HomeMy WebLinkAbout2009-292
I.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
RESOLUTION NO. 2009-292
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING THE EXECUTION OF AMENDMENT NO. 1 TO
THE AGREEMENT FOR AUDITING SERVICES BY AND BETWEEN THE CITY OF SAN
BERNARDINO AND ROGERS ANDERSON MALODY AND SCOTT L.L.P. FOR THE
PROVISION OF FINANCIAL AUDITING SERVICES.
BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AS FOLLOWS:
WHEREAS, the City of San Bernardino desires to enter into Amendment No. 1
("Amendment") to the Agreement for auditing services with Rodgers, Anderson, Ma10dy and
Scott, L.L.P., to extend the Agreement for a period of two (2) years in order to perform
financial audit services for the City of San Bernardino ("City") as attached.
NOW, THEREFORE, THE CITY OF SAN BERNARDINO DOES HEREBY
RESOLVE, DETERMINE AND ORDER, AS FOLLOWS:
SECTION 1. The City Manager is hereby authorized and directed to execute on behalf
of said City the Amendment with Rogers Anderson Malody and Scott L.L.P. approving a two
(2) year extension to the Agreement to perform financial audit services for the City, for a two
(2) year period starting from July 1, 2009 to June 30, 2011. (The audit periods covered will be
FY 08-09 and FY 09-10.) A copy of which is attached hereto as Exhibit "A" and incorporated
herein by reference. Upon execution of said agreement, the Purchasing Manager of the City of
San Bernardino is directed to issue a Purchase Order to Rogers Anderson Malody and Scott III
the amount not to exceed $54,300 for FY 09-10; and $55,900 for FY 10-11.
SECTION 2. The authorization to execute the above referenced agreement is rescinded
if the parties to the agreement fail to execute it within sixty (60) days of the passage of this
resolution.
2009-292
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING THE EXECUTION OF AMENDMENT NO. 1 TO
THE AGREEMENT FOR AUDITING SERVICES BY AND BETWEEN THE CITY OF SAN
BERNARDINO AND ROGERS ANDERSON MALODY AND SCOTT L.L.P. FOR THE
PROVISION OF FINANCIAL SERVICES.
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor
joint
and Common Council of the City of San Bernardino at an regular meeting thereof, held
on the 17th day of August
,2009, by the following vote, to wit:
Council Members:
NAYS
ABSTAIN ABSENT
AYES
ESTRADA X
-
BAXTER X
X
BRINKER
SHORETT X
KELLEY X
JOHNSON X
MC CAMMACK ~
Q...u"P I';;. ~
~
Rachel G. Clark, City Clerk
The foregoing resolution is hereby approved this l~ day of August
2009.
Approved as to Form
JAMES F. PENMAN,
City Attorney
2009-292
EXHIBIT A
AMENDMENT NO.1 TO THE AGREEMENT FOR AUDITING SERVICES
(ORIGINAL AGREEMENT APPROVED BY MAYOR AND COMMON COUNCIL ON
7/11/06 RESOLUTION No. 2006-240)
This Amendment No.1 to the Agreement for Auditing Services ("Amendment No. I") is
made and entered into on this 17 th day of August, 2009 by and between the City of San
Bernardino, a municipal corporation (hereinafter referred to as "CITY") and Rogers,
Anderson, Malody and Scott, L.L.P., Certified Public Accountants (hereinafter referred to as
"AUDITORS").
WITNESSETH
WHEREAS, the AUDITORS are recognized as competent and qualified certified public
accountants who were selected by the CITY through competitive procedures, and are duly
authorized to practice and licensed as such by the California State Board of Accountancy;
WHEREAS, the CITY approved a three year contract for auditing services with AUDITORS
ending 6/30109 (final audit year of2007-08).
WHEREAS, in response to the CITY'S request of vendor to reduce contract cost, AUDITORS
agreed to 10% reduction in exchange for a 2 (two) year contract extension
NOW, THEREFORE, in consideration of their mutual promises, obligations and covenants
hereinafter contained, the parties hereto agree to the following changes to the original
contract:
1. TERM. Unless terminated earlier or cancelled as provided for herein, the term of this
Amendment No.1 shall be extended for each of the two (2) fiscal years ending June 30,
2010 (audit period ofFY 08-09); and ending June 30, 2011 (audit period ofPY 09-10).
