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HomeMy WebLinkAboutR27-Economic Development AgencyECONOMIC DEVELOPMENT AGENCY OR~~~n'^ I OF THE CITY OF SAN BEBNARDINO 1 r /'~ REQUEST FOR COMMISSION/CODNCII. ACTION FROM: Gary Van Osdel SUBJECT: AGENCY FINANCIAL AUDIT Exewtive Director FOR THE FISCAL YEARS 200405 AND 2005-06. DATE: March 28, 2005 Svuoosb otPravioas CommbebdCamxRlCommittee Aetiou(s): On March 22, 2005, Redevelopment Committee Members Estrada and McGinnis read approval ofao am®dmm[ toprovidefora two (2)yearextensionto theagroemwtwithConradaodAssociatev,L.L.P„f~Sna~ialauditservicesfa the fiscal years ending June 30, 2005 and June 30, 2006. Committee Member Lastgville voted against the two (2) year extension. Rteomm~ded Motbn(s)• (Commaokv DevebumeM Commbsbn) MOTION: RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO,CALIFORNIA, APPROVING AMENDMENT NO.1 TO THE AGREE&ffiN'I' WITH CONRAD AND ASSOCIATES, L.L.P., AND AUTHORIZNG EXECUTIONS THEREOF, PROVIDING FOR A TWO YEAR EXTENSION TO PERFORM FINANCIAL AUDIT SERVICES FOR THE ECONOMIC DEVELOPMENT AGENCY. Contact Person(s): Gate Van Osdel/Barbara Lindseth Phone: 663-#044 Project Area(s): All Ward(s): All Supporting Data Attached:®StaffReport O Resolution(s) O Agreement(s)/Conhact(s) ~ Map(s) ~ Ltr/Memo FUNDING REQiJIRIIvIENTS: Amount: $ 69.330 (2 Yrs) Source: TULM/CDBG Budget Authority: 2004-05 and 2005-06 Budgets SIGNATURE: Commbsbn/Cooncil Notes: (~--~"''1c15~~ Barbera Lindseth Admin Services Director GVO:b1:Agenda CDC Conrad and Associates ii COMMISSION MEETING AGENDA MEETING DATES 4-42005 Agenda Item Number. ~~ ECONOMIC DEVELOPMENT AGENCY STAFF REPORT AGENCY FINANCIAL AUDTT FOR THE FISCAL YEARS 2004-OS AND 2005-06 Bsckeround: In December 1992, for the first time, the Agency and the City joimly issued a Request for Proposals for financial audit services. The Agency and the City agreed to a joim Request for Proposals to seek the same audit firm for both entities for consistency and coordination concerning the Single Audit. As the fow (4) proposals received were reviewed, several factors were taken into consideration including: experience with cities and redevelopment agencies; ability to meet deadlines; and, overall qualifications of the firm and of the firm's staff members assigned to the audit. These factors were taken imo consideration before the overall cost of the audit was considered. Based upon interviews and staffrecommendations, the Commission approved a three (3) year audit service agreemem with Rogers, Anderson, Melody & Scott ("RAMS") at a cost of $30,500 per year. On April 15, 1996, the Commission again approved a three (3) year agreement with RAMS for Agency financial audit services for the fiscal years 1995-96,1996-97 and 1997-98. The cost for audit services was $33,600 per year. On July 6, 1999, the Commission approved a one (1) year extension with RAMS for the fiscal year ending June 3Q 1999 at a cost of $34,000. The City also ernered irno a one (1) year extension, with the uitention of issuing a joim Request for Proposals for the next year's audit services for the City, the Agency and the Water Departmenrt. For the five-year period beginning with fiscal year 1999-2000, the Agency, the City and the Water Department issued a joitrt Request for Proposals for audit services. The Request indicated that the Agency, the City and the Water Departmem were imerested in joim proposals for a one (1) to five (5) year period, with the understanding that each emity could select a different audit firm during this time period. Requests for Proposals were setrt to ten (10) audit firms, of these ten (10) firms, six (6) firms responded. Agency Portion Only Fiscal Years 2000 2001 2002 ~ 2004 Moreland & Associates $30,000 $31,200 $32,400 $33,700 $35,000 Rogers, Anderson, Melody & Scott $35,000 $35,000 $36,500 $36,500 $37,000 Conrad&Associates $25,500 $26,140 $26,790 $27,460 $28,150 Thomas, Bigbie & Smith $27,500 $29,000 $29,000 $30,000 $30,000 Vavrinek, Trine, Day & Co $35,500 $37,500 $40,000 $42,000 $43,500 KPMG $40,000 (increase no more than 5% per year) GVO:bLAg~da CDC Conrad and Associates ii COMirII33ION MEETING AGENDA MEETING DATE: 4-4-2005 Agenda Item Nomtxr. -/~-- Community Development Commission Agenda Item Staff Report -Agency Financial Audit Page - 2 - The proposals were reviewed by the City, the Water Department and the Agency taking irno consideration the firm's experience with cities, redevelopment agencies, and water dep~rtmants, their ability to meet deadlines, their professional ability to guide and assist staff with impleme~ation in Govermnent Accounting Standards Board major changes in accounting procedtut's, the firm's overall qualifications and professional strengths, and the qualifications of the firm's staffmembers assigned to the audit. Overall cost ofthe proposals was a factor, but not the first consideration. After the initial review, three (3) firms were selected to be irnerviewed: Moreland & Associates; Rogers, Anderson, Melody & Scott; and Conrad & Associates. Jointly, based on the criteria mentioned above, the City, the Agency and the Water Department interviewed each fine and jointly agreed to recommend that a three-year agreement be entered into with Conrad & Associates, with the ability to enter imo two (2) one-year extensions. Current Issue: The five (5) year agreement with Conrad & Associates has expired, and the time has come to solicit Requests for Proposals or to extend the agreemem with Conrad & Associates. Recently, Barbara Pachon, City Director of Finance, contacted Agency and Water Department staffto determine ifthere was arty interest in extending the agreement with Conrad and Associates for a two (2) year period, with the intention of seeking Requests for Proposals for audit services at the end ofthe proposed two (2) year extension period. From the City's stand point there was concern with possibly changing auditors at this time because ofthe State's budget crisis and the differed items the City is involved with (triple-flip, VLF Loan to State). From the Agency's stand poim, the audit services of Conrad & Associates have been very efiiciern and timely, especially since the Conrad staff members assigned to the Agency have remained constant, so there is no retraining of auditors each year. Conrad & Associates have also been of great assistance with the major change to the audit format to reflect Governmemal Accounting Standards Board Statement 34 requirements. Based upon the Agency's interest, Ms. Pachon solicited a two (2) year proposal from Conrad & Associates. The cost to the Agency for the year ended June 30, 2005 will be $34,320, and for the year ended June 30, 2006 the cost will be $35,010, which is reasonable and still below most ofthe costs outlined in the Proposals received in 2000. Because ofthe Single Audit requirements, the Agency basically is agreeable to follow the City's lead for soliciting audit services, or for entering imo a two (2) year extension with Conrad & Associates. Environmental Imoact• None. GVO:b1:Ageuda CDC Com~ad and Associates ri COMMISSION MEETING AGENDA MEETING DATE: 442005 Ageada Item Number. ,~~, Community 1)evebpment Commission Agenda Item StaffReport- Agency Financial Audit Page - 3 - Fiacsl lmoact: The cost of audit services for fiscal year 2004-05 will be $34,320, and the cost of audit services for fiscal year 2005-06 will be $35,010. Recommendation: That the Community Development Commission adopt the Resolution approving an Amendment to provide for a two (2) year extension to the Agreement with Conrad & Associates for financial audit services for the fiscal years ending June 30, 2005 and June 30, 2006. ltedevelopmem Committee Members Estrada and McGinnis recommended approval of a two (2) year extension with Conrad and Associates, and Committee Member Longville voted against the two (2) year extension. ~~~~-~~ Barbara Lindseth Administrative Services Director GVO:bI:Agenda CDC Conrad and Associates ii COMMI33ION MEETING AGENDA MEETING DATE: 44-2005 Agenda Item Number. I i ..~ 1 II 2 3 4 5 6 7 8 9 10 11 12 13 Q 14 15 17 18 19 20 21 22 23 24' 25 26 (~ 27 ~•+ 28 RESOLUTION NO. ___~~,~ U RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO, CALIItORNIA, APPROVING AMENDMENT NO. 1 TO THE AGREEMENT WITH CONRAD AND ASSOCIATES, L.L.P., AND AUTHORIZING EXECUTION THEREOF, PROVIDING FOR A TWO YEAR EXTENSION TO PERFORM FINANCIAL AUDIT SERVICES FOR THE ECONOMIC DEVELOPMENT AGENCY. WHEREAS, the Community Development Commission ("Commission") on July 11, 2000 entered into an Ageement with Conrad and Associates, L.L.P. ("Auditors"), to perform financial audit services for the Economic Developmern Agency of the City of San Bernardino ("Agency") for athree-year period beginning with the audit of fiscal year 1999-2000, with the option of two one-year extensions. WHEREAS, the term of the 2000 Ageement with the Auditors has expired, but due to the State of California's budget crisis and the complexity of the accouming required by the City of San Bernardino ("City") for the Triple-Flip and the VLF Loan to the State, along with the efficiency and timeliness of the Auditors, the City desires to retain the Auditors for an additional two-year period; WHEREAS, because of the Single Audit requirements, and the efficiency and qualifications of the Auditors, the Agency desires to follow the City's lead in respect to retaining the Auditors for an additional two-year period; WHEREAS, the Commission now desires to enter into Amendment No. 1 to said 2000 Agreement with the Auditors to extend the term of the 2000 Ageemem for two additional years beginning with the fiscal year 2004-05. // \n/ 1' 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 23 24 25 26 2? 281 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO, CALIFORNIA, APPROVING AMENDMENT NO. 1 TO THE AGREEMENT WITH CONRAD AND ASSOCIATES, L.L.P., AND AUTHORIZING EXECUTION THEREOF, PROVIDING FOR A TWO YEAR EXTENSION TO PERFORM FINANCIAL AUDIT SERVICES FOR THE ECONOMIC DEVELOPMENT AGENCY. NOW, THEREFORE, BE IT RESOLVED BY THE COMMI7NITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO, AS FOLLOWS: Section 1. The Commission hereby approves and authorizes execution of Amendmern No. 1 to the 2000 Agreemern providing for atwo-year extension to the 2000 Agreemern with Conrad and Associates, L.L.P., to perform financial audit services for the Economic Development Agency of the City of San Bernardino for the fiscal years 2004-OS and 2005-06, as attached hereto. Section 2. adoption. // // 1/ // // // // // // This Resolution shall take effect upon the date of its i 2i~' 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 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMIVIISSION OF THE CITY OF SAN BERNARDINO, CALIFORNIA, APPROVING AMENDMENT NO. 1 TO THE AGREEMENT WITH CONRAD AND ASSOCIATES, L.L.P., AND AUTHORIZING EXECUTION THEREOF, PROVIDING FOR A TWO YEAR EXTENSION TO PERFORM FINANCIAL AUDTT SERVICES FOR THE ECONOMIC DEVELOPMENT AGENCY. I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community Developmem Commission of the City of San Bernardino at a meeting thereof, held on the day of , 2005, by the following vote, to wit. Commission Members ESTRADA LONGVII,LE MCGINNIS DERRY KELLEY JOHNSON MCCAMMACK Aves Navs Abstain Absent Secretary The foregoing Resolution is hereby approved this _day of ,2005. Judith Valles, Chairperson Community Development Commission City of San Bernardino Approved as to form and legal convent: By: ~/l!~ Agency unsel AMENDMENT NO. 1 AGREEMENT FOR AUDITING SERVICES This Amendment No. 1 to the July 11, 2000 Agreement for Auditing Services is made and entered into on this day of April 2005 by and between the City of San Bernardino Economic Developmem Agency, a municipal corporation (hereinafter referred to as "Agency") and Conrad and Associates, L.L.P., Certified Public Accoumams (hereinafter referred to as "Auditors"). WITNESSETH WHEREAS, the Auditors are recognized as competent and qualified Certified Public Accountants, who were selected by the Agency in fiscal year 1999-2000 through a competitive procedure for financial auditing services, and are duly authorized to pracxice and licensed as such by the California State Board of Accountancy; WHEREAS, on July 11, 2000 the Agency entered irrto an Agreemem with the Auditors for a three (3) year period beginning with the fiscal year 1999-2000, with the option of two (2) one-year extensions for professional financial auditing services; WHEREAS, the term of the2000 Agreemern with the Auditors has expired, but due to the State of California's budget crisis and the complexity of the accounting required by the © City of San Bernardino (hereinafter referred to as "City") for the Triple-Flip and VLF Loan to the State, along with the efficiency and timeliness of the Auditors, the City desires to retain the Auditors for an additional two (2) year period for financial auditing services; WHEREAS, because of the Single Audit requirements, and the efficiency and qualification of the Auditors, the Agency desires to follow the City's lead in respect to retaining the Auditors for an additional two (2) year period for financial auditing services; WHEREAS, the Agency now desires to emer into Amendment No. 1 to said 2000 Agreement with the Auditors to extend the term of the 2000 Agreement for two (2) additional years beginning with the fiscal year 200405. NOW, THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter cornained, the parties hereto agree to amend in their e~irety the following sections of the 2000 Agreement: 1. TERM. Unless terminated earner or canceled as provided in the 2000 Agreement, the term of this Amendme~ No. 1 shall be for an addition two (2) year period for the fiscal year ending June 30, 2005 and June 30, 2006. 3. AGENCY'S OBLIGATIO NS. For famishing services as specified in the 2000 /"''~ Agreement, the Agency will pay and the Auditors shall receive the full 1 ® compensation of $34,320 for the fiscal year ending June 30, 2005 and $35,010 for the fiscal year ending June 30, 2006, as outlined in the letter dated January 24, 2005 from Auditors as attached hereto and by reference incorporated herein and made a part of. Additionally, the Agency agrees to provide Auditors with supporting schedules, trial balances and reconciliations as necessary to complete the services required. APPENDD~ A is hereby replaced in its emirety as attached hereto. APPENDIX B is hereby replaced in its ernvety as attached hereto. All other sections ofthe 2000 Agreement shall remain in full force and effect. IN WITNESS WIIEREOF, the parties hereto have caused this Amendment No. 1 to the 2000 Agreemern to be executed the day and year first written above. CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY Judith Valles, Chairperson Community Developmern Commission CONI2AD AND ASSOCIATES, L.L.P. Michael A Harrisoq Partner O 2 APPENDIX A OUR FIRM'S UNDERSTANDING OF THE OBJECTIVES AND SCOPE OF THE ENGAGEMENTS Our understanding of the objectives and scope of the work to be performed is based upon yow requests for proposal. Based upon yow proposal, we understand the objectives and scope of work for the audit of the City of San Bernardino Economic Development Agency to be as follows: I. We will perform an audit examination of all fund types and account groups of the Economic Development Agency for the years ended June 30, 2005 through June 30, 2006. Ow examination will be conducted in accordance with generally accepted auditing standards and Government Auditing Standards. Auditors will provide technical expertise for adherence to cwrem govenunental pronouncemems and discloswes. The auditors will also draft and word process the component unit financial statements. 2. We will perform a "Single Audit" of the Economic Development Agency in accordance with the Single Audit Act Amendments o 1996 (Public Law 104-156) and OMB Circular A- 133 entitled Audits of States, Local »unents, and Non-Profits rnrizations Ow single audit will cover all federal grants received by the Economic Deve opment Agency either as a primary or secondary rec~p~ent. The Agency will provide to the auditors the Schedule of Federal Financial Assistance encompassing. all direct and pass-through federal funds received by the Agency. We will render ow reports on the single audit in accordance with the single audit requirements. 3. We will perform a.c^mplianrp auditof the Economic Development Agency for the years ended June 30, 2005 through June 30, 2006. Our compliance auditing procedures will meet the State Coctrollers guidelines for compliance audits of Redevelopment Agencies. 4. We will prepare a management letter. This letter will include nonreportable conditions (those constructive comments not required to be included in the single audit report). We will discuss those commems with Finance personnel prior to its finalization. Propgsed Timeframes for the Audits Commencemem of i~erim audit June 26 Commencement of year end field work September 25 Compietioffoffield-work November 10 Provide draft copy of financial statemems December 1 Provide final copes of financial statements December 8 Provide draft of other reports. December 15 Provide other reports as final December 29 V Anoendix B OUR HOURLY RATES AND MAJOMMUM FEE FOR THIS ENGAGEMENT The following is a breakdown of the total cost of services including out of pocket expenses for the City of San Bernardino Economic Development Agency for the years ended June 30, 2005 through June 30, 2006. Year ended June 30 Description of Services 2005 2006 Financial and compliance Audit of the Economic Developmern Agency, Managemem Letter and an A-133 Single Audit of Federal Gram Programs, ongoing GASB #34 procedures and preparation of the financial statemems $~~Z The above amounts include all out of pocket expenses. ® Hourly rates for services outside the scope of services that would be in effect throughout the fiscal years ended June 30, 2005-2006 would be as follows: Classification Hourly Rate Partners $175 Senior Managers 125 Managers 115 Supervisor 105 Senior Auditors 95 Staff Auditors 85 Our fees comemplate conditions satisfactory for the performance of the audit, including that each entity provide at the start of the audit, trial balances reflecting year end adjustmerns, necessary subsidiary schedules supporting asset and liability balances, all necessary reconciliations in agreement with general ledger balances, and customary supporting analyses and schedules normally maintaitted by the Finance Departmern. The Agency will type confirmation requests and pull supporting documernation. CONRAD qNp CERTIFIED PUBLIC ACCOUNTANTS 2301 DUPONT DRIVE, SUFFE 200 ASSOCIATE ~ L.L.P. IRVINE, CALIFORNIA 92612 January 24, 2005 Bazbaza Pachon, Finance Director City of San Bernardino 300 North "D" Street San Bemazdino, California 92418 Deaz Ms. Pachon: Conrad and Associates, L.L.P. is desirous of an ongoing relationship in serving as independent auditors for the City of San Bernardino (City), the Economic Development Agency (EDA) and the Municipal Water Department (Water). For each of the yeazs that we have served the City of San Bernazdino, we have provided experienced staffing and continuity of all key personnel. As the City's independent auditors, we have provided constructive comments relating to improvements in internal control and compliance wEth certain laws and regulations. We aze proud of the excellent service our firm has provided to the City of San Bernardino, the © Economrc Development Agency and the Municipal Water Department. We have a proven track record in meeting deadlines. We have assisted the City in preparing its Comprehensive Annual Financial Report (CAFR) and the 2004 CAFR was recently submitted under both the State and National awazd programs. We have been flexible in our audit schedules to accommodate the requests of the City, EDA and Water. We have made ourselves available (at no extra chazge) throughout the yeazs the answer questions raised by Finance Staff that come up from time to time. As auditors of the City, EDA and Water, we were contracted to perform certain engagements in addition to our audit contract. We were contracted to perform agreed-upon procedures of the concessionaire operations at the City Soccer Complex. We were contracted to perform agreed- upon procedures regarding the operations at the City's Pioneer Memorial Cemetery. We were contracted to perform agreed-upon procedures of the management agreement between the EDA and American Golf, Inc. in regard to the Shandin Hills Country Club. We were contracted to perform agreed-upon procedures regarding the Lease Agreement between the City and San Bernardino Stampede, Inc. (San Bernardino 66ers). We have also been contracted to prepare certain state controller's reports. We plan to provide continuity of staffing. For the upcoming audit term, Conrad and Associates, L.L.P. staff will be available to work with the finance staff of the City, EDA and Water in areas of technical accounting pronouncements, fringe benefits taxation issues as well as compliance and internal control issues. We are available for telephone consultation on various financial matters throughout the yeaz. All professional consultation throughout the year has been included in the fixed fees. (949) 474-2020 Fax (949) 263-5520 MEMBERS OF AICPA AND ULIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERKIW INSTfTUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACFICE SECTION - Bazbaza Pachon, Finance Director City of San Bernardino ©Page two We are proposing a two yeaz extension to our contract for fiscal years ended June 30, 2005 and June 30, 2006 as follows: Fiscal Yeaz Estimated Ended June 30 Description Hours 2005 2006 Audit of the City of San Bernardino, Management Letter, GANN Limit Procedures, A-133 Single Audit of Federal Grant Programs, ongoing GASB #34 procedures and preparation of the fund financial statements 660 $55,760 56,880 2. Financial and Compliance Audit of the Economic Development Agency, Management Letter, A-133 Single Audit of Federal Grant Programs, ongoing GASB #34 procedures and prepazation of the financial statements 400 34,320 35,010 3. Municipal Water Department Audit, Management Letter, A-133 Single Audit of ® Federal Grant Programs, ongoing GASB #34 procedures and preparation of the financial statements 520 43,910 44,790 Hourly rates in effect for services which may be requested outside the scope of the fixed fee engagement aze as follows: Classification Hourly Rate Fiscal Year Ended June 30 2005 2006 Partners $175 175 Senior Managers 125 125 Managers 115 115 Supervisors 105 105 Senior Auditors 95 95 Staff Accountants 85 85 The City has insurance certificates on file for our firm and all such certificates will be maintained up to date with each annual audit examination. We value the City of San Bernazdino, Economic Development Agency and the Municipal Water Department as important clients of our firm and look forwazd to continuing our services for fiscal years 2005-2006. _ Barbara Pachon, Finance Director City of San Bernardino ~Pagethree If the foregoing teens meet with your understanding, you may sign and return the enclosed duplicate of this letter. We will be pleased to execute a formal contract or contract extension for auditing services. Very truly yours, CONI2AD AND ASSOCIATES, L.L.P. Michael A. Harrison, C.P.A. Partner MAH:dac Enclosure Accepted: CITY OF SAN BERNARDINO By: QTitle: Date: CDC/2000-22 AGREEMENT FOR AUDITING SERVICES Q This Agreement for Auditing Services is made and entered into on this _ 11+~i.. day of Ju1y2000 by and between the City of San Bernardino Economic Development Agency, a municipal corporation (hereinafter referred to as "AGENCY") and Conrad and Associates, L.L.P., Certified Public Accounts (hereinafter referred to as "AUDITORS"). WITNESSETH WHEREAS, AUDITORS are recognized as competent and qualified certified public accountants who were selected by the AGENCY through competitive procedures, and aze duly authorized to practice and licensed as such by the California State Board of Accountancy; NOW, THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter contained, the parties hereto agree as follows: T RM. Unless terniinated eazlier or canceled as provided for herein, the term of this Agreement shall be for each of the three fiscal years ending June 30, 2000 through 2002 with the option to renew for the fiscal yeazs ended June 30, 2003, and 2004. 