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CC - Item 8E - Award of Auditing Services Agreement to Rogers, Anderson, Malody & Scott, LLP
i - - TO: THE HONORABLE MAYOR AND CITY COU CIL FROM: JEFF ALLRED, CITY MANAGER DATE: APRIL 12, 2011 SUBJECT: AWARD OF AUDITING SERVICES AGREEMENT TO ROGERS, ANDERSON, MALODY & SCOTT, LLP SUMMARY A competitive bid process has been conducted to find a certified public accounting (CPA) firm for audit services. As a result of a request for proposals (RFP) process six (6) qualified companies submitted proposals. Through an analysis of the proposals a firm has been selected for recommendation to the City Council Staff Recommendation Staff recommends that the City Council do the following: 1. Approve the firm of Rogers, Anderson, Malody & Scott, LLP (RAMS) as the new City auditor. 2. Approve the attached three year contract with two additional one -year extensions. 3. Authorize the City Manager to sign the contract. ANALYSIS In January 2011 staff mailed RFPs to specialized CPA firms. Subsequently staff held a bidder's conference (a question and answer session), oral interviews with firms wishing to remain in the bidding process and finally analyzed the firms for qualifications, work process, fit with the City and price. Of the six responding firms, one was disqualified for excessive cost and one was disqualified due to incompatibility with City requirements. Finally, RAMS emerged as the firm with the best balance of qualifications, experience, City compatibility and price. One firm, Teaman, Ramirez & Smith, Inc., while slightly less costly than RAMS ($5,578 over five years) bid the job with significantly fewer labor hours than all of the other firms, leading staff to conclude that quality control may be compromised for the sake of meeting their hours budget. The bids are for audit and other specialized services for the City, the Community APPROVED FOR CITY COUNCIL AGENDA: ITEM NUMBER: City Council Meeting April 12, 2011 Page 2 of 2 Development Commission and the Housing Development Corporation. In the event that Governor Brown is successful in eliminating redevelopment agencies, the audit work would be reduced or eliminated and costs would be adjusted accordingly. FINANCIAL ANALYSIS Pursuant to the City's purchasing policy, professional services providers should not be selected by bid price alone, and they were not. However, for comparison purposes the following illustrates prices bid by the various firms over the five year term of the agreement: 1. Brown, Armstrong $336,300 2. Lance, Soll & Lunghard, LLP 287,725 3. Vavrinek, Trine, Day & Co, LLP 259,292 4. Diehl Evans & Company, LLP 223,800 5. Rogers, Anderson, Malody & Scott, LLP 216,878 6. Teaman, Ramirez & Smith, Inc. 211,300 PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. Submitted by: Steve Brisco Director of Finance ATTACHMENT A: AGREEMENT FOR AUDITING SERVICES Attachment 1: Auditor's attachment to ATTACHMENT A, City RFP Attachment 2: Auditor's attachment to ATTACHMENT A, response to RFP and pricing ATTACHMENT A Page 1 AGREEMENT FOR AUDITING SERVICES THIS AGREEMENT is made and entered into this 12th day of April, 2011, by and between the CITY OF ROSEMEAD, a municipal corporation, hereinafter referred to as "CITY" and Rogers, Anderson, Malody & Scott, LLP certified public accountants, hereinafter referred to as "AUDITOR." WITNESSETH: WHEREAS, in January 2011, the CITY invited bids for an independent audit of its financial statements and various other services; and WHEREAS, pursuant to said invitation, AUDITOR submitted a bid which was accepted by CITY for said professional service; and WHEREAS, AUDITOR is recognized as a competent and qualified certified public accountant, duly authorized to practice and licensed as such by the California State Board of Accountancy. NOW THEREFORE, for and in consideration of the mutual promises, obligations, and covenants contained herein, the parties herein agree as follows: 1. TERM The term of this Agreement shall be for a period of three (3) consecutive years, beginning with the fiscal year ending June 30, 2011 with the option to extend for two subsequent years. 2. CITY'S OBLIGATIONS For and in consideration of AUDITOR furnishing services specified in this Agreement, CITY shall pay and AUDITOR shall receive in full compensation a total sum not to exceed $42,332, $42,332, $43,766, $43,766 and $44,682 for the fiscal years ending June 30, 2011, 2012, 2013, 2014 and 2015, respectively. Payments to AUDITOR shall be made within thirty (30) days after receipt by CITY of invoices from AUDITOR, which shall be rendered not more often than monthly. Special examinations, surveys, or detailed reports of any nature outside the scope of this Agreement shall be billed separately by AUDITOR and must be specifically authorized in writing by CITY in advance of such additional services proposed to be provided. 3. AUDITOR'S OBLIGATIONS For and in consideration of payments and agreements hereinafter mentioned to be made and performed by CITY, AUDITOR agrees with CITY to furnish those services as set forth in Attachment 1, Request for Proposal for Auditing Services, attached hereto and incorporated herein by reference, and to perform as required by this Agreement and the said specifications. ATTACHMENT A Page 2 4. INSURANCE AUDITOR shall procure and maintain for the entire term of this Agreement, valid insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by AUDITOR, or AUDITOR'S agents, representatives, employees, or subcontractors. AUDITOR shall further maintain professional liability insurance in the amount of one - million dollars ($1,000,000.00) to protect CITY for AUDITOR'S negligent acts, errors, and /or omissions of a professional nature. 5. HOLD HARMLESS AND INDEMNIFICATION AUDITOR agrees to indemnify, defend, and hold harmless CITY, its officials, officers, employees, representatives, and agents from and against all claims, lawsuits, liabilities, or damages of whatever nature including without limitation all consequential damages arising out of or in connection with, or relating in any manner to work performed by AUDITOR, his agents, employees and subcontractors, and employees thereof pursuant to this Agreement. AUDITOR shall investigate and indemnify CITY and do whatever is necessary to protect CITY, its officials, officers, employees, agents, and representatives as to any such claims, lawsuits, liabilities, or damages. 6. AMENDMENTS Any amendment, modification, or variation from the terms of this Agreement shall be in writing and shall be effective only upon written approval by the CITY'S Director of Finance. TERMINATION OF AGREEMENT (a) CITY may terminate this AGREEMENT, with our without cause, at anytime by giving thirty (30) days written notice of termination to AUDITOR. In the event such notice is given, AUDITOR shall cease immediately all work in progress. (b) AUDITOR may terminate this AGREEMENT at any time upon (thirty) days written notice of termination to CITY. (c) If either AUDITOR or CITY fails to perform any material obligation under this AGREEMENT, then, in addition to any other remedies, either AUDITOR, or CITY may terminate this AGREEMENT immediately upon written notice. (d) Upon termination of this AGREEMENT by either AUDITOR or CITY, all property belonging exclusively to CITY that is in AUDITOR's possession shall be returned to CITY. AUDITOR shall furnish to CITY a final invoice for work performed and expenses incurred by AUDITOR in accordance with this AGREEMENT. This final invoice shall be reviewed and paid in the same manner as indicated in Section 2 of this AGREEMENT. 8. INCORPORATION BY REFERENCE The Request for Proposal for Auditing Services, Attachment 1 hereto, and the proposal submitted by Auditor dated February 12, 2011 Attachment 2 hereto, are hereby incorporated by reference and made a part of this Agreement. ATTACHMENT A Page 3 9. COMPLETE AGREEMENT This written Agreement, including all writings specifically incorporated herein by reference, shall constitute the final, complete, and exclusive agreement between the parties hereto. No oral agreement, understanding, or representation not reduced to writing and specifically incorporated herein or executed as an amendment hereto, shall be of any force or effect, nor shall any such oral agreement, understanding, or representation be binding upon the parties hereto. 10. CONTRACT ASSIGNMENT. AUDITOR shall not assign, transfer, convey, or otherwise dispose of this Agreement, or its right, title, or interest, or its power to execute such an Agreement to any individual or business entity of any kind without the prior written consent of CITY. 11. INDEPENDENT CONTRACTOR a. AUDITOR is, and at all times hereafter shall be, an independent contractor of CITY during the entire term of this Agreement. AUDITOR specifically recognizes and acknowledges said status as an independent contractor and not as an employee of CITY. All personnel of AUDITOR shall be employees of AUDITOR and not employees of CITY. AUDITOR shall pay all salaries and wages, employer's social security taxes, unemployment insurance and similar taxes relating to employees and shall be responsible for all withholding taxes. b. AUDITOR shall comply with all Federal and State statutes and regulations relating to the employer /employee relationship including, but not limited to, minimum wage, non - discrimination, equal opportunity, workers compensation, hazardous /unsanitary or dangerous surroundings, the Fair Labor Standards Act 29 USCA Section 201 et seq., and the Immigration Reform and Control Act of 1986 * USCA Section 245(a) et seq. ATTACHMENT A Page 4 12. ANTI - DISCRIMINATION In the performance of the terms of this Agreement, AUDITOR agrees that it will not engage in discrimination in employment of persons because of the age, race, color, sex, national origin or ancestry, or religion of such persons. Violation of this provision may result in the imposition of penalties referred to in Labor Code Section 1735. 13. NOTICE All written notices to the parties hereto shall be sent by United States mail, postage prepaid by registered or certified mail addressed as follows: CITY: City of Rosemead Attn: Steve Brisco, Director of Finance 8838 East Valley Boulevard Rosemead, CA 91770 AUDITOR: Rogers, Anderson, Malody & Scott, LLP Attn: Terry Shea 290 North D Street, Suite 300 San Bernardino, CA 92401 All notices sent pursuant to this Agreement shall be deemed received (1) immediately if served by personal delivery, and (2) on the fifth day after deposited in the custody of the U.S. Postal Service if served by mail. 14. ATTORNEYS FEES In the event an action is commenced by either party to enforce any rights under this Agreement, the prevailing party shall be entitled to recover reasonable attorney's fees and court costs, in addition to any other relief granted by the Court. ATTACHMENT A Page 5 15. CONFLICT OF INTEREST a. All information gained by AUDITOR in performance of this Agreement shall be considered confidential and shall not be released by AUDITOR without CITY'S prior written authorization excepting that information which is a public record and subject to disclosure pursuant to the Public Records Act, government Code Section 6250 et seq. AUDITOR, its officers, employees, agents, or subcontractors, shall not voluntarily provide declarations, letters of support, testimony at depositions, response to interrogatories or other information concerning the project or cooperate in any way with a party who may be adverse to CITY or whom AUDITOR reasonably should know may be adverse in any subsequent litigation. AUDITOR shall incur no liability under this Agreement for materials submitted by it which are later released by CITY, its officers, employees, or agents. AUDITOR shall also incur no liability for statements made by it at any public meeting, or for any document released by it for which prior written CITY authorization was obtained. If AUDITOR or any of its officers, employees, consultants, or subcontractors does voluntarily provide information in violation- of this Agreement, CITY has the right to reimbursement and indemnity from AUDITOR for any damages caused by AUDITOR'S conduct- - including attorney's fees. AUDITOR shall promptly notify CITY should AUDITOR, its officers, employees, agents or subcontractors be served with any Summons, Complaint, Subpoena, Notice of Deposition, Request for Documents, interrogatories, Request for Admissions or other discovery requests from any party regarding this agreement and the work performed thereunder. CITY retains the right, but not the obligation, to represent AUDITOR and /or to be present at any deposition, hearing, or similar proceeding. AUDITOR agrees to cooperate fully with CITY and to provide CITY with the opportunity to review any response to discovery requests provided by AUDITOR. However, CITY'S right to review any such response does not imply or mean the right by CITY to control, direct, or rewrite said response. CITY warrants that AUDITOR will have fully met the requirements of this provision by obtaining CITY'S written approval prior to providing documents, testimony, or declarations; Consulting with CITY before responding to a Subpoena or court order; in the case of depositions upon providing Notice to CITY of same; or providing CITY opportunity to review discovery responses prior submission. For purposes of this section, a written authorization from CITY shall include a "faxed" letter. ATTACHMENT A Page 6 b. AUDITOR covenants that neither they nor any officer or principal of their firm have any interests, nor shall they acquire any interest, directly or indirectly which will conflict in any manner or degree with the performance of their services hereunder. AUDITOR further covenants that in the performance of this Agreement, no person having such interest shall be employed by them as an officer, employee, agent, or subcontractor. AUDITOR further covenants that AUDITOR has not contracted with nor is performing any services directly or indirectly, with the developer(s) and /or property owner(s) and /or firm(s) and /or partnerships owning property in the CITY or the study area and further covenants and agrees that AUDITOR and /or its subcontractors shall provide no service or enter into any contract with a any developer(s) and /or property owner(s) and /or firm(s), and /or partnership(s) owning property in the CITY and /or study area prior to completion of this Agreement. 