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14 AUDITOR SELECTION 03-06-95
NO. 14 3-6-95 DATE: FEBRUARY 28· 1995 Inter-Com TO: WILLIAM A. HUSTON, CITY MANAGER FROM: RONALD A. NAULT, DIRECTOR OF FINANCE SUBJECT: AUDITOR SELECTION RECOMMENDATION: Pleasure. of the City Council FISCAL IMPACT: Not applicable DISCUSSION: At their previOus meeting the City Council continued the auditor selection agenda item and requested additional information. The following information has been added to the Audit Committee's original report: The Resume portion from each proposa.1. The separate pricing proposal from each firm. A summary of the proposed audit effort. A summary of the proposed audit pricing. Additional.communication from the Audit Committee. A member of .the Audit Committee will be available to answer specific questions the City Council may have regarding 'the proposals.on the evaluation process. Director of Finance RAN:is Attachments a:audtsetc.wah Caporicci & Larson Certified Public Accountants Three Hutton Centre Drive, Suite 630 Santa Aha, Califorma 92707 · Office: (714) 436-0927 FAX: (714) 436-0716 December 5, 1994 Mr. Ronald. A. Nault Director of Finance City of Tustin 300 Centennial Way Tustin, CA 92680 Dear Mr. Nault: The accounting firm of Caporicci & Larson, Certified Public Accountants (the Firm) is .Pleased to have the opportunity to respond to your request for a proposal to perform Auditing Services and to submit its qualifications to perform a general audit of the financial records of the City of Tustin (the "City"). The objective of our audit is to issue an opinion regarding the fairness of presentation of the City's financial position for the year ended June 30, 1995 with the option of auditing the. City's financial statements for each of the four subsequent fiscal years in accordance with generally accepted accounting principles. The audit to be performed will follow generally accepted auditing standards, U.S. General Accounting Officets Government Auditing Standards, Single Audit Act of 1984 requirements, and OMB-128 as amended. This proposal will introduce our Firm to you, highlight the background of the partners and staff assigned to the engagement, summarize our experience in the governmental area, and describe our approach to auditing the City. This proposal demonstrates our ability to render the quality examination and to perform the necessary accounting and auditing services requested by the City on a timely.basis. As a partner of the Firm, Gary Caporicci will be the primary contact for negotiation of the contract. Y6u may Contact him at the follocdng address and phone number: Mr. Gary M. Caporicci, Partner Caporicci & Larson Certified Public Accountants Three Hutton Centre Drive Suite 630 Santa Ana, California 92707 Phone Number: (714) 436-0927 Page 2 Letter of Transmittal Page 1 We are committed to performing the required work, completing the audit, and issuing the necessary auditors reports prior to the City's published time frames. Our audit staff includes individuals well versed in municipal auditing and reporting requirements, We have performed auditing and consulting engagements for numerous cities and non-profit organizations. The Engagement Partner assigned to the City, Mr. Caporicci, is a member of various governmental committees, 'has actively participated in the development of accounting and audit guidelines and standards for the governmental sector, and has served as a national reviewer for the GFOA. We are responsive to the needs of the City, understand the City's operational environment, and pledge to you our complete commitment to providing a quality product which meets the City's requirements. This propqsal is a firm and irrevocable offer and will remain valid for 180 days after the date of this letter. " We are confident you will find our organization offers the required expertise, technical knowledge, and business understanding to perform an audit of the City. Our past experience provides us with a thorough understanding of the needs and requirements of the City, as well as the technical knowledge to perform such services in accordance with the accounting and auditing guidelines as published by the various authoritative entities. We welcome your inquires and look forward to further discussions with you. Sincerely, Stephen L. Larson Partner Caporicci. & Larson SLL/Ijc Page 3 IndependenCe Page 4 THE CITY OF TUSTIN Independence The Firm meets the independence requirements as established by the American Institute of Certified Public Accountants and Califorrfia State Society of CPA's promulgated in various auditing and professional standards. Additionally, the Firm is independent of all component units of the City as defined by those standards. The Firm has had no professional relationships involving the City pr any of its component units for the past five years. The Firm will provide the City written notice of any professional relationships entered into during the period of this agreement. Page 5 License to Practice in California Page 6 THE CITY OF TUSTIN License to Practice in California The Firm and all key professional staff assigned to the City's audit are properly licensed to practice as Certified Public Accountants in the State of California. Page 7 Firm Qualifications and Experience Page 8 THE CITY .OF TUSTIN Firm Qualifications and Experience About the Firm The accounting firm of Caporicci & Larson, Certified Public Accountants (a Partnership) located in Santa Aha, California, provides a full range, of accounting services to governmental agencies and private sector organizations including audit, tax, accounting, computer audit assistance, and business and management advisory services. The two principals combined have over 50 years of practical experience encompassing all aspects of the financial arena. Nine professional staff members provide the financial background and specific experience to meet the City's operational needs. Firm policy requires the Engagement Partner, during the first year of the engagement, be actively.involYed in the daily fieldwork. This policy guarantees the proper.and-efficient performance of the audit process, educates the Engagement Partner as to City processes and issues, and provides the City with on-sight'expertise in the areas of governmental auditing, accounting, compliance, and current developments. Consequently, one Partner with over 28 years experience and two professionals with combined experience of over 14 years will be assigned to perform the audit requirements of the City during 1995. In subsequent years, a qualified manager will be assigned t© the engagement and the Engagement Partner's role will evolve to on-sight supervision, direction, review, addressing of compliance issues and update of City staff on current developments. We are committed to providing appropriate and related experience, personal involvement, and a broad business perspective to produce a quality end-product within the time frames required. The Firm's Partners and professional staff assigned to the City have performed audits, accounting services and consulting services for many governmental entities including, but not limited to, the City of Reedley, Reedley Redevelopment Agency; the City of Brawley, Brawley..Community Redevelopment Agency, the Local Transportation Authority Fund for the City of Brawley (a joint powers agreement between seven local cities), the Anaheim Redevelopment Agency, the City of Beaumont, the .City of Campbell, the City of Concord, the City of Houston, the City of Oakland, the County of San Francisco, the San Ramon Community Service District, and the Houston Water and Sewer Treatment District. Each member of the audit team has performed audits and consulting services for other non-profit operations requiring similar services as the City. These include but are not Page 9 THE CITY OF TUSTIN Firm Qualifications and Experience (continued). limited to the RTC, the World Trade Center Association of Orange County, the Santa Ana Economic Development Corporation, the Master Chorale of Orange County, the United Way,.March of Dimes, Skagg's Foundation, 2nd Life Foundation, KPBX Public Radio, Rossm0or Leisure World, Texas Tech University, and East Bay Regional Park District. We will adhere to generally accepted auditing standards as promulgated by the AICPA, United States G~neraI Accounting Office, and the California State Controller's Office. The Firm's Partners are current members of the California Society of Municipal Finance Officers, have been members of various national and State municipal accounting committees, and Mr. Caporicci is a past national reviewer for the GFOA and current quality control reviewer for the California Society of CPAs and the AICPA. Page THE CITY OF TUSTIN Firm Qualifications and Experience (continued) Governmental and Non-Profit Accounting Experience The following is a partial list of selected clients for which accounting services have been provided: : Governmentah · City of Reedley, California · City of Brawley, California · The-Local Tr. ansportation Authority Fund -City of Brawley, California · Santa Ana EConomic Development Corporation, Santa Ana, California · Anaheim Redevelopment Agency, Anaheim, California · The California Maritime Academy, Vallejo, CalifOrnia · City of Campbell, California · City of Concord, California · City of Beaumont, Texas' · City of Bellaire, Texas · . City of Boston, Massachusetts · . · City of Houston, Texas · County of San Francisco, California · City of Oakland Parks and Recreation, California · Department of Transportation (grants), Washington D.C. · Department of Labor (grants), Washington D.C. Page 11 THE CITY OF TUSTIN Firm Qualifications and Experience (continued) Non-Profit Organizations: · · The World'Trade Center Association of Orange COunty, Irvine, California · Fullerton, Arboretum Authority, Fullerton, California The Master Chorale of Orange County, Costa Mesa, California San Ramon Community Services District, San Ramon, California East Bay Regional Park District, San Ramon, California Stanford University, Palo Alto, California Texas Tech UniversitY, Lubbock, Texas 2nd Life Foundation, Los Angeles, California United Way, Oakland, California' March of Dimes, Oakland, California Skagg's Foundation, Oakland, California KPBX Public Radio, Spokane, Washington Rossmoor Leisure World, Walnut Creek, CalifOrnia Houston Water and Sewer Treatment Districts, Houston, Texas Additional Activities Both partners have conducted training and educational seminars and classes on municipal and not-for-profit accounting requirements and processes for the American Institute o_f Certified Public Accountants, the California State Society of Certified Public Accountants, Sonoma.State University, University of California - Irvine, and NationaI University. Page 12 THE CITY OF TUSTIN Firm Qualifications and Experience (continued) Other Accounting and Auditing Experience The Firm has also conducted engagements with similar requirements as those of the city for the following entities: · Bank of America (banking), San Francisco, California Commerce Bank (banking), Newport Beach, California ElDorado Bank (banking), Laguna Hills, California · The Bank of Hemet (banking), Riverside, California · Pacific Mutual Insurance Companies (insurance), Newport Beach, California · American Express Insurance Companies (insurance), New York, New York · Fireman's Fund Insurance Companies (insurance), Novato, California · Crown-Zellerbach (timber products), San Francisco, California · Gulf Oil Company (oil and gas), Houston, California · Texas United Group of Companies (salt, oil and gas), Houston, California · Becon Construction Company (mining), Boise, Idaho · Valhalla Arabians (agriculture), Spokane, Washington · American Express Travelers ChequeS (financial services), Salt Lake City; Utah · Santa Fe Escrow (escrow services), Orange, California Page 13 THE CITY OF TUSTIN Firm Qualifications and Experience (continued) Other Accounting and Auditing Experience (continued) · Sun City Shopping Center (real estate), SUn City, California · Automated Data Technologies (electronics), Santa Ana, California · The Suit Club (retail), Santa Aha, California · Grubb & Ellis Development Corporation (real estate), San Francisco, California · Bechtel Group of Companies (construction), San Francisco, California · Morrison Knudsen (construction), Boise, Idaho · Silverado Country Club (hospitality), Napa, California Page 14 THE CITY OF TUSTIN Firm QUalifications and Experience (continued) Quality Control Review The Firm is a member of the AICPA Quality Review Program. The program is designed to identify weaknesses in policies and procedures relating to the conduct .of accountii~g services. In 1993, a quality review of the Firm's policies, praCtices, and 'procedures was conducted. The reviewers made an independent assessment of the Firm's quality control policies and procedures and inspected the working papers and reports on a representative sample of accounting and auditing engagements including the City of Anaheim. The Firm's administrative files and records were also reviewed and our professional personnel interviewfd. After 'thorough' study of the Firm's procedures and work Practices, the reviewers concluded that our firm complies with the stringent quality control standards established by the American Institute of CPA's (AICPA). In evaluating the Firm's quality controls, a quality reviewer considers, among other things, what a firm does to ensure it hires only qualified people, that it properly supervises them and provides professional training, that it advances them to responsibilities they are capable of handling and that it proVides them with necessary technical resources. Using guidelines established by the AICPA, the reviewers determined that the Firm has an effective quality control system and that-our accounting and auditing work conforms to professional standards. Our continued participation in periodic quality reviews and o. ur voluntary membership in the AICPA and California Society of CPAs support the Firm's commitment to quality and our high-standards for client service. . . There are no federal or state desk reviews to report nor has there been any state or federal disciplinary action taken or is pending against the Firm. The reviewer's report follows. Page 15 GREGORY. YORKE & LERIAS CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF A~PA OtV~S~DN. FOR CPA FIRMS JOHN L~RIAS. C P.A. 1177 NO~TH PARK AVENUE ~ POMONA. CALIFORN~ 91768 ~ (909) 623-6641 ~ FAX NO. [909) 6200947 December 8, 1993 Caporicci & Larson Certified Public Accountants Santa Ana, California We have reviewed the system of'quality control:for the a0counting and auditing practice of Caporicci & Larson, Certified Public Accountants (the "firm") in effect for the year ended September 30, 1993. Our review was conducted in conformity with standards for on-site quality reviews established by the American Institute of Certified Public Accountants. We tested compliance with the firm's quality control policies and procedures to the extent we considered appropriate. These tests included a review.of selected accounting and auditing engagements. In performing our review, we have given consideration to the quality control standards issued by the AICPA.. Those standards indicate that a firm's system of quality control should be appropriately comprehensive and suitably designed in relation to the firm's size, organizational structure, operating policies, and the nature of its practice..They state that variance in individual performance can affect the degree of compliance with a firm's quality control system and, therefore, recognize that there may not be adherence to all policies and procedures in every case. In our opinion, the system of quality Control for the accounting and auditing practice of Caporicci & Larson, Certified Public Accountants in effect for the year ended September 30,.1993 met the objectives of quality control standards established by the AICPA and was being complied with during the year then ended to provide the firm with reasonable assurance of conforming with professional standards in the conduct of that practice. RUDOLPH J. GREGORY ACCOUNTANCY CORe'. ar ~[JOO! ~H. I ¢'~:~cr'.~c)v nc-',',r~r,'--, CITY OF TUSTIN SEALED DOLLAR COST BID PROPOSAL FOR .. ~' '~'' · · . · . . -' ...Q .-~ '.: · , , , PROFESSIONAL AUDITING SERVICES for the years ending June 30, 1995 through June 30, 1999 Submitted December 5, 1994 Caporicci & Larson Certified Public Accountants THE CITY OF TUSTIN Dollar Cost Bid We are committed to the performance of a high quality audit at the most reasonable fee level possible, both initially and throughout the engagement. In the interest of developing a long term relationship, we will absorh~ required to familiarize ourselves with the operations and accounting systems. Additionally, both Partners will be available to.. provide advice and consultation as necessary to the City of Tustin (the "City"). These ~ will also be ~. by the Firm. Total All-Inclusive Maximum Price: Name of Firm: Caporicci & Larson Certified Public Accountants 3 Hutton Centre Drive, Suite 630 Santa Ana, California 92707 Certification: The person signing the proposal is entitled to represent the Firm, empowered to submit the bid and authOrized to sign a contract with the City of Tustin. Total All-Inclusive Maximum Price for the Engagement: All-Inclusive Costs Year 1995 $13,500 1996 13,500 1997 15,510 1998 15,510 1999 17.537 Total $75.55'7 The above costs include all direct and indirect costs including out~-of-pocket expenses and an escalation factor for inflation, etc. THE CITY OF TUSTIN Dollar Cost Bid Rates by Partner, Manager, Senior and Staff ALL-INCLUSIVE SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Average Average Standard Quoted Hourly Hourly Hour~ Rates Rates Total Partners 280 $106 $ 83 $23,000 Managers 310 $ 86 $ 57.8 18,347 Seniors 388.7 $ 56 $ 42 15,860 Staff 495 $ 46 $ 37 18,350 Other (specify): Familiarization Efforts 210 $ 36 0 (Waived) Subtotal 1.683.7 $75,557 Out-of-pocket expenses: Meals and Lodging 0 Transportation 0 Other (specify): 0 Ali-Inclusive Total'proposed price $75.557 The Firm will absorb all out-of-pocket costs. 'Additionally, it is the Firm's policy to accept reimbursement for travel, lodging, and subsistence at the prevailing City rates for its employees. THE CITY OF TUSTIN Dollar Cost Bid Rates by Partner, Manager, Senior and Staff (continued) SCHED~E OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE 1995 FINANCIAL STATEMENTS Standard Quoted Hourly Hourly Hours Rates Rates Total Partners 80 $100 $75 $ 6.000 Managers 0 $80 $50 0 Seniors 115.7 $50 $35 4,050 Staff .. 115 $50 $30 3,450 Other (specify) Familiarization Efforts 150 $90 0 (Waived) Subtotal 460.7 $13.500 Out-of-pocket expenses: Meals and Lodging Transportation Other (specify): Total proposed price for 1995 Audit -- ~' $13.500 The Firm will absorb all out-of-pocket costs. Additionally, it is the Firm's policy to accept reimbursement for travel, lodging, and subsistence at the prevailing City rates for its employees. THE CITY OF TUSTIN Dollar Cost Bid Rates by Partner, Manager, Senior and Staff (continued) SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE 1996 FINANCIAL STATEMENTS Stahdard Quoted Hourly Hourly Hours Rates Rate~ Total Partners 50 $100 $75 $ 3,750 Managers 91 $80 $50 4,550 Seniors 80 $50 $35 2,800 Staff 80 $40 $30 2,400 Other (specify) Familiarization Efforts 60 $90 0 (Waived) Subtotal 361 $13,500 Out-of-pocket expenses: Meals and Lodging Transportation Other (specify): Total proposed price for 1996 Audit The Firm will absorb all Out-of-pocket costs, AdditiOnally, it is the Firm's policy to accept reimbursement for travel, lodging, and subsistence at the prevailing City rates for its employees. $13.500 THE CITY OF TUSTIN Dollar Cost Bid 'Rates by Partner, Manager, Senior and Staff (continued) SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE 1997 FINANCIAL STATEMENTS Hour~ Partners 50 Managers Seniors ., Staff Standard Quoted Hourly Hourly Rates ]Ka~ $110 $85 $ 4,250 73 $90 $60 4,380 64 $60 $45 2,880 · 100 $50 $40 4,000 Other (specify) 0 Subtotal .987 $15,510 Out-of-pocket expenses: Meals and Lodging 0 Transportation 0 Other (specify): 0 Total proposed price for 1997 Audit $15.510 The Firm will absorb all out-of-pocket costs. Additionally, it is the Firm's policy to accept reimbursement for travel, lodging, and subsistence at the prevailing City rates for its employees. " 5 THE CITY OF TUSTIN Dollar Cost Bid Rates by Partner, Manager,' Senior and Staff (continued) SCHED~E OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE 1998 FINANCIAL STATEMENTS Standard Quoted Hourly Hourly Hours Rates Rates Total Partners 50 $110 $85 Managers ' 73 $90. $60 S~niors 64 $60 $45 $ 4,250 4,380 2,880 staff 100 $50 $40 4,000 Other (specify) · Subtotal 287 $15,510 Out-of-pocket expenses: Meals and Lodging Transportation Other (specify): Total proposed price for 1998 Audit The Firm ·will absorb all out-of-pocket costs. Additionally, it is the Firm's policy to accept reimbursement for travel, lodging, and subsistence at the prevailing City rates for its employees. $15.510 THE CITY OF TUSTIN Dollar Cost Bid Rates by Partner, Manager, Senior and Staff (continued) SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR. THE AUDIT OF THE 1999 FINANCIAL STATEMENTS Hour~i Standard Quoted Hourly Hourly Total Partners 50 $110 $95 $ 4,750 Managers 73 $90 69 5,037 Seniors 65 $60 $50 3,250 Staff 100 $50 $45 4,500 Other (specify) 0 Subtotal 288 $17,537 Out-of-pocket expenses: Meals and Lodging 0 Transportation 0 Other (specify): 0 Total proposed price for 1999 Audit $17.537 The Firm will absorb all out-of-Pocket costs. Additionally, it is the Firm's policy to accept reimbursement for travel, lodging, and subsistence at the prevailing City rates for its employees. THE CITY OF TUSTIN Dollar Cost Bid Rates for Additional Professional Services We are hesitant to simply state hourly rates, as often'times the needs of the client and the specific task directly impact the billing rates for our services. We maintain a policy of flexible billing rates and try to work within client cost control parameters. However, to provide the City with additional information, the following are our current published billing rates: · Partner $100.00/hr. · Manager $ 80.00/hr. · Senior $ 50.00/hr. .. · Professional Staff $ 40.00/hr. · Administrative Staff $ 35.00/hr. TIlE CITY OF TUSTIN Dollar Cost Bid Conclusion We are able to offer our services at this fee level because: · We possess the' necessary experience and technical knowledge to' perform an effective and efficient audit. · We are .very familiar with the accounting requirements of the City through past relationships with similar organizations. · We use a comprehensive advanced planning process involving both our personnel and the City's key personnel. · We desire a long-term relationship with the City. In order to maximize the cost/benefit relationship of our services, we will also attempt to identify significant areas for improvements and cost savings. These observations will be communicated to the key personnel of the City. We' would like to express our appreciation to the City of Tustin Audit Committee and to the Staff of the City of Tustin for being given the opportunity to submit a proposal on performing professional accounting services to the City. We are'available, at your convience, to discuss any aspects of our proposal. Thank you. 7200 S Greenleaf Ave Lance \; - - .... %Suite 280 ?Oil ~,' ,X,X. Whittier, California 90602 LungRara (310) 698-6727 ~ (714) 447-6727 CERrIFIED PUBLIC A CCOUN TAN TS Fax (310) 693-1599 Brannon W Burrows Donald L Parker M~chael K Chu DawO E Consultants Robed C. Lance- Fred J. Lunghard. Jr. December 2, 1994 Mr. Ronald A. Nauit Director of Finance City of Tustin 300 Centennial Way Tustin, CA 92680 Dear Mr. Nault: We are pleased to respond to your request for proposals for auditing services. As a leader in the field o.f governmental accounting and auditing we appreciate the opportunity given us to present our ·professionai qualifications. Scope of Services The annual services that would be provided for the City of Tustin, for fiscal year 1991-92 and the subsequent two fiscal years, would be as follows: Perform a financial audit of the General Purpose Financial Statements of the City of Tustin that would include the following oversight and component units' City of Tustin Tustin Redevelopment Agency Tustin Water Corporation . We understand that the City will be responsible to prepare this report and that the financial statements will be included within a Comprehensive Annual Financial Report (CAFR) to be submitted under the National and California award programs.. Our audit would express an opinion as to whether the financial statements and associated notes conform to generally accepted accoUnting principles (as promulgated by the GASB). The audit opinion would include'a "in-relation-to" paragraph to 'cover the combining financial statements. As indicated in your request for proposal, the opinion would not cover the Statistical Section or Transmittal Sections of the CAFR. Perform a Single Audit of ali federal grants of the City utilizing generally accepted govemmental auditing standards. This audit would be performed according to the Single Audit Act of 1984, OMB Circular A-128, Government Auditing Standards issued by the GAO and the AICPA Industry Audit Guide. From our procedures, we would prepare the following reports: MEMBER ~....%,,IFO~NIA $(]ClETY O~' CEPTJFIED P,JBLIC AC.~.OUNTANTS c.'.'.cclI~.AN ,NSTtTuTE Or C.E~T~rtED ¢>uBLtC A~.~.OtJNTANTS Mr. Ronald A. Nault Director of Finance C~ty of Tustin Proposal to Provide Auditing Services Page 2 Report on the internal control structure based on our understanding of the control structure and assessment of control risk: Report on compliance with applicable laws and regulations. Report on the Schedule of Federal Financial Assistance and Office of Criminal Justice Planning'Grant Statement of Costs Claimed and'Accepted. It is our understanding that both of these statements are to be prepared by the City. Report on the internal, control structure used in administering federal financial assistance programs. Report on compliance with specific requirements applicable to major federal financial assistance .programs, non-major federal financial assistance programs or both major and non-major fedex'al financial assistance programs (whichever is applicable). These reports will be included in a separate general purpose financial statement apart from the statements prepared for the award programs. . Perform a financial audit of the Component Unit Financial Statements of the Tustin Redevelopment Agency. Again, these financial statements would be prepared by the City and our opinion would indicate adherence to generally accepted accounting principles. In addition, a separate compliance audit would be performed and an opinion issued as required by. Section 33080.1 of the Health and Safety Code. This audit would be done according to guidelines of the. State Controller's Office. . RevieTM of the City's Proposition 4 (Gann Limitation) as required by Proposition 111. This review would be conducted according to guidelines established by the League of California Cities. o Review and recommendations on the internal control structure, which consists of Control Environment, Accounting System and Control Procedures would be conducted. Here a separate report and management letter to the governing board would communicate any matedal weaknesses, reportable conditions and minor deficiencies in the system and compliance with applicable laws, etc. Before the issuance of such report or letter all applicable findings'would be discussed with staff and management of the entity involved. Reasons to Select Lance, Soil & Lunghard We have been providing services to California municipalities for over 50 years. We offer a level of service unequaled by any of our competitors. This is why cities remain our clients for exceptionally long periods of time. Examples of this are: Lance \ ~ Soil & ~ ngha rd \ Mr. Ronald A. Nault Director of Finance City of Tustin Proposal to Provide Auditing Services Page 3 City of El Monte ............................ 38 years City of Fillmore · 37 years City of California City ......................... 27 years These are just a few of our cities and they have stayed with us because our partners and staff have satisfied !heir needs in a timely and most professional manner. We accomplish this by having partners that participate in the field with the seniors in getting' th'e' audits done. This makes the partners intimately' familiar with your operations. In other firms, the partner only shows up to bid the job and hold an exit conference. Additionally, our partners and staff are sensitive to our clients' needs. We do not take an adversarial role. Instead, we want to help our clients manage their operations. This may mean extra work on our part, but it benefits our clients in the long run. Our involvement of the partner directly in performing the audits has been' the primary reason for satisfying our clients. Knowledge We are 'members of the authoritative bodies for governmental accounting and auditing within the State of California. Again, our direct partner involvement in audits has brought issues to these bodies that otherwise would not have been discussed. We are extremely knowledgeable in performing financial audits of cities, redevelopment agencies, joint authorities, etc. Copies of our financial statements have been used by the State Controlleds Office as examples oT correct repoding for California Redevelopment Agencies. For cities, several of our clients receive awards for the financial statements we prepare. Timeliness Our approach to preparation of financial statements revolves around the use of portable computers. Our knowledge of the use of these tools aids us in preparing financial reports quickly and efficiently. This allows our clients to meet reporting deadlines. It also produces a high-quality report. No city has everfailed to meet a reporting deadline because ora delay on our part in getting the,work done. This_ cannot be said by some of our competitors. We feel that we can meet the timetable specified in your request for proposal. Lance Soil Mr. Ronald A. Nault Director of Finance City of Tustin Proposal to Provide Auditing Services Page 4 Depth of Services We offer a full range of services to cities.. Services we have provided are as follows: - Financial and Compliance Auditing - Reviews of Transient Occupancy Tax - Reviews of Franchisees' Reports - Preparation of State Controller's Reports - Arbitrage Computations - Bond Indenture Audits - Participation.in Financing Teams - Padicipation in Oral Boards for Accounting Positions - Installation of Accounting Systems - Provide Income Tax Information on Withholding, Etc. These services set our organization apad from other firms that perform only audit services. We look forward to discussing our qualifications and capabilities with you further. For purposes of this proposal, Donald L. Parker, Partner, is authorized to make representations for our firm. I can be reached at the address and phone number above. This letter is a firm and irrevocable offer to provide the services stated above for the fees discussed in the sealed envelope accompanying this prOpOsal. Very truly yours, PARTNER AUDIT SERVICES INFORMATION TECHNICAL PROPOSAL OF LANCE, SOLL & LUNGHARD Lance, Soil & Lunghard is a local public accounting firm that has met the individual auditing needs of business and governmental subdivisions for over 70 years. This experience has led to the development of efficient procedures that provide numerous client benefits. Our clients have grown to understand that an audit from us provides them with a wealth of knowledge, confidence and a source of management improvements 2. independence We are a partnership consisting of four partners which do not own any other business organization that have in the past or will in the future be providing services, supplies, materials or equipment to the City of Tustin or any of its component units. We meet the independence requirement of the AICPA and the U.S. General Accounting Office. 