HomeMy WebLinkAbout2014-057 RESOLUTION NO. 2014-57
1
2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING THE EXECUTION OF AN AGREEMENT
3 BETWEEN THE CITY OF SAN BERNARDINO AND MACIAS, GINI & 0
CONNELL L.L.P. (MGO, CERTIFIED PUBLIC ACCOUNTANTS LLP) FOR THE
4 PROVISION OF FINANCIAL AUDITING SERVICES.
5
6 NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON
COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
7
8 SECTION 1. The City Manager is hereby authorized and directed to execute the
9 Financial Auditing Service Agreement with MGO Certified Public Accountants LLP, a copy
10 of which is attached and incorporated herein as Exhibit"A".
11 SECTION 2. The Director of Administrative Services is hereby authorized to issue a
12 Purchase Order to MGO Certified Public Accountants LLP for Financial Auditing Services for
13
an estimated amount of$218,086.
14
15 SECTION 3. The authorization granted hereunder shall expire and be void and of no
16 further effect if the Service Agreement for Financial auditing Services is not completed within
17 sixty(60) days following the effective date of the Resolution.
18 ///
19
///
20
21 ///
22 ///
23 ///
24 ///
25 ///
26
///
27
28 ///
2014-57
1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
2 SAN BERNARDINO AUTHORIZING THE EXECUTION OF AN AGREEMENT
BETWEEN THE CITY OF SAN BERNARDINO AND MACIAS, GINI & 0
3 CONNELL L.L.P. (MGO, CERTIFIED PUBLIC ACCOUNTANTS LLP) FOR THE
4 PROVISION OF FINANCIAL AUDITING SERVICES.
5 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor
6 and Common Council of the City of San Bernardino at a joint regular meeting
7 thereof, held on the 17thday of March , 2014, by the following vote, to wit:
8
9 Council Members: AYES NAYS ABSTAIN ABSENT
10 MARQUEZ x
11 BARRIOS x
12 VALDIVIA x
13 SHORETT
x
14
NICKEL x
15
16 JOHNSON x
17 MULVIHILL x
18
�t Q
19 George Hanna, 'ty Clerk
20
The foregoing Resolution is hereby approved this 17 day of March , 2014.
21
22
23 R. Carey D is, Mayor
City of San Bernardino
24
25 Approved as to form:
Gary D. Saenz, City Attorney
26
27 By:■•••-,., �.L� , . .��
28 4
2014-57
FINANCIAL AUDITING SERVICES AGREEMENT BETWEEN THE CITY OF SAN
BERNARDINO AND MACIAS, GINI & 0 CONNELL LLP
THIS AGREEMENT Auditing Services is made and entered into on this 17th day
of March, 2014 by and between the City of San Bernardino, a charter city ("CITY"), and Macias,
Gini & 0 Connell LLP (MGO, Certified Public Accountants LLP) ("AUDITORS").
WITNESSETH :
A. WHEREAS, CITY proposes to have AUDITORS perform the services described
herein below; and
B. WHEREAS, AUDITORS represents that it has that degree of specialized expertise
contemplated within California Government Code, Section 37103,and holds all necessary licenses
to practice and perform the services herein contemplated; and
C. WHEREAS, CITY and AUDITORS desire to contract for financial auditing
services as described in the Scope of Services, attached hereto as Exhibit "A"; and
D. WHEREAS, no official or employee of CITY has a financial interest, within the
provisions of California Government Code, Sections 1090-1092, in the subject matter of this
Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and conditions
contained herein, the parties hereby agree as follows:
1.0. SERVICES PROVIDED BY AUDITORS
1.1. Scope of Services. For the remuneration stipulated,AUDITORS shall provide the
professional services described in the Scope of Services attached hereto as Exhibit "A" and
incorporated herein by this reference. If a conflict arises between the Scope of Services and this
Professional Services Agreement (hereinafter "Agreement"), the terms of the Agreement shall
govern.
1.2. Professional Practices. All professional services to be provided by AUDITORS
pursuant to this Agreement shall be provided by skilled personnel and in a manner consistent with
the standards of care, diligence and skill ordinarily exercised by professional consultants in similar
fields and circumstances in accordance with sound professional practices. AUDITORS also
warrants that it is familiar with all laws that may affect its performance of this Agreement and shall
advise CITY of any changes in any laws that may affect AUDITORS' performance of this
Agreement. AUDITORS further represents that no CITY employee will provide any services
under this Agreement.
1.3. Warranty. AUDITORS warrants that it shall perform the services required by this
Agreement in compliance with all applicable Federal and California employment laws including,
1
2014-57
but not limited to,those laws related to minimum hours and wages; occupational health and safety;
fair employment and employment practices; workers' compensation insurance and safety in
employment; and all other Federal, State and local laws and ordinances applicable to the services
required under this Agreement. AUDITORS shall indemnify and hold harmless CITY from and
against all claims, demands, payments, suits, actions, proceedings, and judgments of every nature
and description including reasonable attorneys' fees and costs, presented, brought, or recovered
against CITY for, or on account of any liability under any of the above-mentioned laws, arising
from or related to AUDITORS 's performance under this Agreement.
1.4. Non-discrimination. In performing this Agreement,AUDITORS shall not engage
in, nor permit its officers, employees or agents to engage in, discrimination in employment of
persons because of their race, religion, color, national origin, ancestry, age, mental or physical
disability, medical condition, marital status, sexual gender or sexual orientation, except as
permitted pursuant to Section 12940 of the Government Code. Violation of this provision may
result in the imposition of penalties referred to in Labor Code, Section 1735.
1.5 Non-Exclusive Agreement. AUDITORS acknowledges that CITY may enter into
agreements with other consultants for services similar to the services that are subject to this
Agreement or may have its own employees perform services similar to those services
contemplated by this Agreement.
1.6. Delegation and Assignment. This is a personal service contract, and the duties set
forth herein shall not be delegated or assigned to any person or entity without the prior written
consent of CITY. AUDITORS may engage a subcontractor(s) as permitted by law and may
employ other personnel to perform services contemplated by this Agreement at AUDITORS 's sole
cost and expense.
1.7 Conflicts of Interest. During the term of this Agreement, AUDITORS shall at all
times maintain a duty of loyalty and a fiduciary duty as to the CITY and shall not accept payment
from or employment with any person or entity which will constitute a conflict of interest with the
CITY.
1.8 CITY Business Certificate. AUDITORS shall obtain and maintain during the
term of this Agreement, a valid CITY Business Registration Certificate pursuant to Title 5 of the
City of San Bernardino Municipal Code and any and all other licenses, permits, qualifications,
insurance and approvals of whatever nature that are legally required of AUDITORS to practice its
profession, skill or business.
2.0. COMPENSATION AND BILLING
2.1. Compensation.AUDITORS shall be compensated for work performed and the City
shall be billed once per month. Total estimated fee for audit services is approximately$218,086.