2. SCOPE OF SERVICES. The AUDITORS agree to provide services and perform all work necessary in a manner satisfactory to the AGENCY as set forth in Appendix A, the request for proposal (RFP) foraudit services dated 5/2/2000, and AUDITOR'S O proposal dated 5/22/2000. These documents aze attached hereto and by reference incorporated herein and made a part hereof. AGENCY'S OBLIGATIONS For furnishing services specified in this Agreement, AGENCY will pay and the AUDITORS shall receive the full compensation as set forth in Appendix B attached hereto and by reference incorporated herein and made a part hereof. Additionally, AGENCY agrees to provide AUDITORS with supporting schedules, trial balances and reconciliations as necessary to complete the services requested. 4. PAYMENT SCHEDU ... The AUDITORS shall submit a monthly billing based on the percentage of audit work completed. After approval of the AGENCY'S Director of Administrative Services, said invoice shall be paid within thirty (30) days. 5: COMPLETION OF AUDIT AND DFi TVF Y OF A DIT OPINION . A. AUDI'T'ORS shall complete all work by the dates provided in Appendix A of each fiscal year included in the term of this Agreement. V B. AUDITORS shall deliver their final typed audit opinions and other reports Q as set forth in Appendix A for each fiscal year included in the term of this Agreement provided AGENCY furnishes the information to AUDITORS pursuant to Section 3 herein above in a timely manner. 6. TERMINATION. A. Termination Without Cause. AGENCY and AUDITORS shall have the right to terminate this Agreement, by giving not less than thirty (30) days written notice of termination to the other party. On the date of termination stated in the written notice, AUDITORS shalt discontinue performance of the services, preserve the product of the services, and turn over to AGENCY the product of the services in accordance with written instructions of AGENCY. If AGENCY terminates the Agreement under this Subsection A of Section 6, AGENCY shall compensate AUDITORS within thirty (30) days following the etI'ective date of termination a fee for all services satisfactorily provided prior to the effective date of termination based on the amounts and rates set forth in Appendix B. If AUDITORS terminate the Agreement under this Subsection A of Section 6, AGENCY shall compensate AUDITORS in the same amount AGENCY would compensate AUDITORS in the event AGENCY terminated the Agreement under this Subsection A of Section 6, less any costs AGENCY pays other auditors to review or re-perform the © services provided by AUDITORS prior to the date of termination. [n the event of termination without cause by either party, AGENCY'S payment as provided herein shall constitute full satisfaction of AGENCY'S obligations under this Agreement. B. Termination by AGENCY for Cau e. AGENCY may, by written notice to AUDITORS, immediately terminate the whole or any part of this Agreement in any of the following circumstances: a. AUDITORS fail to perform the services required by this Agreement within the time specified herein, or within any extension of that time; b. AUDITORS fail to perform satisfactorily the services called for by this Agreement, or otherwise breaches any provision of this Agreement, and do not correct such failure within a period of ten (10) days or such longer period as AGENCY may authorize in writing after notice is given by AGENCY specifying such failure of breach; ~1./ c. AUDITORS make a general assignment for the benefit of their creditors, files or have filed against them a petition in bankruptcy, or have a receiver appointed on account of their insolvency; or d. AUDITORS fail to maintain the insurance required pursuant to Section 10. 2. Immediately upon receiving written notice of termination, AUDITORS shall discontinue performing services, preserve the product of the services, and turn over to AGENCY the product of the services in accordance with written instructions of AGENCY. In the event AGENCY terminates this Agreement in whole or in part as provided above in Paragraph 1 of this Subsection B of Section 6, AGENCY shall pay AUDITORS a fee for all services satisfactorily provided by AUDITORS prior to the effective date of termination based on the amounts and rates set forth in Appendix B, less any fees AGENCY pays other auditors to review or re-perform the services provided by AUDITORS prior to the date of termination. Said payment shall constitute full satisfaction of AGENCY'S obligations under this Agreement. C. Termination by A iDITOR for auce. AUDITORS may immediately terminate this Agreement if AGENCY is in breach of the Agreement and does not correct such breach within a period often ten (10) days (or such longer period as AUDITORS may authorize in writing) after notice is given by AUDITORS specifying such failure of breach. If AUDITORS terminate the Agreement pursuant to this Subsection C of Section 6, AGENCY shall compensate AUDITORS within thirty (30) days following the effective date of termination a fee for all services satisfactorily provided prior to the effective date of termination based on the amounts and rates set forth in Appendix B, and such payment shall constitute full satisfaction of AGENCY'S obligations under this Agreement. 7. NOT OBLIGATED TO THIRD PARTIF .The AGENCY shall not be obligated or liable hereunder to any party other than the AUDITORS. 8. PROHIBITION A AIN T B nNTRA T[N OR A I NM NT. The experience, knowledge, capability and reputation of AUDITORS, its principals and employees were a substantial inducement for the AGENCY to enter into this Agreement. Therefore AUDITORS shall not contract with any other entity to perform in whole or in part the services required hereunder without the express written approval of the AGENCY. In addition, neither this Agreement nor any 3 interest herein may be transferred, assigned, conveyed, hypothecated or encumbered Q voluntazily or by operation of law, whether for the benefit of creditors or otherwise, without the prior written approval of AGENCY. Transfers restricted hereunder shall include the transfer to any person.or group of persons acting in concert of more than twenty-five percent (25%) of the present ownership and/or control of AUDITORS, taking all transfers into account on a cumulative basis. In the event of any such unapproved transfer, including in any bankruptcy proceeding this Agreement shall be void. No approved transfer shall release any surety of AUDITORS of any liability hereunder without the express written consent of AGENCY. 9. INDEPENDENT nN4T IT TANT. Neither the AGENCY nor any of its employees shall have any control over he manner, mode or means by which the AUDITORS, its agents or employees perform the services required herein, except as otherwise set forth. The AGENCY shall have no voice in the selection, dischazge, supervision or control of AUDITORS' employees, servants, representatives or agents, or infixing their number, compensation or hours of service. AUDITORS agree to maintain continuity of managerial personnel assigned to the engagement except for reasons beyond AUDITORS' control. AUDITORS shall perform all services required herein as an independent contractor of AGENCY and shall remain at all times to the AGENCY a wholly independent consultant with only such obligations as are consistent with that role. AUDITORS shall not at any time or in any manner represent that it or any of its agents or employees are agents or employees of ® AGENCY. AGENCY shall not in any way or for any purpose become or be deemed to be a partner of AUDITORS in its business or otherwise of a joint venture or a member of any joint enterprise with AUDITORS. 10. 1NSL1RAi~. The AUDITORS shall procure and maintain at its cost, comprehensive general liability and property damage insurance, including automobile and excess liability insurance, against all claims for injuries against persons or damages to property resulting from AUDITORS' negligent acts or omissions rising out of or related to AUDITORS' performance under this Agreement. AUDITORS shall also carry Workers' Compensation Insurance in accordance with State Workers' Compensation laws- said Workers' Compensation Insurance shall be through its business services firm Conrad Business Services, Inc. AUDITORS agree to maintain professional liability insurance to protect AGENCY from AUDITORS' negligent acts, errors or omissions of a professional nature. If any claim related to the performance hereunder be asserted against either party hereto, the party claimed against shall receive all reasonable assistance from the other. The requirements herein for subrogation may be waived by the AGENCY with respect to such professional liability insurance. © 4 10. INS AN (ONTIN Dl The insurance required hereunder shall be kept in effect during the term of this Agreement and shall not be subject to reduction in coverage below the limits established herein, nor cancellation or termination without thirty (30) days prior written notice by registered letter to the AGENCY. The insurer shall waive the right of subrogation against AGENCY, its officers, employees and agents, and the coverage shall be primary for losses arising out of AUDITORS' performance hereunder and neither the AGENCY nor its insurers shall be required to contribute to any such loss. A certificate evidencing the foregoing and naming the AGENCY as an additional insured shall be delivered to and approved by the AGENCY prior to commencement of the services hereunder. The procuring of such insurance or the delivery of policies or certificates evidencing the same shall not be construed as a limitation of AUDITORS' obligation to indemnify the AGENCY, its officials and employees. The amount of insurance required hereunder shall be as follows: 1. Workers' Compensation to statutory limits; 2. Commercial General Liability: Each occurrence $1,000,000 © Personal injury $1,000,000 Aggregate limit $2,000,000 3. Hired Auto and Non-Owned Auto Liability: , Each occurrence $1,000,000 Aggregate limit $1,000,000 4. Professional Liability: Each claim and in the aggregate $1,000,000 I i. PR .VAI .[N PARTY. If any court action occurs as a result of a dispute between the parties concerning any element of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees. The costs, salary and expense of the City Attorney and members of his office in enforcing this Agreement on behalf of the City shall be considered as "attorney's fees" for the purpose of this paragraph. 12. 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: AGENCY: Gary Van Osdel, Executive Director City of San Bernardino Economic Development Agency 201 North E Street, Suite 301 San Bernardino, California 92401 5 AUDITORS: Michael A. Harrison, Partner ® Conrad and Associates, L.L.P. 1100 Main Street, Suite C Irvine, California 92614 13 AUTHORITY TO EXEC[ ITE A ,R FFMFNT. Both AGENCY and AUDITORS do 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 instrument to be executed the day and year first written above. CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY lies, Chair ty Development Commission CONRAD AND ASSOCIATES, L.L.P. ® ~r //~rl~tRc-~,~~s ~Nl,cefizt Michael A. Harrison, Partner ~' G APPENDIX A OUR FIRM'S UNDERSTANDING OF THE OBJECTIVES SCOPE OF THE Our understanding of the objectives and scope of the work to be performed is based upon your requests for proposal. Based upon your proposal, we understand the objectives a~ scope of work for the audit of the City of San Bernardirw Economic Developmern Agency to be as follows: I. We will perform an audit examination of all fund types and account groups of the Economic Development Agency for the years ended June 30, 2000 through June 30, 2004. Our examination will be conducted in accordance with generally accepted auditing standards and Government Auditing SYaxdards. Auditors will provide technical expertise for adherence to current governmental pronouncements and disclosures. The auditors will also draft and word process the component unit financial statements. 2. We will perform a "Single Audit° of the Economic Development Agency in accordance with the Single Audit Act Amendments of 1996 (Public Law 104-156) and OMB Circular A- 133 entitled Audits of States, Local Governments, arui Non-Profrts OOrrg~anizations. Our single audit will cover all federal grants received by the Economic Devebpment Agency either as a primary or secondary recipient. The Agency will provide to the auditors the Schedule of Federal Finaceial Assista~e encompassing all direct and pass-through federal funds received by the Agenc)+. We will render our reports on the single audit in accordance with the single audit requirements. 3. We will perform a compliance audit of the Economic Development Agency for the years ended June 30, 2000 through June 30, 2004. Our- compliance auditing procedures will meet the State Controllers guidelines for compliance audits of Redevelopment Agencies. 4. We will prepare a management letter. This letter will include ~nreportable conditions (those constructive comments not required to be included in the single audit report). We will discuss those comments with Finance personnel prior to its finalization. Proposed Timefiames for the Audits Commencement of interim audit June 26 Commencement of year end field work September 25 Completion of field work November 10 Provide draft copy of financial statements December 1 Provide final coptes of financial statements December 8 Provide draft of other reports December 15 Provide other reports as final December 29 OUR HOURLY RATES AND MAXIMUM FEE FOR THIS ENGAGEMENT The following is a breakdown of the total cost of services including out of pocket expenses for the City of San Bernardino Economic Development Agency for the years ended June 30, 2000 through June 30, 2002 with optional years for June 30, 2003 arxl June 30, 2004. Description of Se~dces Financial and complia~e Audit of the Economic Development Agency, Management letter and an A-133 Single Audit of Federal Grant Programs Year ended June 30 (Ootionai Years) 2000 2001 2002 2003 2004 $25.500 26.140 26.790 27.460 28.150 The above amounts include all out of pocket expenses. Hourly rates for services outside the scope of services that would be in effect throughout the fiscal years ended June 30, 2000-2004 would be as follows: Classification Hourly Rate Partner S 190 Senior Managers 125 Manager 100 Supervisor 90 Senior Auditors g5 Staff Auditors ~ Our fees contemplate conditions satisfactory for the performance of the audit, including that each entity provide at the start of the audit, trial balances reflecting year end adjustments, necessary subsidiary schedules supporting asset and liability balances, all necessary reconciliat~ns in agreement with general ledger balances, and customary supporting analyses and schedules normally maintained by the Finance Departmern. The Agency will type confirmation requests and pull supporting documentation. If there arse changes in the scope of the audit (additional major federal grant programs, substa~ial additional debt issues, added enterprise activity, additional component units, changes in the financial reporting modes, we would like to discuss these changes with the Director a~ the effect of these changes on the professional audit hours and costs of the engagement. Our fee proposal includes consuhation and technical advise on GASB #34 implementation but does not include additional costs that wdl be required in the year of implementation (year ended 2002) and subsequent years. V z' PROPOSAL OF AUDIT SERVICES TO THE CITY OF SAN BERNARDINO, THE ECONOMIC DEVELOPMENT AGENCY AND THE MUNICIPAL WATER DEPARTMENT (Price Form) Submitted by: CONRAD AND ASSOCIATES, L.L.P. 1100 Main Street, Suite C Irvine, California 92614 May 22, 2000 CONTACTPERSON - MICHAEL A. HARRISON, PARTNER i PHONE N0. (949) 474-2020, EXT. 230 _ FAX N0. (949) 263-5520 CONRAD AND ASSOCIATES, L.L.P. CALIFORNIA LICENSE NO. PAR 6454 CONRAD AND ASSOCIATES, L.L.P. FEDERAL IDENTIFICATION N0.33-0843820 Q ASSOCIATES, L.L.P. Gary Silvius, Accounting Manager City of San Bernardino 300 North "D"Street, 4"floor San Bernardino, California 92418 Dear Mr. Silvius: 7100 MAIN STREET, StxrE C IRVINE, GLLIFORNU 92674 (949) 474.2020 Faz (949) 263-5520 May 22, 2000 Enclosed you will find Section I of our Proposal for Audit Services which includes "Our Hourly Rates and Maximum Fees for each Engagement" and a completed "Price Fonn." We look forward to serving the City of San Bernardino and its related entities. I~QAH:kac Eodosure PUBLIC ACCOUNTANTS Sincerely, CONRAD AND ASSOCIATES, L.L.P. ~~~~~r.~ Michael A. Harrison, C.P.A. Partner V .~ SECTION I OUR HOURLY RATES AND MAXIMUM FEE FOR EACH ENGAGEMENT The following is a breakdown of the total wst of services including out of pocket expenses for the City of San Bernardino, the Ewnomic Development Agency and the Municipal Water Department for the years ended June 30, 2000 through June 30, 2004. Estimated Year ended June 30 Description of Services Hours 2000 2001 20 2 2003 2004 1. City of San Bernardino, Management letter, GANN limit procedures, and an A-133 Single Audit of Federal Grant Programs 600 $45,000 46,125 47,280 48,460 49,670 2. F'mancial and wmpliance audit of the Economic Development Agency, Management letter and an A-133 Single Audit of Federal Grant Programs 340 25,500 26,140 26,790 27,460 28,150 3. Municipal Water Department audit, Management letter and an A-133 Single Audit of Federal Grant Programs 520 39,000 39,980 40,980 42,000 43,050 The above amounts include all out of pocket expenses. The following is a breakdown of estimated fee including. out. of pocket expense by engagement. City of Economic Municipal Classification San Berr-ardino Development Aaencv Water Department Partner 50 24 40 SeniorManagers 120 60 100 Supervisor - - 200 Seniors 225 140 - Staff 205 116 180 ~ ~ ~ The foregoing estimated hours are budgeted hours for each of the fiscal year 2000-2004 audit examinations. SECTION I Hourly rates for services outside the swpe of services that would be in effect throughout the fiscal years ended June 30, 2000-2004 would be as follows: Classification Hourly Rate Partner $190 Senior Managers 125 Manager 100 Supervisor 90 Senior Auditors $$ StaffAuditors Our fees contemplate conditions satisfactory for the performance of the audit, including that each entity provide at the start of the audit, trial balances reflecting year end adjustments, necessary subsidiary schedules supporting asset and liability balances, all necessary reconciliations in agreement with general ledger balances, and customary supporting analyses and schedules normally maintained by the Finance Department. The City, Agency and Water Department will type confirmation requests and pull supporting documentation. If there are changes in the scope of the audit (additional major federal grant programs, substantial additional debt issues, added project areas, added enterprise activity, additional component units, changes in the flnanciai reporting model), we would like to discuss these changes Huth the Finance Director and the-effect of these changes on the professional audit hours and costs of the engagement. Our fee proposal includes consultation and technical advise on GASB #34 implementation but does not include additional costs that will be required in the year of implementation (yeaz ended 2002) and subsequent years. V APPENDD{D PRICE FORM ^. PTiICE FORM © (To be submitted in a sealed eavdope separate from proposal documents) R>rQU1rSTFORPROPOSAiS: RFP DESCR>1'T10N OF WORK Audit Services OFFEROR'SNAMFJADDRESS: Conrad and Associates, L.L.P. 1100 Main Street. Suite C Irvine. California 49614 NAMFIIFI,>~HONE NO.OF AUTHORIZEDREPRESENTATIVB Michael A. Harrison (949) 4~4-2020 ext. 230 © Please provide deta~7ed Fum Faced Price cost informatioa in the spaces provided bdow, xnd aay other incrdental or additional costs required to complete the Technical Specification regrriremeMs. Item Description UINt ~_ U~ ~ 001 Audit Services - G~ty of San Bernardino ea 1 S 45. 