HomeMy WebLinkAboutFin Auditing Services 2015AGREEMENT FOR PROFESSIONAL SERVICES
FOR PROFESSIONAL AUDIT SERVICES
This Agreement is made and entered into this day of 2015, by
and between the CITY OF SAN RAFAEL (hereinafter "CITY"), and MAZE ASSOCIATES
ACCOUNTANCY CORPORATION (hereinafter "CONTRACTOR").
PROJECT COORDINATION.
A. CITY'S Project Manager. The Finance Director is hereby designated the
PROJECT MANAGER for the CITY, and said PROJECT MANAGER shall supervise all aspects
of the progress and execution of this Agreement.
B. CONTRACTOR'S Project Director. CONTRACTOR shall assign a single
PROJECT DIRECTOR to have overall responsibility for the progress and execution of this
Agreement for CONTRACTOR. Katherine Yuen is hereby designated as the PROJECT
DIRECTOR for CONTRACTOR. Should circumstances or conditions subsequent to the
execution of this Agreement require a substitute PROJECT DIRECTOR, for any reason, the
CONTRACTOR shall notify the CITY within ten (10) business days of the substitution.
2. DUTIES OF CONTRACTOR.
CONTRACTOR shall perform the duties and/or provide services as described in the
Request for Proposals for Audit Services (attached Exhibit A) and pursuant to the
CONTRACTOR'S Proposal dated November 17, 2014 (attached Exhibit B) and incorporated
herein. Adjustments will be made to the scope of the single audit for any year in which the required
number of prop -rams exceed or fall short of the two programs assumed in the proposed scope. Upon
mutual written consent approved by the City Manager, the parties may amend or expand the scope
of services to meet financial auditing needs that exceed the assumed and proposed scope, within the
cost limitations described in section 4.
3. DUTIES OF CITY,
CITY shall cooperate with the CONTRACTOR in its performance under this agreement,
and pay the compensation as provided in Paragraph 4.
4. COMPENSATION.
For the full performance of the services described herein by CONTRACTOR, CITY shall
pay CONTRACTOR pursuant to the Schedule of Fees and Expenses reflected in the
CONTRACTOR'S Pricing Proposal (attached Exhibit Q, dated November 17, 2014, including the
cost of local business license taxes.
Federally required changes to the assumed number (2) of single audit programs will result in an
incremental 39 hour/program adjustment to pricing for any year in which number of programs
Rev, Date: 1/30/14
exceed or fall short of the two programs assumed in the proposed scope. Any other mutually
approved additions or changes to the scope of services described in Section 2 shall not exceed 10%
of the annual contract cost as shown in the Pricing Proposal.
Payment will be made monthly upon receipt by PROJECT MANAGER of itemized
invoices submitted by CONTRACTOR.
5. TERM OF AGREEMENT,
The term of this Agreement shall be for four consecutive years for auditing fiscal years
ending June 30, 2015 through June 30, 2018. Upon mutual agreement of the parties, the term of this
Agreement shall be extended for an additional period of two years for auditing fiscal years ending
June 30, 2019 and June 3 ) 0, 2020.
6. TERMLINTATION,
A. Discretionary. Either party may terminate this Agreement without cause upon
thirty (30) days written notice mailed or personally delivered to the other party.
B. Cause. Either party may terminate this Agreement for cause upon fifteen (15) days
written notice mailed or personally delivered to the other party, and the notified party's failure to
cure or correct the cause of the termination, to the reasonable satisfaction of the party giving such
notice, within such fifteen (15) day time period.
C. Effect of Termination. Upon receipt of notice of termination, neither party shall
incur additional obligations under any provision of this Agreement without the prior written consent
of the other.
D. Return of Documents. Upon termination, any and all CITY docurnents or
materials provided to CONTRACTOR and any and all of CONTRACTOR's documents and
materials prepared for or relating to the performance of its duties under this Agreement, shall be
delivered to CITY as soon as possible, but not later than thirty (30) days after termination.
7. OWNERSHIP OF DOCUMENTS.
The written documents and materials prepared by the CONTRACTOR in connection with
the performance of its duties under this Agreement, shall be the sole property of CITY. CITY may
use said property for any purpose, including projects not contemplated by this Agreement.
8. INSPECTION AND AUDIT.
Upon reasonable notice, CONTRACTOR shall make available to CITY, or its agent, for
inspection and audit, all documents and materials maintained by CONTRACTOR in connection
with its performance of its duties tinder this Agreement. CONTRACTOR shall fully cooperate
with CITY or its agent in any such audit or inspection.
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9. ASSIGNABILITY,
The parties agree that they shall not assign or transfer any interest in this Agreement nor the
performance of any of their respective obligations hereunder, without the prior written consent of
the other party, and any attempt to so assign this Agreement or any rights, duties or obligations
arising hereunder shall be void and of no effect.
10. INSURANCE.
A. Scope of Coverage. During the terns of this Agreement, CONTRACTOR shall
maintain, at no expense to CITY, the following insurance policies:
I. A commercial general liability insurance policy in the minimum amount of
one million dollars ($1,000,000) per occurrence/two million dollars ($2,000,000) aggregate, for
death, bodily injury, personal injury, or property damage.
2. An automobile liability (owned, non -owned, and hired vehicles) insurance
policy in the minimum amount of one million dollars ($1,000,000) dollars per occurrence.
1 If any licensed professional performs any of the services required to be
performed under this Agreement, a professional liability insurance policy in the minimum amount
of one million dollars ($1,000,000) per occurrence"two million dollars ($2,000,000) aggregate, to
cover any claims arising out of the CONTRACTOR's performance of services under this
Agreement. Where CONTRACTOR is a professional not required to have a professional license,
CITY reserves the right to require CONTRACTOR to provide professional liability insurance
pursuant to this section.
4. If it employs any person, CONTRACTOR shall maintain worker's
compensation and employer's liabiliq insurance, as required by the State Labor Code and other
applicable laws and regulations, and as necessary to protect both CONTRACTOR and CITY
against all liability for injuries to CONTRACTOR's officers and employees. CONTRACTOR'S
worker's compensation insurance shall be specifically endorsed to waive any right of subrogation
against CITY.
B. Other Insurance Requirements. The insurance coverage required of the
CONTRACTOR in subparagraph A of this section above shall also meet the following
requirements:
1. Except for professional liability insurance, the insurance policies shall be
specifically endorsed to include the CITY, its officers, agents, employees, and volunteers, as
additionally named insureds under the policies.
1 The additional insured coverage -under CONTRACTOR'S insurance
policies shall be primary with respect to any insurance or coverage maintained by CITY and shall
not call upon CITY's insurance or self-insurance coverage for any contribution. The "primary and
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noncontributory" coverage in CONTRACTOR'S policies shall be at least as broad as ISO form
CG20 0104 13.
3. Except for professional liability insurance, the insurance policies shall
include, in their text or by endorsement, coverage for contractual liability and personal injury.
4. The insurance policies shall be specifically endorsed to provide that the
insurance carrier shall not cancel, tenninate or otherwise modify the terms and conditions of said
insurance policies except upon ten (10) days written notice to the PROJECT MANAGER.
5. If the insurance is written on a Claims Made Form, then, following
termination of this Agreement, said insurance coverage shall survive for a period of not less than
five years,
6. The insurance policies shall provide for a retroactive date of placement
coinciding with the effective date of this Agreement,
7. The limits of insurance required in this Agreement may be satisfied by a
combination of primary and umbrella or excess insurance. Any umbrella or excess insurance shall
contain or be endorsed to contain a provision that such coverage shall also apply on a primary and
noncontributory basis for the benefit of CITY (if agreed to in a written contract or agreement)
before CITY'S own insurance or self-insurance shall be called upon to protect it as a named
insured.
8. It shall be a requirement under this Agreement that any available insurance
proceeds broader than or in excess of the specified minimum insurance coverage requirements
and/or limits shall be available to CITY or any other additional insured party. Furthermore, the
requirements for coverage and limits shall be: (1) the minimum coverage and limits specified in this
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Agreement; or (2) the broader coverage and maximum limits of coverage of any insurance policy or
proceeds available to the named insured; whichever is greater.
C. Deductibles and SIR's. Any deductibles or self-insured retentions in
CONTRACTOR's insurance policies must be declared to and approved by the PROJECT
MANAGER and City Attorney, and shall not reduce the limits of liability. Policies containing any
self-insured retention (SIR) provision shall provide or be endorsed to provide that the SIR may be
satisfied by either the named insured or CITY or other additional insured party, At CITY's option,
the deductibles or self-insured retentions with respect to CITY shall be reduced or eliminated to
CITY's satisfaction, or CONTRACTOR shall procure a bond guaranteeing payment of losses and
related investigations, claims administration, attorney's fees and defense expenses.
D. Proof of Insurance. CONTRACTOR shall provide to the PROJECT
MANAGER or CITY'S City Attorney all of the following: (1) Certificates of Insurance evidencing
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the insurance coverage required in this Agreement; (2) a copy of the policy declaration page and/or
endorsement page listing all policy endorsements for the commercial general liability policy, and
(3) excerpts of policy language or specific endorsements evidencing the other insurance
requirements set forth in this Agreement. CITY reserves the right to obtain a full certified copy of
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any insurance policy and endorsements from CONTRACTOR. Failure to exercise this right shall
not constitute a waiver of the right to exercise it later. The insurance shall be approved as to form
and sufficiency by PROJECT MANAGER and the City Attorney.
11. INDEMNIFICATION.
A. Except as otherwise provided in Paragraph B., CONTRACTOR shall, to the
fullest extent permitted by law, indemnify, release, defend with counsel approved by CITY, and
hold harmless CITY, its officers, agents, employees and volunteers (collectively, the "City
Indemnitees"), from and against any claim, demand, suit, judgment, loss, liability or expense of
any kind, including but not limited to attorney's fees, expert fees and all other costs and fees of
litigation,
, (collectively "CLAIMS"), arising out of CONTRACTOR'S performance of its
obligations or conduct of its operations under this Agreement. The CONTRACTOR's
obligations apply regardless of whether or not a liability is caused or contributed to by the active
or passive negligence of the City Indemnitees. However, to the extent that liability is caused by
the active negligence or willful misconduct of the City Indemnitees, the CONTRACTOR's
indemnification obligation shall be reduced in proportion to the City Indemnitees' share of
liability for the active negligence or willful misconduct. In addition, the acceptance or approval
of the CONTRACTOR's work or work product by the CITY or any of its directors, officers or
employees shall not relieve or reduce the CONTRACTOR's indemnification obligations. In the
event the City Indemnitees are made a party to any action, lawsuit or other adversarial
proceeding arising from CONTRACTOR'S performance of or operations under this
Agreement, CONTRACTOR shall provide a defense to the City Indemnitees or at CITY'S
option reimburse the City Indemnitees their costs of defense, including reasonable attorneys'
fees, incurred in defense of such claims.
B. Where the services to be provided by CONTRACTOR under this Agreement are
design professional services to be performed by a design professional as that term is defined
under Civil Code Section 2782.8, CONTRACTOR shall, to the fullest extent permitted by law,
indemnify, release, defend and hold harmless the City Indemnitees from and against any
CLAIMS that arise out of, pertain to, or relate to the negligence, recklessness, or willful
misconduct of CONTRACTOR in the performance of its duties and obligations under this
Agreement or its failure to comply with any of its obligations contained in this Agreement,
except such CLAIM which is caused by the sole negligence or willful misconduct of CITY.
C. The defense and indemnification obligations of this Agreement are undertaken in
addition to, and shall not in any way be limited by the insurance obligations contained in this
Agreement, and shall survive the termination or completion of this Agreement for the full period
of time allowed by law.
12. NONDISCRIMINATION.
CONTRACTOR shall not discriminate, in any way, against any person on the basis of age,
sex, race, color, religion, ancestry, national origin or disability in connection with or related to the
performance of its duties and obligations tinder this Agreement.
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13. COMPLIANCE WITH ALL LAWS.
CONTRACTOR shall observe and comply with all applicable federal, state and local laws,
ordinances, codes and regulations, in the performance of its duties and obligations under this
Agreement. CONTRACTOR shall perform all services under this Agreement in accordance with
these laws, ordinances, codes and regulations. CONTRACTOR shall release, defend, indemnify
and hold harmless CITY, its officers, agents and employees from any and all damages, liabilities,
penalties, fines and all other consequences from any noncompliance or violation of any laws,
ordinances, codes or regulations.
CITY and CONTRACTOR do not intend, by any provision of this Agreement, to create in
any third party, any benefit or right owed by one party, under the terms and conditions of this
Agreement, to the other party.
15, NOTICES.
All notices and other communications required or permitted to be given under this
Agreement, including any notice of change of address, shall be in writing and given by personal
delivery, or deposited with the United States Postal Service, postage prepaid, addressed to the
parties intended to be notified. Notice shall be deemed given as of the date of personal delivery, or
if mailed, upon the date of deposit with the United States Postal Service. Notice shall be given as
follows:
TO CITY's Project Manager: Mark Moses, Finance Director
City of San Rafael
1400 Fifth Avenue
P.O. Box 151560
San Rafael, CA 94915-1560
TO CONTRACTOR's Project Director: Katherine Yuen
Maze & Associates Accountancy Corp.
3479 Buskirk Avenue, Suite 215
Pleasant Hill, CA 9452' )
For the purposes, and for the duration, of this Agreement, CONTRACTOR, its officers,
agents and employees shall act in the capacity of an Independent Contractor, and not as employees
of the CITY. CONTRACTOR and CITY expressly intend and agree that the status of
CONTRACTOR, its officers, agents and employees be that of an Independent Contractor and not
that of an employee of CITY.
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17. ENTIRE AGREEMENT -- AMENDMENTS.
A. The terms and conditions of this Agreement, all exhibits attached, and all documents
expressly incorporated by reference, represent the entire Agreement of the parties with respect to the
subject matter of this Agreement.
B. This written Agreement shall supersede any and all prior agreements, oral or written,
regarding the subject matter between the CONTRACTOR and the CITY.
C. No other agreement, promise or statement, written or oral, relating to the subject
matter of this Agreement, shall be valid or binding, except by way of a written amendment to t11is
Agreement.
D. The terms and conditions of this Agreement shall not be altered or modified except
by a written amendment to this Agreement signed by the CONTRACTOR and the CITY.
E. If any conflicts arise between the terms and conditions of this Agreement, and the
terns and conditions of the attached exhibits or the docuinents expressly incorporated by reference,
the terms and conditions of this Agreement shall control.
18. SET-OFF AGAINST DEBTS.
CONTRACTOR agrees that CITY may deduct from any payment due to
CONTRACTOR under this Agreement, any monies which CONTRACTOR owes CITY under
any ordinance, agreement, contract or resolution for any unpaid taxes, fees, licenses, assessments,
unpaid checks or other amounts.