2.2. Additional Services. AUDITORS shall not receive compensation for any services
provided outside the Scope of Services unless the CITY, prior to AUDITORS performing the
2
2014-57
additional services, approves such additional services in writing and presented to the Audit
Committee for approval. It is specifically understood that oral requests and/or approvals of such
additional services or additional compensation shall be barred and are unenforceable.
2.3. Method of Billing. AUDITORS may submit invoices to CITY for approval.
Said invoice shall be based on the total of all AUDITORS's services which have been completed to
CITY's sole satisfaction. CITY shall pay AUDITORS 's invoice within forty-five (45) days from
the date CITY receives said invoice. The invoice shall describe in detail, the services performed
and the associated time for completion. Any additional services approved and performed
pursuant to this Agreement shall be designated as "Additional Services" and shall identify the
number of the authorized change order, where applicable, on all invoices.
2.4. Records and Audits. Records of AUDITORS 's services relating to this
Agreement shall be maintained in accordance with generally recognized accounting principles and
shall be made available to CITY for inspection and/or audit at mutually convenient times for a
period of three (3) years from the Effective Date.
3.0. TERM AND NOTIFICATION.
3.1. Term. This Agreement shall commence on the Effective Date and continue
through Fiscal Year ending June 30, 2015, unless the Agreement is previously terminated as
provided for herein.
3.2 Termination. CITY or AUDITORS may terminate the services provided under
Section 1.1 of this Agreement upon thirty(30) days written notice to the other party. In the event
of termination, AUDITORS shall be paid the reasonable value of services rendered to the date of
termination.
3.3 Documents. In the event of termination of this Agreement, all documents
prepared by AUDITORS in its performance of this Agreement shall be delivered to the CITY
within ten (10) days of delivery of termination notice to AUDITORS, at no cost to CITY. Any
use of uncompleted documents without specific written authorization from AUDITORS shall be at
CITY's sole risk and without liability or legal expense to AUDITORS.
4.0. INSURANCE
4.1. Minimum Scope and Limits of Insurance. AUDITORS shall obtain and maintain
during the term of this Agreement all of the following insurance coverages:
(a) Commercial general liability, including premises-operations,
products/completed operations, broad form property damage, blanket
contractual liability, independent contractors, personal injury with a policy
limit of not less than One Million Dollars($1,000,000.00), combined single
limits, per occurrence and aggregate.
3
2014-57
(b) Automobile liability for owned vehicles, hired, and non-owned vehicles,
with a policy limit of not less than One Million Dollars ($1,000,000.00),
combined single limits, per occurrence and aggregate.
(c) Workers' compensation insurance as required by the State of California.
4.2. Endorsements. The commercial general liability insurance policy shall contain or
be endorsed to contain the following provisions:
(a) Additional insureds: "The City of San Bernardino and its elected and
appointed boards, officers, agents, and employees are additional insureds
with respect to this subject project and contract with City."
(b) Notice: "Said policy shall not terminate, nor shall it be materially changed
or cancelled, nor the coverage reduced, until thirty (30) days after written
notice is given to City."
(c) Other insurance: "Any other insurance maintained by the City of San
Bernardino shall be excess and not contributing with the insurance provided
by this policy."
4.3. Certificates of Insurance. AUDITORS shall provide to CITY certificates of
insurance showing the insurance coverages and required endorsements described above, in a form
and content approved by CITY, prior to performing any services under this Agreement.
4.4. Non-limiting. Nothing in this Section shall be construed as limiting in any way,
the indemnification provision contained in this Agreement, or the extent to which AUDITORS
may be held responsible for payments of damages to persons or property.
5.0. GENERAL PROVISIONS
5.1. Entire Agreement: This Agreement constitutes the entire Agreement between the
parties with respect to any matter referenced herein and supersedes any and all other prior writings
and oral negotiations. This Agreement may be modified only in writing,and signed by the parties
in interest at the time of such modification. The terms of this Agreement shall prevail over any
inconsistent provision in any other contract document appurtenant hereto, including exhibits to
this Agreement.
5.2. Notices. Any notices, documents, correspondence or other communications
concerning this Agreement or the work hereunder may be provided by personal delivery, facsimile
or mail and shall be addressed as set forth below. Such communication shall be deemed served or
delivered: a) at the time of delivery if such communication is sent by personal delivery; b) at the
time of transmission if such communication is sent by facsimile; and c) 48 hours after deposit in
the U.S. Mail as reflected by the official U.S. postmark if such communication is sent through
regular United States mail.
4
2014-57
IF TO CONSULTANT: IF TO CITY:
MGO Certified Public Accountants LLP City Manager
777 South Figueroa Street, Ste 2500 300 North"D" Street
Los Angeles, CA 90017 San Bernardino, CA 92418
Telephone: (213) 408-8666 Telephone: (909) 384-5122
Facsimile: (909) 384-5138
5.3. Attorneys' Fees: In the event that litigation is brought by any party in connection
with this Agreement, the prevailing party shall be entitled to recover from the opposing party all
costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party in the
exercise of any of its rights or remedies hereunder or the enforcement of any of the terms,
conditions, or provisions hereof The costs, salary and expenses of the City Attorney and
members of his office in enforcing this contract on behalf of the CITY shall be considered as
"attorneys' fees" for the purposes of this Agreement.
5.4. Governing Law. This Agreement shall be governed by and construed under the
laws of the State of California without giving effect to that body of laws pertaining to conflict of
laws. In the event of any legal action to enforce or interpret this Agreement, the parties hereto
agree that the sole and exclusive venue shall be a court of competent jurisdiction located in San
Bernardino County, California.
5.5. Assignment: AUDITORS shall not voluntarily or by operation of law assign,
transfer, sublet or encumber all or any part of AUDITORS's interest in this Agreement without
CITY's prior written consent. Any attempted assignment, transfer, subletting or encumbrance
shall be void and shall constitute a breach of this Agreement and cause for termination of this
Agreement. Regardless of CITY's consent, no subletting or assignment shall release AUDITORS
of AUDITORS's obligation to perform all other obligations to be performed by AUDITORS
hereunder for the term of this Agreement.
5.6. Indemnification and Hold Harmless. AUDITORS shall protect, defend,
indemnify and hold harmless CITY and its elected and appointed officials, boards, commissions,
officers, attorneys, agents and employees from any and all claims, losses, demands, suits,
administrative actions, penalties, liabilities and expenses, including reasonable attorney fees,
damage to property or injuries to or death of any person or persons or damages of any nature
including, but not limited to, all civil claims or workers' compensation claims arising from or in
any way related to AUDITORS's performance under this Agreement, except when caused solely
by the CITY's negligence.