000 001 Audit Services - Economic Development Ageaey ea 1 S 25 . snn 001 Audit Services-Municipal WaterDepartraeat ea 1 ~ 39, 000 Are there any other additional or inddeatal costs which wi71 be your fmn~ia order to greet the requirements of the Technical SpeaScations? _ Y~s~ (dricle one). If you answered °I'cs"', please provide detail ofsaid additioaa] costs• Please iadieate grey elements of the Techraeal Spedfications which cannot be met by your firm. _ IiY-02-2099 15=42 P.86 f .. ~s - v •p Have you included in your proposal aIl informational items and foams as reques ? No [`/~ (arcle one). Ifyou answered `Tio°, please explain: V 'this offer shall remain firm for 90 days from R71' close date. 2eru and conditions as set forth in this RFP apply to this proposal ~ ~~3 ~ proposal, Offeror warrants that all certifications and doauneau requested herein are attached and properly completed and signed. From time to time, the City may issue one or more addenda to this ItFP.Below, please indicate all Addenda to this RFP receimved by your firers and the date said Addenda was/were received. Verification of Addenda Received Addenda No: R~v~ ~; Addenda No: Recemved ~; AUTHORIZED SIGNATfJRE: _ ~~°`'~ °~`~ . PRINT SI('NEIt'S NAME AND TITLE: DATE SIGDIED: COMPANYNAME & ADDRESS: Michael A. Harrison Partner May 19, 2000 Conrad and Associates, L.L.P. 1100 Main Street. Suite C Irvine. Galiforriia' 4 6ia PHONE:s4g9t C7u- nom FAX:-roux) ~~g_5.s~n IF NOT S1JBMITTII~GADI Og~~ PLEASE STATE REASON(S) BI4..LO'Gi': !iY-H2-2~B 15=43 P 87 PROPOSAL OF AUDIT SERVICES TO THE CITY OF SAN BERNARDINO, THE ECONOMIC DEVELOPMENT AGENCY AND THE MUNICIPAL WATER DEPARTMENT (Technical Proposal) Submitted by: CONRAD AND ASSOCIATES, L.L.P. 1100 Main Street, Suite C Irvine, California 92614 May 22, 2000 CONTACT PERSON -MICHAEL A. HARRISON, PARTNER PHONE NO. (949) 474-2020, EXT. 230 FAX NO. (949) 263-5520 CONRAD AND ASSOCIATES, L.L.P. CALffORNIA LICENSE NO. PAR 6454 CONRAD AND ASSOCIATES, L.L.P. FEDERAL IDENTIFICATION N0.33-0843820 ;- I~ONRAD AND ~ ASSOCIATES, L.L.P. Gary Silvius, Accounting Manager City of San Bernardino 300 North "D" Street, 4th floor San Bernardino, Califomia, 92418 CERTIFIED PUBLIC ACCOUNTANTS Deaz Mr. Silvius: 1lootiwN srREEr, wrrE e IRVINE, AILIFORNIA 9261{ (949) {744020 May 22, 2000 Fu (949) 263-5520 Conrad and Associates, L.L.P. is pleased to respond to your request for proposal to serve as independent auditors for the City of San Bernardino and related entities for Ule years ended ]une 30, 2000 through 2004. We are aware that while the City of San Bernazdino, the Economic Development Agency and the Municipal Water Depardnent have solicited numerous proposals, Conrad and Associates, L.L.P. would be your best selection for the following reasons which are set forth in greater detail in our proposal and Executive Summary: • Conrad and Associates, L.L.P.'s audit team of Michael A. Harrison, Engagement Partner, Ken AI-Imam, Technical Review Partner, Dean Votava, Senior Manager, Steven Dobrenen, Senior Manager, Cheryl Dyas, Supervisor, Courtney Holm, Senior Auditor and Brian Orr, Senior Auditor have a proven track record in serving California cities and redevelopment agencies. © • Conrad and Associates, L.L.P. is one of the largest local accounting-firms in Califomia that specializes in local government auditing and consulting. Our firm employs 67 individuals, including 62 professionals. During calendar year 1999, our professionals performed in excess of 52,000 hours of auditing and consulting services for our governmental and non-profit clients. • Our firm has an extremely high client retention percentage. We believe the primary reasons for this high satisfaction of our services is responsiveness to client needs, experienced staffing, timeliness of our services and reasonableness of our fees. • We currently serve as independent auditors for 35 Califomia cities. We also serve the Redevelopment Agencies of those cities. During 1999, twenty-one of those cities participated in the CSMFO and GFOA Award Programs for Excellence in Financial Reporting. • We understand the scope of work to be performed and we can and will deliver the services desired by each entity in the timeframes desired by each entity. • Conrad and Associates, L.L.P. is a quality control firm and one of the few C.P.A. firms that has voluntarily participated in the AICPA peer review program since 1979. Our firm has developed quality control standards and procedures which have been subjected to AICPA standards of review. We believe it is important for you to know that Conrad and Associates, L.L.P. has received an unqualified opinion on the quality control of our accounting and auditing practice for each of our peer reviews. ® • Conrad and Associates, L.L.P. has experienced tax practitioners that serve as an additional resource to our clients in answering questions that arise concerning tax matters affecting local governments. Gary Silvius, Accounting Manager Q City of San Bernardino May 22, 2000 Page Two • Conrad and Associates, L.L.P. will be advising the City of San Bernardino, the Economic Development Agency and the Municipal Water Department on new accounting developments and will be providing training to our clients on GASB #34 implementation in July 2000. • Conrad Business Services, Inc. has the capabilities to assist the City of San Bernardino, the Economic Development Agency and the Municipal Water Department in inventorying and valuing infrastructure to comply with new Accounting and Reporting Standards of the GASB. • We believe that our fee estimates and strncture will assure the City of San Bernardino, the Economic Development Agency and the Municipal Water Department of the most reasonable cost (based upon the experience of our audit team) to perform the annual audit examination for the City and the related component units. • Mr. Michael A. Harrison, Engagement Partner, and Mr. Ken AI-Imam, Technical Review Partner, are authorized to bind our firm in contractual matters with the City of San Bernardino, the Economic Development Agency and the Municipal Water Department. Messrs. Harrison and AI-Imam are also authorized to make representations for our firm. • We have the required insurance coverages indicated in your RFP. ® • Conrad and Associates, L;L.P. is licensed and in good standing with the California State Board of Accountancy to practice as independent certified public accountants. Additionally, Conrad and Associates, L.L.P. are independent with respect to the City of San Bernardino, the Economic Development Agency and the Municipal Water Department within the GAO standards and is an Equal Opportunity Employer. Our CPA Firm has not had any relationships with the City of San Bernardino, the Economic Development Agency or the Municipal Water Department in the past five years. We are committed to providing outstanding service to San Bernardino, the Economic Development Agency and the Municipal Water Department and in meeting the requested time deadlines and ae will maintain our audit working papers for a period of three years. Our firm thanks the City of San Bernardino, the Economic Development Agency and the Municipal Water Department for the opportunity to present our proposal qualifications and for the opportunity to serve as your independent auditors. Our proposal remains a firm and irrevocable offer for 90 days. I look forward to you contacting me so that I may answer further any questions which you may have. You may contact me at (949) 474-2020, Ext. 230. Very trnly yours, CONRAD AND ASSOCIATES, L.L.P. - /l1.vti~~/~~isr.L Michael A. Harrison, C.PA. Partner Q MAH kac Enclosure f= ® PROPOSAL OF AUDIT SERVICES TO THE CITY OF SAN BERNARDINO, THE ECONOMIC DEVELOPMENT AGENCY AND THE MUMCIPAL WATER DEPARTMENT TABLE OF CONTENTS Section Pale EXECUTIVE SUMMARY PROFILE OF THE PROPOSER A About Conrad and Associates, L.L.P. I PROPOSER'S QUALIFICATIONS B Qualifications and Related Experience of the Personnel who will Service the City of San Bernardino, the Economic Development Agency and the Municipal Water Department 3 C Our Prior Experience Auditing Cities, Redevelopment © Agencies, and other Local Governments 5 D Assistance in the Implementation of New Accounting Pronouncements 14 E References of Current Local Government Clients 18 F Capabilities in General Consulting and Compliance Auditing 19 APPROACH, SCOPE AND TIMING G A~proach, Timing and Work Program of Our Engagement cams 21 H Our Finn's Understanding of the Objectives and Scope of the Engagements 30 AUDIT FEES I Our Hourly Rates and Maximum Fee for each Engagement (removed and bound separately) Appendix A Resumes of Audit Engagement Team B Results of Most Recent Quality Control Review C Non-Collusion Affidavit D Price Form (removed and bound separately) EXECUITVE SUMMARY V © EXECUTIVE SUMMARY We believe that Conrad and Associates, L.L.P. should be selected to serve as independent auditors for the City of San Bernardino, the Economic Development Agency and the Municipal Water Department for the following reasons set forth in greater detail in our proposal: • The engagement team who will service you are vastly experienced in serving California Cities. Mr. Hamson, Partner has 25 years serving municipalities. Mr. AI-Imam, Technical Reviewer is the current statewide chairman of the California Society of CPA's Governmental Accounting and Auditing Committee. Mr. Votava, Senior Manager and Mr. Dobrenen, Senior Manager, each have over 11 years serving Cities and handling complex City and Agency engagements. Ms. Dyas is an experienced Supervisor who has over seven years working on City and Agency engagements. Mr. Orr and Ms. Holm are experienced senior auditors with significant municipal experience. • Our firm qualifications and references you will fmd to be outstanding. We currently audit more than 60 municipalities, including 35 Cities and Redevelopment Agencies. Many of the cities that we. audit provide water and sewer services that are accounted for as enterprise funds. In addition, we currently serve as auditors for the San Diego County Water Authority and the Orange County Water District. • Our professionals are abreast of GASB #34 and are able to assist your staff in technical areas through the years that come in wmplying with the new Financial Reporting Model. We will © keep you abreast through client meetings and periodic seminars on technical topics. • We have an excellent track record in providing continuity of staffing and plan to provide this continuity from year to year for the City of San Bernardino, the Economic Development Agency and the Municipal Water Deparhnertt • We know how to meet deadlines and are timely in our rendering of professional services. • Our approach is one of cooperation and thoroughness through our knowledge of City, Water and Redevelopment Agency accounting and auditing issues. • We strive to minimize the disruption that can so often be caused by the audit process. We will work with you with regard to time tables, schedule preparation, priorities in the Finance Department, etc.. We strive to be good guests in your Finance Department, working around payroll deadlines, etc. Our personnel are trained, professional, courteous, and pleasant to work with. • We welcome and encourage the asking of questions to our fum throughout the year. We believe that this makes for a more effective audit process. Accordingly, we do not charge for telephone consultations made to our firm. We always want to be a resource to you.with regard. to financial matters. This is a part of our client service orientation. We believe that such considerations should be an important element.. in the selection of the auditor. Communication between the auditor and the client with regard to accounting and auditing issues is a focal of our service. EXECUTIVE SUMMARY, (Confinued) • We see ourselves as part of a team with the Finance Department to continually maintain the highest standards of financial reporting. As part of that team, we see ourselves as advisors with respect to financial reporting standards. However, we are not overly dictatorial with regazd to financial presentation issues. We allow our local government clients to choose the reporting practices that it determines is best suited for that local government, as long as it does not violate govenunent accounting standards. As experts in governmental reporting, we will advise you as to relevant accounting pronouncements that are applicable to the financial reporting , as well as keep you up-to-date on developments in the azea of govenunental accounting and reporting. • We desire to have the City of San Bernardino, the Economic Development Agency and the .Municipal Water Department as clients. Each would be an important client of our firm. PROFILE OF THE PROPOSER O SECTION A ABOUT CONRAD AND ASSOCIATES, L.L.P. Conrad and Associates, L.L.P. is located in Irvine, California and employs a staff of sixty-seven (67) individuals, including sixty-two (62) professionals through its Business Services Firm, Conrad Business Service, Inc. Four of the firm's eight partners devote more than 75% of their time in managing governmental audit and general consulting engagements related to governmental clients. Three of the firm's partners have extensive "Big 5" public accounting experience in addition to extensive local firm experience. One of our partners is currently the Chairman of the state-wide "Governmental Accounting and Auditing Committee" of the California Society of Certified Public Accountants and is also an active member of CCMA (California Committee on Municipal Accounting). One of our tax partners has an advanced degree in taxation as well as being a C.P.A. This tax expertise adds an additional dimension for our local governmental clients in areas of taxation affecting local governments. Since 1971, Conrad and Associates, L.L.P. has specialized in governmental and nonprofit accounting and auditing. For the past 28 years, the firm has been performing accounting and audit services to the private and public sector and not-for-profit organizations. A breakdown of our firm's personnel by level ofexperience is as follows: Partners 8 Managets/Supervisors 9 © Semors 17 Professional Staffand Consultants 28 Support Staff 5 Conrad and Associates, L.L.P. and all assigned key personnel are licensed to practice in the State of California and have complied with all applicable California Board of Accountancy requirements. The firm's employees have met all of the State's Continuing Education requirements, and the fine is in compliance with CPA requirements of the Private Companies Practice Section of the AICPA. A Oualiri Control Firm For over 19 year;, Conrad and Associates, L.L.P. has been one of the few local CPA firms which has subjected its audit and accounting practice to the scrutiny of the peer review program administered by the Private Companies Practice Section of the American Institute of Certified Public Accountants (AICPA). As a member of the Private Companies Practice Section of the AICPA, our audit procedrres and working papers are regularly examined by another CPA firm in the Smr-on-firm peer review program. In addition, all aspects of the firm's quality control practices have been reviewed, including the firm's commitment to extensive training programs. In every member firm, each member of the professional staff must enroll in continuous professional education courses: Each is required to take at least 120 hours of chisses over a three-year period. Courses wver a wide spectnrm of professional and technical subjects, often prepared by the AICPA, to help the practitioner maintain his professional expertise. The fi9lowing policies and procedures are evaluated dm~ingthe peer review. SECTION A, (Continued) 1. How a firm implements independence requirements 2. How personnel are assigned 3. Provision for consultation when technical assistance is required 4. How field work is supervised 5. Hiring practices 6. Continuing Professional Education programs 7. Promotion of personnel 8. Decisions on obtaining and retaining clients 9. Internal inspection of the firm's work This means that when the City of San Bernardino, the Economic Development Agency and the Municipal Water Department select our firm to perform services for you, you will know that our firm has agreed to comply with the strict membership requirements of the section to which we belong and has agreed to have our compliance with those requirements reviewed by others. Thus, there is greater assurance that our personnel are adequately trained and up-to-date on professional developments relating to governmental as well as commercial auditing. ® Accordingly, membership in this Division provides additional assurance that our firm will comply v~nth professional accounting and auditing standards. The Governmental Accounting Office (GAO), in their 1994 revisions to the "Yellow Book", Gover»me»t Auditing Sta»dards, require CPA firms performing. governmental audits to participate in quality control "peer" review We are proud of the fact that Conrad and Associates, L.L.P. received an unqualified opinion on the quality of its accounting and auditing practice for each of its quality control reviews. Conrad and Associates, L.L.P. has participated in voluntary peer review since 1979. A copy of our membership, together with the results. and opinion, on our most recent. (1998) peer review, together with California Society of Certified Public Accountants Peer Review Program (CSCPA) approval of the results of the review, are included is Appendix B. We would like to indicate that during our most recent quality control review several government audits, including single audits of cities and other governmental entities, were reviewed by the review team who found our work to substantially comply with all professional standards. Additionally, our firm has had numerous federal and statedesk reviews and field reviews of our audits done by the State Office of Criminal Justice Planning, the U.S. Departments of Labor, Health and-Human Services, Environmental Protection Agency and the California State Controller's office. In all instances the federal or state agencies indicated their satisfaction with our work. Our fine has never had. a rscoid-of substandard audit work, As a local CPA firm, our office contains approximately 10,000 square feet of space for the 67 individuals in our firm.. To accommodate our clients, we have an in-houso- Data- Froeessing Sysoee~ network and numerous compatible personal computers. We use Microsoft Office 2000 and Windows 98 software for the production of reports and ether written documents of tha highest quality. Our field audit staff teams are equtpped with lap-top computers and our audit staff are proficient in several software programs iac uliug Microsoft Word, Excel and Word © Perfect. Our staff are capable of reading/hansfecring data in that media with the City, Agency and Water Department. PROPOSER'S QUALIFICATIONS V SECTION B The successful outcome of any audit requires personnel with the managerial and technical skills to perform the work required. The engagement team who will serve the City of San Bernazdino, the Economic Development Agency and the Municipal Water Department have served together as a team of professionals on numerous financial audit examinations of local govemment entities, including complex govemmental agencies. We believe that efficient administrative management and supervision of the audits is an extremely critical factor in achieving the desired results for the City of San Bernazdino, the Economic Development Agency and the Municipal Water Department. In that regard, we propose to establish the following procedures. Mr. Michael A. Harrison, Engagement Partner, who has 25 years of local govemment auditing experience, will be responsible for the coordination of the audits of the City of San Bernardino, the Economic Development Agency and the Municipal Water Department and fulfillment of the requirements of the City Council of the City of San Bernardino, the Community Development © Commission of the Economic Development Agency and the Board of Water Commissioners of the Municipal Water Department. Mr. Harrison, as the Engagement Partner, will be in the field to plan and coordinate the management of the audit examination of the City of San Bernardino, the Economic Development Agency and the Municipal Water Department. He will work closely with the Finance Director and Accounting Manager of each entity and be responsible to the City Council of the City of San Bernardino, the Community .Development Commission of the Economic Development Agency and the Board of Water Commissioners of the Municipal Water Department. He serves as a reviewer for the CSMFO award program for CAFR's and has been a speaker at a number of CSMFO local chapters on matters pertaining to technical issues and new GASB pronouncements. Mr. Ken AI-Imam serves as a partner in the firm's local govemment auditing practice. He has over 19 years of local governmental auditing experience. Mr. AI-Imam will serve as Technical Review. Partner. In this capacity, Mr. Al-Imam will act as a technical and consulting partner to Mr. Harrison and the Finance Directors and Accounting Managers. As a second partner reviewer, he will perform quality control reviews of audit reports issued by our firm. Mr. AI- Imam is the current Chairman of both the. state-wide "Governmental Accounting. and Auditing Committee" for the California Society of Certified Public Accountants and the Governmental Accounting and Auditing Committee for the Long Beach-Orange County Chapter of the California Society of CPA's. He is also an active member of CCMA (California Committee on Municipal. Accounting). He has made pres,^atations in pulllic hearings before the Governmental Accounting Standards Board (GASB). Mr. Al-Imam' is also responsible for the firm-wide training of audit personnel at Conrad and Associates, L.L.P. in the area of local governmental accounting and auditing. \rr/ SECTION B, (Continued) Mr. Dean Votava, Senior Manager will serve as Engagement Manager on the audit of the City of San Bernardino and the Economic Development Agency. He will participate in the planning and assessment of control risk of the engagements. Mr. Votava will provide direction to the Senior Auditor and will review the audit working papers and all audit reports prepared by the Senior Auditor. Mr. Votava has extensive experience in managing City engagements. Mr. Votava has served as Engagement Manger on numerous complex City and Redevelopment Agency audits. Mr. Steven Dobrenen, Senior Manager will serve as Engagement Manager on the audit of the Municipal Water Department. He will participate in the planning and assessment of control risk of the engagement. Mr. Dobrenen will provide direction to the Senior Auditor and will review the audit working papers and all audit reports prepared by the Senior Auditor. Mr. Dobrenen has extensive experience in managing City engagements and has served as Engagement Manager on numerous complex City audits that included significant water and sewer activity. Mr. Dobrenen currently manages the audit of the San Diego County Water Authority. Ms. Cheryl Dyas will serve as Senior Auditor of the audit of the Municipal Water Deparment. She will work closely with Mr. Dobrenen, Mr. Harrison and Staff of the Finance Department. She will plan and conduct the audit work and supervise the Professional Staff who will work with her. Ms. Dyas has extensive local government auditing experience, including performing as © Staff and Senior Auditor on several City and Redevelopment Agency audits. Mr. Brian Orr will serve as Senior Auditor of the audit of the Economic Development Agency. He will work closely with Mr. Votava, Mr. Harrison and Staff of the Finance Department. He will plan and conduct the audit work and supervise the Professional Staff who will work with him. Mr. Orr has extensive local government auditing experience, including performing as Staff and Senior Auditor on several City and Redevelopment Agency audits. Ms. Courtney Holm will serve as Senior Auditor of the audit of the City of San Bernardino. She will work closely with Mr. Votava, Mr. Harrison and Staff of the Finance Department. She will plan and conduct the audit work and supervise the Professional Staff who will work with her. Ms. Holm has extensive local government auditing experience, including performing as Staff and Senior Auditor on several City and Redevelopment Agency audits. 