, fraud, other illegal acts, or noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect errors, fraud, or other illegal acts that are immaterial to the general-purpose financial statements or to major programs. However, we will inform you of any material errors and any fraud that comes to our attention. We will also inform you of any other illegal acts that come to our attention, unless clearly inconsequential. We will include such matters in the reports required for a Single Audit. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors. Our procedures will' include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will also require certain written representations from you about the financial statements and related matters. An audit of the general-purpose financial statements performed in accordance with generally accepted auditing standards is not designed to determine whether the computer systems of the City are year 2000 compliant, or to provide any assurance on whether the City has addressed all of the affected systems on a timely basis. Further, we have no responsibility with regard to the systems of vendors, service providers, or any other third parties. These are responsibilities of City's management. However, we may choose to communicate matters that come to our attention relating to the Year 2000 Issue. Audit Procedures - Internal Controls In planning and performing our audit, we will consider the internal control sufficient to plan the audit in order to determine the nature, timing, and extent of our auditing procedures for the purpose of expressing our opinions on the City's general~purpose financial statements and on its compliance with requirements applicable to major programs. City of Dublin Engagement Letter February 28, 2001 Page 4 We will obtain an understanding of the design of the relevant controls and whether they have been placed in operation, and we will assess control risk. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the general- purpose financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the general-purpose financial statements. Tests of controls relative to the general-purpose financial statements are required only if control risk is assessed below the maximUm level. Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards. As required by OMB Circular A-133, we will perform tests of controls to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements, applicable to each major federal award program. However, our tests will be less in scope than would be necessary to render an opinion on those controls and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to OMB Circular A-133. An audit is not designed to provide assurance on internal control or to identify reportable conditions. However, we will inform the governing body or audit committee of any matters involving internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general-purpose financial statements. We will also inform you of any nonreportable conditions or other matters involving internal control, if any, as required by OMB Circular A-133. Audit Procedures - Compliance Our audit will be conducted in accordance with the standards referred to in the section titled Audit Objectives. As part of obtaining reasonable assurance about whether the general-purpose financial statements are free of material misstatement, we will perform tests of the City's compliance with applicable laws and regulations and the provisions of contracts and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards. OMB Circular A-133 requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with applicable laws and regulations and the provisions of contracts and grant agreements applicable to major programs. Our procedures will consist of the applicable procedures described in the OMB Circular A-133 Compliance Supplement. The purpose of those procedures will be to express an opinion on the City of Dublin's compliance with requirements applicable to major programs in our report on compliance issued pursuant to OMB Circular A-133. City of Dublin Engagement Letter February 28, 2001 Page 5 Audit Administration, Fees, and Other We understand that your employees will prepare all cash, accounts receivable, or other confirmations we request and will locate any invoices selected by us for testing. At the conclusion of the engagement, it is management's responsibility to submit the reporting package (including financial statements, schedule of expenditures of federal awards, summaw' schedule of prior audit findings, auditors' reports, and a corrective action plan) along with the Data Collection Form to the designated federal clearinghouse and, if appropriate, to pass-through entities. The Data Collection Form and the reporting package must be submitted within the earlier of 30 days after receipt of the auditors' reports or nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audits. At the conclusion of the engagement, we will provide information to management as to where the reporting packages should be submitted ~nd the number to submit. The Agency will also be responsible to file the annual report with the applicable State agencies. The workpapers for this engagement are the property of