3. License to practice in the State of Califomia We are a local public accounting firm licensed by the State of California Department of Consumer Affairs as a Public Accounting Partnership. All of our partners are Certified Public Accountants licensed by the State of California. As a firm we are members of the American Institute of Certified Public Accounts and the California Society of Certified Public Accountants. All key staff to be- assigned to this engagement (Partner-in-Charge, Concurring Partner and Senior) are licensed by the State of California to practice as Certified Public Accountants. 4. Firm Qualification and Experience .. Our acti'vities overall cover auditing, compilation and review services, management service and income..tax preparation. Approximately 60% of our practice deals with governmental auditing and related services. Generally, our services break down into the following major classifications: Financial Auditing: Governmental entities (See Appendix A for additional breakdown) Automotive Dealerships Compilation and Review Services: AutomotiV~ Dealerships Manufadturing and Service Companies Management Services: Design and Installation of Fund Accounting Systems Redevelopment Agency Financial/Debt Planning Participation In Oral Boards Income Tax Preparation: Individual Corporate Partnerships Estates and Trusts We have one office located in Whittier, California. Presently we have four active partners and two retired partners that assist when needed. Professional staff consists of one audit manager, seven seniors and seventeen staff auditors. Governmental audit staff consist of two active partners, four seniors and six staff auditors. All personnel assigned to your engagement would be on a full-time basis as we do not utilize part-time personnel. Type and number of personnel assigned to your engagement would be as follows: City: Partner-In-Charge Manager Senior professional Staff Donald L. Parker, C.P.A. Colleen Meenk, CPA Richard Kikuchi, C.P.A. 3 Redevelopment Agency: Partner-In-Charge Senior Professional Staff Donald L. Parker, C.P.A. Richard KiKuchi, C.P.A i Single Audit: Partner-In-Charge 'Senior Professional Staff Donald L. Parker, C.P.A. Richard Kikuchi, C.P.A. 1 There has been no disciplinary actions against our organization since its inception. We are members of the American Institute of Certified Public Accountant's Private Companies. Practice Section which has the requirement for peer.review along with Generally Accepted Government Auditing .Standards. We have undergone a peer review conducted by Arthur Young & Company (now Ernest & Young a National Public Accounting Firm) and by Harabedian, Hall & Company. Overall, they confirmed what we already knew that our approach and procedures are in compliance with technical and professional pronouncements. Both of these peer reviews covered governmental engagements. Our most recent peer review, conducted by Harabedian, Hall & Company is included in Appendix A to this proposal. VVith regard to desk reviews of our work, annually, all of the single audits we perform are desk reviewed by the respective cognizant agencies. All of these have been found to conform to single audit requirements. We have not had a field review by federal or state auditors within the past three years. 5. En_cla_qement Personnel Audit Team - The most cdtical component to the successful completion of an audit is the personnel assigned to carry out the responsibilities We have assembled a Lance, Soil & Lunghard team composed of individuals with the optimum mix of talents. The individuals assigned have experience in performing the tasks for which they are responsible, as well as familiarity with all municipal accounting operations. In addition, each has developed extensive skills in a variety of other complimentary subjects through their work with clients in other industries.. Thus, the. experience gained on .previous assignments can be applied and tailored to the uhique needs of your organization. For the City of Tustin the personnel assigned to the engagements would be as follows: (Note: For continuing education staff hours, only information for the last two years was available .at the date of this proposal.) Donald L Parker, CPA, Partner-in-Charge Experience: 18 years experience in governmental audits. Mr. Parker is a member of the American Institute of Certified Public Accountants, California Society of CPAs. Additionally, he is an associate member of the Government Finance Officers Association and the California Society of Municipal Finance Officers. He is also a member of the Governmental Accounting and Auditing Committee of the California Society of Certified Public Accountants as well as the State Board of Accountancy's Positive Enforcement Committee (Committee that reviews for substandard work of CPAs). Mr. Parker has extensive experience in preparing City, Redevelopment Agency and Special District financial reports. Presently he is Partner-In- Charge of the following engagements (which include all component units): California City. El Monte Huntington Park Lancaster Loma Linda Maywood Montclair Norco Rancho Cucamonga San Dimas Also, he is a redevelopment specialist and a computer specialist. He has combined these talents to establish a computerized fund accounting systems for the Huntington Park and Rancho Cucamonga Redevelopment Agencies. Additionally, he has used this expertise to develop Microsoft Excel spreadsheet models for preparation of Redevelopment Agency Statement of Indebtedness and State Controller's Reports. Mr. Parker has been a speaker at the CRA Association update conference. He is also familiar with the operations of Counties having been an internal auditor for the County of Los Angeles. Here he specialized in the Court_fy Tax Collector, Fire Protection District, County Waterworks, County Treasurer, and Department of' Recreation. Mr. Parker will be the Partner-In-Charge of the audits of the City of Loma Linda and its component units. For the past three years, Mr. Parker has completed 134 hours of continuing professional education, 48 of those hours relate to governmental accounting and auditing. Some of the more relevant course.s include Arbitrage Rebate and California Redevelopment Agency updates. Mr. Parker has also successfully completed and passed the Governmental Accounting and Auditing Certificate of Education Achievement Program sponsor by the American Institute of Certified Public Accountants. In addition, Mr. Parker acquired some of his professional education hours as lecturer to seminars relating to California Redevelopment Agencies. Michael 'K. Chu, CPA, Concurring Partner Experience: 12 years experience in governmental audits and has extensive experience in preparing Combined Entity audit reports for the various municipal award programs, such as the CSMFO program and the national Certificate of'Conformance in Financial Reporting program offered by GFOA of the United States and Canada. Mr. Chu has been responsible for developing our current Microsoft Excel city financial statement formats, which have been submitted by our clients for the National and California award programs'. Mr. Chu 'has Served as reviewer of articles published by Government Finance Officers Association. Besides being a member of the AICPA and California CPA society, he has served on the State Board of Accountancy's "Rule 69" sub-committee, the function of which is to review audit work performed by accounting firms in connection with certification of potential CPAs. Also, Mr. Chu maintains close association with CSMFO and CMTA and regularly attends these organiza'tion's meetings. Mr. Chu has extensive experience in preparation of State Controller's reports for cities and special districts. He is a computer specialist, and has intimate knowledge of personal computer operations and well as Excel Software. Frequently, he serves as discussion leader for our office in-house continuing education programs sponsored by the AICPA. Mr. Chu is currently the engagement partner of twelve municipal engagements as well as several Special Districts. For the past three years, Mr. Chu has completed 131 hours of continuing professional education, 64 of those hours relate to governmental accounting and auditing. Some of the more relevant courses include Arbitrage Rebate, Compliance auditing under SAS 63, Governmental Accounting and Auditing workshop, Advance Single Audit. Mr. Chu has also completed and passed the Governmental Accounting and Auditing Certificate of Education Achievement Program sponsored by the Amedcan Institute of Certified Public Accountants. As part of the firm's quality control program, ali audits are'subjected to a second partner's concurring review before its final issuance. Mr: Chu will serve as the concurring partner for all audits associated with your engagement. Colleen Meenk, CPA, Manager .Experience: Ms. Meenk joined our firm in 1982 as a bookkeeper, through her dedication and hard work., she' demonstrated her talent in the area of accounting and auditing and was promoted to the professional staff level in 1984. Subsequently, Ms. Meenk passed all parts of the CPA examination in her first try, which confirmed her talent in this field. With ten years of experience since she joined our professional staff in 1904, she.has gain extensive knowledge in municipal audits and is highly regard by our clients. She is currently the in- charge auditor on the following municipal engagements. El Monte (City) Montclair (City, CRA) Norco (City) San Dimas (City, CRA) Walnut (CRA) During t.he past. two continuing education years, Ms. Meenk has 80 hours of continuinr~ professional education, including 29 hours in areas directly relating to governmental accountin(~ and auditing. Ms. Meenk will be Senior assigned t° the audit of the City of Tustin, and will. be directly involved in the field work and final preparation of the financial statements. Richard Kikuchi, CPA, Senior Experience: Over six years experience in governmental audits. Mr. Kikuchi joined our firm in 1988 and has progress in an outstanding manner. He has demonstrated his outstanding talent in the area of municipal accounting and auditing. He has gain extensive experience in municipal.audits and is highly regarded by all our clients. Mr. Kikuchi is currently the senior on the following major municipal engagements. Arcadia San Marino Redondo Beach Lancaster During-the past two continuing education years, Mr. Kikuchi has 114 hours of continuing professional education, including 29 hours in areas directly relating to governmental accounting and auditing. Ms. Kikuchi will be the Senior responsible to perform the audit of the City of Tustin and all component units. Staff auditors Staff auditors assigned to your engagement will have a minimum of one year municipal auditing experience, We expect that at least one staff member and the senior from the current year audit will be a member of the next year's audit team. 6. Prior Engagements with the City of Tustin We have not been engaged to provide any services to the City of Tustin or any of its component units. .. 7. Simllar Engagements with Other Govemment Entities (See Appendix A) City of Arcadia, 240 W. Huntington Drive, Arcadia, CA 91006, 23 years as a client, Arcadia is a full service City with it's own police and fire department. The City also provide water utility service. Services provided include audit of CAFR, Community Redevelopment Agency audit, Single Audit and Transit (State TDA grants) Audit. Engagement partner is Michael K. Chu, contact Person is James Dale, Finance Director (818) 574-5400. City of Rancho Cucamonga - Contract city for police and water provided by special district; however, has fire distdct as component unit. This city has a Comprehensive Annual Financial Report'(CAFR), statements prepared by us, which receives both the national and California awards. Last audit performed was for June 30, 1992. Engagement partner was Donald L. Parker. Total hours was 962. Contact person: Susan Neely (909) 989-1851. City of El Monte - Full service city. This city'has financial statements prepared by us. Last audit performed was for June 30, 1992. Engagement partner was Donald L. Parker. Total hours was 807. Contact person: Marvin K. Louie, Finance Director (818) 580-2019. City of Huntington Park - Full service city. This city has financial statements prepared by us. Last audit performed was for June 30, 1992. Engagement partner was Donald L. Barker. Total hours was 725. Contact person: Donald L. Jeffers, City Administrator (213) 582-6161. City of Lancaster- Contract city for police and fire which has a Comprehensive Annual Financial Report (CAFR), statements prepared by us, which receives both the national and California awards. Last audit performed was for June 30, 1992. Engagement partner was Donald L. Parker. Total hours was 522.75. Contact person: Gary Hill, Finance DirectOr (805) 723-6000. 8..Specific Approach to Audit a. Audit program: We utilize a standardized governmental audit program which we then tailor to the individual City/CRA operations. These programs are very extensive (over 50 pages for a City) and they cover financial as well as legal compliance provisions. We segregate engagements into the major financial components listed in b. below. b. The level of personnel' assigned to the engagements and' number of hours estimated.to be spent by each proposed segment is as follows: -. City of Tustin Segment Partner Manager Senior Staff Total Internal Control Cash Accounts Receivable Inventory Fixed' Assets Accounts Payable Fund Equity Encumbrances Review/Supervision Transactional Testing Water Payroll Revenue Disbursements Report Preparation Total Hours 2.0 5.0 8.0 20.0 10.0 5.0 5.0 50.0 15.0 25.0 65.0 20.0 10.0 15.0 10.0 15.0 15.0 5.0 15.0 29.0 29.0 29.0 29.0 721.0 27.0 10.0 15.0 10.0 15.0 15.0 5.0 15.0 38.0 29.0 29.0 29.0 ' 29.O 60.0 .326.0 Tustin Revelopment Agency Segment Partner Manager Senior Staff Total Cash Land Held Accounts Receivable/Payable Bonds Review/Supervision Transactional Testing Revenue Disbursements Repod Preparation 5.0 15.0 30.0 Total Hours 5.0 45.0 10.0 5.0 10.0 5.0 5.0 10.0 45.0 10.0 5.0 10.0 5.0 20.0 5.0 10.0 30.0 95.0 10 Single Audit of Federal Grant Segment Partner Manager Senior Staff Total Testwork · 5.0 "30.0 35.0 Report Preparation 5.0 15.0 20.0 Total Hours 5.0 20,0 _30.0 55,0 Grand Total All Hours 25._ 0 25.0 130.0 296.0 476.0 c. Statistical Sampling Procedures - Our approach is to utilize statistical sampling in the areas of receipts, disbursements, utility billing and payroll. Here we develop a statistical conclusion based upon a random sample of 30 transactions. This conclusion covers attributes relate to financial recording, compliance with internal control procedures as well as compliance with local restrictions. Additionally, for disbursements we select a stratified sample of all disbursement over a spec!fied dollar limit for review. This allows us to cover all high dollar value disbursements. d. Computer Audi[ Specialists - Our traditional approach is to "audit around" the computer which means that we vedfy output by agreeing it, through our audit tests, with corresponding source input transactions. If however, the clients system warrants a specialized in depth review of vadous controls, etc. then such a specialist would be engaged (we have an arrangement with Ernest'& Young in this area).. This would normally only be needed in the most disastrous scenarios and thus it would be outside the scope of our normal services and proposed fees. e. Analytical procedures to be utilized consist of-determining percentage increases and decreases between revenue, expenditures and balance sheet accounts. Once determined, these are reviewed to determine if the changes appear reasonable 'or are out of line. For all significant differences explanation are obtained as to why the situation occurred. To gain and understanding of the City's internal control structure, we complete forms taken from the Local GOvernment publication of Practitioners Publishing Company. These forms meet the technical standards of the AICPA and allow us to document the purpose of funds, the structqre of the City and to quantify matedality..The forms themselves are over 30 pages in length. AI~0 with regard to the'verification of internal control, we utilized an internal control questionnaire where we solicit responses from staff as to duties performed so' as to determine if proper segregations are present. This is done by most firms; however, we go further in that we then look to see if in fact the controls are present and documented, Thus, we redly the representations of city staff. g. Laws and regulations that will be subject to audit test work are determined from the mUnicipal code of the City (we would ask for access to a volume of the Code during our fieldwork), applicable sections of governmental codes for the State of California (we have a complete library of California codes) and our extensive experience with governmental entities. 11 9. Identification of Anticipated Potential Audit Problems Based on our review of the prior year Comprehensive annual, financial report, and representation of City staff during the bidders conference, we do not anticipate any potential audit problems at this time. 10. Sample Report Formats Appendix C to this proposal contains samples of the reports specified in your request for proposal. ADDITIONAL INFORMATION Retention of working papers - In accordance with your request for proposal, we would retain all working papers associated with the engagements for a minimum of seven (7) years. These papers would be available to anyone authorized to view them by the City of Tustin. Support - We expect minimal assistance from City staff; however, we do require that all accounting functions be performed pdor to our commencement of year-end procedures. This means that reconciliations of cash and investments to the general ledger, balancing of due to and from, balancing of transfers in and out, establishment of accruals and reserves (accounts payable, receivables, encumbrances, etc.) must have been performed. Overall, we probably require the least assistance of all the firms involved in this field. Anticipated Time to Complete Audits - During all of our city audits and for larger redevelopment agencies we make at least one interim contact, subsequent to which a management letter is issued. This type of arrangement has proved to be beneficial to our clients. Therefore, we would anticipate completing one interim Contact prior to June 15, 1993 and commencing Year-end field work when notified by the entity that the records were ready. When we start year-end procedures, we work through until completion of procedures and the draft reports. This process takes approximately 3 weeks. Recent Local Auditincl EXperience CSMFO and GFOA Award Program We prepare the financial statements and footnote disclosures for most of our cities that have received the CSMFO award and/or the GFOA award. All of our governmental partners and seniors have been intimately involved in the preparation of these reports; however, we do not distinguish between cities which are applying for the award and those which are not. Thus, all of our clients receive award quality financial reports. This makes the conversion to award financial statements easier should a city so desire to do so in the future. Cities which are presently,receiving these awards are as follows: Arcadia' Rancho Cucamonga El Segundo Walnut Lancaster Whittier Federal Single Audit - OMB Circular A-128 12 We perform single audit service for all of our cities that have federal grants. These engagements fully comply with OMB Circular A-128 and include preparing the schedule of federal financial assistance along with all required opinions. Our procedures in this area were reviewed by the State Controller's Office acting in their capacity as cognizant agency and we were given high marks for our approach and documentation. With regard to cognizant agency, some of our cities receive their funds directly from HUD and thus they are the cognizant agency; however, most do not have a federal cognizant agent and the State Controller's Office is utilized. Presently, the following cities have Federal Single Audits performed by us: Arcadia Maywood Bell Montclair El Monte Norco El Segundo Rancho Cucamonga Fillmore San Dimas , Huntington Park Walnut Lancaster West Hollywood Loma Linda Whittier Redevelopment Agencies We perform financial .and compliance audits for all redevelopment agencies connected with our cities. These audits include financial statement preparation as well as conducting compliance audits required by Section 33080.1 of the Health and Safety Code. These compliance audits are performed in accordance with the State Controller's Guidelines for Compliance Audits of California Redevelopment Agencies. Some of our agencies are very simple (one project area and no bonding) while others are very complex (eight project areas and significant bonding). Also with regard to bonding, we are familiar with mortgage revenue bends, tax allocation bonds, normal and crossover-refunding bonds, certificates of participation, etc. Additionally, we prepare the financial section of the State Controller's Report for most of our agencies. We do this from Microsoft Excel Spreadsheet models which have been review by the State Controller's Office and approved for filing with them. To our knowledge, these are the only replica of the State Controller's Report which has ever been approved by the State Controller's Office. For some of our agencies, we also prepare the statement of indebtedness form which is filed with the County in which they are located. Presently, we audit the following redevelopment agencies: Arcadia Loma Linda Bell Maywood Califomia City Montclair El Monte Norco El Segundo Rancho Cucamonga Fillmore San Dimas Hidden Hills Walnut Huntington Park ** Whittier Lancaster **As part of our services to the Huntington Park Redevelopment Agency we have participated on their behalf in complicated negotiations with Los Angeles County relating to amending and merging three project areas and creating a deferral of tax increment to the Agency. We performed this enqa.qement as our client needed help, with the full knowledqe that at the 13 completion of the enqagement we would not be independent with respect to the aqreements we helped to neqotiate. Therefore, effective for fiscal year 1990-91 we have resigned as auditors for the Aqency. Presently, we provide bookkeeping, financial statement preparation, statement of indebtedness preparation and controller's report preparation services to this agency. Joint Power Authorities We perform financial and bond compliance audits on several joint authorities. Typically, these are building authorities which have a bond issue present and a lease agreement with the City for the facility. When we perform these audits, we also review the trustee's compliance with the provisions of the trust indenture on the bond issue; a step, which most auditors do not perform. Additionally, for these entities we prepare the Special District State Controller's Repod. Presently, the following joint power authorities are audited by us: Bell Surplus Property Authority (Inactive Presently) California City Community Service District (Inactive Presently) Montclair Fire Authority San Dimas - La Veme Recreation Authority LA County San Dimas Library Authority San Dimas Civic Center Authority East. Kern Aeronautical Corporation Special Districts We perform financial audits of the following special districts: East Kem Airport Distdct Central and West Basin Wate¢ Replenishment District Rancho Cucamonga Fire District (Subsidiary District) Federal and State Grant Programs As we have noted above, we perform single audits on most of our cities. Over the years, we have performed grant auditing on the following: Federal Grants: Community :'DevelOpment Block Grant Urban Development Action Grant (UDAG) Urban Mass Transportation Grant (UMTA) Special Program for the Aging Title IIIB Federal Aid Urban (FAU) Senior Community Service Employment Title V Summer Food Service - USDA Disaster Assistance Program - FEMA FAA Grants - Done for East Kem Airport District State Grants: 14 Criminal Career Apprehension Program - Office of Criminal and Justice We performed a special review of the Rehabilitation Loan Program for the City of Lynwood as a result of a defalcation which occurred there. This city is not our client; however, they thought enough of our abilities to engage us over their regular auditing firm. G ross Receipt Audits We have conducted this type of review for the City of Costa Mesa when they were a client. This review related to their golf course operation which was 'operated by a concessionaire. As a result of 'our review, legal action was instituted against the concessionaire to recover unreported amounts. Donald L. Parker, C.P.A., Partner has additional experience in this area in that while he was with the County of Los Angeles, he 'was the senior auditor in charge of the audits of the concessionaires at Marina Del Rey which was owned by the County and leased to the hotels and restaurant on a percentage of gross receipts basis. Franchise Audits Most of our cities while granting franchises have not required audits of those operations. Presently,we perform a franchise audit for the El Monte Cable TV Corporation which entails. a financial audit of the cable TV operation and'gives the-City a view of where the funds are spent, etc. Currently, the City of Rancho Cucamonga is considering having'such an audit performed on various franchises it has granted. Business License Tax Audits Presently, we perform no audits of business license tax amounts for.our clients. However, this type'of audit is very similar to a gross receipt audit; in that, several of our cities base their business license tax on the amount of gross receipts reported to them by the business. As noted above, we have experience in performing gross receipt type audits. Additionally, while not performing business license tax audits directly, we have performed transient occupancy tax audits for the following cities: Arcadia Maywood San Gabriel These audits involve reviewing the hotels records and agreeing them with reports made when the occ.dpancy tax was paid. Thus, we reviewing an outside entities records to substantiate a city tax calculation. Continuing Education As a firm policy and in compliance with the continuing education requirements promulgated by the AICPA, General Accounting Office and the California Society of CPAs, all our staff auditors meet the requirement of 40 hours of continuing education every year, with at least 24 hours in governmental accounting and auditing in a two year pedod. For our educational programs, we utilize in-house seminars, California Society of CPA attendance courses, AICPA training video tapes, and self-study AICPNCalifomia Society materials. Our formal education program was reviewed by an independent firm dudng our peer-review process and no 15 exceptions were noted. We have listed continuing education hours for the past two years in the resumes above. References of Governmental Clients A complete listing of current city audit clients along with phone numbers of contact personnel and references' as to services provided is contained in Appendix B to this proposal. We welcome your contacting any or all of these to get their opinion on the services we provide. AUDIT FEES As specified in your request for proposal, we have included our audit fee information in a separate sealed envelope. 16 HARABEDIAN, HALL & Co. CEl:~'Tlrlro PU['~LIC ACCOUNTANTS To the Partners Lance, Soll& Lunghard We have reviewed the system of quality control for the accounting and auditing practice .of Lance, Soll & Lunghard (the Firm) in effect for the year ended June 30, 1992. Our review was conduct- ed in conformity with standards for peer reviews promulgated by the 'peer review committee of the Private Companies Practice Sec- tion of the AICPA Division for CPA Firms (the Section). We test- ed compliance with the Firm's quality control policies and proce- dures and with the membership requirements of the Section to the extent we.~ considered appropriate. These tests, included the apPlication of the Firm's policies and procedures on selected accounting and'auditing engagements. In performing our review, we have given consideration to the general characteristics of a system of quality control as described in quality control standards issued by the AICPA. Such a system should be appropriately comprehensive and 'suitably designed in relation to the Firm's organizational structure, its policies, and the nature of its practice. Variance in individual performance can affect the degree of compliance with a firm's prescribed quality control policies and procedures. Therefore, adherence to all policies and procedures in every case may not be possible. In our opinion, the system Of quality control for the accounting and auditing practice of Lance, Soll& Lunghard in effect for the year ended June 30, 1992, met the objectives of quality control standards established by the AICPA, and was being complied with during the year then ended to provide the Firm with reasonable assurance of cOnforming with professional standards. Also, in our opinion, -the 'Firm was in conformity with the membership requirements of the Section in all material respects. August-26, 1992 City Arcadia Artesia California City El Monte El Segundo Fillmore Fontana Hidden Hills Huntington Park Lancaster Loma Linda Manhattan Beach Murrieta Maywood Montclair Norco Rancho Cucamonga Redondo Beach San Dimas Walnut West Hollywood Appendix B Listing of Governmental Audit Clients Person to Contact Mr.J.Dale, Fin. Dir. Mr.P.Phillips, City Mgr. Ms.K. Bailey, Accountant Mr.M.Louie, Fin. Dir. Mr.S.Klotzsche, Fin. Dir. Mr.A.Coates, Fin. Officer Mr. G.Yee, Acct. 'Mgr. Ms. C.Paglia,City Clerk Mr.D.Jeffers,CAO Mr.G.Hiil, Fin. Dir. Mr.J. Morris,Accountant Ms.E.Kramer, Fin. Dir. Mr.J.Smith, City Mgr.. Mr.M.Williams, Treasurer Mr. N. C rutche r, Ast. Fin. Dir M s. C. Ba rtlem a n,Adm in. Srv. Mr.J. H a rt,Ad min. Services Ms. L. Soloday, Fin, Mgr. Ms.H.NisseI,Fin. Dir. Ms.C.Londo,Fin. Dir. Mr.P.Arevalo, Fin. Dir. Service Codes Yr_._~s .Telephone C,R,S,T,U 23 818-574-5425 'C,CR 9 310-865-6262 C,R,J,CR,SI,U 28 619-373-8661 C,R,S,U 39 818-580-2023 C,S,U 3 310-322-4670 C,R,S,CR,U 37 805-524-3701 C,R,S I 909-350-7600 C,R,CR 7 818-888-9281 C,S,SI,U 18 213-582-6161 C,R,S 3 805-723-6000 C,R,S 2 909-799-280Q C,S,J 2 310-545-5621 ' C 2 909-698-1040 C,R,S,CR,SI 12 213-560-3197 C,R,S,J,M 17 909-626-8571 C,R,S,U 11 909-735-3900 'C,R,S,CR,SI,M 13 909-989-1851 C,R,S,M 1 310-372-1171 C,R,S,J 26 909-394-6221 C,R,S 19 909-595-7543 C,S 3 310-854-7421 Ext 2236 Service Codes: C - R - S J T U - CR . SI - M Financial Audit of City Financial and Compliance Audit of Redevelopment Agency Single. Audit of Federal Grants in accordance with OMB Circular A-128 Separate Audi~ of Joint Powers Authorities Transtt Audits In Accordance with State 'FDA and Federal UM'TA Requirements Water Utility Operated and Included in Audit. Prepare State Controller's Report for City Prepare Statement of Indebtedness for Redevelopment Agency City's Participates in Award Programs and has received or anticipates receiving outstanding award. Mortgage Revenue Bond (SB99) Audit 18 Lance, Soil & Lunghard Certified Public Accountants Proposed Auditing Fees The auditing fees proposed below are based upon a review of the financial statements of the various entities comprising the City of Tustin. The Total All-inclusive Maximum Price for the 1995 engagement is $20,280. For the years beyond 1994-95, the escalation factor we used is a fixed five percent each year. Should operations of the entities change significantly from those present at June 30, 1994 then the fees shown below would be subject to further negotiation. Additionally, the fees below are based upon the representation that accounting functions would be pedormed and minimal adjustments would be required. We do not charge extra for meeting with the governing boards of the respective entities or for the preparation of comfort or other letters to underwriters for the inclusion of our report in official statements. Below and on the pages which follow are the forms specified in your request for proposal. The rates for additional professional services beyond the scope of this proposal will be based on the quoted hourly rates for the respective fiscal year. For purposes of this proposal, Lance, Soil & Lunghard certifies that the individual signing below is a general partner in the partnership and empowered to submit this bid. Additionally, this individual is authorized to execute a contract with the City of Tustin for the services specified in this proposal. DONALD L. PARKER, CPA PARTNER SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR TH~ AUDIT OF T~ 1995 FINANCIAL STATEMENTS Partners Managers Supervisory staff Staff Other (specify): _Rounding Subtotal 476.00 Out-of-pocket expenses: Meals and lodging Transportation Other (specify): Standard Quoted Hourly Hourly Hours Rates Rates Total 25.00 . 