4 © SECTION C Conrad and Associates, L.L.P. as a firm, under the direction of partners Mr. Ken Al-Imam and Mr. Michael A. Hamson, are vastly experienced in the audits of local government units (all funds audit examinations of cities including single audits performed under OMB Circular A-133, financial and compliance audits of Califona Redevelopment Agencies, audit examinations of public housing authorities, joint powers authorities and special districts). Among the local government entities which Conrad and Associates, L.L.P. has served during the past fiscal yeaz aze the following: All Funds Examinations of California Cities ~' Ciri of Santa Ana (Approximate budget $340 million) During 1984.1988 our fine served as auditors for the City at Santa Ana the City Council again selected our firm in 1999 to serve as auditors for the 1999-2003 audits of the City and Agency. The City is one of the largest Cities in Orange County. The City has in excess of $400 million in bonded indebtedness and receives more than $40 million in Federal grant Funding through its Housing, Authority, CDBG and other grant programs. The City also receives the CSMFO and GFOA awards for excellence in financial reporting. oc City of Brea (Approximate budget $130 million) During 1992, our fine was selected as auditors among a wide field of competition for this Orange County City. The City has a very active redevelopment agency. Durmg fiscal yeaz 1992, the Brea.Financing Authority issued neazly $200,000,000 in tax allocation and lease revenue bonds and defeased four previous issues of the Redevelopment Agency. The Agency has numerous owner participation and developer disposition agreements with significance to the annual audit. The city has a regional shopping mall and receives various sources of grant funding subject to the single audit.. The City has received the CSMFO Certificate of Achievement for Excellence in Financial Reporting in 1998 and previous years and has submitted its CAFR for the year ended June 30, 1999 for review by the Oovermnent Finance Officers Association and the California Society of Municipal Finance Officers. a` Ciri of Palm Snrinss (Approximate budget $85 million) Comad and Associates, L.L.P. has served as auditors for this Coachella Valley City since 1986..The Palm Springs Redevelopment Agency, which is-part of the reporting entity of the City, has ten project areas. The City operates the Palm Springs Regional Airport and receives various federal funding, including FAA grants subject to the single audit under OMB Circular A-133. Other enterprise funds of the City include the Wastewater and Golf Course activities. The City has received the CSMFO Award for Outstanding Financial. Reporting and the GFOA Certificate of Achievement for Excellence in Financial Reporting for its 1989-1998 CAFR's, and has submitted its 1999 CAFR under each of those award programs. SECTION C, (Continued) ~P Ciri of Norwalk (Approximate budget $56 million) Conrad and Associates, L.L.P. has performed the audit of this Los Angeles County city from 1986 through 1999. We have performed a single audit in accordance with OMB Circular A-133 for each of those years. Our audits include the Norwalk Financing Authority and Norwalk Redevelopment Agency. The City receives grant funding from the U. S. Department of Housing Development for the Section 8 Housing assistance program as well as CDBG and other federal funding. The City also operates a state funded child care program and a Senior.Citizens action program. For each of the years 1986 through 1998, the City has received the CSMFO Award for Outstanding Financial Reporting and the GFOA Certificate of Achievement for Excellence in Financial Reporting. The City has submitted its 1999 CAFR under each of the foregoing programs. °~ City of Costa Mesa (Approximate budget of $105 million) Conrad and Associates, L.L.P. was selected to serve as independent auditors in fiscal 1991. Included in the audit are the operations of the Costa Mesa Financing Authority, the Costa Mesa Redevelopment Agency and the Costa Mesa Sanitary District The City also operates a municipal golf course and receives various sources of Federal funding subject to single audit under OMB CirculazA-133. The City has received the CSMFO Award for Outstanding Reporting and the GFOA Certificate of Achievement for Excellence in Financial Reporting for its 1998 CAFR and has submitted its 1999 CAFR under each of the foregoing programs. ® c'- City of Buena Pazk (Approximate budget of $59 million) During 1982, our professionals assisted the City in implementing NCGA Statement #3 to incorporate changes in the "Reporting Entity". Additionally, in connection with a fixed asset appraisal performed by an outside appraisal firm, we successfully completed audit procedures and assisted the City in recording of those assets on their books. With the appraisal and audit work, the City was able to remove previous accountants' report qualifications relating to the incompleteness of fixed asset records. Conrad and Associates, L.L.P. further assisted the City finance department in upgrading its annual financial report which has been submitted under both the CSMFO Award Programs and the Government Financial Officers Association (GFOA) Certificate of Achievement Program. We have served as independent auditors of this City for the past 17 years. '-'' City of San Gabriel (Approximate budget $11 million) Conrad and Associates, L.L.P. conducted the audit examination of this Los Angeles County City for fiscal 1988 through 1999. A single audit in accordance with OMB Circular A-133 was also conducted for each year. The 1990 through 1998 CAFR received the CSMFO Outstanding Award and GFOA's Certificate of Achievement for Excellence in Financial Reporting. The 1999 CAFR has again been submitted for review under the CSMFO and GFOA awazd programs. `P City of La Veme (Approximate budget $20 million) Conrad and Associates, L.L.P. conducted the audit examination of this City for fisra11988 through 1999. The City and Agency have several owner participation agreements, multiple issues of long-term debt outstanding, and operates both a waterand sewer utility. A single audit in accordance with OMB Citculaz A-133 was also conducted for each yeas The City received the CSMFO Award for outstanding financial reporting for each of the past nine fiscal years. f .a ~- 1 ® SECTION C, (Continued) City of Gilroy (Approximate budget $35 million) Conrad and Associates, L.L.P. has conducted the audit examinafion of this Santa Clara County City for fiscal 1989 through 1999. During fiscal 1992 we assisted the City in a conversion to full governmental GAAP for all its funds. During 1989 we also conducted a management audit of the City's waste disposal contractor, and single audits in accordance with OMB Circular A-133 for 1989 through 1999. s6 Town ofAuale Valley (Approximate budget $12 million) Conrad and Associates, L.L.P. was selected to serve as independent auditors for this relatively new City in San Bernardino County during 1991. The City has a Water District and several special assessment districts. Our staff is also providing technical support and assistance in various areas to the City staff. The City has received the CSMFO Award for outstanding reporting and the GFOA Award for excellence in financial reporting for its CAFR's during 1994-1998. The 1999 CAFR was submitted under both award programs. sb City of Highland (Approximate budget $6 million) Conrad and Associates, L.L.P. currently serves as the auditors of this San Bernardino County City. We completed the examination of the City for the years ended June 30, 1989 through June 30, 1999. During 1990 we assisted the City in developing accounting policies and establishing fund structure for a newly formed Redevelopment Agency. The City has received the GFOA and CSMFO awards for its CAFR © during each of the past nine years. l'-~ Ciri of Hemet (Approximate budget $20 million) Conrad and Associates, L.L.P. was selected during 1989 to serve as auditors of this Riverside County City. We have completed our audit of the City, Redevelopment Agency and the single audit in accordance with OMB Circular A-133 for the years ended June 30, 1989 through 1998. The City has. several internal service fund activities and operates refuse and water utility enterprise funds. ~' City of Hawaiian Gardens (Approximate budget $9 million) Conrad and Associates, L.L.P. was selected in late 1990 to serve as auditors of this Los Angeles County City. Our 5rm completed the 1989 through 1997 audit examinations of the City, Redevelopment Agency and Public Financing Authority. We also conducted single audits in accordance with OMB Circular A-133. We have provided technical assistance to the City and Redevelopment Agency in accounting matter;, and performed special reviews at the Agency's request of the validity of the Redevelopment Agency's tax increment increase from 1988 to 1989. The Redevelopment Agency has engaged in several debt issues, including those involving the advance refunding and defeasance of debt. ?~ Ciri of Rancho Mirage (Approximate budget $18 million) Conrad and Associates professionals under Mr. Harrison's direction, performed the examination of this desert City from 1982 through 1988. The City receives significant hotel-motel bed taxes and has numerous special assessment districts subjected to audit. Our firm was again selected in 1992 to perform the audit examinations of the City, Agency, Financing Authority and single audit. The City has received award recognition under the CSMFO and GFOA Award Programs for Excellence in Financial Reporting for its CAFR 7 ® SECTION C, (Continued) R`'City of L_a Quints (Approximate budget $30 million) Conrad and Associates, L.L.P. was selected in 19 2~to serve as auditors of this Coachella Valley City. Included within the audit are the La Quints Redevelopment Agency and La Quints Financing Authority. The City has received recognition under the CSMFO award program for its CAFR P~ Ciri of Indio (Approximate budget $25 million) Conrad and Associates, L.L.P. was selected in 1993 to serve as independent auditors for this Coachella Valley City. Our firm has also assisted the City in technical issues relating to the Redevelopment Agency, pass-through agreements and the Indio Financing Authority. The City received the CSMFO and GFOA awards for its 1998 CAFR ~ City of Carlsbad (Approximate budget $80 million) Conrad and Associates, L.L.P. was selected in 1993 to serve as auditors for this San Diego County City. The scope of the audit includes the Carlsbad. Housing Authority, Carlsbad Redevelopment Agency and the Encina Joint Powers Financing Authority. Conrad and Associates, L.L.P. previously served as auditors from 1981-83 for the City. The City received the CSMFO and GFOA award for its 1997 CAFR and is again submitting its 1999 CAFR under both award programs. La Ciri of Whittier (Approximate budget $60 million) We were selected in 1994 to perform the audit of this Los Angeles County City, its Redevelopment Agency and Public Financing Authority. The City's enterprise activities include sewer, water and solid waste. We assisted the City in addressing issues relating to its landfill closure and post-closure cost. The City has received the CSMFO and GFOA Awards for Excellence in Financial Reporting for its CAFR +-'~ City of Temple City (Approximate budget $12 million) Conrad and Associates, L.L.P. is under contract through 2003 to perform the audit of the City, Redevelopment Agency, Financing Authority and Single Audit under OMB Circular A•133. We also have provided other technical assistance in the preparation of State Controllers Reports, Employee Benefit Plan tax returns and other budgetary assistance. The City has received the CSMFO and GFOA Awards for Excellence in Financial Reporting for its CAFR }a Ciri of Bell (Approximate budget $12 million) We were selected in 1994 to perform the audit of this Los Angeles County City, the Bell Redevelopment Agency and Surplus Property Authority. We also perform a single audit under OMB Circular A-133. The City has received the CSMFO Award for Excellence in Financial Reporting. i~ City of Pomona (Approximate budget $177 million) We were selected to perform the 1995-98 annual audits of this Los Angeles County City. We have perforned audits of the City, Agency, Housing Authority, Financing Authority and Single Audit. The City received the GFOA award for its 1995-1997 CAFR's. This City is in an urban setting with extensive grant funding under Housing Assistance, Housing Rehabilitation and Preservation, Home Investment Partnership Act, CDBG, Shelter Care and Emergency Shelter Grants. ~ City of Diamond Bar (Approximate budget $10 million) We were selected in 1995 to perform the audit of this Los Angeles County city. We have also performed special cable television (~'; audits for the City during 1995. The City has received the CSMFO and GFOA Awards for err' Excellence in Financial Reporting during each of our years as auditors. SECTION C, (Continued) s9 Citv of Escondido (Approximate budget $125 million) During 1983 through 1988, Conrad and Associates, L.L.P. performed the audit examination of this northern San Diego County City. The City operates numerous proprietary activities, including Water and Sewer. The City receives various grant funding sources, including Community Development Block Grant Funds. Single audits were performed for fiscal 1985, 1986, 1987 and 1988 under OMB Circular A-128. In 1995 the City again selected our firm to serve as auditors. The City receives both the CSMFO and GFOA awards for its CAFR °`" Ciri of Orange (Approximate budget $120 million) This active full service City provides police, fue, water, refuse, and sanitation services. The City and Redevelopment Agency are involved in a number of complex financial transactions with recorded debt of the City and Agency approximating $100 million. The City receives the GFOA and the CSMFO awards for its CAFR +f'Ciri of Villa Park (Approximate budget $1 million) We were selected in 1997 to perform the audit of this Orange County City. We also assist the City in preparing reports including the State Controllers and Street Reports. ~ Ciri of San Clemente (Approximate budget $S3 million) We were selected in 1996 to perform the audit of the City and Redevelopment Agency. We also perform a single audit of grant programs and a financial audit of a joint powers authority for animal control. The City received ® award recognition for its 1996-98 CAFR's under the CSMFO and GFOA award programs and again has submitted its 1999 CAFR for awazd recognition. yF City of South Gate (Approximate budget $60 million) We were selected in 1997 to perform the audit of this Los Angeles County City. We previously served as auditors from 1983-1987. This City has significant grant activity including Section 8 Housing Programs. We performed audits of the City, Redevelopment Agency and Public Financing Authority. The City submitted its CAFR under the CSMFO and GFOA award programs in 1998. =~~ City of La Puente (Approximate budget $8 million) We were selected during 1997 to serve this Los Angeles County City. We performed audits of the City and Redevelopment Agency. D•- City of Laguna NifLuel (Approximate budget $18 million) We were selected in 1996 to serve as independent auditors of this Orange County City. We performed audits of the City and Community Services Districts for fiscal years ended June 30, 1996 through 1999. ~' Ciri of Indian Wells (Approximate budget $33 million) We were selected in 1997 to serve as independent auditors of this Coachella Valley City. We have audited the Redevelopment Agency and perfamted agreed upon auditing procedures at the City's Golf Course operator and hoteUmotel operators. 'a' City of Mission Vieio (Approximate budget $42 million) We were selected in 1997 as auditors of this Orange County City. We perform the audit of the City and Redevelopment Agency. The City also submits its CAFR under the CSMFO and GFOA award programs. ^~ City of Laguna Beach (Approximate budget $43 million) Conrad and Associates, L.L.P. was O selected during 1998 to serve as independent auditors for this beach City. The City operates a municipal transit fund and has dealt wtth several disasters with FEMA grant reimbursements. The City received an award for it's 1998 CAFR under the CSMFO Award Program for Outstazrding Finahcing$eporting. Q SECTION C, (Continued) Experience with Redevelopment Asencies Conrad and Associates, L.L.P. currently or has previously performed fmancial and compliance audits of the following redevelopment agencies: Indio Redevelopment Agency Brea Redevelopment Agency Santa Ana Redevelopment Agency Buena Park Redevelopment Agency Rancho Mirage Redevelopment Agency Stanton Redevelopment Agency Rialto Redevelopment Agency San Mazcos Redevelopment Agency Azusa Redevelopment Agency Vista Redevelopment Agency South Gate Redevelopment Agency Downey Redevelopment Agency Temple City Redevelopment Agency San Jacinto Redevelopment Agency Westminster Redevelopment Agency Norwalk Redevelopment Agency E""~ Palm Springs Redevelopment Agency ~„r/ Carlsbad Redevelopment Agency Cathedra! City Redevelopment Agency Desert Hot Springs Redevelopment Agency Escondido Redevelopment Agency Banning Redevelopment Agency La Verne Redevelopment Agency Gilroy Redevelopment Agency Hemet Redevelopment Agency Highland Redevelopment Agency Costa Mesa Redevelopment Agency Delano Redevelopment Agency La Quints Redevelopment Agency Whittier Redevelopment Agency Bell Redevelopment Agency Pomona Redevelopment Agency Hesperia Redevelopment Agency Orange Redevelopme~Agency San Clemente Redevelopment Agency La Puente Redevelopment Agency Our experience with redevelopmentagencies is extensive and includes the following: • Assistance in the accounting for developer disposition agreements (RDA's) and owner participation agreements © • Computations of obligations under pass-through agreements • Assistance.inthe use<oftax shacingag~nts,as an economic incentive ti ® SECTION C, (Continued) • Consultations regarding the financial benefit to the City resulting from redevelopment activities • Tax increment financing of projects • Consultations regarding low-moderate income housing requirements • The establishment, merging, and adding of project areas • The use of rehab loans in redevelopment agencies • Assistance in issuance (and refimdings) of Tax Allocation Bonds • The establishment of redevelopment fund structure • Use of City loans and advances Audits of Special Districts Orange County Water District The Orange County Water District was formed by a special act of the California State Legislature © in 1933. The purpose of the District is to provide a safe and reliable supply of water to its member agencies, which consist of the cities and water districts within the boundaries of Orange County. This is accomplished by the District's management of the Orange County groundwater basin and to provide for the protection, conservation, and replenishment of the basin. To accomplish this end, the District has issued $235,000,000 irr debt t6 construct facilities to preserve the groundwater basin for its member agencies. The District has an annual operating budget of $60 million. The revemres of the District consist of basin equity assessments and replenishment assessments from the municipalities and water districts thatextract water from the groundwater basin. The District prepares. a CAFR that has received the GFOA award for excellence in financial reporting for each of the past three fiscal years during which Conrad and Associates, L.L.P. has served as the auditors for the District. San £liio Joint Powers Authoriri The Sag Elijo Joint Powers Authority (JPA) was created in June 1987 Yo own, operate, maintain and upgrade the San Elijo Water Reclamation Facility (WRF). The member agencies of the JPA are the Cardiff Sanitation District (Cardiff] and the City of Solana Beach (Solana Beach). The JPA is governed by a board of directors consisting of two directors from each member agency. The JPA is also conducting, is conjunction with the City of Escondido, the repair and maintenance of the ocean outfirll used by the JPA and the City of Escondido. The JPA completed design and bidding for a reclaimed water project during fiscal year 1997-98. Construction started in July, 1998. This project will upgrade. the treatment facility to tertiary treatment to serve reclaimed water to approximately 90 customers in the cities of Encinitas, Solana Beach and Del Mar. This project is being supported by $12,600,000 in State Revolving Fund loan funding and approximately $3,700,000 advancxd by the member agencies. Water will be available in Spring of 2000 and loan repayment and program operations will be supported by © reclaimed water revenues. tZ ;; ,. SECTION C, (Continued) South County Regional Wastewater Authority The South County Regional Wastewater Authority (the Authority) was created on July 1, 1992 by the City of Morgan Hill and the City of Gilroy. The purpose of the Authority is to plan and implement regional solutions to the wastewater treatment and management problems resulting from the, generation of wastewater within the service areas of the Member Agencies. To achieve this purpose, the Authority has constructed and operates a sewage treatment plant that provides secondary treatment for sewage, as well as wastewater reclamation. The City of Gihny has a 58.1% ownership interest in the Authority. The City of Morgan Hill has a 41.9% ownership interest in the Authority. This agreement terminates the joint power agreement entered into in 1979 (the Agreement of 1979). The Authority is governed by a Board of Directors which consists of three members from the Gilroy City Council and two members from the Morgan Hill City Council. Bia Beaz Area Regional Wastewater Aeencv The Big Beaz Area Regional Wastewater Agency (Agency) is a joint powers agency comprised of three members: the Big Bear City Community Services District, the City of Big Bear Lake, and the County of San Bernardino on behalf of the County Service Area 53, Zone B. The Q Agency was formed in 1974 to construct and operate regional sewage treatment and disposal facilities for