19. WAIVERS.
The waiver by either party of any breach or violation of any term, covenant or condition of
this Agreement, or of any ordinance, law or regulation, shall not be deemed to be a waiver of any
other term, covenant, condition, ordinance, law or regulation, or of any subsequent breach or
violation of the same or other term, covenant, condition, ordinance, law or regulation. The
subsequent acceptance by either party of any fee, performance, or other consideration which may
become due or owing under this Agreement, shall not be deemed to be a waiver of any preceding
breach or violation by the other party of any term, condition, covenant of this Agreement or any
applicable law, ordinance or regulation.
20. COSTS AND ATTORNEY'S FEES.
The prevailing party in any action brought to enforce the terms and conditions of this
Agreement, or arising out of the performance of this Agreement, may recover its reasonable costs
(including claims administration) and attorney's fees expended in connection with such action,
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21. CITY BUSINESS LICENSE / OTHER TAXES.
CONTRACTOR shall obtain and maintain during the duration of this Agreement, a CITY
business license as required by the San Rafael Municipal Code CONTRACTOR shall pay any and
all state and federal taxes and any other applicable taxes. CITY shall not be required to pay for any
work performed under this Agreement, until CONTRACTOR has provided CITY with a
completed Internal Revenue Service Form W-9 (Request for Taxpayer Identification Number and
Certification).
22. APPLICABLE LAW,
The laws of the State of California shall govern this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day, month
and year first above written.
CITY OF SAN RAFAEL
NANCY MA(KLE, City Manager
ESTHER C. BEIRNE, City Clerk
APPROVED AS TO FORM:
ROBERT F. EPSTEIN, City Attdiney
By: U
Name: n"W'it—tAt-1 (LAi
Title:
11
I Dpi: fMI M
Date:Issue October 15, 2014
Response Due Date: November 17, 2014, 5 p.m.
%4AYURGARY0. PHILLIPS
VICEMAVOR DATION CONNOLLY
C'MNCILMEMBER MARIBEFUl BL SI WN
COUNCILAIEMBER KATE COON
UOUNCILAIEMBFIZ ANDRLW CUN UG AN MCCULLOUGH
CITY OF SAN RAFAEL
REQUEST FOR PROPOSALS FOR AUDIT SERVICEI
The City of San Rafael (City) is requesting proposals from qualified firms for audit services for
the fiscal years ending June 30, 2015 through June 30, 2018, with the option of extending the
engagement for an additional two years. These audits are to be performed in accordance with
generally accepted auditing standards., the standards set forth for financial audits in the U.S.
General Accounting Office's (GAO) Government Auditing Standards, the provisions of the
Federal Single Audit Act and the U.S. Office of Management and Budget (OMB) Circular A-
133, Audits of State and Local Governments.
In lieu, of a pre -proposal conference, the City will accept written questions through October 3 ) 1.
Answers to the questions will be provided to all of those who confirm their interest in responding
to the RFP. The purpose of the questions is to ensure that all proposing firms have a proper
understanding of the engagement.
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Questions and RFP clarifications (accepted through 12 noon on Friday, October 31, 2010:
finance; &.eitvofsani1afael.org
To be added to the list of those receiving answers to all questions submitted, please submit
an email to the address above with "Audit RFP Questions" in the subject line. Those who
directly submit questions will automatically be added to this list.
Proposals must be received by:
Monday, November 17, 2014
5 p.m, at San Rafael City Hall
Attn: Mark Moses, Finance Director
City of San Rafael
1400 5th Avenue, Room 204
San Rafael, CA 94901-1943
1400 FI 1`11-t AVENUE - PO Box 151560 SAN RAFAEL. CA 94915-1 W
Ak'W%k,('ITYOI-SANRAr,U,[-,OR(i
The City desires the external auditor to express an opinion on the fair presentation of its general
purpose financial statements in conformity with generally accepted accounting principles.
The City combining and individual fund and account group financial statements and schedules in
conformity with generally accepted accounting principles. The auditor is not required to audit
the supporting schedules contained in the comprehensive annual financial report. However, the
auditor is to provide an "in -relation to" report on the supporting schedules based on auditing
procedures applied during the audit of general-purpose financial statements and the combining
and individual fund financial statements schedules.
The City of San Rafael for the past few years has participated in and has been a recipient of the
GFOA Financial Reporting Award. The auditor will be required to prepare the general purpose
financial. statements and combining statements for the City's Comprehensive Annual Financial
Report (CAFRI). It is anticipated that the auditor is familiar with and will provide assistance in
meeting the requirements of these programs. The City will be responsible for preparing the
introductory and statistical sections.
The respondent will also be responsible for performing certain limited procedures involving
required supplementary information required by the Governmental Accounting Standards Board
as mandated by generally accepted auditing standards.
The respondent will provide opinions as to the compliance with the Federal Single Audit Act and
OMB Circular A-133. The respondent is not required to audit the Schedule of Expenditures of
Federal Awards, However, the respondent is to provide an "in -relation -to" report on the
schedule based on the auditing procedures applied during the audit of the financial statements.
C. CITY FINANCIAL TRANSACTION PROCESSING AND
REPORTINGCLOSE
The City uses Eden Software (version 5.10.1.5) for its financial transaction processing (including
accounts payable, payroll., and general ledger). The City maintains 42 funds, including one
enterprise fund for parking services, and a private -purpose trust fund for the San Rafael
Successor Agency.
The Finance Department recently implemented ProSystern N Engagement in order to produce its
government -wide and fund statements. For fiscal year 2014-2015, the City believes it can make
available its government -wide financial statements and fund financial statements in addition to
its trial balance and footnotes ahead of the start of final fieldwork.
The Finance Department staff and responsible management personnel will be available during
the audit to assist the auditors by providing information, documentation and explanations. The
auditors will be expected to coordinate their services with the Finance Director and should
endeavor to accomplish the audit on a phased basis throughout the year to reduce the year-end
workload on the City's staff.
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To meet the requirements of this request for proposal, the audit shall be performed in accordance
with:
• Generally accepted auditing standards as set forth by the American Institute of Certified
Public Accountants (AICPA).
• Standards for financial audits set forth in the U.S. Government Accountability Office's
Government Auditing Standards (**Yellow Book"),
• Provisions of the Single Audit Act,
• Provisions of U.S. Office of Management and Budget Circular A-133, Audits of States,
Local Governments, and Non -Profit Organizations, and
• Applicable State of California audit guidelines.
• Comprehensive Annual Financial Report is to be prepared by the auditing firm., to be
issued on the fair presentation of the financial statements in conformity with generally
accepted accounting principles. The issuance of the CAFR will be no later than
October 31, following the end of each fiscal year. The audit firm will provide 15 bound
copies and one camera-ready PDF.
• Single Audit Report will include a City prepared Schedule of Expenditures of Federal
Awards. The issuance of the Single Audit will be no later than October 31, following
the end of each fiscal year. The audit firm will provide 10 bound copies of the Single
Audit report with independent opinions as to the compliance with the Federal Single
Audit Act and OMB Circular A -I33. When applicable., the respondents will provide
independent opinions as to the compliance with State granting agencies.
• Audit Report for the Child Development and Nutrition Programs in accordance with
the Audit Guide issued for financial and compliance audits by the State of California
Department of Education. The issuance of the Child Development Report will be no
later than October 15 following the end of each fiscal year. The audit firm will provide
10 bound copies of the report.
• Agreed-upon Procedures Applied to the Appropriations Limitation prescribed by
Article X111-13 of the California Constitution. The Independent Accountant's Report on
Agreed-upon procedures will follow the League of California Cities publication entitled
Article HIB Appropriation Limitation Llniform Guidelines and the recommendations of
the California Committee on Municipal Accounting White Paper covering the same
subject matter. The audit firm will provide 10 copies of the report by October 31,
following the end of the each fiscal year.
• Memorandum on Internal Control and Required Communications will be prepared
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by the audit firm to communicate any observations for improvements in the City's
financial operations and any deficiencies in internal controls that need to be addressed by
the City. The audit firm will provide 10 copies of the letter by October 31, following the
end of each fiscal year.
In addition to bound reports noted above, the audit firm will provide one electronic version of
each report to the City.
No later than January 31 of each year, the audit firm and the City will establish dates and
requirements for the interim audit (usually March or April) and final field work (usually early
September).
The City will accept proposals from firms in a two step process. Proposing firms are asked to
submit their proposals in two separate sealed envelopes: the main proposal highlighting their
technical and qualitative abilities and the second envelope with their pricing for the deliverables
and hourly rates for additional work. The City will screen the "services proposals" for the
purpose of inviting two or three firms to proposal interviews. The City will only open the
pricing of the top three rated firms from the proposal screening (the City may choose to
interview fewer than three firms). Proposals and unopened pricing envelopes will be kept by the
City until a contract is signed with the selected firm.
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To achieve a uniform review process and obtain the maximum degree of comparability, it is
required that proposals be organized in the manner specified below:
1. Title Page
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Show the RFP subject, the name of the proposing firm, local address.. telephone number,
name of contact person and date.
2. Table of Contents
i. Letter of Transmittal (limit to one page)
a. Briefly state the understanding of the work to be done and make a positive
commitment to perform the work- within the time period.
b. Give the names of the persons who will be authorized to make representations for the
proposing firm, their titles, addresses and telephone numbers.
4. Profile of the Proposing firm
a. Give the location of the office from which the work is to be done and the number of
partners, managers, supervisors, seniors and other staff employed at the office.
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b. Describe the range of activities performed by the local office such as: audit,
accounting, tax service or management services.
c. Provide any additional profile information that is relevant to the firm's ability to
fulfill the scope of work described in this RFP.
d. Describe the firm's participation in the "Peer Review" program. Provide the date and
extent of the local office's last participation. Please provide a copy of opinion of Peer
Review inspection.
5. Summary of Proposal's Qualifications (in addition to minimum qualifications).
a. Identify the partners, managers, supervisors and seniors who may work on the audit,
including staff from other offices.
b. Please specify which of those listed in "a." is licensed as a CPA with the ability to
attest an opinion on an audit.
c. For each person at the supervisory level or higher, please include their resumes as an
appendix.
d. Describe recent auditing experience similar to the type of audit requested.
Specifically, address experience related to the audit of:
• Municipalities complying with OMB Circular A-133.
).
• Describe the engagement team experience and capabilities to assist
government bond reporting requirements.
• Describe the professional activities of your firm or of the staff
members who support your commitment to governmental accounting.
• Describe any regulatory action taken against your firm, local office, or
any partners at the submitting office.
6. List of references
a. Give names, addresses and telephone numbers of five current municipal audit clients
served by your local office.
b. Include the type of services performed, dates and length of service for each.
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7. Using no more than one page for each question, please respond to the following:
a. What action is your firm taking to prepare municipal audit clients for the
implementation of GASB Statement No. 68?
b. Provide a timeline covering the period from the end of final fieldwork through the
production of the CAFR and other documents listed in Section E. Include key
activities and deliverables from both the City and the audit firm.
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8. Schedule of audit hours needed to accomplish the reports indicated in this RFP.
a. Clearly describe the position and hours of each participating member of the team to
accomplish the first year of the services and the second year of the services.
b. We understand the number of hours for a first year audit firm will be significant
higher than the hours for subsequent 'years.
c. The second year of hours should be indicative of the amount of time to be dedicated
exclusive of the accumulation of the systems and permanent audit files.
H. PRICING PROPOSAL (One copy)
The Pricing Proposal must be submitted in a separate envelope and should include the following
three components:
I Cover or transmittal page specifying that the proposing firm will honor the prices
for 90 days from the submittal deadline and who at the firm is authorized to
negotiate the prices and contract provisions on behalf of the firm.
2. A pricing schedule as formatted similar to the one noted below indicating the
prices for each component of the service by year.
3. Schedule of hourly rates for all firm positions for services outside the scope of the
proposal. Rates should be specified by position and by year. f fourly rates beyond
the first year may be indicated by the use of a fixed escalator (e.g. 3% or 4% per
year). Please do not use escalators that are not known at this time (e.g., CPI).
Pricing schedule must include all other expenses, including travel, data entry, clerical and
printing costs in the total audit fee. The proposal must be on a fixed fee basis inclusive of all
expenses and allocated as follows:
` — Option
--tiion
—
7
Optio ]
1 Year Year
------------------- ---
Fiscal Year ending-' 2015 2016 2017 2018 2019 2020
�Comprehensive Annual Financial Stints
:;Single Audit
;(assuming two major P_rogm �S)_-1—
iChild Development Report
-------------
Appropriations Limitation
Agreed -Upon Procedures Report
Total by Year
..........
Right to re -negotiate prices:
The City maintains the right to re -negotiate the prices with the selected firm before entering into
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a contract for services. If submitted prices are comparable to the other pricing envelopes opened
from the top three firms, the prices submitted will most likely be used for the contract.
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1. EVALUATION OF PROPOSALS
Proposals will be evaluated by the Audit Proposal Committee to ascertain which proposing firm
best meets the need of the City. Factors to be considered are:
1. Clear understanding of the work to be performed, the ability to meet the timeframes
for completing the indicated reports.
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2. The quality of response to the questions posed in Part G 7. (page 6)
3. The audit team's verifiable, relevant experience and independence, and demonstrated
ability to provide the services described in Parts B, D and E to similar agencies.
4. The reasonableness of hours and level of staff dedicated to complete the audit
services as indicated by the schedule of audit hours.
All proposals will be evaluated by first using the criteria of factors I through 4, after which time
the pricing proposals will be opened. After the top firms have been selected, the City may invite
up to three firms for on-site interviews. Additional, less formal interviews and requests for
information may be arranged anytime during the selection process to assist in making the final
decision.
The selected firms will interview with an evaluation panel that will include at least one member
of the City Council Finance Committee on the afternoon of December 4., 2014. Those invited to
interview will be notified by November 21, 2014. The pricing will be summarized for the
evaluation panel. Copies of the proposals of the firms to be interviewed will be provided to the
evaluation panel along with the results of the screenings,
The City reserves the right to select a firm on any combination of price, experience in auditing
governmental agencies, references and other features that are deemed to be in the best interests
of the City. All factors will be considered in the selection process.
K. ADDITIONAL INFORMATION AND CONTACT
1. The submission of a proposal shall be prima face evidence that the proposing firm has
full knowledge of the scope, nature, quantity and quality of work to be performed.
2. The City will not be liable for any costs not included in the proposal and subsequent
contracted -for costs.
1 The City reserves the right to conduct personal interviews of any or all proposing firms
prior to the award of contract.
4. The City reserves the right to negotiate the final prices for the services with the top
selected firm and the right to negotiate with any firm that submits a proposal that meets
the requirements of the City and is submitted within the prescribed deadlines.