5. COMPLETION OF AUDIT AND DELNERY OF AUDIT OPINIONS.
A. AUDITORS shall complete all work by the dates provided in Appendix A (a copy of
which is attached hereto and by this reference made a part hereof) of each fiscal year
included in the term of this Amendment No.1 to the Agreement, but in no event shall
any final written audit report, management letter or affiliated report be delivered to the
City later than December 1 for the immediately prior fiscal year being audited.
B. AUDITORS shall deliver their final typed audit opinions and other reports as set forth
in Appendix A for each fiscal year included in the term of this Amendment No. 1 to
the Agreement provided CITY furnishes the information to AUDITORS pursuant to
Appendix A in a timely manner.
. .
2009-292
13.
AUTHORITY TO EXECUTE AGREEMENT. Both CITY and AUDITORS do
covenant that each individual executing this Amendment No. 1 to the Agreement on
behalf of each party is a person duly authorized and empowered to execute agreements
for such party.
14.
All other provisions of the original agreement approved by Resolution 2006-240 of the
Mayor and Council on July 10, 2006, as set forth in Exhibit 1, shall remain in effect
through the end of revised contract term.
IN WITNESS WHEREFORE, the parties hereto have caused this instrument to be executed
the day and year first written above.
THE CITY OF SAN BERNARDINO
Dated: dc'/'h?~d2 7. ~a:J9
B
ATTEST:
Q~ h. UuJc
City'clerk
APPROVED AS TO FORM:
.f?~-
. y Attorney
Dated:
'S!t~/D9
2
2009-292
EXHIBIT 1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
RESOLUTION NO. 2006-240
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING THE EXECUTION OF AN AGREEMENT
BETWEEN THE CITY OF SAN BERNARDINO AND ROGERS ANDERSON MALODY
AND SCOTT L.L.P. FOR THE PROVISION OF FINANCIAL AUDITING SERVICES.
BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AS FOLLOWS:
SECTION I. The Mayor is hereby authorized and directed to execute on behalf of said
City an agreement with Rogers Anderson Ma10dy and Scott L.L.P. relating to financial
auditing services, a copy of which is attached hereto as Exhibit "A" and incorporated herein by
reference. Upon execution of said agreement, the Purchasing Manager of the City of San
Bernardino is directed to issue a Purchase Order to Rogers Anderson Malody and Scott in the
amount not to exceed $55,200 for FY 06-07; $56,900 for FY 07-08, and $58,600 for FY 08-09.
SECTION 2. The authorization to execute the above referenced agreement is rescinded
if the parties to the agreement fail to execute it within sixty (60) days of the passage of this
resolution.
11/
III
1/1
III
/11
III
III
2009-292
1
2
3
4
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING THE EXECUTION OF AN AGREEMENT
BETWEEN THE CITY OF SAN BERNARDINO AND ROGERS ANDERSON MALODY
AND SCOTT L.L.P. FOR THE PROVISION OF FINANCIAL SERVICES.
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor
5 joint
and Common Council of the City of San Bernardino at an regular
meeting thereof, held
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
on the 10th day of July
Council Members: AYES
ESTRADA X
BAXTER X
MCGINNIS X
-
DERRY X
KELLEY X
-
JOHNSON X
-
MCCAMMACK ---L-
, 2006, by the following vote, to wit:
NAYS
ABSTAIN ABSENT
/~ '
o "d,.<.-f ,0. 6::a.A.A_
Rac el G. Clark, City Clerk
The foregoing resolution is hereby approved this /A+ ^" day of July
2006.
,
atric J. Morris, Mayor~
City of San Bernardino
Approved as to Form
JAMES F. PENMAN,
City Attorney
Byt- rj~
2009-292
2006-240
AGREEMENT FOR AUDITING SERVICES
This Agreement for Auditing Services is made and entered into on this day of June,
2006 by and between the City of San Bernardino, a municipal corporation (hereinafter
referred to as "CITY") and Rogers, Anderson, Malody and Scott, L.L.P., Certified Public
Accountants (hereinafter referred to as "AUDITORS").
WITNESSETH
WHEREAS, AUDITORS are recognized as competent and qualified certified public
accountants who were selected by the CITY through competitive procedures, and are 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:
1. TERM. Unless terminated earlier or cancelled as provided for herein, the term of this
Agreement shall be for the each of the fiscal year ending June 30, 2007 through 2009.