16. AUTHORITY TO EXECUTE AGREEMENT. Both CITY and AUDITOR hereby represent and covenant that each individual executing this Agreement on behalf of each party is a person duly authorized and empowered to execute agreements for such party. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written. CITY OF ROSEMEAD: Jeff Allred, City Manager ATTEST: Gloria Molleda, City Clerk APPROVED AS TO FORM: AUDITOR: M Rachel H. Richman, City Attorney Attachment 1 zslz � 91 A. General Information The City of Rosemead is requesting proposals from qualified firms of certified public accountants to audit its financial statements for the fiscal years ending June 30, 2011, 2012, and 2013, with the option of auditing its financial statements for each of the two subsequent fiscal years. The proposal must be received by the City of Rosemead via email at sbrisco(aDcitvofrosemead.org or at the office of City Hall at 8838 East Valley Boulevard, Rosemead, CA 91770 by 5:00 p.m. February 10, 2011. The City of Rosemead reserves the right to reject any or all proposals submitted. During the evaluation process, the City reserves the right, where it may serve the City of Rosemead's best interest, to request additional information or clarifications from proposers, or to allow corrections of errors or omissions. The City of Rosemead reserves the right to retain all proposals submitted and to use any ideas in a proposal regardless of whether that proposal is selected. Submission of a proposal indicates acceptance by the firm of the conditions contained in this request for proposals, unless clearly and specifically noted in the proposal submitted and confirmed in the contract between the City of Rosemead and the firm selected. There is no expressed or implied obligation for the City of Rosemead to reimburse responding firms for any expenses incurred in preparing proposals in response to this request. It is anticipated that the selected firm will be notified no later than April 15, 2011 All inquires relating to this Request for Proposals should be submitted to: Steve Brisco Director of Finance City of Rosemead 8838 E. Valley Blvd. Rosemead, CA 91770 (626) 569 -2120 phone (626) 569 -2303 fax sbrisco@cityofrosemead.org Submission of a proposal indicates acceptance by the firm of the conditions contained in this request for proposals unless clearly and specifically noted in the proposal submitted and confirmed in the contract between the City of Rosemead and the firm selected. The City of Rosemead reserves the right without prejudice to reject any or all proposals. B. Auditing Standards These audits are to be performed in accordance with generally accepted government auditing standards, the standards set forth for financial audits in the General Accounting Office's (GAO) Government Auditing Standards the provisions of the federal Single Audit Act of 1996 and U.S. Office of Management and Budget (OMB) Circular A -133, Audits of State Local Governments and Non - Profit Organizations or latest versions thereof and the procedures contained in the publication Guidelines for Compliance Audits of California Redevelopment Agencies (2004) or latest version as promulgated by the Controller of the State of California. The financial statements are Attachment 1 prepared in accordance with the latest Governmental Accounting Standard Board (GASB) pronouncements, as required. C. Scope of Mork to be Performed City of Rosemead. The City of Rosemead desires the auditor to express an opinion on the fair presentation of its basic financial statements. The auditor is not required to express an opinion on the combining and individual non -major fund financial statements and schedules. However, the auditor is to provide an "in- relation -to" report based on the auditing procedures applied during the audit of the basic financial statements. Certain limited procedures should be applied to the supplementary information, management's discussion and analysis, and budgetary comparison information, but an expression of an opinion is not required. The auditor is not required to express an opinion on the introductory and statistical sections. The auditor is required to prepare and publish the City's CAFR document. 2. Community Development Commission Report. The auditor is expected to express an opinion on the fair presentation of the financial statements of the Rosemead Community Development Commission (CDC) and a Report on Compliance with applicable laws, regulations and administrative requirements governing its activities. The auditor is required to prepare and publish the Commission's financial report. 3. Community Housing Development Corporation. The auditor is expected to express an opinion on the fair presentation of the financial statements of the Rosemead Community Development Commission (CDC) and a Report on Compliance with applicable laws, regulations and administrative requirements governing its activities. The auditor is required to prepare and publish the Corporation's financial report. 4. Single Audit Act Report. The City receives federal funds which come under the provision of the Single Audit Act. The auditor is not required to audit the schedule of federal financial assistance. However, the auditor is to provide an "in- relation -to" report on that schedule based on the auditing procedures applied during the audit of the financial statements. This report must satisfy all requirements of the federal Single Audit Act of 1996. 5. Additional Consulting Hours. The auditor shall be prepared to provide up to 20 additional consulting hours on accounting and technical matters throughout the year. D. Reports to be Issued Following the completion of the audit of the fiscal year's financial statements, the auditor shall issuer 1. A report of the fair presentation of the financial statements in conformity with generally accepted accounting principles. 2. A report on internal controls over financial reporting and on compliance and other matters based on an audit of the financial statements performed in accordance with Government Auditing Standards. 3. A report on compliance with requirements applicable to each major program and internal control over compliance in accordance with OMC Circular A -133. 4. A report of the fair presentation of the financial statements of the Community Development Commission of the City of Rosemead in conformity with generally accepted accounting principles. 5. A report of the fair presentation of the financial statements of the Housing Development Corporation of the City of Rosemead in conformity with generally accepted accounting principles. 2 Attachment 1 6. A report on internal controls over financial reporting and on compliance and other matters based on an audit of the financial statements of the Community Development Commission of the City of Rosemead performed in accordance with Government Auditing Standards. E. internal Control and Compliance Reports In the required reports on internal control, the auditor shall communicate in a letter to management any reportable conditions found during the audit. A reportable condition shall be defined as a significant deficiency in the design or operation of the internal control structure, which could adversely affect the organization's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. Reportable conditions that are also material weaknesses shall be identified as such in the report. Non- reportable conditions discovered by the auditors shall be reported in a separate letter to management, which shall be referred to in the report on internal controls. Auditors shall be required to make an immediate, written report of all irregularities and illegal acts of which they become aware to the Director of Finance, the City Manager, the Assistant City Manager and the City Attorney. Auditors shall assure themselves that the City is informed of each of the following: 1. The auditor's responsibility under generally accepted auditing standards 2. Significant accounting policies 3. Management judgments and accounting estimates 4. Significant audit adjustments 5. Other information in documents containing audited financial statements 6. Disagreements with management 7. Management consultation with other accountants 8. Major issues discussed with management prior to retention 9. Difficulties encountered in performing the audit GENERAL TERMS AND CONDITIONS A. Proposal Requirements 1. Requirement to Meet All Provisions. Each individual or firm submitting a proposal (proposer) shall meet all of the terms and conditions of this Request for Proposals (RFP) specifications package. By virtue of its proposal submittal, the proposer acknowledges agreement with and acceptance of all provisions of the RFP specifications. 2.Proposal Submittal. Each proposal must be submitted in the format described in the RFP specifications and accompanied by any other required submittals for supplemental materials. Proposal documents shall be either emailed to sbrisco(o_Dcityofrosemead.org or submitted in person or by mail to City of Rosemead, Finance Department, 8838 East Valley Boulevard, Rosemead, CA 91770 by 5:00 p.m. February 10, 2011. 3. Insurance Certificate. Each proposal must include a certificate of insurance showing: a. The insurance carrier and its A.M. Best rating. b. Scope of coverage and limits. Attachment 1 c. Deductibles and self - insured retention. The purpose of this submittal is to generally assess the adequacy of the proposer's insurance coverage during proposal evaluation; endorsements are not required until contract award. The City's insurance requirements are detailed in Section D of Attachment 1 "Model Professional Services Agreement." 4. Proposal Quotes. The prices quoted by the proposer must be entered in figures in the spaces provided on the form in Exhibit A. 5. Proposal Withdrawal. A proposer may withdraw its proposal, without prejudice prior to the deadline submission, by submitting a written request to the Finance Manager for its withdrawal. 6. Proposal Retention and Award. The City reserves the right to retain all proposals for a period of 60 days for examination and comparison. The City also reserves the right to waive non - substantial irregularities in any proposal, to reject any or all proposals, to reject or delete one part of a proposal and accept the other, except to the extent that proposals are qualified by specific limitations. 7. Competency and Responsibility of Proposer. The City reserves full discretion to determine the competence and responsibility, professionally and /or financially, of proposers. Proposers will provide, in a timely manner, all information that the City deems necessary to make such a decision. S. Contract Requirement. The proposer to whom the award is made (Contractor) shall execute a written contract with the City within ten (10) calendar days after notice of the award has been sent by mail to the address given in its proposal. The contract shall be made in the form adopted by the City and incorporated in these specifications as Attachment 1 "Model Professional Services Agreement." 