Vavrinek, Trine, Day & Co., LLP, and constitute confidential information. HoweVer, we may be requested to make certain workpapers available to Federal Grantors pursuant to authority given to it by law or regulation. If requested, access to such workpapers will be provided under the supervision of Vawinek, Trine, Day & Co., LLP personnel. Furthermore, upon request, we may provide photocopies of selected workpapers to Federal Grantors. The Federal Grantors may intend, or decide, to distribute the photocopies or information contained therein to others, including other governmental agencies. The workpapers for this engagement will be retained for a minimum of three years after the date the auditors' report is issued or for any additional period requested by the Oversight Agency for Audit. If we are aware that a federal awarding agency, pass-through entity, or auditee is contesting an audit finding, we will contact the party(ies) contesting the audit finding for guidance prior to destroying the workpapers. Our fees for these services will be at our standard hourly rates plus out-of-pocket costs (such as report reproduction, typing, postage, travel, copies, telephone, etc.) except that we agree that our gross fee, including expenses, will not exceed the fees as detailed in the attached schedule. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. If we elect to terminate our services for nonpayment, you will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket costs through the date of termination. The fees in the attached schedule are based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. City of Dublin Engagement Letter February 28, 2001 Page 6 Hold Harmless Clause Any costs incurred by Auditor for legal and/or court actions related to the engagement for those services required pursuant to this Agreement, such as subpoenas, testimony or consultation involving private litigation, arbitration or government regulatory inquiries and resulting from City' s written request or lawful subpoena, will be paid at the rates agreed to by City in annual Engagement Letters between City and Auditor. Legal Costs Clause The City shall hold harmless and indemnify the Auditor from any liability, damages and legal costs sustained by Auditor for the limited event that any written representation from the City provided to Auditor shall be found to be false, Jury Waiver Clause In the unlikely event that differences concerning our services or fees should arise that are not resolved by mutual agreement, we both recognize that the matter will probably involve complex business or accounting i~ssues that would be decided most equitably to us both by a judge heating the evidence without a jury. Accordingly, you and we agree to waive any tight to a trial by jury in any action, proceeding, or counterclaim arising out of our services and fees for this engagement. Government Auditing Standards require that we provide you with a copy of our most recent quality control review report. Our 2000 peer review report accompanies this letter. We appreciate the opportunity to be of service to the City of Dublin and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. Yours very truly, Kevin T. Pulliam of VAVRINEK, TRINE, DAY & CO., LLP KTP/cjh Enclosures 2K0977 P~ESPONSE: This letter correctly sets forth the understanding of the City of Dublin. By: Title: Date: Employer Identification Number: CITY OF DUBLIN SCHEDULE OF AUDIT FEES 2000-2001 2001-2002 2002-2003 City of Dublin Single Audit, if applicable Measure B Gann Limit Dublin MTC State Controllers Report Annual Street Report STIP (State Transportation Implimentatic The annual Transit Occupancy Tax (TOT) Audits will be billed at $ 18,500 $ 19,000 $ 19,500 3,000 3,200 3,400 2,100 2,200 2,300 400 450 500 2,100 2,200 2,300 1,500 1,600 1,700 900 1,000 1,100 2,100 2,200 2,300 2,500 2,600 2,700 The costs for the implementation of GASB 34 have been detailed below: Rates by Staffing Level Parmer/Principal $ 170 $ 175 $ 180 Manager 135 140 145 Supervisor 115 120 125 Senior 95 100 105 Staff 60 65 70 Paraprofessional 40 40 40 Governmental Accountin~ Standards Board fGASB) Statement No. 34 ImOlementation Costs. Our fee for the implementation of GASB 34 will not exceed $30,000. We estimate the hours to implement the new pronouncement ~vill be approximately 240 we will perform the following: We expect the implementation to be performed in different segments. These segments have been defined below with an estimated timeline for completion. As noted in our proposal the fee for each of the areas noted below will vary depending upon the assistance provided by City staff. GASB 34 Planning meetings. Timeline May 2001 · Meet with City staff to forrealize timelines and to agree upon the division of work required to implement the new GASB. We estimate four to eight hours for this first meeting. Meetings with city engineers/consultants. Timeline May 2001 - December 2001 · We suggest that the city put together a listing of vendors for the infrastructure valuation by the end of May 2001. The City should also issue and RFP for the consulting services by the end of May. · By the end of June 2001 the City should have chosen the vendors to complete the valuations. · A contract should be