125.00 _ 91.25 _ 2,28.1,25 25.00 _ 90.00 65.70 1,642.50 130.00 296.00 Total proposed price for 1995 Additional Information: Discount from standard rates Breakdown of Fee by Engagement: City'of'Tustin Tustin Redevelopment Agency Single Audit of Federal Grants 70.00 51.10 6,643.00 4'5.00 32.85 _ 9,723.60 audit -10.35 20,280.00 None None None None 20,280.00 27.00% 13,590.00 4,230.00 2,460.00 SCHEDULE OF PROFESSIONAL FEES ;%ND EXPENSES FOR THE AUDIT 1996 FINANCIAL STATEMENTS Hours Partners Managers Supervisory staff Staff Other (specify): Roundinq Subtotal 476.00 Out-of-pocket expenses: Meals and lodging. Transportation Other (specify): 25.00 Standard Quoted Hourly Hourly · Rates _Rates 125.00 91.25 25.00 90.00 65.70 130.00 296.00 70.00 45.00 Total proposed price for 1995 audit Increase Factor from 1995 Audit Total proposed price for 1996 audit Additional Information: Discount from standard rates Breakdown of Fee b~ Engagement: City of Tustin Tustin Redevelopment Agency Single Audit of Federal Grants _ 51.10 32.85 2,281,25 1,642.50 6,643.00 9,723.60 -10.35 _20.280.00 None None None None _20,280.00 5.00 _21,290.00 27.00% _ 14,270.00 _4,440.00 2,580.00 SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE .~997 FINANCIAL STATEMENTS Hours 25.00 Partners Managers .... 25.00 Supervisory staff 130.00 Staff. 296.00 Other (specify): Roundinq Subtotal 476.00 1996 Increase Out-of-pocket expenses: Meals and lodging Transportation other (specify)- Standard Quoted Hourly Hourly Rates Rates ..125.00 91.25 90.00 65.70 70.0o 5~.10 45.00 32.85 Total proposed price for 1996 audit Increase Factor from 1995 Audit Total proposed price for 1996 audit Additional Information: Discount from standard rates Breakdown of Fee by Engagement: City of Tustin Tustin Redevelopment Agency Single Audit of Federal Grants Total 2.281,25 1,642.50 6.643.00 9,723.60 -10.35 20,280.00 1,010.00 None None None None 21,290.00 5.00~ 22,350.00 27.00% 14~980.00 4,660.00 2,710..00 SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE 1998 FINANCIAL STATEMENTS Partners Managers Supervisory staff Staff Other (specify): Rounding Subtotal 1996 Increase Hours 25.00 25.00 130.00 296.00 476.00 1997 Increase Out-of-pocket expenses: Meals and lodging Transportation Other (specify): Standard Hourly Ra%es 125.00 90.00 70.00 45.00 Total proposed price for 1997 audit Increase Factor from 1997 Audit Total proposed price for 1998 audit Additional Information: Discount from standard rates Breakdown of Fee by Engagement: City of Tustin Tustin Redevelopment Agency Single Audit of Federal Grants Quoted Hourly ..Rates 91.25 ,, .. 65.70 5i.10 32.85 Total 2,281,25 1,642.20 6,643.00 9,723.60 -10.35 20,280.00 1,010.00 1,060.00 None None None None 22 , 350.00 5.00% · 23,470.00 27.00% · . 15,730.00 4,890'"00 2,850.00 SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF TH~ 1999 FINANCIAL STATEMENTS Hours Partners 25.00 Managers 25.00. Supervisory staff Staff Other (specify): Roundinq Subtotal 476.00 1996 Increase 1997 Increase 1998 Increase Out-of-pocket expenses: Meals and lodging Transportation Other (specify): Standard Quoted Hourly Hourly Rates Rates 125.00 9~.25 90.00 65.70 130.00 70.00 51.10 296.00 45.00 32.85 Total proposed price for 1997 audit Increase Factor from 1997 Audit Total proposed price for 1998 audit Additional Information: Discount from standard rates Breakdown of Fee by Engagement: City of Tustin Tustin Redevelopment Agency Single Audit of Federal Grants Total 2,281,25 1,642.50 _ 6,643.00 9,723.60 -10.35 20,280.00 1,010.00 1,060.00 1~120.00 None None None None 23,470..00 5.00% 24,640.00 27.00% 16,520.00 5,130.00 2,990.00 PROPOSAL OF AUDIT SERVICES (Technical Portion) TO THE CITY OF TUSTIN Submitted by: CONRAD & ASSOCIATES 1100 Main Street, Suite C Irvine,, California 92'/14 December 2, 1994 CONTACT PERSON - MICHAEL A. HARRISON, PARTNER PHONE NO. (714) 474-2020 FAX NO. (714) 263-5520 CONRAD & ASSOCIA'TES CALIFORNIA LICENSE NO. X3447 CONRAD & ASSOCIATES FEDERAL IDENTIFICATION NO. 95-3389106 CON $SOCIP{i'ES C[RIIFIED PUBLIC ACCOUNTANTS 1100 MAIN STRI[1. SUITI C IRVIN[. CALIFORNIA 92714 (714) 474-2020 December 2, 1994 Ronald A. Nault, Director of Finance City of Tustin 300 Centennial Way Tustin, California 92680 Dear Mr. Nault: Conrad & Associates is pleased to respond to your request for proposal to serve as independent auditors for the City of Tustin. We are aware that while the City of Tustin-has solicited numerous proposals, Conrad & Associates would be your best selection for the following reasons which are set forth in greater detail in our proposal: · We consider ourselves experts in the field of governmental accounting and auditing. The Conrad & Associates audit team who will be assigned to the City of Tustin are vastly experienced in conducting City and Redevelopment Agency audits and single audits under OMB Circular A-128. Our professionals are also experienced in redevelopment agency compliance matters, establishment of redevelopment accounting systems and regularly provide technical adVice in the recording of complex transactions and other assistance which is enumerated in Section C of'our proposal. · Our firm has an extremely high client retention percentage. We believe the Primary reasons for this high satisfaCtion of our services is responsiveness to client needs, experienced staffing, timeliness of our services and reasonableness of our fees. · Conrad & Associates is a large local CPA firm employing 38 individuals, including 33 .professionals. During calendar 1993, our professionals performed in excess of" 41,000 hours of auditing, and consulting services for our governmental' clients. · In. Los Angeles and Orange Counties, we currently serve as independent auditors for the Cities of Norwalk, Hawaiian Gardens, Azusa, San Gabriel, LaVerne, Brea, Buena Park and Costa Mesa. We also serve as independent auditors for the Redevelopment Agencies of those Cities. Additionally, we serve as auditors for seventeen other California Cities and Redevelopment Agencies and numerous special districts, joint powers authorities and public non-profit corpora tions. MEMBERS OF. .........AICPA AND CALIFORNIA SOCi=TY~ OF CERTIFI=D. PUBLIC ACCOkJ,~TANTS Ronald A. Nault, Director of Finance City of Tustin December 2, 1994 Page Two Conrad & Associates is a member of the American Institute of Certified Public Accountants (AICPA) Private Companies Practice Section. Peer Review. Our firm has developed quality control standards and procedures which have been subjeCted to AICPA standards' of review. We believe it is important for you to know that Conrad & Associates has received an unqualified opinion on the quality control of our accounting and auditing practice for each of our peer reviews. Two partners within Conrad & Associates have advanced degrees in Law and Taxation and provide an additional resource to the City of Tustin in fringe benefit taxation matters. We believe that our fee estimate and structure will assure the City of Tustin of the lowest overall possible cost (based upon quality of work) to perform the annual audit examinations for the City of Tustin. Our firm and the audit team who will be assigned to the City of Tustin are all very experienced individuals, There will be no lost time in training our staff. Each year we plan to provide continuity of staffing which is in the best interests of both City staff and our firm. Both Mr. Harrison and Mr. Al-Imam are technical reviewers of City CAFR's under the California Society of Municipal Finance Officers Award Program for Outstanding Financial Reporting. Each year these individuals perform technical reviews of city comprehensive annual financial reports of non-client cities submitting their reports under the awards program. Mr. Michael A. Harrison, Technical Review Partner, and Mr. Ken Al-Imam, Engagement Partner, are authorized to bind our firm in contractual matters with the City of Tustin. Messrs. Harrison and Al-Imam are also authorized to make representations for our firm. Conrad & Associates is licensed and in good standing with the California State Board of Accountancy to practice as independent certified public accountants. Additionally, Conrad & Associates is independent with respect to the City of Tustin within the GAO standards and is an Equal Opportunity Employer. We are committed to providing outstanding service to the City and in meeting the r.equested time deadlines and we will maintain our audit working papers for a period of three years. Ronald A. Nault, Director of Finance City of Tustin December 2, 1994 Page Three Our firm thanks the City of Tustin for the opportunity to present our proposal qualifications and for the opportunity to serve as your independent auditors. We have not previously performed any engagements for the City of Tustin during the past five years. Our proposal remains a firm offer for 120 days from this date. I look forward to your contacting me so that I may answer further any questions which you may have. You may contact me or Ken Al-Imam at ('/14) 4?4-2020. Very truly yours, CONRAD & ASSOCIATES Michael A. Harrison, CPA Partner' PROPOSAL FOR AUDIT SERVICES TO THE CITY OF TUSTIN TABLE OF CONTENTS Section A PROFILE OF THE PROPOSER About Conrad & Associates PROPOSER'S OUALIFICATION$ Qualifications and Related Experience of the Personnel who will service the City of Tustin Our Prior Experience Auditing Cities, Redevelopment Agencies, Special Districts and Authorities D References of Current Local Government Clients Capabilities in General Consulting and Compliance Auditing 13 14 G APPROACH, SCOPE AND TIMING Approach, Timing and Work Program of Our Engagement Team Our Firm's Understanding of the Objectives and Scope of the Engagement 16 25 H Appendix A B C AUDIT FEES Our Hourly Rates and Maximum Fee to Perform This Engagement (removed and bound separately) Resumes of Audit Engagement Team Results of Most Recent Quality Control Review Proposer Guarantees and Warranties PROFILE OF THE PROPOSER SECTION ^ ABOUT CONRAD 8: ASSOCIATES Conrad & Associates is located in Irvine, California and has a staff of thirty-five (35) individuals, including thirty (30) professionals. Three of the firm's six partners devote more than 75% of their time in managing governmental audit and general consulting engagements related to local governmental clients. Three of the firm's partners have extensive "Big 6" public accounting experience in addition to extensive loca! firm experience. Two of our tax partners have advanced degrees in law and taxation as well as being CPA's. This tax expertise adds an additional dimension for our local governmental clients in areas of taxation affecting local governments. Since 1972, Conrad & Associates has specialized in governmental and nonprofit accounting and auditing. For the past 22 years, the firm has been performing accounting and audit services to the private and public sector and not-for-pro fi t organi za t ions. A breakdown of our firm's personnel by level of experience is as follows: Partners 6 ~anagers/Supervi sots 6 Seniors 12 Staff 9 · Clerical/Bookkeepers '5 Conrad & Associates is licensed to practice in the State of California and has complied with all applicable California Board of Accountancy requirements. The firm's employees have met all of the State's Continuing Education requirements, and the firm is in compliance with CPA requirements of the Private Companies Practice Section of the AICPA. A Ouality Control Firm For over 14 years, Conrad 8: Associates has been one of the few local CPA firms which has subjected its audit and accounting practice to the scrutiny of the peer review program administered by the Private Companies Practice Section of the American Institute of Certified Public Accountants (AICPA). As a member of the Private Companies Practice Section of the AICPA, our audit procedures and working papers are regularly examined by another CPA firm in the firm-on-firm peer review program. In addition, all aspects of the firm's quality control practices have been reviewed, including the firm's commitment to extensiv~"training programs. In every member firm, each member of the professional staff must enroll in continuous professional education courses. Each is required to take at least 120 hours of classes over a three-year period. Courses cover a wide spectrum of professional and technical subjects, often prepared by the AICPA, to help the practitioner maintain his professional expertise. The following policies and procedures are evaluated during the' peer review. 1. How a firm implements independence requirements o How personnel are assigned -1- SECTION A. (Continued) 4~ 5~ Provision for consultation when technical assistance is required How field work is supervised Hiring practices continuing Professional Education programs Promotion of personnel Decisions on obtaining and retaining clients Internal inspection of the firm's work This means that when the City of Tustin selects our firm to perform services for you, you will know that our firm has agreed to comply with the strict membership requirements of the section to which we belong and has agreed to have our compliance with those requirements reviewed by others. Thus, there is greater assurance that our personnel are adequately trained and. up-to-date on professional developments relating to governmental as well as commercial auditing. Accordingly, membership in this Division provides additional assurance that our firm will comply with professional accounting and auditing standards. The Governmental Accounting Office (GAO), in their 1994 revision to the "Yellow Book", Government Auditing Standards, require CPA firms performing governmental audits to participate in quality control "peer" review. We are proud of the fact that Conrad & Associates received an unqualified opinion on the quality of its accounting and auditing practice for each of its quality control reviews. A copy of those opinions, together with American Institute of Certified Public Accountants (AICPA) approval of the results of the review, are included in Appendix B. We would like to indicate that during our most recent quality control review several government audits, including single audits of cities, were reviewed by the review team who found our work to substantially comply with all AICPA standards. Additionally, our firm has had numerous federal and state desk reviews and field reviews of our audits done by the State Office of Criminal Justice Planning, the U.S. Departments of Labor, Health and Human Services, Environmental Protection Agency and the California State Controller's office. In all instances the federal or state agencies indicated their satisfaction with our work. Our firm has never had a record of substandard audit work. As a lOCal CPA firm, our office contains approximately '/,000 square feet of space for the 38 individuals in our firm. To accommodate our-clients, we have an in-house IBM Data' Processing System and numerous IBM compatible personal computers, as Well as Wang Word Processing multi-station equipment for the production of reports and other written documents of the highest quality. -2- PROPOSER'S OUALIFICATIONS , SECTION B QUALIFICATIONS AND RELATED EXPERIENCE OF THE PERSONNEL WHO WILL SERVICE THE CITY OF TUSTIN The successful outcome of any audit requires personnel with the managerial and technical skills to perform the work required. The engagement team who will serve the City of Tustin have served together as a team of professionals on numerous financial audit examinations of local government entities. We believe that efficient administrative management and supervision of the audits is an extremely critical factor in achieving the desired results for the City Council of the City of Tustin. In that regard, we propose to establish the following procedures. Mr. Ken Al-Imam, Engagement Partner will be responsible.for the coordination of the audit of the City of Tustin and fulfillment of the requirements of the City Council of the City of Tustin. Mr. Al-Imam, as the engagement partner, will be in the field to plan and coordinate the management of the various audit examinations of the City of Tustin. He will work' directly with the Finance Director and Assistant Finance Director and be responsible to the Finance Committee and City Council. Mr. Al-Imam's time is expected to aggregate 10% of the total professional hours on the engagement. The purpose of this time is to appropriately address all accounting and auditing issues and ensure the objectives of the City Council are met. Mr. Michael A. Harrison serves as a partner in the firm's local government auditing practice. He has over 24-years of auditing experience including 19 years of providing services to cities and redevelopment agencies. Mr. Harrison will serve as Technical Review Partner. In this capacity Mr. Harrison will act as a technical and consulting partner to Mr. Al-Imam and the Finance Director of the City of Tustin. As a second partner reviewer, he will perform quality control reviews of all audit reports issued by our firm. Mr. Dean Votava, CPA, Engagement Manager, is an experienced field manager and will supervise the field senior auditor and staff accountant. He will work closely with Mr. Harrison to address all technical, accounting and audit issues. Mr. Votava has served in staff, senior and manager capacities on ten California cities and the related Redevelopment Agencies of those cities. Ms. Steven Dobrenen will serve as senior auditor of the City of Tustin. He will work closely with Mr. Votava in the conduct of the various audits of the City of Tustin. He will plan and conduct the audit work and will supervise the staff accountants who will work with him. Mr. Dobrenen has served as senior auditor on the Cities of Cathedral City, Hawaiian Gardens, Brea and Whittier. The chart in Appendix A illustrates the organization of the audit team for the audit of the City of Tustin. Resumes of the audit team are included in Appendix A to the technical proposal. -3- SECTION C OUR PRIOR EXPERIENCE AUDITING CITIES, REDEVELOPMENT AGENCIES, SPECIAL DISTRICTS AND AUTHORITIES Conrad & Associates as a firm, under the direction of partners Mr. Michael A. Harrison and Mr. Ken Al-Imam, are vastly experienced in the audits of local government units ('all.funds audit examinations of cities including single aUdits performed under OMB Circular A-128, financial and compliance audits of California Redevelopment Agencies, audit examinations of joint powers authorities and special districts). Among the local government entities which Conrad & Associates has served during the past fiscal year are the following: All Funds Examinations of California Citie~ City of Brea (Approximate budget $130 million) During 1992, our firm was selected as auditors among a wide field of competition for this Orange County City. The City.has a very active redevelopment agency, During fiscal year 1992, the Brea Financing Authority issued nearly $200,000,000 in tax allocation and lease revenue bonds and daf eased four previous issues .of the Redevelopment Agency..The Agency has numerous owner participation and developer ..disposition agreements with significance to the annual audit. The city has a regional shopping mall and receives various sources of grant funding subject to the single audit. The City has received the Certificate of Achievement for Excellence in Financial Reporting in 1992 'and pl~evious years and has submitted its CAFR for the year ended June 30, 1993 for review by the Government Finance Officers Association. City of Palm Springs (Approximate.budget $60 million) Conrad & Associates has served as auditors for this Coachella Valley City since 1986. The Palm Springs Redevelopment AgenCy, which is part of the reporting entity of the City, has nine project areas. The City operates the Palm Springs Regional Airport and receives various federal funding, including FAA grants subject to the single audit under OMB Circular A-128. Other enterprise funds of the City include the Palm Springs Convention Center, the Wastewater and Golf Course activities. The City has received the CSMFO Award for Outstanding Financial Reporting and the GFOA Certificate of Achievement for Excellence in Financial Reporting for its 1989-1992 CAFR's, and has submitted its ]993 CAFR under each of those award programs. City of Norwalk (Approximate budget $56 million) Conrad & Associates has performed the audit of this Los Angeles County city from 1986 through 1993. We have performed a single audit in accordance with OMB Circular A-128 for each of those years. Our audits include the Norwalk Financing Authority and Norwalk Redevelopment Agency. The City receives grant funding from the U. S. Department of Housing Development for .the Section 8 Housing assistance .program as well as CDBG and other federal funding. The City also operates a state funded child care program and a Senior Citizens action program. F.or each of the years. 1986 through 1992, the City has received the CSMFO Award for Outstanding Financial Reporting and the GFOA Certificate of Achievement for Excellence in Financial Reporting. The City has submitted its 1993 CAFR under each of the foregoing programs. City of Vi$~ (Approximate budget of $58 million) During 1983 through 1993, Conrad & Associates performed the audit examination of the City of Vista. The audit included the Vista Community Development Commission, Vista Joint Powers Financing Authority and the Buena Sanitation District. The City is also a participant in the Encina Water Pollution Control Facility and the Encina Financing Joint Powers Authority which are accounted for on the equity method of accounting. The City has the Vista Sewer Enterprise Fund and Buena Sanitation Enterprise Fund. The City receives various grant funding sources including SECTION C. (ConTinued) CDBG and Title III Congregate meals funding for senior citizens. The City has received the CSMFO Award of Outstanding Reporting and/or the GFOA Certificate of Achievement for Excellence in Financial Reporting for each of the years 1986 through 1992. The City has submitted its 1993 CAFR under each of the foregoing programs. City of Costa Mesa (Approximate budget of $95 million) Conrad & Associates was selected to serve as independent auditors in fiscal 1991. Included in the audit are the operations of the Costa Mesa Financing Authority, the Costa Mesa Redevelopment Agency and the Costa Mesa Sanitary District. The City also operates a municipal golf course and receives varioUS sources of Federal funding subject to single audit under OMB Circular A-128. The City has received the CSMFO Award for Outstanding Reporting and the GFOA Certificate of Achievement for Excellence in Financial Reporting for its 1992 CAFR and has submitted its 1993 CAFR under each of the foregoing programs. City of Az~a (Approximate budget of $41 million) Conrad & Associates has conducted the audit examinations of the City of Azusa and Azusa Redevelopment Agency since 1987. The City operates several enterprise activities including water, sewer and an electric utility. The Agency has entered into several'developer disposition .agreements which include rebates of sales 'taxes. The City has received the Certificate of Achievement for Excellence in Financial Reporting for its 1992 CAFR and has again submitted its 1993 CAFR to GFOA for review recognition. City of Buena Park (Approximate budget of $59 million) During 1982, our pro~essionals assisted the City in implementing NCGA Statement #3 to incorporate changes in the "Reporting Entity". Additionally, in connection with a fixed asset appraisal performed by an outside appraisal firm, we successfully completed audit procedures and assisted the City in recording of those assets on their books. With the appraisal and audit work, the City was able to remove previous accountants' report qualifications relating to the incompleteness of fixed asset records. Conrad & Associates further assisted the City finance department in upgrading its annual financial report which has been submitted under both the CSMFO Award Programs and the Government Financial Officers Association (GFOA) Certificate of Achievement Program. For fiscal years 1983 through 1992, the City has been awarded the GFOA Certificate of Achievement and the CSMFO's Outstanding Award for'fiscal 1983-92. (~i~;y of Cathedral City (Approximate budget $20 million) Conrad& Associates has conducted the audit examination of the City, Redevelopment Agency and the Community Services District of Cathedral City. A single audit in accordance with OMB Circular A-12g was conducted for fiscal 1986 through 1993. The City was active in financing an Auto Mall through various debt issues and has extensive special assessment and redevelopment agency financing'. The Agency has also entered into varioUS developer disposition agreements having audit significance. City of San Gabriel (Approximate budget $11 million) Conrad & Associates conducted the audit examination of this Los Angeles County City for fiscal 1988 through 1993. A single audit in accordance with OMB Circular A-128 was also conducted for each year. The 1990 through 1992 CAFR received the CSMFO Outstanding Award and GFOA's Certificate of Achievement for Excellence in Financial Reporting and the 1993 CAFR has again been submitted for review under the CSMFO and GFOA Award Programs. SECTION C. [Continued) City of La Verne (Approximate budget $20 million) Conrad & Associates conducted the audit, examination of this City for fiscal 1988 through 1993. The City and Agency have sev.eral owner participation agreements, multiple issues of long-term debt outstanding, and operates both a water and sewer utility. A single audit in accordance with OMB Circular A-128 was also conducted for each year. The City received the CSMFO Award for outstanding financial reporting for each of the past three fiscal years. City of GilroY (Approximate budget $35 million) Conrad & Associates conducted the. audit examination of this Santa Clara County City for fiscal 1989 through 1993. During fiscal 1992 we assisted the City in a 'conversion to full governmental GAAP for all its funds. During 1989 we also conducted a management audit .of the City's waste disposal contractor, and single audits in accordance with OMB Circular A-128 for 1989 through 1993. Town of A_vple Valley (Approximate budget $15 million) Conrad & Associates was selected to serve as independent auditors for this relatively new City in San Bernardino County for 1991-1995. The City has a Water District and several special assessment districts. Our staff is also providing technical support and assistance in various areas to the City staff. City of Highland (Approximate budget $6 million) Conrad & Associates currently serves as the auditors of this recently incorporated City in San Bernardino County. We completed the examination of the City for the years ended June 30, 1989 through June 30, 1993. During 1990 we assisted the City in developing accounting policies and establishing fund structure for a newly formed Redevelopment Agency. The City has received the GFOA and csMFo awards for its CAFR during each of the past four years. City of Hemet (Approximate budget $20 million) Conrad.