9. insurance Requirements. The Contractor shall provide proof of insurance in the form, coverages and amounts specified in Section D of Attachment 1 "Model Professional Services Agreement' within ten (10) calendar days after notice of contract award as a precondition to the contract execution. 10. Business License. The Contractor must have a valid City of Rosemead business license before execution of the contract. Additional information regarding the City's Business License program may be obtained by calling (626) 569 -2104. B. Contract Performance 1. Ability to perform. The Contractor warrants that it possesses, or has arranged through subcontracts, all capital and other equipment, labor, materials, and licenses necessary to carry out and complete the work hereunder in compliance with any and all federal, state, county, city and special district laws, ordinances, and regulations. 2. Safety Provisions. The Contractor shall conform to the rules and regulations pertaining to safety established by OSHA and the California Division of Industrial Safety. 3. Contractor non - Discrimination. In the performance of this work, the Contractor agrees that it will not engage in, nor permit such subcontractors as it may employ, to engage in discrimination in employment of persons because of age, race, color, sex, national origin or ancestry, sexual orientation, or religion of such persons. 4. Work Delays. Should the Contractor be obstructed or delayed in the work required to be done hereunder by changes in the work or by any default, act, or omission of the City, or by strikes, fire, earthquake, or any of Act of God, or by the inability to obtain materials, equipment, or labor due to federal government restrictions arising out of defense or war programs, then the time of completion may, at the City's sole option, be extended for such periods as may be agreed upon by the City and the Contractor. C! Attachment 1 5. Payment Terms. Interim progress payments may be made on the basis of progress points on each audit service. These are at the 25 %, 5D %, 75% and 90% levels of completion. Payment to the auditor will be made within thirty days of receipt of auditor's invoice. Final payment will be made upon acceptance of each audit service as complete by the City. 6. Working Papers. All working papers and reports must be retained, at the auditor's expense, for a minimum of seven (7) years, unless the firm is notified in writing by the City of Rosemead of the need to extend the retention period. The auditor will be required to make working papers available, upon request by the City of Rosemead. In addition, the firm shall respond to the reasonable inquiries of successor auditors and allow successor auditors to review working papers relating to matters of continuing accounting significance. 7. Contract Term. The contract will have a three -year term with a two options to renew for an additional year. At the end of each year, the City reserves the right to terminate services for the subsequent year upon 90 days notification. B. Field Work. The City of Rosemead anticipates and expects the major field work for the City to begin on or near the third week of October of each year. This does not include preliminary field work which may occur in May, June or July. 9. Draft Reports. The auditor shall provide draft copies of the audit reports and management letter no later than November 25 of each year. 10. Final Reports. The auditor shall provide final copies of the audit reports and management letter no later than December 15 of each year. 11. Attendance at Meetings and Hearings. As part of the workscope, and included in the contract price, is attendance by the Contractor at up to three (3) public meetings to present and discuss its findings and recommendations. Contractor shall attend as many "working" meetings with staff as necessary in performing workscope tasks. A. General Requirements The purpose of the Technical Proposal is to demonstrate the qualifications, competence and capacity of the firms seeking to undertake an independent audit of the City of Rosemead In conformity with the requirements of this request for proposals. As such, the substance of the proposals will carry more weight than their form or manner of presentation. The Technical Proposal should demonstrate the qualifications of the firm and of the particular staff to be assigned to this engagement. It should also specify an audit approach that will meet the request for proposal's requirements. The Technical Proposal should address all the points outlined in the request for proposals. The proposal should be prepared simply and economically, providing a straightforward, concise description of the proposer's capabilities to satisfy the requirements of the request for proposals. While additional data may be presented, items B through J must be included. They represent the criteria against which the proposal will be evaluated. B. Independence The firm should provide an affirmative statement that it is independent of the City of Rosemead, as defined by generally accepted auditing standards and the U.S. General Accounting Office's Government Auditing Standards (1994). The firm also should provide an affirmative statement that it is independent of all of the component units of the City of Rosemead, as defined by those same standards. 5 Attachment 1 The firm should also list and describe the firm's professional relationships involving the City of Rosemead or any of its agencies and component units for the past five (5) years, together with a statement explaining why such relationships do not constitute a conflict of interest relative to performing the proposed audit. In addition, the firm shall give the City of Rosemead written notice of any such professional relationships entered into during the period of this agreement. C. License to practice in California An affirmative statement should be included that the firm and all assigned key professional staff are properly licensed to practice in California. D. Firm Qualifications and Experience The proposer should state the size of the firm, the size of the firms' governmental audit staff, the location of the office from which the work on this engagement is to be performed and the number and nature of the professional staff to be employed in this engagement on a full -time basis and the number and nature of the staff to be so employed on a part-time basis. If the proposer is a joint venture or consortium, the qualifications of each firm comprising the joint venture or consortium should be separately identified and the firm that is to serve as the principal auditor should be noted, if applicable. The firm is also required to submit a copy of the report on its most recent external quality control review, with a statement whether that quality control review included a review of specific governmental engagements. The firm shall also provide information on the results of any federal or state desk reviews or field reviews of its audits during the past three (3) years. In addition, the firm shall provide information on the circumstances and status of any disciplinary action taken or pending against the firm during the past three (3) years with state regulatory bodies or professional organizations, as well as any pending or settled litigation within the past three (3) years. E. partner, Supervisory and Staff Qualifications and Experience Identify the principal supervisory and management staff, including engagement partners, managers, other supervisors and specialists, who would be assigned to the engagement. Indicate whether each such person is registered or licensed to practice as a certified public accountant in California. Provide information on the government auditing experience of each person, including information on relevant continuing professional education for the past three (3) years and membership in professional organizations relevant to the performance of this audit. Provide as much information as possible regarding the number, qualifications, experience and training, including relevant continuing professional education, of the specific staff to be assigned to this engagement. Indicate how the quality of staff over the term of the agreement will be assured. Include affirmative statement that engagement partners, managers, other supervisory staff and specialists may be changed if those personnel leave the firm, are promoted or are assigned to another office. These personnel may also be changed for other reasons only with the express prior written permission of the City of Rosemead. However, in either case, the City of Rosemead retains the right to approve or reject replacements. Consultants and firm specialists mentioned in response to this request for proposal can only be changed with the express prior written permission of the City of Rosemead which retains the right to approve or reject replacements. Attachment 1 Other audit personnel may be changed at the discretion of the proposer provided that replacements have substantially the same or better qualifications or experience. F. Similar Engagements with other Governmental Entities For the firm's office that will be assigned responsibility for the audit, list the most significant engagements performed in the last five years that are similar to the engagement described in this request for proposal. Indicate the scope of work, date, engagement partners, total hours, and the name and telephone number of the principal client contact. A list of all governmental audit clients in this section for the principal office should also be supplied. G. Specific Audit Approach The proposal should set forth a work plan, including an explanation of the audit methodology to be followed, to perform the services required in this request for proposal. Proposers will be required to provide the following information on their audit approach: 1. Proposed segmentation of the engagement 2. Sample size and the extent to which statistical sampling is to be used in the engagement 3. Type and extent of analytical procedures to be used in the engagement 4. Approach to be taken to gain and document an understanding of the City of Rosemead's internal control structure. 5. Approach to be taken in determining laws and regulations that will be subject to audit test. 6. Approach to be taken in drawing audit samples for purposes of tests of compliance H. Total Maximum Price The cost bid should contain all pricing information relative to performing the audit engagement as described in this request for proposal. The cost bid should be submitted in a format consistent with Exhibit A. The total maximum price to be bid is to contain all direct and indirect costs including all out -of- pocket expenses. Cost should be specified for each fiscal year. Costs within each fiscal year should also specify the amount for each individual assignment. For example, costs for the Community Development Commission and Housing Development Corporation should be separately identified. The City of Rosemead will not be responsible for expenses incurred in preparing and submitting the technical proposal and cost bid. Such costs should not be included in the proposal. The cost bid must include the following information: Certification that the person signing the proposal is entitled to represent the firm, empowered to submit the bid, and authorized to sign a contract with the City of Rosemead. 