the entire Big Beaz Valley. The senrice azea for the Agency includes most of the Big Beaz Valley in the San Bernardino Mountains in Western San Bernardino County. The Agency was formed under a joint exercise of powers agreement among the member entities for the purposes of planning and constructing sewer improvements to serve the member entities' sernce areas, obtaining State and Federal Clean Water grants; financing the local share of project costs, and operating the regional facilities. A regional treatment plant and disposal area were constructed and began operation in 1978. Experience in Auditing Public Housin¢ Authorities and Programs Name of Housin¢ Authority Type of Audit Dates Pomona Housing Authority A-133 Single Audit 6/95-6/98 Hawaiian Gardens Housing Authority A-133 Single Audit 6/94-6/98 Norwalk Housing Authority A-133 Single Audit 6/86-6/99 Carlsbad Housing Authority A-133 Singie Audit 6/93-6/99 County of Riverside Housing Authority A-133 Single Audit 6/98 Santa Ana Housing Authority A-102/A-128 Single Audits 6/83-6/88/6/99 South Gate Housing Authority A-133 Single Audit 6/97-6/99 (^, San Bernardino Housing Authority A-133 Single Audit 9/95-9/99 V 13 SECTION D As a part of our service to the City of San Bernardino, the Economic Development Agency and the Municipal Water Department, we will assist each entity in understanding the impact of new accounting pronouncements, such as the following: NEW FINANCIAL REPORTING MODEL In July 1999, the GASB issued as final a new accounting pronouncement entitled GASB Statement No. 34 which sets forth a new financial reporting model for governmental entities. The new model (called the integrated model) will report financial data differently for the government-wide perspective and the fund perspective. The model will include the following: Government-wide Perspective The new model will add a new summary level of reporting in addition to the fund level of reporting currently in use. This highly aggregated summary level of reporting will be called the © government-wide perspective. These summary financial statements will (unless the reporting government has discretely presented component units) have just three columns (governmental activities, business-type activities, and a total column). The data in this perspective will be oa the full accrual basis of accounting. Fund Perspective The integrated model will also have a second section called the fund perspective. At the fund perspective, data will be on the modified accrual basis of accounting for the governmental funds, as is the current practice. At the fund perspective, there will be separate columns for the general fund, each major fund and a column for all of the nonmajor funds. There will be no columns for the general frxed assets account group or the general long term debt account group (these will be reflected only at the government-wide perspective level). There will also be no required grouping by fund type. Behind these statements will be the individual fund budget- actual schedules. Budgetary comparisons will only be shown for the general fund and each major special revenue fund that has a legally adopted annual budget. These budget-actual schedules will be presented as required supplementary information. These schedules must include columns for both that fund's original adopted budget, as well as the final revised budget for that fund. Summary Financial Data will Use a Different Basis of Accounting Than at the Fund Level At the government-wide level, the full accrual basis of accounting will be used. At the fund perspective level, the modified accrual basis of accounting will be used for governmental funds. This will make it difficult to track numbers from the fiord perspective to the government-wide perspective. The new financial reporting model will require a reconciliation between the total equity at the fund perspective (which is on the mod~ed accrual basis of accounting for the governmental funds) with the total equity at the government wide perspective (which will be on the full accrual basis of accounting). Although total equity will be reconciled, it will be difficult 14 ® SECTION D, (Continued) to show how specific numbers change from one level of reporting to the other as a result of the two different bases of accounting that are used. Management Discussion and Analysis As a requirement of financial reporting, management must include in the front of the financial statements a section called management discussion and analysis. This will contain information similar to what is being reported currently in the transmittal letter used for comprehensive annual frnancial reports that are submitted for governmental financial reporting awazd programs. This information will include condensed financial data, explanations of major fluctuations from the prior year, major changes in economic conditions, explanations of significant budget variances for the general fund, major differences between the original and final budget for the general fund, description of major capital assets and long-term debt activities during the year, whether the government's financial position has improved or deteriorated during the year, factors or conditions or events that are expected to have a significant impact on the financial position of the government, and an explanation of the differences between the two bases of accounting reflected in the government wide perspective and the fund perspective. Changes in Reporting Fixed Assets Q A major change will be required for reporting general fixed assets in that GASB will require infrastructure assets (streets, etc.) to be included. Generally, local governmental clients will hire an appnusal fine to inventory these assets. The original cost of these assets can be estimated by the appraisal fums by studying local government street maps and estimating the original cost of these assets by using various discounting techniques to estimate construction costs when the assets or improvements were acquired. Impact on the Books of Local Government The modified accrual basis of accounting for governmental funds will still be required for the fund perspective that is required to be presented in the new financial reporting model. Therefore, most of the changes resulting from this new model will have to be dealt with- during the preparation of the year end financial statements. We recommend that governments continue to maintain their fund accounting system as they have in the past. Most local govenunents will need to engage their auditors to make the necessary modifications to the local government's financial data in order to produce the required government wide perspective of reporting, which will be on the full accrual basis of accounting. We expect that considerable time will be expended to change the combined data from the modified accrual basis of accounting to the full accrual basis of accounting each year. An estimate of the hours required to make these modifications and the related cost will be provided to the client at that time. O 15 }~ Expected Date of Final Statement SECTION D, (Continued) The effective date for the new pronouncement varies depending on the size of the governmental entity and is as shown below. New infrastructure additions must be capitalized and reported as fixed assets prospectively with the implementation of the new standard. However, compilation of prior year infrastructure records would be not be required until four years after the effective date for the implementation of the new financial reporting model: Total Revenues O Over $100,000,000 Financial Reporting Model- Effective For Fiscal Years Ending June 30, 2002 Prior Year Infrastructure Records- Required For. Fiscal Years Ending June 30, 2006 $10,000,000 - $100,000,000 June 30, 2003 June 30, 2007 Under $10,000,000 June 30, 2004 Retroactive reporting not Required REVENUE RECOGNITION FOR NONEXCHANGE TRANSACTIONS In January 1999, GASB issued GASB Statement No. 33 entitled Accounting and Financial Reporting for Nonexchange Transactions.. This new pronouncement redefines the rules of revenue recognition for nonexchaage transactions, which include taxes, state subventions, and other significant local government revenue sources that do got involve the providing of goods or services as consideration for the monies received. This new accounting standard classifies nonexchange transaotions into four categories: Derived tax revenues-taxes derived from (or imposed on) exchange transactions that take place between private parties. • Generally these are recognized in the period in which the underlying exchange transaction between the private parties occurs. An example would be the tax on sales transactions that take place between merchants and their customers. Imposed nonexchange transactions-imposition is not based upon exchange transactions between private parties. • Generally these are recognized as revenue when an enforceable legal claim to the asset arises unless the revenue is required to be used a specific period. In that © case, revenue is recognized over the period for which the tax is levied. • An example would be property taxes whose imposition is based upon property ownership (which is not an exchange transaction). 16 © SECTION D, fCondnued) Government-mandated nonexchange transactions-resources received from another government to finance a mandate imposed upon the recipient government by the providing government. • Generally not recognized until all eligibility requirements have been met. Voluntary nonexchange transactions~onations and most voluntary grants. • Generally not recognized until all eligibility requirements have been met. This new accounting standard is effective for fiscal years ending June 30, 2002. We will assist the City in the interpretation of this standard as it applies to the major revenue sources of the City. We will provide practical advice to help the City make the necessary measurements and accounting distinctions. I7 ;, . Q SECTION E REFERENCES OF LOCAL GOVERNMENT CLIENTS For your convenience, we have listed below references with regard to audit work currently being performed by Conrad and Associates, L.L.P. for several local governments in California. Mr. Al-Imam or Mr. Harrison currently serve as partners on these engagements. Name of City/Contact Person Partner Ao yroximate Hours 1. City of Brea and related entities Larry D. Hurst, Financial Services Director (949) 990-7675 Harrison 800 2. City of Arcadia and related entities Tracy Hause, Director of Administrative Services (626) 574-5425 Hamson 600 3. City of San Clemente and related entities Paul Gudgierson, Finance Director (949) 361-8341 Harrison 500 4. City of Santa Ana and related entities Rod Coloma, Financial Services Director (760) 324-4511 Harrison 1000 S. City of Mission Viejo and related entities Irwin Bornstein, Director of Finance (949) 470-3059 Harrison 500 6. City of Hemet and related entities Steve Temple, Finance Director (909) 765-2330 Al-Imam S50 7. City of Temple City and related entities Francene Maldonado, Director of Finance (626) 285-2171 Harrison 500 8. City of Bell and related entities Robert Rico, City Manager (213) 588-6211 Harrison 500 9. .City of Orange and related entities Helen Bell, Finance Director (7),4) 744-2234 Hamson 800 10. City of Patm Springs ahd related entities Thomas M. ICanarr, Finance Director/Treasurer © (760) 323-8229 Harrison 950 i8 © SECTION F CAPABILITIES IN GENERAL CONSULTING AND COMPLIANCE AUDITING In addition to our annual auditing services, we have assisted our clients by performing various management advisory and other accounting services, including: • Special hotel-motel bed tax audits • Other gross receipts audits (cable television franchise fees, excavation tax, etc.) • Contractual agreement compliance audits • Review of central purchasing systems • Review of warehouse controls and inventory systems • Investment Portfolio reviews and policy on derivative use • Review of operations in City Treasurers' Office © Reviews of water billing systems • Reviews of cash controls in parks and recreation departments • Review of investment policies and modifications thereto • Special EDP reviews • Review of permitting process within city building departments • Analysis of investment yields • Special fraud audits • Assistance in presentations to city councils • Assistance insetting up special accounting systems for redevelopment agencies • Assistance to Bond underwriters in providing "comfort letters" on debt issues of municipalities • Consultations regarding the maximizing of tax increment revenue for redevelopment agencies • Organizational review of finance departments Q • Tax advice regarding deferred compensation, employee benefits, use of city vehicles, etc. • Review of financial forecasts 19 © SECTION F, (Continued) • Assistance in cash reconciliation problems • Determination of the cost of excess sewer capacity for adeveloper/city contractual arrangement • Assistance in the selection of qualified finance personnel for employment by the City • Assistance in computation of Proposition 111 Gann Limitations • Management reviews of finance and City Treasurer's office • Assistance in establishing accounting for development projects and fees to comply with AB 1600 • Special Reviews of the Validity of Changes in Tax Increment Revenue from year to year vmthin Redevelopment Agencies • Assistance in Section 8 Housing program portability issues • Assistance in the acquisition of private water companies and the accounting issues related Q thereto 20 APPROACH. SCOPE AND TIMING SECTION G APPROACH. TIMING AND WORK PROGRAM OF OUR ENGAGEMENT TEAMS The audit approach of Conrad and Associates, L.L.P. is unique with regazd to the following: • Our firm is sensitive to the priorities and work requirements of our clients. We work azound the schedules of our clients when scheduling segments of the audit or requesting documentation in order to minimize disruption in the Finance Department. • Whenever possible, we use accounting support already prepared by the Finance Department in order to avoid duplication or unnecessary requests for audit supporting schedules. • Because of our firm's expertise in local governmental auditing, our staff are trained and familiaz «zth local government accounting. You will spend no time in training our personnel. • When formulating internal control recommendations, we obtain a thorough understanding of the specific circumstances in order to provide a tailored, practical recommendation. © • Throughout the yeaz we are a resource to our clients in providing accounting advice, reseazching technical questions, dealing with tax problems, and helping with other problems as they arise. Following our appointment as auditors of the City of San Bernardino, the Economic Development Agency and the Municipal Water Department, each audit team will meet with the respective Finance Department Staff for the purpose of planning the audits. In addition to establishing an effective and efficient communication link with personnel, the following will be accomplished: - Dates for audit field work of the various audit examinations will be finalized. - Arrangements will be made with personnel for the typing of confirmation requests. - Analytical procedures will be utilized in planning the audit which will focus on: a) Enhancing our understanding of the City of San Bernardino, the Economic Development Agency and the Municipal Water Department and the transactions and events that have occurred since your last audit date and; b) Identifying areas that may represent specific risks relevant to the audit (assessment of control risk). - Critical audit areas will be identified and the universe of transactions will be identified for © purposes of statistical sampling of transactions and other audit tests in conjunction with determining whether reliance can be placid upon the system of internal accounting controls. 21 SECTION G, (Continued) - We will be evaluating the following cycles of the City, Agency and Water Department: Purehasing/Receiving/Accounts Payable and Cash Disbursements Cycle; Payroll Cycle. - We will also be reviewing internal control structure within the revenue ash receipts cycle, property and equipment and treasury management cycles. - We will identify areas of potential concern to management. - Based upon our planning procedures we will develop levels of materiality for audit testing and develop and tailor our audit programs. Following fire engagement planning meetings, the engagement manager and senior auditor will coordinate with the respective Accounting Manager those items which would be required by our staff in meeting the timing requirements of the various audits. In conjunction with our planning of the engagement, we will perform our interim audit work. We Wall have evaluated the critical audit areas and assessed control risk (as mentioned above). Our review of internal control structure will be by questionnaire, and. procedural write-up of your accounting system. Each of the approaches requires inquiry and observation of entity personnel. Comments and recommendations relating to the accounting system will be discussed Wrath the appropriate personnel and where appropriate be included in our management letter which will be issued at the conclusion of the examination. Additional procedures that will be accomplished during our interim audit procedures include the following: 1. Reviewing of internal control structure (including controls surrounding the EDP environment) and communication of recommendations to Management concerning policies and procedures. 2. Testing of audit areas where reliance can be placed upon internal control structure for audit purposes. 3. Reviewing of minutes of the City Council of the City and related entities. 4. Reviewing of conflict of interest (related party) statements. 5. Following up on unusual items noted from analytical procedures. (We will perform significant comparison and inquiry regarding fluctuations of revenues and expenditures by fund budgets versus actual and actual for the previous year). ("~~ 6. Reviewing of important contracts, new debt issues, leases and joint power agreements. ® SECTION G, (Continued) Performing required compliance and internal control testing relating to the federal grant programs of the City, Agency and Water Department. 8. Reviewing the City's calculation of its appropriations limit (Gann limit) in accordance with Article XIII B of the State Constitution. 9. Testing for compliance with budgetary.policies and procedures, including testing the integrity of the budgetary data reflected in the accounting systems. 10. Providing suggestions regarding the close of the books after year end. Our assistance and communication in the closing of the books is expected to minimize the number of audit adjustments required after the close of the books. As a part of our Single Audit for the years in which the City„ Agency and Water Department expend greater than $300,000 in federal funding, we would supplement our approach with the following procedures in performing the single audits. (This would be accomplished as a part of our planning and interim audit work.) 1. Re-review all pertinent federal and AICPA publications including: © The Single Audit Act Amendments of 1996 (Public Law 104-156) signed into law on July 5, 1996 and effective for the fiscal years ending on or after June 30, 1997. This law amends the Single Audit Act of 1984 (Public Law 98-502) previously applicable to local governments • OMB Circular A-133 entitled Audits of States, Local Governments, and Non- Profit Organizations • GAO Government Auditing Standards (Yellow Book), 1994 revision • AICPA Audit and Accounting Guide Audits of State and Local Government Units (1994 revision) and Statement of Position 98-3, Audits of States, Local Governments, and Not for-Profit Organizations Receiving Federal Awards • SAS No. 74, Compliance Auditing Considerations in Audits of Governmental Entities and Other Recipients of Federal Financial Assistance • Revised Compliance Supplement for Single Audits of State and Local Governments • Catalog of Domestic Assistance Programs • OMB Circular A-87 • OMB Circular A-102 2. Identify the federal programs administered by the City of San Bernardino, the Economic Development Agency and the Municipal Water Department and the amounts expended during the audit period. 23 SECTION G, (Continued) 3. Apply the risk-based auditing approach mandated by the Single Audit Act Amendments of 1996 (Public Law 104-156) and OMB Circular A-133 entitled Audits of States, Local Governments, and Non-Profits Organizations for the determination of major programs to be selected under the single audit process. As prescribed by the directives of the new single audit requirements, this will involve a consideration of the complexity of the program, pnor audit findings, changes in personnel, the competency of personnel, the extent to which sub-recipients are used, the extent of overnew and monitoring by granting agencies, the extent of recent changes in program requirements, the newness of the program, the size of the program, and the inherent risk of the program. 4. Identify the oversight audit agency. 5. Identify and list the major compliance supplements and subrecipients of the City, Agency and Water Department, if any. 6. Review the administrative control systems to ensure compliance. 7. Execute the sampling plan. 8. Perform audit procedures for the selected transactions. 9. Test compliance with other material compliance requirements. 10. Test matching requirements, if any. 11. Test indrrect costs, if any. 12. Review reports and claims for advances and reimbursements to the federal government. 13. Review processing of audit reports for state and local government subrecipients. 14. Prepaze the independent auditors' reports required by OMB Circular A-133. 15. Prepare the data collection form required to be filed with the Single Audit Central Clearinghouse. After the final closing of the books and preparation of final trial balances for the year ended June 30, we will wmmence performing our year-end substantive audit Our final examination will include tests which we deem necessary, including: 1. Confuma6on of cash and investment balances. 2. Testing of bank reconciliations. 24 ® SECTION G. (Continued) 3. Testing of allocations of interest income to the various funds. 4. Confirmation by third parties of selected sources of revenue. 5. Examination of support and subsequent receipt of significant receivable balances. 6. Seazch for unrecorded liabilities. 7. Testing of long term debt balances. 8. Consideration of support and proper valuation of the liabilities for compensated absences and claims and judgments. 9. Testing of support for other significant assets and liabilities. 