& Associates was selected during 1989 to serve as auditors of this Riverside County City. We have completed our audit of the City, Redevelopment Agency and the single audit in accordance with OMB Circular A-128 for the years ended June 30, 1989 through 1993. The City has several internal service, fund activities and operates refuse and water utility enterprise funds. City of Delano (Approximate budget $15 million) Conrad & Associates was selected in 1991 to perform the 1991-1995 audit examinations of the City. The City recently established a redevelopment agency, has a private (non-PERS) pension plan and uniquely operates a 426 bed community correctional facility under contract with the State Department of Corrections. The City also operates an airport and water and sewer services for its residents. We are also assisting the City in preparing various State Controller Reports. City of Hawaiian Gardens (Approximate budget $15 million) Conrad & Associates was selected in late 1990 to serve as auditors of this Los Angeles County City. Our firm completed the 1989 through 1993 audit examinations of the City, Redevelopment Agency and Public Financing Authority. We also conducted single audits in accordance with OMB Circular A-128. We provided technical assistance to the City and Redevelopment Agency in accounting matters, and performed special reviews at the Agency's request of the validity of the Redevelopment Agency's tax increment increase from 1988 to 1989. The Redevelopment Agency has engaged in several debt issues, including those involving the advance refunding and defeasance of debt. City of Santee (Approximate budget $15 million)~ Conrad & Associates was selected in 1991 to perform the audit examinations of this City in San Diego County. We have completed the 1991-1993 audits of the City, Redevelopment Agency and Single Audit of Federal grant programs in accordance with OMB Circular A-128. -6- SECTION C. (Con~inved) City of San Jacinto (Approximate budget $10 million) Conrad & Associates was selected in 1991 to perform as auditors for this Riverside County City. The City has a Redevelopment Agency, numerous special assessment districts and water and sewer enterprise activities. We have also assisted the City in preparation of State Controller reports for the Agency and City during fiscal 1991 and 1992. City of Rancho Mirage (Approximate budget $18 million) Conrad & Associates professionals under Mr. Harrison's direction, performed the examination of this desert City from 1982 through 1988. The City 'receives significant hotel-motel bed taxes and has numerous special assessment districts subjected to audit. Our firm was again selected in 1992 to perform the audit examinations of the City, Agency, Financing Authority and single audit. The City has received award recognition under the CSMFO and GFOA Award programs for excellence in Financial reporting for its 1992 CAFR and submitted the 1993 CAFR for consideration to CSMFO and GFOA. Gi17 of La Ouinta (Approximate budget $30 million) Conrad & Associates was selected in 1992 to serve as auditors of this'Coachella Valley City. Included within the audit are the La Quinta Redev.elopment Agency'and La Quinta Financing Authority. City of Indi0 (Approximate budget $25 million) Conrad & Associates was selected in 1993 to serve as independent auditors for this Coachella Valley City. Our firm has also assisted the City in technical issues relating to the Redevelopment Agency, pass-through 'agreements and the Indio Financing Authority. City of Carlsbad (Approximate budget $80 million) Conrad & Associates was selected in 1993 to serve as auditors for this San Diego County City. The scope of the audit includes the Carlsbad Housing Authority, Carlsbad Redevelopment Agency and the Encina Joint Powers Financing Authority. Conrad & Associates previously served as auditors from 1981-83 for the City. The following are Cities which Conrad & Associates has audited in years prior to 1993: Previous City Clients City of E$¢ondido (ApProximate budget $65 million) During 1983 through 1988, Conrad & Associates performed the audit examination of this northern San Diego County City. The City operates numerous proprietary activities, including Water and Sewer. The City receives various grant funding sources, including Community Development Block Grant Funds. Single audits were performed for fiscal 1985, !986, 1987 and 1988 under OMB Circular A-128. City of South Gate (Approximate budget $39 million) During 1984 through 1988, Conrad & Associates performed the audit of. this Los Angeles County City. The City receives Urban Development Action Grants and Community Development Block Grant funding. The City also operates a Housing Authority and receives various other federal funding. During 1985, 1986, 1987 and 1988, Conrad & Associates performed a single audit of this City in accordance with OMB Circular A-128. During 1986, our firm also provided services in auditing the accounting records of a developer in order to determine the amount of revenue due to the redevelopment agency under terrhs of a lease agreement with the developer. -'7- SECTION C. (Conlinued) City of Westminster (Approximate budget $24 million) Conrad & Associates, under Mr. Harrison's and Mr. Al-Imam's direction, have performed the examination of the City. Separate financial statements are issued on the Water Utility Enterprise Fund in addition to the general purlx)se financial statements of the City. Conrad & Associates performed single audits in fiscal years 1985, 1986, 1987, 1988 and 1989 in accordance with OMB Circular A-128. City of LOs Alamitos (Approximate budget $6 million) conrad & Associates conducted the audit examination of this Orange County City for fiscal 1986. A single audit in accordance with OMB Circular A-128 was conducted for fiscal 1986, 198'/ and 1988. For 1987 we assisted the City in converting to GAAP basis (modified accrual) financial statement. Previously the City was reporting on the cash basis of accounting. City of Rialto (Approximate budget $58 million) The City uniquely participates in a joint venture with a private entity to operate an Industrial Park within the City of Rialto. The City also operates several enterprise activities, including an airport, water, sewer, cemetery and racquetball activities. During 1985, 1986, 1987, 1988 and 1989, Conrad &' Associates c'onducted single audits in accoi-dance with OMB Circular A-128. The City received the CSMFO Outstanding Award for Excellence in Financial Reporting for its 1989 annual report. . City of Claremont (Approximate budget $20 million) We performed the 1983 through 1988 audit examinations of the City of Claremont. The City participates in various joint powers authorities, Operates congregate meal programs (Area Agency on Aging) and receives various state, county and federal grants. The City received the CSMFO Outstanding Award for Excellence in Financial Reporting for its annual report for 1985, 1986, 1987 and 1988. City of Stanton (Approximate budget $8 million) During 1983 through 1987, we performed the audit examinations of the City of Stanton. The City participates in the CDBG program and receives various state and federal grants. During 1986 and 1987 we performed a single audit in accordance with OMB Circular A-128. City of San~;i~ Ano ·(Approximate budget of $210 million) In October of 1983, the City Council of Santa Ana selected Conrad & Associates to perform the annual audit examination of the City and its related entities, including the Community Redevelopment Agency of the City of Santa Ana, the Santa Ana Housing Authority and the Santa Ana Local Economic Development Corporation. During fiscal year 1984, our firm performed a "single audit" under OMB Circular A-102, Attachment P. The cognizant audit agency is the U. S. Department of Housing and Urban Development. The City operates. Mortgage Revenue Bond Programs, Industrial Development Bond Programs, Commercial Rehabilitation Loan Programs and numerous other housing rehabilitation loan programs. The City holds the GFOA Certificate of Conformance and CSMFO Outstanding Award for. each of its annual financial reports. During 1985, 1986 and 1987~ our single audit was conducted in accordance with OMB Circular A-128. City of San Marcos (Approximate budget $18'million) We performed the audit examinations of the City of San Marcos for fiscal 1983 through 1987. The City established a redevelopment agency and receives various state and federal grants. The City received the CSMFO Outstanding Award for its fiscal 1985, 1986 and 1987 CAFR's while Conrad & Associates served as auditors.. · SECTION C. (Cominuect} City of Downey (Approximate budget $46 million) We conducted the audit for fiscal 1985 of the City and Redevelopment Agency. Separate audits are also conducted of the Recreation Area Authority and Water Facilities Corporation. A single audit in accordance with OMB Circular A-128 was performed for fiscal 1985, 1986 and 1987. We have also performed audits of transient occupancy tax for the City of Downey. The City received the CSMFO Outstanding Award for its 1986 and 'I987 reports while we served as auditors. City of Desert Hot Svrin~s (Approximate budget $5 million) Conrad & Associates conducted the 1985, 1986, 198;/, 1~88, 1989 and 1990 audits of the City and Redevelopment Agency. The City received the GFOA Certificate of Achievement for its 1985 CAFR and has received the CSMFO "Outstanding" Award for its 1989 CAFR. City of BeaumonI (Approximate budget $5 million) Conrad & Associates conducted the audit examination of this Riverside County City for fisCal 1986, 1987, 1988, 1989, 1990 and 1991. A single audit in accordance with OMB Circular A-128 was conducted in fiscal 1986, 1987, 1988, 1989, 1990 and 1991. City of B~nning (Approximate budget $30 million) Conrad & Associates has conducted the 1987, 1988, 1989, .1990 and 1991 audit examinations of the City and Banning Redevelopment Agency. The City operates an electric utility and during 1987 established a Mello Roos Community Facilities Act District. Conrad & Associates has performed and addressed various accounting and reporting issues with respect to the Community Facilities Act District and the Electric Utility. We have also assisted the City with their GANN limit computations. · Audits of Special Districts and Authorities Name of En;ity Azusa Agricultural Water Banning Public Facilities Corporation Brea Public Financing Authority Buena Park Library District Capistrano Bay 'Community Services Capistrano Beach Sanitary District Coachella Valley Association of Gove rnmen ts Coachella Valley Joint Powers Insurance Authority Community Development Commission of the City of Escondido Downey Civic Center Corporation Tvoe of Entity Non-Profit Corporation Financing Authority Financing Authority Special District Special District Special District Joint Powers Authority Joint Powers Authority Financing Authority Financing Authority -9- Dates 06/87-06/93 06/87-06/89 06/92-06/93 06/88-06/89 06/91-06/93 06/84-06/93 06/93 06/93 06/87-06/88 06/85-06/87 $SCTION C. (Continued) Name of Entity . Downey Water Facilities Corp. E1 Barrio Park Authority Eneina Joint Powers Financing Authority Encinitas Fire Protection District- Indio Public Financing Authority La Quinta Public Financing Authority Los Alamitos County Water District Los Angeles County/City of Downey Regional Public Recreation Authority Mesa Consolidated Water District Norwalk Civic Improvement Corporation Orange County Civic Center Authority Orange County Water District Palm Springs Financing Authority Palm Springs Public Facilities Corporation San Elijo Joint Powers Authority Southeast Water Coalition Transportation System Development Authority .- . Tri Cities Park Authority VistaFire Protection District Water Facilities Authority Yorba Linda Water District ~vpe of, Entity -- Financing Authority Joint Powers Authority Joint Powers. Authority Special District Financing Authority Financing Authority Special District Financing Authority Special District Financing Authority Joint Powers Authority Special District Financing Authority Financing Authority Joint Powers Authority Joint Powers Authority Joint Powers ~.uthority Joint Powers Authority. Special District Joint Powers Authority Special District Dates Performed 06/85-06/87 06/83-06/88 06/93 06/92-06/93 06/93 06/92-06/93 06/88-06/93 06/85-06/87 06/83-06/86 06/86-06/91. 06/82-06/85 02/84-02/88 06/86-06/93 06/85-06/93 06/92-06/93 06/92-06/93 12/86 06/92-06/93 06/83-06/90 06/85-06/93 06/81-06/91 -10- SECTION C. (Conlinue~ Clients Receiving GFOA/CSMFO Award for Financial Re_~arling Conrad & Associates has a proven track record in assisting cities in the upgrading of their financial reporting. A number of our clients have received the "Certificate of Achievement for Excellence in Financial Reporting" issued by the Government Finance Officers Association (GFOA) and the "Certificate of Award for Outstanding Financial Reporting" issued by the California Society of Municipal Finance Officers (CSMFO). In addition, both Mr. Harrison and Mr. Al-Imam serve as technical reviewers in the CSMFO award program. The following cities received financial reporting awards during the period of time that we served as their auditors: GFOA CSMF0 Awar~l Award City of Carlsbad X City of Vista X City of Buena Park X City of Desert Hot Springs X City .of Norwalk X City.of Palm Springs City of San Gabriel . 'X Water Facilities Authority. X City of Hemet X City of Highland X City of La Verne City of Costa Mesa X City of Rialto X City of Carlsbad X City of San Marcos X City of Downey X City of Santa Ana X City of Brea X City of Azusa X City of Rancho Mirage X ExD_ erience with Redevelopment Agencies Conrad & Associates currently or has previously performed financial and compliance audits of the following redevelopment agencies: Indio Redevelopment Agency Brea Redevelopment Agency Santa Aha Redevelopment Agency Buena Park Redevelopment Agency Rancho Mirage Redevelopment Agency Stanton Redevelopment Agency Rialto Redevelopment Agency San Marcos Redevelopment Agency Azusa Redevelopment Agency Vista Redevelopment Agency South Gate Redevelopment Agency Downey Redevelopment Agency -]1- SECTION C. (ConTinued) Experience with Redevelo_vment Agencies. (Continued) San Jacinto Redevelopment Agency Westminster RedeveloPment Agency Norwalk Redevelopment Agency 'Palm Springs Redevelopment Agency Carlsbad Redevelopment Agency Cathedral City Redevelopment Agency Desert Hot Springs Redevelopment Agency Escondido Redevelopment Agency Banning Redevelopment Agency La Verne Redevelopment Agency Gilroy Redevelopment Agency Hemet Redevelopment Agency Highland Redevelopment Agency Costa Mesa Redevelopment Agency Delano Redevelopment Agency La Quinta Redevelopment Agency Our experience with redevelopment agencies is extensive and includes the following: · Assistance in the accounting for developer, disposition agreements (DDA's) and owner participation agreements · Computations of obligations under pass-through agreements · Assistance in the use of tax-sharing agreements as an economic incentive · consultations regarding the financial benefit to the City resulting from redevelopment activities · Tax increment financing of projects · Consultations regarding low-moderate income housing requirements · The establishment, merging, and adding of project areas · The use Of rehab loans in redevelopment agencies · Assistance in issuance (and refundings) of Tax Allocation Bonds . · The establishment of redevelopment fund structure · Use of City loans and advances -12- SECTION D REFERENCES OF LOCAL GOVERNMENT CLIENTS The following five engagements were performed by Conrad & Associates during the most recent fiscal year. Both Mr. Al-Imam and Mr. Harrison served as partners on these five engagements. Name of City/Contract person 1, City of Vista and related entities Frank RoWlen, Finance Director (619) 726-1340 City of Brea and related entities Larry Hurst, Finance Director (714) 990-7675 3. City of Norwalk and related entities Jim Weber, Finance Director (31 O) 929-2677 City of Costa Mesa and related entities Susan Temple, Finance Director (714) 754-5219 City of Palm Springs and related entities Tom Kanarr, Finance Director (619) 323-8229 -12_ SECTION E CAPABILITIES IN GENERAL CONSULTING AND COMPLIANCE AUDITING In addition to our annual auditing services, we have assisted our clients by performing various management advisory and other accounting services, including: · Review of central purchasing systems · Review of warehouse controls and inventory systems · Review of operations in City Treasurers' Office ® Reviews of water billing systems · . Reviews of cash controls in parks and recreation departments · Special EDP reviews · Review of permitting process within city building departments · Analysis of investment yields · Special fraud audits · Assistance in presentations to city councils · Assistance in setting up special accounting systems for redevelopment agencies · Assistance to Bond underwriters in providing "comfort letters" on debt issues of municipalities · Consultations regarding the maximizing of tax increment revenue for redevelopment agencies · Organizational review of finance departments · Tax advice regarding deferred compensation, employee benefits, use of city vehicles, etc. · Review of financial forecasts Assistance in cash reconciliation problems · Special hotel-mote1 bed tax audits Other gross receipts audits (cable television franchise fees, excavation tax, etc.) · ContractUal agreement compliance audits · Determination of the cost of excess sewer capacity for a developer/city contractual arrangement -14- SECTION E. (Continued) Assistance in the selection of qualified finance personnel for employment by the city Assistance in computation of Proposition 111 GANN Limitations Management reviews of finance and City Treasurer's office Assistance in establishing accounting for development projects and fees to comply with AB 1600 ' Special Reviews of the Validity of Changes in Tax Increment Revenue from year to year within Redevelopment Agencies Assistance in Section 8 Housing program portability issues. -]5- PROPOSAL OF AUDIT SERVICES (Price Portion) TO THE CITY OF TUSTIN · Submi.tted by: CONRAD & ASSOCiATES 1100 Main Street, Suite C Irvine, California 92714 December 2, 1994 CONTACT PERSON - MICHAEL A. HARRISON, PARTNER PHONE NO. (714) 474-2020 FAX NO. (714) 263-5520 CONRAD & ASSOCiATES CALIFORNIA LICENSE NO. X3447 CONRAD & ASSOCIATES FEDERAL IDENTIFICATION NO. 95-3389106 RAD SSO TES CERTIFIED PUBLIC ACCOUNTANTS 1100 MAIN STR£EI', SUIT[ C IRVIN£, CALIFORNIA 92714 (714) 474-2020 December 2, 1994 Ronald A. Nault Director of Finance City of Tustin 300 Centennial WaY Tustin, California 92680 .. Dear Mr. Nault: Enclosed is Section H of our proposal setting forth our hourly rates and maximum fees to perform the audit of the City of Tustin and its component units. We look forward to serving the City of Tustin. MAH:dac Enclosure Very truly yot~trs, CONRAD & ASSOCIATES Michael A. Harrison, CPA Partner MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLtC ACCOUNTANTS SECTION H The following is a summary of the estimated hours and a breakdown of the maximum fee (including out-of-pocket expense) for the engagement: Descrivtion of Services City of Tustin RedevelOPment Agency Tustin Water Corporation Tustin Public Financing Authority Single Audit Gann Limii" ' Not to exceed mnount Estimated ~ ~ _ 1995_ _1996_ _I~ _1~ _~ 368 $16,560 16,928.17,296 17,664 18,032 120 5,400 5,520 5,640 5,760 5,880 42 1,890 1,932 1,974 2,016 2,058 30 1,350 1,380 1,410 1,440 1,470 32 1,440 1,472 1,504 1,536 1,568 Average rate per hour of fixed fee engagement $45 46 47 48 49 The above not to exceed amounts for each years services include out-of-pocket expenSes. The estimated level of audit effort by classification is as follows: Classification_ Estimated Partners 60 10~ Manager 90 15% .Senior Accountant 240 40% Staff Accountant 2J~ ~ Should the City desire additional services, classification for the 1995-1999 year. the following rates would be in effect by Classificatio~ Partner $110 . Manager 75 Supervisor 65 Senior Accountant 52 Staff Accountant 45 110 115 115 120 75 80 80 85 65 70 70 75 52 55 55 60 45 48 48 52 SECTION H. (Continued_) The annual audit of the City of Tustin and component units contemplate cOnditions satisfactory to completion of the examinations, including the City providing the auditors with trial balances with substantially all closing entries completed. Additionally, the City agrees to furnish subsidiary details of account balances and reconciliation of accounts to the general ledger. We understand that the City will provide maximum cooperation and schedule preparation for the auditors as set forth in the City's RFP. We also contemplate that the City will type confirmation requests and pull supporting documentation for our staff. If there are any changes in the scope of the audit; i,e., additional federal grant programs, substantial additional debt issuances, purchase of water enterprise activities, refundings, added project areas, etc., we would like to discuss these changes with the Finance Director and the effect of these changes on professional audit hours and costs of 'the engagement. CITY OF TUSTIN Proposal of Audit Services Table of Contents LETTER OF TRANSMITTAL .......................................................... INDEPENDENCE ................................................. . ......... CALIFORNIA STATE LICENSE ...................................................... FIRM QUALIFICATIONS AND EXPERIENCE ................... Firm Overview .......... · ............... ' ................ KPMG Peat Marwick US- · Public Service Line of Business ............... . .......... : ............................. Local Public Services Practice: Focused Services, Clear Leadership ............ Our ReSOures Meet Your Needs ...................................................... Audit Quality ;: ..... - .............................. Service Quality ........................................................................... Training .......................... GFOA - Certificate of Achievement Pro~ ........................................ Federal/State Desk Reviews ............................................................ PARTNER, SUPERVISORY AND STAFF QUALIFICATIONS AND EXPERIF. NCE. Engagement Team..i[iiiiiiiiiiiiiiiiiiiiiiiiill ........... : ............................. Education and Training ........... ............... ii~ii~iiiiii~iii~iiiiii'i~i~iiiiiiiiiii Resource Group- National Expertise ................................................ PRIOR ENGAGEMENTS WITH THE CITY OF TUSTIN ........................ ' SIMILAR ENGAGEMENTS WITH OTHER GOVERNMENT ENI-ri-IES. .... Redevelopment Agency Experience .................................................. Single Audit Experience ....................................... . ........................ SPECIFIC AUDIT APPROACH ................................................ ~ ...... Audit Scope ............. ,'. .... ,~:~ ......................................................... Reporting.. - . Communications ............... Our Audit Philosophy ............................................................... ' Ovcra]] Audit 'Approach.: ......... .................................................... Estimated.Audit Hours by Audit Phase City Staff Assistance ..................... ' .............................................. Working Paper Retention .......... /.'.~ii~.~[ii~/.'.'.~iii~.'.~i~/.'.~[i~/.'.~[~ii 5 5 5 6 6 7 8 9' I0 11 11 12 12 13 14 15 15 17 17 18 18 19 '19 20 20 24 24 24 APPENDIX A: Engagement Team Resumes APPENDIX B: References of Southern California Municipal Clients APPENDIX C: 1995 Audit and Annual Report Process Schedule (Tentative) APPENDIX D: Proposer Guarantees and Warranties APPENDIX E: Sample Auditor Report Formats KPMG-Peat Marwick LLP Orange County Office Center Tower 650 Town Center Drive Costa Mesa. CA 92626 December 5, 1994 Mr. Ronald A. Nault Director of Finance City of Tustin 300 Centennial Way Tustin, California 92680 Dear Mr. Nault: KPMG Peat Marwick is pleased to respond to your Request for Proposal to provide audit services to the City of Tustin. Your aim for excellence meets our aim to serve those organizations who seek a reputation for the highest quality among municipal professional organizations (such as GFOA and CSM]:O), bond rating 'agencies, bond counsel firms, state and Federal agencies, and of course, the general public. Accordingly, your engagement would be staffed from among our most experienced governmental auditors and the City can be assured of receiving timely, re _sponsivc wofessional services from our staff throughout our tenure as the City's auditors. Your selection of an accounting f'm'n is a decision that has implications beyond the annual audit. The accounting fu'm you engage must be qualified to provide management with the advice and support needed to develop and implement the City's business strategy. We have relevant experience in specialized areas of importance to the City, including transient occupancy tax revenue audits, financial reviews of franchise refuse haulers, contract compliance procedures'and reviews of fcc collection controls and procedures. The challenges the City faces also make it imperative that your accounting firm have the resources necessary to fulfill this expanded role. We fu'mly believe that KPMG Peat Marwick is the firm best qualified to meet these objectives. The engagement team to be assigned to the City of Tustin has experience auditing approximately 50 governmental entities, including some of the largest governmental entities in Orange, Los Angeles, Riverside and San Bcrnardino Counties. The team includes professionals who have authored and instructed Governmental Training Courses for both KPMG Peat Marwick and thc AICPA and who serve as reviewers for the Government Finance Officers Association (GFOA) and California Municipal Finance Officcrs-(CSMFO) Certificate programs. Accordingly, thc City can be assured that competent, professional consultation will be available to City staff and management throughout the year, and that the audit will be accomplished efficiently and with minimal 'disruption to City finance and accounting personnel. We will maintain continuity of personnel assigned to the engagement and our key people will be continually available when needed. We use thc words "commitment" and "quah'ty" often throughout this proposal. These are not words that we take lightly. We believe that our commitment u) deliver superior client service with quality results through a stable, experienced engagement team is the cornerstone of a lasting professional relationship. As you study our qualifications and compare our expertise with that of other f'ms, we ask that you give thought to each fu'm's ability to work effectively with you. There are several reasons why we believe KPMG Peat Marwick is best suited to serving you: Mr. Ronald A. Nault City of Tustin December 5, 1994 Page 2 · Our Extensive Local Resources: Our local governmental practice is actually a triad of offices with locations in Ontario, Orange County and Los Angeles. Our local resources include 5 parmers, 14 senior managers and managers, and more than 50 staff auditors who spend a significant amount of time in the governrnent services area, thug, we can assure the cOntinued availability of experienced, qualified personnel. Extensive National Resources: KPMG Peat Marwick is the preeminent firm of Certified Public Accountants in terms of leadership in the development and formation of accounting principles for governments. Our thrust is to be fully knowledgeable about the latest accounting practices, audit techniques and other developments in the governmental industry. Locally, we are supported by a national practice which develops and disseminates the most comprehensive and practical guidance available in the industry. · Our Commitment to the Public Sector: We are activelY involved in CSMFO, GFOA and the California CPA Society (both at the state and local levels), as well as being involved in current municipal reporting and accounting developments. These activities furnish a basis to provide you with ongoing, cOntinuous assistance on current municipal accounting issues. · Our Focus on Quality Service: Providing the highest quality service to our clients is the cornerstone of KPMG Peat Marwick. We utilize a formal client survey process to continually improve our service delivery process, thus insuring that we meet or exceed our clients' expectations. · New Perspective: We will bring a fresh viewpoint and objectivity to the engagement. Additionally, by using experienced governmental auditors and management consultants in the engagement, we will- be able to provide recommendations to enhance internal controls and to suggest innovative ways for improvement of City procedures and systems. This proposal is .intended to represent our f'n-m and irrevocable offer to provide professional services for the City of Tustin, valid for 120 days from the date of this letter. The designated Firm contact who is author/zed to make representations and binding decisions on behalf of the Firm is as follows: Mark T. Thomas KPMG Peat Marwick IJ~P Partner 650 Town Center Drive (714) 8504308 Costa Mesa, California 92626 We appreciate .being considered for this important engagement and once again assure you that, with our selection, the' City will receive the finest professional effort and Services available on a timely basis- and v,,ithin established deadline~5. We give you both our professional and personal guarantees. - Very truly yours, KPMG PEAT MARWICK LLP Mark T. Thomas, Partner l .:- .... -' EXECUTIVE SUMMARY: 'E ~'.:2'~2 7::. ' "~;.'...' "' .'_. '~ '"'.._ ' " · .... :. · .. J ;;~;~..'...~7;::~ ~-~:-'~. ~:~' ?-: .... ~.;~."~::.~.-; ~.--"~;' t':.~.' .-',k~~,~ . ' "~-~: , ~:.~ ."~.~:"' ~'~"-'~" ~' :..'.~..:'~ ~" "~"~ ~': :':: ~:''.'": ' . -:..' ' ~ ~.." ' ' " .... ..`.:~.~;~:~`~t~..[~.~.:.k2J.~..~.~.:~ ~;~.`~.~.~.L.~`~.~.~:~.~.~?:.~:' '. :.::::..~,7, L.' ~:~:5.~'.~L' ' -'.' ' .~'.-." :.'~: :.,~. '" .:.:'.:' ."'. :'. '.: ' : ':" ' "";~"~ ........ '--.' ' .~..'~,~:~:~2"..~'~: .'~L'~. ':' ~ T'~ ...... :'~','-' .... ." .' ....... ~ '.~., .... t ..... . '-', .~.-':',.' .~'w '~'~'-~ .. "':" ~ '.' ~'"':- ""."~'ff.~', A?'~f: ..... ~~' ~J ':'-.'.i~ ~ :.~.'.l?-.~ '~..,~' ", · ~:.., . -.',~. ;~:...',:. '.;. ' . ' . ' -': ....... . .. ,., ~ .... ~..~ .... ~,~,:,~ .~.;,,":;.',.~:~:~:.,~:~,.~.~. ~::~..:': .... :,. ' ..... ,.',:':,.' ..... :., _.'.. : .... ".-.,.. ~,~.,;-:. ~ ",. ...... '~ .::'.:'.' E~ : .. : %'"' ' '.:.- '.'-:: ..... ~ ....... . ................. ~.~ .--.. , .... ,.,~,- .-. :E"' ....... :'""~ ' '~7.' :'. ......... .~ .- ' · ................ .... ................... : ........... : ....................... . . '-.:.'~,.,~:.:::~:7~,, ..:.~:.: :::,:.. '.:'..-.:.;',-.~::~..' .. '. ., : . . . '"'~q~' 'aO~'i'"'~"~'~,~-~'".',f:"'"4~J'~' '~-.I-t~q~C%':'t'.a~.*-;,:~'~k-'.~ .-i~ ::~.~,~;.-~ ,?~ ?,~T~:~ ........ ~. ,.~k.~';t~b'~-~'-4-r.:..'.'.~-,.~ ~ *,.~,,.. ~ ~ ..... ~;E.~,.,~ .,. ,. : , .... ,~ ...~ · , ~ . , .............. ~ , .................................... ~ . . ~..:. ............. : .... . ..... : ..... . ............... .... .,.:- . ......... . ....... : ..... :,' .': . - ~-. ..... . . .,~.~.E:,.... ~ . '.. ..... , -- . .~ ~ ~ , ,,,. ~. a..~.,, . . ~ "'.. ,, ............... .' ,',". · ~',~:.:....:.~, t,,.A ....., , . .:.' .~,' :.; .:-. ~ ..:t.=:.: ,. E..; ~,: -,,, '...,. ........ ' , L' '.' ~.-: ,'.:A' : ',.?':...,EE.'~ .,: . '..~:~ ~E. ': ..... " ......... , ....... ..,~. ..... ~,.:-.~.,.., ..... ,,.: .... ,,~, ... .... ~. -'.~:'..?:,-: ~ .....:~ .,..':: ..... ,. : ':~-: .... _:.~ : -...~-.. :-,~:. - ..... . ...~ :....~..:..-: .... ~.~.,. .... :., ,- ..... ........... . . . · .' ":. · ~. -.~E.: ::-' : "-:,;r-:,." ','" :7':, ";E~ .... - ": :' '~7~ .... : ....... - ...... ' ............. ~ .... . -. -... ', .~ .- . , - · ...... :.~:;~::.:-':F~ ';"E.' "::'::'"'~'~?':-"' :"~'~:~ ~.'~:.:.:.~v:,. :,'.-~ ...: ..... . ........ '.. ,.. ...... · -,..:...., .:' '- ... - ........... : . ' . . . EXECUTIVE SUMMARY: WHAT MAKES US DIFFERENT The selection of auditors is just one part of assembling a team to assist the City in carrying out its plan and meeting its financial goals. KPMG Peat Marwick is known world-wide for its long- standing commitment to our governmental cIients. We are excited about the possibility of serving the City of Tustin and hope to demonstrate our tradition of excellence and our record of innovation in the governmental arena. The thrust of this proposal is to emphasize What makes us different from local and other international fa'ms. We truly believe there is no other fa'm better equipped to serve the City of Tustin, whether in the areas of accounting, reporting, development of internal controls, procedural design, organizational or business development. We Bring to the Table: The world's foremost accounting firm, with virtually unlimited resources. KPMG Peat Marwick employs over 72,000 professionals in more than 700 offices. We are known world- wide as'a quality-oriented organization which stands behind its reports and its clients. Depth of our Government Practice. We are currently serving more than 3,000 public sector clients nationwide, with more than 1,300 government services specialists. No other firm is able to come close to this depth of personnel and breadth of experience. Our Business Advisor attitude. Our focus is to provide our clients with useful, money- making or money-saving ideas. We have performed numerous studies for Southern California cities in the areas of Transient Occupancy Tax Revenues, Rubbish Removal Costs, Personnel Organization, Purchasing, Golf Course Revenues, Parking Revenues, Payroll and other related ' areas, resulting in real dollar benefits being recognized by our clients. Unparalleled experience. We audit by far, more cities, counties, redevelopment agencies, joint powers authorities, school districts and other governmental agencies in Southern California than any other f'u'm, local or international. Our knowledge of so many local governmental entities allows us to bring an informed perspective to our clients'problems and opportunities. Payroll and Benefit Tax Expertise. With the ever-changing tax laws, it is important to engage a £u'm that has extensive resources in the tax areas specifically involving local governments. Our local and national resources have proven invaluable to our clients in keeping them updated on the most recent developments, including such areas as taxation of employee benefits, expanded reporting'requirements, accountable employee expense plans and providing suggestions for implementation of new requirements. Continuity and depth of local office personnel. Because of the depth of our practice, wc arc able to involve a minimum of two partners on every engagement. We likewise assign to our engagements managers, seniors, staff and assistants in order to ensure that all work will be thoroughly reviewed and that our clients will benefit from continuity of staff on their engagements throughout our tenure as their auditors. Trained personnel. We' truly believe that our people are our most important r~source. Their highly developed skills have been accumulated through the successful performance of engagements for numerous local government clients and through KPMG Peat Marwiek's comprehensive and formal professional staff training programs. Thc depth of our practice and thc cxpcricncc of our professionals, at all levels, allows us to provide services that cannot be matched .by any other fu'm. Wc understand thc competitive cnvironmcnt in which we practice and, accordingly, have proposed a fcc which wc fccl is very competitive. It is our strong desire to be associated with cities like Tusfin. We are commined to providing the highest level of quality services available anywhere, and doing so at a competitive fee. · The, KPMG- Peat Marwick Profile . . .~..~-../.'7:...:.,.;,,2",,.','. ..... ,'.'.,.. ~.i-'22.~.~.-~ ...... ',~: ..... ;'. .... '. .... "" "' ' -". "[. ~ · ~" 'l ." t; ..... ~., '-- .... v. ~. - i ,, · -, ~ - ~; x" ".r.. ........... . ' '. l .... ,... . ...... .L . '.-. : - ' .' ...... : --b ..... ~l-'fgf~t,r;~:'7~ ..... <"-~":.~.~ ....~..~ ....... - ......... ~ ....... '... ', ~:.,7 ' .. '27''~ 2 ' · ":~' :"': ~7' .... ~"~ "'"' ' '' ...... ' .......... , .... . ............ t~'..~ ..~i.. '~.~ ;, e .... ,;~" I- ':'~:,':~r:"/~:? '-~-.'.-.-'- : '; '' ,. ':' ': ' · '' ''-2 ,- .'~' '.:. 7.'" ~r; .... r .... :' · ...... : ~ .. .... S .......... .,-: .......,,~ .....~-,,....~: ..... ,-. k¢::2,5-:2.:.'gJ ~ :7, ."..1'" :.'(; 2 ."..;'::~' '-'. "~:.":':.:.' .... 2 ...... - .........' ........ ~ ........ ,', .........., ............ ;,: ..: .... : ........., ;'..: .... :.