5.7. Independent Contractor. AUDITORS, at all times while performing under this
Agreement, is and shall be acting at all times as an independent contractor and not as an agent or
employee of CITY. AUDITORS shall secure, at its expense, and be responsible for any and all
payment of wages, benefits and taxes including, but not limited to, Income Tax, Social Security,
5
2014-57
State Disability Insurance Compensation, Unemployment Compensation, and other payroll
deductions for AUDITORS and its officers, agents, and employees, and all business licenses, if
any are required, in connection with the services to be performed hereunder. Neither
AUDITORS nor its officers, agents and employees shall be entitled to receive any benefits which
employees of CITY are entitled to receive and shall not be entitled to workers' compensation
insurance, unemployment compensation, medical insurance, life insurance, paid vacations, paid
holidays, pension, profit sharing or social security on account of AUDITORS and its officers',
agents' and employees' work for the CITY. This Agreement does not create the relationship of
agent, servant, employee partnership or joint venture between the CITY and AUDITORS.
5.8 Conflict of Interest Disclosure: AUDITORS or its employees maybe subject to the
provisions of the California Political Reform Act of 1974 (the "Act"), which (1) requires such
persons to disclose financial interests that may be materially affected by the work performed under
this Agreement, and (2) prohibits such persons from making or participating in making decisions
that will have a foreseeable financial effect on such interest.
AUDITORS shall conform to all requirements of the Act. Failure to do so
constitutes a material breach and is grounds for termination of the Agreement by CITY.
5.9. Responsibility for Errors. AUDITORS shall be responsible for its work and
results under this Agreement. AUDITORS, when requested, shall furnish clarification and/or
explanation as may be required by the CITY's representative, regarding any services rendered
under this Agreement at no additional cost to CITY. In the event that an error or omission
attributable to AUDITORS occurs, then AUDITORS shall, at no cost to CITY, provide all other
AUDITORS professional services necessary to rectify and correct the matter to the sole
satisfaction of CITY and to participate in any meeting required with regard to the correction.
5.10. Prohibited Employment. AUDITORS shall not employ any current employee of
CITY to perform the work under this Agreement while this Agreement is in effect.
5.11. Costs. Each party shall bear its own costs and fees incurred in the preparation and
negotiation of this Agreement and in the performance of its obligations hereunder except as
expressly provided herein.
5.12. No Third Party Beneficiary Rights. This Agreement is entered into for the sole
benefit of CITY and AUDITORS and no other parties are intended to be direct or incidental
beneficiaries of this Agreement and no third party shall have any right in, under or to this
Agreement.
5.13. Headings Paragraphs and subparagraph headings contained in this Agreement are
included solely for convenience and are not intended to modify, explain or to be a full or accurate
description of the content thereof and shall not in any way affect the meaning or interpretation of
this Agreement.
6
2014-57
5.14. Amendments. Only a writing executed by all of the parties hereto or their
respective successors and assigns may amend this Agreement.
5.15. Waiver. The delay or failure of either party at any time to require performance or
compliance by the other of any of its obligations or agreements shall in no way be deemed a waiver
of those rights to require such performance or compliance. No waiver of any provision of this
Agreement shall be effective unless in writing and signed by a duly authorized representative of
the party against whom enforcement of a waiver is sought. The waiver of any right or remedy
with respect to any occurrence or event shall not be deemed a waiver of any right or remedy with
respect to any other occurrence or event, nor shall any waiver constitute a continuing waiver.
5.16. Severability. If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable for any reason, such determination shall not
affect the validity or enforceability of the remaining terms and provisions hereof or of the
offending provision in any other circumstance, and the remaining provisions of this Agreement
shall remain in full force and effect.
5.17. Counterparts: This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original. All counterparts shall be construed together and shall
constitute one agreement.
5.18. Corporate Authority. The persons executing this Agreement on behalf of the parties
hereto warrant that they are duly authorized to execute this Agreement on behalf of said parties and
that by doing so, the parties hereto are formally bound to the provisions of this Agreement.
///
///
///
2014-57
FINANCIAL AUDITING SERVICES AGREEMENT BETWEEN THE CITY OF SAN
BERNARDINO AND MACIAS, GINI & 0 CONNELL LLP
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and
through their respective authorized officers, as of the date first above written.
CITY OF SAN BERNARDINO, AUDITORS
A Municipal Corporation
Allen J. Parker, City Manager Signature
Jim Godsey, CPA, CGMA, Partner
ATTEST:
Georgeann"Gigi" Hanna, City Clerk
APPROVED AS TO FORM:
Gary D. Saenz,
City Attorney
8
2014-57
FINANCIAL AUDITING SERVICES AGREEMENT BETWEEN THE CITY OF SAN
BERNARDINO AND MACIAS, GINI & 0 CONNELL LLP
THIS AGREEMENT Auditing Services is made and entered into on this 17th day
of March, 2014 by and between the City of San Bernardino, a charter city ("CITY"), and Macias,
Gini & 0 Connell LLP (MGO, Certified Public Accountants LLP) ("AUDITORS").
WITNESSETH :
A. WHEREAS, CITY proposes to have AUDITORS perform the services described
herein below; and
B. WHEREAS, AUDITORS represents that it has that degree of specialized expertise
contemplated within California Government Code, Section 37103, and holds all necessary licenses
to practice and perform the services herein contemplated; and
C. WHEREAS, CITY and AUDITORS desire to contract for financial auditing
services as described in the Scope of Services, attached hereto as Exhibit "A"; and
D. WHEREAS, no official or employee of CITY has a financial interest, within the
provisions of California Government Code, Sections 1090-1092, in the subject matter of this
Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and conditions
contained herein,the parties hereby agree as follows:
1.0. SERVICES PROVIDED BY AUDITORS
1.1. Scope of Services. For the remuneration stipulated,AUDITORS shall provide the
professional services described in the Scope of Services attached hereto as Exhibit "A" and
incorporated herein by this reference. If a conflict arises between the Scope of Services and this
Professional Services Agreement (hereinafter "Agreement"), the terms of the Agreement shall
govern.
1.2. Professional Practices. All professional services to be provided by AUDITORS
pursuant to this Agreement shall be provided by skilled personnel and in a manner consistent with
the standards of care,diligence and skill ordinarily exercised by professional consultants in similar
fields and circumstances in accordance with sound professional practices. AUDITORS also
warrants that it is familiar with all laws that may affect its performance of this Agreement and shall
advise CITY of any changes in any laws that may affect AUDITORS' performance of this
Agreement. AUDITORS further represents that no CITY employee will provide any services
under this Agreement.
1.3. Warranty. AUDITORS warrants that it shall perform the services required by this
Agreement in compliance with all applicable Federal and California employment laws including,
2014-57
but not limited to,those laws related to minimum hours and wages;occupational health and safety;
fair employment and employment practices; workers' compensation insurance and safety in
employment; and all other Federal, State and local laws and ordinances applicable to the services
required under this Agreement. AUDITORS shall indemnify and hold harmless CITY from and
against all claims, demands, payments, suits, actions, proceedings, and judgments of every nature
and description including reasonable attorneys' fees and costs, presented, brought, or recovered
against CITY for, or on account of any liability under any of the above-mentioned laws, arising
from or related to AUDITORS 's performance under this Agreement.
