HomeMy WebLinkAboutR36-Economic Development
CITY OF SAN BERNARDINO 0 RIG I N A L
ECONOMIC DEVELOPMENT AGENCY
FROM: Emil A. Marzullo
Interim Executive Director
SUBJECT:
Rogers, Anderson, Malody & Scott, LLP -
Amendment No. 1 to the Agreement for
Auditing Services
DATE:
April 28, 2009
Svnoosis of Previous Commission/Council/Committee Action{s):
On April 23, 2009, the Redevelopment Committee Members Johnson, Baxter and Brinker unanimously voted to recommend
that the Mayor and Common Council and/or the Community Development Commission consider this action for approval.
Recommended Motion(s):
(Communitv Development Commission)
Resolution of the Community Development Commission of the City of San Bernardino, California, approving
and authorizing the Interim Executive Director of the Redevelopment Agency of the City of San Bernardino
("Agency") to execute Amendment No. I to the Agreement for Auditing Services by and between the Agency
and Rogers, Anderson, Malody & Scott, LLP
Contact Person(s):
Emil A. Marzullo/Barbara Lindseth
Phone:
Project Area(s):
Supporting Data Attached:
N/A
Ward(s):
(909) 663-1044
All
o Staff Report 0 Resolution(s) 0 Agreemcnt(s)/Contract(s) D Map(s) D Letter(s)
Funding Requirements:
Amount: $
37,150
Source:
All
Budget Authority:
Fiscal Year 2008-2009 Budget
Signature:
L-
~.
Emil A. Marzullo, Interim
e Director
Fiscal Review:
( Russ
Interi
,
//
vices Director
Commission/Council N utes:
.....~~~-;;......?!/\..(i72a;;IF::..77m....
P:\Agendas\Comm Dcv Commission\CDC 2009\05-04-09 RAMS . Amendment No. [ SR,doc
COMMISSION MEETING AGENDA
Meeting Date: 05/04/2009
Agenda Item Number: Jl.'&I
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
ROGERS, ANDERSON, MALODY & SCOTT, LLP - AMENDMENT NO.1 TO THE
AGREEMENT FOR AUDITING SERVICES
BACKGROUND:
In December 1992, the Economic Development Agency ("Agency") and the City of San Bernardino
("City") jointly issued a Request for Proposals ("RFP") for financial audit services. The Agency and
the City agreed to a joint RFP in order to seek the same audit firm for both entities for consistency and
coordination concerning the Single Audit. As the proposals were reviewed, several factors were taken
into consideration: experience with cities and redevelopment agencies; ability to meet deadlines; and,
overall qualifications of the firm and of the firm's staff members assigned to the audit. These factors
were taken into consideration before the overall cost of the audit was considered. Based upon these
factors, interviews and staff recommendations, the Community Development Commission of the City
of San Bernardino ("Commission") approved a three (3) year audit service agreement with Rogers,
Anderson, Malody & Scott, LLP ("RAMS") at an Agency cost of$30,500 per year.
On April 15, 1996, the Commission approved a subsequent three (3) year agreement with RAMS for
financial audit services for the fiscal years July I, 1995 through June 30, 1998. The Agency's cost for
audit services was $33,600 per year. On July 6, 1999, the Commission approved a one (I) year
extension with RAMS for the fiscal year ending June 30, 1999 at an Agency cost of $34,000. The City
also entered into a one (I) year extension, with the intention of issuing a joint RFP for the next year's
audit services for the City, the Agency and the Municipal Water Department.
Beginning with the fiscal year ending June 30, 2000, the Agency, the City and the Water Department
issued a joint RFP for audit services for a one (1) to five (5) year period, with the understanding that
each entity could select a different audit firm during this time period. After initial review of the
proposals and interviews, and based upon the above mentioned criteria, the City, the Agency and the
Water Department recommended, and the Commission approved, a three (3) year agreement with the
audit firm of Conrad & Associates, with two (2) one (I) year extensions. The Agency cost of the five
(5) year audit agreement ranged from $25,500 to $28,150 per year.