2. SCOPE OF SERVICES. The AUDITORS agree to provide services and perform all work
necessary in a manner satisfactory to the CITY as set forth in the proposal, the request for
proposal (RFP) for audit services dated 4/13/2006, and AUDITOR'S proposal dated May
4, 2006. These documents are attached hereto and by reference incorporated herein and
made a part hereof.
3. CITY'S OBLIGATIONS. For furnishing services specified in this Agreement, CITY will
pay and the AUDITORS shall receive the full compensation as set forth in the proposal
attached hereto and by reference incorporated herein and made a part hereof.
Additionally, CITY agrees to provide AUDITORS with supporting schedules, trial
balances and reconciliations as necessary to complete the services requested.
4. PAYMENT SCHEDULE. The AUDITORS shall submit a monthly billing based on the
percentage of audit work cornp1eted. After approval of the CITY'S Director of Finance.
said invoice shall be paid within 30 days.
5. COMPLETION OF AUDIT AND DELIVERY OF AUDIT OPINIONS.
A. AUDITORS shall complete all work by the dates provided in the request for proposal
of each fiscal year included in the term of this Agreement.
B. AUDITORS shall deliver their final typed audit opinions and other reports as set forth
in the proposal for each fiscal year included in the term of this Agreement provided
CITY furnishes the information to AUDITORS pursuant to the request for proposal in
a timely manner.
2009-292
2006-240
6. TERMINATION.
A. Termination WithoUlt Cause. CITY and AUDITORS shall have the right to terminate
this Agreement, by giving not less than thirty (30) days \\Titten notice of termination
to the other party. On the date oftennination stated in the written notice, AUDITORS
shall discontinue performance of the services, preserve the product of the services, and
turn over to CITY the product of the services in accordance with written instructions
of CITY. If CITY terminates the Agreement under this Subsection A of Section 6,
CITY 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 the proposal. If
AUDITORS terminate the Agreement under this Subsection A of Section 6, CITY
shall compensate AUDITORS in the same amount CITY would compensate
AUDITORS in the event CITY terminated the agreement under this Subsection A of
Section 6, less any costs CITY pays other auditors to review or re-perform the services
provided by AUDITORS prior to the date of termination. In the event of termination
without cause by eithe party, CITY's payment as provided herein shall constitute full
satisfaction of CITY's obligations under this Agreement.
B. Termination bv CITY for Cause.
1. CITY 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 CITY may authorize in writing after notice is given by
CITY specifying such failure of breach; or
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.
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 the City the product of the services in accordance with written
instructions of CITY. In the event CITY terminates this Agreement in whole
or in part as provided above in Paragraph 1 of this Subsection B of Section 6,
CITY shall pay AUDITORS a fee for all services satisfactorily provided by
AUDITORS prior to the effective date of termination based on the amounts
2006-240
2009-292
and rates set forth in the proposal, less any fees CITY 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 City's
obligations under this Agreement.
C. Termination bv AUDITORS for Cause. AUDITORS may immediately terminate this
Agreement if CITY is in breach 'of the Agreement and does not correct such breach
within a period often (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,
CITY 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 ful1' satisfaction of CITY's obligations under this Agreement.
7. NOT OBLIGATION TO THIRD PARTIES. The CITY shall not be obligated or liable
hereunder to any party other than the AUDITORS.
8. PROHIBITION AGAINST SUBCONTRACTING OR ASSIGNMENT. The experience,
knowledge, capability and reputation of AUDITORS, its principals and employees were a
substantial inducement for the CITY 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 CITY. In addition, neither this
Agreement nor any interest herein may be transferred, assigned, conveyed, hypothecated
or encumbered voluntarily or by operation of law, whether for the benefit of creditors or
otherwise, without the prior written approval of CITY. 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 consent of CITY.
9. INDEPENDENT CONSULTANT. Neither the CITY nor any of its employees shall have
any control over the manner, mode or means by which the AUDITORS, its agents or
employees perform the services required herein, except as otherwise set forth. The CITY
shall have no voice in the selection, discharge, supervision or control of AUDITORS'
employees, servants, representatives or agents, or in fixing 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 CITY and shall
rernain at all times to the CITY 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
CITY. CITY 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.