1.4. Non-discrimination. In performing this Agreement,AUDITORS shall not engage
in, nor permit its officers, employees or agents to engage in, discrimination in employment of
persons because of their race, religion, color, national origin, ancestry, age, mental or physical
disability, medical condition, marital status, sexual gender or sexual orientation, except as
permitted pursuant to Section 12940 of the Government Code. Violation of this provision may
result in the imposition of penalties referred to in Labor Code, Section 1735.
1.5 Non-Exclusive Agreement. AUDITORS acknowledges that CITY may enter into
agreements with other consultants for services similar to the services that are subject to this
Agreement or may have its own employees perform services similar to those services
contemplated by this Agreement.
1.6. Delegation and Assignment. This is a personal service contract, and the duties set
forth herein shall not be delegated or assigned to any person or entity without the prior written
consent of CITY. AUDITORS may engage a subcontractor(s) as permitted by law and may
employ other personnel to perform services contemplated by this Agreement at AUDITORS's sole
cost and expense.
1.7 Conflicts of Interest. During the term of this Agreement, AUDITORS shall at all
times maintain a duty of loyalty and a fiduciary duty as to the CITY and shall not accept payment
from or employment with any person or entity which will constitute a conflict of interest with the
CITY.
1.8 CITY Business Certificate. AUDITORS shall obtain and maintain during the
term of this Agreement, a valid CITY Business Registration Certificate pursuant to Title 5 of the
City of San Bernardino Municipal Code and any and all other licenses, permits, qualifications,
insurance and approvals of whatever nature that are legally required of AUDITORS to practice its
profession, skill or business.
2.0. COMPENSATION AND BILLING
2.1. Compensation. AUDITORS shall be compensated for work performed and the City
shall be billed once per month. Total estimated fee for audit services is approximately $218,086.
2.2. Additional Services. AUDITORS shall not receive compensation for any services
provided outside the Scope of Services unless the CITY, prior to AUDITORS performing the
2
2014-57
additional services, approves such additional services in writing and presented to the Audit
Committee for approval. It is specifically understood that oral requests and/or approvals of such
additional services or additional compensation shall be barred and are unenforceable.
2.3. Method of Billing. AUDITORS may submit invoices to CITY for approval.
Said invoice shall be based on the total of all AUDITORS's services which have been completed to
CITY's sole satisfaction. CITY shall pay AUDITORS 's invoice within forty-five (45) days from
the date CITY receives said invoice. The invoice shall describe in detail, the services performed
and the associated time for completion. Any additional services approved and performed
pursuant to this Agreement shall be designated as "Additional Services" and shall identify the
number of the authorized change order, where applicable, on all invoices.
2.4. Records and Audits. Records of AUDITORS 's services relating to this
Agreement shall be maintained in accordance with generally recognized accounting principles and
shall be made available to CITY for inspection and/or audit at mutually convenient times for a
period of three (3) years from the Effective Date.
3.0. TERM AND NOTIFICATION.
3.1. Term. This Agreement shall commence on the Effective Date and continue
through Fiscal Year ending June 30, 2015, unless the Agreement is previously terminated as
provided for herein.
3.2 Termination. CITY or AUDITORS may terminate the services provided under
Section 1.1 of this Agreement upon thirty(30)days written notice to the other party. In the event
of termination, AUDITORS shall be paid the reasonable value of services rendered to the date of
termination.
3.3 Documents. In the event of termination of this Agreement, all documents
prepared by AUDITORS in its performance of this Agreement shall be delivered to the CITY
within ten (10) days of delivery of termination notice to AUDITORS, at no cost to CITY. Any
use of uncompleted documents without specific written authorization from AUDITORS shall be at
CITY's sole risk and without liability or legal expense to AUDITORS.
4.0. INSURANCE
4.1. Minimum Scope and Limits of Insurance. AUDITORS shall obtain and maintain
during the term of this Agreement all of the following insurance coverages:
(a) Commercial general liability, including premises-operations,
products/completed operations, broad form property damage, blanket
contractual liability, independent contractors, personal injury with a policy
limit of not less than One Million Dollars($1,000,000.00),combined single
limits, per occurrence and aggregate.
3
2014-57
(b) Automobile liability for owned vehicles, hired, and non-owned vehicles,
with a policy limit of not less than One Million Dollars ($1,000,000.00),
combined single limits, per occurrence and aggregate.
(c) Workers' compensation insurance as required by the State of California.
4.2. Endorsements. The commercial general liability insurance policy shall contain or
be endorsed to contain the following provisions:
(a) Additional insureds: "The City of San Bernardino and its elected and
appointed boards, officers, agents, and employees are additional insureds
with respect to this subject project and contract with City."
(b) Notice: "Said policy shall not terminate,nor shall it be materially changed
or cancelled, nor the coverage reduced, until thirty (30) days after written
notice is given to City."
(c) Other insurance: "Any other insurance maintained by the City of San
Bernardino shall be excess and not contributing with the insurance provided
by this policy."
4.3. Certificates of Insurance. AUDITORS shall provide to CITY certificates of
insurance showing the insurance coverages and required endorsements described above, in a form
and content approved by CITY, prior to performing any services under this Agreement.
4.4. Non-limiting. Nothing in this Section shall be construed as limiting in any way,
the indemnification provision contained in this Agreement, or the extent to which AUDITORS
may be held responsible for payments of damages to persons or property.
5.0. GENERAL PROVISIONS
5.1. Entire Agreement: This Agreement constitutes the entire Agreement between the
parties with respect to any matter referenced herein and supersedes any and all other prior writings
and oral negotiations. This Agreement may be modified only in writing,and signed by the parties
in interest at the time of such modification. The terms of this Agreement shall prevail over any
inconsistent provision in any other contract document appurtenant hereto, including exhibits to
this Agreement.
5.2. Notices. Any notices, documents, correspondence or other communications
concerning this Agreement or the work hereunder may be provided by personal delivery,facsimile
or mail and shall be addressed as set forth below. Such communication shall be deemed served or
delivered: a) at the time of delivery if such communication is sent by personal delivery; b) at the
time of transmission if such communication is sent by facsimile; and c) 48 hours after deposit in
the U.S. Mail as reflected by the official U.S. postmark if such communication is sent through
regular United States mail.
4
2014-57
IF TO CONSULTANT: IF TO CITY:
MGO Certified Public Accountants LLP City Manager
777 South Figueroa Street, Ste 2500 300 North"D" Street
Los Angeles, CA 90017 San Bernardino, CA 92418
Telephone: (213) 408-8666 Telephone: (909) 384-5122
Facsimile: (909) 384-5138
5.3. Attorneys' Fees: In the event that litigation is brought by any party in connection
with this Agreement, the prevailing party shall be entitled to recover from the opposing party all
costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party in the
exercise of any of its rights or remedies hereunder or the enforcement of any of the terms,
conditions, or provisions hereof The costs, salary and expenses of the City Attorney and
members of his office in enforcing this contract on behalf of the CITY shall be considered as
"attorneys' fees" for the purposes of this Agreement.