10. Testing for the proper establishment of reserves and designations. 11. Review of significant events after yeaz end (through the completion of our audit). ® 12. Review of attorney letters for significant legal matters affecting each entity's. financial position. 13. Testing of revenues and expenditures through analytical procedures and other substantive procedures as necessary. The aforementioned tests aze only a few of the tests performed during the examination and by no means is it meant to be all inclusive. At the completion of the audits each year, Mr. Harrison, the Engagement Manger and Senior Auditor will meet with the. Finance Director and Accounting. Managettn-review our audit findings-and any adjusting journal entries. Based upon the records being closed and ready for audit, we plan to comply v~nth the audit timeline for finalization of ap audit reports. All auditing work will be coordinated with the respective Accounting Manager to facilitate staff scheduling and yeaz-end closing. The Auditors will. provide the Finance Directors with.periodic progress reports during the conduct of the. field. work. These reports will identify problems encountered or foreseen, deficiencies in work beiag performed by City, Agency or Water Department staff, disagreements over the application of accounting principles, or other items which couldresult in delay of the audit work oradditional work We will also make ourselves available to meet with City Council, Community Development Commission and Board of Water Commissioners, as necessary. O 25 SECTION G, (Continued) Utilization of Computers on Govenunental Audits Each audit team member in our firm is assigned and utilizes a portable personal computer at the job site. The primary software program utilized by our audit staff is "Fast G° -the fund accounting audit system. Fast G, once set up on each local governuent client will automatically produce fund accounting workpapers and financial reports. Journal entries once posted will automatically update individual, combining and combined level financial statements. Our audit staff have received specific training in this software prognun to facilitate effectiveness on our local governmental audits. Also utilized are Microsoft Word, Excel, Quatro Pro and Word Perfect. All of our field staff are computer literate in the foregoing programs and we could exchange data with the staff in these programs. Additionally, each of our audit Seniors are knowledgeable of controls surrounding the EDP environment and assessing the effectiveness of those controls within the audit of the local government. Use of Statistical Sampling O Based upon our preliminary assessment of control risk for each entity's internal control structure, we identify those major transaction cycles where reliance upon the internal control structure is deemed to be the most effective audit approach. At a minimum, this is expected to entail tests of controls for the purchases/disbursements/payables cycle and the payroll cycle. For those transaction systems we utilize statistical sampling techniques to support a lower asse~~+ t of control risk. In conducting our tests of controls, we use the parameters set forth in the AICPA Audit Sampling Guide for statistical sampling techniques. The Guide establishes the following sample sizes when a 10% allowable risk of over-reliance is used and when the preliminary review of the internal control structure supports an expectation of no significant weaknesses or errors: Planned Degree on Tolerable Sample Reliance of Controls Rate Sizes Substantial 2% - 7% 32-114 Moderate 6%-12% 18- 38 Minimal 11%-20% 11- 20 The achral sample sizes used will depend upon our preliminary assessment of control risk and the extent of our planned substantive tests and analytical procedures. We statistically evaluate the results of our sampling techniques to determine whether or not any modifications need to be made to the nature, timing and extent of our planned substantive tests. Our substaativve• tests arE designed to be responsive to the areas of higher control risk revealed by our statistical sampling. We use our firm's IBM Data Processing System to randomly select the transactions to be tested. Our computer has specialized software designed for this purpose which can produce a statistically random sample even when there are breaks in the transaction sequence (for example, different sets of check numbers are used). 26 © SECTION G, (Continued) Analytical Procedures to Improve Understanding of Client Analytical procedures are used by our firm in general planning to improve the auditor's understanding of the governmental unit's operations and to identify audit areas for increased attention. SAS No. 56 requires the use of analytical procedures in the planning and overall review stages of all audits. SAS No. 56 states that "analytical procedures should be applied to some extent ...for all audits of financial statements made in accordance with generally accepted auditing standards" for the following purpose among others: To assist the auditor in planning the nature, timing and extent of other auditing procedures. Analytical procedures may be used in both general planning and audit program planning. SAS No. 56 describes the two broad uses of analytical procedures in audit planning as follows: • Enhancing the auditor's understanding of the client's business and the transactions and events that have occurred since the last audit date. © + Identifying areas that may represent specific risk relevant to the audit.. Comparisons of account balances between accounting periods and ratio and trend analysis usually improve the auditor's understanding of the client and its operations and may identify critical audit areas, e.g., comparing general and special revenue fund expenditures by functions and revenue by source for the past two years provides an understanding of the governmental unit's operations and may identify a revenue source that requires increased attention in the current audit. SAS No. 56 requires use of analytical procedures in audit planning, but does not specify particular procedures that are always necessary. Our firm believes that in a governmental engagement, the auditor's preliminary analytical procedures should include, as a minimum, a comparison of current account balances in the working trial batance to similar amounts in the prior annual period's financial statements and the current period's budget. HoweSer, a thoughtful consideration. of expected relationships among account balances and periods by an experienced auditor is far more important than a mechanical comparison. The auditor should think about these relationships and bring to beaz other knowledge about the governmental unit and government operations. 27 :. SECTION G. (Continued) Consideration of Laws and ReQUlations Our audit approach recognizes the importance of laws and regulations in planning the audit of a local governmental entity. As a part of the audit, our fum obtains an understanding of those laws and regulations that have a direct and material effect on the determination of financial statement amounts. We then design the audit to provide reasonable assurance of detecting material instances of noncompliance that will have a direct and material effect on the determination of financial statement amounts. Assistance from Client Staff Normal cooperation and assistance from staff is expected by the auditors including typing of confirmation requests, and normal year-end schedule preparation (i.e., lead schedules, bank reconciliations and other support for significant asset and liability balances). We would also expect reasonable assistance from staff in reproducing permanent files or other documents and refiling requested documentation during the audit examination. Projected Man-Hours to Complete Audits © A breakdown of our professional hours by classification for each audit engagement is as follows: City of Economic Municipal Classification San Bernardino Development Agency Water Department Partners 50 24 40 Senior Manager 120 60 100 Supervisor - - 200 Senior Auditor 225 140 - Professional Staff 205 116 180 52Q \.r/ 28 SECTION G. (Continued) Proposed Timefiames for the Audits The following proposed timefiames are for each of the three entities referred to in the proposal. Commencement of interim audit Commencement of year end field work Completion of field work Provide draft copy of component unit financial statements Provide final copies of component unit financial statements Provide draft of other reports Provide other reports as final June 26 September 25 November 10 December 1 December 8 December 15 December 29 Tune frames will be modified to accommodate the City's desire to submit under the CS1V1F0 and ® GFOA award programs. err' 29 Q SECTION H Our understanding of the objectives and scope of the work to be performed is based upon your request for proposal. Based upon the foregoing, we understand the objectives and scope of work for the audit of the City of San Bernardino to be as follows: 1. We will perform ati audit examination of all fund types and account groups of the City of San Bernardino for the years ended June 30, 2000 through June 30, 2004. Our examination will be wnducted in accordance with generally accepted auditing standards and Government Auditing Standards. Auditors will provide technical expertise for adherence to current governmental pronouncements and disclosures. The auditors will draft and word process the City of San Bernardino Component Unit Financial Statements. 2. We will perform a "Single Audit" of the City of San Bernardino in accordance with the Single Audit Act Amendments of 1996 (Public Law 104-156) and OMB Circular A-133 entitled Audits of States, Local Governments, and Non-Profits Organizations. Our single audit will cover all federal grants received by the City of San Bernardino either as a primary or secondary recipient. The City will provide to the auditors the Schedule of Q Federal Financial Assistance encompassing all direct and pass-through federal funds received by the City_ WawiU render our reports- on the single audit in accordance with the single audit requirements as described in Section F of this proposal. 3. We will drift and word process the City's Comprehensive Annual Financial Report. The funds of the Economic Development Agency will be blended with the funds of the City. The enterprise funds of the Municipal Water Department will be treated as a discreetly presented component unit. 4. We will test the City's appropriation limit and provide a letter of Agreed-Upon Procedures for the years ended June 30, 2000 through June 30, 2004. 5. We will prepare a management letter. This letter will include nonreportable conditions (those constructive comments not required to be included in the single audit report). We will discuss those comments with Finance personnel prior to its finaliTation. Based upon your proposal, we understand the objectives and scope of work for the audit of the City of San Bernardino Economic Development Agency to be as follows: 1. We will perform an audit examination of all fund types and account groups of the Ewnomic Development Agency for the years ended June 30, .2000 through June 30, 2004. Our examination will be conducted in accordance with generally accepted auditing standards and Government Auditing Standards. Auditors will provide techmcal expertise for adherence to current governmental pronouncements and disclosures. The auditors will also draft and word process the component unit financial statements. 30 r- SECTION H, (Continued) 2: We will perform a "Single Audit" of the Economic Development Agency in accordance with the Single Audit Act Amendments of 1996 (Public Law 104-15~ and OMB Circulaz A-133 entitled Audits of States, Local Governments, and Non-Prof is Organizations. Our single audit will cover all federal grants received by the Economic Development Agency either as a primary or secondary recipient. The Agency will provide to the auditors the Schedule of Federal Financial Assistance encompassing all direct and pass-through federal funds received by the Agency. We will render our reports on the single audit in accordance with the single audit requirements as described in Section F of this proposal. 3. We will perform a compliance audit of the Economic Development Agency for the years ended June 30, 2000 through June 30, 2004. Our compliance auditing procedures will meet the State Controllers guidelines for compliance audits of Redevelopment Agencies. 4. We will prepare a management letter. This letter will include nonreportable conditions (those constructive comments not required to be included in the single audit report). We will discuss those comments with Finance personnel prior to its finalization. Based upon your proposal, we understand the objectives and scope of work for the audit of Municipal Water Depaitment of the City of San Bernardino to be as follows: © 1. We will perform an audit examination of the enterprise funds of the Municipal Water Department of the City of San Bernardino for the years ended June 30, 2000 through June 30, 2004. Our examination will be conducted in accordance with generally accepted auditing standards and Government Auditing Standards. Auditors will provide technical expertise for adherence to current governmental pronouncements and disclosures. The auditors will also draft and word process the component unit funancial statements. 2. We will perform a "Single Audit" of the Municipal Water Department of the City of San Bernardino in acwrdance with the Single Audit Act Amendments of 1996 (Public Law 104-15~ and OMB Circular A-133 entitled Audits of States, Local Governments, and Non-Profits Organizations. Our single audit will cover all federal grants received by the Municipal Water Department of the .City of San Bernardino either as a primary or sewndary recipient. The Water Department will provide to the auditors the Schedule of Federal Financtal Assistance encompassing all direct and pass-through federal funds received by the Water Department. We will render our reports on the single audit in accordance with the single audit requirements as described in Section F of this proposal. 3. We will prepare a management letter. This letter will include nonreportable conditions (those constructive comments not required to be included in the single audit report). We will discuss those comments with Finance personnel prior to its fuuslizatioe. 31 O SECTION H, (Continued) Conrad and Associates, L.L.P. desires to keep its total government clients abreast • of new developments affecting local government finance. In July 1999, we held a client training seminar for firm clients that focused on the then just recently released GASB Statement No. 34 (issued earlier that month). We were probably the first firm in Southern California to thoroughly research this important new pronouncement line by line and to immediately provide training to our clients within 30 days of its issuance. We will also advise staff of new accounting developments during the interun/planning stage of each year's audit. We plan on providing additional client. training to our clients in our July 2000 client training conference with respect to GASB No. 34. Finally, we perceive the scope of our work as being advisors to our clients. Throughout the year, City, Agency and Water Department personnel will have access to the Engagement Partner, Michael Harrison, Technical Review Partner, Ken Al-Imam, City and Agency Engagement Manger, Dean Votava, and Water Department Engagement Manager, Steven Dobrenen, to scek advice in the application of advise regarding debt issuance, financial statement preparation and content and other matters relating to the City, Agency and Water Department including matters of taxation and policy relating to fringe benefits. With respect to the City of San Bernardino and its component units, Conrad and Associates, L.L.P. meets the independence requirements of generally accepted accounting standards and the ® Government Auditing Standards (1994 revision) published by the U.S. General Aceomting Office. Our firm has never had a record of substandard audit work. Conrad and Associates, L.L.P. does not intends to use subcontractors. We are independent with respect to the City of San Bernardino, the Economic Development Agency and the Municipal Water Department of the City of San Bernardino. No conflicts of interest exists relative to our firm performing the audit. 32 r. AUDIT FEES (removed and bound separately) V APPENDIX A RESUMES OF AUDIT ENGAGEMENT TEAM City Coundl of the City of San Bernardino, Economic Development Commision and Board of Water Commisioners City Administrator and General Manager Directors of Finance Michael A. Hanison, C.P.A. Ken AI-Imam, C.PA Engagement Partner Technical Review Partner Dean A Votava, C.PA Steven Dobrenen, C.P.A City and Agency Engagement Manager Water Department Engagement Manager Courtney Holm SeniorAuditor -City BriarcOn- Senior Auditor -Agency Cheryl Dyas, C.PA Supervisor Professanal Stat Professional Staff Professional Staff MICHAEL A. HARRISON, C.P.A. . ©- En¢a¢ement Partner California CPA Certificate No. 19299E, Date Issued - 928/73 EDUCATION B.A. Accounting - Califona State University, Fullerton PROFESSIONAL EXPERIENCE 9 12 years - KPMG Peat Marwick (Senioc Manager) 20 years -Conrad and Associates, L.L.P. (Partner) Total Auditing Experience - 29 12 years Total Supervisory Experience - 27 years RELATED EXPERIENCE The following audits were performed under Mr. Hamson's supervision. Mr. Hamson's .experience in the performance of si a audits under Circular A-128 and A-I33 .and in the financial audits of local goverrmtental units entth~es and other related entities include the following: Organizational Wide Audits of California Cities (All Funds and Account Grouas) C~ Duties Performed Dates Performed City of Orange Partner 06/96-06/99 City of Brea. .Partner 06/92-06/99 City of Laguna Niguel Partner 06/96-06/99 City of Westminster.. Partner 06/81-06/89 Cityof Carlsbad Partner 06/81-06/83 City of Rancho Mirage Parhter 06/8206/87 City of Indio Partner 06193-06/99 City of Rialto Partner 06/82-06/90 Qty of Buena Park Manager/Partner 06/78, 06/82-06!89 I~ ® Michael A. Harrison, (Continued) Oreaniza6onal Wide Audits of California Cities (All Funds and Account Groups), (Continued C~ Duties Performed Dates Performed City of San Jacinto Partner 06/91-06/95 City of Vista Partner 06/83-06/90 City of Delano Partner 06/91-06/94 City of Stanton Partner 06/83-06/87 City of San Clemente Partner 06/96-06/99 City of Hesperia Partner 06/95-06/97 City of San Marcos Partner 06/83-06/87 City of Escondido Partner 06/83-06/88 City of Santa Ana Partner 06/84-06/87/ ~`'j i V C ty of South Gate Partner 06/84-06/88 City of Downey Partner 06/85-06187 City of Desert Hot Springs Partner 06/85-06/90 City of La Verae Partner 06/88-06/92 City of Azusa Partner 06/8T--06/92 City of Palm Springs Partner 06186-06/99 City of Norwalk Partner 06/86-06/99 City of Los Alamitos Partner 06/86-06/88 City of Beaumont Partner 06/86-06/91 City of Banning Partner 06/87-06/91 City of San Gabriel Partner 06/88-06/99 City of Highland Partner 06/89-06/99 © City of Hemet Partner 06/89-06/93 City of Gilroy Partner 06/99 06/89-06/93 r Michael A. Harrison, (Continued) Oreanizational ode Audits of California Cities (All Funds and Account Groups), (Continued C~ Duties Performed Dates Performed City of Temple City Partner 06/94-06/99 City of Claremont Partner 06/83-06/88 City of Lomita Partner 06/99 City of Villa Park Partner 06/97-06/99 City of Redlands Partner 06/99 Audits of California Redevelopment Agencies (All Funds) Aaency Duties Performed Dates Performed Brea Redevelopment Agency Partner 06/92-06/99 (~'~ V Orange Redevelopment Agency Partner 06/96-06/99 Indio Redevelopment Agency Partner 06/93-06/99 Santa Ana Redevelopment Agency Partner 06/84-06/87/ 06/99 Rialto Redevelopment Agency Partner 06/82-06/89 Rancho Mirage Redevelopment Agency Partner 06/82-06/88, 06/92 Redlands Redevelopment Agency Partner 06/99 Cathedral City Redevelopment Agency Partner 06/87-06/96 Buena Park Redevelopment Agency Partner 06/82-06/90 Claremont Redevelopment Agency Partner 06/83-06/88 Delano Redevelopment Agency Partner 06/91-06/93 San Jacinto Redevelopment Agency Partner 06/91-06/96 Carlsbad Redevelopment Agency Partner 06/82-06/84 San Clemente Redevelopment Agency Partner 06/96-06/98 ® Michael A. Harrison, (Continued) Audits of California Redevclopment Aiencies (All Funds), (Continued) Agency Duties Performed Dates Performed Hesperia Redevelopment Agency Partner 06/95-06/97 Westminster Redevelopment Agency Partner 06/83-06/89 San Marcos Redevelopment Agency Partner 06/83-06/87 South Gate Redevelopment Agency Partner 06/84-06/88 Stanton Redevelopment Agency Partner 06/84-06/87 Downey Redevelopment Agency Partner 06/85-06/87 Desert Hot Springs Redevelopment Agency Partner 06/85-06/90 La Quinta Redevelopment Agency Partner 06/92 Santee Redevelopment Agency . Partner 06/91-06/96 © Norwalk Redevelopment Agency Partner 06/86-06/99 Palm Springs Redevelopment Agency Partner 06/86-06/99 Banning Redevelopment Agency Partner 06/87-06/91 Azusa Redevelopment Agency Partner 06/87-06/92 Gilroy Redevelopment Agency Partner 06/89-06/90 .Hemet Redevelopment Agency Partner 06/89-06/92 Highland Redevelopment Agency Partner 06/90-06/99 Temple City Redevelopment Agency Partner 06/94-06/99 Audits of Special Districts and Authorities Duties Dates Entiri Tv~e of Eritiri Performed Performed Los Angeles Park and Open Space District Spccial District Partner 06/97-06/99 /1 Palm Springs Public Financing Authority Financing Authority Partner 06/90-06/99 ~,/ Yorba Linda Water District Special District Partner 06/81-06/91 ~- Michael A. Harrison, (Continued) Audits of Special Districts and Authorities. (Continued) Entity Los Alamitos County Water District Orange County Water District Mesa Consolidated Water District Azusa Agricultural Water Water Facilities Authority Tri-Cities Park Authority Orange County Civic Center Authority Brea Public Financing Authority Transportation System Development Authority Pahn Springs Public Facilities Corporation Norwalk Civic Improvement Corporation- Los Angeles County/City of Downey Regional Public Recreation Authority Downey Civic Center Corporation Downey Water Facilities Corp. Community Development Commission of the City of Escondido Capistrano Bay Community Services EI Barrio Park Authority Banning Public Facilities Corporation Capistrano Beach Sanitary District Buena Park Library District Southeast Water Coalition Duties Dates Type of Entity Performed Performed Special District Partner 06/88-06/93 Special District Partner 02186-02/88 Special District Partner 06/83-06/86 Non-Profit Corp. Partner 06/87-06/93 Joint Powers Authority Partner 06/85-06/93 Joint Powers Authority Partner . 