2006-240
2009-292
10. INSURANCE. 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
CITY from AUDITORS' negligent acts, errors or omissions of a professional nature. If
any claim related tot he 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 CITY with respect to such
professional liability insurance.
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 CITY. The insurer shall waive the right of subrogation against CITY, its officers,
employees and agents, and the coverage shall be primary for losses arising out of
AUDITORS' performance hereunder and neither the CITY nor its insurers shall be
required to contribute to any such loss. A certificate evidencing the foregoing and naming
the CITY as an additional insured shall be delivered to and approved by the CITY 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 CITY, 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
~ 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
11. PREVAILING 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 expenses 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.
2006-240
2009-292
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:
CITY:
Barbara Pachon, Finance Director
City of San Bernardino
300 North "D" Street, 6th Floor
San Bernardino CA 92418
AUDITORS:
Terry P. Shea, Partner
Rogers Anderson Malody & Scott L.L.P.
290 N "D" Street, Suite 300
San Bernardino CA 92401
13. AUTHORITY TO EXECUTE AGREEMENT. Both CITY 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 WHEREFORE, the parties hereto have caused this instrument to be executed
the day and year first written above.
THE CITY OF SAN BERNARDINO
B~~
Patrick J. orris, ~p
ATTEST:
~,-d,_<..l )J.. c...t-tV<../C
City lerk
APPROVED AS TO FORM:
ROGERS ANDERSON MALODY &
SCOTT
~
\ij:\\D
.., ..' .
.., .
. . . . ......
....:.. -0:-:-.-0:.
:.:-,:':':',:':':'.
.:.:..:.:.:........
.' .
IiIIII.T
2009-292
APPENDIX A
')('11"-'
_.J J lAy~. 7:ERCHER, C.P.A
ROBERT B. MEMORY, C.P.A
PHILLIP H WALLER, C.P_A
BRENDA L. OOLE. C.P.A.
TERRY P. SHEA, C.P.A.
KIRK A. FRANKS. CP ~
MATTHEW B. WILSON, C_P.K
SCOTT W. MANNO, C,P.A
LEENA $HANBHAG, C.P.A
ROGERS, ANDERSON, MALODY & SCOTT, LLP
CERTIFIED PUBLIC ACCOUNTANTS
July 9. 2009
NANCY Q'RAFFERTY, CoP_A
BRAD FE AD A. WELEBIA, C.P,A.
JENNY lIU, C,P.A.
TIMOTHY P_ HORN. C.P.A.
KATIE L MILLSQM, CoP_A
JOHN J. BADIA, C.P_A
JONATHAN R. KUHN, C,P.A
BRADFORD L. ROCKABRANO, C.P.A
PAPA MAlAR THIAW, C,P_A
City of San Bernardino
City Council
300 North "0" Street
San Bernardino. CA 92418
We are engaged to audit the Primary Government financial statements and Comprehensive Annual
Financial Report (CAFR) (collectively the City's basic financial statements or the City) for the years
ended June 30, 2009 and 2010. We will audit the financial statements of the governmental activities.
the business-type activities. each major fund, and the aggregate remaining fund information, which
collectively comprise the basic financial statements of the City. as of and for the years ended June 30.
2009 and 2010. We understand the City will present its financial statements in the form of a
Comprehensive Annual Financial Report and in the form of primary government statements (excluding
the City's Water Department). Accounting standards generally accepted in the United States provide
for certain required supplementary information (RSI), such as management's discussion and analysis
(MD&A). to accompany the City's basic financial statements. As part of our engagement, we will apply
certain limited procedures to the City's RSI. These limited procedures will consist principally of inquiries
of management regarding the methods of measurement and presentation. which management is
responsible for affirming to us in its representation letter. Unless we encounter problems with the
presentation of the RSI or with procedures relating to it. we will disclaim an opinion on it. The following
RSI is required by generally accepted accounting principles and will be subjected to certain limited
procedures, but will not be audited (CAFR and primary government financial statements):
1. Management's Discussion and Analysis.
2. PERS schedule of funding progress.
3. Major fund budgetary comparison schedules.
Supplementary information other than RSI also accompanies the City's basic financial statements. We
will subject the following supplementary information to the auditing procedures applied in our audit of
the basic financial statements and will provide an opinion on it in relation to the basic financial
staternents (CAFR and primary government financial statements):