5.4. Governing Law. This Agreement shall be governed by and construed under the
laws of the State of California without giving effect to that body of laws pertaining to conflict of
laws. In the event of any legal action to enforce or interpret this Agreement, the parties hereto
agree that the sole and exclusive venue shall be a court of competent jurisdiction located in San
Bernardino County, California.
5.5. Assignment: AUDITORS shall not voluntarily or by operation of law assign,
transfer, sublet or encumber all or any part of AUDITORS's interest in this Agreement without
CITY's prior written consent. Any attempted assignment, transfer, subletting or encumbrance
shall be void and shall constitute a breach of this Agreement and cause for termination of this
Agreement. Regardless of CITY's consent, no subletting or assignment shall release AUDITORS
of AUDITORS's obligation to perform all other obligations to be performed by AUDITORS
hereunder for the term of this Agreement.
5.6. Indemnification and Hold Harmless. AUDITORS shall protect, defend,
indemnify and hold harmless CITY and its elected and appointed officials, boards, commissions,
officers, attorneys, agents and employees from any and all claims, losses, demands, suits,
administrative actions, penalties, liabilities and expenses, including reasonable attorney fees,
damage to property or injuries to or death of any person or persons or damages of any nature
including, but not limited to, all civil claims or workers' compensation claims arising from or in
any way related to AUDITORS's performance under this Agreement, except when caused solely
by the CITY's negligence.
5.7. Independent Contractor. AUDITORS, at all times while performing under this
Agreement, is and shall be acting at all times as an independent contractor and not as an agent or
employee of CITY. AUDITORS shall secure, at its expense, and be responsible for any and all
payment of wages, benefits and taxes including, but not limited to, Income Tax, Social Security,
5
2014-57
State Disability Insurance Compensation, Unemployment Compensation, and other payroll
deductions for AUDITORS and its officers, agents, and employees, and all business licenses, if
any are required, in connection with the services to be performed hereunder. Neither
AUDITORS nor its officers, agents and employees shall be entitled to receive any benefits which
employees of CITY are entitled to receive and shall not be entitled to workers' compensation
insurance, unemployment compensation, medical insurance, life insurance, paid vacations, paid
holidays, pension, profit sharing or social security on account of AUDITORS and its officers',
agents' and employees' work for the CITY. This Agreement does not create the relationship of
agent, servant, employee partnership or joint venture between the CITY and AUDITORS.
5.8 Conflict of Interest Disclosure: AUDITORS or its employees may be subject to the
provisions of the California Political Reform Act of 1974 (the "Act"), which (1) requires such
persons to disclose financial interests that may be materially affected by the work performed under
this Agreement, and (2) prohibits such persons from making or participating in making decisions
that will have a foreseeable financial effect on such interest.
AUDITORS shall conform to all requirements of the Act. Failure to do so
constitutes a material breach and is grounds for termination of the Agreement by CITY.
5.9. Responsibility for Errors. AUDITORS shall be responsible for its work and
results under this Agreement. AUDITORS, when requested, shall furnish clarification and/or
explanation as may be required by the CITY's representative, regarding any services rendered
under this Agreement at no additional cost to CITY. In the event that an error or omission
attributable to AUDITORS occurs, then AUDITORS shall, at no cost to CITY, provide all other
AUDITORS professional services necessary to rectify and correct the matter to the sole
satisfaction of CITY and to participate in any meeting required with regard to the correction.
5.10. Prohibited Employment. AUDITORS shall not employ any current employee of
CITY to perform the work under this Agreement while this Agreement is in effect.
5.11. Costs. Each party shall bear its own costs and fees incurred in the preparation and
negotiation of this Agreement and in the performance of its obligations hereunder except as
expressly provided herein.
5.12. No Third Party Beneficiary Rights. This Agreement is entered into for the sole
benefit of CITY and AUDITORS and no other parties are intended to be direct or incidental
beneficiaries of this Agreement and no third party shall have any right in, under or to this
Agreement.
5.13. Headings Paragraphs and subparagraph headings contained in this Agreement are
included solely for convenience and are not intended to modify, explain or to be a full or accurate
description of the content thereof and shall not in any way affect the meaning or interpretation of
this Agreement.
6
2014-57
5.14. Amendments. Only a writing executed by all of the parties hereto or their
respective successors and assigns may amend this Agreement.
5.15. Waiver. The delay or failure of either party at any time to require performance or
compliance by the other of any of its obligations or agreements shall in no way be deemed a waiver
of those rights to require such performance or compliance. No waiver of any provision of this
Agreement shall be effective unless in writing and signed by a duly authorized representative of
the party against whom enforcement of a waiver is sought. The waiver of any right or remedy
with respect to any occurrence or event shall not be deemed a waiver of any right or remedy with
respect to any other occurrence or event, nor shall any waiver constitute a continuing waiver.
5.16. Severability. If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable for any reason, such determination shall not
affect the validity or enforceability of the remaining terms and provisions hereof or of the
offending provision in any other circumstance, and the remaining provisions of this Agreement
shall remain in full force and effect.
5.17. Counterparts: This Agreement maybe executed in one or more counterparts,each
of which shall be deemed an original. All counterparts shall be construed together and shall
constitute one agreement.
5.18. Corporate Authority. The persons executing this Agreement on behalf of the parties
hereto warrant that they are duly authorized to execute this Agreement on behalf of said parties and
that by doing so, the parties hereto are formally bound to the provisions of this Agreement.
///
///
///
7
•
' 2014-57
FINANCIAL AUDITING SERVICES AGREEMENT BETWEEN THE CITY OF SAN
BERNARDINO AND MACIAS, GINI & 0 CONNELL LLP
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and
through their respective authorized officers, as of the date first above written.
CITY OF SAN BERNARDINO, AUDITORS
A Municipal Corporation
Alle i. Parker, City Manager Sig ature
Jim Godsey, CPA, CGMA, Partner
ATTEST:
(_2d1-4-' ' -1 614fAC,--
Georgeann" if_i" Hanna, ity Clerk
APPROVED AS TO FORM:
Gary D. Saenz,
City Attorney
By: !_. •._._ 51,x-2
8
2014-57
3
EXHIBIT A
Proud To Be
Boring Accountants:
a
3
311.
3-
31
3 Strengthen your
City with an
i •.
ironclad audit.
1
Proposal for Professional
AuditingServices(F44-04)
City of San Bernardfna,
X
July 23,2013
3
Prepared fo- .:-)..by:
James V.Godsey,CPA/Partner
Call:213.4D8.E666
EmaU:jgodseyrrgocpa.corn
777 South FighJerca Street Su to MO
.. ..- ,,
7 , .