2. A total maximum price for the five -year engagement. Rates by Partner, Specialist, Supervisory and Staff Level Times Hours Anticipated for Each 7 Attachment 1 The cost bid should include a schedule of professional fees and expenses, presented in the format provided in the attachment (Exhibit B), which supports the total maximum price. Separate form should be prepared for each of the fiscal years 2010 -11, 2011 -12, 2012 -13, 2013 -14 and 2014 -15. J. Out -of- Pocket Expenses in the Total Maximum Price and Reimbursement Rates All estimated out -of- pocket expenses to be reimbursed should be presented on the second page of the cost bid in the format provided in the attachment (Exhibit B). All expense reimbursements will be charged against the total maximum price submitted by the firm. K. City Staff hours An estimate of the number of "additional" City staff hours required to assist the auditors and the tasks to be performed by City staff. (Present in the format provided in Exhibit C.) Do not include time preparing correspondence, discussions with auditors, or preparing balance sheet support schedules (in the City's format). Do include any time pulling invoices, copying or otherwise assisting the auditors. L. Rates for Additional Professional Services If it should become necessary for City of Rosemead to request the auditor to render any additional services to either supplement the services requested in this RFP or to perform additional work as a result of the specific recommendations included in any report issued on this engagement, then such additional work shall be performed only if set forth in an addendum to the contract between City of Rosemead and the firm. Any such additional work agreed to between City of Rosemead and the firm shall be performed at the same rates set forth In the schedule of fees and expenses included in the cost bid. A. tame and Telephone plumber of Principal Contact The auditor's principal contact with the City of Rosemead will be Carolyn Chu, Finance Manager who will coordinate the assistance to be provided by the City of Rosemead to the auditor. Her telephone number is (626) 569 -2146. B. Background Information The City of Rosemead, incorporated in 1959, has a population of approximately 57,000. The City is a general law City and operates under the City Council /City Manager form of government. The City is located approximately 10 miles north of Los Angeles in the County of Los Angeles. The City of Rosemead's fiscal year begins on July 1 and ends on June 30. The City of Rosemead provides the following services to its citizens: Highways and Streets Public Improvements Planning and Zoning Recreation and Parks General Administrative Support Police (L. A. County Sheriff contract) Fire (L. A. County Fire) Wastewater (sewer) Transportation The City of Rosemead has a total payroll of approximately $8.6 million covering about 59 full -time and 200 part- time employees. C. Fund Structure Attachment 1 The City of Rosemead uses the following fund types in its financial reporting: D. Budgetary Basis of Accounting The City of Rosemead prepares its budgets on a basis consistent with generally accepted accounting principles. E. Federal and State Financial Assistance During the initial fiscal year to be audited (2010 - 2011), the City of Rosemead received the following financial assistance: Community Development Block Grant HOME Investment Partnership Federal Emergency Management Agency Department of Justice Department of Transportation Federal Stimulus Other forms of Federal financial assistance may be added to the list before the fiscal year ends. F. Pension Plans The City of Rosemead participates in the State of California Public Employees' Retirement System (PERS), an agent multiple - employer retirement system. The City also maintains supplemental defined benefit plan for all full - time employees and certain part-time employees who are not covered by PERS. G. Component Units The City of Rosemead is defined, for financial reporting purposes, in conformity with the Government Accounting Standards Board's Codification of Governmental Accounting and Financial Reporting Standards, Section 2100. Using these criteria, component units are included in the City of Rosemead's financial statements. The management of the City of Rosemead identified the Rosemead Community Development Commission and the Rosemead Housing Development Corporation as component units that are included in the City of Rosemead's financial statements. These component units are to be audited as part of the audit of the City of Rosemead's financial statements. H. Current Financial Software The City of Rosemead currently uses IDC software but is recommending to City Council the award of bid to Tyler Technologies- Incode software in December 2010. Statements and Schedules to be Prepared by the Staff of the City of Rosemead Number of Fund Type /Account Group Individual Funds General Fund 1 Special Revenue Funds 12 Debt Service Funds 3 Capital Project Funds 4 Internal Service Funds 2 Agency Funds 4 Trust & Agency 1 D. Budgetary Basis of Accounting The City of Rosemead prepares its budgets on a basis consistent with generally accepted accounting principles. E. Federal and State Financial Assistance During the initial fiscal year to be audited (2010 - 2011), the City of Rosemead received the following financial assistance: Community Development Block Grant HOME Investment Partnership Federal Emergency Management Agency Department of Justice Department of Transportation Federal Stimulus Other forms of Federal financial assistance may be added to the list before the fiscal year ends. F. Pension Plans The City of Rosemead participates in the State of California Public Employees' Retirement System (PERS), an agent multiple - employer retirement system. The City also maintains supplemental defined benefit plan for all full - time employees and certain part-time employees who are not covered by PERS. G. Component Units The City of Rosemead is defined, for financial reporting purposes, in conformity with the Government Accounting Standards Board's Codification of Governmental Accounting and Financial Reporting Standards, Section 2100. Using these criteria, component units are included in the City of Rosemead's financial statements. The management of the City of Rosemead identified the Rosemead Community Development Commission and the Rosemead Housing Development Corporation as component units that are included in the City of Rosemead's financial statements. These component units are to be audited as part of the audit of the City of Rosemead's financial statements. H. Current Financial Software The City of Rosemead currently uses IDC software but is recommending to City Council the award of bid to Tyler Technologies- Incode software in December 2010. Statements and Schedules to be Prepared by the Staff of the City of Rosemead Attachment 1 City staff currently produces schedules and other backup for most balance sheet accounts at year end (accounts receivable listing, accounts payable listing, compensated absences listing, bank reconciliations, schedule of fixed assets etc.). The auditor is expected to produce any other necessary schedules. City staff will help obtain any necessary information. In addition to this, auditors are expected to pull their own invoices and documentation whenever possible. If this is not your firm's practice, please estimate the staff time necessary to perform this function in a format similar to Exhibit C. Work Area, internet, Photocopying and Fax Machines The City of Rosemead will provide the auditor with reasonable work space, desks and chairs. The auditor will also be provided with access to an internet connection, photocopying facilities and fax machines to be used for the audit. 10 Attachment 1 i 11 Attachment 1 Total Maximum Price C ity $ $ - $ - $ - $ Redevelopment Housing Corp. Single Audit Grand Total* $ $ - $ - $ - $ - $ All inclusive total for services. out -of- pocket expenses, meals, lodging, transportation. printing and other costs. (Should see to maximum price on Exhibit B) I (izanze, title azd firm) am empowered to submit this bad., and am authorized to sign a contract with the City of Rosemead. (Si.-nature) 12 Attachment 1 Rate Hours Cost (rate x hours) Partners $ $ $ Managers Supervisory Staff Staff Other (Specify) Subtotal Staff $ $ Billable Expenses $ $ $ Meals & Lodging Transportation Other (Specify) Subtotal Billable Expenses $ - $ - $ Total Maximum Cos $ - $ - $ Notes: - The quoted hourly rate should not be presented as a general percentage of the standard hourly rate or as gross deduction from the total maximum puce. - A separate Exhibit B should be completed for each fiscal year being proposed. 13 Attachment 1 EXF Esti mated Additional Requireme m�* t _, , l List anticipated tasks such as "pulling mzd filing invoices for s) tesring" or °pulling and filing timecards", etc. 14 Attachment 1 I I Due date for Proposals Award Contract Year End Field Work Begins Draft Financials Submitted to City Draft Financials Returned by Auditor Audit Reports submitted to City Presentation to City Council February 10, 2011 April 15, 2011 October 17, 2011 November 23, 2011 December 9, 2011 December 20, 2011 January 12, 2012 15 Attachment 2 i ; Proposal or Professional Aud iting For the fiscal years ending June 30, 2011, 2012 and 2013 (with the option to extend for two subsequent years) PREPARED BY: ROGERS, ANDERSON, AIALODY AND SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS CPA LICENSE NUMBER 2596 FEIN 95- 2662063 290 NORTH "D" STREET, SUITE 300 SAN BERNARDINO, CALIFORNIA 92401 (909) 889 -0871 CONTACT: TERRY SHEA, PARTNER tshea@ramscpa.net ALTERNATE CONTACT PERSON: SCOTT MANNO, PARTNER smanno @ramscpa.net February 10, 2011 Attachment 2 CITY OF ROSEMEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Tables of Contents Transmittal Letter Technical Proposal Paqe i Independence and License to practice in California 1 Firm qualifications and experience 2 About our firm Range of activities Single audit experience External quality control examinations Partner, supervisory and staff qualifications and experience 4 Partner and supervisory staff involvement Continuing professional education Assigned personnel Similar engagements with other Government entities 7 Client references I Capabilities in general consulting and compliance auditing 9 Specific audit strategy (approach, scope and timing) 10 Specific audit strategy and proposed segmentation Sample sizes Paperless audit Analytical procedures Understanding of internal control Approach in determining applicable laws and regulations Approach in drawing samples for compliance testing Resumes of key engagement personnel Attachment A: Quality Control Review Report Attachment B: Certificate of Insurance 15 Attachment C: City Staff Hours Attachment 2 I III I ROGERS, ANDERSON, MALODY & SCOTT LLP CERTIFIED PUBLIC ACCOUNTANTS ROBERT B MEMORY, CPA. (19452009) OF COUNSEL JAY H ZERCHER. C.P A. February 10, 2011 City of Rosemead Attn: Steve Brisco, Director of Finance 8838 E. Valley Blvd Rosemead. CA 91770 PHILLIP H. WALLER, CP.A BRENDA L ODLE, CP A. TERRY P. SHEA, C A. KIRK A. FRANKS, CS.A MATTHEW B. WILSON, C. P SCOTT W. MANNO, C A LEENA SHANBHHG, C PA NANCY O'RAFFERTY, C A. BRADFERD A. WELBE R. C.P.A JENNY LIU. C.P.A. KATIE L. MILLSOM, C.PA. JONATHAN R. KUHN, CPA. PAPA MATAR THIAW, C.PA MAYA S. IVANOVA, C A. CHRISTOPHER MONTOYA. C.P.A. DANIELLE E. ODGERS, C.P.A. Rogers, Anderson, Malody and Scott, LLP is pleased to present this proposal for professional auditing services to the City of Rosemead (the City). For 63 years, Rogers, Anderson, Malody and Scott, LLP has been providing honest, accurate, objective results to all of our clients, including governmental agencies such as yours. We pride ourselves on developing solid relationships with all of our clients, but first and foremost, we view our relationship with you as professional; we are your auditor and advisor. That is what we have been hired to do; these are the responsibilities we are hired to fulfill. Our extensive experience has helped us understand the complex requirements and issues encountered by agencies like yours. We also understand the desire for the timely delivery of accurate reports (including the timely submission of the Comprehensive Annual Financial Report (CAFR)) and the desire for a quality audit performed in a competent, efficient manner. We pride ourselves on helping you meet all reporting /auditing deadlines, resolving any issues encountered during your audit (e.g., accounting or auditing, new pronouncements, etc.) and by providing you with quality audit services. We understand that the City has requested proposals from many other firms, but feel we would be the most qualified choice for the City's engagement based on the following: As a recognized leader in the governmental accounting and auditing community, we are committed to providing excellent, timely service and quality reports to all of our clients. We take pride in providing the most experienced and technically skilled professionals on all of our engagements. We strive to recruit and retain the best and brightest professionals in our field ensuring you receive qualified professional staff on your engagement. In addition, our staff prides itself on being able to take a proactive approach to serving the City by actively seeking opportunities to improve the efficiency and effectiveness of your operations. Simply stated, we are a full service firm committed to providing the highest standards of quality and professionalism to all of our clients. MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS POPS THE AiCPA ALLIANCE FOB CPA FIRIAS CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS VANIR TOWER + 290 NORTH "D" STREET • SUITE 300 SAN BERNARDINO. CA 92401 (909) 889 -0871 • (909) 824 -6736 ^ FAX (909) 889 -5361 Websife: Www_ramwpa. nel Attachment Z City of Rosemead February 10, 2011 2. We understand that the audit process as a whole can be a taxing experience for you and your staff; we understand that you will have other commitments and your regular workloads during the audit period. For all of our clients, we make every effort to ensure the audit process, from the interim field work to the preparation of any required reports, Will be as trouble -free as possible for you and your staff. We do this by planning the audit properly and utilizing our staff in the most efficient and effective manner. Also, we keep an open line of communication with all parties involved in the audit process. 