1. Combining fund schedules.
2. Budgetary comparison schedules.
MEMBERS
AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS
PCPS THE AICPA ALLIANCE FOR CPA FIRMS
VANIR TOWER . 290 NOATH "0" STREET. SUITE 300
SAN BERNARDINO. CA 92401
(909) 889-0871 . (909) 824-6736 . FAX (909) 889-5361
Website: www.ramscpa.net
CALIFORNIA SOCIETY OF
CERTIFIED PUBLIC ACCOUNTANTS
2009-292
City of San Bernardino
City Council
July 9, 2009
Page 2
The following additional information accompanying the basic financial statements will not be subjected
to the auditing procedures applied in our audit of the financial statements, and for which our auditor's
report will disclaim an opinion (CAFR only):
1. Statistical data.
Audit Objectives
The objective of our audit is the expression of opinions as to whether your basic financial statements
are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting
principles and to report on the fairness of the additional information referred to in the first paragraph
when considered in relation to the basic financial statements taken as a whole. The objective also
includes reporting on-
. Internal control related to the financial statements and compliance with laws, regulations, and
the provisions of contracts or grant agreements, noncompliance with which could have a
material effect on the financial statements in accordance with Government Auditing Standards.
. Internal control related to major programs and an opinion (or disclaimer of opinion) on
cornpliance with laws, regulations, and the provisions of contracts or grant agreements that
could have a direct and material effect on each major program in accordance with the Single'
Audit Act Amendments of 1996 and OMB Circular A-133, Audits of States, Local Governments,
and Non-Profit Organizations, if applicable.
The reports on internal control and compliance will each include a statement that the report is intended
solely for the information and use of management, the body or individuals charged with governance,
others within the entity specific legislative or regulatory bodies, federal awarding agencies, and if
applicable, pass-through entities and is not intended to be and should not be used by anyone other
than these specified parties.
Our audit will be conducted in accordance with auditing standards generally accepted in the United
States of America; the standards for financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; and
the proviSions of OMB Circular A-133, and will include tests of accounting records, a determination of
major program(s) in accordance with OMB Circular A-133, and other procedures we consider
necessary to enable us to express such opinions and to render the required reports. If our opinions on
the financial statements or the Single Audit compliance opinions are other than unqualified, we will fully
discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are
unable to form or have not formed opinions, we may decline to express opinions or to issue a report as
a result of this engagement.
2009-292
City 9f San Bernardino
City Council
July 9, 2009
Page 3
Management Responsibilities
Management is responsible for the basic financial statements and all accompanying information as well
as all representations contained therein. Management is also responsible for preparation of the
schedule of expenditures of federal awards in accordance with the requirements of OMB Circular A-133,
if applicable. As part of the audit, we will assist with preparation of your financial statements, schedule
of expenditures of federal awards, and related notes. You are responsible for making all management
decisions and performing all management functions relating to the financial statements, schedule of
expenditures of federal awards, and related notes and for accepting full responsibility for such decisions.
You will be required to acknowledge in the management representation letter our assistance with
preparation of the financial statements and the schedule of expenditures of federal awards and that you
have reviewed and approved the financial statements, schedule of expenditures of federal awards, and
related notes prior to their issuance and have accepted responsibility for them. Further, you are
required to designate an individual with suitable skill, knowledge, or experience to oversee any
nonaudit services we provide and for evaluating the adequacy and results of those services and
accepting responsibility for them.
Management is responsible for establishing and maintaining effective internal controls, including
internal controls over compliance, and for monitoring ongoing activities, to help ensure that appropriate
goals and objectives are met. You are also responsible for the selection and application of accounting
principles; for the fair presentation in the financial statements of the respective financial position of the
governmental activities, the business-type activities, the aggregate discretely presented component
units, each major fund, and the aggregate remaining fund information of the City and the respective
changes in financial position and, where applicable, cash flows in conformity with U.S. generally
accepted accounting principles; and for compliance with applicable laws and regulations and the
provisions of contracts and grant agreements.
Management is also responsible for making all financial records and related information available to us
and for ensuring that management and financial information is reliable and properly recorded. Your
responsibilities also include, including identifying significant vendor relationships in which the vendor
has responsibility for program compliance and for the accuracy and completeness of that information.