-.;,i..h~g~i~iy.h',:~-~C.~.,~lr;;l.l~-~;¢~::r~'~z~2~;;, ;.' z: .*:~;r;5.. ' ~: -'z .}r.. :. ~7. .... . . . . '..'.."-.: .' "'', ":'i ¢ ~ .::~L['2~': ~7:'7:'* ":2 ~ : ' ~" V~'''',' - ? ' ~ .......... - ' ..... - ~'."-'.,..':~'-~',,:'~"'--~ ..... ,.,.-.~'~'~ ~-'~ ; -~ ..,-~- - ~;~-~ .... ~ ~-.'- 27 t~,-.~'-"- ~"~- . .' --~"~:'~'.'." ' ~-~' i, ~,:'~*'~ '['.'"-.. -"~'. -' · - ';'.:.: : ;~¢-'; *' -i.,i,.. 2;' · ~, .'~";". '. ...................................................... ...... ............... DEPENDENCE : ::{"~t'" ': ':";"": ':' : · =':-' : · .*:.::: .t-.;, ;:::' ........... ~,.,:;; ~ ;... ,.:L, · .~..l ..::.,,2 ..... . .. . . · ..~,.. ~.~, . · .. ....... -., . · .... ..... , .... I.~ .'. ?.~1:..'... · :a'-: .......... '.':'l.. "'-.:[-'T l.. .. . : " . . , · . . .... ':"'"'":': ........ : .:'"::'.:: .... .... CALIFORNIA STATE LICENSE .................... ~ ........... L:._~. 2' . ...... ] .- .- FIRM..Q U ALIFI C ATI O N S .AND EXpERIENCE,-: . .-. - ,. -. .,.. ' ' ' .... ,', · ' ' ' ' :" - 'r .... . [. ' ...._...; ::-:::.:::_.,... :' !~'-er':::A.i:-.:F-::-?{-;; .... b'"'4:.'--'} '.'-.-:'.; ........ . ' " J ...... '.'; ; ':'r: 'AS::."i:'.' '.,'~:";' ':~ -.... - ..... :.- ....-: ..... .. .: ,:,' ..... ~.'' - -'-.-5;;5':';~:-5'¢~:'.~,:~+:~¢*~X:Br~?.}75;:'¢'i:?:}?::':-:.: :'.:'..::. '. :'.'"': :":'".',:;L:::':::' .::- ' '-::::':'- ' ;' ;5'.':' ": ::'-:'{' :'::'..' - ' ....... : :'" ..... .-. ................. -~ "Peat Marwick has never been one to follow the crowd. It has a history of char~ing new ground, and that philosophy continues today... PeaH .... ?' .. ..... :. : ...... ..... : Marwick has invested heavily to be a leader in · -' ':::' "i{i. "::':' '_' ',: .~ ...",:::...information technology, it has invested heavily ....... 'to deliver very industry specialized services, l '. -, ...... '.-.:~'it provides a very personal level of service to . -.. ~.- ..... .. : ~ :.,:.:i all-sized . clients, : it ~.. has · unparalled . : . · ....... · --7 .... ~ ..... "' '""~" "" ~ .....~'~ i ... ~ .......... ' ~, ';~_ - .-~ :- . ........ .... ~ : :.:..1..- . .. ! _..'~.. " :.. .: .' international reach and scope, it is bold, it is . . ; ....... : aggressive, it has tre_J~endous business savvy... · . ............................................... a Firm that is leading .today and is extremely } .... :.:- -~ i ~. := , . .... · ,..-, . .,.. ......... .... . -. ::~'.'; . , . , ".- . :-.'_-: -, . . ~ ..... :-:': '.::'*":V.- ::'-":' .: '.':':: ....... . .... "· well-Dosltlonett'__ ~ _ _ _ for '~omor~o3_ ,- .. ...... : ?_.'4 - '... '-- :::. :. ;.. _'-' .'~ :: :. :: ' ;~:~ .... :': ".~': i.' ' · : ''" ': ~ :: ' '" i' . .......... : ::~..-. ................. :- . . .',. ......... :-~ ........ ~ .- ....- . .. -. -~ .i~ ;: ...... ~' ' : ;' ' ', ...... :- ,u-~' '. ....... - -~'. ...... "'' ' '"'" · "-~ ....... i - .' '.'i:"' ' .~ '. . ',' .h ' . ' .' .' :'. -.,-~': :-.,," .'. · ' · ;L.: 7~'.', '. ., . .. ; -~}' '"i;~'l"!~.!:~..]":.'-r'-"'i:.. ;" ' :."/';"::' "ii:' !' ' · THE BIG EIGHT REVIEW ":5 _' '-'-. ':-' "' ......... ' · . . . . . _. · .. INDEPENDENCE KPMG Peat ~Marwick is committed to establishing and maintaining client relationships that are consistent with the professional standards established by the American Institute of Certified Public Accounmts, the California Society of CPA's, the SEC and governmental and regulatory agencies, including those standards defined by generally accepted auditing standards, the U. S. General Accounting Office's Government Auditing Standards (1988). Such'standards include the requirement of independence in the performance of audit engagements. It is fundamental to an audit that it be performed and that the opinions be given by a professional accountant who is, and who is seen to be, independent. It is fundamental to an audit that it be performed and that the opinions be given by a professional accountant who is, and who is seen to be, independent. We are of independent the City of Tusfin and 'any other component units of the City of Tustin as defined by generally accepted auditing standards and the U. S. General Accounting Office's Government Auditing Standards (1988). We have not. been involved in any professional relationships with the City of Tusfin or any of its component units within the past five years. If, during our tenure as the City's auditors, we were to enter into any professional relationships with the City or its component units, we would notify City officials in writing and discuss with them any potential conflicts of interest. - . CALIFORNIA STATE LICENSE KPMG Peat Marwick and its assigned key professional staff are appropriately registered/licensed to practice in the State of California. Our employees are well trained in the standards set forth by the AICPA, the State Controller's Office, the United States Governmental Accounting Office and the California Society of CPA's and will perform your audits in accordance with such standards. FIRM QUALIFICATIONS AND EXPERIENCE Firm Overview Klynveld Peat Marwick Ooerdeler (KPMG) is the global leader in providing accounting and consulting services. We provide a broad range of services through a network of 819 offices in 125 countries, with over 76,000 total staff. Founded over 100 years ago, we achieved our present status, not just through the'1987 merger of Peat, Marwick, Mitchell & Co. and Klynveld Main Goerdeler (KMG), but through over years of concentrated worldwide effort and focused, coordinated stra. tegic direction. As a result, we have developed a solid reputation for responsiveness to client's needSand for consistently rendering-top quality professional services to clients engaged in all segments of business activities. KPMG currently serves more than 180,009 clients in private industry, government and the not-for- profit sector. Our commitment to client service, quality control, technical research and professional training enables us to provide consistently high-quality services on a worldwide basis. KPMG Peat Marwick - United States: Structured to Think Like a Client KPMG in thc United States is called KPMG Peat Marwick (Peat Marwick) and has a system of 135 offices, organized geographically as well as by five lines of business. The five national businesses by market are: public services, financial services, manufacturing and distribution, information and communications, and health care and life sciences. The decision to define our fu'm along those parameters is based not on internal need or convenience, but on direct feedback from clients. Our clients, in surveys and focus groups, stressed their need for market-responsive services that will help them compete and achieve long-term success in their businesses. They cited key issues like maintaining competitiveness, achieving better financia~ and nonfinancial results and implementing effective business solutions. Put simply, clients want their professional services finn to go beyond the attest function and be an advisor who sees their business the way they do. - · Our industry group concept responds to that by fostering market focus --- ensuring that our professionals have a deep understanding of our clients' markets, business issues and .political environment in order to provide solutions-oriented advice. With teamwork among offices m the Southern California area and among other national areas, key resources are always made available no matter when Or where a client needs them. Our ability to serve our clients is also elevated by the depth of expertise that is the product of our industry structure. This structure is designed to help us think like our clients and to develop resources that focus on a particular industry. Public Services Line of Business Peat Marwick is the leading government auditing and consulting fh'rn in the country, serving more than 3,000 clients. We serve as auditors for 5 of the largest 10, and 14 of the largest 50 cities in the country. Peat Marwick's government services practice has been serving governments for over 80 years, and today comprises 110 parmers who devote their full time to this end. Over the years, we have developed significant experience in operational characteristics and accounting requirements unique to governmental entities. Our government services practice is staffed by individuals who have extensive experience in providing auditing and consulting services, supplemented by timely and up-to-date training. Special audit and consulting tools, industry practice guides and training sessions for staff maintain the high quality of our services. As a result, Peat Marwick is able to provide the problem-solving abilities that properly address current and future problems -- often before they become problems. This results in continued growth in the depth and scope of services we provide. Our Local Public Services Practice: Focused Services, Clear Leadership Your key team members are professionals dedicated exclusively to government- and especially to Southern California. The engagement will be staffed with our most experienced governmental auditors from our Orange County office located in Costa Mesa. This office has experienced substantial growth during the past decade and currently have a staff' of approximately 300 personnel, including 22 parm. ers and'principals. This ability to place a number of locally available . qualified personnel at the disposal of the City of Tustin is especially important when the total auditing, accounting and advisory needs of the City are cortxidered. The core of our government services team consists of professionals committed full time to our government clients and backed by resources in computer auditing and performance enhancement. In the Southern California area we have more than 100 professionals, with experience serving governments. Our government staff have been trained to see things from your perspective and develop observations that are meaningful for you. Our staff will make the audit valuable to you through their observations. We encourage you to contact any of our other government clients to see what a difference dedicated government specialists make. Our engagement team knows the issues affecting California cities, understands the political · environment and is commiued to providing added value during the audit through the development of cost-saving ideas and sound management advice. We believe we present a service team of unparalleled qualifications. Our local municipal clients currently include (but are not limited to): City of Alhambra City of Anaheim. City of Avalon City. of Bellflower City of Burbank' City of Carson City of Commerce City of Corona City of Dana Point City of Glendale City of Huntington Beach City of Indian Wells City of Laguna Beach City of Lake Elsinore City of Long Beach City of Newport Beach .. City of Ontario City of Orange City of Paramount City of Pasadena City of Rancho Palos Vcrdes City of Rolling Hills Estates City of Riverside City/County of San Diego City of Santa Ana City of Santa Monica City of Solvang City of South Pasadena City of Upland City of Westminster County of Los Angeles County of Orange OUR RESOURCES MEET YOUR NEEDS City's Needs Peat Marwiek's Resources Auditors' Report on the City's F'mancial Statements GFOA and CSMFO Certificates of Excellence in Financial Reporting Government specialists and business advice A ~Fresh Look" Year-round counsel, advice and supp(~ A link to :pi~fcssiOnal and aandard setting Minimal City managerial and staff time and effort devcae, ci to the audits An audit with value (in cost arid in Highly experienced and committed government sexvices specialists locmexl in the Inland Empire Our engagement partners serve as reviewers for the GFOA and CSMFO spec~ review committees Peat Marwick's national government services practice focusing on innovative solutions to help government succeed in the '90s Peat Marwiek's fresh look will help to avoid a complacency and/or a lack of innovation in providing services to the City Our commitment is to serving the City year-round, not just during the audit We will be available for consultation at all times Our government services personnel have o~tstanding credentials with the GASB, AICPA, FASB, GFOA, CSMFO, the rating agencies and the invesunent community Our team members arc experienced with Southern California cities; our auditors will not have to be trained. Our experienee,'training and approach .will ensure minimal ctixmption to City staff ,:- Peat Marwick will bring value to the City's audit not only through competitive fees but through substantive 'business" A Tradition of Quality Audit QUality Peat Marwick's foremost goal is to provide superior quality service. Everything else is secondary to that goal. Our approach to client service incorporates the necessity to meet client needs as the primary focus of our service. We strive to identify, understand and satisfy governments' needs and expectations. This approach has helped Peat Marwick build its extensive government practice. Everyone talks about and promises quality service. However, we are taking quality service out of the abstract realm and providing a mai, objective and measurable system of monitoring our quality of service. We are very proud of our reputation for quality and leadership in our profession. However, we believe that the pursuit of excellence in quality is an objective that is never fully satisfied. Peat Marwick's quality control system includes a concurring partner review, intra-office self reviews, interoffice professional practice reviews, and a peer review by another Big Six accounting fu'm. Indeed, Peat Marwick was the fu'st accounting fura to have its audit practice peer reviewed by another accounting fn'rn. Further, our government engagements have always been subject to these reviews. We have quality control checklists devoted exclusively to government engagements. A description of the various aspects of Peat Marwick's quality control system follows: Work Paper Review --- Every work paper is reviewed by someone at a higher level than its preparer. Critical audit areas have up to three levels of review. Concurring Partner Review m Prior to the release of our auditors' report, the financial statements are carefully reviewed by an experience& industry-knowledgeable partner to ensure that the form, content and disclosures reflect the latest developments in fa'rn and professional standards. This partner also serves as a year-round resource to the engagement team on technical audit questions and issues. Self-Review Program .-- Each office of the fu'm annually performs a self-review of its audit practice. Partners and managers not otherwise associated with an engagement review the reports and supporting work paper documentation to ensure that all pertinent firm and professional standards have been adhered to. This process is performed on a test basis with at least one engagement of each parmer and manager being selected for' the review. Professional Practice Review Program- This program monitors the performance of the acw~unfing and auditing practice of all Peat Marwick offices. The review procedures peff~ are substantially similar to those of the self-review program; however, the review is performed by individuals not otherwise associated with the office under review. Peer Review--- While the above quality control programs provide progressively independent reviews of our auditing and accounting practice, maximum independence is achieved through the peer review pi'ogram. Peat Marwick is the unquestioned leader in the concept and implementation of peer reviews. The former chairman of Peat Marwick, Tom Holton, chaired the AICPA's Special Committee to Study Quality Review for Multi-Office Firms. Although the commirtee developed a plan for an AICPA program for independent voluntary quality control reviews in 1974, the plan's implementation date was deferred. However, in early 1975, Peat Marwick became the fa'st public accounting rum to engage another fu-m to review our audit practice and make its'findings public. Peat Marwick has had seven pe.~r reviews performed since we fn'st took this leadership position, with the most recent review conducted in 1993 by Price Waterhouse. In each case we have rec~ved ~ opinions on the conduct of our audit practice. Our commitment to peer review as a means of maintaining high standards of performance in the profession has been demonstrated in many ways. We have participated with others in developing peer review and in obtaining public acceptance of this means of monitoring complianCe with professional standards. -. In summary, our objective is to provide service that meets the highest standards of the profession. The continuing commitment of each of our professionals to adhere to the quality control policies of the Firm will keep us on course toward that objective. Service Quality We have developed a quality service program which includes 'direct feedback from our clients to determine whether we are meeting or exceeding our clients' expectations. KPMG is the only f'm'n to implement a formal program of obtaining tangible feedback from our clients. We use this feedback to develop strategies to further improve our delivery of quality service. The City's management team Will be requested annually to give us a "report card" on our efforts. We know of no other f'zrm, that matches KPMG Peat Marwick in its tradition of quality service or in the steps taken to continually guarantee that its professionals focus-on quality service as their number one priority. Since we began our Client Service Measurement Process, a detailed questionnaire with which our clients evaluate us, more than 50,000 of our clients in the U.S. have responded to us. This process gives them a chance to express their concerns beyond the day-to-day interaction with our people, and it gives us a tool to improve our services. This program, and the ethic it embodies, benefits our clients by helping to make sure our services create value. We use client feedback from the surveys to: · Clarify client expectations and specific needs · Identify potential service delivery problems · Develop a stronger government service strategy · Build more rewarding client relationships · Recognize new client service opportunities. According to an analysis of the responses from all government clients, a high level of satisfaction resulted from our work in five key areas: · .. · Our responsiveness · Om' overall level of communications · Our understanding of the government environment · Level of technical and professional support that we provide. · ' Value that clients place on our services in comparison with the fees we charge. Training One of the best measures of a fu'm's commitment to its governmental audit practice is the depth of specialized training provided to its professionals. Peat Marwick has the largest number of internal training programs devoted exclusively to government accounting, auditing, reporting and. operations and has had the largest number since 1976. To ensure that our local office professionals maintain the highest level of technical proficiency, Peat Marwick's government services practice provides the courses described below. Government Services Industry: An Orientation .-- A self-study course that explains the principles of governmental ac. counting and the procedures used to audit governments to assistant and staff accountants assigned to audits of governmental units for the f'n'st time. It includes an introduction to Single Audits. Governmental Accounting and Reporting Diagnostic Review m A self-study course designed to provide an update on governmental accounting, auditing, Single Audits and financial reporting to government specialists. Government Services Industry In2Charge Responsibilities--- Provides in-charge accountants with an understanding of the requirements and the skills needed for planning and directing a financial and' Single Audit of a governmental unit in an efficient and effective manner. Managing Single Audits --- provides guidance for managers and panners on managing Single Audit engagements and provides a technical update on the latest Single Audit developments. Government Roundtable --- provides an update on the latest developments in accounting, auditing, .Single Audits, financial reporting, financial management and related topics.for state and local government specialists. Government Consulting Workshop --- provides a forum for our senior government consulting partners and managers to share experiences on the challenges, needs and opportunities facing government officials and ways to meet them. Emphasis is on problem awareness and problem solving in areas such as organization, financial management, human resources, and policy and. planning. We believe even more relevant than the courses a fu-m offers is the level of training actually received by your audit team members. Offering a great listing of courses does little to benefit you if the staff assigned to the City audit do not receive this training. All members assigned to the City of Tustin engagement team have met the minimum government CPE requirements. We are very proud of our investment in government training and know that no other firm can match it-- either nationally or locally. In addition, Peat Marwick has developed and presented 'numerous seminars to many organizations having an interest in governmental matters. Subjects presented include: · Securities disclosure requirements · General revenue sharing · Retirement systems · GASB and NCGA statements and interpretations · GFOA Certifi~ of Achievement · Government auditing 10 · Tax and spending limitations · Financial trend indicators · Emer~g government accounting and auditing issues · Cash management · Single audits · Productivity · Quality in the government environment GFOA - Certificate of Achievement Program A majority of KPMG Peat Marwick - Orange County City Clients apply and receive the GFOA Certificate of Achievement. Approximately 80% of the government entities audited by KPMG Peat Marwick received the certificate on their first submission. As the GFOA becomes more strict in its reviews, this experience should prove invaluable to the City in submitting for the Certificate. In addition,' KPMG Peat Marwick has approximately 50 members on the Certificate of Achievement Special Review Committee, including Mark Thomas, your engagement partner. As a result, we are prepared to provide recommendations necessary to help the City prepare its Comprehensive Annual Financial Report for submission to the GFOA Certificate of Achievement Special Review Committee. .. " Federal/State Desk Reviews Federal and state entities routinely perform desto reviews of single audit and other reports issued by KPMG Peat Marwick. Field reviews of our supporting work papers are also performed by Federal and state agencies as they see fit. During the past three years there have been, and currently are, no ~ taken by Federal or state agencies as a result of these reviews that would preclude KPMG Peat Marwick from performing the work detailed in this proposal. 11 KPMG Peat Marwick LLP Orange County Office Center Tower 650 Town Center Drive Costa Mesa. CA 92626 ' Dcc~mber 5, 1994 Mr. Ronald A. Nault Director of Finance City of Tustin 300 Centennial WaY Tustin, California 92680 Dear Mr. Nault: Enclosed with this transmittal letter please find our detailed cost proposal to examine the financial statements of the City of Tustin, the Tustin Community Development Agency and the City of Tustin Water Corporation for the years ended June 30, 1995 through 1999. The cost proposal includes the fees we would charge and the rates for the various classifications of audit personnel, which would be the basis for fees to provide services beyond the scope of this engagement. We are very enthusiastic about the possibility of serving as the City's auditors. Please don't hesitate to contact me at (714) 850-4308 ff you have any questions or require additional information. As was noted in our Proposal, I will act as our Firm contact and am authorized to make representations and binding decisions on behalf of the Firm. Very truly yours, KPMG Peat Marwick I.I.p Mark T. Thomas, Partner Enclosure. F,r~ o~ Peet Me-~,c. Goe'oe.e' PROFESSIONAL FEES - KPMG-PEAT MARWICK Fee Analysis City officials and management are cognizant of their responsibilities to manage their public resources and to obtain value in exchange for their resources. Value is measured by the effective use of City personnel, the quality of advice, counsel and service, a return on investment and, of course, out-of-pocket costs. In evaluating our fees we ask that the City also consider the following factors in establishing the degree of value we might add to the City: · Thc City's needs when compared against our demonstrated engagement team resources and continuity of personnel. Our efficient audit methodology, precise focus and degree of audit coverage. The current state of our audit technology, its attendant efficiencies, and the degree to which that technology can be placed in the hands of the City for its own use in the future. .- · Our proven abilities to deliver quality advice, counsel and service. · Our derr~nstrated commitment to local government. In determining the fees to be charged for the annual audit of the City of Tustin, we have considered several factors, including: · Our past experience performing audits of California cities and the efficiencies that we expect to gam from this knowledge. · The timing of the engagement. Our estimates of the fees we"shalI charge anticipate a long-term relationship with the City. We are prepared to commit to a fixed fee which includes all out-of-pocket expenses as summarized below: Schedule of Professional Fees and Expenses for the Audit of the City of Tustin for the 1995 Financial Statements for each of the four portions of the overall annual financial audit: City of Tustin Financial Aud/t* Single Audit Tustin Community Development Agency City of Tustin Water Corporation 1995 $23,500 6,500 5,000 4.000 Total 1995 fee $39,000 * Includes preparation, review, editing, and reprographics of the City's general purpose financial statements including the notes to the financial statements at a cost of $2,500. As was noted in our Proposal, Mr. Mark T. Thomas, Partner will act as our Firm contact and is authorized to make representations and binding decisions on behalf of the Firm. Below we have presented the amounts supporting our fee calculation for the June 30, 1995 audit. Fees for subsequent audits are calculated in a similar manner based' on cost of living increases. (See attached Schedules). These fees contemplate the City providing assistance in acquiring supporting documentation, including account analysis and reconciliations and typing confmnafions. Further, our fee commitment assumes the books of the City and related entities will be closed and in balance by the specific agreed upon dates supported by the appropriate documentation, beginning fund balances will agree to the prior auditors' reports, and that no significant changes in the scope of operations or the reporting entity occur. Hourly Hours Rates Total Partners 35- $150 $ 5,250 Manager 65 90 5,850 In-charge(s) 170 65 11,050 Staff (composite rate) 250 55 ~ Subtotal :520 35,900 Out-of-pocket expenses: Transportation, report processing, supplies and courier charges Fee to City for the 1995 audit $ .39,000 As set forth above, all out-of-pocket expenses are included in the our fixed fee and KPMG Peat Marwick will calculate these out-of-pocket expenses for travel, lOdging and subsistence at the prevailing City of Tusfin rates for its employees. It is important to m-emphasize that both the Partner and Manager will be accessible and available for meetings and/or consultation throughout the year, as we see this as being an essential part of keeping abreast of issues relating to the City. We are prepared to commit to the hourly rates noted in the attached Schedule of Fees for that respective audit year for any additional services requested for the duration of the contract with the City. Our fees for accounting and auditing services or other special services rendered (not in connection with the aforementioned services) will be estimated using the hourly rates quoted above. Fees for services titiliZing our management consulting personnel will be negotiated at such time as they are requested. Prior to commencing any special work, we would meet with appropriate City personnel to review the scope of the proposed work and provide an estimate of our fees. Schedule 1 Schedule of Professional Fees and Expenses for the Annual Audit of the City of Tustin 1995 Financial Statements Standard Quoted Hourly Hourly Hours Rates Rates Total Parmers 35 $300 .$150 $ 5,250 Manager 65 143 90 5,850 In-charge(s) 170 92 65 11,050 Staff (composite rate) 250 76 55 13.750 Subtotal 520 35,900 Out-of-pocket expenses: Transportation, report processing, supplies and courier charges 3.100 Total proposed fee for the 1995 audit $ 3%000 Schedule of Professional Fees Tustin Schedule 2 and Expenses for the Annual 1996 Financial Statements Audit of the City of Standard Quoted Hourly Hourly Hours Rates 1~ Partners 35 $300 $150 Manager 65 143 90 In-charge(s) 170 92 65 Staff (composite rate) 250 76 55 Subtotal 520 Out-of-pocket expenses: Transportation, report processing, supplies and courier charges Total .proposed fee for the 1996 audit $ 5,250 5,850 11,050 13.750 35,900 3,109 $ ,39,000 Schedule 3 Schedule of Professional Fees and Expenses for the Annual Audit of the City of Tustin 1997 Financial Statements Standard Quoted Hourly Hourly Hours Rates Rates Total Partners 35 $300 $155 $ 5,425 Manager 65 143 95 6,175 h-charge(s) 170 92 70 11,900 Staff (composite rate) 250 76 58 14.500 Subtotal 520 38,000 Out-of-pocket expenses: Transportation, report processing, supplies and courier charges Total proposed fee for the 1997' audit 3.300 $ 41,300 Schedule 4 Schedule of prOfessional Fees and Expenses for the Annual Audit of the City of ,-. Tustin 1998 Financial Statements' Standard Quoted Hourly Hourly Hours Rates Rates Total Partners 35 $300 $160 $ 5,600 Manager 65. 143 95 6,500 In-charge(s) 170 92 75 12,750 Staff (composite rate) 250 76 60 15.000 Subtotal 52. 0 39,850 Out-of-pocket expenses: Transportation, report processing, supplies and courier charges Total proposed fcc for the 1998 audit 3.300 $ 43,150 Schedule 5; Schedule of ProfesSional Fees and Expenses for the Annual Audit of the Cily of Tustin 1999 Financial Statements Standard Quoted Hourly Hourly Hours Rates Rates Total Partners 35 $300 $160 $ 5,600 Manager 65 143 100 6,500 h-charge(s) 170 92 77 13,090 Staff (composite rate) 250 76 65 16.250 Subtotal 520 41,440 Out-of-pocket expenses: Transportation, report processing, supplies and courier charges Total proposed fee for the 1999 audit 3.810 $ ..45,250 CITY OF TUETIN TEflqNICAL PROPOSAL FOR FISCAL YEARS !994-95, 1995-96, 1996-97, 1997-98, 1998-99 'S~tted by: Moss, Levy & Hartzheim 9465 Wilskire Blvd., Suite 915 Beverly Hills, CA 90212 (310) 275-3883 ShOtted 'On.: December S, 1994 Contact Person: Ron Levy, C.P.A. MOSS, 'LEVY & HAI~TZHEIW ~"V[~qLY HIL~. C.ALIFOI~NtA * C£1~TIIrI£D PUBLIC ACCOUNTANTS · sANTA MAglA. CALIIIr'OI~I, NIA AUDIT ~FICATI~ Letter of Transraittal ...................................... 1 Profile of the Audit Fir~ .................................. 4 Mandatory Criteria ......................................... 5 Audit Staffing and Qualifications .......................... 6 Audit Scope ........................ ~. ....................... 8 Governmental Audit Clients ............................... 9 References ............................................... 12 Quality Contel Review ..................................... 13 Proposer Guarantees and Warranties .......................... 