1 '' - .'1:44%; '''''''''' , r
:
A i W
•te- i **1 , f- 'j - - ' , r----'-' '
... , .
ilfft0 ir ' it. .,_. ; . , _ _.
, . 1 h ;44.
;
I i
I f 1 7 1 41 II
;
i, „
t tg I ii 1 1(4
1.4
,..,1
• .t, . ! :„
•,, - . _ '
_ • ,,
I f.
c. _ . ... ........
,..„., ....1,....7
.„. .
1
. 2014-57
I
II
SPECIFIC AUDIT APPROACH
II
II We tinclerstand
I
1 your needs.
We will provide an audit plan that is • Annual Financial Statement Audits: • Audit of the San Bernardino
complete,clear and descriptive and We will audit City's basic comparative Successor Agency:Plans for the audit
realistic,thus forming the basis by financial statements and express an of the Agency's financial statements.
which audit progress can be measured. opinion on the fair presentation of
Frequent communication is required the City's basic financial statements, Overview
for the audit plan to be an effective in conformity with generally accepted The Successor Agency to the
management tool.We will meet with the accounting principles(GAAP)and Redevelopment Agency of the City of
appropriate management personnel on generally accepted government San Bernardino(Successor Agency)
a regular basis to report the progress of auditing standards(GAGAS).In was formed January 31,2012,as a
is We audits,and any preliminary findings. addition,we will express an"in- result of the dissolution of California
We expect the City to communicate any relation-to"opinion on the supporting redevelopment agencies,and is
III foreseeable delays in the delivery of schedules based on the auditing reported as a private purpose trust in
accounting records,financial statements, procedures applied during the audit of the CAFR. The significant activity of
111 and/or other documents needed to the BFS. the Successor Agency is the receipt
complete our work. of property tax apportionment
• Single Audit We will perform a distributions every six months based
In the event that circumstances warrant Single Audit in accordance with the on the approved recognized obligation
more extensive and detailed services federal Single Audit Act of 1984, payment schedule(ROPS)submitted to
lit beyond those in the contractual Single Audit Act Amendments of the California Department of Finance
agreement,we shall provide in writing 1996;the provisions of U.S.Office (DOF),and payments of enforceable
1 and in advance the reasons for the of Management and Budget(OMB) obligations,including debt service.
additional services together with our Circular A-133,Audits of States,
g estimate of costs.No additional work will Local Governments and Non-Profit Approach
be performed without advance approval Organizations and the related Our audit will include the following:
II by the City. compliance supplement for Single • Planning—We will inquire about
Audits of State and Local Governments. any communications received
g Scope otServtces The following reports will be issued: from the DOF to evaluate the
MGO will provide the following auditing • Opinion on the schedule of impact on current year activity and
i services beginning with the fiscal year expenditures of federal awards in disclosures. We will also develop
ending June 30,2013: relation to the general purpose an audit plan in response to our
It financial statements of the risk assessment of current activities
• City's Annual Financial Metropolitan taken as a whole. and changes in legislation.
E Statement Audit • Opinion on the Metropolitan's • Testing-We will compare the
• Annual Single Audit compliance with laws,regulations, names of payees paid during
• Redevelopment Agency contracts and grant agreements the fiscal year to those approved
g Successor Agency that have a direct and material on the ROPS and confirm that
• GANN Limit Review effect on each major Federal award. balances of cash,debt and
g • Apppropriations limit • Communicate considerations of the amount of property tax
• Attendance at Board of Directors and internal control over the financial distributions received during the
It Other Meetings reporting and compliance. fiscal year. Further;we will test for
compliance with certain laws and
It We will assist in the preparation of: regulations,including Assembly
• Summary schedule of prior audit Bills 1x26 and 1484,that may have
■
findings a material impact on the Successor
• Corrective action plan Agency financial statements.
1 • Data collection form
1
:, ,ti..a..isaa ..e: 29
I
2014-57
k
t
SPECIFIC AUDIT APPROACH Y`
i
It
• Reporting-We will obtain • Attendance at Board of Directors OtherRequiredServices-We are proud
the statement of net assets, and Other Meetings: MGO's of our record of being well-informed
statement of changes in net representatives shall attend meetings with regard to the government sector
assets,and disclosures for the of City's Council,or its committees, and the changes in auditing standards
Successor Agency and review primarily meetings of the Audit and that may occur throughout the course of
for appropriateness of activity Ethics Committee,whenever requested providing audit services to our dients.
and disclosure reported. We will by City's General Auditor,General MGO's professionals continue to have
review any determinations from Manager,General Counsel,or the a presence in both State and federal
the DOF and the results of any Council.In addition to the City Council, levels of government,as well as at the
meet and confers with the State for or committee meetings.If required, regional level.We will acquire prompt
possible contingency disclosures then MGO representatives will attend and pertinent responses to inquiries that g
in the notes to the financial or participate in other staff meetings may arise from a technical or procedural
statements.. upon the request of City's General standpoint,over the development of our
Auditor,General Manager,and General engagement with the City. Our liaison
• Agreed Upon Procedures to report Counsel or their designees. relationship with GASB,the AICPA,
on the City's GANN appropriation • Report on Internal Controls:We GFOA and ASB will allow us to obtain
limit calculation: We will perform will present to the City's Council and precise,relevant information necessary
agreed-upon procedures to test Senior Management,findings and to provide exceptional communication
and report on the City's GANN recommendations noted during the and audit services to you.We will present g
appropriation limitation calculation in course of our audit that improve or matters or topics which may be of
accordance with attestation standards correct,as necessary,any accounting interest to the accounting and financial
established by the American Institute controls and/or management practices reporting personnel of the Metropolitan
of Certified Public Accountants. of the City. related to government auditing and It
accounting. Topics that may be covered
• Agreed Upon Procedures to report • We will address systems of internal include updates on generally accepted g
on the City's Proposition 111 control;accounting and financial accounting principles(GAAP),generally
Appropriations Limit Compliance systems,functions,procedures accepted auditing standards(GAAS),
Report:We will perform agreed-upon and processes,especially related OMB Circular revisions,recent GASB
procedures to test and report on the to cost effectiveness,compliance pronouncements,changes in business
It
City's Proposition 111 Appropriations with laws,regulations,contracts and trends relating to the Metropolitan and
Limit Compliance Report in accordance grants;and responses of the City to other authoritative procedures. We will
II
with attestation standards established recommendations from the prior year. also provide information encompassing
by the American Institute of Certified It is our policy to discuss all findings GAAP and GAAS related topics. t
Public Accountants. and recommendations with the
appropriate management personnel Required Cortuntudcations
• Annual Letter of Recommendations prior to inclusion in our letter. Professional standards require us II
to Management: MGO will prepare to communicate any instances of
and submit an annual Letter of irregularities and illegal acts or
Recommendation to Management at indications of illegal acts to the City's
the conclusion of each of the annual staff and City Council(Council). Also, It
financial statement audits. The professional standards require that
letter will summarize any significant we communicate other information I
observations or findings noted by specifically related to the audit
MGO during the conduct of the annual engagement. We will ensure that our It
audit together with MGO's related communications to the Council meet
recommendations for improvements these requirements. I
or Management corrective actions.We
will submit such letters to Management It
more frequently than annually if the
circumstances dictate.