Your responsibilities include adjusting the financial statements to correct material misstatements and
confirming to us in the representation letter that the effects of any uncorrected misstatements
aggregated by us during the current engagement and pertaining to the latest period presented are
immaterial, both individually and in the aggregate, to the financial statements taken as a whole.
You are responsible for the design and implementation of programs and controls to prevent and detect
fraud, and for informing us about all known or suspected fraud or illegal acts affecting the government
involving (1) management, (2) employees who have significant roles in internal control, and (3) others
where the fraud or illegal acts could have a material effect on the financial statements. Your
responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud
affecting the government received in communications from employees, former employees, grantors,
regulators, or others. In addition, you are responsible for identifying and ensuring that the entity
complies with applicable laws, regulations, contracts, agreements, and grants. Additionally, as required
by OMB Circular A-133, it is management's responsibility to follow up and take corrective action on
reported audit findings and to prepare a summary schedule of prior audit findings and a corrective
action plan.
2009-292
City 9f San Bernardino
City Council
July 9, 2009
Page 4
Management is responsible for establishing and maintaining a process for tracking the status of audit
findings and recommendations. Management is also responsible for identifying for us previous financial
audits, attestation engagements, performance audits, or other studies related to the objectives
discussed in the Audit Objectives section of this letter. This responsibility includes relaying to us
corrective actions taken to address significant findings and recommendations resulting from those
audits, attestation engagements, performance audits, or studies. You are also responsible for providing
management's views on our current findings, conclusions, and recommendations, as well as your
planned corrective actions, for the report, and for the timing and format for providing that information.
Audit Procedures-General
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; therefore, our audit will involve judgment about the number of transactions to be
examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather
than absolute assurance about whether the financial statements are free of material misstatement,
whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4)
violations of laws or governmental regulations that are attributable to the entity or to acts by
management or employees acting on behalf of the entity. Because the determination of abuse is
subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of
detecting abuse.
Because an audit is designed to provide reasonable, but not absolute assurance and because we will
not perform a detailed examination of all transactions, there is a risk that material misstatements or
noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect
imrnaterial misstatements or violations of laws or governmental regulations that do not have a direct
and material effect on the financial statements or major programs. However, we will inform you of any
material errors and any fraudulent financial reporting or misappropriation of assets that come to our
attention. We will also inform you of any violations of laws or governmental regulations that come to our
attention, unless clearly inconsequential. We will include such matters in the reports required for a
Single Audit. Our responsibility as auditors is limited to the period covered by our audit and does not
extend to any later periods for which we are not engaged as auditors.
Our procedures will include tests of documentary evidence supporting the transactions recorded in the
accounts, and may include tests of the physical existence of inventories, and direct confirmation of
receivables and certain other assets and liabilities by correspondence with selected individuals, funding
sources, creditors, and financial institutions. We will request written representations from your attorneys
as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our
audit, we will require certain written representations from you about the financial statements and related
matters.
In addition, we will prepare the CAFR and the primary government financial statements on behalf of the
City.
2009-292
City of San Bernardino
City Council
July 9, 2009
Page 5
Audit Procedures-Internal Controls
Our audit will include obtaining an understanding of the entity and its environment, including internal
control, sufficient to assess the risks of material misstatement of the financial statements and to design
the nature, timing, and extent of further audit procedures. Tests of controls may be performed to test
the effectiveness of certain controls that we consider relevant to preventing and detecting errors and
fraud that are material to the financial statements and to preventing and detecting misstatements
resulting from illegal acts and other noncompliance matters that have a direct and material effect on the
financial statements. Our tests, if performed, will be less in scope than would be necessary to render an
opinion on internal control and, accordingly, no opinion will be expressed in our report on internal
control issued pursuant to Government Auditing Standards.
As required by OMB Circular A-133, we will perform tests of controls over compliance to evaluate the
effectiveness of the design and operation of controls that we consider relevant to preventing or
detecting material noncompliance with compliance requirements applicable to each major federal
award program. However, our tests will be less in scope than would be necessary to render an opinion
on those controls and, accordingly, no opinion will be expressed in our report on internal control issued
pursuant to OMB Circular A-133.
An audit is not designed to provide assurance on internal control or to identify significant deficiencies.