5. The City reserves the right to reject any and all proposals, the right in its sole discretion
to accept the proposal it considers most favorable to the City's interest, and the right to
14001-11-Tii AVENLE - PO Box 151560 SAN RAFAFL, CA 94915-t';60 Page 8
'WAAV,C1TY0FSANRAFAEL.0RG
waive minor irregularities in the procedures.
6. The City reserves the right to modify the composition of the interview panel,
7. The contracting firm shall make itself available to the City Council and management to
answer questions related to audit findings.
8. Compensation for the conduct of audit service will be paid upon submission of progress
billings and of a final billing, along with the required reports.
9. The successful proposing firm will be required to sign the standard City Professional
Services Agreement, including meeting the City's minimum insurance requirements of -
a. Comprehensive general liability insurance policy in the amount of $1,000,000 per
occurrence for death, bodily injury, personal injury or property damage.
b. Automobile liability (owned, non -owned and hired vehicles) insurance policy in
the amount of $1,000,000 per occurrence.
c. Professional liability insurance policy in the amount of $1,000,000 to cover any
claims arising out of the audit firm's performance of services.
10. City staff requests that, once proposals have been submitted, no unsolicited contact
and/or discussions concerning these proposals be made prior to the evaluation of all
proposals.
11. The total audit staffing should be at a level sufficient to complete the audit in the time
scheduled and specified in the REP. In addition, the audit staff should remain constant
through each year's audit process. At least one staff member from the prior year's audit is
to be a member of the subsequent year's audit team.
Additional communications and information requests should be directed through the process
described in Part A.
Simple phone requests for copies of the City's CAM or budget information are acceptable by
calling finance staff -member Van Bach at (415) 458-5001.
Summary of Key Dates -
Distribution/Postip_g RFP- TOctober 15, 2014
— - ------- . ....... — - ------- . ....
Questions / Requests to be included on City Responses October 31, 2014 (noon)
RFP submissions November 17, 2014 (5 pm.)
Notification of those selected to interview November 21, 2014*
1 Interview with selection panel December 4, 2014*
Final selection announced December 11, 2 0 14
- — - -- — -------- . .........
City Council Approval January 5. 2015*
* These dates are subject to change at the discretion of the City-, however the City will make
every effort to adhere to this schedule.
1400 Firm AVENUE - PO Box 151560 SAN RAFAELCA 94915-1560 Page 9
WWW.CITYOFSANRAFAEL.ORG
PROPOSAL
To Continue to Provide
Professional Auditing Services
For The
CITY OF SAN RAFAEL
Submitted By
MAZE & ASSOCIATES ACCOUNTANCY CORPORATION
CERTIFIER PUBLIC ACCOUNTANTS
3478 Buskirk Avenue, Suite 215, Pleasant hill, CA 94523
(925) 930-0902 — Fax - (925)-930-0135
November 17, 2014
Contact Persons
Katherine Yuen, CPA
Amy Meyer, CPA
Vice President
Vice President
p (925)-930-0902, Ext. 248
W (925)-930-0902, Ext. 271
F2 katheriney mazeassociates.com
2 amym ,mazeassociates.com
MMUIMMIJUNUM
TABLE OF CONTENTS
PROFILE OF THE PROPOSING FXRM.... ............................. .................. ........................................ ...... .
Overview................................. .............. ........ ----.----....... -'----................. ........................
3
License {oPractice inCaDfboda---...... ... -... ......... ................. ---............. -----............... 3
Insurance................. -.......... ..... ___ .... .......... ---....... ...... .......... ....... ___ ........ -........... .........
3
Business License -----............... -.-------....... -.................. ___ ...........................................
3
Independence.... ......... ----...... --............ -___ ............. ... -.... .......... ....... ........ ..... ...............
.
National Kccu6njdou.... --...... ----..... -...... ......... ......................... ------....... -.......... -..4
--r----'--'---'--------------------'---'---------------~
Our Municipal Focus ....... ----.......... -..... -........ ---.......... ...... ...... ........ ........ .........
-6
CityClients_ ........ _-------.......... ....... ....... -_--....... ........ ..... ...... ___ ........... ........
7
Grant and Compliance Audit -............ .......... ........ ___ ......... -...... ...... ___ ............ -'8
Transportation Expeouncm---..... ....... -------------...... -------......... ____ ....... .)O
LongTerm Debt......... ......... ................ ''--'_........ ...... -....... ..... ___ ......... -....
]O
Public Financing Authorities and Mello -Roos Experience ----........ -...... ......... -....... ....... -i0
Assistive Resources .... ......... ... ....... ................. --..... -......... ----------.......... ---.....
lO
Client Training and Professional --...... .......... '---........ -........ -...... ...............
}]
Books, Periodicals, News Letters, and Professional Stundozdo---... ----......... .... ____ ... .... ......
\l
Capabilities iuGeneral Consulting and Compliance Auditing .... --------....... .......... ...... .....
|l
Professional Ac|ivih'--...... _-.-----------...... -..... ...... ............ --.----------l2
Internal Quality Assurance System .............. -......... .... .......... ...... ... ...... ...... ........... ......... ...........
l3
SpecificAudit........ -...... ___ ... ___ .......... '--........ -.......... -............ .......... '.......
l3
Specific Audit Strategy - Interim --............... .......... --_---_-'-.---....... ...... ....... 'l4
Laws Regulations and Cumoianue... ......... _--_....... -_....... ----....... ........ ''....... --l4
Specific Audit - Year End ........... ____ ...... -....... ........ -....... ......... ............ .............. .........
l5
Audit lISystems and Going Green .......... -.... .... .... .......... -.... .... -........ .-... ....... .....................
l5
Local Expertise and Resounceo-... ... .... -......... ................... ....... ... -..... -................. -...... .....
l6
Auditing Large and Complex EDP Systems ----------------...... .... -............ ......... ...
lG
Information System keview-... ...... ___ ........ ----.......... --.............. -....... .-....... ................
l6
System Controls and Transaction Cycle Processing \/ohfioatiou-.... ___ ..... _........................... .......
I7
Profiles, Access & Setup Controls ... ......... .......... .......... .----........ -........ ........ ----...... .....
lQ
Data Extraction. ----------------.----------...... ----------......... ......
|8
Assessing Risks -Interim Phuae-............ ..... ........ -............ --'-----_'............... ....
lX
Fraud Considerations ................ ................................. ....... .......... -.----.-----........... ......... ..l9
Client Tailored Risk Assessment ............. .................. .............. --.----------.......... ...........
19
Client Paticipation iothe Risk Assessment Process. ... ____ ...... ----------........... ........... -.2O
Assessing &iska-pinal Phase ..... '~.,---_...-...--._.--...-........ ........ -..-_........
20
Ability toProvide Services ooa Short Notice ......... ----...... .......... -........ ....... ....... ....... --........
20
CommunicationnndCoo,dinutiou.... ..... -----_--.............. -------_.-................ ''2l
Prompt Service and Delivery of --... ............. .... .... .................................................. ........
2|
NoDisciplinary Action ....................... .......... ........ ......................... '--.......... ...... ........ -......... -.22
Federal orState Field Reviews ..... ........... ---....................... ........... ...... --'-_-......................
22
External OuyityControl Review .......... .-..... ...... ....... -----.-------------~............
2%
PeerReview CeUmr-.... ... -....... .... ........ _--...... ---................. .................... ............. ...... ___
23
SUMMARY OF PROPOSAL'S QUALIFICATIONS ....... ........... ................... .----... ...... ..... ---
24
AuditTeam ..... ..... --- .... ................................ ... .... —..... —......... .------_—........ .......... ....
24
8mlf—... --- '...... -................ —.... ....... ..... ....... ........ ------.------..............
24
Qualifications and —.... .... —............ ......... ...... —.......... ------------------'25
RE, FERE NCES ........... —...... .... .................................... -----............. ...... --'---.--......
26
CityClient List .................................................................... ...... —................... ...... .---...................
26
ADDITIONAL—................. ....................... ....... ---............................. --....... —27
New GASB Implementation...... ...... ............................................... ----....... ....... --------'Z7
Timelime— ......... ....................... —.................... ................... —'_---.......... ----_....... —2D
AuditSchedule .......... ..... ......... .... —......... .......... —... ........... .......... ................... .......... ...... ................
30
November 17, 2014
Mark Moses, Finance Director
City of San Rafael
1400 5'1' Avenue, Room 204
San Rafael CA 94901-1943
Dear Mark:
A
M AZ E
ASSO CIATES
We appreciate this opportunity to submit our proposal to continue to provide external audit services for the
City of San Rafael. We agree to audit the basic financial statements of the City as well as assist with the
preparation of the Comprehensive Annual Financial Report (CAFR). We will also perform additional
services as specified in the City's Request for Proposal, within the time periods established by the City.
We are quite certain we are the most qualified firm to be your independent accountants. Maze &
Associates began operating a quarter of a century ago, and since that time, we have rigorously employed
our philosophy that "We are in Business to Help our Clients Succeed"! Our clients know froth
experience we employ a variety of techniques, technologies and strategies to maximize effective and
efficient audits without shifting our work onto our Clients staff. We have summarized our reasons below
and explained them in depth in our proposal.
We are the best-known regional municipal audit firm in Northern California. Over our twenty-
eight year history, we have achieved national recognition with the consistent high quality of our work
and with our leadership on issues such as bankruptcy trends and implications, Redevelopment
Agency dissolution, GASB Statement 45, GASB Statement 34, Y2K, and municipal investment
losses.
Municipal auditing is our main business. We believe we have the necessary qualifications and are
your best choice,
• We annually audit over 200 municipalities including special districts, joint powers
authorities, successor agencies, housing authorities and financing authorities,
L- Z:�
• We currently have forty-four City clients ranging in size from small towns to large complex
cities, including seven with populations in excess of 100,000.
• We have experience auditing several dozen large enterprise operations, some operated as
departments or funds of our City clients and others operated as stand-alone independent
special districts and authorities.
• We conduct three dozen Single Audits annually.
• Our firm does not make the newspapers very often, but when it does, it's for doing our
job, See Proposer Qualifications — Reputation for details.
We currently prepare the annual required filings for the State Controllers Office, including the
Annual Report of Financial Transactions and Street Report, for many of our municipal clients.
T 925.930.0902
Accountancy Corporation F 925,93c0135
3478 BunirkAvema,Sure215 E
I
Ra3sant 11, CA 94523 W mazeassociates,corn
Our Partners are actively involved in planning, conducting and completing the audit in our
it,
client's offices and our Partners are available when you need them. We resolve issues on the spot
while the audit is being performed.
When our Partners communicate with you, the Council and Committees, their knowledge is based on
detailed specifics, not information which has been filtered through several layers of review.
We have a long term track record of client retention beyond our client's original contract terms
because of the quality of our service. Please pay special attention to the client start dates on
page 7.
Our audit staff average more than 80 hours of training in municipal auditing and accounting
and 1,500 hours of municipal audit experience each year. This means you do not train our staff!
We are an Equal Opportunity Employer.
➢ With our qualified information security staff we have developed and employ a number of
technologies to streamline our audit process, ensure open channels of communication and data
transfer while securing the confidentiality of client data. These technologies include LANs, a VPN,
"Leapfile" data file transfers, "Mimecast" email protection software, paperless audit workpapers, and
a major upgrade of our "direct downloads" technique elkninating manual financial statement inputs
and maximizing easy to use financial rollup reports.
Up to half our total audit time is spent at interim each year, ensuring a smooth year-end audit.
Our interim audit includes much of the work other firms postpone to year-end; we even begin the
preparation of the financial statements.
We have never been stied over deficient work, although we are proud to say we were stied for doing
our work too well! See Proposer Qualifications - Litigation for details.
r -I
Our references - indeed, any of our clients, will confirm we are your best choice.
As with all our audits, we are committed to continuing to provide timely, quality audit services to the City
of San Rafael. We have no doubt that we are the firm best qualified to perform the services described in
the request for proposal. After you have analyzed our proposal and - most important - talked with our
references, we are quite confident you will agree. The proposal is a firm and irrevocable offer for a
period of sixty days from the date of this proposal.
Katherine Yuen, Vice President, and Amy Meyer Vice President are authorized to represent, sign for and
contractually obligate Maze & Associates, a Professional Corporation, located at 3478 Buskirk Avenue,
Suite 215, Pleasant Hill, CA, 94523, (925) 930-0902.
We look forward to the opportunity to continue to work with the City!
Yours very truly,
O nil Rodricz
JR:smg
2
PROFILE OF THE PROPOSING FIRM
Overvieiv
We are a professional services corporation located in Pleasant Hill, California. We presently have a total
of forty-seven people, including eight shareholders, two Directors, four Managers, seven Supervisors, ten
Z� C,
Senior Associates, ten Associates and six Office Staff. Fifteen of our professional staff are California
Certified Public Accountants and two additional staff are in the process of completing their applications
for licensure. All of our professional staff comprise our governmental audit staff, as our firm's emphasis
is on governmental auditing and accounting. Several of our professional staff have national accounting
firm experience, which we have blended with the more personal approach of a smaller firm.
Most of our clients are cities or other municipal entities and we do this work twelve months of the year.
We limit our practice in other areas and focus on being the best municipal audit firm in Northern California.
Our clients include several cities similar to the City of San Rafael in size. Our audit strategy is tailored to
municipalities and is quite different from the traditional approach adapted from commercial clients by
general practice accounting firms.
We have focused on municipalities since our inception in 1986. We are active in GFOA, CSMFO and
CMTA, and our Partners have been speakers at many GFOA, CSMFO and CMTA functions,
We are in business to help our clients succeed. We help you use the ever-growing, tangle of accounting
rules property, but to your best advantage, by helping you keep out of trouble and helping you do the right
thing. We stay in touch throughout the year to keep you abreast Of municipal accounting developments and
Z� Z_
to help you avoid problems, instead of coming in afterwards to assess the damage. We rotate our audit
emphasis based on our planning meetings with you so areas that concern you can be addressed as a normal
0
part of the audit at no extra cost.
License to Practice in California
Maze & Associates is a properly licensed California Certified Public Accounting firm. We are members of
C�
the Government Finance Officers Association (GFOA) and the California Society of Municipal Finance
Officers (CSIA/1170) as well as the American Institute of Certified Public Accountants and the California
Society of Certified Public Accountants.
All assigned key professional staff are properly licensed to practice in California. Those staff that are
certified public accountants have Current California CPA licenses in the attest function, and have received
more than twice the required level of continuing education, including the credits specifically required in
the area ot'governmental audits. See Partner, Supervisory and Staff Qualifications and Experience — Audit
Team for the resumes of the Proposed audit team.
Neither our firm nor any of our employees have a record of substandard or unsatisfactory performance, nor
have any claims ever been filed with any State Board of Accountancy against our firm or any of our
employees.
Insurance
Maze & Associates maintains professional, general liability, worker's compensation and automobile
insurance at limits which minimally will rnect those required by the City of San Rafael. All insurance will
remain in effect through our entire term as the City of San Rafael's auditors.
