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HomeMy WebLinkAbout1996-116 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 4 5 6 7 8 96-116 RESOLUTION NO. RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXECUTION OF AN AGREEMENT BY AND BETWEEN THE CITY OF SAN BERNARDINO AND ROGER, ANDERSON, MALODY & SCOTT BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: SECTION 1. The Mayor and the City of San Bernardino is hereby authorized and directed to execute on behalf of said City an agreement with Roger, Anderson, Malody and Scott, a copy of 9 which is attached hereto marked Exhibit "A" and incorporated herein by reference as fully as though set forth at length. SECTION 2. The authorization to execute the above referenced agreement is rescinded if the parties to the agreement fail to execute it within sixty (60) days of the passage of this resolution. / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / 1 RES 96-116 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 4 5 6 7 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXECUTION OF AN AGREEMENT BY AND BETWEEN THE CITY OF SAN BERNARDINO AND ROGER, ANDERSON, MALODY & SCOTT I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Mayor and Common Council of the City of San regular meeting thereof, held on the Bernardino at a May 199~, by 20th day of 8 the following vote, to wit: Council Members: AYES NAYS ABSTAIN ABSENT NEGRETE x /0 (i)' t Ih l/JlL C . tH The foregoing resolution is hereby approved thi ~37ttJ;;' ~,;;m~Wt_ Tom Minor, Mayor City of San Bernardino day of May Approved as to form and legal content: James F. Penman, City ttorney " . . /~^-- 2 RES 96-116 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 96-116 AGR.EEMENT /t+b AGREEMENT, , 1996, and Roger, WIT N E SSE T H WHEREAS, City desires certain auditing services, and WHEREAS, Consultant warrants that it is trained, expert and experienced in the performance of such auditing services, NOW, THEREFORE, the parties hereto agree as follows: 1. Subject to the terms and conditions set forth in this Agreement, Consultant shall perform an audit and related services, as described in Exhibit A, attached hereto and incorporated herein, of the following financial statements to be issued by the City of San Bernardino as of June 30, 1996; June 30, 1997; and June 30 1998. a. Audit of the City of San Bernardino's General Purpose Financial Statements. b. Preparation of the City of San Bernardino's Primary Government Financial Statements. c. Compliance with the requirements of the Single Audit Act of 1984 and OMB Circular A-128. d. Audit procedures required by Proposition 111 r7lative to the City's Appropriations Limit. 2. Said financial statements will be prepared in accordance 20 with generally accepted accounting principles. 21 3. consultant shall also perform the audits specified in Section 1 above so as to satisfy the audit requirements imposed by 22 the Single Audit Act of 1984 and the U.S. Office of Management and Budget (OMB) Circular No. A-128. 23 4. Consultant will conduct the audit in accordance with 24 generally accepted auditing standards, including generally accepted government auditing standards for financial and 25 compliance audits as set out in Government Auditing Standards issued by the Comptroller General of the United States, and the 26 provisions of the Single Audit Act of 1984, OMB Circular A-128 Requirements for Grants to State and Local Governments, 27 28 1 RES 96-116 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5. Said audit shall be planned and performed in such manner to obtain reasonable assurance about whether the financial statements are free of material misstatement. Said audit shall include examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 6. In addition to its reports on the City's financial statement, Consultant will also issue the following reports or types of reports: a. A supplementary report on the fairness of the presentation of the City of San Bernardino's schedule of federal financial assistance for the year ended June 30, 1996, June 30, 1997, and June 30,1998. b. Reports on compliance with statutory, regulatory and contractual matters in accordance with Auditing Standards, the Single Audit Act of 1984, and OMB Circular A-128. c. Reports on the City of San Bernardino's internal control structure and controls used in administering federal programs that meet the requirements of the Government Auditing Standards, the Single Audit Act of 1984 and OMB Circular A- 128. d. Report on certain agreed-upon procedures required by Proposition 111. reports on internal accounting and will include any reportable conditions and operational weaknesses in the system of 7. Consultant's administrative control material structural or which it becomes aware, 8. Consultant's reports on compliance matters will include any errors, irregularities or illegal acts, violations of compliance obligations and other responsibilities imposed by State and federal statutes and regulations, and assumed by contracts, and any State or federal grant, entitlement or loan program questioned costs of which it becomes aware. 9. The parties understand that the audit is subject to the inherent risk that material errors, irregularities, or illegal acts, including fraud or defalcations, if they exist, may not be detected. It is also subject to the inherent risk that violations 2 RES 96-116 1 2 3 4 of compliance obligations and other responsibilities imposed by state and federal statutes and regulations, or assumed by contracts, if they exist, may not be detected. 