14 MOSS, LEVY & HARTZHEIM · CERTIFIED PUBLIC ACCOUNTANTS B~"V[RLY HIt~. C..ALIFOR'NIA ~,AN'rA MA~IA,. CALIFORNIA A. Letter of Transmittal 1. Introduction' After 42 years in public accounting, it is extremely gr~tifyin9 to witness thecontinuedgrowthof the firm frcma one-person operation to a meclium-sized public accounting firm with offices in t~o cities and clients throughout the State of California as well as numerous other states. We and the entire staff are pleased with not only the continudmg development of the firm but also the progress and econc~c health of our clients. We strive to constantly improve the quality of our professional services and. the degree of dedication with which we render those services to our clients. We feel that our size is such that we are large enough to provide, a broad spectrum of services and experience backed by an in-house training pr~, professional devel~t courses and an. extensive professional library, yet not so large as to become impersonal and rigid. · 2. It is our understanding that the work to be performed .would include: A. Customary testing of accounting records B. Audit procedures as to: (1) Cash (2) Receivables (3) Inventories (4) Fixed assets (5) Payables (6) Fund balances ( 7 ) Revenues (8) Expenditures (9) Encumbrances (10) Payroll (11) Other accounts C. Ommprehensive review and evaluation of the system of internal control as to: (1) A~equacy of systems as structured (2) Compliance with systems as actually implemented D. An extensive analysis including, but not limited to: (1) Flowcharting (2) Table of organization review (3) Division of duties (4) Further refinewmnt of internal control evaluation E. Budgetary c~isons with actual expenditures would be scrutirhzed. -1- MOSS, LE:VY & HARTZHE:IM · CERTIFIED PUBLIC ACCOUNTANTS I~t"V~:RLY HILL.~. CALIFORNIA SANTA MAI~IA. CALIFOI~NIA A. Letter of ~ttal (Continued) F. Illustrations of procedures to be emplo~ are: (1) Statistical sampling (2) Confirmations by positive and negative circularizations (3) Physical verifications and observations (4) Analysis and review of evidential material (5) Interviews and investigative efforts (6) Electronic data processing testin9 for ~ter and software reliability (7) Internal control .review (8) Numerous other procedures .. G. Preparation of management letter including: (1) Exit conference (2) Finclings (3) Observations (4) Opinions (5) Reccmnendations as io: a. Systems of internal control b. Accounting' 'systems c. Compliance with laws and regulations d. Division of duties e. Data processing f. Paper flow H. The approximate target dates for the audit would be: (1) Inception date - April 10, 1995 · (2)' Pre-audit conference date - week of April i0, t995 if convenient for city staff (3) ' Post-audit conference date - week of September 16, 1995 (4) Concluding date - November 13, 1995 I. Minimal assistance of the City's staff is required during the course of the audit: (1) Ccoperation ~ answering questions (2) No sch~=dules or working papers will need be prepared by the City's staff for our firm J. Authorized Representatives: (1) RonLevy, C.P.A. 9465 Wilshire Blvd. Suite 915 Beverly Hills; CA 90212 (310) 275-3883 -2- MOSS, LEVY & HARTZHEIM · C£RTIFIED ImUBLIC ACCOUNTANTS ~EVEI~'LY HILt~'. CAILI~'O~NIA . ~NTA ~IAI~IA.. C, ALIFO~'NIA A. Letter of Transmittal (Continued) (2) Robert M. Moss, C.P.A. 9465 Wilsh/re Blvd. Suite 915 Beverly Hills, CA90212 (310) 275-3883 Respectfully submitted, MOSS, LEVY & HARTZHEIM Robert M. Moss, C.P.A. Moss, Lev!; & Hartzheim is an equal opportunity employer -3-- LEVY & HARTZHEII,4 · c£1~I'IFII:"o PUBLIC ACCOUNTANTS ~&"I~'LY HILI~, CA~..I~'01~NIA ,/ 5ANT& MA~I~ C. ALI~'0~'NIA B. Profile of Audit Firm Size of Firm A. There are 23 people enlplo~ by our firm consisting of 9 professionals and 14 non-professionals. Audit staff consists of 5 professionals and 4 non-professionals in the local audit office. B. The firm's gross annual revenues is between 1.5 and 2 million dollars. 2. hpcation of Offices A. Beverly Hills, California B. Santa Maria, California 3. Local Office Beverly Hills, California Range of Activities Performed byLocal Office Audits Governmental Non-Profit Ccnwnercial Accounting Services Reviews Compilations Management Advisory Services Data Processing Services Business Consultation Pension and Profit Sharin~ plans Assistance Acquisitions and Mergers Income Tax Services- Preparation Planning Tax Audits and Negotiations with InterDa] Revenue Service and other taxing authorities Business Management Service Enterta~t Industry. Inplant Feeding Restaurant Industry Attorney Assistance Marital Dissolutions Sale of Business Interests -4- HO'SS, LeVY & HARTZHEIM-' · CE:RTIm£D PUBLIC ACCOUNTANTS ~V[I~LY HII1~'. CALIFORNIA . SANTA MA~'IA. CALIFOI~NIA B. Profile of .Audit Firm (Continued) 5. Types of Services Offered a. As an additional audit tool and management advisory service, we have analyzed and cc~paredper A.D.A. costs and expenses by p~ in total for each of our school districts. · $. . Our firm has ~orked on efficient reinvestment of time deposits. We have instituted a bid system for time deposits so that the bank quoting the, highest interest rate receives the deposits. C. A revolving payroll account has been adopted by scn~ of our municipal clients at our suggestion. D. Lnventorycontrol systems have been set up. Ee A. representative of the firm has been present when insurance p~ have been presented in order to assist in obtaining the best coverage for the lowest cash outlay. F. We have always made it a practice robe available for consultation, management services and advice. G. One of our CertifiedPublicAccountants recently workedwith a city at ad ay-long presentation to assist the city in beccming self-insured for workers' compensation purposes. H. We have been asked by a number of our clients to attend m~etings and rec~d our choice of Business Manager, Chief Accountant and other top management staff. I. We consult with cities, counties and districts re~gbudgets, tax assessments, internal control, insurance coverage, record retention, purchase pooling and, in fact, any area requiring assistance. J. Additional revenue w-asproducedbyanalyzingandperforming %pot audits of bed tax returns and collections. Mandatory Criteria Moss, Levy & Hartzheim is a properly licensed certified public accounting firm in the State of California. Moss, Levy &Hartzheimmeets the independence standards oftheGAOStandardsforAud/t of Gove~tal~zations, PrccFrams~ _Activities, and Functions. Moss, Levy &Hartzheim is Lndependent of all of the ccm!~nent units of the City of Tustin. -5-, MOSS, LEVY & HARTZHEIM · CERTIFIED PUBLIC ACCOUNTANTS ~['V~:~LY HILL~, CALIFOII~NIA . SAN?A MAI~IA. CALHI'01~NIA . . . Expe~ rience of ?arr_ners, Managers and .Key Staff Members E. Fo (Continued) we h~ve at our cli .s~osal an extensive library of various gove~tal accounting t~xts and publications. We make it standard practice to order publications from our various tax services dealing with governmental accounting, single audit act, federal prcgr-oms and all other related data. Robert M. Moss is a member of the California Society of Municipal Finance Officers. G. Ron Levy is a member of the California Association of School BUSiness Officials. Our firm has received a positive quality review (unqualified opinion) frown the American Institute of Certified Public Accountants for the fiscal y~ar ending December. 31, 1993. I. Our firm has never been the object of disciplinary action from any governing ...body. Level of expertise in dealing with full financial disclosures :. · '.A. Every governmental audit and the numerous private industry audits we perform require full financial disclosure, in accordance with F.A.S .B., G.A.S.B., A.I.C.P.A. and A.P.B. pronouncements. Additional qualifications: A. Ability to assist and implement operating systems, procedures and controls. B. Availability on a day-to-day basis for consultation and auditing needs during the year. - ..... C. Data processing auditing: D. The majority of the cities, districts and counties for which we perform audits have their accounting records on computers, and our management and staff are very much at ease in working with computer print-outs. Municipal clients which have received the GFOA Certificate of Achievement: City of Santa Paula City of Santa Maria -7- MOSS, LEVY & HARTZHEIM B~"V[RLY HIL~. C. ALIImORNiA · CERTIFIED PUBLIC ACCOUNTANTS · SAN?A I',~AR'IA. CALIFORNIA E..Audit Score 1. The main thrust of our ~ork ~ould be what is required to ena~_ble us to express an opinion of the financial statements in accordance with: A. AICPA Industry Audit Guide for State and Local Gove~tal Units B. AICPA Audit Standards C. National Cc~mitt~ on Governmental Accounting, Auditing and Fi~ncia! Reporting (Amended) publication D. Laws of the State of California E. Requirements of CMB CirCular A-128 F. GAO Stanclard for Audit of Gov~tal Organization, Activities and Functions, the Guidelines for Financial and Ccmloliance Audits of Federally Assisted Programs G. Our firm's own additional standards and procedures 2. The audit will be made in accordance with generally accepted auditing standards. 3. The primary purpo, se of the audit is to express an opinion on the financial statements, and such an audit is subject to the inherent risk that e.~rors or irregularities may not be detected. If conditions are discovered wb_~ch lead to the belief that material errors, defalcations, or other irregularities may exist, or if any other circumstances are encountered tb~t require extended services, we will promptly advise the City. No extended services will be performed unless they are authorized in the contractual agreement, or in an amendment to the agreement. 5. The cc~pliance audit will be made in accordance with generally accepted auditing standards and the GAD Standards for Audit of Govermne~ntal Orq~zatio~, ProQ-r-an~, Activities, and Functions, and the GAD ~uide!ines for Financial and Cxm~liance Audits of Federally Assisted Prccrrmms. F. Staffinq Hours Total Estimated Hours Partner Staff Planning 35 15 20 Interim Audit ~ork 99 10 89 Final Audit work 131 25 106 Report ing 64 1--8 46 329 68 · 261 -8- MOSS, LEVY & HAIqTZI.-IF'IM · 'Cr"RTIFI£D I:~lSl..IC ACCOUNTANTS B["V[RLY HIL~, CALIFORNIA . SANTA MARIA. CALIFORNIA MOSS, LEVY & HARTZHEIM . · CERTIFIED I:~JBLIC ACCOUNTANTS .~ANTA 1,4AAIA. CALiIrOI~'NIA AUDIT CLIENTS MUNICIPALITIES Client Name City of Arroyo Grande, CA City of Atascadero, CA City of Bellflower, CA City of Gonzales, CA City of Grover Beach, CA City of Holtville, CA City of King, CA City of Lawndale, CA City of Pismo Beach, CA City of Paso Robles, CA City of Santa Maria, CA City of Santa Paula, Ca City of Soledad, CA Holtville Redevel~t Agency Redevelotm~_nt Agency of the City of King Paso Robles Redevel~t Agency Pismo Beach Redevel~t Agency Redevelopn~_nt Agency of the City of Santa Maria Santa Paula Redevel~t Agency Redevelopment Agency of the City of Soledad Lawndale Redevel~t Agency -9- MOSS, LEVY & HARTZHEIM . CI:'RTIF'IED ~JBLIC ACCOUNTANTS BL~"V'£RLY HIt~, CALIFORNIA · SANTA MAI~IA, CALIF'OI~NIA ~ AUDIT OTHER ~ Transuortation Develo~n~_nt Act Financial Audits Arroyo. Grande Grover Beach Paso' Rabies Pismo Beach Southern County Area Transit South County/San Luis Obispo Transit San Luis Obispo County and Cities Area Planning Council Local ~rtation Fund State Transit Assistance Fund Transient Occupancy Tax Represented the following cities in the audit of hotel "bed tax" records: Pismo Beach, CA Airport District Santa Maria Public Airport District, Santa Maria, CA Comnmity Service Districts California Valley CSD, CA Cuyama CSD, CA Los Alamos CSD, CA Mission Hills CSD, CA Vandenberg Village, CA Cemetery Districts Arroyo Grande, CA Atascadero, CA San Miguel, CA Shandon, CA Block Grants Arroyo Grande Gonzales Lawndale Santa Maria Paso Robles Santa Paula Fire Districts Cayucos, CA San Miguel, CA Recreation Districts Arroyo. Grande, CA Conej o, CA 'Pleasant Valley, CA Tr-~u-sDo~at ion Svstem~ and Funds S.M.O.O.T.H., Santa Maria (Senior Citizens) Meals on Wheels - ~, CA Grants and Aid Allan Hancock College Student Financial Aid ?rograms Sanitanion Districts Cayucos, CA I~055, LEVY & HART7HEIH ~LrV[RI.Y Hll. J.~. ~UFORNUI~ -!0- · CERTIFIED PUBLIC ACCOUNTANTS · SANTA MAI~'IA. C..A~iIrOi~,NiA GO~ AUDIT CL!ESrI~ SCHOOL DISTRICTS AND RELATr~D ENTITIES il School Districts Allan Hancock Joint ~ty College District Ballard School District Blochman Union Scbz~l District Buellton Union School .District Cambria Unified Sc_~x~ol District Casmalia School District Cayucos Element~ School District Coast Joint Union High School District Cold Spring School District C~ Joint Unified School District Goleta Union Schcol District Hope School District Montecito Union School District' Orcutt Union Schcol District Pleasant' Valley Joint Union Elementary School District San Miguel Joint Union School District Santa Maria-Bonita School District Santa Ynez High School District · Shandon Unifi_~ School District Other School ~2ntities Special Education Local Plan Area Santa Ynez High School District Educational Facilities Corp. Santa Maria-Bonita Educaticr~nl Facilities Corp. -11- MOSS, LEVY & HARTZHEIM ~E"V'£RLY HIL[~-.o CALIFORNIA · CERTIFIED PUBLIC ACCOUNTANTS · SANTA ~v~A~:~'IA. C..ALI~'OI~NIA References e 3~ e 5, City of Santa Maria 110 E. Cook, Santa Maria, CA 93454 (805) 925-0951 City of Santa Paula Cynthia Kretzler 970 Venturm,. Santa Paul&, dA 93061 (805) 525-4478 City of ~e Jan Rush~i~ Lrwen 14717 S. Burin Avenue, Law~._?L~le, CA 90260 (310) 970-2111 City of Holtville Karen Stauffer 121 West 5th street, ~Ioltville, CA 92250 (619) 356-2912 City of Pismo Beach P.O.Box 3, Pis~o Beach, CA 93449 (805) 773-4655 MOSS, L~'VY & HARTZH£|M I~'VI[:FILY HILL~, CALIFORNIA -12- CF_RTIFI£D I:MJBLIC ACCOUNTANTS SJ~J~ITA MARIA, C. ALIFO~:~NIA K. Carsotr CERTIFIED PUBLIC ACCOUNTANT 24009 Ventura Boulevard, Suite 250 Calabasas, California 91302 (818) 8'76-0286 Fax (818) 8'/6-0287 July 7, 1994 T= 5he Pa~tner~ Mc~s, Levy & Hartzheim We ~ave reviewed the system of quality control for the accounting - = auditing practice of Moss, Levy & Hartzheim (the firm) in effect for the year ended December 31, 1993. Our review was cc=~ucted in conformity with standards for on-site quality ._=,_ews established by the A~eriCan Institute of Certified Public · g~=ountants. We tested compliance with the firm's quality cc=~rol policies and procedures to the extent we considered a_--~_-ropriate. These tests included a review of selected accounting and auditing engagements. Z~ performing our review, we have given consideration to the ~-=!ity control standards issued by the AICPA. ThoSe standards ~-~icate that a firm's system of quality control should be a~ropriately comprehensive and suitably designed in relation to t~e firm's size, organizational structure, operating policies, a~ the nature of its practice. They state that'variance in 5-~ividual performance can affect the de~ree of compliance with a f~_-m's quality control'system and, theref°re, recognize that tkere may not be adherence to all policies and procedures in ever%; case. Zn our opinion, the syssem of quality control, for the accounting a~d auditing practice of Moss, Levy & Hartzheim in effect for the year ended December 31, 1993, met the objectives of quality ccntrol standards established by the AICPA and was being complied w~h during the year then ended to provide the firm with reasonable assurance of conforming with professional standards in the conduCt of that practice. Adrienne K. Carson Team Captain Member of: American Institute of Certified Public Accountants & The California Society of Certified Public Accountants A. The proposer certifies it c~__n and will provide and make available, at a minimum, all services set forth in Section II, Nature of Services Required. . t~ser warrants that it is willing and able to obta/n an errors and cmissions insurance policy providing limits not less than one (1) million dollars of covermge for the willful or negligent acts, or cmissions of any officers, employees or agents thereof, or sbz~ evidence of the ability to provide substitute security equal to the same limit. Co Proposer ~ts that it will not delegate or ~tr~ct its responsibilities under an agreement without the express prior written permission of the City of Tustin.. D. Proposer warrants that all information provided by it in connection with this proposal is true and accurate. Signature of Official: Name (typed): Robert M. Moss Title: Manaqinq Partner Firm: Date: Moss, T evy & Hartzheim December 1, 1994 MOSS, LEVY & hARTZHEIM · CERTIFIED PUBLIC ACCOUNTANTS B~"VERLY HIL~, CALIFORNIA ' SANTA MAJ~IA. CALIFORNIA CITY' OF %US'fIN DOLLAR COST BID FOR FISCAL YEARS 1994-95, 1995-96, 1996-97, 1997-98, 1998-99 Subnitted by: Moss, Levy &Hartzehim 9465 Wilshire Blvd. Suite 915 Beverly Hills, CA 90212 (310) 275-3883 Suborned On: December'5, 1994 Contact Person: RonLevy, C.P.A. Certification: RoberLM. Moss, C.P.A. is entitled torepresent the firm, .em~redtosutm~t the bid and is authorized to sign a contract with the City of Tustin. Maximum Price: 1995 - $ 15,900 MOSS, LEVY & HARTZHEIM · CERTIFIED PUBLIC ACCOUNTANTS BEV£RLY HIL~, 'CALIFORNIA . SANTA NARIA~ C~IF'ORNIA APPENDIX D Part 1 SCHEDUIJE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE 1995 FINANCIAL STA~S Partners Hours 68 89 Standard' Quoted Hourly Hourly Rates Rates $ 80 $ 80 Total 5,440 Managers 60 60 5,340 Supervisory Staff Staff Other (specify): Clerical 148 32 32 24 329 4,736 16 16 384 Subtotal $ 15,900 Out-of-pocket expenses: Meals and Lodging Tr~rtation Other (specify): Total proposed price for 1995 audit N/A N/A N/A $ 15,900 MOSS, LEVY & HARTZHEIM · CERTIFIED PUBLIC ACCOUNTANTS BE"¥£RLY HIL~, CALIFORNIA · SANTA HARIA. CALIFORNIA APPENDIX D Part 1 'S~ OF PROFESSIONAL F~-q AND EXPENSES POR THE AUDIT OF THE 1996 FINANCIAL STA~ Standard Quoted Hourly Hourly Hours Rates .Rates Total Partners 68 $ 82 $ 82 $ 5,576 Managers Supervisory Staff 89 62 62 5,518 Staff Other ispecify): Clerical 148 33 33 24 329 4,884 17 17 408 Subtotal $ 16,386 Out-of-pocket expenses: Meals and Lodging Transpo~ation Other (specify): Total proposed price for 1996 audit N/A N/A N/A $ 16,386 MOSS, LEVY & HARTZHEIM · CERTIFIED PUBLIC ACCOUNTANTS BE"VERLY HILI~., CALIFOR'NIA , SANTA MARIA, CALIrO.NtA APPENDIX D Part 1 S(/45ZtK2E OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE 1997 FINANCIAL STA~ Standard Quoted Hourly Hourly Hours Rates Rates Total Partners 68 Managers 89 Supervisory Staff Staff 148 Other (specify): Clerical 24 Subtotal 32 9 Out-of-pocket expenses: Meals and Lodging Transportation Other (specify): Total proposed price for 1997 audit $ 84 $ 84 $ 5,712 64 64 5,696 34 34 5,032 18 18 432 $ 16,872 N/A N/A N/A $ 16,872 MOSS, LEVY & HARTZHEIM · CERTIFIED PUBLIC ACCOUNTANTS B["VERLY HILL--~. CALIFORNIA - SAN'rA MARI~I~ CALIFORNIA APPENDIX D Partl SCHEIX3LE OF PROFESSIONAL F~WS AND EXPENSES FOR THE AUDIT OF /]qE 1998 FINANCIAL STA~ Hours 68 89 148 24 329 Standard Quoted Hourly Hourly Rates Rates Total Partners Managers Supervisory Staff $ 87 $ 87 $ 66 66 5,916 5,874 Staff Other (.specify): Clerical SAmbtotal 35 35 5,180 19 19 456 $ .,, 17,426 Out-of-pocket expenses: Meals and Lodging Transpo~ation Other (specify): Total proposed price for 1998 audit N/A N/A N/A $ .. 17,426 MOSS, LEVY & HARTZHEIM BEVERLY HI~, CALIFORNIA · CERTIFIED PUBLIC ACCOUNTANTS ~ SANTA MARIA., CALIFORNIA APPENDIX D Part 1 SCHEDULE OF PROFESSI~ FEES AND EXPENSES FOR THE AUDIT OF THE 1999 FINANCIAL STA~ Partners Managers Supervisory Staff Staff Other (specify): Clerical Subtotal Hours Standard Quoted Hourly Hourly Rates Rates Total 68 $ 90 $ 90 $ 6,120 89 68 68 6,052 148 36 36 5,328 24 329 2O 2O 48O $ 17,980 Out-of-pocket e>.z~_nses: Meals and Lodging Transpo~ation Other (.specify): Total proposed price for 1999 audit N/A N/A N/A $ 17,980 MOSS, LEVY & HARTZHEIM · CERTIFIED PUBLIC ACCOUNTANTS B~'vrRLY HILL.So CALIIrORNIA . SANTA MARIA, CALIFORNIA Moreland &, CERTiFiED PUBLIC ACCOL/N1ANTS 2111 PALOMAIR AI~P('IF~I lqOA[) CAIqLSRAD ({;1D) 431 December 5, 1994 Mr. Ronald A. Nault Director of Finance City of Tustin 300 Centennial Way Tustin, CA 92680 Dear Mr. Nault:..,. .. We are pleased to present this proposal of audit services to the City of Tustin. We have addressed each of the specifications included in your Request for PrOposal. We have also prov/ded significant information about our service approach to auditing. We currently audit the financial statements of forty-one California cities, thirw~one redevelopment agencies and many other governmental entities. Our success in providing professional services to your specialized industi'y is in part due to our dedication to the development and implementation of the' accounting and auditing issues relating.to governmental accounting. Our knowledge of your industry is best demonstrated by the fact that for the past eight years,, over ten percent of the "outstanding" awards in financial reporting issued by the California Society of Municipal Finance Officers were issued to our clients. Additionally, approxSmately ten percent of the Certificates of Achievement · for Excellence in. Financial Reporting issued by the Government Finance Officers Association to California cities during the past eight years were issued to our clients. We are very. proud of our part in these achievements. We have als6' achieved success because we.understand that we provide a service to our clients. I have served California governmental clients for nearly ten years. We provide an audit approach which satisfies all of the technical requirements witl~out forgetting that we provide a service. We encourage you to verify our level of service as well as the availability of Ms. Store),, the audit manager, w/th the references provided in our proposal. We think you will be pleasantly surprised at how highly our clients praise the quality of sen'ice we provide. Briefly stated, the scope of work for the year ending June 30, 1995, (with the option for the four years ending June 30, 1999) will include: Mr. Ronald A. Nault Director of Finance City of Tustin December 5, 1994 Page 2 A financial audit of the City's ComPrehensive Annual Financial Report. A separate financial and compliance audit of the Tustin Community Redevelopment Agency. A separate financial audit of the City of Tustin Water Corporation. An expansion of the City's financial audit to meet the requirements of the Single Audit Act of 1984. An annual management letter containing our comments and recommendations for improving the accounting procedures and the systems of internal control for the City. The letter will also contain any nonmaterial instances of noncompliance with laws and regulations noted during our audit and any nonreportable internal control structure conditions. A review of the annual calculation of the appropriations limit as required by Section 1.5 of Article XIIIB of the California Constitution for the City. An ann~ual letter to the City of Tustin Audit Committee regarding the conduct,of the annual audit. A consent/comfort letter (as applicable). We have the experience and the resources to complete the above scope of services in a timely manner each year. As you read through our proposal you will note that we are extremely well qualified to be selected as your auditors. Additionally, another quality which we believe is very important is the fact that our clients tell us they feel comfortable in working with us. We work hard to maintain that level of comfort. Thank you for providing us the opportunity to present this proposal, as we would very much like to become auditors for the City of Tustin. We sincerely look forward to working with you and your staff. We would be pleased to provide anY additional information or answer any questions you may have regarding our proposal: Our proposal represents a firm and irrevocable offer and will remain open 120 days. Very truly yours, MORELAND & ASSOCIATF_.S '-~¢ 7'-'~,,.2 P 'rt~ne~ Patricia Rives, PR:sd SEC-WION I - INDEPENDENCE .] Our firm and each staff member meets the independence requirement as defined by generally accepted' auditing standards and the U.S. General Accounting Office's Government Auditing Standards. This applies to the City of Tustin and its component units. During the past five years we have not provided any services to the City of Tustin. However, we are the auditors for the Orange County Cities Risk Management Authority (OCCRMA) whose accounting records are maintained by. the City of Tustin. We will provide written notice to the City of any professional relationships entered into during our term as auditors for the City. SECTION II - LICENSE TO PRACTICE IN THE STATE OF CALIFORNIA The firm and all assigned key professional staff are properly licensed to practice in California. SECTION III - FIRM QUALIFICATIONS AND EXPERIENCE ABOUT OUR FIRM Moreland & Associates is a large local firm of certified public accountants providing auditing, consulting and income tax services to numerous governmental clients. Our services are provided from our offices in Newport Beach and C_.arlsbad by nearly thirty- five professionals and four support staff. Our services to the City will be provided by our Newport Beach office. Our firm and all of our employees are strongly committed to governmental accounting. All of our thirty-five professional' staff have municipal government auditing experience. Over ninety percent of our work involves services to local government clients. Ms. Rives has held leadership positions and is currently very active in all professional organizations in California which deal with municipal finance. Much of her involvement is included in her resume, which is included in the next section of our proposal. All of the staff identified in this proposal are also quite active in their commitment to 'governmental accounting, as indicated in their resumes. They are all employed by the firm on a full-time basis. OUALITY CONTROL REVIEW Our firm has enrolled in the Quality Review Program offered by the American Institute of Certified Public Accountants. Our most recent quality review was completed in May of 1994 and included specific government engagements. We received an unqualified opinion. A copy of the report stemming from this review is included in Appendix A. 3 Several ,,,ears ago, the State Controller's Office completed a qualilv control reX, iew of ~ur working papers supporting audits of two California cities. We were informed ~lm~ we were the firs! firm they reviewed that "fully complied" with ail of the professional and governmental standards when conducting audits of California cities. There is not now nor has there ever been any regulatory action taken against Moreland & Associates. CURRENT GOVERNMENTAL CLIENTS AND DIRECTLY RELATED EXPERIENCE We have completed, or are in the process of completing, financial audits for the following governmental clients for the year ended June 30, 1994: Cities of Agoura Hills, Baldwin Park, Banning, Bell Gardens, Bradbury, C. amarillo, Chino, Chino Hills, Covina, Culver City, Escondido, Fountain Valley, Fullerton, Glendora, La Canada Flintridge, La Mirada, La Palma, Laguna Hills, Laguna Niguel, Lake Forest, Los Alamitos, Mission Vieio, Montebello, Monrovia, Monterey Park, Palos Verdes Estates, Perris, Pico I~ivera, Pomona, Poway, San' Buena.ventura, San Marcos, Santa Fe Springs, Solana Beach, Stanton, Temecula, Tulare, Twentynine Palms, Villa Park, West Covina and Yorba Linda, California. Twenty-two of these cities have been clients for over five years and the remaining nineteen cities have selected us as their auditors for a three or more year period. Community Redevelopment Agencies of the Cities of Agoura Hills, Baldwin Park, Banning, Bell Gardens, Chino, Covina, Culver City, Escondido, Fountain Valley, Fullerton, Glendora, La Canada Flintridge, La Mirada, La Palma, Mission Viejo, Montebello, Monrovia, Monterey Park, Perris, Pico Rivera, Pomona, Poway, San Buenaventura, San Marcos, Santa Fe Springs, Solana Beach, Stanton, Temecula, Tulare, West Cov/na, and Yorba Linda. - Laguna Niguel Community Services District. Santa Fe Springs Public Improvements Corporation. Santa Margarita-San Luis Rey Watershed Planning Agency. California Avocado Commission. .. Orange County Council" Boy Scouts of America. Central Orange County Fixed Guideway Agency. California Inland Empire Council - Boy Scouts of America. - Chino Valley Independent Fire District. - Escondido Center for the Arts. Oceanside Build~,, Authority. - Orange County Cities Risk Management Authority (OCCRMA). - La Palma Civic Center Authority. San Diego Pooled Insurance Program Authority (SANDpIPA). West San Gabriel Valley Consortium. - Rossmoor Community Services District. Fountain Valley improvement Authority. Santiago LibrarY System. - Triunfo Sanitation District. Glendora Library Authority. - Fullerton Library Building A.uthority. - Fullerton Parking Authority. - Transportation Corridor Agencies. In addition to the financial audits listed above, we are currently performing or have recently completed the follow/ng: City of Brea - Senior Citizen compliance audit. procedures. Review of a fixed asset appraisal. Special review of purchasing City of Del Mar - performed limited reviews of admissions taxes paid to the City relating to the annual Del Mar Grand Prix auto race. City of El Segund0 - Review records supporting business licenses at selected businesses within the City. - City of Fullerton'. We reviewed golf course revenues in order to determine compliance ..w/th the City's g01f course management agreement. · - City of Laguna Beach - Special review of City Treasurer's activities, and a Transportation Development Act compliance audit. City of La Mirada - Transportation Development Act compliance audit, and 'a special five-year review of certain Redevelopment Agency transactions. Cit.`', of Manhattan Beach - Sen'c as Cit.,,' internal audit staff performing reviews of various internal accounting activities such as cashicrint~, business license issuance and related cash receipts and fire department permit issuance. Also, annuallv review admission taxes paid to the City in connection with a Virginia Slims tennis tournament. City of Montebello - Various cash flow projections in connection with proposed bond issues, and a review of the accounts payable system. City of Oceanside - Community Development Block Grant audit, Section 8 Housing Assistance Payment Program Grant audit, a long-term loaned accountant, a special review of the golf course operations, and a special review of cash cut-off. City of Pasadena - Review of accounts payable system. City of Pomona - Evaluation of computerized systems and internal· controls relating to their on-line utility billing system. City of San Fernando - Business license tax audit. - City of Santa Fe Springs - Review of tax increments allocated by the County of Los Angeles to each Redevelopment Agencs, Project Area since inception of the project areas. .- California Avocado Commission - Assisted staff in the documentation of accounting and budgeting policies and procedures. West San Gabriel Valle.