1 As governmental accountants and auditors, we understand the time constraints that our clients face. Therefore, as with all of our clients, we will be committed to performing quality work within any required time frames. 4. It is the firm's policy to provide unlimited telephone & e -mail consultations to our municipal clients regarding accounting and other technical matters. After reading through our proposal, we hope that you will have gained an understanding of our firm's commitment to our clients, that is, our commitment to providing exceptional and timely service, quality products, and experienced staff to all of our clients, whether new or continuing. We understand the scope of the work to be performed, auditing standards to be followed and the reports to be issued, as described in the City's Request for Proposal, in addition, we are committed to perform the work within any required timeframes. This proposal is a firm and irrevocable offer for ninety (90) days. Mr. Shea and Mr. Manno, Partners, are authorized to act on behalf of Rogers, Anderson, Malody and Scott, LLP. They can be reached at: 290 North "D" Street, Suite 300, San Bernardino, CA 92401, (909) 889 -0871, tshea @ramscpa.net or smanno @ramscpa.net. Thank you for the opportunity to serve the City of Rosemead. We look forward to having a long and mutually beneficial association. Respectfully yours, ROGERS, ANDERSON, MALODY& SCOTT, LLP Terry lea Certified Public Accountant Partner Attachment 2 CITY OF ROSEmEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Independence and License to practice in California Independence Rogers, Anderson, Malody & Scott. LLP is independent of the City of Rosemead, and all of its component units, as defined by general standard number two of the generally accepted auditing standards. We are also independent of the City of Rosemead, as defined by the second general standard for government auditing in the U.S. Government Accountability Office's Government Auditing Standards ( 2007). We have had no professional relationships with the City for the past f ive (5) years License to practice in California Rogers, Anderson, Malody & Scott, LLP is licensed to practice in the State of California. The key professional staff, which includes the partners and managers, are all certified public accountants licensed to practice in the State of California. 1- AttacTbment 2 CITY OF ROSEMEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Firm qualifications and experience About our firm Rogers, Anderson, Malody & Scott, LLP was founded in 1948 and is located at 290 North °D" Street, Suite 300, San Bernardino, California. We are one of the oldest CPA firms in Southern California, with over 63 years of public practice experience, specializing In governmental agency auditing, accounting and management advisory services. Over fifteen thousand hours per year are devoted to this area of our practice, which includes cities, redevelopment agencies, water districts, other special districts, nonprofit corporations and joint power authorities. Our firm has a total staff of thirty-three people, which includes sixteen certified public accountants. Our staff consists of seven partners, four managers, six seniors, eleven staff accountants and five secretarial /support staff. Our municipal audit staff consists of twenty members who devote approximately 75% of their time to municipal engagements. Tentatively, the audit team assigned to the City engagement will consist of the following full -time staff: one audit partner, an audit manager and two auditing professionals. There will be no part-time staff assigned to the engagement. All personnel are located in our San Bernardino office. As governmental auditors, we understand that the City desires its auditors to have a thorough understanding of the complex accounting and compliance issues confronting governmental entities such as yours. Our firm is committed to providing our clients the highest quality service at the most reasonable fee. The professionals assigned to the City financial audit have each made providing quality services their priority. As stated earlier, our firm has a long history of governmental accounting and auditing. Over the years, we have gained valuable experience, acquired an in -depth knowledge and obtained the technical expertise needed for governmental accounting and auditing. Our firm's partners and professional staff assigned to the City have performed audits, various accounting services and management advisory services for many governmental agencies like yours. The following is a listing of current clients, similar to the type of audit requested, that our firm serves: City of Norco City of Dana Point City of Canyon Lake City of Fillmore Crestline -Lake Arrowhead Water Agency Redevelopment Agency of San Bernardino County Running Springs Water District Heartland Communications Facility Authority San Bernardino international Airport Authority Rim of the World Recreation and Park District City of Grand Terrace City of San Bernardino City of Calimesa City of Lemon Grove Crestline Village Water District Rincon del Diablo Municipal Water District City of San Bernardino EDA Inland Valley Development Agency Inland Empire West Resource Conservation District Western Regional Council of Governments — TUMF audits Town of Yucca Valley City of El Cajon City of Goleta City of Grand Terrace County of San Bernardino Special Districts San Bernardino Valley Municipal Water District Heartland Fire Training Authority Ventura Regional Sanitation District Rossmoor Community Seniices District Ventura County Regional Energy Alliance -2- Attachment 2 CITY OF ROSEMEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Firm qualifications and experience (continued) Range of activities We have performed audits for redevelopment agencies, pension plans, and compliance requirements in accordance with OMB Circular A -133, as well as for water and sewer utility districts and public financing authorities. We have assisted in the creation of several special districts which have split from the County of San Bernardino to become independent districts. In addition, we have provided audit and consulting services for various private enterprises. We also provide tax and consulting /planning services to individuals, not -for- profit and for - profit enterprises. Single audit experience Over the past several years, many of our clients have been subject to an audit in accordance with OMB A -133. In addition, we have many other government and nonprofit clients that are also subject to single audit standards. A current audit client of ours receives approximately 92% of its revenues from Federal, State and local grants. For the fiscal year ending June 30, 2010, we performed single audits for the City of San Bernardino, the City of Goleta, the City of Norco, the City of El Cajon, the City of Dana Point, the Inland Valley Development Agency and the San Bernardino International Airport Authority. During the fiscal year ended. several of our clients received ARRA money which was subject to single audit standards. External quality control examinations As a member of the AICPA Private Companies Practice Section, our firm has participated in "Peer Review" since 1993 and has been examined every three years since that date. During participation in this program, the firm has received unqualified . opinions from the peer reviewers. A copy of our most recent external quality control review dated September 2, 2009 for the year ended November 30, 2008 (Attachment A) is attached. The latest review included reviews of specific governmental agencies. The firm is not aware of any federal or state desk reviews or field reviews of its audits during the last three years. The firm has not had any disciplinary action taken or pending against them during the past three years with state regulatory bodies or professional organizations, nor has it had any pending or settled litigation, present civil or criminal investigations within the past three years. Our firm does not have a record of substandard work. -3- Attachment 2 CITY OF ROSEMEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Partner, supervisory and staff qualifications and experience The quality of service you receive is dependent on the capabilities of the individuals assigned to the engagement, and the manner in which those personnel resources are organized to efficiently focus their abilities on providing you with the requested audit services. Our engagement team will provide significant understanding of governmental accounting and and knowledgeable and have a thorough governmental entities operate. experience coupled with an extensive, practical auditing. These professionals are highly trained understanding of the environment in which Partner and supervisory staff involvement All partners and supervisory staff are working professionals and are actively and continually involved in all aspects of their engagements. We believe that partner and supervisory level staff personnel involvement in all areas of the audit is a key aspect of the overall audit process. This involvement includes being on -site for interim and year -end fieldwork thus facilitating a proper, efficient and effective audit, with minimal disruption of City staff. In addition, the time spent on- site by the partners and supervisory staff ensures they gain an understanding of all the City's accounting processes and procedures, which will enable them to evaluate, develop opportunities for efficiency, and offer practical and functional advice for improving your accounting processes and procedures. In summary, we want to emphasize the credentials of the professionals who will be directly responsible for the quality of service the City will receive. Additionally, our audit team has another attribute that is very important, even though it is intangible -- the professionals assigned to the City's audit have worked together as a multi - disciplined team, thus ensuring a smooth, efficient and effective audit. We are committed to allocating the necessary resources to ensure that we provide continuity of personnel throughout the term of our relationship with the City. Continuing professional education All professionals at our firm participate in continuing professional education programs which are sponsored by various organizations including the Government Finance Officers Association, the American Institute of Certified Public Accountants, the California State Society of Certified Public Accountants, the California Society of Municipal Finance Officers and the Association of Government Accountants. Participation in these classes helps us to ensure that our clients are receiving the best trained and proficient government auditors and accountants available. Continuity of audit staff is a principal concern with our firm. Therefore, we plan to provide staff continuity from year to year, which is in the best interest of the City and our firm, thus ensuring an orderly, efficient and less disruptive audit experience by competent professionals. Since we cannot guarantee that our staff will remain with us, principal supervisory and management staff, including engagement partners, managers, other supervisory staff and specialists, may be changed if those personnel leave the firm or are promoted. 