executed by the end of July so that work on the valuations can start in August. August through November, we would expect the infrastructure valuation to be completed during these months. We will need to be involved in a preliminary planning meeting and at least one progress meeting to review the assumptions used in the valuations. · The final report should be completed in December 2001 and we should be involved in the final exit meeting to cover the results of the valuations. · This assumes that the City contracts, or uses in house engineers to complete the infrastructure valuation during this time period. The final numbers should be completed by the end of 2001 for the use in the next section, the completion of the preliminary CAFR in GASB 34 format. The above bullets have us participating in a minimum of three meetings. We estimate that each meeting will take between four to eight hours. Additional meetings may be required based upon the progress and circumstances encountered during the valuation process. Completion of the City's CAFR in the new format. Timeline January - March 2002 · It is during this time period that the majority of the work will be performed. · During January and February we will work with City staff to ensure that the City of Dublin's CAFR is prepared in compliance with the new requirements. The City is not required to submit a compliant report until June 30, 2003. By preparing the report early we will comply with the requirements with an early implementation, or if we find problems with the implementation process we will have a year to find a solution. · During March we will assist the City in the preparation of the Management Discussion and Analysis (MD&A) section of the CAFR and put together any final information that will be necessary to complete the CAFR. · Also during March 2002 we will assist the City in the development of new policies and procedures to track GASB 34 information so that the City's records can be maintained in a compliant manner on an ongoing basis. · We expect to have the June 30, 2001 CAFR restated into the GASB 34 format no later than the end of March 2002. This will enable the City to prepare a June 30, 2002 CAFR in the new format. We estimate the following hours: Preparation of the City's CAFR in a GASB 34 compliant format: Assistance in the preparation of the MD&A section: Assistance in the development of new policies/procedures: Exit meeting with City staff and possibly City Council to cover New format: Assistance with and renew of City' s valuation of infrastructure: Total 120 hours 24 hours 24 hours 8 hours 64 hours 240 hours STANDARD CONTRACTUAL SERVICES AGREEMENT THIS AGREEMENT is made at Dublin, California, as of March 20, 2001 by and between the CITY OF DUBLIN, a municipal corporation ("CITY"), and Vavrinek, Trine, Day & Co. Certified Public Accountants., ("CONTRACTOR"), who agree as follows: 1. SERVICES. Subject to the terms and conditions set forth in this Agreement, CONTRACTOR shall provide to CITY the services described in Exhibit A. CONTRACTOR shall provide said services at the time, place and in the manner specified in Exhibit A. 2. PAYMENT. CITY shall pay CONTRACTOR for services rendered pursuant to this Agreement at the time and in the manner set forth in Exhibit B. The payments specified in Exhibit B shall be the only payments to be made to CONTRACTOR for services rendered pursuant to this Agreement. CONTRACTOR shall submit all billings for said services to CITY in the manner specified in Exhibit B; 0r, if no manner be specified in Exhibit B, then according to the usual and customary procedures and pra'ctice's which CONTRACTOR uses for billing clients similar to CITY. 3. FACILITIES AND EOUIPMENT. ExCept as set forth in Exhibit C, CONTRACTOR shall, at its sole cost and expense, furnish all facilities and equipment which may be required for. furnishing services pursuant to this Agreement. CITY shall furnish to CONTRACTOR only the facilities and equipment listed in Exhibit C according to the terms and conditions set forth in Exhibit C. 4. GENERAL PROVISIONS. The general provisions set forth in Exhibit D are part of this Agreement. In the event of any inconsistency between said general provisions and any other terms or conditions of this Agreement, the other term or condition shall control insofar as it is inconsistent with the general provisions. 5. EXHIBITS. All exhibits referred to herein are attached hereto and are by this reference incorporated herein. 