However, during the audit, we will communicate to management and those charged with governance
internal control related matters that are required to be communicated under AICPA professional
standards, Government Auditing Standards, and OMB Circular A-133.
Audit Procedures-Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of material
misstatement, we will perform tests of the City's compliance with applicable laws and regulations and
the provisions of contracts and agreements, including grant agreements. However, the objective of
those procedures will not be to provide an opinion on overall compliance and we will not express such
an opinion in our report on compliance issued pursuant to Government Auditing Standards.
If applicable, OMB Circular A-133 requires that we also plan and perform the audit to obtain reasonable
assurance about whether the auditee has complied with applicable laws and regulations and the
provisions of contracts and grant agreements applicable to major programs. Our procedures will consist
of tests of transactions and other applicable procedures described in the OMB Circular A-133
Compliance Supplement for the types of compliance requirements that could have a direct and material
effect on each of the City's major programs. The purpose of these procedures will be to express an
opinion on the City's compliance with requirements applicable to each of its major programs in our
report on compliance issued pursuant to OMB Circular A-133.
Audit Administration, Fees, and Other
We understand that your employees will prepare all cash, accounts receivable, or other confirmations
we request and will locate any documents selected by us for testing.
We will provide copies of our reports to the City; however, management is responsible for distribution of
the reports and the financial statements. Unless restricted by law or regulation, or containing privileged
and confidential information, copies of our reports are to be made available for public inspection.
2009-292
City of San Bernardino
City Council
July 9, 2009
Page 6
At the conclusion of the engagement, we will complete the appropriate sections of the Data Collection
Form that summarizes our audit findings. We will provide two copies (an original and print-ready master)
of our reports to the City; however, it is management's responsibility to submit the reporting package
(including financial statements, schedule of expenditures of federal awards, summary schedule of prior
audit findings, auditors' reports, and corrective action plan) along with the Data Collection Form to the
federal audit clearinghouse and, if appropriate, to pass-through entities. The Data Collection Form and
the reporting package must be submitted within the earlier of 30 days after receipt of the auditors'
reports or nine months after the end of the audit period, unless a longer period is agreed to in advance
by the cognizant or oversight agency for audits. At the conclusion of the engagement, we will provide
information to management as to where the reporting packages should be submitted and the number to
subrnit.
The audit documentation for this engagement is the property of Rogers, Anderson, Malody & Scott, LLP
and constitutes confidential information. However, pursuant to authority given by law or regulation, we
may be requested to make certain audit documentation available to any cognizant or oversight
agencies or its designee, a federal agency providing direct or indirect funding, or the U.S. Government
Accountability Office for purposes of a quality review of the audit, to resolve audit findings, or to carry
out oversight responsibilities. We will notify you of any such request. If requested, access to such audit
documentation will be provided under the supervision of our firm personnel. Furthermore, upon request,
we may provide copies of selected audit documentation to the aforementioned parties. These parties
may intend, or decide, to distribute the copies or information contained therein to others, including other
governmental agencies.
The audit documentation for this engagement will be retained for a minimum of five years after the
report release or for any additional period requested by any cognizant agencies, any oversight
agencies, or any pass-through entities. If we are aware that a federal awarding agency, pass-through
entity, or auditee is contesting an audit finding, we will contact the party(ies) contesting the audit finding
for guidance prior to destroying the audit documentation.
Our fee for these services will be at our standard hourly rates plus out-of-pocket costs (such as report
reproduction, word processing, postage, travel, copies, telephone, etc.) except that we agree that our
gross fee, including expenses, will not exceed $54,300 for 2009 and $55,900 for 2010. Our standard
hourly rates vary according to the degree of responsibility involved and the experience level of the
personnel assigned to your audit. Our invoices for these fees will be rendered each month as work
progresses and are payable on presentation. If we elect to terminate our services for nonpayment, our
engagement will be deemed to have been completed upon written notification of termination, even if we
have not completed our report(s). You will be obligated to compensate us for all time expended and to
reimburse us for all out-of-pocket costs through the date of termination. The above fee is based on
anticipated cooperation from your personnel and the assumption that unexpected circumstances will
not be encountered during the audit. If significant additional time is necessary, we will discuss it with
you and arrive at a new fee estimate before we incur the additional costs.