10. Either party may cancel this Agreement on thirty (30) days written notice to the other. 11. The parties understand and agree that at the conclusion 5 of the audit, Consultant will request certain written representations from City about the financial statements and 6 matters related thereto as well as certain compliance matters. 7 12. The assistance to be supplied by City personnel in the performance of the audit is described in client participation 8 schedule attached hereto as Exhibit "A" and incorporated herein. 9 13. The timing of the preparation of schedules and analysis by City staff and the delivery of preliminary drafts and final 10 copies of the reports will be coordinated with City's Finance Director. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 14. Representatives of City, other government audit staffs, 12 and the U. S. General Accounting Office shall have access to Consultant's audit working papers upon request. 15. Consultant shall keep and maintain the working papers for a period of at least three years after the date of the report, or for such longer period as requested by City in writing. 16. The fee for the services described in this Agreement shall not exceed $38,225 annually for each of the three years, without prior written approval of City. 17. City staff will be responsible for the printing and binding of City's Financial Report. Consultant will be responsible for the preparation and typing of the City's Financial Report. . 18. City will provide Consultant with copies of the computer spreadsheet models used in preparation of the June 30 reports of each year, and a data file containing the "notes to financial statements." 19, Upon written notice to and approval by City, the fees outlined in Section 15 of this Agreement may be revised under the following conditions: a. Accounting assistance is necessary in order to properly close the City's books so that they will be suitable to be audited. 3 RES 96-116 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 b. The information requested by Consultant in the Client Participation Schedule (Exhibit "A") is not provided, the information provided is not accurate and/or not complete, or is provided after the requested date. c. The Scope of Work is changed by written direction from City. All other provisions of this Agreement will remain binding despite any fee adjustment. 20. If City intends to publish or otherwise reproduce the financial statements and make reference to the firm name of Consultant, City agrees to provide Consultant with printers' proofs or masters for its review and approval before printing. City shall also provide Consultant with a copy of the final reproduced material for approval before distribution. Consultant's report on the financial statements is not to be included in an official statement or other documents involved with the sale of debt instruments without the prior approval of Consultant. Nothing in this Section 20 shall prohibit or limit the obligation of City to make copies of Consultant's reports available to the public under the California Public Records Act (Government Code Sec. 6250 et seq.). 21. Any notice to be given from one party to the other pursuant to this Agreement is to be in writing and deposited with the United States Postal Service, postage prepaid and addressed as follows: To City: Finance Director City of San Bernardino 300 North "D" Street San Bernardino CA 92418 To Consultant: Rogers, Anderson, Malody & Scott Certified Public Accountants Vanir Tower, Suite 300 290 North "D" Street San Bernardino CA 92401 Nothing in this Section shall be construed to prevent the giving of notice by personal service. 22. Consultant shall assume the defense of, and indemnify and save harmless, the City, its officers, employees, and agents, and each and everyone of them, from and against all actions, damages, claims, losses or expenses of every type and description including attorney's fees to which they may be subjected or put, by reason of, or resulting from, the performance of the work, which is caused in whole or in part by any negligent act or 4 RES 96-116 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 omission of the Consultant, and subcontractor, anyone directly or indirectly employed by any of them or anyone for whose acts any of them may be liable, whether or not it is caused in part by a party indemnified hereunder. 23. This Agreement constitutes the complete and exclusive agreement between the parties, superseding all proposals oral or written and all other communication, with respect to the terms of the engagement between the parties. IN WITNESS WHEREFORE, the parties hereto have executed this Agreement on the day and date first above shown. THE CITY OF SAN BERNARDINO By ~~)(fca~ TOM MINOR, MAYOR ROGERS, ANDERSON, MALODY & SCOTT By r;l._M~ xrr J By ~;p ~..~.7 ATTEST: By C(~. C~-k.. APPROVED AS TO FORM AND LEGAL CONTENT. James F. Penman City Attorney t1 Ii BYo~M /) ?