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2200 - Rogers, Anderson, Malody & Scott - Audit Services RA ROGERS, ANDERSON. MALODY& SCO11, LLP M S 73S E.Carnegie Dr.Suite 100 San Bernardino.CA 92408 909 889 0671 T 909 889 5361 f rarnscpa net March 13, 2017 Pearl Lieu, Finance Director City of Rosemead 8838 East Valley Blvd Rosemead, CA 91770 Dear Pearl, • As you are aware, our contract with the City expired with the fiscal year ending June 30, 2016. We are proud of the excellent service our firm has provided the City. In addition to the audit, we have provided assistance to the City in the preparation of its financial statements, we have been flexible in our audit schedules to accommodate any requests of the City and we have made ourselves available (at no extra charge) throughout the year to answer questions raised by finance staff. We have made it an absolute priority to provide the City with the best service possible and we would like to continue providing those services. We would like to propose a new one year contract in order to provide continuous and uninterrupted auditing services. As has been the case during our current contract period,we will continue to provide continuity of staffing, be available to work with the finance staff in areas of technical accounting pronouncements as well as compliance and internal control issues. We are available for telephone consultation on various financial matters throughout the year. All professional consultations throughout the year have been included in our proposed fixed fee. STABILITY. ACCURACY. TRUST. Please see the attached fee schedule for our proposed fees for the fiscal year ending June 30, 2017. As you will see, we have increased the fees from the 2016 fee by 1.4%. We value the City as an important client and look forward to continuing our services for the next year. Please do not hesitate to contact us at (909) 889-0871 for further clarification. We look forward to continuing our professional relationship with the City Very truly yours, ROGERS, ANDERSON, MALODY& SCOTT, LLP Terry Shea, Partner Certified Public Accountant 2 City of Rosemead PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Total Maximum Price Rogers, Anderson, Malody & Scott, LLP Cerified Public Accountants 2015/16 2016117 City of Rosemead $ 25,160 $ 25,660 Successor Agency 5,516 5,625 Housing Corp 4,302 4,385 Single Audit Report 6,704 6,840 State Controller's Report 3,200 3,000 Grand Total $ 44,882 $ 45,510 J� to ROGERS. ANDERSON. MALODY & SCOTT. LIPS CERTIFIED PUBLIC ACCOUNTANTS. SINCE 1948 735 E Carnegie Dr S W tC I OD May 1, 2014 San Bernardino, CA 92408 909 889 08] I T 9C9 889 5361 P To the Honorable City Council an„cPa. net City of Rosemead Scott W. Mann,. CPA. CGMA 8838 East Valley Boulevard LAC - Shanhhag. CPA. MST. CGMA Rosemead CA 91770 PA RTN -RS Brerdr L One CPA. MST Ten, P. She, CPA Kid, A Fanla_ CnA Mp,[i,e,, B. WIIson, CPA MSA CGMA Scott W. Mann,. CPA. CGMA We are pleased to confirm our understanding of the services we are to provide the LAC - Shanhhag. CPA. MST. CGMA City of Rosemead, the Rosemead Housing Development Corporation, and the I';y k armer. C =A tParner Emertn,l Successor Agency to the former Rosemead Community Development Commission Pnln,e rI W, 0, , CPA,Par —r An nnis) (collectively the City) for the year ended June 30, 2014. We will audit the financial statements of the governmental activities, each major fund, and the aggregate ; STAFF IwAdleTt remaining fund information, including the related notes to the financial statements, p -,dl A MCI CPA, MBA ,...,, which collectively comprise the basic financial statements, of the City as of and for �,,.,,,, L,_,. aP,,. L, , CPA Papa Mater T1IS, CPA MCA the year ended June 30, 2014. Accounting standards generally accepted in the Ma,a S wane'.,. CPA. -FA United States of America provide for certain required supplementary information Se. , rhea Lee. CPA. MBA (RSI), such as management's discussion and analysis (MDBA), to supplement the Carle, De S,'—, CPA City's basic financial statements. Such information, although not a part of the basic Ynn, rang _CPA financial statements, is required by the Governmental Accounting Standards Board D- CI T. Tarneq CPA. `1SA who considers it to be an essential part of financial reporting for placing the basic D—d D. HP—ne. CPA M.,, r,a,nanr IPA. "I financial statements in an appropriate operational, economic, or historical context, As B Ba, c.a. IPA part of our engagement, we will apply certain limited procedures to the City's RSI in G,, ne;;,, Dn,an. CPA accordance with auditing standards generally accepted in the United States of r- R,n CSC —1 America. These limited procedures will consist of inquiries of management regarding La, Gnn_I- c=A. MSA the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We will not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The following RSI is required by generally accepted accounting principles and will be subjected to certain limited procedures, but will not be audited 1) Management's Discussion and Analysis. 2) PERS /OPEB schedules of funding progress. 3) Major fund budgetary comparison schedules. "'rM` " "S We have also been engaged to report on supplementary information other than RSI C.l,fed InC,A n, �e,nner, n "h,�CACCnun[an:, that accompanies the City's financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the PA °S Ta "'CPA'" ""'r° financial statements and certain additional procedures, including comparing and CPA F;,r ,. P 9 com P 9 reconciling such information directly to the underlying accounting and other records r, - „A,1° used to prepare the financial statements or to the financial statements themselves, ",I-, ,, and other additional procedures in accordance with auditing standards generally e,I,mr, S."CE, o accepted in the United States of America, and we will provide an opinion on it In C,,,f— ;=acr, A.