`', Consortium - We performed a management and operations audit of all of the major operating functions of the Consortium. We also developed procurement policies and procedures and a cost allocation plan. We have reviewed franchise payments and/or contract compliance from various cable and disposal companies for the Cities of Brea, Glendora, Laguna Hills, Lake Forest, Mammoth Lakes, Mission Viejo, Newport Beach, Oceanside, and Yorba Linda. We have reviewed Transient Occupancy Tax payments from some or all hotels/motels for the Cities of Bars. tow, Big Bear Lake, Costa Mesa, Cypress, Escondido, Hawthorne, Laguna Beach, Lake Forest, Long Beach, Manhattan Beach; Mission Viejo, Newport Beach, Pomona, San Marco, SOlana Beach, Solvang, Sunnyvale and Torrance. DATA PROCESSING AUDITING AND CONSULTING As you know, nearly all cities today utilize some form of electronic data processing equipment. Therefore, our staff has extensive experience in auditing within an electronic data processing environment. During our evaluation o~ ~ _.z internal controls over your major a'¢,..ounting operations such as cash receipts, cash disbursements and payroll, we will determine the controls you have established over data processed by the computer. Subsequently, we will deveiop audit tests to verify that the controls you have established are functioning as intended. We utilize Lotus 1-2-3, a word processing program and several other useful software programs on portable computers as an audit tool on all audit engagements. The audit manager, the senior accountant and an assistant accountant to be assigned to the engagement will have extensive experience in efficiently and effectively utilizing these 'computers on a variety of auditing and consulting engagements. Several years ago we completed an evaluation of the computerized utility billing system of the City of Pomona. The study included an evaluation of activities in the Finance Department, Data Processing Department, Water Department and the Treasury Office. We have evaluated alternative computerized accounting software for several Cities. We assisted the Cities of C..alabasas, La Canada Flintridge, Laguna Hills, Laguna Niguel, Lake Forest, Malibu, and Twentynine Palms in their implementation of new hardware and accounting software, which includes training staff and developing policies and procedures for.manual and computer processes. OTHER CONSULTING SERVICES _ . Our genera1 capability to provide consulting services is best demonstrated by our many years of successfully serving the governmental industry as described in our resumes. We are intentionally expanding our management consulting practice. We have recently completed management audits for the County of San Bernardino, the South Coast A/r Quality Management District, and the City of Modesto: We provide a wide variety of consulting services to our municipal clients. Those services which are related to accounting or auditing or which involve finance department type activities are performed entirely by our professional staff. Examples of these types of sercices are as follows: Review of business licenses, transient occupancy taxes, admission taxes, franchise fees, contract compliance, etc., Review and analysis of property taxes allocated by the Count5,, Review of or documentation of accounting policies and procedures, Special accounting projects, Internal audit department .type services, and Loaned accountants. We performed a study to determine if the internal control procedures were adequate and functioning pr. operly within the Parks and Recreation Depanrnent of a large city. Thc major systems reviewed were cash receipts/revenues, purchasing/accounts payable/contracting, and payroll for contract employees. We also performed, on behalf of a governmental entity, a study of the administrative systems, procedures and controli of one of the largest temporary shelters for the homeless in California. The project involved the assessment of new and/or imProved systems and the identification of the administrative positions responsible for monitoring the new systems. Part of this work was performed by Arroyo Seco Associates, Inc. as a subcontractor to our firm. Arroyo Seco is available to assist us if necessary to meet your needs. GOVERNM~AL ACCOUNTING SERVICES DEPARTMENT. Our Governmental Accounting services Department is, in effect, an employment agency that provides temporary, full-time or part-time personnel who are experienced in governmental accounting. Our'staff are available on a recurring basis each month to replace an absent employee on a full-time basis, or available to complete a specific task or series of tasks. While we can imagine a variety of recurring and nonrecurring projects which we can perform for you, there are many more which only you know about. Some of the projects we have performed for other cities are' Preparation of monthly bank reConciliatiOns, investment reports and financial reports. · Assistance in the preparation of the budget. · Assistance in the year end closing. · Assistance in recording bond issues or monthly fiscal agent activity. · Preparation of the State Controller's Report and the Street Report. · On-call staff from the Accountant to Finance Director level. These services are offered throughout the year at the same reduced rates regardless of the constraints of a "busy season". In today's jargon, we are providing you an opportunity to privatize certain functions within your Finance Department or fill temporarily vacant positions. KNOWLEDGE OF REDEVELOPMENT AGENCIES We have performed financial and compliance audits of numerous redevelopment agencies as listed in our resumes. You will also note in Mr. Moreland's resume that he is a member, of the State Controller's Advisory Committee which developed the Redevelopment Compliance Audit Guidelines. Mr. Moreland, as Chairman of the Governmental Accounh._= and Auditing Committee of the Cah~ornia Society of Certified Public Accountants, advised the State Controller's Office in the develo~)mc'nt of an accounting system for redevelopment agencies, revisions to the Compliance Audit Guidelines, and revisions to the Annual State Controller's Report. REVIEW OF THE ANNUAL CALCULATION OF THE APPROPRIATIONS LIMIT Mr. Moreland was a member of the League of California Cities Gann Appropriation Limit Task Force. The Task Force developed new guidelines for the computation of the annual appropriations limit as a result of the passage of Proposition 111. Mr. Moreland, on behalf of the California Society of Certified Public Accountants, assisted the task force by developing the appropriate procedures and reporting in connection with the review of the annual calculation of the appropriations limit as part of the annual financial audit process. MANAGEMENT LETTERS · We issue management letters every year in connection with all of our municipal clients. Unless there are unusual circumstances, the management letters are issued at the conclusion of the examination concurrent with the issuance of the CAFR. -.. Our management letters contain observations and recommendations which are meaningful to our clients. They are intended to be constructive and are in fact viewed in a very positive manner by our clients. Management letters are always reviewed in draft form with appropriate City personnel and the Audit COmmittee before they are issued. ASSISTANCE IN RECEIVING AWARDS Each year, four of our staff, including Ms. Rives, participate in the review of annual financial reports under the California Award .Program. For the past eight years, Mr. Moreland has been a member of the final three-person committee reviewing reports under the California Award Program. During the past several years we have assisted the Cities of Brea, Camarillo, Chino, Cypress, Dana Point, Dinuba, Escondido, Fountain Valley, Fullerton, Glendora, Irvine, La Mirada, Laguna Beach, Laguna Hills, Lake Forest, Mission Viejo, Montebello, Monterey Park, Newport Beach, Oceanside, Orange, Pico Rivera, Placenta, Poway, Rialto, San Buenaventura, San Clemente, San Fernando, San Juan Capistrano, San Marcos, Santa Fe Spr/ngs, Solana Beach, Temecula, Tulare, West Cov/na and Yorba Linda in r. eceiving "outstanding" awards under the California Award Program. -, Most of these cities have als° received Certificates of Achievement from the GFOA. For the.year ended June 30, 1993, all eighteen that applied to the CSMFO received "outstanding" awards in financial reporting. All of the staff identified in our proposal have experience in preparing award-winning CAFR's. In 1990, Mr. Moreland developed a program entitled "How to Prepare an Award Winning CAFR" for the California Society of Municipal Finance Officers. He participated in presenting the pro.am on five occasions to over one hundred attendees. FEDERAL ANI) STAT[:. GRANTS AND THE SINGLE AkIDIT Today, nearly all cities are receiving significant revenues from Federal and State grants. These revenue sources have become so si~znificant tha. t the National C, ouncil on Governmental Accounting (NCGA) selected th~e subject of'Grant Accounting to be one of the first areas to be resolved in connection with the restatement of GovernmenTal Accounting~ Auditing and Financial Reporting. Mr. Moreland was a member of the NCGA Accounting Task Force which developed the exposUre draft that became NCGA Statement 2, Grant, Entitlement, and Shared Revenue Accounting and Reporting by State and Local Governments. We have audited countless Federal and State grants in connection with the municipal clients we have served. Some of the grants we have audited include CDBG, CETA, FAA, FEMA, FDA, FAU, JTPA, TDA, UMTA, OCJP, Revenue Sharing, Senior Citizens' Nutrition, Child Development and Section 8 Housing Assistance Payment Programs. We have also audited numerous Federal and State grants in connection with scho°l district audits. OMB Circular A-102, Attachment P, was published in the Federal Register on October 22, 1979, and became effective immediately. 'It prov/ded for what is commonly called the "single audit approach".. Because most local governments did not comply with the single audit approach, Congress passed the Single Audit Act of 1984, which became mandatorY in California for the year ended June 30, 1986. We performed single audits for the cities of Montebello, Oceanside and Santa Fe Springs for the year ended June 30, 1985. Single audits were required for nearly all of our municipal audit clients for each of the years ended subsequent to June 30, 1985. All of our single audits were performed in accordance with OMB Circular A-128, Audits of State and Local Governments. Mr. Moreland was a guest speaker on the subject of the Single Audit Concept for the California Society of Municipal Finance Officers Southern Chapter meeting in July, 1982, and again spoke on this subject at the 1986 Annual Seminar in Claremont. In June, 1983, Mr. Moreland published an article on the single audit concept in Outlook Magazine, a publication of the California Society of Certified Public Accountants. Our working papers will be retained for a minimum of three vears. They will be available to the City, Federal agencies, State agencies and other parties at the direction of the City. KNOWLEDGE OF NCGA AND GASB STATEMENTS AND INv'r'ERPRETATIONS Mr. Moreland worked'closely w/th three members of NCGA in connection with various governmental accounting organizations. AlSo, as Chairman of the California Committee on Municipal Accounting, he made an oral presentation to the GovernmentaiAccounting Standards Board (GASB) on the governmental accounting issues which are most important in California, and has responded to all documents released by the G ASB seeking public comment. 10 Mr. Moreland is one of'~,.,ai- practicing CPA's in the United States selected bv the GASB to review and comment upon ,potential implementation problems in con~ection with proposed GASB Statemefits for smaller governmental units. He is also a member of the GASB Task Force on the Financial Reporting Model. ASSISTANCE IN GOVERNMI~NTAL BOND OFFERINGS Today, because 'of the changing bond market and the changes in financing vehicles available to local government, cities almost always utilize bond consultants in developing a financing strategy and the' appropriate bond documents. When requested, we assist our clients in the review of the official statement in connection with municipal bond issues. We also issUe consent letters upon request. Ms. Rives and others in' the firm have assisted in local government bond issues. AVAILABILITY Throughout the year you and your staff should feel comfortable in calling us for advice. We should be v/ewed as another resource available to you in carrying out your financial and administrative duties. We will contact .you throughout the year to discuss how current accounting pronouncements may affect your accounting or financial reporting. We believe .our ability to quickly respond to your needs and to keep you informed should be 'a significant consideration in selecting us as your auditors. Please verify our level of service and the.availability of Ms. Rives and Ms. Storey with the references progided in Section VI. Our staff is, of course, available to provide accounting, auditing Or consulting services throughout the year. SECTION IV- PARTNER, SUPERVISORY AND STAFF QUALIFICATIONS AND EXPERIENCE Our audit team members have extensive direct experience in auditing California cities. We believe our individual qualifications will assure you of receiving the type of serv/ce we describe in. this proposal. We encourage you to contact the references provided in Section VI. We are confident that all of our clients are satisfied with the level of service we provide. Patricia Rives will assume overall responsibility for services provided to the City. She will be supported by. Karen Storey, who will manage the staff working in the field. Patrick Dorr will be the senior accountant in charge of the field' work. Michael-Moreland will be the quality control rev/ewer. Their resumes are presented below. We understand the City will retain the right to approve or reject staff replacements, if any. .RESUME OF PATRICIA RIVES ENGAGEMENW' PARTNER Patricia Rives will assume overall responsibility for services provided to the City of Tustin. She has worked in public accounting for over ten years, serv/ng governmental clients almost exclusively. Prior to joining our firm, she worked for another' CPA firm which worked extensively in the field of'governmental accounting and auditing. Some of the clients served include: "' 11 Cities of Agoura Hills. Baldwin Park. Brawley, Brea, Camarillo. Chino. Cypress. Dana Point, Del Mar. El Segundo, Fullerton. Huntington Beach. l~guna ~'iguel. Manhattan Beach, Mission Viejo, Monterey Park, Powav, San Juan C-.apistrano, San Marcos, Santa Fe Springs, Solana Beach~ Stanton, TwtJntvnine Paints. Ventura, and Villa Park, California. ' Community Redevelopment Agencies of the Cities of Agoura Hills, Baldwin Park, Brawley, Brea, Chino, Cypress, Dana Point,' Fullerton, Huntington Beach, Monterey Park, Poway, San Juan Capistrano, San Marcos, Santa' Fe Springs, Solana Beach, Stanton and Ventura. - C. apistrano Valley Water District. San Diego Pooled Insurance Authority. San Diego County Cities Risk Management AUthority. Southeast Area Social Services Funding Authority. San Elijo Joint Powers Authority. ~.. Ms. Rives is very active in organizations which relate to the public sector industry. Her involve me n t. includes: Chairperson Orange County/Long Beach Chapter of the California Society of Certified Public Accountants Governmental Accounting and Auditing Committee. Associate member of the California Society of Municipal Finance Officers (CSMFO); regularly attends monthly section meetings and annual conferences. Participates in the review of CA.FRs for the CSMFO Certificate of Award for Outstanding Financial Reporting Program. Participates in the rev/ew of annual budget documents under the CSMFO Budget Award Program. Member, Government Finance Officers Association (GFOA) Special Rev/ew Committee-for the Certificate of Achievement for Excellence in Financial Reporting.: Each year attends the Annual Conference of the Government. Finance Officers Association of the United States and Canada (GFOA). Ms. Rives received a Bachelor of Science degree in Business Administration with a major in Accounting from California State University at Long Beach and is a Certified Public Accountant in the State of California. She is a member of the California Society of Certified Public Accountants, the American Institute of Certified Public Accountants and the California Society of Municipal Finance Officers (CSMFO). 12 SEALED DOLLAR COST BID PROPOSAL FOR CITY OF TUSTIN FOR PROFESSIONAL AUDITING SERVICES DECEMBER $, 1994 Moreland &~/~(~.;~.~, CERTIFIED PUBLIC ACCOUNTANTS S ,EALED DOLLAR COST BID PROPOSAL FOR CITY OF TUSTIN FOR PROFESSIONAL AUDITING sERvICES DECEMBER 5, 1994 CERIIFli. D PUBLIC, AC, COUNIAN1 $ Dec~:mber 5, 1994 ;'11'~ ['AL()MM,I Allr,O'()I,ll [t()A['~ ,'<,tlllJ (~A{,{J ',:,BAD (TA[ IJ (I[,INIA ((;19) .131 Mr. Ronald A. Nault Director of Finance City of Tustin 300 Centennial Way Tusdn, CA 92680 Dear Mr. Naulu Attached are thc forms supporting thc audit fees for cach of thc five years ending June 30, 1999, which are as follows: ] 995 J 996 .1997 .199g ! 999 Total all-inclusive Maximum Audit Prices $17,500 $18,200 $18,900 $19,700 $20,500 · . The above fees and the hourly rates in the attached forms provide for approximately a 4% increase each year !o cover 'increased. salary and other costs. The above fees cover all the services described in our proposal for 'the City, the Community Redevelopment Agency, the Water Corporation and the Single Audit. Our fee associated with the possible issuance of consent/comfort letters will depend upon the amount of 'down-to-date" review required for the particular bond issue; however, we estimate our fee will not exceed $2,000. It is our experience that the audit process is far more successful in terms of client sen,ice, when there is greater involvement by those who possess extensive industry expertise. For this reason, both the audit manager and I will have considerable involvement in >'our audit. We understand that you are in the process of documenting >'our accounting policies and procedures. We have prepared accounting policies and procedures manuals for many cities. We believe this is a very o important project and we are offering, at no charge, twenty-four hours each year to assist you in developing and maintaining your manual. Thank you again for the opportunity to present this proposal. We hope we were able to convey to you our knowledge of your industry and the quality of service which we provide to our clients. Since. we are obviously not the biggest, we have to provide the best service: Ms. Rives, who signed this proposal, is authorized {6 submit this proposal and to sign a contract on behalf of Moreland & Associates with the City of Tustin. Very truly yours, MORELAND & ASSOCIATES Patricia Rives, Partner PR:ymd APPENDIX D PART 1 SCHEDULE OF PROFESSIONAL FE~S AND EXPENSES FOR THE AUDIT OF THE 1995 CITY OF TUSTJN FINANCIAL STAT~MI~NTS Standard Quoted Hourly Hourly Hours Rates Rates ... Total Partners. :."' 18 $110 $80 $ 1,440 .. Manager 46 90 60 2,760 Supervisory Staff 180 60 45 8,100 Staff 120 55 40 4,800 Other (Specify): Clerical 12 ~ 15 180 Subtotal 376 $17.280 Out-Of-pocket expenses: Transportation Total proposed price for 1995 audit 220 ,, ,~17~500 We will accept reimbursement for travel, lodging and subsistence at the prevailing City of Tustin rates for its employees. Hourly rates for additional service will be as follows: Provided by our auditing and consulting staff- standard hourly rates. Provided by our Governmental Accounting Services Department - quoted hourly rates. APPENDIX D PART 2 SCHEDUbt~ OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE 1996 CITy OF TUSTIN FINANCIAb STATEMENTS, Hours Standard Hourly Rates Partners 18 ti; 110 Quoted Hourly Rates Total $83 $ 1,494 Manager 46 90 62 2,852 Supervisory Staff 180 60 47 8,460 Staff 120 55 41 4,920 Other (Specify): Clerical 12 ~ 16 ]92 Subtotal ..376 $17,918 Out-of-pocket expenses: Transportation Total proposed price for 1996 'audit 282 ~18~200 We will accept reimbursement for travel, lodging and subsistence at the prevailing City of Tustin rates for its employees. · Hourly'rates for additional service will be as follows: Provided by our auditing and consulting staff- standard hourly rates. Provided by our Governmental Accounting Services Department - quoted hourly rates. APPENDIX D PART 3 SCHEDUbE OF PROFESSIONAL FJ~ES AND EXPI~NSES FOR THE AUDIT OF THE 1997 CITY OF TUSTJN FINANCIAL STATEMENTS Standard Quoted Hourly Hourly Hour.5 Rates Rates Total Partners . · 18 $110 $86 $ .1,548 Manager 46 90 65 2,990 Supervisory' Staff 180 60 49 8,820 Staff 120 55 . 42 5,040 Other (Specify): Clerical .. 12 9...5 17 204 Subtotal ..376 $18,602 Out-of-pocket expenses: Transportation Total proposed price for 1997 audit 298 $18.900 We will accept reimbursement for travel, lodging and subsistence at the prevailing City of Tustin rates for its employees. Hourly rates for additional service will-be as follows: Provided by our auditing and consulting staff- standard hourly rates. Provided by our Governmental Accounting Services Department-qnoted hourly rates. APPENDIX D PART 4 SCHEDULE OF PROFESSIONAL FEES AND.EXPENSES FOR THI~ AUDIT OF 'I'HE J998 CITY OF TUSTJN FINANCIAL STATEMENTS Hours Standard Quoted Hourly Hourly. Rates _ Rates Total Partners 18 $115 '$89 $ 1,602 Manager 46 95 68 3,128 Supervisory Staff 180 65 51 9,180 Staff 120 60 44 5,280 Other (Specify): Clerical ...712 28 18 216 Subtotal .3. 76 $ ] 9,406 Out-of-pocket expenses: Transportation Total proposed:.price for 1998 audit' 294 $'19,700 We will accept reimbursement for travel, lodging and subsistence at the prevailing Ciw of Tustin rates for its employees. ' Hourly rates for additional service will be as follows: Provided by our auditing and consulting staff-standard hourly rates. Provided by our Governmental Accounting Services DePartment-quoted hourly rates. APPENDIX D PART 5 SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF ?HE 1999 CITY OF TUSTIN FINANCIAL STATEMENTS - Standard Quoted Hourly Hourly Hou r._._...~s Rates RaTes Total Partners 18 Manager 46 Supervisory Staff 180 Staff 120 Other (Specif-),): Clerical 12 Subtotal ...376 $115 $93 $1,674 95 71 3,266 65 53 9,540 60 46 5,520 28 19 228 $20.228 Out-of-pocket expenses: Transportation 272 Total proposed prices for 1999 audit ":' $20,500 We will accept reimbursement for travel, lodging and subsistence at the prevailing City of Tustin rates for its employees. Hourly rates for additional service will be as follows: Provided by our auditing and consulting staff- standard hourly rates. Provided by our Governmental Accounting Services Department - quoted hourly rates. Certified Public Accouneonts A'enneeh A. 3dacsa. s £,.nrst J. Gl,. ./ay £. Siegel 15c~I Red Hdl Avenue 5%¢ :01 Tus.n. CA q2t~gO (714) 25S-0026 FAX (7141258.2102 CITY OF TUSTIN Proposal to Provide Professional Auditing Services Technical Proposal COPY December 5, 1994 CONTACT PERSON: Ma¢ias & Company, CPAs Kenneth A. Ma¢ias, Managing Partner Ronald .T, Kzal, Manager 15901 Red Hill Avenue, Suite 201 Tustin, CA 92680 (714) 258-9026 FAX (714) 258-2102 Office Locations: Sacramento ,. Los Angeles o Orange Coun~ ,,' San Francisco Bay Area CITY OF TUSTIN TABLE OF CONTENTS TECHNICAL PROPOSAL Section III. · IV. Vo Xe PAGE Letter of Transmittal ..................................... 1 - 2 General Requirements ...................................... 3 Independencg ........................................... 3 License to Practice in California ................................ 3 Qualifications and Experience of Macias & Company, CPAs ............ 3 - 9 Partner, Supervisory, and Staff Qualifications and Experience ........... 9 - 13 Pr/or Engagements with the City of Tustin ........................ 13 Similar Engagements with Other Government Entities .............. 13 - 14 Specific Audit Approach .... . ............................ 15 - 25 Identification of Anticipated Potential Audit Problems .............. 25 - 26 Sample Report Formats .................................... 26 Avvendices Resumes Macias Consulting Group Proposer Guarantees and Warranties Peer Review Report Additional Information Ao B. C. D. E. COST PROPOSAL (Submit'ted under separate cover) Dollar Cost Bid Macias & Company, CPAs' CiO' of 7'ustin MA CIAS & COMPANY Certified Public kccountonts ?artner~: Kenneth A. ,¥tac~a~ Ernett J. Gins Jay E. Siegel ;3'~)1 Re;: ti;Il gu:',c Tusnn. C.-\ itl.l) 25$.0025 FAX ~'14~ 25$-2102 December 5, 1994 Mr. Ronald A. Nault, Finance Director . City of Tustin 300 Centennial Way Tustin, CA 92680 Dear Mr. Nault' Macias & Company, CPAs is pleased to submit our proposal to provide the City of Tustin (City) professional auditing services for fiscal year ending June 30, 1995. We have carefully researched your requirements and believe that our technical approach and staffing plan described herein respond fully to the City's needs.... .. We will perform a financial and compliance audit of the general purpose financial statements of the City of Tustm (including the component units, City of Tustin Water Corporation and Tustin Community Redevelopment Agency), for the fiscal year ending June 30, 1995, and at the Ciry's option, the four subsequent fiscal years. We will render an opinion on the financial statements in conformity with generally accepted accounting principles, applied on a basis consistent with that of the previous year. We will also perform a Single Audit and' submit required compliance reports in accordance with the Federal Single Audit Act of 1984 and U.S. Office of Management and Budget (OlVEB) Circular A-128. Our engagement will include a review of the annual calculation of the .appropriations limit as required by Section 1.5 of Article XiZI2B of the California Constitution. All field, work and analyses will be completed in a timely manner to facilitate adequate review of draft reports, revisions (if necessary), and the completion of all final audit reports as required by the City.. Our firm and its .people have distinguished ourselves among the elite governmental auditing firms. We believe our firm is the best qtmti.fied to serve the City of Tustm for a number of reasons. We are nationally recognized as a leader in serving the government sector. I am an appointed :metnbdr of. the AICPA State and Loczd Government Accounting and Auditing Commin&e (GA.AC) and serve as the. only West Coast representative on this prestigious standm-d serf. rog body. The Committee establishes generally accepted accounting principles (GAAP) for governmental agencies. Therefore, the City of Tustin will have a direct lirflc and a distinct advantage throughout the year in communica.tmg with our firm its concerto about GAAP and other technical or procedural issues. Our membe=hip on the California State Society of CPAs' GAAC and the Sacramento Chapter's GA.AC further provides the liaison relationships to address any questions that may be encountered. 1 Office Locarionz: Sacramento · Los Angeles · Orange CounD' ° San Francisco Bay .Area Several of our team rncmbers have recent experience providing auditing and consulting services for the Cities of Los Angeles, San Diego, Sacramento, West Sacramento, Fort Bragg, Modesto, Hesperia, Gait, Vacavill¢, Needles, Rohnert Park, and La Mesa; Counties of San Bemardino, Los Angeles, Butte, Yolo, Tuolumne, Placer, Napa, and El Dorado; special districts and joint powers authorities (Sacramento Housing and Redevelopment Agency, Vacaville Public Financing Authority); Orange County Transportation Authority; and other large governmental agencies. We are experts in the field of redevelopment accounting. We have conducted seminars for public finance officials charged with the responsibility of accounting for redevelopment agencies as well as for professionals in accounting Who wanted more knowledge about the redevelopment accounting area. Members of our audit team are certified reviewers for the Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting and the California Society of Municipal Finance Officers Certificate of Award for Outstanding Financial Reporting programs. Our government consulting organization, Macias Consulting Group, has an experienced group of consultants specializing in EDP systems. Most importantly, we have established an excellent, proven client service record with all of our government, clients and encourage you to call any of them about our jo"-'~ performance. In summary, we believe that Macias & Company provides you with qualifications unmatched by other firms. The quality of our service is comparable to "Big 6" firms without the high costs, partner distance, and bureaucracy often associated with such services. Our proposal demonstrates our qualifications, competence, and ability to perform satisfactor3., professional audit services for the City. We are very enthusiastic about establishing an effective and harmonious relationship with the City of Tustin. You will find Macias & Company highly qualified, easy to work with, always accessible, and eager to serve as your independent auditor. If the Audit Committee should have any questions concerning this proposal, please contact me or Ronald Kral, Manager, at ('71,~) 258-9026. As Managing Partner of the firm, I am authorized to make representations and contract negotiations concerning our finn. Our proposal is a firm and irrevocable offer for 120 days fi.om the date of this letter. As requested, our sealed dollar cost bid proposal is submitted separately. Very truly yours, MACIAS 8: COMPANY Certified Public Accountants · Ker~eth A. Macias, CPA Managing Partner KAM/lsm Macias & Company, CPAs ~ ,..:... ~,. ..... :_. SECTION I - GENERAL R" UIRE3I'RNTS Our detailed proposal demonstrates the qualifications, competence, and ability of Macias & Company, -°X'As to provide the City of Tustin with an independent audit. We also present an audit approach that exceeds the requirements of the City. Our technical proposal addresses all points outlined in the Request for Proposals (RFp), excluding cost . information, and is presented in the order set forth in Section VI B of the RFP. ' SECTION II - INDEPENDENCE Our firm is independent of the City of Tustin and all component units of the City. We meet the independence standards, due professional care, qualifications, and quality control requirements as' defined by generally accepted auditing standards and the Government Auditing Standards, 1994 revision, published by the "U.S. General Accounting Office. , . Our firm has not had mY professional relationships involving the City of Tustin or any of its component ,. units for the past five years. Our fn-m shall give the City of Tustin written notice of any professional relationships '~-- ~.red into during the period of this agreement. SECTION III- LICENSE TO PRACTICE IN CALIFORNIA Our finn and all assigned key professional staff are properly licensed by the State of California to practice as a Certified Public Accountant. ' - SECTION IV - QUALI~CATIONS AND EXTER~NCE OF MACIAS & cOMPANY Firm's Practice Macias & Company, ..CPAs (a partnership) is a statewide certified public accounting firm with offices in Tustin. SaCramento, Los Angeles. and the San Francisco Bay area. As a full-service CPA firm. we provide auditing, accounting, rnm~gement consulting, and tax services to governmental and nonprofit organizations, as well as corporations, partnerships, and individuals. The firm was founded by 'Kenneth Macias on September 1, 1987. After six months, he merged his sole r, roprietorship with Edward Pierini and created the partnership of Macias & Pierini, CPAs (M&P). Ernest Gini .joined the ., in AugUst, 1990. Effective May 1, 1993, Kenneth Macias and Ernest Gini merged their 70% of the M&P practice with Macias & .Company, CPAs CIO., of Tustin Qualifications and EX'pen'ence of Macias & Company IV - :he auditing and accounting practice of R. J. Miranda & Company to become Macias & Miranda. The partnership changed :ts name to Macias & Company and remains a flourishing, full-service CPA firm, which offers the benefits of hands-._.: partner involvement in the delivery of services. All partners are experienced accountants, auditors, and consultants .:ommitted to providing professional, personalized, and timely service. Also, our partners and managers gained valuable experience and knowledge while employed by national public accounting firms. Our firm has maintained continued growth and financial stability. There are not any conditions that would impede our ability to complete projects assigned to us. Our firm does not anticipate any conditions arising such as bankruptcy, iitigation, office closures, or any other situations which would have an effect on our ability to perform our tasks efficiently and effectively for the City of Tustin. Location of Main Headquarters and Staff Composition · We are a statewide minority-owned CPA firm with approximately 60 professionals, including two partners, one .'nanaging director, six managers, and' four shareholders in our consulting group. Our corporate office is located in Sacramento. We are a registered Minority Business Enterprise (MBE) With the Regional Transit Association of the Bay Area :b..rough Central Contra Costa Transit Authority), Caltrans, Los Angeles County Metropolitan Transportation Authority, City :f Los Angeles, City of Sacramento, Sacramento Housing and Redevelopment Agency, and other governmental agencies. Our firm is a member of the Government Finance Officers Association (GFOA.), American Society of Public qdministrators (ASPA), State Association of County Auditor-Controllers, California Society of Municipal Finance Officers :.ssociation, American Institute of Certified Public Accountants (AICPA), the California Society of CPAs, the SEC Practice ;ection of the AICPA, and the California Transit Association. ;taft Assi,m'tments Only full-time, experienced governmental auditors from our Tustin office will be assigned to this engagement. ;-overnmental Experience Our firm specializes in governmental accounting, auditing, and management consulting. Our references will '.:~s:2.ntiate the quality and timeliness of our services. Over 70 percent of our audits are government related, and we a- ddely recognized as a leader in serving the government sector. All members of our professional staff are experienced in ove:'nment auditing. Members of'our firm have served as independent auditors and f'mancial consultants to numerous cities,. Macia.r & Cornr~anv. Cpa ~ ..... Qualificazions and Exi ?ncc of Macias & Company . liT- such as Alhambra. Calexico. Folsom. Fort Bragg. Gait, Hesperia. La Mesa. Los Angeles, Modesto (GFOA awarded), !