0 Attachment 2 CI M/ OF ROSEMEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Partner, supervisory and staff qualifications and experience (continued) Assigned personnel It is our goal to provide the City with capable, competent and personal individuals who offer an extensive background, not only in governmental accounting and auditing, but also in general business practices. We offer practical solutions, as well as provide technical support. This enables you to stay at the forefront of governmental accounting and provides you with the support you need in dealing with the complex issues confronting governments such as yours. In addition, our engagement team has the managerial and supervisory experience to provide the City with a comprehensive audit of the highest quality, while still focusing on personal service. The following individuals will be assigned to the engagement for the entire contract period: Terry Shea, CPA Audit Partner— Engagement Partner Mr. Terry Shea, CPA is a municipal audit partner with the firm and will be the engagement partner. Mr. Shea has been in public accounting for 29 years serving local governments such as yours. As the engagement partner, he will be responsible for overall engagement quality, as well as ensuring that the engagement is performed in the most effective and efficient manner. He will review all work - papers prepared during the engagement, In addition to all required reports. Mr. Shea provides real world experience to all of our governmental engagements. He has gained this experience by serving as interim/contract finance director for several cities over the years. He served as Interim Finance Director for the City of Perris from July 1998 to October 2001. He currently serves as the Contract Finance Director for two Riverside County cities. Mr. Shea has extensive experience both in auditing and consulting for redevelopment agencies. He has been auditing cities and redevelopment agencies since the early 1980's, which was when most cities activated their redevelopment agencies. He has audited the City of San Bernardino Economic Development Agency, one of the largest redevelopment agencies in the State with eleven project areas and over $180 million in long -term debt, for 17 years. He served as a contract accounting manager for the City of Fontana for two years where he devoted a substantial amount of time to the City's Redevelopment Agency. He assisted the Inland Valley Development Agency, a redevelopment agency created by special legislation for the reuse of the former Norton Air Force Base, in setting up their general ledger and fund accounting system. -5- Attachment 2 Cln/ OF ROSEMEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Partner, supervisory and staff qualifications and experience (continued) Scott loanno, CPA Quality Control Partner Mr. Scott Manno, CPA will be the Quality Control Partner. Mr. Manno has over 15 years of practical, governmental accounting and auditing experience. He will be responsible for overall engagement quality. Mr. Manno will review all required reports. In addition, Mr. Manno also assisted the following cities in their endeavors to obtain the CSMFO and /or GFOA awards for outstanding financial reporting, Town of Yucca Valley, Elsinore Valley Municipal Water District, Rincon del Diablo Municipal Water District, City of Lake Elsinore, City of Ontario, the Ventura Regional Sanitary District, the City of Norco and the City of Twentynine Palms. From 1997 -2000, Mr. Manno served as a technical reviewer under the CSMFO award program. Both Mr. Shea and Mr. Manno are working partners and will be actively and continually involved in all aspects of the engagement. Travis Hickey, CPA, Manager Mr. Travis Hickey, CPA is a manager with the firm. He is licensed to practice as a certified public accountant in the State of California. Mr. Hickey has over ten years of public accounting experience. He has provided accounting, auditing and consulting services for municipalities, special districts, water agencies, and various non - profit organizations. He will be responsible for planning the audit, supervising the staff assigned to the engagement and performing reviews of all work - papers prepared for the engagement. In addition, he will also be responsible for the preparation of any required reports. Katie IlAillsom, CPA, Senior Mrs. Katie Millsom. CPA is a senior accountant with the firm. Mrs. Millsom has five years experience in providing accounting and auditing services for municipalities, special districts and redevelopment agencies. As a senior accountant, she will be responsible for examining general ledger accounts, verifying revenues and expenditures, preparing work- papers, supervising staff accountants and assisting in the preparation of the financial statements and any other required reports. -6- Attachment 2 CITY OF ROSEMEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Similar engagements with other Government entities Similar engagements vvith other Government entities Entity: CITY OF SAN BERNARDINO Scope of Work: Financial Audit /Single Audit/RDA Audit /CAFR * /GASB 34/ AOMD Audit Date: Years ending June 30 2006 through 2010 Engagement Partner. Mr. Terry P. Shea Total Hours: Approximately 1,400 hours Contact Person: Mis. Barbara Pachon, Finance Director, (909) 384 -5242 pachon_ba@sbcity.org 2. Entity.' CITY OF NORCO Scope of Work: Financial Audit /Single AudiURDA Audit /CAFR' /GASB 34 Date: Years ending June 30, 2001 through 2010 Engagement Partner: Mr. Terry P. Shea Total Hours: Approximately 500 hours each year Contact Person: Ms. Olivia Hoyt, Accounting Manager, (951) 735 -3900 ohoyt@ci.norco.ca.us 3. Entity: CITY OF EL CAJON Scope of Work: Financial Audit /Single Audit/RDA Audit /CAFR` /GASB 34 Date: Years ending June 30, 2007 through 2010 Engagement Partner: Mr. Terry P. Shea Total Hours: Approximately 500 hours each year Contact Person: Mrs. HDlly Reed -Falk, Financial Operations Manager, (619) 441 -1722, hrfalk @ci.el- cajon.ca.us 4. Entity: CITY OF GOLETA Scope of Work. Financial Audit/Single Audit /RDA Audit /CAFR' /GASB 34 Date: Years ending June 30, 2008 through 2010 Engagement Partner. Mr. Terry P. Shea Total Hours: Approximately 300 hours each year Contact Person: Ms. Tina Rivera, Finance Director, (805) 961 -7527 trivera@cityofgoleta.org 5. Entity CITY OF DANA POINT Scope of Work. Financial Audit /Single Audit /CAFR' /GASB 34 Date: Years ending June 30, 2007 through 2010 Engagement Partner. Mr. Terry P. Shea Total Hours: Approximately 275 hours each year Contact Person: Mr. Andrew Glass, Accounting Manager, (949) 248 -3500 aglass @danapoint.org = Received GFOA or CSIvlFO award Attachment 2 CITY OF ROSEMEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Client rafarances Client references Entity. CITY OF LEMON GROVE Scope of Work. Financial Audit/RDA Audit Date: Years ending June 30, 2008 through 2010 Engagement Partner: Mr. Scott Manno Contact Person: Mrs. Cathy Till, Finance Director, (619) 825 -3800 cti I I @ ci .I e mo n -g rove. ca. us 2. Entity: TOWN OF YUCCA VALLEY Scope of Work: Financial Audit/RDA Audit/CAFR Date: Years ending June 30, 2008 through 2010 Engagement Partner. Mr. Scott Manno Contact Person: Mr. Curtis Yakimow, Director of Administrative Services, (760) 369 -7207, cyakimow @yucca - valley.org 1 Entity.' SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY Scope of VVork. Financial Audit /RDA Audit (11 Project Areas) Date: Years ending June 30, 2006 through 2010 Engagement Partner. Mr. Terry P. Shea Contact Person: Mr. Russ DeJesus, Accounting Manager, (909) 663 -1044, rdjesus @sbrda.org 4. Entity. INLAND VALLEY DEVELOPMENT AGENCY Scope of Work: Financial Audit/RDA Audit /Single Audit Date: Years ending June 30, 1995 through 2010 Engagement Partner: Mr. Kirk Franks Contact Person: Mr. Martin Romeo, Controller, (909) 382 -4100 mromeo@sbairport.com 5. Entity: CITY OF GRAND TERRACE Scope of Work: Financial Audit / /RDA Audit/ GASB 34 Date: Years ending June 30, 2003 through 2010 Engagement Partner. Mr. Terry P. Shea Contact Person: Mr. Bernie Simon, Finance Director, (909) 430 -2216 bsimon @cityofgrandterrace.org -8- Attachment .2 CITY OF ROSEMEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Capabilities in general consulting and compliance auditing Capabilities in general consulting and compliance auditing The firm provides various other services to governmental agencies. Services to these governments include: • Contract compliance agreed upon procedures • Treasurer duties • Contract Finance Director • Study and evaluation of financial condition and fiscal policies • Transient Occupancy Tax agreed upon procedures • Financial projections • Franchise (refuse, cable) agreed upon procedures • EDP control reviews and computer feasibility studies • Job classification and compensation studies • Accounting policies and procedures • Utility rate studies • Cost control and cost allocation plans • Capital improvement program procedures and policies • Cash management studies • Financing and public bond offering assistance • Assistance in development of internal audit programs • Employee benefit consulting • Franchise agreement assistance (ambulance, cable, television, refuse, etc.) M Attachment 2 CITY OF RosEmEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Specific audit strategy (approach, scope and timing) Specific audit strategy and proposed segmentation The following is a summary of the audit team's approach for the City of Rosemead engagement. The audit will be divided into the following phases: Interim phase — planning, pre -audit administration and internal control testing: During this phase of the audit, our principal objectives will be as follows: • Discuss the dates of the interim and year -end fieldwork. • Gather information about the City and its environment, including internal control. • Obtain an understanding of the City and its environment, including its internal control sufficient to plan the audit. • Evaluate the design and effectiveness of the City's internal controls and determine whether they have been implemented. • Perform single audit testing procedures, if applicable. • Perform tests of controls, if applicable. In order to achieve the desired objectives of this phase of the audit, we will: • Meet with City staff in order to determine convenient dates for the City in which we can begin our audit and to discuss the assistance to be provided by City staff. • Review and evaluate the City's accounting and reporting processes by reviewing the prior year audit work- papers, any City prepared documents such as budgets, in- house financial reports, policies and procedures manuals, minutes of council meetings, etc. and by using various analytical procedures. Analytical procedures will enhance our understanding of the City and will help us identify areas that may need further assessment and additional testing. • Review and retain copies of any pertinent local, state and federal statutes, regulations, or charters that apply to the City. We will also review and retain copies of any agreements or contractual obligations (e.g., bond and grant documents, lease agreements, contracts for deposit of monies, revenue agreements, etc). • Evaluate the design of controls that are relevant to the audit by obtaining a thorough understanding of the City's internal controls over financial reporting and compliance by documenting key internal control components, utilizing questionnaires, walkthroughs, inquiring of City personnel, and observing and reviewing of key supporting documentation (a more thorough explanation of this process is discussed later in the technical proposal). • Hold brainstorming session with engagement team members to discuss the susceptibility of the City's financial statements to material misstatement and fraud. • Review and analyze supporting data and determine what reliance will be placed on internal controls and assess control risk. 10- Attachment 2 CITY OF ROSEMEAD PROPOSAL FOR PROFESSIONAL AUDITING SERV @CES Specific audit strategy (approach, scope and timing) (continued) Test controls, if control risk is assessed below the maximum, by selecting a sample of transactions within the audit area being tested and reviewing supporting documentation, evaluating the completeness of the documentation tested, as well as the adequacy of support and approvals as they appear on the support. • Document and review with management any findings noted during the testing of internal controls and provide a preliminary management letter that will include our recommendations for improving any weaknesses in operations noted during our internal control analysis and tests of controls. The letter will also include suggestions for improving the efficiency of