I
I
illi
30 rrwes•a.a.r:.sa•o«ast•r•
I
2014-57
r:
ri
SPECIFIC AUDIT APPROACH
Hours
IN Our team intends to commit at least the number of hours detailed in the chart at right. A more detailed breakdown of the
hours by component unit is included in the Cost proposal. We would be happy to assist the City with additional projects,
as requested,above and beyond the hours committed for the audits.
•
NAnnual S2''
Financi;,l B:rnorc'ino SHnalc Audit GANN Li tilt Arprorn;iti:n'
ToUl
I' Succasscry Rcport" Rcviev: Lim1
Statements
Agency
1 Planning and Interim Fieldwork
Project Partner 20 2 2 - - . 24
I Technical Review Partner 5 - - - - 5
Engagement Director 30 3 3 1 1 38
• IT Consulting Director 20 - - - - 20
Engagement Manager 30 3 8 1 2 44
Audit Seniors) 45 5 15 1 1 67
I Semi Senior a and Staff 30 5 25 1 1 62
Roan oo am Int=_or,Fic'Dr.'co:Totr,I 180 18 53 4 5 260
Year-End Fieldwork
Project Partner 20 1 5 - - 26
Technical Review Partner 5 - - - - 5
Engagement Director 40 3 5 1 1 50
IT Consulting Director 15 - - - - 15
Project Manager 60 4 25 1 2 92
Il Audit Senior(s) 75 15 75 3 3 171
Semi Seniors end Staff 190 20 290 10 10 520
1 'lc:ar-End Frelowor'-Total 405 43 400 15 16 879
mimei■Na.a awwww■nnawswimmm■w
0 Report Production/Presentation
Project Partner 20 2 2 1 1 26
Technical Review Partner 15 2 4 1 1 23
II Engagement Director 20 3 - - - 23
IT Consulting Director 1 - - 1 1 3
1 Project Manager 40 4 10 1 1 56
Audit Senior(s) 50 5 15 1 2 73
Semi Seniors and Staff 60 - 20 1 2 83
Report Pro duct;onrPres,ntafion Total 206 16 51 6 8 287
791 77. 504, 25 29,' 1,426
1
I
I
I
I
w
I
I
r..ostra.a..r.sac.....1.: 31
I
2014-57
I
IDENTIFICATION OF POTENTIAL AUDIT PROBLEMS
Mu icipallBankkrupt g Chapter 9
The City faces numerous challenges in the determination of its financial obligations as a settlement plan is finalized under
the Chapter 9 filing. Significant effort will be expended in understanding the nature of the various settlements that have
been put in place as of June 30,2013 in an effort to evaluate the adequacy of management disclosures. Areas of impact
include the following:
1 • Collective bargaining agreements
• Secured and unsecured debt obligations
• General obligations of the City
• Use of special revenues and special assessments to pay general obligation debt and
• Obligations for Retirement and OPEB
t Going Concern
Audit standards require that the independent auditor conclude on the ability of the entity to continue in business for a
period of one year after the balance sheet date. This will require the auditor to review documents that demonstrate the
City's budgetary,cash flow and legal documents to ascertain that show an ability to sustain operations. The absence of
such documentation will result in the auditor including a matter of emphasis paragraph in their report.
! Recent Developments in Accounting and Reporting
The following is a summary of the more recent and relevant accounting and reporting developments,which may have a
significant impact on the City's upcoming basic financial statements.We will have ongoing discussions with management
about these as well as other developments in an effort to be prepared in advance for their implementation.
The Governmental Accounting Standards Board(GASB)standards that are required to be implemented for the City's 2013
CAFR include the following:
• GASB Statement No.60,Accounting and Financial Reporting for Service Concession Arrangements(GASB No.60);
• GASB Statement No.61, The Financial Reporting Entity:Omnibus,an amendment of GASB Statements No. 14 and No.34
a (GASB No.61);
• GASB Statement No.62,Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30,
7989 FASB and AICPA Pronouncements(GASB No.62);and
• GASB Statement No.63, Financial Reporting of Deferred Outflows of Resources,Deferred inflows of Resources,and Net
Position(GASB No.63),which the City early implemented during fiscal year 2012.
Also the City may choose early implementation of GASB Statement No.65,Items Previously Reported as Assets and
Liabilities(GASB No.65).
GASB No.60—Our experience has taught us that service concession arrangements can be frequently masked as leases,
contracts,or other types of management arrangements.As such,as part of our planning phase,we provide a short
questionnaire to the City to help them with deciding whether a service concession arrangement exists and ask about where
these types of arrangements may exist,who would know about them in the City,and where the documentation would be
held so that there would not be surprises during fieldwork.
GASB No.61 -The best place to start may be analyzing the current state of component units in the City and taking a fresh
look at these entities and review the current enabling statute,list any guarantee or transfer agreements with the City,and
list of those charged with governance at the component unit to ensure that things did not change with the new standard.
GASB No.62-Despite the number of paragraphs that this pronouncement covers,there should only be a minor amount
of work to do when implementing GASB No.62. GASB No.62 codifies all FASB and AICPA pronouncements issued before
November 30,1989. Some of the minor work that may need to be done include:
t
E
P,wdTtir•a•.thIk : 41
I
2014-57
1
IDENTIFICATION OF POTENTIAL AUDIT PROBLEMS
4
• Removing the paragraph in the summary of significant accounting policies contained in the notes to the basic financial
statements that has been in place for years making the election to follow pre-November 30. 1989,FASB and AICPA
pronouncements as long as they did not conflict with a GASB standard.
• Re-reading the lease accounting paragraphs(212-271)given the complexity of some of these topics such as sale
leaseback transactions,subleases and leases between related parties given the guidance is different from GASB No.13,
Accounting for Operating Leases with Scheduled Rent Increases.
Early Implement GASB No.65•The City may want to early implement GASB No.65.The City will have to review the list
of assets and liabilities that become deferred outflows of resources,deferred Inflows of resources and may want to consider C
if it is a good idea to early Implement this statement. The City has a number of transactions that are currently portrayed as
assets or liabilities that will now become inflows or outflows.
Once the City takes care of these requirements,it may want to tackle one of the more controversial and newsworthy C
standards. In June 2012,GASB approved Statement No.68,Accounting and Financial Reporting for Pensions,an
amendment of GASB Statement No.27.GASB No.68,which primarily relates to reporting by governments that provide C
pensions to their employees such as the City,and is effective for fiscal years beginning after June 15,2014. Key changes
include:
• Separating how the accounting and financial reporting is determined from how pensions are funded.