06/92-06/99 Joint Powers Authority Partner 06/82-06/85 Joint Powers Authority Partner 06/92-06/99 Joint Powers Authority Partner 06/98-06/99 Financing Authority Partner .06/85-06/99 Financing Authority Partner 06/86-06/92 Financing Authority Partner 06/86-06/88 Financing Authority Partner 06/85-06/87 Financing Authority Partner 06/85-06/87 Financing Authority Partner 06/87-06/88 Special District Partner 06/92-06/93 Joint Powers Authority Partner 06/83-06/88 Financing Authority Partner 06/87-06/91 Special District Partner 06/85-06/94 Special District Partner 06/88-06/89 Joint Powers Authority Partner 06/93 Michael A. Harrison, (Continued) Audits of Special Districts and Authorities, (Continued Duties Dates Enti Type of Entity Performed Performed Cathedral City Public Financing Authority Financing Authority Partner 06/92-06/96 Cathedral City Community Services District Special District Partner 06/86-06/96 San Gabriel Valley Mosquito Abatement District Special District Partner 06/93-06/96/ 06/99 Audits of Public Housinrt Authorities Authori Duties Performed Dates Performed San Bernardino Housing Authority Partner 1996-99 Santa Ana Housing Authority Partner 1999 Hawaiian Gardens Housing Authority Partner 1994-99 Pomona Housing Authority Partner 1995-98 Norwalk Housing Authority Partner 1986-99 Carlsbad Housing Authority Partner 1982-84, 1993-96 County of Riverside Housing Authority Partner 1998 Baldwin Park Housing Authority Parhrer 1983-84 1995 SnvthGate Housiag Authority Partner 1981-83 PROFESSIONAL AFFILIATIONS AND LEADERSHIP QUALITIES Mr. Harrison is a member of the. AICPA„ Govenmtent Finance Officers Association and California Society of CPA's. Mr. Harrison is a member of the Governmental Accounting and Auditing Committee of the Long BeacWOrange Cotmty Chapter of the Califonua Society of CFA's. Mr. Harrison has been a speaker at .California Society of CPA's workshops and to the California Society of Municipal Finance Officers on technical and non-technical matters. Mr. Harrison has, for the past 17 years, served on the Professional and Technical Standards Committee of the California r- Michael A. Harrison, (Continued) PROFESSIONAL AFFILIATIONS AND LEADERSHIP QUALITIES, (CONTINUED Society of Municipal Finance Officers. The members evaluate annually the excellence of Comprehensive Annual Financial Reports of California cities. Mr. Harrison, who was with KPMG Peat Marwick for 9 12 years prior to joining Conrad and Associates, L.L.P. in 1980 instructed numerous ICPMG Peat Marwick courses, including: 1. Regional Staff Audit Training Courses -Staff Accountants -Instructed all modules ofthis five day regional audit training course 2. Regional Staff Audit Training Courses -Senior Accountants -Instructed all modules of this five day regional audit training course . 3. Regional Government Audit Training -Advanced -Instructed this three day course on governmental accounting and auditing for senior accountants and management 4. California Government Audit Training -Basic -Instructed this one day course on governmental accounting and auditing in all of ICPMG's seven California offices Mr. Harrison has been the coordinator and/or co-coordinator of Conrad and Associates, L.L.P. Ia- House Governmental Audit Training Seminars for the past 17 years. He has extensive knowledge ® of local governmental accounting and auditing issues and serves as an instructor semi-annually in the firm's CPE training. Mr. Harrison has been responsible for numerous consent reviews related to bond offerings. Mr. Harrison served as the fines liaison during their past four quality control reviews in which Conrad and Associates, L.L.P. received an "unqualified opinion" oa the quality control of the accounting and audit practice. The following is a list of selected continuing education courses attended by Mike Hamson during the past three years. Date Syonsor 01/19/95 Cal Society of Municipal 0224/95 .Cal Society of CPA's 0425-26/95 Conrad and Associates, L.L.P. 072426/95 Conrad and Associates, L.L.P. 08/07/95 Chapman University 11/01/95 Cal Society of CPA's TOp1C LAIF Investment Pool Safety Finance Officers Reporting Investment Losses Update oa CCMA White Paper Local Govenunent Audit Training 1995 Session I Local Government Audit Training 1995 Session II Chapman Non-Profit Seminar Understanding Chapter 4 Municipal. BanktulrtcY ;. Michael A. Harrison, (Continued) PROFESSIONAL AFFILIATIONS AND LEADERSHIP QUALITIES, (CONTINUED Date S nsor TOp1C 12/06/95 Cal-Society of CPA's Current Tax Developments for Nonprofits and Tax Exempt Organi7a6ons 12/19/95 Cal-State University Fullerton Accounting and Auditing Update Accounting Focus Group 0122/96 Conrad and Associates, L.L.P. Accounting for Nonprofits: Contributions and Financial Statements 02/07/96 Cal Society of CPA's 02/25-27/96 CSMFO 04/25-26/96 Conrad and Associates, L.L.P. 07/26-28/96 Conrad and Associates, L.L.P. 01/27/97 Cal Society of CPA's 01/31/97 Conrad and Associates, L.L.P 02/23-25/97 CSMFO Non-profit Investment Guidelines Annual Conference 1996 Local Government Audit Training 1996 Local Government Audit Training Session II GASB Update - PERS Disclosures The New AICPA Accounting and Audit Guide for Nonprofits 1997 Annual Conference 04/21/97 Cal Society of CPA's 05/01-02/97 Conrad and Associates, L.L.P. 0728-30/97 Conrad and Associates, L.L.P 12!18/97 Cal-State University Fullerton 01/27/98 CSMFO 02/02/98 AICPA 02/22-24/98 CSMFO 04/23 24/98 Conrad and Associates, L.L.P. The GASB Exposure Draft on the New Financial Reporting Model 1997 Local Government Audit Training Session I 1997 Local Government Audit Training Session II Information Technology Update GASB 32 Accounting for Deferred Compensation Assets SAS #82 Consideration of Fraud in Financial Statement Audits Annual Conference Local Government Audit Training Session I Michael A. Harrison, (Continued) PROFESSIONAL AFFILIATIONS AND LEADERSHIP QUALITIES, (CONTINUED) . Date 06/05/98 062425/98 0727-29/98 1022/98 1124/98 02128-03/02/99 04126-27/99 05/16/99 12/9-10/99 05118 21/99 072b-28/99 082-3/99 12l9-10/99 Sponsor Cal Society of CPA's Non-Profit Resource Center Conrad and Associates, L.L.P CSMFO CSMFO California Society of Municipal Finance Officers Conrad and Associates, L.L.P.. TopIC GASB Financial Reporting Model Unrelated Business Income Tax and Critical Issues in Maintaining Tax Exempt Status Local Government Audit Training Session II Financial Reporting Model from GASB GASB Technical Bulletin 98-1 Y2K Disclosure Issues Annual Conference 1999 Local Government Audit Training Session I National Association of Housing Developing Audit RFP's for Housing and Redevelopment Officials Authorities Conrad and Associates, L.L.P. GFOA Annual Conference Conrad and Associates, L.L.P CBSI -CBIZ Conrad and Associates, L.L.P. 1999-2000 Non-Profit Accounting Audit and Tax Update Seminar Various Technical Topics 1999 Local Government Audit Training - Session II Management of Accounting Seminar 1999-2000 Non-Pmfit Organization Audit and Accounting Training KEN AL-IMAM, C.P.A. Technical Revietiv Partner California CPA Certificate No. 32377E. Ju1y.1981 EDUCATION B.A. -California State University, Fullerton (Accounting) Certified Public Accountant -California PROFESSIONAL EXPERIENCE 4 years -Conrad and Associates, L.L.P. (Senior Accountant) S years -Conrad and Associates, L.L.P. (Audit Manager) 2 years -Conrad and Associates, L.L.P. (Senior Manager) 7 years -Conrad and Associates, L.L.P. (Partner) Total Auditing Experience - 18 years Total Supervisory Experience -16 years RELATED EXPERIENCE The following is a summary of Mr. Al-Imam's related experience: Audits ofCalifornia Cities Mr. Al-Imam has been directly responsible for the annual financial .audits including single audits conducted under OMB CircularA-133 of the following entities: C_yt Duties Performed Dates Performed City of Costa Mesa Partner 06/91-06/99 City of La Quinta Partner 06/92-06/99 City of Laguna Hills Partner 06/98-06/99 City of Santa Ana Manager 06/84-06/86 City of Laguna Beach Partner 06/98-06/99 Cityof Buena Park Senior/Manager/Partner 06/82-06/99 City of Rialto Senior/Manager 06/82-06/89 City of Rancho Mirage Partner 06/92-06/99 (~, ~./ City of Carlsbad Seaior/Partner 06/81-06/83, 06/93-06/99 © Ken Al-Imam, (Continued) Audits of Califonua Cities, (Continued) C~ Dufies Performed Dates Performed City of Stanton Manager 06/83-06/87 City of Westminster Senior/Manager 06/81-06/86, 06/88-06/89 City of Azusa Manager/Partner 06/87-06/97 City of South Gate Manager/Partner 06/84-06/88, 06/97-06/99 City of Vista Manager/Partner 06/85-06/94 City of Banning Manager/Partner 06/87-06/91 City of La Verne Manager/Partner 06/88-06/99 City of San Marcos Manager 06/83-06/87 ® City of Indian Wells Partner 06/97-06/98 City of Escondido Manager 06/83-06/88 City of Downey Manager 06/85-06/86 City of Norwalk Manager 06/86 City of Hemet Manager/Partner 06/89-06/99 City of San Gabriel Manager 06/88 City of Gilroy Manager/Partner 06/89-06/99 City of Santee Partner 06/91-06/95 City of Whittier Partner 06/94-06/99 City of La Puente Partner 06/97-06/99 i- Ken AI-Imam, (Continued) California Redevelopment Aftencv Audit Experience A_gen y Duties Performed Costa Mesa Redevelopment Agency Partner Carlsbad Redevelopment Agency Partner Santa Ana Redevelopment Agency Manager La Quinta Redevelopment Agency Partner Buena Park Redevelopment Agency Senior/Manager/Partner Rancho Muage Redevelopment Partner Rialto Redevelopment Agency Senior/Manager Westminster Redevelopment Agency Senior/Manager San Marcos Redevelopment Agency Manager Stanton Redevelopment Agency Manager Downey Redevelopment Agency Manager La Verne Redevelopment Agency Manager/Partner Norwalk Redevelopment Agency Manager Azusa Redevelopment Agency Manager/Partner South Gate Redevelopment Agency Manager Y~sta Redevelopment Agency Manager/Partner Banning Redevelopment Agency Manager/Partner Gihny Redevelopment Agency Manager .Hemet Redevelopment Agency Manager/Partner La Puente Redevelopment Agency ,Partner Dates Performed 06191-06/99 06/93-06/99 06/84-06/86 06/92-06/99 06/82-06/99 06/92-06/99 06/82-06/89 06!83-06/87, 06/89 06/84-06/87 06/84-06/87 06/85-06/86 06/88-06/99 06/86 06/87-06/97 06/83-06/88 06/97-06/99 06/86-06/94 06/87-06/92/ 06/92 06/89-06/90 06/89-06/99 06/97-06/99 C Ken Al-Imam, (Continued) Audits of Special Districts and Authorities Duties Dates Entity Name Tvpe of Entity Performed Performed Los Angeles Park and Open Space District Special District Q.C. Paztner 06/97 San Elijo Joint Powers Authority Joint Powers Authority Partner 06/92-06/99 Big Beaz Regional Waste Management Joint Powers Authority Partner 06/94-06!99 Authority Encma Financing Authority Joint Powers Authority Partner 06/93-06/99 Yorba Linda Water District Special District Senior 06/81-06/82 California Joint Powers Insurance Joint Powers Authority Partner 06/97-06/98 Authority Encinitas Fire Protection District Special District Partner 06/92-06/93 © Orange County Water District Special District Senior 06/83 Azusa Agricultural Water Non-Profit Corporation Manager/ 06/87-06/97 Partner Azusa Public Financing Authority Financing Authority Partrter 06/91-06/97 Water Facilities Authority Joint Powers Authority Manager/ 06/85-06/96 Partner La Quinta Public Financing Authority Financing Authority Partner 06/92-06/98 Orange County Civic Center Authority Joint Powers Authority Senior 06/83 Transportation System Development Joint Powers Authority Manager 12/86 Authority Norwalk Civic Improvement Corporation Financing Authority Manager 06/86 Los Angeles County/City of Downey Financing Authority Manager 06/86 Regronal Public Recreation Authority Downey Civic Center Corporation Financing Authority Manager 06/86 Downey Water Facilities Corp. Financing Authority Manager 0686 Community Development Commission " Financing Authority Manager 06/87-06/88 of the City of Escondido Ken Al-Imam, (Continued) Audits of Special Districts and Authorities, (Continued) Entity Name Banning Public Facilities Corporation Capistrano Beach Sanitary District Audits of Public Housing Authorities Authori Santa Ana Housing Authority Norwalk Housing Authority Carlsbad Housing Authority County of Riverside Housing Authority Baldwin Park Housing Authority South Gate Housing Authority Type of Entity Financing Authority Special District Duties Performed Manager Manager Senior/Parttter Manager Manager/Partner Senior/Manager PROFESSIONAL AFFILIATIONS AND LEADERSHIP QUALITIES Dates Performed 06/87-06/91 06/85-06/95 Dates Performed 1984-88 1986-88 1982-84, 1993-97 1983-84 1983-84,1995-98 1981-83, 1997 Mr. AI-Imam is a member of the American Institute of Certified Public Accountants and the Califomia Society of Certified Pubfic Aocountants. He is also a member of the California Society of Municipal Finance Officers (CSMFO) and the Governmental Accounting and Auditing Committee of the Long Beach/Orutge County Chapter of the Cal-Society of CPA's. Mr. Al-Imam serves as partner in charge of the Finn's continuing education training seminars. He has spoken fiequetrtly on technical topics to various sections and chapters and at the 1998 Annual ' Conference of the California Society of Municipal Finance Officers. Mr. Al-Imam has been a technical reviewer under the CSMFO Award Program for excellence in Financial Reporting for the past eleven years. The following is a summary of selected continuing education courses attended by Mr. Al-Imam during the past three years. Date Saonsor TOpiC 01/19/95 CSMFO LAIF Investment Pool Safety Duties Performed Manager Manager/ Partner Q Ken Al-Imam, (Continued) PROFESSIONAL AFFILIATIONS AND LEADERSHIP QUALITIES, (CONTINUED) Date Sponsor TOp1C 0224/95 Cal Society of CPA's 0425-26/95 Conrad and Associates, L.L.P. 9720/95 CSMFO 0724-26/95 Conrad and Associates, L.L.P 0122/96 Conrad and Associates, L.L.P 02/25-27/96 CSMFO 0425-26/96 Conrad and Associates, L.L.P. 0726-28/96 Conrad and Associates, L.L.P 0127/97 Cai Society of CPA's 01/31/97 Conradand Associates, L.L.P 0223-25/97 CSMFO 0421/97 Cal Society of CPA's 05/01-02!97 Conrad and Associates, L.L.P. 0728-30/97 Conrad and Associates, L.L.P 12/18/97 Cal-State University Fullerton 0127/98 CSMFO © 0126/98 Conrad aad Associates, L.L.P. Reporting Investment Losses, Update on CCMA White Paper Local Government Audit Training 1995 Session I Municipal Debt Disclosures Local Govenunent Audit Training 1995 Session II Accounting for Nonprofits: Contributions and Financial Statements 1996 Annual Conference 1996 Local Government Audit Training - Session I 1996 Local Government Audit Training - Session II GASB Update - PERK Disclosures The New AICPA Accounting and Audit Guide for Nonprofits 1997 Annual Conference The GASB Exposure Draft on the New Financial Reporting Model 1997 Local Government Audit Training Session I 1997 Local Government Audit Training Session II Information Technology Update GASB #32 Accounting for Defen-ed Compensation Assets Non-Profit Organizations Update ~= ,~ Kea AI-Imam, (Continued) PROFESSIONAL AFFILIATIONS AND LEADERSHIP QUALITIES, (CONTINUED) Date Sponsor TOPIC 0222-23/98 CSMFO Annual Conference 0423-24/98 Conrad and Associates, L.L.P. Local Government Audit Training 1998 Session I 06/05/98 Cal Society CPA's 0727-29/98 Conrad and Associates, L.L.P 1022/98 CSMFO 1124/98 CSMFO 228-03/02/99 CSMFO 0426-27/49 Cnnrad.and Associates, L.L.P. 0726-27/99 Conrad and Associates, L.L.P. 12/9-10199 Conrad and Associates, L.L.P. GASB Financial Reporting Model Local Governnent Audit Training 1998 Session II Financial Reporting Model finm GASH GASB Technical Bulletin 98-1 Y2K Disclosure Issues Annual Conference 1999 Local Government Audit Training Session I 1999 Local Government Audit Training Session II Non-Profit Organizations Audit and Accounting Training DEAN A. VOTAVA, C.P.A. Engagement Manager California CPA Certificate No. 64413E V~ EDUCATION Bachelor of Business Administration (BBA) -Accounting University of North Dakota, Grand Forks, North Dakota PROFESSIONAL EXPERIENCE 12 yeazs -Conrad & Associates (Staff/Senior/Supervisor and Manager/Senior Manager) RELATED EXPERIENCE Audits of Califomia Cities (Including Single Audits conducted under OMB Circulaz A-133 C~ Responsibilities Dates Performed City of Santa Ana Manager 06/99 City of Palm Springs Staff/Senior/Manager 06/87-06/96 City of Hesperia Manager 06/95-06/97 City of Norwalk Supervisor/Manager 06/91-06/98 City of Cazlsbad Manager 06/93-06/95 City of Indio Manager 06/93, 06/98 City of La Quints Supervisor 06/92 City of Cathedral City Senior/Supervisor 06/90-06/91 City of Vista Staff/Senior 06/87-06189 City of Rialto Staff 06/87-06/88 -City of Escondido Staff 06/87 City of Westminster Staff 06/87 City of Bell Manager 06/94-06/99 City of Whittier Manager 06/94 City of Gilroy Manager 06/94 06/97-06/99 City of Pomona Manager 06/95-06/98 City of Costa Mesa Manager 06/95-06/99 City of La Puente Manager 06/97-06/99 City of South Gate Manager 06/97-06/99 ~' . V V Dean Votava, (Continued) Agency South Gate Redevelopment Agency La Puente Redevelopment Agency Palm Springs Redevelopment Agency Norwalk Redevelopment Agency Pomona Redevelopment Agency Cazlsbad Redevelopment Agency Indio Redevelopment Agency Bell Redevelopment Agency La Quinta Redevelopment Agency Cathedral City Redevelopment Agency Vista Redevelopment Agency Rialto Redevelopment Agency Whittier Redevelopment Agency Hesperia Redevelopment Agency Costa Mesa Redevelopment Agency Responsibilities Manager Manager Staff/Senior/Manager Supervisor/Manager Manager Manager Manager Manager Supervisor Senior/Supervisor Staff/Senior Staff Manager Manager Manager Dates Performed 06/97-06/99 06/97-06/99 06/87-06/96 06/91-06/99 06/95-06/99 06/93-06/95 06/93, 06/99 06/94-06/99 06/92 06/90-06/91 06/89 06/87-06/88 06/94-06/95 06/95-06/97 06/95-06/99 Audits of Public Financing Authorities, Joint Powers Authorities. and Other Special Districts Enti Orange County Water District Los Angeles Pazk and Open Space District Coachella Valley Association of Governments Palm Springs Public Facilities Corporation Palm Springs Financing Authority Norwalk Financing Authority Southeast Water Coalition Encina Financing Joint Powers Authority Carlsbad Public Improvement Corporation Pomona Financing Authority Costa Mesa Sanitary District Costa Mesa Public Financing Authority Carlsbad Parking Authority Indio Public Financing Authority Responsibilities Manager Manager Manager Senior/Manager Senior/Manager Supervisoi•/Manager Supervisor/Manager Manager Manager Manager Manager Manager Manager Manager Dates Performed 02/98-06/99 06/97-06/99 06/93 06/89-06/96 06/91-06/96 06/91-06/99 06/92-06/94 06/93-06/95 06/93-06/95 06/95-06/98 06/95-06/99 06/95-06/99 06/93-06/95 06/93-06/94, 06/99 Dean Votava, (Continued) Enti Responsibilities Dates Performed Yorba Linda Water District Staff 06/88 Vista Fire Protection District Staff/Senior 06/87-06/89 Authori Responsibilities Dates Performed Norwalk Housing Authority Senior/Manager 1990-99 Hawaiian Gazdens Housing Authority Manager 1994-98 Cazlsbad Housing Authority Manager 1993-97 Baldwin Park Housing Authority Manager 1995 Pomona Housing Authority Manager 1995-98 San Bernardino County Housing Authority Manager 1995-99 Q Riverside County Housing Authority Manager 1998 Other Related Governmental Auditinr: Experience Mi. Votava has performed and managed a variety of governmental audits including audits which our firm has conducted of Job Training Partnership Act (JTPA) service providers, audits of Office of Criminal Justice Planning Recipients (OCJP), financial and compliance audits performed for the U.S. Department of Health and Human Services and the County of Orange alcohol and drug abuse service contractors. HUD Section 8 Housine Consultintt Experience Mr. Votava is knowledgeable in Section 8 Voucher and Certificate Housing programs and has prepared annual yeaz-end housing reports filed with HUD for both the Norwalk and Hawaiian Gardens Housing Authorities. He has also performed extended scope reviews of internal controls relating to housurg portability. Professional Involvement Mr. Yotava is a member of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants. He also regulazly participates in the activities sponsored by the California Society of Municipal Finance Officers and has performed as a reviewer ~I of Cities submitting under the CSMFO Award Pmgram for Excellence in Financing Reporting. V Dean Votava, (Continued) Computer Skills Mr. Votava's computer skills include Excel, Lotus 1-2-3, Word, Quatro and Prentice Hall's Government Software Program -FAST! G. Experience in Convertins Housins Authorities to GAAP Mr. Votava attended atwo-day "GAAP Conversion Seminar" in December 1998 that was put on by PHA Finance. The seminar dealt with all aspects of the GAAP conversion process, including the preparation of journal entries. Mi~. Votava also recently went through this GAAP wnversion process during the audit of the San Bernardino County Housing Authority for the year ended September 30, 1998. Continuine Education The following is a summary of related continuing education courses Mr. Votava has attended during the past three years: Date Sponsor TOp1C © 689/95 Conrad and Associates, L.L.P. Performing Audits of Drug/Alcohol Providers 784-26/95 Conrad and Associates, L.L.P. 1995 Local Government Audit Training -Session II 8/17!95 California Redevelopment Financial Management Seminar Agency Association 11/1/95 Cal Society of CPA's Understanding Chapter 9 Municipal Banloziptcy 1/22/96 Conrad and Associates, L.L.P. Accounting for Non-Profits: Contributions and Financial Statements 22i-27/96 CSMFO 1996 Annual Conference 485-26/96 Conrad and Associates, L.L.P. 1996 Local Government Audit Training -Session I 786-27/96 Conrad and Associates, L.L.P. 1996 Local Govermnent Audit Training -Session II 187/97 Cal Society of CPA's GASB Update and PERS Disclosures 1/31/97 Conrad and Associates, L.L.P. The New AICPA Accounting and Audit Guide for Nonprofits 2/2425/97 CSMFO 1997 Annual Conference -Harvesting Prosperity 5/1-2/97 Conrad and Associates, L.L.P. 1997 Local Government Audit Training -Session I 788-30/97 Conrad and Associates; L.L.P. 1997 Local Government Audit Training - Session I[ 186/98 Conrad and Associates, L.L.P. Non-Profit Training r • Dean Votava, (Continued) Date SpOIISOr TOp1C .1/27/98 Cal Society of CPA's GASB #32 Accounting for Deferred Compensation Assets 2/23-24/98 CSMFO 1995 Annual Conference 423-24/98 Conrad and Associates, L.L.P. 1998 Loca! Government Audit Training -Session I 6/5/98 Cal Society of CPA's Update on New Financial Reporting Module 7/27-29/98 Conrad and Associates, L.L.P. 1998 Local Government Audit Training -Session II 11/24/98 CSMFO -Local Chapter Y2K Disclosure Requirements 12/8-9/98 PHA Finance Converting Housing Authorities to GAAP 4/26-27/99 Conrad and Associates, L.L.P. 1999 Local Govenunent Audit Training -Session I 7/26-28/99 Conrad and Associates, L.L.P. 1999 Local Govenunent Audit Training -Session II ® STEVEN DOBRENEN. C.P.A. Eneseement Manaeer California CPA Certificate 62712E ' EDUCATION Bachelor of Science -Business Administration (Accounting) - Biota University, La Mirada, California PROFESSIONAL EXPERIENCE 11 years -Conrad and Associates, L.L.P. (Senior Manager) RELATED EXPERIENCE Mr. Dobrenen has been assigned responsibility for numerous sudits/special assignments. This experience has encompassed financial and compliance audits of graats, contracts, cooperative agreements, and initial pricing proposals; indirect cost audits; performance audits; recipient capability audits; single audits; and quality control reviews. Each of these audits included a review of the entity's internal controls and financial management system. © Audits of California Cities (including Single audits Under OMB Circular A-133) C~ Tvpe of Audit Dates Performed Brea Annual Audit 06/92-06/99 Hawaiian Gardens Annual Audit 06/89-06/99 City of Whittier Annual Audit 06/9406/99 City of Orange Annual Audit 06/96-06/99 Hemet Annual Audit 06/89-06/91 Highland Annual Audit 06/89-06/90 Norwalk Annual Audit 06/89 Cathedral City Annual Audit 06/89-OC~93 Banning Annual Audit 06/89-06/91 Palm Springs Annual Audit 06/90-06/91 Audits of California Redevelopment Aeencies A enc Type of Audit Dates Performed Brea Redevelops ent Agency Hawaiaan Gardens Redevelopment Agency Annual Audit Annual Audit 06/92-06/99 06/89-06/99 Hemet Redevelopment Agency Annual Audit 06/91 Whither Redevelopment Agency Annual Audit 06/94-06/99 Orange Redevelopment Agency Annual Audit 06/96-06/99 Cathedral City Redevelopment Agency Annual Audit 06/90-063 /"`~ Palm Springs Redevelopment Agency Annual Audit 06/90 ~,~/ Banning Redevelopment Agency Annual Audit 06/90-06/91 Steven Dobrenen, (Continued) Audits of Special Districts and Authorities Entity Yorba Linda Water District Norwalk Child Development Program Audits ofNon-Profit Orsaaizations Organization Type of Entity Special District Local Government Legal Aid Society of Orange County YWCA of South Orange County Orange County Council of Campfire Orange YMCA Sutton Foundation United Agricultural Business League Public Law Center San Fernando Valley Neighborhood Legal Services Type of Audit Financial Financial and Compliance Type of Audit Annual Audit/A-133 Annual Audit/A-133 Annual Audit Annual Audit Annual Audit Annual Audit Annual Audit/A-133 Annual Audit/A-133 COMPUTER SKILLS AND PROFESSIONAL INVOLVEMENT Dates Performed 06/89 06/89-06/90 Dates Performed 01/97-01/99 12/9412/96 12189-12190 06/89 06/89 12/96-12198 12/94-12/98 12/97-12/98 Mr. Dobrenen is proficient in IBM compatible computers including Quatro Pro, Lotus 1-2-3, Microsoft Excel and Word, Word Perfect, Accountants Trial Balance and Prentice Hall's Goverrunent Fund Acwunting Software FAST-G. Mr. Dobrenen is a member of the American Institute of Certified Public Accountants and California Society of Certified Public Accountants. 