<nunnn” relation to the financial statements as a whole: STABILITY. ACCURACY. TRUST. Honorable City Council May 1, 2014 City of Rosemead Page 2 1) Schedule of expenditures of federal awards, if applicable. 2) Combining fund schedules. 3) Non -major fund statements and budgetary comparison schedules. The following other information accompanying the financial statements will not be subjected to the auditing procedures applied in our audit of the financial statements, and our auditor's report will not provide an opinion or any assurance on that other information. 1) Statistical data. 2) Introductory section. Audit Objectives The objective of our audit is the expression of opinions as to whether your financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles and to report on the fairness of the supplementary information referred to in the second paragraph when considered in relation to the financial statements as a whole. The objective also includes reporting on- • Internal control related to the financial statements and compliance with the provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a material effect on the financial statements in accordance with Government Auditing Standards. • Internal control related to major programs and an opinion (or disclaimer of opinion) on compliance with laws, regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 1996 and OMB Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations, if applicable. The Government Auditing Standards report on internal control over financial reporting and on compliance and other matters will include a paragraph that states (1) that the purpose of the report is solely to describe the scope of testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance, and (2) that the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. The OMB Circular A -133 report on internal control over compliance will include a paragraph that states that the purpose of the report on internal control over compliance is solely to describe the scope of testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A -133. Both reports will state that the report is not suitable for any other purpose. Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America; the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996, and the provisions of OMB Circular A -133, and will include tests of accounting records, a determination of major program(s) in accordance with OMB Circular A -133, and other procedures we consider necessary to enable us to express such opinions. We will issue written reports upon completion of our Single Audit. Our reports will be addressed to the City Council of the City. We cannot provide assurance that unmodified opinions will be expressed. Circumstances may arise in which it is necessary for us to modify our opinions or add emphasis -of- matter or other - matter paragraphs. If our opinions on the financial statements or the Single Audit compliance opinions are other than unmodified, we will discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed opinions, we may decline to express opinions or issue reports, or may withdraw from this engagement. Management Responsibilities Management is responsible for the financial statements, schedule of expenditures of federal awards, and all accompanying information as well as all representations contained therein, Management is also responsible for identifying all federal awards received and understanding and complying with the compliance requirements, and for preparation of the schedule of expenditures of federal awards (including notes and noncash assistance received) in accordance with the requirements of OMB Circular Honorable City Council May 1, 2014 City of Rosemead Page 3 A -133. As part of the audit, we will assist with preparation of your financial statements, schedule of expenditures of federal awards, and related notes. These nonaudit services do not constitute an audit under Government Auditing Standards and such services will not be conducted in accordance with Government Auditing Standards. You agree to assume all management responsibilities relating to the financial statements, schedule of expenditures of federal awards, related notes, and any other nonaudit services we provide. You will be required to acknowledge in the management representation letter our assistance with preparation of the financial statements, schedule of expenditures of federal awards, and related notes and that you have reviewed and approved the financial statements, schedule of expenditures of federal awards, and related notes prior to their issuance and have accepted responsibility for them. Further, you agree to oversee the nonaudit services by designating an individual, preferably from senior management, who possesses suitable skill, knowledge, or experience; evaluate the adequacy and results of those services; and accept responsibility for them. Management is responsible for (a) establishing and maintaining effective internal controls, including internal controls over compliance, and for evaluating and monitoring ongoing activities, to help ensure that appropriate goals and objectives are met; (b) following laws and regulations; (c) ensuring that there is reasonable assurance that government programs are administered in compliance with compliance requirements; and (d) ensuring that management is reliable and