Government Auditing Standards require that we provide you with a copy of our most recent external
peer review report and any letter of comment, and any subsequent peer review reports and letters of
comment received during the period of the contract. Our 2005 peer review report accompanies this
letter.
2009-292
City of San Bernardino
City Council
July 9, 2009
Page 7
We appreciate the opportunity to be of service to the City of San Bernardino and believe this letter
accurately summarizes the significant terms of our engagement. If you have any questions, please let
us know. If you agree with the terms of our engagement as described in this letter, please sign the
enclosed copy and return it to us.
Very truly yours,
ROGERS, ANDERSON, MALODY & SCOTT, LLP
,~ /I~
Terry sa
RESPONSE:
This letter correctly sets forth the understanding of the City of San Bernardino.
By:
Title:
Date:
'"""-----.-.-...-..-......
. _.~.uuw_"'_"'...._._.~,.....,_"..,-"....,"_.'"'...".
2009-292
FOUNDERS
Lawrence $. Timpson, CPA (1891-1974)
LeVerne W. Garcia, CPA (1904-1983)
TIMPSON GARCIA LLP
CPAs AND CONSULTANTS
PARTNERS
Dennis S. Kaneshiro, CPA
Elaine Li!C Kawasaki, CPA
William E. May, CPA
Edgar Cagawan. CPA
August 16, 2006
To the Owners
Rogers, Anderson, Malody & Scott, LLP
CONSULTANT
william I. Boyle, CPA
FIRM ADMINISTRATOR
Liz Davis
We have reviewed the system of quality control for the accounting and auditing practice of Rogers, Anderson, Malody
& Scott, LLP (the firm) in effect for the year ended November 30, 2005. A system of quality control encompasses the
rum's organizational structure, the policies adopted and procedures established to provide it with reasonable assurance
of confonning with professional standards. The elements of quality control are described in the Statements on Quality
Control Standards issued by the American Institute of Certified Public Accountants (AICP A). The rum is responsible
for designing a system of quality control and complying with it to provide the firm reasonable assurance of conforming
with professional standards in all material respects. Our responsibility is to express an opinion on the design of the
system of quality control and the firm's compliance with its system of quality control based on our review.
Our review was conducted in accordance with standards established by the Peer Review Board of the AICP A. During
our review, we read required representations from the firm, interviewed firm personnel and obtained an understanding
of the nature of the firm's accounting and auditing practice, and the design of the firm's system of quality control
sufficient to assess the risks implicit in its practice. Based on our assessments, we selected engagements and
administrative files to test for confonnity with professional standards and compliance with the firm's system of quality
control. The engagements selected represented a reasonable cross-section of the firm's accounting and auditing practice
with emphasis on higher-risk engagements. The engagements selected included among others, audits of Employee
Benefit Plans and engagements performed under Government Auditing Staruklrds. Prior to concluding the review, we
reassessed the adequacy of the scOpe of the peer review procedures and met with firm management to discuss the
results of our review. We believe that the procedures we performed provide a reasonable basis for our opinion.
In perfonning our review, we obtained an understanding of the system of quality control for the firm's accounting and
auditing practice. In addition, we tested compliance with the firm's quality control policies and procedures to the
extent we considered appropriate. These tests covered the application of the firm's policies and procedures on selected
engagements. Our review was based on selected tests therefore it would not necessarily detect all weaknesses in the
system of quality control or all instances of noncompliance with it. There are inherent limitations in the effectiveness
of any system of quality control and therefore noncompliance with the system of quality control may occur and not be
detected. Projection of any evaluation of a system of quality control to future periods is subject to the risk that the
system of quality control may become inadequate because of changes in conditions, or because the degree of
compliance with the policies or procedures may deteriorate.
In our opinion, the system of quality control for the accounting and auditing practice of Rogers, Anderson, MalOOy &
Scott, LLP in effect for the year ended November 30, 2005, has been designed to meet the requirements of the quality
control standards for an accounting and auditing practice established by the AICP A and was complied with during the
year then ended to provide the rum with reasonable assurance of conforming with professional standards.
....-:1 _ ~ .
I (,~.~~o "~/LLP
Members of:
70 Washington Street. Suite 300
Oakland, CA 94607-3705
510.832.2325 or 800.941.2727
Fax 510.465.2979
A .
~
^ worldwide Network of Independent Firms
www.timpsongarcia.com