6. CONTRACT ADMINISTRATION. This Agreement shall be administered by the Administrative Services Director ("ADMINISTRATOR"). All correspondence shall be directed to or through the ADMINISTRATOR or his or her designee. NOTICES. Any written' notice to CONTRACTOR shall be sent to: Mr. Kevin T. Pulliam, Partner Vavrinek, Trine, Day, & Co. Rancho Cucamonga California 91729-4407 Post Office Box 4407 Any written notice to CITY shall be sent to: Carole A. Perry, Administrative Services Director City of Dublin 100 Civic Plaza Dublin, California 94568 Executed as of the day first above stated: CITY OF DUBLIN a municipal corporation Attest: Kay Keck, City Clerk By Richard Ambrose, City Manager FOR CONTRACTOR: By Kevin T. Pulliam, Partner Vavrinek, Trine, Day, & Co., C.P.A.'s ATTACHMENT 2 Exhibit A - Scope of Services I. General This agreement shall cover the required reports for the fiscal years ending June 30, 2001, 2002 and 2003. These audits are to be performed in accordance with the provisions contained in this Exhibit and the proposal and GASB 34 implementation schedule submitted by Vavrinek Trine, Day, & Co. to the City of Dublin dated February 28, 2001. Further, in accordance with AICPA procedures the City Staff may be required to execute an Engagement Letter, specifying terms and scope of the audit. The City of Dublin desires the auditor to express an opinion on the fair presentation of its general purpose financial statements in conformity with generally accepted accounting principles. The audit shall include an examination of all funds of the City of Dublin by Certified Public Accountants duly authorized to practice as such by the State of California. The auditor shall also be responsible for performing certain limited procedures involving required sutlplementary information required by the Governmental Accounting Standards Board, as mandated by generally accepted auditing standards. Auditor shall prepare all trial balance worksheets and summary schedules including balance sheets, revenues, expenditures, and changes in fund balance for each fund of the City. Data source for the schedules will be the computerized financial statements supplied by the City. Report preparation and necessary editing shall be the responsibility of the Auditor. Auditor shall submit for management review a draft of all reports. The final reports are subject to review by an ad-hoc City Council subcommittee. Auditor shall incorporate as part of the basic proposal meeting time with Staff and the committee for the purpose of discussing the audit or management letter and its conclusions. II. Basic Reports To Be Issued Following the completion of the audit of the fiscal year's financial statements, the auditor shall issue the following: Independent Auditor's Report - A report on the fair presentation of the financial statements in conformity with generally accepted accounting principles, based upon an audit of the General Purpose Financial Statements. The Auditor shall also prepare and deliver a City Council Summary of the Audit Report. A Management Letter which includes findings, statements, observations, opinions, comments, or recommendations related to: (1) Systems of internal control based upon the auditors' understanding of the control structure and assessment of control risk. (2) Compliance with applicable laws and regulations. (3) Accounting systems, functions, procedures and processes especially with regard to cost effectiveness. C. Alameda County Transportation Authority - Measure B Local Distribution Compliance Audit. Agreed Upon Procedures Performed Related to the calculation of the Gann Appropriations Limitation. E, Annual Report of Financial Transactions to State Controller, must be prepared and available for City Staff review 5 days prior to the statutory submittal deadline. F. Annual Street Report to the State Controller, must be prepared and available for City Staff review 5 days prior to the statutory submittal deadline. III. ~Additional ReportS:Which May Be Requested Annually At City Option Due to the fluctuation in the receipt of special grant ~mds the need for some reports will be based upon whether the City meets the audit threshold for the Specific program, and/or whether the City received any funds under the program. Also, depending on Staff availability the .City may elect to prepare the State Controllers Report of Financial Transactions and/or Annual Street Report. A. Single Audit Report of Federal Financial Assistance B. Metropolitan Transportation Commission (MTC) Bicycle / Pedestrian Projects in accordance with the Transportation Development Act (TDA). C.' State Transportation Improvement Program. D. Transient Occupancy Tax Audit of one hotel in the City of Dublin IV. Supplemental Reports / Studies As part of this contract, VTD agrees to provide assistance to the City with the implementation of Governmental Accounting Standards Board Statement 34 (GASB 34) at a cost not to exceed $30,000, including performing the following services: a, Preparation of the City's CAFR in a GASB 34 compliant format Assistance with the preparation of the new MD&A section in,the CAFR Assistance with and review of the City's valuation of its infrastructure Assistance with development of new accounting policies and procedures required under GASB 34 Review of new format of CAFR with City Council (8 hours) Reports on such other audits or agreed-upon procedures as may be agreed to in writing and as stated in a supplemental audit agreement. The scope of the study and associated costs shall be approved by City prior to beginning work. Payments for these additional services shall be reimbursed at the rates noted in Exhibit B of this contract. Number of Copies of Report To Be Produced A) B) B) C) D) E) F) G) H) Annual Financial Report - 75 copies City Council Summary - 25 copies Management Letter - 25 copies Measure B Compliance Audit - 25 copies Gann Limit - 25 copies Single Audit, if applicable, 25 bound reports. MTC Audit, if applicable, 25 bound