financial information is reliable and properly reported. Management is also responsible for implementing systems designed to achieve compliance with applicable laws, regulations, contracts, and grant agreements. You are also responsible for the selection and application of accounting principles; for the preparation and fair presentation of the financial statements in conformity with U.S. generally accepted accounting principles; and for compliance with applicable laws and regulations and the provisions of contracts and grant agreements. Management is also responsible for making all financial records and related information available to us and for the accuracy and completeness of that information, You are also responsible for providing us with (1) access to all information of which you are aware that is relevant to the preparation and fair presentation of the financial statements, (2) additional information that we may request for the purpose of the audit, and (3) unrestricted access to persons within the government from whom we determine it necessary to obtain audit evidence. Your responsibilities also include identifying significant vendor relationships in which the vendor has responsibility for program compliance and for the accuracy and completeness of that information. Your responsibilities include adjusting the financial statements to correct material misstatements and confirming to us in the management representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud affecting the government involving (1) management, (2) employees who have significant roles in internal control, and (3) others where the fraud could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the government received in communications from employees, former employees, grantors, regulators, or others. in addition, you are responsible for identifying and ensuring that the government complies with applicable laws, regulations, contracts, agreements, and grants. Management is also responsible for taking timely and appropriate steps to remedy fraud and noncompliance with provisions of laws, regulations, contracts, and grant agreements, or abuse that we report. Additionally, as required by OMB Circular A -133, it is management's responsibility to follow up and take corrective action on reported audit findings and to prepare a summary schedule of prior audit findings and a corrective action plan. The summary schedule of prior audit findings should be available for our review on May 19, 2014. You are responsible for preparation of the schedule of expenditures of federal awards (including notes and noncash assistance received) in conformity with OMB Circular A -133. You agree to include our report on the schedule of expenditures of federal awards in any document that contains and indicates that we have reported on the schedule of expenditures of federal awards. You also agree to [include the audited financial statements with any presentation of the schedule of expenditures of federal awards that includes Honorable City Council May 1, 2014 City of Rosemead Page 4 our report thereon OR make the audited financial statements readily available to intended users of the schedule of expenditures of federal awards no later than the date the schedule of expenditures of federal awards is issued with our report thereon]. Your responsibilities include acknowledging to us in the written representation letter that (1) you are responsible for presentation of the schedule of expenditures of federal awards in accordance with OMB Circular A -133; (2) you believe the schedule of expenditures of federal awards, including its form and content, is fairly presented in accordance with OMB Circular A -133; (3) the methods of measurement or presentation have not changed from those used in the prior period (or, if they have changed, the reasons for such changes); and (4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the schedule of expenditures of federal awards. You are also responsible for the preparation of the other supplementary information, which we have been engaged to report on, in conformity with U.S. generally accepted accounting principles. You agree to include our report on the supplementary information in any document that contains and indicates that we have reported on the supplementary information. You also agree to include the audited financial statements with any presentation of the supplementary information that includes our report thereon OR make the audited financial statements readily available to users of the supplementary information no later than the date the supplementary information is issued with our report thereon. Your responsibilities include acknowledging to us in the written representation letter that (1) you are responsible for presentation of the supplementary information in accordance with GAAP; (2) you believe the supplementary information, including its form and content, is fairly presented in accordance with GAAP; (3) the methods of measurement or presentation have not changed from those used in the prior period (or, if they have changed, the reasons for such changes); and (4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the supplementary information. Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying for us previous financial audits, attestation engagements, performance audits, or other studies related to the objectives discussed in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits, attestation engagements, performance audits, or studies. You are also responsible for providing management's views on our current findings, conclusions, and recommendations, as well as your planned corrective actions, for the report, and for the timing and format for providing that information. Audit Procedures — General An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the government or to acts by management or employees acting on behalf of the government. Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse. Because of the inherent limitations of an audit, combined with the inherent limitations of internal control, and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements or noncompliance may exist and not be detected by us, even though the audit is properly planned and performed in accordance with U.S. generally accepted auditing standards and Government Auditing Standards. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements or major programs. However, we will inform the appropriate level of management of any material errors, any fraudulent financial reporting, or misappropriation of assets that come to our attention. We will also inform the appropriate level of management of any violations of laws or governmental Honorable City Council May 1, 2014 City of Rosemead Page 5 regulations that come to our attention, unless clearly inconsequential, and of any material abuse that comes to our attention. We will include such matters in the reports required for a Single Audit. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may Include direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, funding sources, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our'audit, we will require certain written representations from you about your responsibilities for the financial statements; schedule of expenditures of federal awards, federal award programs; compliance with laws, regulations, contracts, and grant agreements; and other responsibilities required by generally accepted auditing standards. Audit Procedures — Internal Control Our audit will include obtaining an understanding of the government and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements. Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards. As required by OMB Circular A -133, we will perform tests of controls over compliance to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements applicable to each major federal award program. However, our tests will be less in scope than would be necessary to render an opinion on those controls and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to OMB Circular A -133. An audit is not designed to provide assurance on internal control or to identify significant deficiencies or material weaknesses. However, during the audit, we will communicate to management and those charged with governance internal control related matters that are required to be communicated under AICPA professional standards, Government Auditing Standards, and OMB Circular A -133. Audit Procedures — Compliance As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of the City's compliance with provisions of applicable laws, regulations, contracts, and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards. OMB Circular A -133 requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with applicable laws and regulations and the provisions of contracts and grant agreements applicable to major programs. Our procedures will consist of tests of transactions and other applicable procedures described in the OMB Circular A -133 Compliance Supplement for the types of compliance requirements that could have a direct and material effect on each of the City's major programs. The purpose of these procedures will be to express an opinion on the City's compliance with requirements applicable to each of its major programs in our report on compliance issued pursuant to OMB Circular A -133. Engagement Administration, Fees, and Other We may from time to time, and depending on the circumstances, use third -party service providers in serving your account. We may share confidential information about you with these service providers, but remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain Internal policies, procedures, and safeguards to protect the confidentiality of your personal Honorable City Council May 1, 2014 City of Rosemead Page 6 information. In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information and we will take reasonable precautions to determine that they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others. In the event that we are unable to secure an appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your confidential information with the third -party service provider. Furthermore, we will remain responsible for the work provided by any such third -party service providers. We understand that your employees will prepare all cash, accounts receivable, or other confirmations we request and will locate any documents selected by us for testing. At the conclusion of the engagement, we will complete the appropriate sections of the Data Collection Form that summarizes our audit findings. It is management's responsibility to submit the reporting package (including financial statements, schedule of expenditures of federal awards, summary schedule of prior audit findings, auditors' reports, and corrective action plan) along with the Data Collection Form to the federal audit clearinghouse. We will coordinate with you the electronic submission and certification. If applicable, we will provide copies of our report for you to include with the reporting package you will submit to pass- through entities. The Data Collection Form and the reporting package must be submitted within the earlier of 30 days after receipt of