-./~ 5 RES 96-116 EXHIBIT A IiIIIIT ROGERS, ANDERSON, MALODY & SCOTI CERTIFIED PUBLIC ACCOUNTANTS DONALD l. ROGERS. C PA DENNIS H. MALODY II, C,P.A. JAY H. ZERCHEA, C.P.A. ROBERT S. MEMORY. C_PA THOMAS V. HESS, C,P.A PHilLIP H, WALLER, C.P.A. BRENDA L. DOLE. C,P.A. TERRY p, SHEA 0.0.. NANCya'RAFFERTv ? A CYNTHIA L. SAKS P,,!, BRIAN W. TOMPKINS ;>,A LINDA M. HERNANDEZ ? A LEENA SHAN8HAG P_A LORI ANN KUNTZ P,A KATHLEEN l. DEVALl(. PA CHARLES E. PALODICHUK PA LAURIE K. MARSCHER PA KIRK A. FRANKS P,A April 23, 1996 To the Honorable City Council of the City of San Bernardino 300 Nonh D Street San Bernardino, California 92418 Weare pleased to confIrm our understanding of the services we are to provide for the City of San Bernardino (City) for the years ending June 30, 1996, 1997, and 1998. We will audit the general purpose financial statements and the primary government financial statements of the City as of and fix the years ended June 30, 1996, 1997 and 1998. Also, the document that we submit to you will include the following additional information that will be subjected to the auditing procedures applied in our audit of the general purpose financial statements: 1. Combining financial statements by fund 2. Comprehensive Annual Financial Report Our audit will be a single audit conducted in accordance with generally accepted auditing standards; the standards for fInancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act of 1984; and the provisions of OMB Circular A-128, Audits of State and Local Governments, and will inciude tests of the accounting records of the City and other procedures we consider necessary to enable us to express an unqualified opinion that the financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles and to report on the Schedule of Federal Financial Assistance and on the City's compliance with laws and regulations and its internal controls as required for a single audit. If our opinion is other than unqualitied, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the single audit engagement, we will not issue a report as a result of this engagement. MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBliC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION OF THE DIVISION FOR CPA FIRMS CAliFORNIA SOCIETY OF CERTiFIED PUBliC ACCOUNTANTS I VANIR TOWER. 290 NORTH "0" STREET. SUITE 300 SAN BERNARDINO, CA 9240 I (909) 889-0871 . (909) 824-6736 . FAX (909) 889-5361 RES 96-116 The management of the City is responsible for establishing and maintaining an internal control structure. In fulfIlling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorizations and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles, and that federal financial assistance programs are managed in compliance with applicable laws and regulations. In planning and performing our audits for the years ended June 30, 1996, 1997, and 1998, we will consider the internal control structure in order to determine our auditing procedures for the purpose of expressing our opinions on the City's general purpose financial statements and on its compliance with requirements applicable to major programs and to report on the internal control structure in accordance with OMB Circular A-128, and not to provide assurance on the internal control structure. We will obtain an understanding of the design of the relevant policies and procedures and whether they have been placed in operation, and we will assess control risk. Tests of controls may be performed to test the effectiveness of certain policies and procedures that we consider relevant to preventing and detecting errors and irregularities that are material to the general purpose financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the general purpose financial statements. (Tests of controls are required only if control risk is assessed below the maximum level). Our tests, if performed, will be less in scope than would be necessary to render an opinion on the internal control structure policies and procedures and, accordingly, no opinion will be expressed We will perform tests of controls, as required by OMB Circular A-128, to evaluate the effectiveness of the design and operation of internal control policies and procedures that we consider relevant to preventing or detecting material noncompliance with specific requirements, general requirements, and requirements governing claims for advances and reimbursements and amounts claimed or used for matching that are applicable to each of the City's major federal financial assistance programs. Our tests will be less in scope than would be necessary to render an opinion on the internal control structure policies and procedures and, accordingly, no opinion will be expressed. We will inform you of any matters involving internal control structure and its operation that we consider to be reportable conditions under standards established by the American Institute of CertifIed Public Accountants. Reportable conditions involve matters coming to our attention relating to significant defIciencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the entity's ability to record, process, summarize and report financial data consistent with the assertions of management in the general purpose fInancial statements. We will also inform you of any nonreportable conditions or other matters involving the internal control structure, if any, as required by OMB Circular A-128. 2 RES 96-116 Compliance with laws, regulations, contracts, and grant agreements applicable to the City is the responsibility of the City's management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we will perform tests of the City's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our audit will not be to provide an opinion on overall compliance with such provisions, and we will not express such an opinion. Our audit will be conducted in accordance with the standards referred to in the second paragraph. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether material noncompliance with the requirements governing types of services allowed or unallowed; eligibility; matching, level of effort, or earmarking; reporting; special tests and provisions; claims for advances and reimbursements; and amounts claimed or used for matching that are applicable to major programs occurred. The purpose of our audit will be to express an opinion on the City's compliance with the specific requirements applicable to major programs listed in the previous sentence. We will perform certain procedures to test the City's compliance with the general requirements applicable to its federal financial assistance programs as required by OMB Circular A-128. Our procedures will be limited to the applicable procedures described in the OMB's Compliance Supplement for Single Audits of State and Local Governments. Our procedures will be substantially less in scope than an audit, the objective of which is the expression of an opinion on the general requirements, and we will not express such an opinion. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confIrmation of receivables and certain other assets and liabilities by correspondence with selected individuals, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our. audit, we will also request certain written representations from you about the financial statements and related matters. 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. Also, we will plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. As required by the Single Audit Act of 1984, our audit will include tests of transactions related to federal assistance programs for compliance with applicable laws and regulations. However, because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions, there is a risk that material errors, irregularities, or illegal acts, including fraud or defalcations, may exist and not be detected by us. We will inform you, however, of any matters of that nature that come to our attention, and we will include such matters in the reports required for a single audit. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors. 3 , __J RES 96-116 We understand that you will provide us with the basic information required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, but the responsibility for the financial statements remains with you. This responsibility includes the maintenance of adequate records and related internal control structure policies and procedures, the selection and application of accounting principles, and the safeguarding of assets. The assistance to be supplied by your personnel is described in the attached client participation schedule which outlines the specific schedules and analyses which we will require to complete our services. This schedule has been discussed with Barbara Pachon, City Finance Director. Our fee quote which follows has been prepared on the basis that all the information on the attached schedule will be provided to us when requested. The timely completion of this work will assist us in performing our work efficiently. The timing of the preparation of schedules and analyses by City staff and the delivery of preliminary drafts and fmal copies of the reports will be coordinated with Gary Silvius. We understand that your employees will type all cash or other confirmations we request and will locate any invoices selected by us for testing. The workpapers for this engagement are the property of Rogers, Anderson, Malody and Scott and constitute confidential information. However, we may be requested to make certain workpapers available to your Cognizant Agency pursuant to authority given to it by law or regulation. If requested, access to such workpapers will be provided under the supervision of Rogers, Anderson, Malody and Scott personneL furthermore, upon request, we may provide photocopies of selected workpapers to the Cognizant Agency. They may intend, or decide, to distribute the photocopies or information contained therein to others, including other governmental agencies. Our fees are based on the time .required by the individuals assigned to the engagement, plus direct expenses. Individual hourly rates vary according to the degree of responsibility involved and skill required. Interim billings will be submitted as work progresses and as expenses are incurred. Our estimated fee for the services described in this letter will be $38,225, $38,225 and $38,225 for the fiscal years ending June 30, 1996, 1997 and 1998 respectively. The components of our work for the years ended June 30, 1996, 1997, and 1998 are as follows: Audit of the City of San Bernardino's General Purpose financial Statements Preparation of the City of San Bernardino's Primary Government financial Statements Compliance with the requirements of the Single Audit Act of 1984 and OMB Circular A-128 Audit procedures required by Proposition 111 relative to the City's Appropriations Limit 4 RES 96-116 The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. Government Auditing Standards-1994 Revision requires that we provide you with a copy of our most recent quality control review report. Our June 30, 1993 peer review report accompanies this letter. We appreciate the opportunity to be of service to the City of San Bernardino and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. ROGERS, ANDERSON, MALODY AND SCOTT ~P'~ Phillip H. Waller, Partner RESPONSE: This letter correctly