the City's operations. The audit manager and two accounting professionals will perform this phase. This phase will take approximately 80 hours. Year -end phase 1— substantive testing: During this phase of the audit, our principal objectives will be as follows: • Assess the risk of material misstatement at the financial statement level and specific assertions. • Design overall responses to assessed risks and further audit procedures. • Perform substantive tests on all significant accounts over materiality levels and complete the audit. • Evaluate audit findings, if applicable. In order to achieve the desired objectives of this phase of the audit, we will: ® Determine whether our testing supports the assessed level of risk initially assigned at the financial statement level and at the assertion level. • Identify significant risks. • Develop a detailed audit plan. Design substantive tests of balances, designed and modified specifically for the City's operations and assessed level of risk (develop audit programs). The audit partner, manager and two audit professionals will perform this phase. This phase will take approximately 240 hours. Year -end phase II — reporting /audit conclusion: During this phase of the audit, our principal objectives will be as follows: ✓ Evaluate whether the financial statements, taken as a whole, are free from material misstatement. ✓ Form an opinion and issue the audit report . -11- Attachment 2 CTTY OF ROSEMEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Specific audit strategy (approach, scope and timing) (continued) In order to achieve the desired objectives of this phase of the audit, we will: ® Determine whether, based on our substantive testing and other procedures, the financial statements, taken as a whole, are free of material misstatement. This will provide the basis for our opinion. ® Review all audit work- papers by the engagement partner and manager to ensure that the audit was performed in accordance with the required standards (GAAS, GAGAAS, etc.). Prepare drafts of all required reports by the agreed upon dates. Conduct an independent review of financial statement draft by engagement's quality control partner. Issue all reports by agreed upon dates. The two audit partners, a manager and one audit professional will perform this phase. This phase will take approximately 100 hours. Sample sizes Our sample sizes will be determined in accordance with the AICPA Audit and Accounting Guide, Audit Sampling, and will be selected using professional judgment as permitted by SAS 39. Our methods are designed to provide the most audit coverage without expending excess time. Our sample sizes will depend upon our preliminary assessment of control risk, as well as our planned substantive testing and analytical procedures. Paperless audit Our firm has adopted a paperless audit approach. Therefore, we would prefer all audit information in electronic format, particularly trial balances and general ledgers. If electronic formatting is not available, all audit teams have portable scanners in the field. Analytical procedures We will utilize analytical review procedures throughout our audit of the City. During the interim phase of our audit, we will compare current and prior year unadjusted balances to determine areas that may need additional analysis; we will also compare current year actual amounts to the City's annual budget. During the final phase of our audit, we will perform procedures similar to those mentioned above as well as compare certain financial ratios for current and prior years. We will also conduct certain "reasonableness' tests. Finally, after we have completed our fieldwork, we will compare current and prior year audited balances, keeping in mind expected relationships obtained from our knowledge of the City and various other entities. 12- Attachment 2 CFTY QF RO SEMEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Specific audit strategy (approach, scope and timing) (continued) Understanding of internal control Our approach to obtaining an understanding of the City's internal control over financial reporting will be performed in accordance with professional standards as promulgated by the American Institute of Certified Public Accountants -- our understanding will include the Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring. Our approach is as follows: Control Environment. Through inquiry of the City's personnel prompted by questionnaires and personal knowledge and review of the minutes of the City council meetings, we will obtain an understanding of management's and the City council's attitudes, awareness and actions concerning the control environment, focusing on the substance of the controls rather than their form. Risk Assessment. Again, through inquiry of the City's personnel and the use of questionnaires, we will obtain sufficient knowledge of the City's risk assessment process to understand how management considers risks relevant to financial reporting objectives and decides upon actions to address those risks. This will include understanding how management identifies risks, estimates the significance of these risks, assesses the likelihood of their occurrence, and relates them to financial reporting. Control Activities. Certain control procedures will be documented during our analysis of the control environment and the accounting system. However, many specific control procedures will still need to be documented that will focus primarily on the City's major transaction cycles. As mentioned above, we will test the City's control procedures on which we intend to rely for safeguarding assets from unauthorized use or disposition and detecting /preventing unauthorized transactions. Any flow charts, organizational charts and any other manuals, programs and financial and management information systems will be analyzed during this process. Information and Communication. Again, through inquiry of the City's personnel, we will identify the major types of transactions engaged in by the City. Next, we will become familiar with the treatment of those transactions, including how the transactions are initiated, the related accounting records and the manner of processing the transactions. Finally, we will obtain an understanding of the City's financial reporting process used to prepare financial reports, including the approaches used to make accounting estimates and disclosures. Monitoring. With the use of questionnaires, we will obtain sufficient knowledge of the major types of activities the City uses to monitor internal control over financial reporting. We will also determine how those activities are used to initiate corrective actions. -13- Attachment Z CITY OF ROSEMEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Specific audit strategy (approach, scope and timing) (continued) Approach in determining applicable laws and regulations As governmental auditors, we realize the importance of laws and regulations in planning an audit of a local government agency. As part of our audit process, our audit team will obtain an understanding of the laws that will have a direct and material effect on the City's financial statements. In determining which laws and regulations are applicable to the City's financial statement audit, we will consult the following sources: AICPA Audit and Accounting Guide, Audits of State and Local Governments a The Division of Local Government Fiscal Affairs Minimum Audit Requirements a U. S. Government Accountability Office's Government Auditing Standards ( The Yellow Book), 2007 Revision a Applicable contracts /grants of the City of Rosemead t The Single Audit Act Amendments of 1996 ♦ Office of Management and Budget (OMB) Circular A -133, Audits of States, Local Governments and Non- Profit Organizations a OMB Circular A -87, Cost Principles for State and Local Governments 4 OMB's Circular A -133, Compliance Supplement After consulting the applicable sources, we will design our audit to provide reasonable assurance of detecting material instances of noncompliance. Approach in draining samples for compliance testing Our approach to be taken in drawing audit samples for purposes of tests of compliance will depend on the number of transactions, the amounts of financial assistance provided (as applicable) and the City%s internal controls over the respective programs. We will select samples that will provide sufficient evidence of the City's compliance with the laws and regulations that will have a material effect on the financial statements. 14- Attachment 2 CITY OF ROSEMEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Resumes of key engagement personnel Terry P. Shea, Engagement Partner Certified Public Accountant Professional Experience Mr. Shea began his career with Thomas, Byrne and Smith in 1981. He spent six years with the firm primarily working on audits of municipalities, special districts, redevelopment and other governmental agencies. He joined our firm In 1987 and has completed governmental audits including municipalities and has provided financial consulting services for various cities and redevelopment agencies. Education Bachelor of Arts degree from California State University, Fullerton Certified Public Accountant — State of California Related Professional Experience Governmental agencies that [Or. Shea has served include the following (`includes redevelopment agency): City of Dana Point City of Grand Terrace' City of Canyon Lake City of Corona* City of Norco" City of Goleta' City of Indian Wells' City of Calimesa City of Loma Linda' City of Palm Desert* City of San Jacinto' City of Riverside City of San Bernardino City of San Bernardino EDA City of El Cajon' Mr. Shea served as the Interim Finance Director for the City of Perris from July 1998 to October 2001. He currently serves as the Contract Finance Director for two cities In Riverside County. Continuing Professional Education Mr. Shea has completed approximately 200 hours of continuing professional education courses in the past three years, of which, the following select courses are relevant to this engagement: e American Institute of Certified Public Accountants, Applying A -133 to Nonprofit and Governmental Organizations m Government Finance Officers Association, OPEB Implementation c California CPA Education Foundation, Risked Based Auditing a California CPA Education Foundation, Audit Standards Update a California CPA Education Foundation, Governmental Auditing Skills s American Institute of Certified Public Accountants.. 2010 Governmental and Not- for - Profit Training Program Professional Affiliations Mr. Shea is a member of the following professional organizations: a American Institute of Certified Public Accountants (AICPA) ♦ California Society of Certified Public Accountants (CSCPA) o Government Finance Officers Association (GFOA) a California Society of Municipal Finance Officers (CSMFO) -15- A-ttachment 2 CTn OF ROSEMEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Resumes of key engagement personnel (continued) Scott W. Manno, Quality Control Partner Certified Public Accountant Professional Experience Mr. Manno began his career with Thomas, Bigbie and Smith in 1995. He spent six years with the firm primarily working on audits of municipalities, special districts and redevelopment agencies as well as various non - profit organizations. He joined Rogers, Anderson, Malody & Scott, LLP in July 2001. Education Bachelor of Science degree from California State University, San Bernardino Certified Public Accountant — State of California Related Professional Experience Governmental agencies that Mr. Manno has served Include the following (`includes redevelopment agency): City of Blythe* City of Grand Terrace - City of Twentynine Palms' City of Canyon Lake Town of Yucca Valley* City of Norco' City of Banning* City of Galt Goleta Sanitary District Elsinore Valley Municipal Water District City of San Jacinto* Lake Elsinore Public Financing Authority City of Perris* City of Lemon Grove City of Ontario* City of Isleton* City of Calimesa Ventura Regional Sanitation District City of Goleta Continuing Professional Education Mr. Manno has completed over 106 hours of continuing professional education courses over the past three years of which the following select courses are relevant to this engagement: o American Institute of Certified Public Accountants, Governmental Accounting and Auditing Update a Association of Government Accountants, Governmental Accounting, Financial Reporting and Budgeting ♦ Government Finance Officers Association, Advanced Governmental Accounting Professional