Business License
We will obtain a business license from the City of San Rafael when we have been awarded the contract
for professional auditing,, services.
PROFH,E OF TE PROPOSING FIRM (Continued)
Independence
As independent auditors, our most valuable asset is our independence. Unlike many firms, we have
never allowed our independent audit function to be used to promote consulting or other work. In fact,
consulting and related work have never amounted to more than a few percent of our total revenues, while
our independent audit work has amounted to over eighty percent of our revenues.
Our fine and all our partners and employees are independent of the City of San Rafael and its component
units as that tern is defined by the General Accountability Office's Government Auditing Standards, the
American Institute of Certified Public Accountants, the California Society of Certified Public Accountants
and the California State Board of Accountancy. We have no present or past professional relationships with
the City or any of its Council members or employees that would compromise our independence.
We will discuss in advance with the City any professional relationships being contemplated during
the period of engagement that may present a potential conflict of interest. If the City and we believe
any such relationship presents a conflict of interest, we will not enter into it.
National Recognition
We first achieved national recognition among accountants when we identified problems with municipal
investments in April of 1994, months before the same problem drove Orange County into
bankruptcy. While others dithered, we prepared our clients for the inevitable questions by alerting them
immediately to the problem, working with GASB to address the accounting issues involved, and increasing
our clients' financial statement disclosures so that the questions which came later were already answered un
the financial statements. We were pleasantly surprised to see that a key disclosure element of GASB 40
is investment maturity data. Some of our client's have included maturity data in their CAFRs since
1994, when we recommended it as a way of reporting liquidity to financial statement users.
In early 1999, when most accounting firms were saying that Y2K uncertainties would affect their
audit opinions, we tool: a different stance. We said full disclosure of the steps taken to prepare for Y2K
was sufficient for us to issue an unqualified opinion. By this tune our national reputation was such that
GASB used our refusal to follow the majority as leverage in negotiating a compromise on the Y2K issue
with the American Institute of CPAs.
In the years before the issuance of GASB 34, we developed a full-blown alternative to GASB's heavily
criticized Dual Perspective proposal. Our alternative received favorable written comments from over
one hundred and twenty-five cities and prompted many of the major changes made by GASB before
they issued GASB 34. We received national recognition for this effort and one of our Partners was named
to the GASB 34 Implementation Guide Task Force.
I PROFILE OF THE PROPOSING FIRNI (Continued) I
We have stayed active throughout the years in alerting our clients to potential issues by recognizing
important trends and advising our clients of their impacts well before they become effective. We noted
C�
years before GASB 45 became effective that advance funding other post employment benefits had
significant long term savings potentials and since 2007, we have emphasized to our clients the need to pay
careful attention to the shift in the municipal debt markets from one based on insurance to one based on
credit worthiness.
Our work quality and financial statement clarity have earned us a solid national reputation with
underwriters, bond counsel, financial advisors and others involved with debt issuances. Our clients have
been involved with a broad variety of debt issues and refundmas over the years, and the quality of our work
has never been an issue. Underwriters have praised our financial statements for being very clear and easy to
understand.
Reputation
We believe quality and an emphasis on doing our job right is far more important than being cheaper than
our competitors. Despite the economic pressures faced by municipalities and the need to save money,
there are other, more serious concerns to be weighed. Those being perceived or actual audit failures in
the municipal audit sector. The City of Bell news, especially the State Controller's Office Report on that
City's audit firm, is raising serious questions about municipal audit quality. Whether this is justified or
not isn't really the issue. What is at issue is the perception of poor quality in municipal audits. We have
received a number of inquiries and requests for proposal from that firm's clients who desire a change in
auditors. A former client of ours, which rotated to them several years ago, called us and asked if we
would propose on the City's work. That Council simply did not want to expend the energy to defend
whether that firm is providing quality work.
We received calls from other municipalities with a different audit firm that released their fiscal 2009-10
audit reports late. The reason - the audit firm merged and rc-merged in fiscal 2009-10 and the new firm
I -
placed a "quality control review" on municipal audits. The end result was that CAFR extensions were
needed for 2009-10.
These trends indicate that it would unwise to reduce audit effort for any municipal audit. Our commitment
to quality and preserving our Firm's reputation remains our top priority and serves our clients best.
Clients tend to remain with Lis through their difficulties. Consider for a moment high risk audit
environments, which are those entities undergoing financial stress, bankruptcy or fi-aud. For example,
these clients are still clients today:
4- Richmond - Financial Stress (FYs 2002-05)
-,� Millbrae — Financial Stress (FYs 2002-05)
We think there are two other clients worth -v of comment.
In early 2009, the City of Los Banos discovered fraud originally estimated at $400,000. This was the
second case of cash receipts fraud at that City within five years, The Los Banos Council instructed staff
to replace the then audit firm with a "credible auditor" - they hired Lis. After that City's forensic auditor
completed their investigation, the actual fraud was revised to $1.7 million. Our audits revealed numerous
material weaknesses in cash receipts and billing controls. It is clear to us that the weaknesses had been
present for many years and that the weaknesses were obvious. That City no longer believes a cheap audit
has value.
PROFILE OF THE, PROPOSING FIRM (Continued)
Lastly, we used to audit the City of Pacific Grove. In our first audit in fiscal 2003-04, we determined that
their General Fund cash balances were not sufficient and included our comments in the year end
management letter. Our firtir made the local paper. The article was titled: "Auditor Warns P. G.
Council!" We are rarely in the news, but when we are, it is for doing our job.
Our /Municipal Focus
We have focused on municipalities since our inception in 1986. We are active in and our Partners have
been speakers at GFOA, CSMFO, CMTA, and the CaICPA Education Foundation.
Our practice includes forty-tvvo city clients and forty-one city and special district CAFR award
winners—more municipal clients and more award winners than any other Northern California
accounting firm or international firm branch office. Included in those totals are six award-winning
Special District CAERs. Eighty percent of our practice is municipal auditing, accounting and consulting,
continuing throughout the entire year. Our growth can be seen in the graph below, which shows the growth
in the number of our total municipal entlih, clients in blue, City audit clients in greeji and '.y1 1: award
winners in
160
150
140
130
120
Ito
100
90
80
70
60
50
40
30
20
10
1998 19991 2000 2001 2002 22003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Every one of the above CAFR.9, won awards from GFOA and/or CSMFO.
I PROFILE OF THE PROPOSING FIRM (Continued) _J
grim=
The table below summarizes our most recent experience with audits of cities. We are responsible for all
phases of the work on, these clients. All of this work represents recurriug annual audit and related
work; all this work and that presented in the table was completed on or before the deadline from the
first year listed for each client.
Trans-
Retire -
Sill -lie
portation
raenZ
Fiamwing
City
Sitar
f,,'Al7lZ
RDA
Audit TDA
N'leasure
Flails
Corp.
Population
> 100,000
Daly City
Hayward
i
v
ffichmond
20Wz
Roseville
V'
TM
Santa Clara
i0i_,
v/ I/
sunnyval-,
7 Of
V
V, ✓
Vallejo
Alameda
191 0
Atherton
201i`1)
Belmont
19%1
Benicia
Brentwood
7(in-
VI
Brisbane
_q
V,
Cupertino
200
I"
"I ✓
Dublin
2�
01-1
e
V,
V,
El Cerrito
10W;
v
V/
Fairfax
20W)
Gait
2Ci
V,
I
Half Mean Bay
24174
Larkspur
V'
Lathrop
V,✓
Livermore
Los Altos
V,
V,
MantecaV/
Martinez
Millbrae
V
v
Milpitas
V, ✓
Moraga
Mountain view
f0l, i
V,
Oakley
Petaluma
I/
Piedmont
2U07
Pittsburg
I
Ponola Valley
Rancho Cordova
V I i 9,
San Leandro
I
San Pablo
San Rafael
2007
✓
San Ramon
2: i 4
Sausalito
-06
J
South San Francisco
26"l
Turlock
2tiI3
I PROFILE OF TRE, PROPOSING FIRTNI (Continued) I
As you can see from the client list on page 7, we have a winning combination that has resulted in strong
client loyalty and retention. Several clients wlio left have returned after seeing the difference between our
firm and our competitors. Others have remained our clients after completing a full-blown proposal
process, most recently Brentwood, Manteca and Belmont.
Grant €a€ Complianee A utfit Experienee
Our pertinent Non -Transportation Single Audit Act experience is graphed below:
.4 o' a n i a vt
FIT d owol c it t
I lieaI th
Eivi ro o
ad Urban
ior the Arts
1 1"—!T':i,-:
MVelap-
flamelml
x the
Human
Prok!Cti,)n
Client in -at Justice
Security
Agriculture
Defense
Commc—e-o
Interior Roincnifie";
Services
Alameda
American Canyon
ABAG
::Belmont
:Concord
Daly City
s!
M
Davis
EBNf(JD
East Palo Alto ja
21
El Cerrito Is
M
,EID
Food Batik
t
Livermore
Manteca
Martinez 2 2
Milpitas 111 z
L
H
bdountam View 2 a
14
Napa
3
Palo Alto
Rancho Cordova
Richmond ff
is
Roseville
WFTA
San Pub -to
San Rafael
VFPD
So, Lake Tahoe M
S),San Francisco
Suisun City is a
Sunnyvale M
A
tti
Vallejo
Waterford
lWest Sacrament;
I PROFILE OF THE PROPOSING FMI (Continued)
Our pertinent Single Audit Act and Transportation grant experience is graphed below:
c�
T
Airport
fliglivray
SUP1
Tw5u/ Idle-'Cle
Impraverseni
Planning &
Transit
U msu cs A,
SLTPP/
Yarn- tides Tian
Program
Construction
& Other
U & V
ISM
Transit Trall
NUD
AC Transit
ACTIA
ACTA
4
+
I
Alameda
�
American Canyon
ABAG
0
0
Atherton
4
Belmont
4
Brentwood
4
OCTA
II
Concord
Daly City
Davis
East Palo Alto
El Cerrito
Galt
Larkspur
Livermore
is
�
11 4
LAVTA
-4
Los Banos
4.
Manteca
Martinez
1)
Millbrae
4
4
Milpitas
#
#
4
Modesto
+
4
4
Mountain View
Napa
-41
Oakley
Peninsula Corridor Joint powers Board
4
Palo Alto
Formic valley
Rancho Cordova
Richmond
Roseville
Sao Carlos
Sao Mateo Transit District
+
San Marco County Transportation Authority
Sell Pablo
Sun Rafael
Solana, Trans Authority
0
4
South Lake Tahoe
0
0
South San Francisco
6
Suisun City
4
Sunnyvale
Vallejo
Water Frntrgency Transportation Authority (WETA)
Waterford
West Sacramento
4
WoodsidesA
PROFILE Or, THE PROPOSLNG FHM (Continued)
Transportation Experience
We have experience on both an international airport, (e.g. San Francisco) and on regional client airports
including Hayward, Livermore, South Lake Tahoe, Modesto, Rio Vista and Visalia. Our experience
includes important segments such as, concessionaires and lessees, hangar rentals and construction, Federal
Transit Assistance programs, fuel farms and assisting in the evaluation and ranking of Airport Operator
proposals.
Our Transportation experience includes audits of airports, fixed -route transit, paratransit and ferry transit
operations funded by State Transit Assistance, Federal Transit Assistance, County voter approved
transportation grants and Transportation Development Act grants received under Articles 3.0, 4.0, 4,5 and
8.0. We have also audited Article 3.0 projects Such as bike paths, wheelchair ramps and trails and
Proposition 113 projects,
Long Terin Debt Experience
Because of our depth of experience with municipalities we have experience with virtually every debt type
and structure. We have experience auditing revenue bonds, certificates of participation, special assessment
Z7
bonds, Marks -Roos bond pools, capital appreciation bonds, variable rate demand bonds, auction rate bonds,
bond anticipation notes and bonds/swap agreements with synthetic fixed interest rates. Our experience with
swaps by client including the total notional amount follows:
• Contra Costa Transportation Authority - $3 ) 00 million (Forward Swap corrunitment)
• City of Richmond - $199 million, including a counter swap
• City of Pittsburg - $156 million
• City of Roseville - $115 million
• South Placer Wastewater Authority- $94 million
• City of Modesto - $62 million
• City of San Pablo - $36 million
• East Bay Municipal Utility District - $90 million
Publie Financing Authorities and -Hello -Roos Experienee
We have performed audits of Public Facilities Financing Authorities and Mello -Roos districts and designed
firiancial statements that went beyond required disclosures to include Inception -to -Date information about
capital projects. These disclosures can allow the reader to see and understand the entire scope and cost of
capital projects, even though they may not remain on the Authority's books after completion.
We are familiar with public financing authorities and the accounting and auditing problems that can arise
with their use. We have many clients that use financing authorities in issuing debt. We have considerable
experience with the "blending" of financing authority funds with other City funds.
Assistive Resources
viii ,
Uri client suppo—It is ujimi-atChed by any other fain. As a San Francisco Bay Area municipal audit niche firm
with five audit partners, we are positioned perfectly to provide staff and Council with a wide variety of
resources. Support ranges from turn key financial statement drafts with linked footnotes and direct
download -based financial statements to professional continuing education sessions. We are active in
professional organizations affecting local government and have a strong presence in neighboring local
governments which keeps our knowledge current that we readily share with our clients. And we do not
charge extra for the five minute phone calls throughout the year.
10
I PROFILE OF THE PROPOSING FMNI (Continued)
Client Training and Professional Development
We can provide you with varying levels of training and professional development resources. We provide
our semi-annual continuinc, education to our staffand have on occasion opened it Up to Our clients who wish
to keep their licensees current. We have also developed and conducted training specifically for our clients.
Training can be general theory in nature, semi—customized or fully customized training that fits your
operations. Theory intensity can be at the beginning, intermediate and advanced levels. On occasion, we
have provided our clients with shorter presentations of new pronouncements and other requirements. At the
City of Richmond, for example, we developed and taught monthly training sessions on virtually every major
finance area to its staff over a twelve month period. Much of their staff assumed new functions in the
aftermath of serious staffing cuts several years acro and their Finance Director was seeking an economical
method of enhancing their knowledge base and skill sets. At the City of Livermore, we provided customized
training on capital assets to their finance staff and grants management training to several departments as a
means of solving coordination weaknesses.