At the end of the five (5) year agreement with Conrad & Associates, the Commission approved a one
(1) year extension, with further direction to issue an RFP for financial audit services at the end of the
extension period on June 30, 2005. The Agency cost for the extension was $34,320.
After the end of the final one (I) year extension with Conrad & Associates, realizing the importance of
periodically seeking financial audit proposals to ensure the most advantageous independent audit
services available, on April 13, 2006, the City, the Agency and the Water Department issued a joint
RFP for financial audit services beginning with the fiscal year ending June 30, 2006. The RFP
required separate audits and subsequent separate financial statement reports for each of the three (3)
entities (component units), plus the comprehensive annual financial report ("CAFR") encompassing all
P:\Agendas\Cormn Dev Commission\CDC 2009\05-04-09 RAMS ~ Amendment No. I SR.doc
COMMISSION MEETING AGENDA
Meeting Date: 05/0412009
Agenda Item Number: ~
Economic Development Agency Staff Report
RAMS - Amendment No. 1
Page 2
three (3) entities. These financial reports are required in accordance with governmental accounting
standards established by the Governmental Accounting Standards Board ("GASB").
Under City lead and coordination, an RFP was sent to thirteen (13) qualified Certified Public
Accounting ("CPA") firms, as well as being posted on the City's website and provided to the Chamber
of Commerce. Two (2) audit firms responded with proposals, and one (I) firm declined to bid based
upon staff limitations. The two (2) responding firms were Mayer Hoffman McCann P.e. (formerly
Conrad & Associates) and RAMS, both audit firms having prior experience with the Agency, the
Water Department and the City.
On May 11, 2006, accounting staff from the City, the Agency and the Water Department met to
evaluate the two (2) proposals. Based upon familiarity with each of the two (2) responding firms, staff
concluded that interviews with the responding firms would not add significantly to the evaluation
process. Both firms were evaluated by staff as competent and qualified in the areas of understanding
the scope of work, demonstrating necessary skills and credentials, related work experience and
reverences, quality of the proposals, and approach to performing the audit. Additionally, the first
year's cost of the audit services to the Agency was almost identical for either firm ($34,320 versus
$35,000). However, the concern of continuing the use of one (I) firm for an extended period of time
was raised during the last one (1) year extension with Conrad & Associates. Thus, the appearance of
independence led to the decision to recommend a change in audit firms at that time. Based upon this
consideration, as well as experience and qualifications, RAMS was recommended for a three (3) year
audit agreement for the City and the Agency. The Water Department decided to continue with Mayer
Hoffinan McCann P.C.
CURRENT ISSUE:
The three (3) year agreement with RAMS ended with the financial audit on June 30, 2008. Based upon
continuity and satisfaction with the financial audit process and audit reports for the prior three (3) year
period with RAMS, it is recommended that the Agency amend the agreement with RAMS to extend
the agreement for two (2) more years at the rate of $37,150 for the fiscal year ending June 30, 2009
and $38,270 for the fiscal year ending June 30, 2010. Further, RAMS is a local San Bernardino firm
and the overall cost increase of the financial audit each year has been approximately three percent
(3%). All other terms and conditions of the agreement will remain in place.
ENVIRONMENTAL IMPACT:
None.
FISCAL IMPACT:
The Agency's cost of the financial audit for the fiscal year ending June 30, 2009 is $37,150, and
$38,720 for the fiscal year ending June 30, 2010. Funds are currently approved in the Agency's fiscal
year 2008-2009 budget.
P:\Agendas\Comm Dcv Commission\CDC 2009\05-04-09 RAMS - Amendment No_ 1 SR.doc
COMMISSION MEETING AGENDA
Meeting Date: 05/04/2009
Agenda Item Number: (l.~
Economic Development Agency Staff Report
RAMS - Amendment No.1
Page 3
RECOMMENDATION:
That the Community Development Commission adopt the attached Resolution.