reports. Transient Occupancy Tax Audit, if applicable, 10 reports STIP, if applicable, 25 bound reports. State Controllers Report of Financial Transactions -2 copies State Controllers Annual Street Report - 2 copies VI. Auditing Standards To Be Followed The audit shall be performedin accordance with generally accepted auditing standards as set forth by the AICPA "Audits of State and Local Governmental Units" and publications of the Governmental Accounting Standards Board.' As applicable, the provisions of the Single Audit Act of 1984 and the provisions of U. S. Office of Management and Budget (OMB) Circular A-133, Audits of State and Local Governments shall also be addressed. VII. Special Considerations The City of Dublin has been awarded the Government Finance Officers Association of the United States and Canada (GFOA) Certificate of Achievement for Excellence in Financial Reporting and the California Society of Municipal Finance Officers (CSFMO) Outstanding Financial Reporting Programs for ten consecutive years. The City of Dublin anticipates that it will continue to send its comprehensive annual financial report to GFOA and CSFMO for review in thdir CAFR award programs. The Auditors shall ensure that the format of reports shall allow the City to continue to meet the requirements in effect for each year for these programs. This also requires that the Auditor ensure that the audit report and financial statements are complete in time for submission to these programs. The Auditor shall also assist with developing responses to any comments or deficiencies noted by GFOA and CSFMO. Due to potential development projects, the City of Dublin currently anticipates that during the term of this agreement, it may prepare one or more official statements in connection with the sale of debt securities. The Financing documents may contain the general purpose financial statements and the auditor's report thereon. The auditor shall be required, if requested by the fiscal advisor and/or the underwriter, to issue a "consent and citation of expertise" as the auditor and any necessary "comfort letters." ~ VIII. Assistance To Be Provided By The City City Staff will be available during the audit to assist the auditor by providing information, documentation and explanations. City Staff will type the necessary confirmation letters prepared by the Auditor. IX. AUDITOR STAFFING An integral part of this agreement is the assignment and use of Audit staff who possess a significant level of experience performing governmental audits. Vavrinek, Trine, Day, & Co. shall assure that the Engagement Parmer, Audit Manager and Audit Supervisor are actively involved in the completion of the field work as stated in the Proposal dated February 28, 2001. For the 2000/01 Audit the audit team shall include Kevin Pulliam as Engagement Partner, Gail Smith as Audit Manager and Travis Hickey as Audit Supervisor. Any proposed changes to the staffing of these three positions in future years shall be subject to the review and approval of the City. EXHIBIT B PAYMENT SCHEDULE Fiscal Year Ended June 30th Reports 2001 City CAFR $18,500 Measure B Compliance 2,100 Gann Limit 400 State Controller's Report 1,500 Annual Street Report 900 Total $23,400 Optional Services Single Audit $3,000 MTC 2, 100 STIP 2,100 Transient Occupancy Tax Audit 2,500 Total $9,700 2002 2003 $19,000 $19,500 2,200 2,300 450 500 1,600 1,700 1,000 1,100 $24,250 $25,100 $3,200 $3,400 2,200 2,300 2,200 2,300 2,600 2,700 $10,200 $10,700 In addition, VTD will provide professional services on an hourly basis to assist the City with the implementation of GASB 34. This amount shall not exceed $30,000 in total for the three year term of this contract unless an amendment is approved by both parties to this contract. The City shall pay the Auditor the payment due under this contract as the audit work is completed and within 30 days of receipt of invoices from the Auditor. The payment for services may be billed and paid for as the work progresses. A 10% retention may be withheld by the City for all amounts invoiced until the City has received the final copies of the reports noted above. Reports on such other audits or agreed-upon procedures as may be agreed to in writing and as stated in a supplemental audit agreement. The scope of the. study and associated costs shall be approved by City prior to beginning work. Payments for these additional services shall be reimbursed at the hourly rates. listed below: Fiscal Year Ended June 30th Rates by Staffing Level 2001 2002 2003 Partner / Principal $170 $175 $180 Manager $135 $140 $145 Supervisor $115 $120 $125 Senior $95 $100 $105 Staff $60 $65 $70 Paraprofessional $40 $40 $40 g:~audit',agreements\payment schedule.xls EXHIBIT C - City Facilities CITY shall fumish physical facilities such as desks, filing cabinets, and conference space, as may be reasonably necessary for CONTRACTOR'S use while consulting with CITY employees and reviewing records and the information in possession of CITY. The location, quantity, and time of furnishing said physical facilities shall be in the sole discretion of CITY. In no event shall CITY be obligated to furnish any facility which may involve incurring any direct expense, including, but not limiting the generality of this exclusion, long-distance telephone or other communication charges, vehicles, and reproduction facilities. EXHIBIT D GENERAL PROVISIONS 1. INDEPENDENT CONTRACTOR. At all times during the term of this Agreement, CONTRACTOR shall be an independent contractor and shall not be an employee of CITY. CITY shall have the fight to control CONTRACTOR only insofar as the results of CONTRACTOR'S services rendered pursuant to this Agreement; however, CITY shall not have the fight to control the means by which CONTRACTOR accomplishes services rendered pursuant to this Agreement. 