• Employers with defined benefit pension plans(including cost-sharing employers)will recognize a net pension liability,as
defined by the standard,in their government-wide,proprietary and fiduciary fund financial statements.
• Incorporating ad hoc cost-of-living adjustments and other ad hoc postemployment benefit changes into projections of
benefit payments,if an employer's past practice and future expectations of granting them indicate they are essentially
automatic.
• Using a discount rate that applies(a)the expected long-term rate of return on pension plan investments to projected
benefit payments for which plan assets are expected to be available to make projected benefit payments,and(b)the
interest rate on a tax-exempt 20-year AA/Aa or higher rated municipal bond index to projected benefit payments for C'
which plan assets are not expected to be available for long-term investment in a qualified trust.
• Adopting a single actuarial cost allocation method-entry age normal-rather than the current choice among six
actuarial cost methods.
• Requiring more extensive note disclosures and required supplementary information.
The City will be subject to the provisions of GASB No.68 beginning with the fiscal year ending June 30,2015. It is likely
that this standard will dramatically change the City's financial statements and disclosures and will result in the recognition
of net pension liability. As the auditors of CaIPERS,we have been discussing the implementation challenges with CaIPERS,
provided numerous webinars and training sessions prior to the standards issuance and will be speaking at the upcoming
CSFMO Conference to discuss the potential impact of these new accounting and reporting on the local governments'
financial statements.
C
C
C
e
I
C
c
42
hsurfirbMt•rinsaroeard_hc
2014-57
IDENTIFICATION OF POTENTIAL AUDIT PROBLEMS
r
Yellow Book
a The federal government spends more than$600 billion annually in the form of grants and cooperative agreements.
OMB and the federal agencies have been talking for some time about how grant policies can be reformed to increase
the efficiency and effectiveness of federal programs,as well as to eliminate unnecessary and duplicative requirements
and focus in on areas that emphasize achieving better outcomes at a lower cost.OMB's issuance of the Proposed
Guidance is the culmination of the information gathering process that began when OMB issued the Advance Notice on
this topic area in early 2012.
The following describes some of the key areas of change covered in the Proposed Guidance:
Single Audit Threshold for Audit Proposed to Increase to$750,000.
Changes to the Major Program Determination Process-Type A/8 Threshold.The OMB is proposing to"tinker"
with several key provisions of the major program determination process.For example,the minimum threshold for the
Type A/B program determination would be revised from$300,000 to$500,000.
Changes to the Major Program Determination Process—High-Risk Type A Programs.The criteria for Type A
programs to qualify as high-risk are being revised such that for a Type A program to be designated as high-risk it must
have,in the most recent period,failed to receive an unqualified opinion;had a material weakness in internal control;or
had questioned costs exceeding five percent of the program's expenditures.
Changes to the Major Program Determination Process-Type 8 Programs.The proposed guidance would reduce
the number of high-risk Type B programs that must be tested as major programs from at least one-half to at least one-
fourth of the number of low-risk type A programs.Additionally,small Type B programs would be considered those that
are a flat 25%of the Type A/B program threshold.
Percentage of Coverage Changes.The percentage of coverage required in a single audit is proposed to be reduced
from the current 50%(normal)and 25%(low-risk auditees)to 40%(normal)and 20%(low-risk auditees).
Criteria for Low-Risk Auditee Status.The criteria for low-risk auditee status has been revised.For example,it would
now more clearly indude data collection form submission within required tirneframes as a criteria and adds a criteria
that the auditor did not report a substantial doubt about the auditee's ability to continue as a going concern,it also
removes the previous options for waivers in this area.
Reduction in Types of Compliance Requirements to be Tested.The Federal Register notice indicates that OMB is
also proposing that the number of types of compliance requirements to be tested in a single audit be reduced from
the current 14 types of compliance requirements to 6 types of compliance requirements.
Findings.More detail will be required to be reported in auditor findings.However,the questioned cost threshold for
reporting will be increased from$10,000 to$25,000.
Streamlining of Related Circulars and Guidance.The proposal streamlines eight existing OMB Circulars into one
document including Circular A-133 and the various Cost Principles.Additionally,the Proposed Guidance would
consolidate the cost principles into a single document with limited variations by type of entity.OMB states that the
Proposed Guidance will supersede the following OMB Circulars:
Indirect Costs and Time and Effort Reporting.A number of changes are being proposed in these complex areas that
the GAQC will be analyzing over the upcoming weeks to determine any impact on auditors performing single audits.
Administrative Requirements.A number of changes are being proposed in this area as well.The GAQC will be
analyzing this area within the Proposed Guidance over the upcoming weeks to determine any impact on auditors
performing single audits.
Pitese Araea.d samaallale: 43
C
2014-57
COST PROPOSAL
•
C t Effective.
ValueforFees.
31 Our fee philosophy is to foster long-term client relationships by offering fair and competitive pricing.We have
developed a pricing model which will allow us to provide the requisite experience,commitment and quality for
3 your engagement Our proposal is based on the information provided based on Request for Proposal
No.F-14-04 and the City's financial statements for the fiscal year2011,as the fiscal year 2012 financial statements
3 have yet to be issued.While we believe that our estimated fees are reasonable,due to the status of the fiscal year -
2012 financial statements and the nature of a restructuring under Chapter 9 we are not proposing a maximum not
3 to exceed fee.
7 Our professionals have a proven reputation for demonstrating an uncompromising dedication to responsive,
value-added service.We believe our proposed fees reflect the MGO Team's experience along with our sensitivity
3 to the budgetary concerns you are facing.Our proposed fees summarized below for completion of audit services
assume the following:
• All out-of-pocket expenses,including parking,telephone,fee,copying and reproduction are included in the
price.You will not be billed separately for these costs.
V Q>rjz_z-c■T
3 James V.Codsey,CPA
MGO Partner
1
1
1
1
1
1
1
leadTheell«f sAaeeertaeta:
i
2014-57
COST PRO 'OSAL
All-Inclusive Estimated :
Cost Summary.
Fisca War Enc ci Juno 30, V
Annual Financial Statements $ 129,719 $ 129,719 $ 129,719 $ 389,157 1
San Bernardino Successory Agency 21,267 21,267 21,267 63,801
Single Audit Report** 59,135 59,135 59,135 177,405
GANN Limit Review 3,715 3,715 3,715 11,145
Appropriations Limit 4,250 4,250 4,250 12,750
Total estimated fee for audit services I: 210,086 $ 218,086 $ 218.014:; $ ;_6547258:.
**Includes 6 Major Programs.
1
■
Hourly Rates.
Hourly Rates
2013 2014 2015
Partner
$ 332' $ 332: ,$ 332
Director 264 264 264
Manager 162 162 162
Senior - 111 111 111
Semi Senior(s)/Staff _ 102 102 102 1
i
2
PreudIsislothallecaustaaa
■
■
■
■
■
a
■