~_gNeedle$, Rohnert Park. Roseville, Sacramento (GFOA awarded), San Diego (GFOA awarded), Santa Ana, Simi Valley ,,3FOA awarded), Vacaville (GFOA awarded), West Sacramento, and Winters. Management Capabilities We offer clients the benefit of closer partner and manager involvement. The partners of Macias & Company are Kenneth Macias and Ernest Gin/. Our Managing Directors are Caroline Walsh (Los Angeles office) and Ronald K. ral (Orange County office). These highly qualified individuals are government specialists. Kenneth Macias'is the firm's Managing Partner and has 16 years of auditing and consulting experience. Formerly, Mr. Macias was the Director of the Governmental Industry Group at Deloitte & Touche (Sacramento). He is an appointed member of the AICPA State and Local Government Accounting and Auditing Committee (GAAC) and is also a' member of · the California State Governmental Committee. Mr. Macias served for two years as the Chairman of the Government . .. Accounting an~ Auditing Committee for the California Society of CPAs, Sacramento Chapter. ! He resides in both Northern and SOuthern California and provides full service and personalized attention to clients throughout the State of California. His clients include the Cities of Los Angeles, San Diego, Sacramento, Modesto; Counties ,~, San. Bernardino, Fresno, Sacramento; California State Lottery; and Sacramento Housing and Redevelopment Agency. Ernest Gin/, Partner, is an AICPA Registered Quality Control Reviewer and serves clients primarily in the Northern · California area. Mr. Gini, who has 20 years of CPA experience, was previously a partner with the national CPA firm of . Grant Thornton and has eleven years of experience with Arthur Young & Company (merged as Ernst & young). He is the ', Chairman of the Government Accounting and Auditing Committee for the California Society of CPAs, Sacramento Chapter. lvtr. Gini is a member of the State Association of County Auditor,Controllers. He is our firmwide Technical Reviewer and has provided services to such clients as City. of Simi Valley, City of Modesto, City of Vacaville, Count), of san Bernardino, · County of Yolo, County of Placer, County of Tuolumne, and Sacramento Homing and Redevelopment Agency. Caroline Walsh, Managing Director of our Los Angeles office, has over 14 years of specialized experience in · . auditing and consulting. Prior to joining Macias & Company, Ms. Walsh was associated for thirteen years with Deloitte & Touche where she was the lead government Senior Manager. Her clients include the City of Los Angeles, City of Simi u~'lley, City of Alhambra, County of Los Angeles, County of Ventura, County of San Bemardino, and Los Angeles County · ,~nsportation Commission. Macias & Company, CPAs .. 5 CiO' of Tustin Qualifications and Experience of Macias & Company - IV- Ronald Kral, Manager of the Tustin office, has over seven years of experience in accounting, auditing, ap~ nmnagement consulting, including workload studies, program evaluations, cost/benefit analyses, performance measurements, md information systems/data bases. Mr. Kral has three years of experience as a Performance Auditor with the California )ffice of the Auditor General. He is our firm's representative in the California Transit Association. His area of service .s primarily the Los Angeles, Orange County, and Inland Empire regions. gtaff Capabilities Our staff fully understands the government arena, related professional standards, and criteria. Generally Accepted 3overnment Auditing Standards (GAGAS) are set forth by the Comptroller'General of the United States and are often :pplicable and recommended for use by state and local government auditors. Our professional staff is 'knowledgeable of these ;tandards and adheres to continuing education requirements to maintain professional proficiency. In addition to GAGAS and generally accepted auditing standards (GAAS), our staff is proficient in understanding criteria established through the 3overnmental Accounting Standards Board (GASB), Federal Office of Management and Budget Circulars, AICPA Audit 3uides and Statements on Accounting Positions, Federal Compliance Supplements, State Administrative Manual, OC'~ 3rantee handbook, and other technical material as deemed necessary. We strive to keep our staff current with the ever- :~anging criteria and relating applications affecting public organizations. ~ontinuing Professional Education of Employees In compliance with Generally Accepted Government Auditing Standards, our firm administers a program to ensure ':nat all professional staff members meet continuing professional education (CPE) requirements. Since a large composition .'f Macias & Company's client base includes governmental entities, we are aware of the strict educational guidelines required -,v the 'Yellow Book," Governmental Auditing Standards, 1994 revision, published by the U.S. General Accounting Office. 3ur audit team receives their CPE from in-house and certified'CPE training courses. All members of the audit team have ;.',-:isfied the "Yellow Book" requirement of having at least 24 hours continuing professional education in governmental audit. 3vet the last two years, our staff have attended qualifying CPE classes for governmental training related to Governmental nte.,--rml Control Structure, Internal Control Testing and Reporting, GASB Updates, Single Audit updates, classes taken :'-rough the City of Los Angeles, and self-study coursework. ~onrinuing Professional Education for Clients We routinely offer quality CPE courses to our clients throughout the State. We provide technical updates on Macias &Cornpanv, CPAs ~ r':~,. ~,~' Qualifications and Ex~ ence of 31acias & Company - IV- _ generally accepted accounting principles, generally accepted auditing standards, and recent GASB pronouncements. We have ;-'invited our clients t° attend governmental auditing training on such topics as Auditor General and County Operations and ~'heir Relationships to Government Auditors, GASB Pronouncements 10 - 15, CAFR Review Commen.u Given by the GFOA, State Controller's Responsibilities, Quality .Review (case analysis of a local government emphasizing financial -i .;. reporting, deficiencies, and substandard audits), Status of SAS 63 Revisions, ASLGU Audit Guide Revisions, Internal -~ Controls, and Program Specific Audits. Our courses are typically free of charge for our clients. .t Courses that we will be conducting in the future'Will be related to recent GASB pronouncements (in particular, ~ implementing GASB 14 and 16), HUD 'audits, the Federal Accounting Advisory Board, transportation audits, special district audits, and review Of Exposure Draft on Financial Reporting. We recently conducted a seminar for the County of San Bernardino regarding GASB 14 -21 and new "Yellow Book" recommendations. In addition, Ken MaCias, who is one of the authors of the new AICPA Audit Guide, will be instructing on its updates. Financial Auditin~ Services Our financial audit approach is distinguished from other aPproaches because it is based on a conceptual framework -- -'ognizing that every organization and operating environment is different. Consequently, a thorough understanding of the organization's structure, strategic plans, operations, and environment is required to tailor an audit program to achieve all audit objectives in an efficient and effective manner. The resulting audit plan minimizes redundant audit procedures while maximizing the potential for providing practical recommendations to improve operations. We do not stop at identifying weaknesses; we provide solutions and a means to accomplish organizational goals and legal mandates. Our audit department is very knowledgeable and experienced with the Single Audit requirements, grant programs, and cost allocation Plans in accordance with the guidelines issued by OMB and federal agencies. They are sk.illed in auditing large en'terprise funds (such.. as medical center, recreation, airport, and. waterwork district funds), system operations, capital improvement programs, special revenue funds, internal service, debt service, pension trust and agency funds, and federal assistance programs. Computer Audit Capabilitie,~ All members of our staff are skilled at auditing in an electronic data processing (EDP) environment and have '-~ "nsive experience with microcomputers and software applications. Our ~udit personnel has a wealth of experience in .. evaluating complex computerized accounting systems of governmental units. They are proficient at analyzing detailed Macias & Company, CPAs 7 City of Tustin Qualifications and Experience of Macias & Company - IV- financial records which are computerized with automated subsystems. We use computer-assisted audit techniques and vario,,q tests through and around the computer to audit large and/or complex EDP systems. Members of our audit team have extensive training and }mowledge with information technology computer auditing. Our EDP expertise draws upon resources from the Macias Consulting Group, which specializes in developing and implementing strategic management information system plans. Many of our EDP-related recommendations have helped in contingency planning for disaster recovery related to ADA, microfades and DSK safety measures. Further, it is important :o remember that as a CPA firm specializing in financial and performance auditing of governmental agencies, we are familiar with a large variety of accounting systems and software packages. Our team members are knowledgeable of many types of cost accounting software solutions, especially using IBM platforms, and Lotus/Quattro Pro software. Peer Review Our firm does not have a record of substandard audit work. Macias & Company received an unqualified opinion on a recent peer review of our firm. A copy of this report is provided in the Appendices of our proposal. This external 4uali.ry control review included a review of specific government engagements. Field reviews of our audits performed by the U.S. Department of Labor Inspector General, California State 2ontroller's Office, GFOA, CSMFO, Department of Education, Office of the Auditor General, and the Office of Criminal Justice Planning have resulted in all of our reports being accepted as originally submitted. D. isciplinam, Action There are not any current or pending disciplinary or litigation actions against our firm in any manner related to our professional activities nor have there been any such actions in the past. Eertificate of Ach/evement Expertise Our knowledge of the requirements for the Government Finance Officers Association (GFOA) Certificate of -XchieVement (COA) for Excellence in Financial Reporting program is best illustrated by the fact that members of our audit '~-.~am have assisted the Ci~, of Sacramento, City of Modesto. CiD, of San Diego, City of Simi Valley, Cit')' of Vacaville, -aunt, of San Bernardino, County of Fresno, Count, of Los Angeles, County of Orange, and County of Ventura in ~:hieving their award. We assisted Sacramento Housing and Redevelopment Agency to receive their first GFOA certific ut year. Our proficiency with the most recent technical advice, pronouncements, and certificate requirements will be ;eneficial in ~sisting the City towards achieving its goal. Macias & Company, CPAs ' Liability lnxurance Coverao_.e Our firm maintains adequate professional liability, automobile, and general insurance coverage to audit large "ntgardzations, as well as Workers' Compensation Insurance for all employees who will be engaged in the performance of . mis contract. · Commitment to Total Service Macias & Company is available year-round to provide the City of Tustin with professional accounting advice and to consult on unusual financial .events. Our service does not end after the completion of your audit. pleased to assist the City with extra projects on an as-needed basis. We would also be SECTION V - PARTNER, SUPERVISORY, AND STAFF : EX2 ERIENCE QUALIFICATIONS Our engagement team will provide the City of Tustin with the quality of service and attention you require and · deserve. All t. eam members specialize in governmental fund accounting and auditing. Our auditors have attended continuing professional educati'0h relevant to Governmental Internal Control Structure, Internal Control Testing 'and Reporting, GASB '~ Updates, and Single Audit updates. Please allow us to introduce a few of our key management personnel: Kenneth A. Macias, M.B.A., M.S.. CPA -Partner-in-Charge Mr. Macias, Managing Partner of our firm, will provide overall responsibility for coordinating and managing all ', Macias & Company services provided to the City. Mr. Macias has over 16 years of audit and management consulting _ experience, including audits of governmental agencies with assets which exceed $5 billion at the time of the audit. He was formerly a Senior Audit Manager and Director of the Governmental Industry Group at Deloitte & Touche (a Big Six CPA firm) where he was employed for nine years. His governmental experience is further enhanced by his appointment to the .AICPA State and Local Government Auditing and Accounting Committee. He also served for two years as the Chairman of the Government Accounting and Auditing Committee for the California Society of CPAs, Sacramento Chapter and.is an .. · · . active member of the Governmental Finance Officers' Association and the .American Society of Public Administrators. His active participation allows him to be a.t the forefront in understanding and establishing quality standards of reporting and auditing governmental entities and to be an effective liaison with the.GASB, the AICPA, the CSCPAs~ and other significant federal, state, and local agencies. He has provided a variety of auditing and consulting services for numerous state and local governments, school a,.,a-icts, and nonprofit organizations. His governmental clients include the City of Los Angeles, San Diego, Modesto, West Macias & Company, CPAs 9 City of Tustin Parrner, Super¥isor3.' and Staff Qualifications and Experience V ~ Sacramento, Sacramento. Vacaville, Gait, and Winters: County of San Bernardino, Fresno. Tuolumne, Yolo. Plac,- Sacramento, Et Dorado; Fresno County Transportation Authority: and Sacramento Housing and Redevelopment Agency, :~nd numerous State of California agencies. Mr. Macias graduated from California State University, Sacramento (CSUS) with a Bachelor of Science in Business Administration emphasizing Accounting; Golden Gate University, San Francisco with a Master of Business Administration degree in Finance; and also earned a Master of Science in Accountancy degree from CSUS. He is presently enrolled in the University of Southern California's Doctorate in Public Administration (D.P.A.) program. His areas of study are finance and accounting for public sector organizations. Ernest J. Gini, CPA - Technical Review Partner Mr. Gini, Partner of our firm, has over 20 years of experience in the CPA profession. He will be responsible for providing technical review and quality control functions of the audit approach, field work, and report presentation. Prior :o his employment with Macias & Company, Mr. Gini was a partner in the national CPA fn-m of Grant Thornton. Prior :o Grant Thornton, Mr. Gini was employed for 11 years with Arthur Young & COmpany (merged as Ernst & Young). ' :s the Chairman of the Government Accounting and Auditing Committee for the California Society of' CPAs, Sacramento Zhapter. His governmental clients include the City of Sacramento, City of Rohnert Park, City of Mociesto, City of Vacaville, Zirs.' of Sim/Valley, California Office of the Auditor General, California Community Colleges, California Department of Veterans Affairs, California State Teachers' Retirement System, County of Tuolurnne, County of Yolo, County of El Dorado, County of Ventura, County of Placer, Fresno County Transportation Authority, and Sacramento Housing and ~eci~velopment Agency. -. .. : Mr. Gini has conducted continuing professional education seminars on Accounting for 'Redevelopment Agencies. T'he course focused on accounting principles, regulatory reporting requirements, recent law changes (i.e., AB 1290), case rudies, and specialized accounting issues related to redevelopment agencies. Mr. Gini graduated from California State University, Stamslaus with a Bachelor of Science in Business ;.dmmistration emphasizing Accounting. He is a member of the American Institute and California Society of Certified Pub' :.:countants and the State Association of County Auditor-Controllers. Macias & Comt2anv. CPA.v ,r, ,...: ..... ,. ,,, ... Partner, Supers'isory, ~ Staff Qualifications and Expc ~nce -V- Ronald .l~ .Krai, M.B.A., CPA -Project .Manal~e~r , .... Mr. Kral, Manager of our Tustin office, has served on numerous governmental financial and compliance audit i engagements. His recent governmental audits include the City of Modesto, City of Vacaville, City of West Sacramento, County of Tuolumne, County of Placer, County of Amador, and County of E1 Dorado. Additionally, Mr. Kral has · ~ experience in many management consulting and performance audit areas including workload studies, program evaluations, icost/benefit analyses, performance measurements, and information systems/data bases. Mr. Kral has three years of experience as a Performance Auditor with the California Office of the Auditor General. He is currently the manager in charge of several annual fiscal and TDA compliance audits, including San Bernardino Association of Governments, Central Contra Costa Transit Authority, Solano Transportation Authority, Fresno County Transportation Authority, and Riverside County Transportation Commission, Placer County Transportation Commission and Butte County Association of Governments. : Mrl Kral received a B.B.A. degree specializing in Finance from ~he University of Wisconsin, Madison and an M.B.A.. degree, also specializing in Finance, from Arizona State University. He is a member of the American institute of ~ "tiffed'Public Accountants, the California Society of CPAs, California Transit Association, and Institute of Management iccoun[al'~ts. Mr. David Seidenfeld - Senior Auditor Mr. Seidenfeld has five years of auditing and accounting experience, including financial, compliance/internal control, and contract reviews. His governmental auditing experience includes the City of Los Angeles (financial and single audit), City of Simi Valley, City of Los Angeles Sewer ConstructiOn and Maintenance Fund, County.of Ventura. County of Los Angeles Department of Community and Senior Citizens Services, and Count)., of Los Angeles Department of Mental Health. Mr. Seid~nfeld received a Bachelor of Science degree in accounting from Arizona State University, Tempe, Arizona. . Staff Auditors Only full-time, qualified staff auditors from our pool of government specialists will be assigned to serve the City. All of our staff auditors have a four-year college degree in accounting or related field, and many have passed the CPA exam. Working under close supervision by seniors and management, staff auditors execute specific audit assignments..in various ~-'~'~' ~ts of an engagement. Resumes of the key management personnel are provided in the Appendices of our proposal. MaCias &Cornpany} CPAs ] ] City of 7'ustin Partner, Supervisory, and Staff Qualifications and Experience Qualim, Assurance As indicated in our proposal, ou,r firm specializes in auditing government agencies. Only qualified, experienced 7overnment auditors will be assigned to the City's engagement. They will provide you with personalized, professional, and :imely service. It is our firm's policy to have our management personnel very involved during the audit of the City. This :)olicy should ensure that the City will have someone very lmowledgeable of its operations throughout the duration of our professional contract with the City of Tustin. Thus, the City will be audited by full-time, experienced auditors (not a "trainee") who can offer quality recommendations and assist City management in analyzing difficult financial matters. The fourth general standard for government performance auditing per Generally Accepted Government Auditing Standards as defined by the Comptroller General of the United States via Government Auditing Standards, 1994 revision, ~tates that "Each audit organization conducting audits in accordance with these standards (including performance audits) qhould have an appropriate internal quality control system in place and undergo an external quality control review." We .nave a comprehensive internal quality control system in place, and we do participate in an external quality control review >rogram at least once every three years by an organization not affiliated with us. Our internal quality control system provides for an ongoing review throughout the engagement to assure conceprual ~oundness and the technical accuracy of working papers. ,~ continuous quality control system helps insure that deliverables ~e provided to the client as scheduled. We also provide for mid-point status meetings with the applicable organization as -'. forum to communicate potential reporting issues and concerns in order to eliminate to .the maximum extent possible the :iement of "surprise." Frequent communication between the consultant 'and client has proven to be an effective tool to naximize benefits'derived from the performance audit in addition to meeting scheduled time frames. A final comprehensive quality control review will be undertaken in Phase 3 to assure accurate report statements and :ara. Our project management system has proven to be effective in providing deliverables with.in scheduled time frames and 'f a quality that is in accordance with Generally Accepted Government Auditing Standards. ~'ommitment to Maintain Continuity. of Staff Our firm believes in maintaining the same management team and staff throughout the term of our contract with the riD' of Tustin. We understand that having a continuity of auditors minimizes the time that the City personnel must spe: ~' familiarize the auditors with the City's accounting records, procedures, and operations. From a business perspective, lacias & Company, CPAs also would prefer to maintain continuity of staff as our firm would be much more efficient and 3lacias & Cornnanv. ('pa ~ .~ Partner, Supervisor3.,, ', i.' Staff Qualifications and ExP. jence effective when conducting the audit of )'our City. Consequently, we commit to staffing your engagement with the same. --'~ditors from the previous year to the extent they are employed by our firm. It is also our firm's policy to oblige the City should thc City request replacement of any members of our auditing team prior to and during the course of the audit if circumstances Warrant it. Only personnel that have substantially the same or better qualifications or experience will serve as replacements. SECTION VI - PRIOR ENGAGEMIV. NTS WITH TI--I'~. CITY OF TUSTIN · Our firm has not provided any professional services to the City of Tustin or its component units within the past five SECTION VII - SIMIL~ ENGAGEB'fENTS WITH OTItER GOVERNM~E~ ENTITIES At a time when many public agencies are experiencing increasing demands for services and severe budget constraints, our auditors and consultants can bring innovation and creativity to these challenges, while searching for realistic solutions. Our staff has expertise in a wide variety of private and public settings which has provided us an opportunity to view a wide r_ange of problems and solutions. We are familiar with successful strategies and unsuccessful strategies. Consequently, our znts have found that we often have an edge in solving problems over our competitors. Our reports are known for containing practical and innovative recommendations. Please take an opportunity to verify this information with some of our clients: CLIENTS CITY OF LOS ANGELES Mr. Antonio Micra, Chief Deputy Controller 200 N. Spring Street, Room 220 Los Angeles. CA 90012 (213). 495-3695 CITY OF MODESTO Mr. Kevin Riper, Director of Finance 1012 1 Street sERVICES PROVIDED Performed the finan,c~al and Single Audits for June 30, 1991, 1992, and 199~. Assisted with City's GAAP conversion and provide,d various consulting services. Engagement Parmer: Ken Macias Engagement Director: Caroline Walsh. Total staff hours: 7,000 Currently conducting the audit for fiscal year ending June 30. 1994. · Conducted the financial and compliance audits for fiscal year ended June 30. 1993. Issued separate reports for the Single Audit, Redevelopment Agency, Tuolumne River Regional Park. Transportation Development Act Funds, Appropriations Limitation. Total staff hours : 1,200 ' Modesto. CA 95353 (209) 577-5223 Enga,ement Partner: Emie Gini Curr~'ntly conducting the audit for fiscal year ending June 30. 1994. Macias & Company, CPAs 13 CiO' of Tustin Parrner, Super~.isor3,' and Staff Qualifications and Experience C~TY OF HESPERJA Mr. Donald Fraser, Finance Director 15888 Main Street Hesperia, CA 92345 (619) 947-1441 CITY OF CALEXICO Ms. Judy Hashem. Finance Director 408 Heber Avenue Calexico, CA 92231 (619) 768-2120 CITY OF VACAVILI.E Mr. Terry Wolford, Director of Finance 650 Merchant Street · Yacaville, CA 95688 (707) 449-5118 COGNIZANT AGENCIES ":" . U.S. DEPARTMENT OF LABOR INSPECTOR GENERAL Mimi Y. Lee, CPA, Retfional Inspector General for Audits 71 Stevenson Street, Suite 720 San Francisco, CA 94105 ~'.._.__~.415) 744-6664 STATE OF CALIFORNIA OFFICE OF STATE CONTROLLER Mark Steinwert, Audit Manager (916) 445-3568 William Fong, Chief (916) 324-0961 300 Capitol Mall, Suite 621 S__.___acramento, CA 94250-58'74 U.S. DEPARTMF.,Nq' OF I'~ALTH & HTr,IA.N SERVICES Barbara A. Bennett, Director National External Audit Review Center Lucas Place. Room 514 323 West 8th Street Kansas Cin'. MO 64105 (816) 374-~714 Full-sc°pc audit, including general purpose financial statements, Redevelopment Agency, Single Audit, and State Controller reports, for fiscal years June 30, 1992 and 1993. ' Total staff hours. 800 hours Engagement Partner: Jay Siegel Currently conducting the audit for fiscal year ending June..._~30. 1994. (Ernie Gini, En2aeemen{ Partnerl Full-scope audit, including general Purpose financial statements, Redevelopment Agency, Single Audit, and State Controller reports, for fiscal years June 30, 1990 and 1991. Total staff hours: 700 hours E~ement Partner: Jay Siegel Prepared June 30, 1989, 1990, 1991, 1992, and 1993 general purpose financial statements and provided various consulting services. Prepared financial statements for Transportation Development Act. Submitted financial statements for Certificate of Achievement (COA) and received the award. Total staff hours' 445 hours Engagement Partner:' Ernie Gini Currintly conducting the audit for fiscal year ending June 30, 1994. QUALITY'REVIEW CONDUCTED Jerry Sweet conducted a quality review of our audit rep(Jrt for the City of Los Angeles for the fiscal year 1990-91. Evaluated our audited financial statements for the County of El Dorado and Count), of Tuolumne. Reviewed our audit report for the Count), of Yolo for the period Julv i. 1991 through June 30, 1992. Report met'th~ requirements Sf the OMB Circular A- 128. . There has not been an), instance where our services have been terminated by an audit client. :ferences can be provided upon request. .. Additional 3Iacias & Comvanr, CP.4.~ .... Proposal to Provide Professio_nal A_uditing Services MACIAS d- COM?A~ry Certified Public Accountants MA CIAS & COMPANY Certified Public Accountants ]x'enneth A. £rnest J. jay E. Siegel 15901 R¢cl Hill A~¢n~c Sum: 201 Tustm. CA 02680 [714) 25S-0026 FAX {714) 258-2102 CITY OF TUSTI2N Proposal to Provide Professional Auditing Services Cost Proposal ·., COPY December 5, 1994 CONTACT PERSON: Macias & Company, CPAs Kenneth A. Macias, Mamgmg Partner Ronald J. Kral, Manager 15901 Red Hil! Avenue, Suite 201 Tusrin, CA 92680 (714) 258-9026 FAX (714) 258-2102 Office Loca~ons: Sacramento * Los Angeles * Orange County. * San Francisco Bay Area MACIAS d. COMPAIvT Certified Public Accounlonl$ Ken n err .4..~tac:a~ £rnest f. Gint fa)' £. Siegel !500! Red lt~i! Su::: 2~1 Tustm. CA '~',~,xO FAX 171.~) 25x.2!02 December 5, 1994 Mr. Rona. ld A. Nault, Finance Director City of Tustin 300 Centennial Way Tustin, CA 92680 Dear Mr. Nault: Macias & Company, CPAs is pleased to submit our sealed dollar cost bid proposal to provide the City of Tustin (City) professional auditing services for fiscal year ending June 30, 1995. I certify that as Managing Partner, I am entitled to represent the fzrm, empowered to submit the bid, and authorized to sign a contract with the City of Tustin. -, We are sensitive to the city's control of costs. We believe our proposed fees reflect our experience and have also included a substantial discount over our typical ram. Our estimated hours and proposed all-inclusive maximum fees for completion of audit services for fiscal years ending June 30, 1995, 1996, 1997, 1998, and 1999 are presented on the following Schedule of Professional Fees and Expenses. proposed fees for f'zscal years ending June 30, 1996, 1997, 1998, and 1999 are based on an agreed-upon cost of living increase (not to exceed five percent per year) of the fees stated for fiscal year ending June 30, 1995. Should there be a need for additional professional services, our standard hourly rates would apply. Additional work shall be performed only if set for-da in an addendum to the contract between the City of Tustin and our fn-m. Our total all-inclusive max2muna price for fiscal year ending June 30, 1995 is S18.900. The cost of special services as descr/bed in Section ri E of the RFP is a sermrate comr~onent of the total all-inclusive maximum price. Should we be required to issue a "co'nsent and ~itafion of expemse" or any necessary "comfort letters," our proposed fee would be 51,750. Sincerely, MACIAS & COM?ANY Certified Public Accotmtan~ By: , K.e::me~ A. Mac/as, ~.~, M2.rm~g Parmer Office Locations: Sacramento * Los Angeles * Orange County San Francisco Bay Area S~DUI~ OF PROF~_$$iO~ .~--~S A~ND E~$ES FOR Tw''-~. AUDIT OF ~ Standard Quo=ed Hou=!y Hourly Hour~ Ra~es R~tes Tota ~ ParCh.ers 25 $., 150 $ 105 $ 2,625 Managers 65 105 75 . 4 ~ 875 Supez-~isory Staff 140 65 45 6 ~ 300 Staff ~.. 165 ., 40 28 4 i620 O~her (specify) · _Clerical 2~ , ~O ~0 ~0 sub~o=~l .,, ~19 S 18,900 Ou~-of-pocken expenses- Meals and Lodgin? Transpo~anion O~her (sD ~ ~-' - . ec__y) N/A N/A To=a! propcsed .=rice for !995 audi~ S Macias & Company, CPAs C~y of 7~tsrin cu%-of-pccke; expenses: Hour! Z 115 80 2,875 4,880 7,000 4,650 22 440 -- Meals and Lodqin.c 0 t_% e - (s ~- pa___y) . N/A aud£u ' - 19,845 ~acias & Comvanv. CP~ ~ ..... k~ P--~ITD I~ D · 997 F 'i2fA~CI.~L S.~A_-~~S Standard Quo=ad Hourly Hourly 'Fours ,, .RaTes Ra~e$ ~ pa_.~_ners . 25 $ 165 $ ,120 $ 3,000 Managers Supe~-Visory Staff 63 115 82 5,166 140 72 52 7,28O S~-~ 159 44 31 4 929 O=.he_ (s:ecifv): ClericaI" 20 33 23 460. Sub~o=a! a 0 7 Ou=-of-pocke~ expenses- Meals and Lodging Transpolar! on ,Or_her (specify) - N/A N/A . . .- ..... O~ 1997 audi~ Macias & Company, CPAs City of rustin Eourl y ~ ~ _ S_ 1~5 ~ 3,.125 - _ 120 84 - - 5,376 Supe~iso~f S:a:~__140 75 -- -- 55 7,700 Sta~_ - ~ 63 46 - - ~2 5,216 or_her (specify): £1¢rical. 20 _ 412 Ou=-"f--P°ck='- expense=: 23 46O 21 ,877 Y. eals and Lcd.tin% Or. her (specify) N ,/~ N/A 21 .877 Macias & Company, CPAs r.:~.. ,,-.,..,....:_ AP PE1TDI~ D I~ 99 ?--~NCI~L .Dal--~ers Managers Supervisory S~ff Sta~ O~her (smec~ ~v): __ S~o~a! 65 163 20 Stazlda~d Quoted Hourly Hourly 182 126 __ 79 48 36 130 88 57 34 24'. s 3,250 5,720 7,980 5,542 480 S 22,97.2 °u=-of-pocke= e-xpenses- Meals and Lodging TransDo~a~icn O-~her (speclfy) · N/A To-~! proposed price for aud/~ 1_o99 22,972 Macias & Company, CPAs City of Tusrin