2. LICENSES; PERMITS; ETC. CONTRACTOR represents and warrants to CITY that he has all licenses, permits, qualifications and approvals of whatsoever nature which are legally required for CONTRACTOR to practice his profession. CONTRACTOR represents and warrants to CITY that CONTRACTOR shall, at his sole cost and expense, keep in effect at all times during the term' of this Agreement any licenses, permits, and approvals which are legally required for CONTRACTOR to practice his profession. 3. TIME. CONTRACTOR shall devote such time to the performance of services pursuant to this Agreement as may be reasonably necessary for satisfactory performance of CONTRACTOR'S obligations pursuant to this Agreement. 4. INSURANCE REQUIREMENTS. CONTRACTOR shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by the CONTRACTOR, his agents, representatives, employees or subcontractors. The cost of such insurance shall be included in the CONTRACTOR'S bid. (a) Minimum Scope of Insurance. Coverage shall be at least as broad as: 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; or Insurance Services Office Commercial General Liability coverage ("occurrence" form CG 0001 .) Insurance Services Office form number CA 0001 (Ed. 1/78) coveting Automobile Liability, code 1 "any auto" and endorsement CA 0025. Workers' Compensation Insurance as required by the Labor Code of the State of California and Employers Liability Insurance. (b) Minimum Limits of Insurance. CONTRACTOR shall maintain limits no less than: General Liability: $1,000,000 combined single limit per occurrence for bodily injury, personal injury and property damage. If commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit Shall be twice the required occurrence limit. Automobile Liability: $1,000,000 combined single limit per accident for bodily injury. and property damage. (C) (d) Workers' Compensation and Employers Liability: Workers' Compensation limits as required by the Labor Code of the State Employers Liability limits of $1,000,000 per accident. of Califomia and Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to and approved by the CITY. At the option of the CITY, either the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects the CITY, its officers, officials and employees; or the CONTRACTOR shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. Other Insurance Provisions. The policies are to contain, or be endorsed to contain, the following provisions: 1. General Liability and Automobile Liability Cove. rages. The CITY, its officers, officials, employees and volunteers are to be covered as insureds as respects: liability arising out of activities performed by or on behalf of the CONTRACTOR; products and completed operations of the CONTRACTOR, premises owned, occupied or used by the CONTRACTOR, or automobiles owned, leased, hired or borrowed by the CONTRACTOR. The coverage shall contain no special limitations on the scope of the protection afforded to the CITY, its officers, officials, employees or volunteers. The CONTRACTOR'S insurance coverage shall be primary insurance as respects the CITY, its officers, officials, employees and volunteers. Any insurance or self- insurance maintained by the CITY, its officers, officials, employees or volunteers shall exceed the CONTRACTOR'S insurance and shall not contribute with it. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to the CITY, its officers, officials, employees or volunteers. The CONTRACTOR'S insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability.. 2. Workers' Compensation and Employers Liability Coverage. The insurer shall agree to waive all rights of subrogation against the CITY, its officers, officials, employees and volunteers for losses arising from work performed by the CONTRACTOR for the CITY. 3. Professional Liability. CONTRACTOR shall carry professional liability insurance in an amount deemed by the CITY to adequately protect the CONTRACTOR against liability caused by negligent acts, errors or omissions on the part of the CONTRACTOR in the course of performance of the services specified in this Agreement. Each insurance policy required by this clause shall be endorsed to 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. (e) Acceptability of Insurers. Insurance is to be placed with insurers with a Bests' rating of no less than A:VII (f) Verification of Coverage. CONTRACTOR shall furnish CITY with certificates of insurance and with original endorsements effecting coverage required by this clause. 