the auditors' reports or nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audits. We will provide copies of our reports to the City; however, management is responsible for distribution of the reports and the financial statements. Unless restricted by law or regulation, or containing privileged and confidential information, copies of our reports are to be made available for public inspection. The audit documentation for this engagement is the property of Rogers, Anderson, Melody, & Scott, LLP and constitutes confidential information. However, subject to applicable laws and regulations, audit documentation and appropriate individuals will be made available upon request and in a timely manner to various regulators or Its designee, a federal agency providing direct or indirect funding, or the U.S. Government Accountability Office for purposes of a quality review of the audit, to resolve audit findings, or to carry out oversight responsibilities. We will notify you of any such request. If requested, access to such audit documentation will be provided under the supervision of Rogers, Anderson, Melody, & Scott, LLP personnel. Furthermore, upon request, we may provide copies of selected audit documentation to the aforementioned parties, These parties may intend, or decide, to distribute the copies or information contained therein to others, including other governmental agencies. The audit documentation for this engagement will be retained for a minimum of seven years after the report release date or for any additional period requested by any regulator. If we are aware that a federal awarding agency, pass- through entity, or audited is contesting an audit finding, we will contact the party(ies) contesting the audit finding for guidance prior to destroying the audit documentation. We expect to begin our audit on approximately May 19, 2014. Terry P. Shea, CPA is the engagement partner and is responsible for supervising the engagement and signing the reports or authorizing another individual to sign them. Our fee for these services will be at our standard hourly rates plus out -of- pocket costs (such as report reproduction, word processing, postage, travel, copies, telephone, etc.) except that we agree that our gross fee, including expenses, will not exceed $24,640 for the City of Rosemead, $4,216 for the Rosemead Housing Development Corporation, and $5,338 for the Successor Agency to the former Rosemead Community Development Commission. If a single audit is required, our fee for those services will be $6,572. If requested, we will prepare the State Controller's Report and the Statement of Indebtedness for the amounts not to exceed $3,200 and $900, respectively. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed upon written notification of termination, even if we have not completed our report(s). You will be obligated to compensate us for all time expended and to reimburse us for all out -of- pocket costs through the date of termination. The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during Honorable City Council City of Rosemead May 1, 2014 Page 7 the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs, We appreciate the opportunity to be of service to the City and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed original and return it to us. Keep the copy for your records. We provided you with a copy of our most recent external peer review report and any subsequent reports received during the contract period, Accordingly, our 2011 peer review report accompanies this letter. Very truly yours, ROGERS, ANDERSON, MALODY & SCOTT, LLP Terry P. Sk6a, CPA RESPONSE: This letter correctly sets forth the understanding of the City of Rosemead. Management signature: iY r- Title: K CAM Ii_r '� ice ire4 Date: TIMPSON GARCIA „ System Review Report I Iw.a snnnnlsfnasa May 31, 2012 To the Owners of Rogers, Anderson, Malady & 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, Malady & Scott, LLP (the fim) in effect for the year ended November 30, 2011. 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 www.aicpa.org/prsu=ary, 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 & Scott, LLP in effect for the year ended November 30, 2011, 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 fall. Rogers, Anderson, Malady & Scott, LLP has received a peer review rating of pass. •- Qati ceu. 01 , U P ,,L.: I" -IlJ A3q "Yl. hA, "VI):r �..I. II :mlaun 3tS� ROGERS, ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1946 735 E_ Carnegie Dr. Suite 100 San Bernardino. CA 92408 April 23, 2013 909 889 0871 T 909 889 5361 F iamscpa. net Because the agreed -upon procedures listed on the attached schedule do not constitute an examination, we will not express an opinion on whether the hotels and motels are complying with the City's Transient Occupancy Tax Ordinance and subsequent amendments. In addition, we have no obligation to perform any procedures beyond those listed in the attached schedule. MEMBERS American Institute of Certified Public Accountants We will submit a report listing the procedures performed and our findings, if PCPS The AICPA Alhance any. This report is intended solely for the use of the City's management, and rnr CPA Firers should not be used by anyone other than these specified parties. Our report cnvernrnentulAudit will contain a paragraph indicating that had we performed additional Qunfity center procedures, other matters might have come to our attention that would have California Society of been reported to you. Certified Public Accountants COPY STABILITY. ACCURACY. TRUST. City Council PARTNERS City of Rosemead Brenda L Odle. CPA, MST 