P\Agendas\Comm Dev CommissionlCDC 2009\05-04-09 RAMS - Amendment No 1 SRdoc
COMMISSION MEETING AGENDA
Meeting Date: 05/04/2009
Agenda Item Number: ft(,
RESOLUTION NO.
t(Q)rPl{
2
3
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF SAN BERNARDINO, CALIFORNIA, APPROVING AND
AUTHORIZING THE INTERIM EXECUTIVE DIRECTOR OF THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
("AGENCY") TO EXECUTE AMENDMENT NO.1 TO THE AGREEMENT
FOR AUDITING SERVICES BY AND BETWEEN THE AGENCY AND
ROGERS, ANDERSON, MALODY & SCOTT, LLP
4
5
6
7
WHEREAS, the Community Development Commission of the City of San Bernardin
("Commission") desires to enter into Amendment No. I ("Amendment") to the Agreement fo
auditing services with Rodgers, Anderson, Malody and Scott, L.L.P., to extend the Agreemen
8
9
10
for a period of two (2) years in order to perform financial audit services for the Redevelopmen
11
Agency of the City of San Bernardino ("Agency") as attached.
t2
NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF TH
CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, A
FOLLOWS:
13
14
15
Section 1.
The Commission hereby approves and authorizes the Interim Executiv
16
Director of the Agency to execute the Amendment with Rogers, Anderson, Malody and Scott
L.L.P., approving a two (2) year extension to the Agreement to perform financial audit service
for the Agency, for a two (2) year period beginning with the fiscal year ending June 30, 2009
through the fiscal year ending June 30, 2010.
17
18
19
Section 2.
20
Commission.
21
II
22
II
23
II
24
II
25
II
This Resolution shall take effect from and after its date of adoption by th
P\Agendas\Resolutions\Resolutions\2009\05-04-Q9 RAMS - Amendment No I CDC Reso doc
2
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF SAN BERNARDINO, CALIFORNIA, APPROVING AND
AUTHORIZING THE INTERIM EXECUTIVE DIRECTOR OF THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
("AGENCY") TO EXECUTE AMENDMENT NO.1 TO THE AGREEMENT
FOR AUDITING SERVICES BY AND BETWEEN THE AGENCY AND
ROGERS, ANDERSON, MALODY & SCOTT, LLP
3
4
5
6
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the
7
Community Development Commission of the City of San Bernardino at a
8
meeting thereof, held on the
,2009, by the following vote to wit:
day of
Commission Members:
Ayes
Abstain
Absent
Nays
9
10
ESTRADA
BAXTER
BRINKER
SHORETT
KELLEY
JOHNSON
MC CAMMACK
11
.12
13
14
15
16
17
Secretary
18
The foregoing Resolution is hereby approved this
day of
,2009.
19
20
21
Patrick J. Morris, Chairman
Community Development Commission
of the City of San Bernardino
22
23
Approved as to Form:
By: \ //~~ ~
Agency Co el
24
25
2
, P\Agendas\Resorution~\R".olu(ion!l\2009\05_04_09 RAMS - Amendment No. I COC Reso.OOc
AMENDMENT NO.1 TO THE AGREEMENT FOR AUDITING SERVICES
This Amendment No. I to the Agreement for Auditing Services ("Amendment No. I") is made and
entered into on this 4th day of May, 2009, by and between the Redevelopment Agency of the City of
San Bernardino, a public agency, corporate and politic, duly organized and existing as a community
redevelopment agency, (hereinafter referred to as "Agency") 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 Agency 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:
I. TERM. Unless terminated earlier or cancelled as provided for herein, the term of this
Amendment No. I shall be for the each of the two (2) fiscal years ending June 30, 2009 and
June 30,2010.
2. SCOPE OF SERVICES. The Auditors agree to provide services and perform all work
necessary in a manner satisfactory to the Agency as set forth in Appendix A, attached hereto
and by reference incorporated herein and made a part hereof.