C,
Books, Periotlicals, News Letters, and Professional Standards
We provide Our staff and our clients, if they wish, all of the resources they need to complete their work
efficiently and effectively. Our resources include all AICPA Professional Standards, AICPA Audit and
Accounting Guides, GASB statements, interpretations, implementation guides and concept statements,
FASBs, ARBs, APBs, Generally Accepted Government Audit Standards (The "Yellow Book"), Single
Audit Regulations and website links to OMB Circulars, the SF -Sac Data Collection Form and instructions,
website links for CFDA numbers, the Code of Federal Regulations and publications of the Government
Accountability Office. We also have GFOA documents such as CAFR Checklists, the Governmental
Accounting, Auditing and Financial Reporting Guide (the "Blue Boole'), the GAAFR Review, and ACWA
newsletters. We maintain all up-to-date library of guidelines and other documents we use such as cash and
investment guidelines, and Transportation Development Act regulations and guidelines, Transportation
.Measures; A, B and J guidelines and regulations. And, we attend conferences by CSMFO, ACWA, AIPCA
and the CaICPA Education Foundation to keep ourselves current.
Capabilities in General Consulting and Compliance Auditing
We also provide a variety of other services which you may need, including:
Temporary Accounting Assistance - When we are not limited by independence regulations, we
have provided additional accounting help in areas such as:
Construction in Progress Accounting Capital Assets
Owner Participation eemen
AJg t/Disposition and General Ledger Journal Entries
Development Agreement Accounting
Forecasts and Projections ➢ Debt recording
Grant Management Account analysis and cleanup
4- Preparation of Controller's Reports and annual filings - We can prepare any of the following
whether you are an audit client or not.,
State Controller's Reports for: Annual Street Reports
Za Cities Information Returns
® Special Districts, or
* Transportation Planning Agencies
II
PROFILE OF THE PROPOSING FIRM (Continued)
,.'* Training and Continuing Education — Generic or customized to fit your needs!
Governmental Accounting - Beginning,
Intermediate and Advanced Levels
Grant Accounting and Management
'Bank Reconciliations
Management and Accounting
➢ Cash and Investments
-« Operational Segment Audits such as:
Cash collection controls and procedures
Loans receivable management
Accounting for Receivables and
Revenues
>, Accounts Payable and Purchasing
Capital Asset Accounting
Debt Accounting and Management
Information System Security and
Microsoft training
r- Police evidence room
> Cal -Card and Purchasing Card
Project Length Audits such as Construction in Progress project audits and Joint Powers Authority
member equity calculations.
LLease/Fi•anchise/TOT/Independent Operator Agreement Audits including rent recalculations,
revenue controls, payroll/independent contractor compliance and more.
-:- Pre -award Operator/Contractor Analysis and Audits, such as
Preaward audits of Engineering Firms funded by CALTRANS
Independent Analysis of Proposed Airport Operators
➢ Independent Analysis for Prospective Fire Service Providers
-. Information Systems Support customized to fit your needs-
➢ Information System Reviews and Audits
Network Vulnerability Scans
➢ Security and Access Reviews
Professional Activity
Security and Microsoft Certified Training
Microsoft Small Business Specialist
Microsoft Professional Accountants
Network
We are active members of the Government Finance Officers Association and the California Society of
Municipal Finance Officers as well as the American Institute of Certified Public Accountants and the
California Society of Certified Public Accountants. We are also a member of the Association of
California Water Agencies (ACWA). We are frequent speakers at various organizations; some of our
pertinent presentations are listed below:
In May 2009, Cory Biggs, our former CEO, was a speaker at the annual Governmental Accounting and
11 'on Foundation of the Callilfbinia Society of Certified Public
Auditing Conference hosted by tine Educations I I I I r
Accountants. This annual conference is held for CPAs for the purpose of keeping CPAs current on issues
affecting Governmental Accounting and Auditing. At the conference, Cory presented "The Auditor's
Perspective" on auditing municipalities on the verge of, or in bankruptcy. His presentation followed
remarks made by the City of San Rafael Assistant Finance Director and the City's bankruptcy attorney,
He was also requested to provide an update at the 2010 conference.
IN
PROFILE OF THE PROPOSING FIRl`vI (Continued)
Also in 2009, Cory spoke at the semi-annual conference of the California Municipal Treasurer's
Association on "Maintainine, a Good Relationship with Your Auditor" in which he discussed techniques
for treasury staff to use when working with auditors to achieve a meaningful, thorough audit process. This
discussion included a heavy focus on cash and investment processes and procedures, compliance,
financial reporting and disclosures.
In August 2007, Cory presented Trust Fund Alternatives for Funding Retiree Health Care Benefits at a
symposium sponsored by ABAG.
In August 2006, Cory, made two presentations at a Symposium on the Implementation of GASB 445,
C,
sponsored by ABAG. One presentation was a summary of the Statement and its impacts on
municipalities and the other presentation explored funding options and ramifications of the Statement.
Z�
In February 2006, Cory presented "Cost Impacts from Implementing GASB 45, Accountin of Financial
Roprthigy by Employers for Post -employment Benefits Other then Pensions", to the San Mateo Finance
Officers Group. He was also a speaker at the 2005 CSMFO Annual Conference, on "How to Stay Out of
Trouble" regarding identification of adverse fiscal trends in local governments and appropriate responses.
We attend CSMFO Northern California chapter meetings on a regular basis, and we have served as
speakers on various occasions. We all attend the CSMFO Annual Conference, at which our Partners have
been speakers. We have also attended the League of California Cities' annual Financial Management
Seminars.
Amy Meyer and Katherine Yuen serve on the Governinental Accounting and Auditing Committee of the
California Society of CPAs.
Internal Quality Assurance Sjisten,
Every one Of Our audit and assurance engagements has an Engagement Partner responsible for the
successful completion of the work as well as ensuring we maintain quality levels that satisfy professional
standards. Our very high Partner to staff ratio of one to five is double that of traditional firms. We
specifically structure our work for on-site Engagement Partner participation while the audit is being
conducted. This structure is done by design to ensure we have active on the job oversight of staff and
timely completion of the work.
We have always subjected our audit and assurance engagements to a second Quality Assurance Review.
Historically this was performed by a second partner. However, over the past several -ears audit quality
controls standards have been revised and enhanced. Standards issued by the American Institute of
Certified Public Accountants and General Accountability Office now form the guidance in determining
adequate quality controls for audit firms. While not required by the Standards, we believed it would be
better to have an independent second review of the work by someone without engagement responsibilities
and to have that person report to the shareholders directly as a group rather than any one shareholder.
Spec" AudiiApproac'
it
Our audit strategy is designed specifically for municipalities. We perform half our audit well before year-
end so we can identify problems early. Our strategy maximizes our efficiency and lessens the load on our
clients. When engaged to prepare the financial statements, we prepare proformas of them for your
review, well before year-end and we give you detailed interim and final -phase checklists of all the items
we will need from you months in advance. We have integrated GASB 34 requirements into our strategy
so that there is a searnless transition to the entity -wide statements.
13
PROFILE OF THE PROPOSLNG FIRM (Continued)
We will plan the audit in detail and prepare an Audit Plan which details the information we will need
from you to complete our interim and year-end audits, along with the person responsible for preparing it
and the date they will have it ready. We tailor it to refer directly to the schedules you already prepare.
We do not require special reports or reconciliations just for our audit. We have -found that
coordinating our team and our client's staff works very well because it helps minimize the impact on your
staff at year end. This way the Audit Plan includes most data we need from you so you and your staff can
plan and schedule your work accordingly. Our clients know from prior experience with our firm, that
we excel at minimizing our impact on City staff.
Specific Audit StrategyInterim
Unlike older -style firms, we perform most of our important work at interim, well before the end of the
fiscal year. We use our interim work to identify and solve problems and plan the year-end closing and
audit in detail. Well before we begin our interim work we'll send you a list of the items we'need, so you
will have time to prepare.
We forecast many year-end amounts at interim, so that we can limit the amount of work required at year-
end and concentrate instead on areas of concern. For example, we normally perform all our cash and
investment testing at interim, including sending confirmation letters to depositories and determining
financial statement categorizations, Performing these last two steps at interim allows plenty of time to
follow up on confirmations or resolve questions about the proper categorization of an investment without
delaying the audit, As another example, we test long -ten -n debt at interim and forecast year-end balances
and transactions for each debt issue.
We use remote inquiry as much as possible at interim, in order to increase our efficiency and reduce our
impact on your staff. We can download Council Minutes and other documents from your Website for
review. Combining these abilities with our checklists has allowed us to perforin larger portions of the
audit in our own offices and reduce our questions to writing so that you have more tune to deal with them.
Laws, RegqulationN and Camplianee
Our audits are designed to ensure that we test transactions for ng
compliance with the Single Audit Act and
p 0
other applicable laws and regulations, including the California Government Code, provisions of
applicable Grant guidelines, California Constitution Gann Limit requirements, requirements of local
measures, Transportation Development Act requirements, etc. We identify applicable laws and
regulations as part Of Our audit planning each year.
The California Government Code has many provisions and underlying regulations relating to investments
and the investment policy, all of which are tested as part of our audit of cash and investments. That Code
and the underlying regulations also form the basis of our compliance audit tests of Housing Successors,
Child Development Programs, debt and other areas.
14
PROFILE OF THE PROPOSING FIRM (Continued)
To the extent possible, we also begin our tests of compliance with laws and regulations at interim,
including use of the OMB Circular A-1313 and the Compliance Supplement and any other applicable
compliance guidelines. Even if the work cannot begin until year-end we determine the applicable laws and
regulations for our compliance testing so that we may incorporate the necessary information in our year-end
closing checklist. Our audit samples for purposes of compliance vary based on the grant or compliance
guidelines and are program -specific. The samples are stratified to ensure we test transactions that are
representative of the costs charged to grants,
Specific Audit Strategi—Year End
At year-end we do not repeat any of the work we performed at interim. Instead, we focus on the items in
your Audit Plan and on the Basic Financial Statements. Our year-end audit field -work actually starts
in our office, so that when we do arrive in your offices we are fully prepared and we minimize our impact
on your operations.
In our offices, we cross-reference or reconcile your Audit Plan information, reports and schedules. The
Engagement Partner performs our detailed Analytical Review and emails our questions to you in
advance of our arrival in your offices. Our experience is that this Analytical Review identifies any
issues remaining after our interim work, as well as most potential audit adjustments. This gives all of us
time to address these items in person while the audit field -work is proceeding, instead of by telephone,
fax and e-mail afterward.
When we start work in your offices, we will need you to complete your responses to the Analytical
Review, but we will not need much of your time and we will not ask for more schedules or reports. Our
Engagement Partner and Supervisor will meet with you on the first day of the year-end audit to discuss
any remaining unanswered Analytical Review questions, review the status of the year-end closing and to
determine if modifications to our year-end approach are needed. This meeting sets the stage for the year-
end audit.
At the conclusion of our year-end work, our Partner and Supervisor will review the final financial
statement drafts with you and your staff. The following week, our Quality Assurance Director will
perform a "quality assurance review" of the financial statements and workpapers so that we will be ready
to sign the financial statements as soon as the City approves them.
We designed this strategy specifically to fit cities and the complications introduced by GASB 34. It
requires our Partners to be fully and actively involved in the planning and performance of the work and it
allows us to `ssue final firiancial statements and reports inimediatelly after we finish our field -work m your
offices.
You will find our strategy allows you to control the audit process, enables you to spread the work over the
year as you wish and greatly reduces the pressure at year end.
Audit IT Systems, Security and Going Green
Hand-in-hand with our continuing investment in our people has been our 'increased investment in systems
and hardware support. Eight years ago our systems work was handled by an outside consultant. Today, we
have a full-time staff of three people who maintain our state-of-the-art systems capabilities and
provide increasing levels of such service to our clients.
15
PROIFILE OFi THF, PROPOSLNG FUM (Continued)
Every person on our staff is provided with a Windows operating system PC networked with other audit team
PCs and a printer via our own wireless LAN establish at the start of each audit in our client's office. In
2008, we completely eliminated hardcopy workpapers by converting to ProSystems fx Engagement
paperless audit software published by Commerce Clearing House. We use Word as our word processor and
Excel for preparation of financial statements and schedules and Outlook for personal information
management.
Because of our shift from hardcopy documentation to softeopy and our obligation under professional
standards to maintain confidentiality of client data, we instituted state-of-the-art security protections to
ensure client data remains confidential and secure. For example, many CPAs use email as a method of
communicating financial data to and from clients. But emails are not secure communications! We therefore
employ a secure data file transfer system called "Leaffile" under which we exchange data files with our
clients using a secure website. This keeps data confidential and has the added benefit of permitting
downloads of large excel files or Nficrosoft Office files that may be erroneously rejected by some email
scanning software. In the event one of our staff works out of town or teleconunutes, they access data via
our virtual private network. Our VPN, LANs, and audit software are password protected and
encrypted to ensure your data remains confidential and secure.
We will also use some type of connection to the internet during our audit, but coordinate it with our
client's IT Staff to ensure there are no breaches in security or protocols.
Local Expertise and Resources
Our expertise and resources are local which provides our clients with timely on -the -spot responses to
issues and questions as they arise. Our Audit Supervisors are on site daily while the audit team is in the
field. Our Engagement Partners are on site at least weekly checking on progress, discussing and resolving
issues with the Audit Team, as well as meeting with our client as needed. In cases of highly complex
operations or unusual issues, our Technical Review Partner is brought out to meet with the audit team and
provide technical support, consultation and participate in meetings with our clients as needed. With all
our resources available locally, our clients are assured of in depth, timely audits and expedient resolutions
to questions and issues as they arise.
A udifing Large and Complex EDP Systems
Our approach to auditing EDP systems encompasses information system reviews, system controls and
transaction cycle processing, verification and data extraction.
.Information System Review
Information System Security became an important part of financial statement audits and we have
performed an Information Systems Review (ISR) with every audit since 2001. Unlike our competitors,
we extend our review to not only encompass the financial system, but also the network environment that
houses that system. From our perspective, the internal controls that are present in the overall network
environment are critical to understanding the internal controls over the financial system.
N
PROFILE OF THE PROPOSING FIRM (Continued)
Unlike financial statements, there are currently no authoritative standards that local governments
must employ to ensure that adequate and appropriate IT controls are designed and implemented.
We extensively researched this area and concluded it was most appropriate to base our ISR on the
certification and accreditation -framework developed by the National Institute of Standards and
Technology (NIST) for the Federal Information Security Management Act (FISIVIA) which is the
minimum security required for federal government agencies information systems. NIST recommends
states, local governments and Indian tribes comply with these standards as well. Our reviews include
procedures to determine that your systems are adequately protected from unauthorized internal
access, provide for reasonable measures to ensure continuation of service, provide for security of
data from physical or network access and have internet access defenses including hacker
prevention, detection and deterrent systems.
Our information systems reviews are performed by qualified information security professionals
who hold at least the Information Systems Audit and Control Association's (ISACA) Certified
Information Systems Auditor (CISA) or the (ISC)2's Certified Information Systems Security
Professional (6SSP). Both certifications require continuing professional education. As a value
added service we will provide the City with a matrix of the City's maturity as compared with NIST's
certification and accreditation framework. Each internal control taken from NIST SP 800-53Revl is
ranked in this maturity matrix and an average score is provided to the City to give the City a benchmark.