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 certificates and endo/sements are to be received and approved by the CITY before work commences. The CITY reserves the right to require complete, certified copies of all required insurance policies, at any time. (g) Subcontractors. CONTRACTOR shall include all subcontractors as insureds under its policies or shall fumish separate certificates and endorsements for each subcontractor. All coverages for subcontractors shall be subject to all of the requirements stated herein. (h) The Risk Manager of CITY may approve a variation in those 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. CONTRACTOR NO AGENT. Except as CITY may specify in writing, CONTRACTOR shall have no authority, express or implied, to act on behalf of CITY in any capacity whatsoever as an agent. CONTRACTOR shall have no authority, express or implied, pursuant to this Agreement to bind CITY to any obligation whatsoever. ASSIGNMENT PROHIBITED. No party to this Agreement may assign any right or obligation pursuant to this Agreement. Any attempted or purported assignment of any right or obligation pursuant to this" Agreement shall be void and of no effect. PERSONNEL. CONTRACTOR 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 removal of any such persons, CONTRACTOR shall, immediately upon receiving notice from CITY of such desire of CITY, cause the removal of such person or persons. STANDARD OF PERFORMANCE. CONTRACTOR 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 CONTRACTOR is engaged in the geographical area in which CONTRACTOR practices his profession. All instruments of service of whatsoever nature which CONTRACTOR delivers to CITY pursuant to this Agreement shall be prepared in a substantial, first class and workmanlike manner and conform to the standards of quality normally observed by a person practicing in CONTRACTOR's profession. 9. HOLD HARMLESS AND RESPONSIBILITY OF CONTRACTORS. CONTRACTOR shall take all responsibility for the work, shall bear all losses and damages directly or indirectly resulting to him, to · . :~ any subcontractor, to the CITY, to CITY officers and employees, or to parties designated by the CITY, on account of the performance or character of the work, unforeseen difficulties, accidents, occurrences or other causes predicated on active or passive negligence of the CONTRACTOR or any subcontractor. CONTRACTOR shall indemnify, defend and hold harmless the CITY, its officers, officials, directors, employees and agents from and against any or all loss, liabilityi expense, claim, costs (including costs of defense), suits, and damages of every kind, nature and description directly or indirectly arising from the performance of the work. This paragraph shall not be construed to exempt the CITY, its employees and officers from its own .fraud, willful injury or violation of.law whether willful or negligent. For purposes of Section 2782 of the Civil Code the parties hereto recognize and agree that this agreement is not a construction contract. By execution of this agreement CONTRACTOR acknowledges and agrees that he has read and understands the provisions hereof and that this paragraph is a material element of consideration. Approval of the insurance contracts does 'not relieve the CONTRACTOR or subcontractors from liability under this paragraph. 10. GOVERNMENTAL REGULATIONS. To the extent that this Agreement may be funded by fiscal assistance from another governmental entity, CONTRACTOR shall comply with all applicable rules and regulations to which CITY is bound by the terms of such fiscal assistance program. 11. DOCUMENTS. All working papers and reports must be retained, at the auditor's expense, for a minimum of three (3) years following completion of the audit, unless the firm is notified in writing by the City of Dublin of the need to extend the retention period. The auditor will be required to make working papers available, upon request, to the following parties or their designees: City of Dublin Parties designated by the federal or state governments or by the City of Dublin as part of an audit quality review process Auditors of entities of which the City of Dublin is a subrecipient of grant funds State of California, Office of the State Controller In addition, the firm shall respond to 'the reasonable inquiries of successor auditors and allow successor auditors to review working papers relating to matters of continuing accounting significance. CITY OF DUBLIN BUDGET CHANGE FORM New Appropriations (City Council Approval Required): Budget Transfers: CHANGE FORM # X From Unappropriated Reserves (If Other than General Fund, Fund No - From New Revenues From Budgeted Contingent Reserve (1080-799.000) Within Same Department Activity Between Departments (City Council Approval Required) Other !Narae: Name: General Fund - City Council Professional Services $5,000.00 Account #: Name: Account #: 001.10100.741.000 Name: /? Account #: Name: Account #: Name: Account #: Name: Account #: Name: Account #: Name: Account #i Name: Account #: Account #: City Manager: Signature ASD/Fin Mgr '/~~i ~ Signature Date: Date: REASON FOR BUDGET CHANGE ENTRY: To appropriate additional funds for professional services to provide assistance with the implementation of GASB 34. Mayor: Date: Signature Posted By: Date: G : L~ UD ITL t greementslFORM-budget change. doe Signature ATTACHMENT 3