8838 E. Valley Blvd. Terry P. Shea, CPA Kirk A. Franks, CPA Rosemead, CA 91770 Matthew B. Wilson, CPA, NSA Scott W. Manno, CPA Leena Shanbhag, CPA. MST This letter is to confirm our understandin g of the terms and objectives of our fay H. Zercher, CPA (Retired) Phillip H. Weller, CPA (Retired) engagement and the nature and limitations of the services we are to provide for the City of Rosemead (City). MANAGERS /STAFF Nancy O'Raffel CPA. MBA We will apply certain agreed -upon procedures which management of the City Brad (er d A , Welebir, CPA, MBA Jenny Lill, CPA. MST has specified, as listed in the attached schedule, to selected hotels and Kane L Millsom. CPA motels within the City, for the calendar years 2010, 2011 and 2012. This Papa Matar Thiaw, CPA, MBA engagement is solely to assist management in determining whether local CPA, MBA Maya S. C. Cla ytt on. CPA C William C. Cla hotels and motels are complying with the City's Transient Occupancy Tax Y P Y Peter E. Murray, CPA Ordinance and subsequent amendments (i.e., accurately reporting and Genivive Schwa, zkopf, CPA remitting their transient occupancy taxes to the City). Our engagement to seong -Iiyea Lee. cPA, NBA apply agreed -upon procedures will be conducted in accordance with Charles De Simoni, CPA attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of any procedures is solely the responsibility of those parties specified in the report. Consequently, we will make no representation regarding the sufficiency of the procedures described in the attached schedule for the purpose for which they are requested or for any other purpose. If, for any reason, we are unable to complete the procedures, we will describe any restrictions on the performance of the procedures in our report, or will not issue a report as a result of this engagement. Because the agreed -upon procedures listed on the attached schedule do not constitute an examination, we will not express an opinion on whether the hotels and motels are complying with the City's Transient Occupancy Tax Ordinance and subsequent amendments. In addition, we have no obligation to perform any procedures beyond those listed in the attached schedule. MEMBERS American Institute of Certified Public Accountants We will submit a report listing the procedures performed and our findings, if PCPS The AICPA Alhance any. This report is intended solely for the use of the City's management, and rnr CPA Firers should not be used by anyone other than these specified parties. Our report cnvernrnentulAudit will contain a paragraph indicating that had we performed additional Qunfity center procedures, other matters might have come to our attention that would have California Society of been reported to you. Certified Public Accountants COPY STABILITY. ACCURACY. TRUST. City Council April 23, 2013 City of Rosemead Page 2 Terry P. Shea, CPA is the engagement partner and is responsible for supervising the engagement and signing the report, or authorizing another individual to sign it. We estimate that our fee for these services will be as follows: Per hotel /motel 10 - 12 hours $1,000 per calendar year These estimates are based on the anticipated cooperation from hotel /motel personnel and the assumption that unexpected circumstances will not be encountered during the engagement. If significant additional time is necessary, we will discuss the issue with you before proceeding. We appreciate the opportunity to assist you and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please do not hesitate to call our office. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. If the need for additional services arises, our agreement with you will need to be revised. It is customary for us to enumerate these revisions in an addendum to this letter. If additional specified parties of the report are added, we will require that they acknowledge in writing their responsibility for the sufficiency of procedures. Very truly yours, ROGERS, ANDERSON. MALODY & SCOTT. LLP Terry P. ea, CPA RESPONSE: This letter correctly sets forth the understanding of the City of Rosemead. By: 5 %— Title: i' iss� G& Mana��e� lana�4C Date: - 3D-/3 7., r Attachment Transient Occupancy Tax Tentative Agreed -Upon Procedures 1) Review the City's municipal code and all updates relating to transient occupancy taxes. 2) Obtain copies of all transient occupancy tax returns filed by the specified hotels for the calendar years selected. 3) Verify the mathematical accuracy of the tax computations and remittances. 4) Verify proper application of penalties and interest to the tax returns. 5) Verify gross rents per returns and agree to the hotels' monthly accounting records (sales journals, general ledgers, income tax returns). 6) Agree the hotels cash receipts records to bank deposits on a sample basis. 7) Gain an understanding of the hotels internal controls relating to transient occupancy taxes. 8) Review exemptions on a sample basis. 9) Compare room records to cash receipts records on a sample basis. 10) Obtain notification letter to the operator of the hotel. r,. �f y� � tilsi rY 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. 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. 7. 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. 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. 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. 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. 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: By: (�A`Vllj -9 � Jeff Allr , City anager ATTEES�T: , 3Q�1(5%A ,,e c� Gloria Molleda, City Clerk APPROVED AS TO FORM: Rachel H. Richman, City A or AUDITOR: By: ��