sets forth the understanding of the City of San Bernardino. By: Title: Date: 5 RES 96-116 CITY OF SAN BERNARDINO CLIENT PARTICIPATION SCHEDULE June 30, 1996 General Matters - Make available the minutes of the City Council - Copies of the resolutions/ordinances adopting and/or amending the 1995-96 budget - Schedule of all transactions between related entities including the Economic Development Agency, the Financing Authority, and the City - Copies of all Joint Powers Agreements - Copies of all applications, agreements, entitlement letters, and award letters for all grants received by the City - Copies of the City's Affirmative Action Plan - Copies of the annual (or biennial) report to the EEOC - Prepare lead schedules on Excel - Input City trial balances on FAST Cash and Investments - Schedule of cash by fund - Schedule of cash by account - Schedule of cash held by fiscal agents - Copies of year-end bank statements and reconciliations for all accounts - Schedule showing transfers between cash and investment accounts of all entities for five days before and after June 30, 1996 - Provide details of any cash restrictions and/or compensating balance arrangements with financial institutions 6 RES 96-116 - Schedule of investments owned at June 30, 1996 indicating: - Description of investment - Purchase date - Maturity date - Par value - Cost - Market value - Form of investment (bearer, registered, book entry, etc.) - From whom purchased - Investment held by (safekeeping, broker, physical possession, etc.) - Related interest receivable - Related recorded discount/premium - Schedule showing the cash surrender value of any life insurance policies owned by the City - Schedule of deferred compensation investments by fmancial institution - Copies of the City's safekeeping agreements - Copies of the City's investment policy - Copies of the City Treasurer's reports Receivables - Schedule of property tax receivable by fund - Schedule of property tax revenue by fund - Copy of the County's property tax calendar for 1995-96 - Schedule of grant, entitlement and shared revenue receivables by fund - Schedule of miscellaneous receivables and amounts due from other governments Inter- and Intra-fund Transactions - Schedule showing beginning and ending balances and summarizing transactions for all inter-and intra-fund transfers, purchase/sale transactions, loan and advances 7 RES 96-116 Inventories - Copies of the count sheets or summary of all City inventories showing description, quantity, price and extensions Prepaid ExpendituresIExpenses - Copies of all insurance policies and fidelity bonds Property and Equipment - Summary of general fIXed assets showing beginning balance, additions, deletions and ending balance by category - Summary of proprietary fund type property and equipment showing beginning balance, additions, deletions, and ending balance by category and fund - Schedule of property and equipment additions - Schedule of property and equipment deletions showing acquisition and disposal dates, description, life, depreciation method, cost or fair market value at date received, accumulated depreciation and sales proceeds - Summary of accumulated depreciation showing beginning balances, additions, deletions and ending balances by category and fund Intangibles and Other Assets . - Schedule of deferred, intangible, or other assets Accounts Payable - Schedule of accounts payable - Schedule of encumbrances 8 RES !J6-1l6 Accrued Expenses - Schedule of all accrued expenses including: - Accrued payroll - Accrued compensated absences - Accrued payroll taxes - Accrued interest payable - Accrued rentals - Accrued pension obligations - Accrued claims and judgments - Schedule of deposits held by the City Schedule of all funds held by the City In a trustee capacity including deferred compensation funds - Copies of the City's vacation and sick leave policies - Copies of the City's pension plan agreements - Copies of the reserve statements from the City's insurance plan administrators - Schedule of any retentions payable on construction contracts Long-Term Debt - Schedule of general long-term debt including beginning balance, additions, repayments, and ending balance by issue - Schedule of proprietary fund debt including beginning balance, additions, repayments, and ending balance by issue and fund - Copies of documents relating to the issuance of all long-term debt including official statements, lease agreements, trust agreements and maturity schedules Schedule of outstanding balances of all defeased debt issues including remarmng maturity schedules - Summarize and make available the trustee statements of all debt issues outstanding - Schedule of five-year maturities for all debt issues outstanding 9 RES 96-116 Equity - Schedule of each component of the equity accounts (fund balance - reserved, designated and undesignated, contributed capital, retained earnings - reserved and unreserved, and investment in general fixed assets by source and major asset category) of all funds and account groups Operations - Make available the payroll tax returns for the quarters ended during the year - Schedule ofPERS contributions and covered payroll - Copies of the City's policies relative to competitive bidding - Trial balance for each fund - Summary of revenue and expenditures for each fund Commitments and Contingencies - Make available all invoices for legal services paid during the year - Make available all fIlings for conflict of interest 10