Affiliations Mr. Manno is a member of the following organizations: r American Institute of Certified Public Accountants (AICPA) E California Society of Certified Public Accountants (CSCPA) c Association of Government Accountants (AGA) e Government Finance Officers Association (GFOA) a California Society of Municipal Finance Officers (CSMFO) 16- Attachment 2 LAKE ARROIAWE,AD CQMIF uiT£TY SERv=s MsTR= PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Resumes of key engagement personnel (continued) Travis Hickey, Manager Certified Public Accountant Professional Experience Mr. Travis Hickey is a manager with the firm. Mr. Hickey has over 13 years of experience in providing accounting and auditing services for municipalities, special districts and redevelopment agencies. As a manager, he will be responsible for examining general ledger accounts, verifying revenues and expenditures, preparing work- papers, supervising staff accountants and assisting In the preparation of the financial statements and any other required reports. Education Bachelor of Science degree from California State University, San Bernardino Certified Public Accountant — State of California Related Professional Experience Governmental agencies that Mr. Hickey has served include the following (`includes redevelopment agency): City of Camarillo* City of Lake Forest City of Manhattan Beach City of Huntington Park* City of Laguna Niguel City of Dublin Yucaipa Valley Water District OmniTrans City of Rancho Palos Verdes' City of Moorpark* City of Palmdale* City of Yucaipa* City of Piedmont Inland Empire Utilities Agency Chino Valley Fire Protection District First 5 Riverside Continuing Professional Education Mr. Hickey has completed over 80 hours of continuing professional education courses over the past two years, of which the following select courses are relevant to this engagement: California CPA Education Foundation, Government Accounting and Auditing Conference ♦ California CPA Education Foundation, Accounting and Auditing Conference a Sisk Education, Government Auditing Standards: Yellow Book e Bisk Education, Advanced Fraud Techniques d Bisk Education, Single Audits of Governmental Entities r Bisk Education, Internal Control and Fraud in Government Engagements a Bisk Education, GASB Pension Standards Overview a Bisk Education.. Ethical Obligations of CPAs Professional Affiliations Mr. Hickey is a member of the following organizations: a American Institute of Certified Public Accountants (AICPA) o California Society of Certified Public Accountants (CSCPA) a Government Finance Officers Association (GFOA) a California Society of Municipal Finance Officers (CSMFO) -17- Attachment 2 CITY OF ROSEMEAD PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Resumes of key engagement personnel (continued) Katie L. Millsom, Senior Accountant Certified Public Accountant Professional Experience Mrs. Millsom began her career with Rogers, Anderson, Malody and Scott, LLP in August 2006. During her time with the firm, she has worked primarily on audits of municipalities, special districts and redevelopment agencies, as well as various non - profit organizations. Education Bachelor of Science degree from University of California, Los Angeles Certified Public Accountant — State of California Related Professional Experience Governmental agencies that Mrs. Millsom has served include the following ('includes redevelopment agency): City of Grand Terrace City of San Bernardino` City of Dana Point City of El Cajon* City of Goleta* County of San Bernardino Special Districts Perris Valley Cemetery District Rincon del Diablo Municipal Water District Continuing Professional Education Mrs. Millsom has completed over 120 hours of continuing professional education courses over the past two years, of which the following select courses are relevant to this engagement: a Government Finance Officers Association, Advanced Financial Reporting for Governments a Education Foundation, Governmental Accounting and Auditing Update r California Society of Municipal Finance Officers, GFOA Accounting and Auditing Update t American Institute of Certified Public Accountants, GAO: Yellow Book, Single Audits and More ® American Institute of Certified Public Accountants, 2010 Governmental and Not -for- Profit Training Program Professional Affiliations Mrs. Millsom is a member of the following organizations: a American Institute of Certified Public Accountants (AICPA) a California Society of Certified Public Accountants (CSCPA) a California Society of Municipal Finance Officers (CSMFO) an CPAS AND CONSULTANTS System Review Report September 2, 2009 Attachment A FOUNDERS Lawrence S. Timpson, CPA (1991 -1974) LeVeme W. Garcia, CPA (1904 -1993) PARTNERS Dennis S. Kaneshtro, CPA Elaine Lee Kawasaki, CPA William E. Moy, CPA CONSULTANT William I. Boyle, CPA FIRM ADMINISTRATOR Liz Davis To the Owners of Rogers, Anderson, Malody & Scott, LLP and the Peer Review Committee of the California Society of Certified Public Accountants We have reviewed the system of quality control for the accounting and auditing practice of Rogers, Anderson, Malody & Scott, LLP (the firm) in effect for the year ended November 30, 2008. Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of 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 v,w aicpa. org /prsummary. As required by the standards, engagements selected for review included engagements performed under Government auditing Standards and audits of employee benefit plans. In our opinion, the system of quality control for the accounting and auditing practice of Rogers, Anderson, Malody a& Scott, LLP in effect for the year ended November 30, 2008, 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. Firms can receive a rating of pass, pass with deficiency(ies) or fail. Rogers, Anderson, Malody & Scott, LLP has received a peer review rating of pass. 70 Washington Street, Suite 300 • Oakland, CA 94607 -3705 • 510.832.2325 of 800.94 1.2727 G Fax 510.465.2979 Attachment B CERTIFICATE ®F LIABILITY INSURANCE COVERAGES THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM DR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORUED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS, DATE sizo i PRODUCER (951} 736 -9477 FAX (951} 736 -9478 Orion Risk Management Insurance Services, Inc. Ca. Li c. #0 ➢28764 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION DNLY AND CONFERS NO RtGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. jINSUREb: AFFORDING COVERAGj INSURER olden Eagle Insur. NAIC # 10836 2Z80 Wardlow Circle, Suite 250 Corona, CA 9Z880 INSURED Rogers, Anderson, Melody & Scott LLP 290 North D Street S 1, ® 00e000 DAMAGE TO RENTED $ 500 000 MED EXP {Any ow PeM0n) Suite 300 San Bernardino, CA 92401 INSURER F_ COVERAGES THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM DR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORUED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS, INBR LTR 0D' N TYPE OFINSURANCE GENERAL LIABILITY X COMMERCIAL GENERAL LIABILITY POLICY NUMBER COP3017545 POLICY EFFECTIVE 04 /0I /20IU POLICY EXPIRATION T Y1 04/01/2011 LIMITS EACH OCC URRENCE S 1, ® 00e000 DAMAGE TO RENTED $ 500 000 MED EXP {Any ow PeM0n) S 10,000 A CLAIMS MADE OCCUR PERSONAL 6 AOV INJURY F 1, 000,00 0 GENERALAGGREGATE $ 2,000,000 PRODUCTS COMPIOPAGG S 2,O00,00 GENL AGGREGATE LIMIT APPLIES PER X POLICY JE� LET, _ AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT (Ea.=Id Pq S ANY AUTO ALL OWNED AUTOS BODILY INJURY (Pe, Rerson) S SCHEDULED AUTOS HIRED AUTOS BODILY INJURY (Par ac<itleD[) s NON-DWNED AUTOS PROPERTY DAMAGE (Per=1d..0 S GARAGE LIABILITY AUTO ONLY - EA ACCIDENT S OTHER THAN EA ACC AUTO ONLY: AGG $ AIM AUTO S EXCESBIOIABRELL4 LtA81LTTY EACH OCCURRENCE & AGGREGATE S OCCUR CLAIMS MADE g S a£DVCrIBLE s RETENTION S WC STATU- 0TH -1 WORKERS COMPENSATION AND EL EACH ACCIDENT S EMPLOYERT 41ABILM ANY RROPRIETORIPARTNERIE.YECUTIVE OFFICEWMEMBER EXCLUDED? EL DISEASE -EA EMPLOYE $ EL DISEASE - POLICY LIMIT S Orion does not warrant that coverage may exist for any specific purpose or situation IIyes, tlembe.Me SPECIAL PROVISIONS b 1l OTHER Cart does not address coverage limitations/ ezcl Usians DESCRIPTION OF OPERATIONS / LOCATIONS, VEHICLES i EXCLUSIONS ADDED BY ENDORSEMENT I SPECIAL PROVISIONS or Bidding Purposes Only 0 day notice of cancellation except 10 day for non - payment SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE ISSUING INSURER WILL ENDEAVOR TO MAIL 30 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO NAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR LIABILITY Evidence of Coverage ACORD 25 (20DVOS) ©AGORD CORPORATION 1988 Attachment C City of Rosemead PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Estimated Additional City Staff Requirements Tasks Dir of Finance Finance Manager SR. Accting Spcist. Accting S clst. Total Pulling /Filing AP Invoices Interim Testing 4 4 Pulling/Filing Pulling/Filing Time Cards 2 2 Pulling /Filing AP Invoices Single Audit 2 2 Cash Receipts 2 2 Pulling /Filing AP Invoices Substantive Testing 2 2 Total 4 8 12 Attacbment 2 City of Rosemead PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Total Maximum Price Rogers, Anderson, Malody & Scott, LLP Cerified Public Accountants Total Maximum Price for the Five -year Engagement Optional Items City State Controller's Report $ 3,200 Statement of Indebtedness $ 900 Transient Occupancy Audits $ 1,000 Per entity $ 216,878 I Terry Shea, Partner of Rogers, Anderson, Malody & Scott, LLP am empowered to submit this bid, and am authorized to sign a contract with the City of Rosemead. ��� P (Signs re) Page 1 2010/11 2011/12 2012113 2013114 2014115 City of Rosemead $ 23,840 $ 23,840 $ 24,640 $ 24,640 $ 25,160 Redevelopment Audit 8,076 8,076 8,338 8,338 8,516 Housing Corp 4,072 4,072 4,216 4,216 4,302 Single Audit Report 1 6,344 1 6,344 6,572 6,572 6,704 Grand Total 1 $ 42,332 1 $ 42,332 $ 43,766 $ 43,766 $ 44,682 Total Maximum Price for the Five -year Engagement Optional Items City State Controller's Report $ 3,200 Statement of Indebtedness $ 900 Transient Occupancy Audits $ 1,000 Per entity $ 216,878 I Terry Shea, Partner of Rogers, Anderson, Malody & Scott, LLP am empowered to submit this bid, and am authorized to sign a contract with the City of Rosemead. ��� P (Signs re) Page 1 Attachment 2 City ®f Rosemead PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Schedule of Professional Fees and Expenses For the Audit of Fiscal Year 2010 -11 Financial Statements Title Rate Hours Cost Partners $ 190 50 $ 9,500 Managers 120 70 8,400 Supervisory 92 155 14,352 Staff 70 144 10,080 Subtotal 420 42,332 Billable Expenses - Meals/Lodging - Transportation - Subtotal Billable Expenses - Total Not to Exceed Price $ 42,332 Page 2 Fiscal Year 2010 -11 Attachment 2 City ®f Rosemead PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Schedule of Professional Fees and Expenses For the Audit of Fiscal Year 2011 -12 Financial Statements Title Rate Hours Cost Partners $ 190 50 $ 9,500 Mane ers 120 70 8,400 Supervisory 92 156 14,352 Staff 70 144 10,080 Subtotal 420 42,332 Billable Expenses Meals/Lodging Transportation Subtotal Billable Expenses Page 3 Fiscal Year 2011 -12 Attachment 2 City ®f Rosemead PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Schedule of Professional Fees and Expenses For the Audit of Fiscal Year 2012 -13 Financial Statements Title Rate Hours Cost Partners $ 195 50 $ 9,750 Managers 122 70 8,540 Supervisory 95 1 156 1 14,820 Staff 74 144 10,656 Subtotal 420 43,766 Billable Expenses - Meals/Lodging - Transportation - Subtotal Billable Expenses - Total Not to Exceed Price 1 1 420 1 $ 43,766 Page 4 Fiscal Year 2012 -1 a Attachment 2 City Of Rosemead PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Schedule of Professional Fees and Expenses For the Audit of Fiscal Year 2013 -14 Financial Statements Title Rate Hours Cost Partners $ 195 50 $ 9,750 Managers 122 70 8,540 Supervisory 95 1 156 1 14,820 Staff 74 144 10,656 Subtotal 420 43,766 Billable Expenses - Meals/Lodging - Transportation - Subtotal Billable Expenses - Total Not to Exceed Price I 1 1 $ 43,766 Page 5 Fiscal Year 2013 -14 ®ttacbment 2 City of Rosemead PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Schedule of Professional Fees and Expenses For the Audit of Fiscal Year 2014 -15 Financial Statements Title Rate Hours Cost Partners $ 200 50 $ 10,000 Managers 125 70 8,750 Supervisory 97 1 156 15,132 Staff 75 144 10,800 Subtotal 420 44,682 Billable Expenses - Meals /Lod in - Transportation - Subtotal Billable Expenses - Total Not to Exceed Price I 1 1 $ 44,682 Page 6 Fiscal Year 2014 -15