System Controls and Transaction Cycle Processing- Verification
With any data processing system upon which we intend to rely as a means of reducing substantive testing,
we perform a variety of tests to verify the accuracy of transaction processing, the reliability of system
control points and authorization controls, appropriateness of profile structures including Super -user rights
access, and automated functionality such as sub -ledger integration and auto journal entry validity and set
up controls.
Gaining an understanding of the design of relevant procedures, controls and authorization levels is
t'
integrated with our risk assessment procedures discussed under the Client Tailored Risk Assessment
section below. As part of our risk assessment process we identify those transaction cycles we intend to
rely on. Both processing procedures and controls that are to be relied on are tested with our audits.
Transaction cycle processing and control tests typically involve sampling techniques. Most of our
transaction samples are selected and tested during the interim portion of our work. Each sample will run
from thirty to filly transactions in size. We use interval and judgment sampling techniques with a high
degree of stratification. Most municipalities operate more than one major revenue system. Therefore, we
typically determine which revenue transactions are processed with common procedures and controls and
deem that to be a single population and subject it to a single sample. Other revenue cycles processed with
separate controls are tested with their own samples. For example, it is common for separate samples to be
selected for governmental receipts and each major enterprise fund. Transaction cycles we sample are
dependent on materiality to each client's financial statements but typically include, payroll,
disbursements, receipts, loans receivable, investments and budget transactions and in accordance with the
requirements of Statement of Auditing Standards 499 we also sample journal entries. Samples from each
grant audit or major federai award program are also made. Samples are triple purpose samples and we test
n
for correct recording., compliance with applicable policy or regulation and key control attributes - both
manual and automated. This includes verification of sub -ledger integration and auto journal entry
validity, if needed.
17
PROFILE OF THE PROPOSING T (Continued)
Profiles, Access and Setup Controls
Despite advances in information technology automation and system control features, classic segregation
of duties concepts remain a mainstay for providing adequate internal controls. What has changed,
however is the necessity to determine system profile structures and actual system access. We inquire how
our clients establish and maintain system profiles for relevant staff with the objective of detemiming
,whether controls are in place to provide for adequate segregation of duties and to determine if system
profiles are appropriate based on the individual's duties. We also determine how our clients monitor
access and we test access through reviews of access logs, observation and in some extreme cases, with
fully observed access attempts.
We will also inquire about procedures and controls used to ensure only those system functions and
controls assigned to an employee are in fact setup in system profiles. Considerations include Super User
Rights, system profile set up, and system authorization functionality such as transaction initiation, review
and approval, automated entry setup and posting, Work typically involves inquiry of staff with Super -
User Rights and determining how the organization provides a check and balance against the possibility
that one person with Super -User kights can intentionally or inadvertently assign unauthorized access. We
often review access logs and examine approvals of profile changes and review authorization levels.
Data Extraction
We employ rather simple data extraction techniques these days since most modem systems provide easy
download capabilities to text or Excel files. We have been utilizing data extraction for over fifteen years.
We first be -an data extraction as a means of downloading data from our clients financial systems for
upload directly into the financial statements. Then we expanded this to include transaction details,
account information and other data contained in our clients systems that we need for audit. Our Chief
Operations Officer, Chris Hunt, oversees our data extraction needs and has successfully worked with all
of our clients and their systems to achieve data extractions for our use. We are extremely adept at
converting from text, delimited and fixed width files, and with every system used by clients,
Assessing Risks — Interim Phase
Beginning with fiscal 2007-2008 audits, a new set of Statements of Auditing Standards became effective
and required that most auditors change the way they audit. Much of this new guidance came out of the
aftermath of highly publicized audit failures such as Enron, Global Crossings and the like. The
Statements make it clear that a generalized one -size -fits all audit approach will not be permitted. An audit
must be based on a unique audit strategy customized to fit each client and its industry.
The primary objective of these Standards is to require the auditor's application of an audit risk model.
The concept is that a set of financial statements should be evaluated for the underlying risks of material
misstatement. Then, a customized audit should be tailored to test for misstatements and verify that
controls are designed and in place to prevent and detect misstatements.
We have consistently employed a risk based concept from our firm's inception in 1986. Our audit
checklists and prograrns were originated by reference to Audits of Local Governments published by the
Practioners' Publishing Company (PPC), a third party vendor specializing in producing audit guides for
unique industries. But, we have not simply used their guide as our approach. We have customized it
further for the simple reason that California municipalities have many unique risks not faced by
municipalities in other states. As you know, California state law and applicable regulations cover a wide
variety of areas such as cash and investment management, redevelopment compliance, transportation
development act programs, and child development programs. Indeed, even revenues of California
municipalities are unusual and complex such as the Triple Flip and Proposition 1A securitization.
18
PROFILE OF THE PROPOSD;G FIRM (Continued)
Our primary objective in an audit of each client's financial statements is to opine on whether the financial
statements, including disclosures, are free of material misstatement. Our opinion must be based on
sufficient, appropriate audit evidence that we obtain and this evidence must be documented. To achieve
this objective, we further refine our approach to be responsive to each individual audit. We may reduce
the scope of our substantive audit tests provided we conclude there are effective specific controls in place
which would detect and correct misstatements due to errors or fraud.
Fraud Considerations
Beginning with our 2004 audits, we employed additional audit steps required by Statement of Auditing
Standards #99, Consideration of Fraud in a Financial 5tatement Audit. SAS 1199 requires auditors to
consider risk areas that may be susceptible to fraud and to then modify their audit strategy. We have been
employing a variation of the SAS -#99 concept since the early 1990's. For example, for many of our
recurring clients, we visited all of their cash collection sites. We performed cash counts and reviewed
cash handling practices and procedures, including security measures employed to limit access to cash.
This and our planning meetings with our clients staff have resulted in the inclusion of a variety of special
emphasis areas in our audits. We combine our fraud consideration brain storming sessions with our
overall risk assessment process discussed below -
Client Tailored Risk Assessment
Our strategy to assessing risk- begins with a brainstorming session of our audit team where they review
your prior year financial statements and operations to identify areas of major audit risk. We also
incorporate our consideration of other factors such as the risk of fraud, the economy, regulatory
complexities or changes, credit market conditions and others into our initial assessment. We may also
compare unusual transactions and estimates to those used by other municipalities or to current trends and
issues. Since we are a niche firm specializing in California municipalities this is relatively easy. For
example, certain development agreements are unique to municipalities. These agreements usually contain
complex financial transactions and legal restrictions. With so much experience in this area we can
quickly design an efficient response to these risks.
Major audit risks are further evaluated through consideration of relevant assertions to determine inherent
risk due to error or fraud. For example, cash on hand has a relative higher inherent risk of loss due to theft
than an infrastructure asset. High and medium inherent risk audit areas are further evaluated to determine
relevant internal controls needed to prevent, detect and correct errors or fraud.
We start our evaluation of your internal controls by interviewing staff and meeting with Department
heads as needed, We review policies and procedure manuals and other documentation to determine the
design of procedures and controls. As part of our evaluations we document narrative memoranda
outlining the duties of each pertinent person as well as our GRID evaluation of the important nexus
control points. The GRJD is our own design; it is a two -axis chart we use to identify potential conflicts of
duties in vour controls. We enhance our evaluation by reviewing systern profile reports, paying special
attention to super -user rights. This data is then used to determine the presence or absence of
compensating controls designed to mitigate conflicts of duties vested in a single individual.
We then test to verify that procedures and controls are operating effectively such that they reduce the risk
that errors or fraud could occur and go undetected and 'uncorrected. We use a variety of techniques to
verify controls are effective including: sampling, observation, documentation of reviews, examining
system access reports and comparisons with other data,
19
PROFILE OF THE PROPOSING FMNI (Continued)
After this has been completed, we assess the risk of material misstatement which is determined by the
relative inherent risk of an area and the associated control risk to plan our substantive tests. That is, the
risk that controls are not in place or are not operating effectively. Areas with a low risk of material
misstatement assessment may receive limited substantive procedures while those with a high risk of
material misstatement will receive significant substantive procedures.
We then design our final phase audit plan to ensure we obtain sufficient appropriate evidence about
the financial statements and disclosures. Specific audit procedures are developed and documented in
our audit programs and we develop potential internal control points for further evaluation as to
significance and communicate those to staff.
Client Participation in the Rusk Assessment Process
Of course, any risk assessment process is incomplete without our clients' active participation. We hold
meetings with senior finance staff and others within the organization to discuss their views and
assessments of risks affecting the financial statements. Our inquiries are backed up by reviews of the
annual budget, mid -year budget revisions, internal audit reports, grantor performance and monitoring
correspondence and any other pertinent data we deem relevant.
We must also establish two-way communication with the Council or Audit Committee which we typically
accomplish by meeting to discuss the audit process and timing, management representations and fraud
considerations. For those organizations without an Audit Committee, we typically attend a Council
meeting or meet with representatives of the Council.
Assessing Risks - Final Phase
Although the majority of our evaluations and testing of internal controls is completed with our interim
testing, it is during the final phase that actual year end balances, transactions and disclosures are known
and our substantive procedures are employed. These procedures and data often reveal unusual or
unexpected results that must be considered in the risk assessment process. Risk assessment processes are
iterative and cumulative. That is, we must continually re-evaluate our assessments based on information
and procedures gathered. It is not uncommon for an initial assessment and the corresponding substantive
audit work to be restructured as a result of new data. Indeed it is the intent of current audit standards that
the audit be responsive to risks.
Our substantive procedures are selected to be responsive to the assessed risk and relevant assertion and
typically involve analytical procedures, third -party confirmation, estimation techniques, mini -max tests,
trend analyses, recomputations, corroboration with other tests, tests in total, sampling and comparisons to
data gathered in other municipal audits.
Risk assessment procedures would be incomplete without an evaluation of the adequacy of our evidence
obtained including internal control tests, any significant deficiencies or material weaknesses and
substantive test results. These factors are considered prior to the release of our opinion in a final re-
assessment process that includes our quality assurance review.
Ability to Provide Services on a Short Notice
We are always ready to provide our clients with the services they need. Depending on the amount of work
involved we can adjust our calendar to accommodate smaller projects at any time. Larger projects can be
problematic during our peak busy season which lasts from mid-September through December. During
those months, our approach to providing services on a short notice is predicated on the principle that we
must satisfy our existing obligations before accepting new work. In the rare instance that we are
unavailable due to existing commitments, we have a number of recommended consultants that can assist
the City.
INM
PROFILE OF T11E PROPOSING ,,
Conznaunication and Coordination
We will meet with you at the start of each phase of work and conduct an exit conference at the end
of each phase of work. This will ensure you know everything we do, with plenty of time to address
any issues.
Two key objectives for a well run audit are to ensure timely communication of the audit results and to
provide for seamless coordination of the external auditors with City staff. The concept is virtually
identical to our Accounting Issues Memorandum and detailed Interim and Closing Checklists that we
typically prepare for our clients.
The Accounting Issues Memorandum concept was originated by one of our staff over a decade ago to
function as a partner's brief of an engagement's status. It worked so well we expanded it to all our audits
and share it with our clients. It has proven to be an indispensable communication and coordination tool
ever since. This informal memo condenses and summarizes the audit status and issues as of the end of
our interim work. It includes housekeeping matters, major and minor potential findings, scheduled audit
fieldwork start and finish dates, etc. We produce this memo right in your office before the conclusion of
our interim work, so you have an idea of what we've found so far and whether there are areas that need
work.
Our Memorandum on Internal Control is drafted at year-end and may include significant issues raised
with our interim phase Accounting Issues Memorandum as well as issues arising from our year-end work.
We review a draft with you, so that you will have plenty of time to consider the facts and discuss our
findings before the audit results are presented to the Council and Committees.
Prompt Service and Delivery of'Reports
Financial information, like fish, must be as fresh as possible and this is an important part of our service.
We have always focused on reducing financial statement turn -around time and we have never missed a
deadline. We normally complete the review of the final draft of the financial statements on the last day of
our Field -work iii our clients' offices or within two weeks thereafter.
Our audit strategy emphasizes detail planning and coordination of our staff and client staff to complete
the audit as efficiently as possible. We have found that completing all our work and our reports as part of
our Field -work dramatically reduces the time required to issue final reports to our clients.
Our strategy allows our clients ample time to review all report drafts before issuance, while ensuring that
all reports are issued timely. Many clients have been able to advance the date on which their reports
are presented to Council.
21
PROFIEL>L OF THE PROPOSING F (Continued)
No Disciplinary Action
We have no record of substandard or unsatisfactory performance, nor have any claims ever been filed with
any State Board of Accountancy against our firm or any of our employees.
Federal or State Field Reviews
We have not been subject to any Federal or State Field Reviews of our audits during the past three years
We have not been sued over poor work quality, nor have we paid any such claims out of court in the past
five years.
But we are proud to say we have been sued! This was an action by a third -party contractor who filed
suit to prevent us from issuing a report critical of their operation and their method of determining the
amount of revenue they should share with our client. This action was not settled out of court; but went to
judgment. In that case the Superior Court of the State of California held in our favor and dismissed
us from the proceedings without prejudice. hi other words, the Court decided that our report should be
issued without any change.
In the words of our insurance representative, "You are the only accounting firm we know of that has
been sued for doing their work RIGHT!"
External Quality Control Revieiv
We are members of the Quality Review Program of the AICPA, which means we subject ourselves to a peer
review of our workpapers and quality control procedures every three years by independent accountants
specializing in such work. Our most recent peer review was completed in 2011; we again received a
rating of pass, the highest level of assurance possible. This peer review included a review of four
goverrnmental and non-profit audit engagements, including a Special District. A copy of our most recent
peer review opinion is located at the end of this section.
Our municipal audit reports are subject to annual reviews by various branches of the Office of the State
Controller. District audit reports and Single Audit Act reports reports receive particular scrutiny. During
the past five years every one of these reports has been accepted as submitted. Of course, all of our clients'
CAFRs are also reviewed by CSMFO and GFOA for award consideration; every report submitted has won
an award from one of these organizations.
22
PROFILE OF THE PROPOSING FIRM (Continued)
Peer Review Letter
t JE>" G.u,,, Eii era
PCW1I & Sint FCr,D, i i G CFA
—
CIL l flf IFF"j ICIAC:CCI,'� IAN I S t �t, � i _ r„�tj
H A ..,.,,d.,...
System Review Report
To the Shareholders
Maze & Associates
and the Peer Review Committee ofthe California Society of CPAs
We have reviewed the system of quality control for the accounting and auditing practice of Maze &
Associates (the firm) in effect for the year ended May 31, 2011. Our peer review was conducted in
accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer
Review Board at' the American Institute of Certified Public Accountants. The firm is responsible for
designing a system of quality control and complying with it to provide the firm with reasonable assurance
of performing and reporting in conformity with applicable professional standards in all material respects.