1 CONTINUING EDUCATION TRAINING The following is a summary of pertinent continuing education courses attended by Mr. Dobrenen during the past four years. Date SpOnSUi TOpiC 01!19/94 Cal RDA Association The Community Redevelopment Law Reform Act of 1993 04/18-20/94 Conrad and Associates, L.L.P. 1994 Government Audit Training 07/25-27/94 Conrad and Associates, L.L.P. 04/73-26/95 Conrad and Associates, L.L.P. 1994 Government Audit Training Local Government Audit Training 1995 Session I Steven Dobrenen, (Continued) CONTINUING EDUCATION TRAINING. (CONTINUED Date Sponsor TOPIC 07/20/95 CSMFO Municipal Debt Disclosures 0712426/95 Conrad and Associates, L.L.P. Local Government Audit Training 1995 Session II 01/22/96 Conrad and Associates, L.L.P 04/2426/96 Conrad and Associates, L.L.P 07/26-28/96 Conrad and Associates, L.L.P 01/27/97 Cal Society of CPA's 01/31/97 Conrad and Associates, L.L.P OS/01-05/97 0728-29/97 0126/98 0127/98 02/23-24/98 0423-24/98 06/05/98 06/10/98 0727-29/98 0426-27/99 1219-10/99 Conrad and Associates, L.L.P Conrad and Associates, L.L.P Conrad and Associates, L.L.P. Cal Society of CPA's CSMFO Conrad and Associates, L.L.P. CSCPA City of Professional Education Conrad and Associates, L.L.P. Conrad and Associates, L.L.P. Accounting for Nonprofits: Contributions and Financial Statements Local Government Audit Training 1996 Session I 1996 Local Government Audit Training Session II GASB Update - PERS Disclosures The New AICPA Accounting and Audit Guide forNonprofits Local Government Audit Training 1997 - Session I Local Govenmment Audit Training 1997 - Session II Non-Profit Audit Training Aceounting for Defers ed Compensation Assets -GASB No. 32 Various -Annual Conference Local Government Audit Training Update on New Financial Report Module Auditing Employee Benefit Plans 1998 Local Government Audit Training 1999 Local Government Audit Training Conrad and Associates, L.L.P. Non-Profit Organisation Audit and Accounting Training •Q CHERYL DYAS. C.P.A. Field Supervisor California CPA Certificate No. 72349 EDUCATION Bachelor of Science -Business Administration (Accounting) - California State University - Fullerton PROFESSIONAL EXPERIENCE S Years -Conrad & Associates, L.L.P. (Audit Supervisor) RELATED EXPERIENCE Mrs. Dyas has been assigned responsibility to numerous audits/special assignments. This experience has encompassed financial statement audits of municipalities; compliance audits of grants, contracts and cooperative agreements; nonprofit organization audits; and single audits. Each of these audits included a review of the entity's internal controls and financial management system. ~, ~ Performed for Type of Audit Years Ended City ofPal~Sprittgs All funds audit/single audit 6/94-6/95 City of>=omona All fimds audit/single audit 6/95 City of San Jaciuto All funds audit/single audit 6/95 City ofNorwalk All funds sudit/single audit 6/94-6/95, 6/97-6/99 City of Indio All funds audit/single audit 6/95 City of South Gate All funds audit/single audit 6/99 City of Hesperia All funds audit/single audit 6/95-6/98 City of Hemet All funds audit/single audit 6/95 City of Hawaiian Gardens All funds audit/single audit 6/95 City of Azusa All funds audit/single audit 6/94 Cathedral City All fimds audii/singlesudit 6/95 City of Costa Mesa Allfunds audit/single audit 6/94 Town.ofAppleValley All-funds sudit/si~lcaudit 6/95 •Q Cheryt Dyas, (Continued) Audits of California Redevelopment Aeencies Performed for Attencv Tvpe of Audit Years Ended Palm Springs Financial and compliance 6/946/95 Pomona Financial and compliance 6/95 San Jacinto Financial and compliance 6/95 Norwalk Financial and compliance 6/94-6/97-6/99 Indio Financial and compliance 6/95 Hemet Financial and compliance 6/95 Hawaiian Gardens Financial and compliance 6/95 Aansa Financial and compliance 6/94 Q Cathedral City Financial and compliance 6/95 Costa Mesa Financial and compliance 6/94 OtherAudits Performed for Entit Tvpe of Audit Years Ended Orange County Healthcare Agency Alcohol and Drug Abuse Grant Audits 1995 and 1994 Hesperia Fire Protection District Special Internal Control Review 1995 Audits of non-profit on?anizations Performed for Orsanization Tvpe of Audit Years Ended Temecula Valley Balloon & Wine Festival Association Financial 6/95-W98 ~g~ ~ M~~ Financial 8/95-6/976/99 Baby Buddies Kids Connection Financial 6/95 Central County United Way A-133 Single audit I?19412/96 Cheryl Dyas, (Continued) Audits of non-profit organizations. (Continued) Organization FISH Harbor Area Girl Scouts Council of Orange County Orangewood Childrens Foundation Public Law Center YWCA of South Orange County YMCA of Orange County United Agricultural Business League Performed for Type of Audit Years Ended A-133 Single audit 12/94-12/95 Financial 12/95 A-133 Single audit 12/94-12/98 A-133 Single audit 12/95 A-133 Single audit 12/94 A-133 Single audit 12/96-12/98 Financial 12/96-12/98 COMPUTER SHILLS AND PROFESSIONAL INVOLVEMENT Ms. Dyas is proficient in IBM compatible computers including Quatro Pro, Lotns 1-2-3, Microsoft Excel and Word, Word Perfect, Accountants Trial Balance and Prentice Hall's Government Fund Accounting Software FAST-G. CONTINUING EDUCATION TRAINING The following is a summary of pertinent continuing education courses attended by Mrs. Dyas during the past four years. Date Sponsor TOplC 0720/95 CSMFO 07/24-26/95 Conrad & Associates, L.L.P. 01/22/96 Conrad & Associates, L.L.P 424-4-24-96 Conrad & Associates, L.L.P 7-24-7-26-96 Conrad & Associates, L.L.P •01/31/97 Conrad & Associates, L.L.P. New Municipal Disclosure Rules Local Government Audit Training 1995 Session R Accounting for Non-Profit Contributions and Financial Statement Presentation Local Govemment Audit Training'1996 Session I Local Government Audit Training 1996. Session II The New AICPA Accounting and Audit Guide for Nonprofits I• Cheryl Dyas, (Continued) CONTINUING EDUCATION TRAINING. (CONTINUED) Date Sponsor TopIC 04/21/97 Cal Society of CPA's 05/01-02/97 Conrad & Associates, L.L.P 07128-30/97 Conrad & Associates, L.L.P. The GASB Exposure Draft on the New Financial Reporting Model 1997 Local Government Audit Training Session I 1997 Local Government Audit Training Session II 12/18/97 Cal-State University Fullerton Information Technology Update 02/02/98 Conrad & Associates, L.L.P SAS #82 Consideration of Fraud in Financial Statement Audits 0423-24/98 Conrad & Associates, L.L.P 0727-29198 Conrad & Associates, L.L.P. 1998 Local Government Audit Training -Session I 1998 Local Government Audit Training -Session II p BRIAN ORR Senior Auditor EDUCATION Bachelor of Science -Business Administration (Accounting) - Biola University PROFESSIONAL EXPERIENCE 3 Years -Conrad and Associates, L.L.P. RELATED EXPERIENCE Mr. Orr has been assigned responsibility to numerous sudits/special assignments. This experience has encompassed financial statement audits of municipalities; compliance audits of grants, contracts and cooperative agreements; nonprofit organization audits; and single audits. Each of these audits included a review of the entity's internal controls and financial management system. © Audits of California Cities (includirr ¢ Single Audits conducted under OMB Circular A 1331 Performed for Tvae of Audit Years Ended La_Veme Annual Audit 06/98-06/99 Indio Annual Audit 06/99 South Gate Annual Audit 06/97-06/98 Buena Park Annual Audit 06/97 ~roY Annual Audit 06/97 Costa Mesa Annual Audit 06/97 Bell Annual Audit 06/97 ~8e Annual Audit 06/97 ~ Ql~lnts Annual Audit 06/97 Indian Wells Annual Audit 06/98 Pomona Annual Audit 06/98 r= ~~ Brian Orr, (Continued) Audits of California Redevelopment A¢encies Performed for A¢ency Type of Audit Years Ended La Verne Annual Audit 06/98-06/99 Indio Annual Audit 06/99 South Gate Annual Audit 06/98 Costa Mesa Annual Audit 06/97 Compliance Audits Performed for Entity Type of Audit Years Ended Transient Occupancy Tan for the City of Indian Wells Annual Audit 06/99 ® Indian Wells Golf Resort Annual Audit 06/98 Air Quality Management District for the City of Costa Mesa Annual Audit 06/97 Airborne Law Enforcement for the City of Costa Mesa Annual Audit 06/97 Audits of Special Districts and Authorities Performed for Entity Type of Audit Years Ended San Elijo Joint Powers Authority Joint Powers Authority 06/98 South Bay Regional Public Communications Authority Joint Powers Authority 06/98-06/99 Independent Living Center Annual Audit 06/97 California Center for the Arts -Escondido Annual Audit 06/98 Southeast Water Coalition Annual Audit 06/98 i , -~ Brian Orr, (Continued) Other Audits Performed for Entity Tvae of Audit Years Ended Palmetto Health Care Home Health Care Cost Report Audit 12/96-12/97 Welhnark Health Care Home Health Care Cost Report Audit 12/96-12/97 Health Care Financing Authority Health Maintenance Organization Compliance Audit 12/96 Blue Cross of Califonva Skilled Nursing Facility Cost Report Audit 12/96 COMPUTER SKILLS AND PROFESSIONAL INVOLVEMENT Mr. Orr is proficient in IBM compatible computers including Excel, Word Perfect, Word, Accountants Trial Balance and Prentice Hall's Government Fund Accounting Software FAST-G. O CONTINUING EDUCATION TRAINING The following is a summary of pertinent continuing education courses attended by Mr. Orr during the past two years. Date Sponsor TOpiC 0728-30/97 Conrad and Associates, L.L.P. 1997 Local Government Audit Training Session II 0126/98 Conrad and Associates, L.L.P. Non-Profit Training 0423-24/98 Conrad and Associates, L.L.P. 1998 Local Govenmient Audit Training -Session I 0527-28/98 Conrad and Associates, L.L.P. Wellmark Home Health Agency Cost Reporting 0727-29/98 Coarad and Associates, L.L.P. 1998 Local Government Audit Training - Sessioa II 1123-25/98 Conrad and Associates, L.L.P. Palmetto Home Health Agency Cost Reporting 0426-28/99 Conrad and Associates, L.L.P. 1999 Local Government Audit Training -Session I 0726-28/99 Conrad and Associates, L.L.P. 1999 Local Government Audit Training - Sessioa II 12/9-10/99 Conrad and Associates, L.L.P. Non-Profit Organization Audit and Accounting Training 1216-9/99 Corned and Associates, L.L.P. Medical Services Audit Getup Training .~ COURTNEY A. HOLM Senior Auditor EDUCATION Bachelor of Science -Business Administration (Accounting) -Cal-Poly University Pomona PROFESSIONAL EXPERIENCE 1'/: years Conrad and Associates, L.L.P. 1 %: years Bank of America RELATED EXPERIENCE lvls. Holm has been assigned responsibility to numerous audits and special assignments. This experience has encompassed financial and compliance audits of governmental and non-profit engagement which have been performed in accordance with "Government Auditing Standards". Each of these audits have entailed a review of the entity's internal control and financial management system. Audits of California Cities (including: Single Audits conducted under OMB Circular A-1331 Performed for C~ Type of Audit Years Ended Norwalk All Funds Audit/Single Audit 06/98 Diamond Bar All Funds Audit/Single Audit 06/98 .San Gabriel All Funds Audit/Single Audit 06198 ~~Y All Funds AudiUSingle Audit 06/99 Villa Park All Funds Audit/Single Audit 06/99 Audits of California Redevelopment Agencies Performed for A enc T~~pe of Audit Years Ended Norwalk Redevelopment Agency Financial and compliance 06/98 Diamond Bar Redevelopment Agency Financial and compliance 06/98 San Gabriel Redevelopment Agency Financial and compliance 06/98 r. i - Courtney A. Holm (Continued) Audits of California Special Districts Entity Los Angeles County Regional Parks and Open Space District Audits of Non-Profit Organizations Enti Catholic Charities of Orange County Performed for Type of Audit Years Ended Financial and compliance 06/99 Performed for Type of Audit Years Ended A-133 Single Audit 06/98-06/99 COMPUTER SKILLS AND PROFESSIONAL INVOLVEMENT Ms. Holm is proficient in the use of computer technology including the use of Windows 98 and Microsoft Excel and Word. CONTINUING EDUCATION TRAINING The following is a summary of pertinent continuing education courses attended by Ms. Holm in the last eighteen months. Date S nsor 07/26/98 GFOA/Conrad and Associates, L.L.P 0727-29/98 Conrad and Associates, L.L.P. 0426-27/99 Conrad and Associates, L.L.P. 0726-27/99 Conrad and Associates, L.L.P. TOpiC GAFR Study Guide t 998 Governmental Accounting and Auditing Seminar 1999 Governmental Accounting and Auditing Seminaz I 1999 Governmental Accounting and Auditing Seminaz II APPENDIX B RESULTS OF MOST RECENT QUALITY CONTROL REVIEW . • ~- ~ ~ . ~ PCP~~ O THE AICPA ALLIANCE FOR CPA FIRMS American Institute of ~,,,~+ _ Certified Public Accountants CERTIFICATE OF MEMBERSHIP Conrad e'r Associates, LLP is admitted to PCPS/Partneringfor CPA.Pra tirP Success The ATCPA Alliance for CFA Firms and is entitled to all rights and privileges of membership. /~'~~. r. ST911FNLROe1N,CM SUSANKCRAMIANp,CM G MMKIIRCOW,CM JOIN E ORIIMUE, GA SCOTTY[ -SLLER.CM YCNAEI.i MRRON. CPA To the Partners Conrad ~ Assodates, LLP. ME12tWErxER, WILSON AND COMPANY, P.L.C. CEKrirED PU9UCA000UNTAI(rE 12CO VALLEY WFSi Off7CESAT ORNE. SUITE ~41YE3T DES UGUIES, IOWA59M6 17E7.0N SiREEC PENM, pWAE07l0 TEIFPMONE W EST OES AgYIES ~d13717.pppT PERRY NS'/WE91 FAX YiE4T CES UCR$S._.SISRripgp PERRY •ISgtSJip We have reviewed the system of quality control for the accounting and audiing prsdice of Conrad & Assodates, LLP. (the fine) in effect for the year ended December 31, 1997. Our review was conducted in conformity with standards established by the Peer Review Boatd of the Amedcan Institute of Certified Public Accountants {AICPA). We tested compliance with the firm's quality control polldes and procedures to the extent we considered appropdate. These_tests inducted a review of selected accounting and audfiing engagements. in performing our review, we have given consideration to the quality control standards Issued by the AICPA. Those standards indicate that a firm's system of quality control should be appropdatey comprehensive and suitably designed in relation to the fine's size, organhational structure, operating pofides, and the nature of Ms practice. They state that vadance In individual performance can aged the degree of rmmpliance with a fum's quality control system and, therefore, recognize that there may not be adherence to all pofides and procedures in every case. In our opinion, the system of quality control for the accounting and auditing practice of Conrad 3 Assodates, LLP. in effect for the year ended December3l, 1997, met the objectives of quafdy control standards established by the AICPA and was being comp9ed with during the. year then ended to provide the fine with reasonable assurance of conforming with professional standards in the eondud of that prsctice. Conrad ~ Assodates, LL.P. is a member of the pdvate companies practice section of the AICPA division for CPA fines (the section) and has agreed to comply with the membership requirements of the section. In connection with our review, we tested the fine's compliance wittrthose requirements to the extent we considered appropriate. in our opinion the fum was in conformity with the membership requirements of the section dudng the year ended December 31,1997, in all matedal respells. //~~jQIWETAf.~ /~'LSe~J fss ~ 1'~. ty(ERIWEfHER, WILSON AND COMPANY, PST • . Certified Pub9c Accountants May 7,1998 West Des Moines, Iowa MEMBERSAMEarGN rNSIIiUFE OF CERio:7ID PUBLtcwcceurrrw*nx G CaliFOmia Society August 28, 1998 Certified Ronald Z. Conrad, CPA Conrad 6 Associates, LLP PabiiC 1100 Mafn St., Suite C ACCOUrltan~tvine, CA 92619-6730 Peer Review Program Dear Mr. Conrad: It is my pleasure to notify you that on August 26, 1998 the California Peer Review Committee accepted the report on the most recent peer review of your firm. The report will now be placed in the public files of the Division for CPA Firms. The due date for your next review is June 30, 2001. .This is the date by which all revie~r documents should be completed and submitted to the administering entity. As yon know, the reviewer's opinion •was unqualified. The Committee asked me to convey•its congratulations to the firm. Sincerely, Linda McCrone Director, Technical Services cc: Dennis J Wagner, CPA Firm Number: 10095453 Review Number: 126105 i6~j as ias6 fu (69n 80?-2~Oi an~p~ APPENDIX C NON-COLLUSION AFFIDAVIT . ,_ s ~ NON - COLLUSION AFFIDAVIT TO: TAE COMMON COUNCIL, CITY OF SANBERNARDINO 7n accordance with Trtle 23, United States Code,- Section 112, the undersigned hereby states, under Penalty ofPerjury: That hdshe has not, either directly or indirectlX ~~ into ~3' ~~~, P~«P~ in arty collusion, or otherwise takes action in restraint offree competitive bidding in connection with 12FP Audit Services. Business Name Conrad and Associates. L.L.P. B~~~~p~110~0 MJain Street, Irvi!ne~CA ,~,:, Signature of offerorX ~' "~~`"'~~~'~/ - - -- Mi eai nn Visa~n Place ofliesideace Subscn'bed and sworn before me this day of , 2000. Notary Public in and for the County of , State of California: My ~mm+~~on expires 20 MRY-O~Zfl~. 15:43 ~ P.08 ., i • STATE OF CALffORNIA COUNTY OF ORANGE ss. On May 17, 2000, before me, DEBBIE CONRAD, personally appeared MICHAEL A. HARRISON, personally known to me (or proved to be on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and aclmowledged to me that he executed the same in his authorized capacity, and that by his signature on the instnmient the person or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. DEBBIE CONRAD Comm. / t 212240 N . NOTA9Y pOBtIC-CAIffORNU N Oren0e Ceuery Nr Comm. Eyees June 25, 2007 "' ~ aa~ Debbie Conrad ** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT ** RESOLUTION AGENDA ITEM TRACHING FORM Meeting Date (Date Adop d): "I~ ~ ~~ Item # ~ .Resolution # ©~ Vote: Ayes Nays Abstain Abse t Change to motion to amend original documents ^ Companion Resolutions Null/Void After: days / Resolution # On Attachments: ^ PUBLISH ^ POST ^ Date Sent to Mayor: r/49 Date of Mayor's Signature: ~ Date of Clerk/CDC Signature: Note on Resolution of attachment stored separately: ^ RECORD W/COUNTY ^ By: Date Memo/Letter Sent for Signature: Date Retained: 1 ~` Reminder Letter Sent: 2nd Reminder Letter Sent: Reso. Log Updated: ^ Seal Impressed: ^ Not Returned: ^ Request for Council Action & Staff Report Attached: Updated Prior Resolutions (Other Than Below): Updated CITY Personnel Folders (6413, 6429, 6433, 10584, 10585, 12634): Updated CDC Personnel Folders (5557): Updated Traffic Folders (3985, 8234, 655, 92-389): Copies Distributed to: Animal Control City Administrator City Attorney Code Compliance Development Services Others: Notes: Yes No By Yes _ No By Yes _ No _ By Yes No _ By _ Yes _ No _ By ^ _-. _ .. EDA Information Services ^ ^ Facilities ^ Parks & Recreation ^ ^ Finance ^ Police Deparment ^ ^ Fire Department ^ Public Services ^ ^ Human Resources ^ Water Department ^ Ready to File: Date: ~~~ ~~ Revised 12/18/03 ~ ~~~ ~ Q~7 , Ci of San Bernardino ECONO1 ~'L~ENT AGENCY Redevelopment •Communlty Development •Housing • Buss. ~~t l~n~Revitalizetlon • Mein Sbeet Inc. Conrad & Associates, L.L.P. Attn.: Michael A. Harrison 2301 Dupont Drive, Suite 200 Irvine, California 92612 RE: Amendment No. l -Agreement for Auditing Services Deaz Mr. Harrison: Enclosed for your records is the fully executed Agreement as referenced above. Thank you for your assistance in this matter. If you should have any questions, I can be reached at (9p9) 663-1044. Was'dna A. Chantha Secretary Enclosure: Amendment No. 1-Agreement for Auditing Services cc: Bazbara Lindseth (with Original Executed Agreement) Eileen Gomez (with Original Executed Agreement) Maggie Pacheco (with Copy of Executed Agreement) 201 North E Street Sufte 301 • San Bemarclino, California 92401-1507 •(909) 663-1044 • Fax 1309) 888-9413 www.sanbemardno-eda.org. Apri122, 2005