Our responsibility is to express an opinion on the design of the system of quality control and the firm`s
compliance therewith based on our review. The nature, objectives, scope, limitations of, and the
procedures performed in a System Review are described in the standards at yyAgyp.aicpa.orL,!prstumnmar-v.
As required by the standards, engagements selected for review included engagenicnts performed under
Garter•nmenr.9ucliritig5ranclerrds.
In our opinion, the system of quality control for the accountina and auditing practice of Maze
Associates in effect for the year ended May 31, 201 I, has been suitably designed and complied with to
provide the firm with reasonable assurance of performing and reporting in conformity with applicable
professional standards in all material respects. Pines can receive a rating of puss, pn.t.V with deficiency
(ies) or -jail. Maze & Associates has received a peer review rating of pass.
October 5, 201 1
GC4��.(mci�Cour-I ® Sanl�iern�r=:iinr� `�.)=1-1�? F,.0J_ux.5547
23
SU�lAd Y OF PROPOSALS Q LTALIFICATIONS
Audit Team
We are proposing to assign Katherine Yuen as Engagement Partner, Amy Meyer as Technical
Review/Alternate Partner, Grace Zhang as Manager and Chris Thomas as Supervisor to your audit. We
will also have Donald Hester, our Information Technology Director, perform a review of your
information system as it relates to our work and our Quality Assurance Director, Cory Biggs, perform a
zt'n
Quality Assurance Review of all our reports and workpapers.
We understand that engagement partners, managers, directors and other supervisory staff may be
changed only with the express written permission of the City.
We will balance out our resources with our Senior Associates and Associates to form frilly leveraged teams.
All of our audit staff are experienced with Comprehensive Annual Financial Reports, large enterprise
operations, retirement plans, Single Audits, capital assets and infrastructure, long term debt, including swaps
and related compliance and continuing disclosures, and all other aspects of municipal accounting and
financial reporting.
We provide our clients continuity while introducing enough new people to keep our perspective fresh and
a,
provide you with the benefits of rotation. We intend to retain all the people assigned to your audit
throughout this year's entire engagement. In future years we plan to rotate no more than one person on each
segment whom we will replace with someone of equal experience.
Brief resumes of our proposed team members can be found in the Appendix:
Staff Training
We believe the level of training we provide is unmatched by any other accounting firm. Our audit staff
n
receives an average of 80 hours of continuing education annually, including an average of over 48
hours of municipal audit and accounting training. These are twice the amount required by
professional standards.
Our program places heavy emphasis on governmental accounting and auditing classes conducted by our
C,
own staff, supplemented by courses offered by the California Society of Certified Public Accountants, the
American Institute of Certified Public Accountants, the Government Finance Officers Association, the
California State Municipal Finance Officers Organization and the Association of California Water
Agencies.
We accomplish this task by reserving a solid week in January or February and another week in July
solely for staff training. Our training is very specific and very participatory; lectures are almost non-
existent as people are involved in a continual give-and-take format designed to educate while it helps us
improve our services. We deal with specific clients and situations, we solve problems and do case studies,
and we train people for real-life situations through role-play exercises. Everyone is equal in these exercises
and everyone contributes their own experience in the field and the ideas they have formulated from that
experience.
Suggestions coming out of staff training sessions are the source of most of the service improvements
and refinements we make each year.
24
Y OF PROPOSAL'S QIfAI,II+ICN17IONS (Continued)
A listuig of our continuing education courses provided to all our staff, both certified and non -certified, over
the past three years is as follows:
Arca(Course
2010
Spring Summer
40 Hrs. 40 Hrs.
2011 2012 2013
Spring Summer Spring Summer Spring Summer
40 Hrs. 40 Hrs. 40 Hrs. 4011rs, 1 Mrs. 40 Firs.
A _ : s eat
Municipal Audit - Practice Analysis and Review
(z1
p_l-
ID
ITA
CA
(l 0
Nianaging Municipal Audits - Audit Supeivisors
!
C
(
Gi
Cities it] the News
Quality Control
I
[1
GAAP' Updates
Cash, Debt, and Capital Asset Auditing Updates
FA
Researching CCII, Best Practices Consulting/ Governmental Accounting
r I
GASBXASu Update
P3
G
GASB 34 -Training
G
(�
Journal Entry Testing
LLI
Compliance Audits
Transportation Audits - TDA, STH' and Measures A, B, C
RDA Compliance
iii
GA
(_R
M
EH
Single Audit Compliance
GI
1n
(13
94
Housing Authority Audits and REAL Submissions
lel
Prop 1 B Testing -
Audit Standards Update
[ 1
New SASs, Risk Assessment and Impacts on Approach
Assessing Internal Control Risks/ Sample Sixes
f
�9
Updating our Audit Approach
SAS 1121111.5, Memorandum on Internal Control Workshop
�
(�
Compliance Auditing (SAS 117)
fA
Yellow hook Update
C9
TTIPaperiess/other
Team Building: Building and Maintaining Effective and Successful Teams
Gia
CCII Paperless Audit Sofhvare/ Trial Balance Function
G4
(a
(TA
0
(Ii
IT Information Systems Review Updates
Proress'sonal 1,iability Insurer Loss Prevention Seminar
la -1
P i
M
[i;VD
Qualifications and Continuity
Our people accumulate over 1500 hours of purely municipal audit and accounting experience
annually, far more than in any general service accounting firm. And we keep the same people on the
job, normally for at least three years.
We provide our clients continuity while introducing enough new people to creep our perspective fresh
and provide you with the benefits of rotation. We intend to retain all the people assigned to your
audit throughout this year's entire engagement. In future years we plan to rotate no more than one
person on each segment whom we will replace with someone of equal experience.
25
MIN NOR=
We do everything we can to ensure continuity because it helps you, it helps our staff and it helps us. We
M
schedule the entire year in advance to avoid conflicts, and we give priority to clients who are able to
accurately predict the date their books will be closed, so that the staff on their audit will not be affected if
another client's closing or audit is delayed. We attempt to match personalities as well as skills and
abilities so that our staff and yours will get along well.
City Client List
Please see the listing of all of our city clients on page 7.
City ofMonntain Heiv - A client since 2001
Principal contact -- Patty J. Kong, Assistant Finance and Administrative Services Director, (650) 903-
6316
Engagement Partner - Katherine Yuen
Workscope and Reports:
Audits:
Comprehensive Annual Financial Report
Revitalization Authority including Redevelopment Compliance Report
Shoreline Regional Park Community Basic Component Unit Financial Statements
Single Audit Act Report
Transportation Development Act including Compliance Report
Memorandum on Internal Controls
Agreed Upon Procedures
GANN
Gatekeeper Program (tests of costs charged to development fees)
Golf Course Secret Shopper and Revenue Procures
Lessee Revenue and Control Procedures (Michaels)
Lessee Revenue and Control Procedures (Silicon Shores)
Lessee Revenue and Control Procedures (Livenation)
OV qf11tqward-- A client from 1996 to 2007, rotated back to Maze & Associates in 2011
Engagement Partner - Katherine Yuen
Principal contact ---Dustin Clausen (510) 583-4014
Work -scope and reports:
Comprehensive Annual Financial Report
Memorandum on Internal Control
Single Audit Act Report
Gann Limit Agreed Upon Procedures Report
Measure B Compliance Report
Transportation Development Act Report
Sewer Enterprise Fund Financial Statements
Water Enterprise Fund
Hayward Public Financing Authority
Deferred Compensation Plan Financial Statem-entas
In
F_ REFERENCES (Continued)
City of Richmond- A client since 2005
Principal contact - James Gains, Finance Director,
J510) 620-6740
Engagement Partner - Amy Meyer
Workscope and reports:
Comprehensive Annual Financial Report
Single Audit Act Report
Gann Limit Agreed Upon Procedures Report
Memorandum on Improvements in Internal Controls
Richmond Joint Powers Financing Authority
Basic Intermediate and Advanced Governmental Accounting Training
Annual Report of Financial Transactions (State Controller's Report)
Richmond Housing Authority (w/ REAQ
Richmond Housing Authority Properties
RHA Single Audit
City qfBrenhvood - A client since 2007
Principal contract - Pam Eliler, Director of Finance- (925) 516-5460
Engagement Partner - Aniv Meyer
rne
Workscope & Reports:
Comprehensive Annual Financial Report
Memorandum on Internal Control
Gann Limit Agreed Upon Procedures Report
Transportation Development Act Audit
Single Audit Report
City of Santa Clara --A client since 2011
Engagement Partner - Mark Wong
Principal contact — Linh Lam, Senior Accountant, (408) 615-20.55
Staff hours -1,060
Workscope and reports:
Comprehensive Amival Financial Report
Recommendations for Improvements in Internal Control
Report on Silicon Valley Power
Report on Sports and Open Space Authority
Proposition 111 Agreed Upon Procedures Opinion
Single Audit Act Reports
ADDITIONAJINFORMATION
,,Ve;v GASB Implementation
We will provide the City with whatever support it needs with regard to gaining an understanding of new
pronouncements affecting the financial statements and o!lr audits. Our consistent approach is To provide
our clients with advance identification of new GASBs as they are issued. With every audit, we provide
overviews of new pronouncements including effective dates and we review these with staff.
27
ADDITIONAL INFORMATION (Continued)
In the year of implementation we proforma new disclosures and add on additional data requests to our
interim. and closing checklists. For complex rules, we prepare course materials and conduct training and
education sessions during interim for finance and other affected City staff to ensure they understand the
requirements. We include the new GASB provisions as well as any additional resources such as
implementation guides, practical application examples and additional technical resources and contacts.
After staff has had a chance to think about the City's operations we conduct a follow-up conference to
determine the potential impact to the financial statements and audit. hi unusual cases we will schedule
additional field work before year end to ensure the new rules do not affect year end timing.
Beginning in fiscal year 2015, the City will be required to implement the provisions of GASB Statement
No. &8, Accounting and Financier[ Reporting for Pensions — an amendinent of GASB Statenlent'Vo. 27,
which will have a significant impact on the City's financial statements and footnote disclosures related to
the CalPERS pension plan. Although it is anticipated that CalPERS will be able to provide the
infonnation necessary for the implementation of the new pronouncement for the year ended June 30,
2015, that information is not expected to be available until the fall of 2015, so we are not able to
determine whether the pronouncement will result in an increase to the scope of the audit. As soon as that
information is available, we will clearly communicate any revisions to the scope of the audit to the City
and whether those changes affect the audit fee.
Thne Line
We have timed our audits to complete all or your reports so they are ready to print by your
deadline. Our timeline below is aimed at meeting those deadlines, but does not affect the timing of your
closing. Of course, our timetable may be adjusted to fit your needs. We will start our work as soon as
you appoint us your auditors, with an entrance conference as soon as possible.
Our final audit will commence in our office, in August, 2015, when we will collect the financial statement
drafts, reconciliations and other items on our Annual Closing Checklist from you and bring them back to our
office. We will start our fieldwork, in your office two weeks after receiving these items. We will review
your final draft CAIR and our management letter with you at our exit conference in late
September. This date allows you weeks for your final review and more than sufficient time to print your
financial statements.
M
ADDITIONAL INFORMATION (Continued)
Our proposed Time Line follows:
December 2014:
Final Award, execute contract
March/April 2015:
Prepare Interim Checklist
Entrance conference and detailed audit plan
Complete interim audit tests
Review and revise financial statement formats and disclosures and provide comments
Prepare Annual Closing Checklist
Prepare Accounting Issues Memorandum
Prepare draft recommendations, if any
Complete GAIN Report
Interim exit conference
July/August:
City closes books, completes preparation of data on Annual Closma Checklist
August 2015:
We review Annual Closing Checklist information
We prepare draft financial statements.
We perform Partner Level Analytical Review of fund -level statement and email questions to City.
City answers email Analytical Review questions.
We refine audit scope based on answers to analytical review questions,
)tember 2015:
Final phase entrance conference, start of year-end field -work in the City's office
Finalize answers to Analytical Review questions
Complete Fund -level year-end audit tests.
Complete entity -wide audit tests
We complete drafts of reports:
September 7-25:
City prepares Management's Discussion & Analyses
We review Management's Discussion & Analysis
Drafts are finalized and approved
October I —15:
We perforin a Quality Assurance Review
Complete final chanes
October 30 or earlier:
November:
Present audit reports to the Council
29
ADDITIONAL DATA (Continued)
We have consistently achieved this Timeline every year.
Audit Schedule
We have timed our audit to complete all your reports so that they are ready to print by your
deadlines. We will start our work as soon as you appoint us _your auditors, with an entrance conference
as soon as possible. Please see the proposed segmentation of the engagement on the schedule at the end
of this section.
KM
CITY OF SAN RAFAEL
Proposed Engagement Segments and Budget
31
Partners
Budgeted Hours
Staff
Audit Activities
Engagement
Alt -nate
Manager
I
Supervisor I
A'1-63ia I
Office
Total
Planning & bud4et/ConfirrolChecklists
1,00
4.06
4 CX)
160
11,00
.'':SAS M9,9 Fraud Assessment
8.00
minutes -resolutions
Re ort
600
2-00
12.00
12m
8 OG
40.00
urvlsinnlreviuw `^
10,00
16,00
40,00
66.00
lConferences & meetings
4,00401)
6 UU
IManagement letter
1.00
2 CO
4.00
1 GCI
3,00
4. 00
4.00
Accounting Issues Memo
4,,Ki
100
6.00
Analytical review
4010-
4Av ...
16.00
Adjustments
T
t
......... .....
IOU
2.00
GRID -Internal Control Evaluation
6AQ
6.1}0
Information systems Review
Cash &- investments
4,00
'G 00
4.00
40,00
jReVennelRuceivables
26 ..00
26.00
Interfunds
5,00
8.00
Notesiloans receivables
12 GO
12.00
Capitol Assets
37
32.00
Accounts
00
24.00
Payroll/Accrucd liabilities
21.001
24.00
Lone'V.rm Debt
1,5.00
PERSiOPEB
600
6.00
Fund balance & net position
6_G0
6.00
Self iwwraocelclaons
8,00 -
-----------
8.00
Discrete Component unit
8,00
8.00
Journal entry trsfin;,,
400
4.00
Budget
611,10
6.00
Subtotal - Com P-1, Letter
27.00
2.00
44.00
100AR0
232.00
10.00
415.00
Additional Services:
Single Audit (I Program)
1.00
4.00
6.00 1
32.00
2.00
45.00
Child Development Program Report
1.00
4.0(18.00
45.00
2.00
60.00
Gann Limit Agreed Upon Procedures
OeSO
0.50
1.00
5.00
L(e)
8.00
GRANDTOTAL
29.50
2.00
52.50 I
115 U70
314.00
15.00
528.00
31
APPEN-DLX I
KATHERINE' YUEN, CPA, Engagement Partner — Katherine is a year-round municipal auditor and has
been with Maze & Associates for t6 years. She has helped her clients in implementing various
accounting standards including, GASB Statements 34 Basic Financial Statements- -and Alonagenient's
Discussion and Analysis—
,for State and Local Governinents, 45 Accounting and Financial Reporting by
Employers for Postemployment Benefits Other Than Pensions, and 54 Fund Balance Reporting and
Governmental Fund Type Definitions.
Katherine has received over two hundred and forty hours of continuing education in the past three years
as an instructor and participant. Over the years, she has taught classes both externally and internally on
topics including GASB Statements implementation, auditing techniques under the Government Auditing
Standards, and internal controls environment.
Katherine currently serves on the Governmental Accounting and Auditing Committee of the California
Society of Certified Public Accountants, which provides practical guidance to CPAs in the area of
governmental accounting, and auditing in an effort to improve the quality of financial reporting on
governmental entities.
n
Katherine is also a member of the American Institute of Certified Public Accountants and the California
Society of Certified Public Accounts.
Katherine holds a Bachelor of Science degree in Business Administration from the University of
California, at Berkeley. She is a Certified Public Accountant in the State of California.
City of Alameda
Alameda Mayors' Conference
Alameda Power and Telecom
Alameda Reuse and Redevelopment Authority
Association of Bay Area Governments
Town of Atherton
Bay Area Air Quality Management District
City of Benicia
City of Belmont
City of Campbell
Central Contra Costa County Solid Waste Authority
City of Daly City
City of Davis
East Bay Recreation and Park District
El Dorado Irrivation District
City of Emeryville
Town of Fairfax
City of Galt
City of HaNyt.vard
Hindu Culture and Community Center
Town of Larkspur
City of Lathrop
Las Trampas, hic.
Livermore Area Recreation and Park District
City of Los Altos
City of Los Banos
32
Town of Los Gatos
City of Manteca
City of Martinez
City of Millbrae
City of Milpitas
City of Monterey
City of Napa
City of Newark
City of Oxnard
City of Palo Alto
City orPetaluma
City of Pinole
City of Pleasant Hill
City of Roseville
City of San Carlos
City of San Mateo
City of San Rafael
City of San Ramon
San Ramon Valley Fire Protection Agency
Small Cities Organized Risk Effort (SCORE)
City of South Lake Tahoe
South Placer Wastewater Authority
City of Tracy
City of Walnut Creek
City of Woodland
Town of Woodside
APPENDIX (Continued)
zLiVy MEYER, CPA, Technical Revie;vlAlfernate Partner - Amy graduated from the University of the
Pacific in 1993 with a B.S. in Accounting and a minor in Information Systems, and has worked with
Maze & Associates since 1993. Amy is a California CPA and is a member of the California Society of
CPAs and the American Institute of Certified Public Accountants. Amy has assisted several of our clients
with their computer applications and is very comfortable using a variety of systems. She has been
involved with a number of accounting and GASB, irriplementation training classes customized to our
clients' needs. Amy is also our PC applications expert.. Amy currently serves on the Governmental
Accounting and Auditing Committee of the California Society of Certified Public Accountants, which
provides practical guidance to CPAs in the area of governmental accounting and auditing in an effort to
improve the quality of financial reporting on governmental entities- Amy is also a CAFR reviewer for
GFOA. She has accumulated three hundred four hours of continuing education during the last
three years as an in-house instructor and participant. She has gained valuable experience on the audits
of the following:
City of Alameda City of Mountain View
Alameda Power and Telecom City of Oakley
City of Albany City of Palo Alto
City of American Canyon Redwood Empire Municipal Insurance Fund
Town of Atherton City of Rancho Cordova
Association of California Water Agencies Joint City of Richmond
Powers Insurance Authority
City of Rio Vista
City of Brentwood
City of Rocklin
California Joint Powers Risk Management Authority
City of Roseville
City of Concord
Town of San Anselmo
City of Dublin
City of San Carlos
East Bay Regional Park District
City of San Pablo
City of El Cerrito
City of Santa Clara
City of Hercules
Livermore Area Recreation and Park District
City of Livermore
Town of Los Gatos
City of Manteca
City of Martinez
City of Milpitas
City of Modesto
City of Saratoga
South Placer Wastewater Authority
City of Tracy
City of Turlock
City of Vallejo
City of Waterford
West Contra Costa Transportation Advisory Committee
Citv of Woodland
GF-4CE ZHANG, CPA, Manager - Grace graduated fToin Assumption University in Bangkok. Thailand,
with a BBA in Finance and received her MBA in Finance from Case Western Reserve University, Ohio,
in 2001. She has received over two hundred and forty hours of continuing education in the last three
k,
years. Grace has been a certified public accountant since 2006, and is a member of the AICPA and
Ca!iL-,T.;aSoc--tyofCPA's. Grace -has participated Iii the following audits:
City of Campbell
Contra Costa Water District
City of Cupertino
City of Daly City
City of East Palo Alto
City of Hayward
City of Livermore
33
City of Palo Alto
City of Piedmont
City of Richmond
12ictimond Housing Authority
City of San Carlos
City of Sausalito
City of Vallejo
APPENDIX (Continued)
Grace Zhang (Continued)
Livermore Amador Valley Transportation Authority Silicon Valley Animal Control Authority
City of Martinez
City of South. Lake Tahoe
City of Milpitas
City of South San Francisco
City of Mountain View
West Bay Sanitary District
City of Sunnyvale
Town of Woodside
City of Newark
CHRJS THOMAS, CPA, Supervisor — graduated from Sonoma State University in 2007 with a BSE
Degree in Business Administration with a concentration in Accounting. Chris has received 240 hours
of continuing education in the past three years. Chris is a Certified Public Accountant in the State of
California- Chris has participated in the following audits.
City of Alameda
City of American Canyon
City of Belmont
City of Brentwood
City of Brisbane
City of Concord
Contra Costa Water District
Contra Costa Mosquito and Vector Control District
City of Davis
Delta Diablo Sanitation District
East Bay Municipal Utilities District
East Contra Costa Fire Protection District
City of East Palo Alto
City of El Cerrito
EI Dorado Irrigation District
City of Hayward
City of Larkspur
City of Manteca
City of Martinez
City of Millbrae
City of Napa
City of Newark
Partners in School Innovation
Placer County Water Authority
City of Pleasant Hill
Town of Portola Valley
City of Rancho Cordova
City of Richmond
Richmond Housing Authority
City of Roseville
City of San Carlos
City of San Pablo
City of San Rafael
Solan Irrigation District
City of South Lake Tahoe
City of Stockton
City of Suisun City
City of Vallejo
City of Waterford
CORY B-IGGS, CPA, Quality Assurance Director - Cory is a graduate of CSU Hayward with a B.S, in
Business, emphasis in Accounting. He is a California CPA with over twenty nine years experience, three
with Deloitte, Haskins & Sells, three with Seiler & Company, a large Bay Area local firm, and the rest
with us. He is a member of the AICPA and California Society of CPA's. Cory's experience includes
cities, school districts, and a variety of high-tech and commercial for-profit organizations. He is a CAFR
reviewer for the GFOA and was a member of the Professional and Technical Standards Committee which
summarizes and makes the final determination for CSMF0 awards for Cities. Cory has accumulated
three hundred twenty hours of continuing education in the past three years as on in-house
instructor and participant. His relevant municipal experience includes:
City of Alameda Liven-nore AmadorNalley Transit Authority
City of American Canyon City of Los Altos
Association of Bay Area Governments Town of Los Altos Hills
34
APPENDIX (Continued) I
Coty Biggs (Continued)
Town of Atherton
City of Belmont
Belmont San Carlos Fire Department
Belmont Net Six Joint Powers Authority
Belmont South San Mateo Police Authority
City of Capitola
Coastside Countv Water District
City of Concord
Contra Costa County Bond Funds
Contra Costa Transportation Authority
City of Cupertino
City of Daly City
City of Dublin
,Dublin San Ramon Services District
East Bay Municipal Utility District
City of El Cerrito
El Dorado Irrigation District
City of Emeryville
City of Hayward
Town of Hillsborough
City of Livermore
Livermore-Amador Valley Transit Authority
Livermore Area Recreation and Park District
Town of Los Gatos
City of Manteca
City of Martinez
City of Millbrae
City of Milpitas
City of Modesto
City of Mountain View
City of Napa
City of Palo Alto
Placer County Water Agency
City of Pleasant Hill
Town of Portola Valley
Richmond Housing Authority
San Francisco Bay Area Water Emergency Transit Authority
San Francisco Bay Transit Water Emergency Authority
City of San Carlos
City of San Rafael
San Ramon Valley Fire Protection District
Santa Clara Valley Water District
City of Saratoga
City of South Lake Tahoe
South Lake Tahoe Basin Waste Management Authority
City of South San Francisco
City of Vallejo
DONALD E. HESTER IT Director -Donald's clients include local municipalities, non -profits,
corporations and federal government agencies, specializing in a wide array of compliance programs and
security assessments such as PCE FtSMA. COBIT, JUL and IS027002. He is a guest lecturer and
speaker on security topics for CMTA, CSMF 0, MISAC, CISOA, ISACA and others and he has served on
various advisory committees and as a subject matter expert in information technology and security.
Donald also teaches IT Audit and Forensics at the University of Sar. Francisco and. Microsoft courses for
Los Positas College, San Diego City College and for the Ca One program of the California State
Chancellor's office. Donald graduated with honors from the American Military University with a
Bachelor's Degree in Security Management with a concentration in Information Security. Ile has nearly
Cl
20 years of experience in the security field. Donald has been with us for ten years now and has received
more than 320 hours of continuing education in the past three years and has over 900 hours of
instructional work. His certifications include; CISSP, CISA, CAP, MCT, MCITP, MOTS, MCSE
Securioy, MCSA Security, MCDST, Security+ and CTT+. Donald is also a Chairman and past Treasurer
for the Brentwood Veterans Memorial Building and Commandant and past Treasurer for the Delta Diablo
Det. 1155 Marine Corps League.
35
COST PROPOSAL
TO CONTINUE TO PROVIDE
PROFESSIONAL AUDITING SERVICES
FOR THE CITY OF SAN RAFAEL
2� r.
MAZE & ASSOCIATES
3478 Buskirk Avenue, Suite 215
Pleasant Hill, CA 94523
(925) 930-0902
Contact Persons
Katherine Yuen - e-mail address - katherincyCi�i-nazeassociates.com
Amy Meyer - e-mail address .- amyrn(��-)mazeassociatesxom
November 17, 2014
COST PROPOSAL
Certification
Katherine Yuen and Amy Meyer are authorized to submit this proposal and negotiate and sign a contract
with the City of San Rafael. Our offer is firm and irrevocable for a period of ninety days from the date of
this proposal,
Total Cost of Audit
Our Total All -Inclusive Maximum Prices for the services specified in the Request for Proposal for the
fiscal years ending June 30, 2015 through June 30, 2020 are detailed at the end of this section. Our Total
All-inclusive Maximum Prices for the services specified in the RFP are firm Fixed fees.
Our policy is to attempt to keep our clients fees constant after inflation. Therefore, the fees for years
subsequent to 2015 have been adjusted by 3.00% per year.
Additional Services
Any additional services will be performed and billed only on the City's prior authorization at our standard
billing rates.
Fees
Our fees are firm fixed prices. In determining our fees, we understand that the City's records will be in
condition to be audited; that is, transactions will be properly recorded in the general ledger and subsidiary
records, these accounting records and the original source documents will be readily available to use, we will
be furnished with copies of bank reconciliations and other reconciliations and analyses prepared by the City
and City personnel will be reasonably available to explain procedures, prepare audit correspondence and
obtain files and records.
:Manner of Payment
Progress billings will be sent on the basis of actual audit work completed during the course of the
engagement. We do not bill for out-of-pocket expenses as they are included in our stated all-inclusive
maximum price.
We do not post separate rate structures for municipal audit work. We view this work as being every
bit as important and valuable as the work we perform for other clients and we put our best people on
it. Any consulting work you request will be performed at the same rates as our audit work,
Cost Rationale
We have always completed our work in the time budgeted and for the agreed upon fee. We have never
:n
requested additional fees for work within the scope of the audit after our work was completed. As always.
we Finish what we start, regardless of the accuracy of our budgets.
CITY OF SAN RAFAEL
SCHEDULE OF PROFESSIONAL FEES AND EXPENSES
FOR THE AUDITS OF THE FTNANCTAL STATFNIENTS FOR THE YEARS ENDED JI. -NE 30
NOTES:
Out -o( -Pocket expenses are included in our standard hourly rate
i2 i Our policy is to attempt to keep our clients fees constant alter inflation. Therefore, the Ices for years subsequent
to 2015 have been adjusted for the estimated CPI increase Q1'3-0- .
i',) Estimated hours are expected to remain constant,
(4) Rates are aruruaEy adjusted for a 10,o cost ofliving adjustment,
Option Year-,,
Hourly
Totals (2)
Hours
Rates
2015
2616
2017
2018
2019
2020
Comprehensive Annual Financial Report
&- Manaacmenr Letter:
Partners
29,00
33o0
SMOO
58,961
S9.230
SOJO7
59,79-Y
510,086
Manager
4400
st55
6,920
7,025
7,236
7-453
7,677
7.90L7
Supervisor
100.0Q
120
12,000
12,360
12,731
!3,113
11506
13.911
Associates
232,00
85
I9,720
20,312
20,921
21,549
22,195
22.861
Office
10.00
65
650
670
690
711
732
754
Total Comprehensive Annual Financial Repo
41500
47,890
49,328
50,808
31333
53.902
19
Additional Reports:
Single Audit (2 Programs)
84.00
8,300
8,549
8,805
9,069
9,341
9,621
Child Development Program Report
60,00
5,835
6,010
6,190
oX6
6-56-,
G764
Gann Limit Agreed Upon Procedures
8.00
838
863
889
916
943
971
Out-ol'-pocket expenses (1)
Total firm fixed fete
567.00
362,863
564,750
566,692
S68,694
570,753
............. ...... .....
572.815
Schedule
of Hourly
Rates by Position
By Year
Rate.,
per Hour14)
Position
2015
2 () i 6
2017
20I8
2019
2020
Partners
5300
5309
5313
5328
S338
5348
Manager
5155
5160
5165
5170
5175
$ISO
Supervisor
$120
S124
5128
5132
5136
5140
Associate.;
585
S88
S91
594
S97
Slop
Office
S65
W
S69
S71
573
S7,5
NOTES:
Out -o( -Pocket expenses are included in our standard hourly rate
i2 i Our policy is to attempt to keep our clients fees constant alter inflation. Therefore, the Ices for years subsequent
to 2015 have been adjusted for the estimated CPI increase Q1'3-0- .
i',) Estimated hours are expected to remain constant,
(4) Rates are aruruaEy adjusted for a 10,o cost ofliving adjustment,