3. AGENCY'S OBLIGATIONS. For furnishing services specified in this Amendment No.1 to
the Agreement, the Agency will pay and the Auditors shall receive the full compensation as
set forth in Appendix A, attached hereto and by reference incorporated herein and made a part
hereof. Additionally, the Agency agrees to provide the Auditors with supporting schedules,
trial balances and reconciliations as necessary to complete the services requested in Appendix
A.
4. PAYMENT SCHEDULE. The Auditors shall submit invoices based on the percentage of audit
work completed. After Agency approval, said invoice shall be paid within 30 days.
5. COMPLETION OF AUDIT AND DELIVERY OF AUDIT OPINIONS.
A. The Auditors shall complete all work by the dates provided in Appendix A of each
fiscal year included in the term of this Amendment No. I to the Agreement, but in no
event shall any final written audit report, management letter or affiliated report be
delivered to the Agency later than December I for the immediately prior fiscal year
being audited.
B. The 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. I to the
Agreement provided Agency furnishes the information to Auditors pursuant to Section
P 'Agtndas\Agenda Att.achmrntslAgrmt'i-Amend 2009\OS-Q4-Q9 RAMS-Amendment No.1 doc 1
3 herein above in a timely manner.
6. TERMINATION.
A. Termination Without Cause. The Agency and the Auditors shall have the right to
terminate this Amendment No. I to the Agreement, by giving not less than thirty (30)
days' prior written notice of termination to the other party. On the date of termination
stated in the written notice, the Auditors shall discontinue performance of the services,
preserve the product of the services, and turn over to the Agency the product of the
services in accordance with written instructions of the Agency. If the Agency terminates
this Amendment No. I to the Agreement under this Subsection A of Section 6, Agency
shall compensate Auditors within thirty (30) days following the effective date of
termination for all services satisfactorily provided prior to the effective date of
termination based on the amounts and rates set forth in Appendix A. If Auditors
terminate this Amendment No. I to the Agreement under this Subsection A of Section
6, the Agency shall compensate the Auditors in the same amount the Agency would
compensate the Auditors in the event the Agency terminated this Amendment No. I to
the Agreement under this Subsection A of Section 6, less any costs the Agency pays
other auditors to review or re-perform the services provided by the Auditors prior to the
date of termination. In the event of termination without cause by either party, the
Agency's payment as provided herein shall constitute full satisfaction of the Agency's
obligations under this Amendment No. I to the Agreement.
B. Termination bv Agency for Cause.
I. The Agency may, by written notice to the Auditors, immediately terminate the
whole or any part of this Amendment No. I to the Agreement in any of the
following circumstances:
a. The Auditors fail to perform the services required by this Amendment No. I
to the Agreement within the time specified herein, or within any extension
of that time; .
b. The Auditors fail to perform satisfactorily the services called for by this
Amendment No. I to the Agreement, or otherwise breaches any provision
of this two year extension to the Agreement, and do not correct such failure
within a period of ten (10) days or such longer period as Agency may
authorize in writing after notice is given by Agency specifying such failure
of breach;
c. The Auditors make a general assigrunent for the benefit of their creditors,
files or have filed against them a petition in bankruptcy, or have a receiver
appointed on account of their insolvency; or
d. The Auditors fail to maintain the insurance required pursuant to Section 10.
2. Immediately upon receiving written notice of termination, the Auditors shall
discontinue performing services, preserve the product of the services, and turn
over to the Agency the product of the services in accordance with written
instructions of the Agency. In the event the Agency terminates this Amendment
No. I to the Agreement in whole or in part as provided above in Paragraph I of
this Subsection B of Section 6, the Agency shall pay the Auditors for all services
satisfactorily provided by the Auditors prior to the effective date of termination
based on the amounts and rates set forth in Appendix A, less any fees the Agency
P\^g~ndas"Agenda Aftachmellts\Agrmts-An1o:n4 2009\03-04-09 RAMS-Amendment No 1 doc 2
pays other auditors to review or re-perform the services provided by the Auditors
prior to the date of termination. Said payment shall constitute full satisfaction of
the Agency's obligations under this Amendment No. I to the Agreement.
C. Termination bv Auditors for Cause. The Auditors may immediately terminate this
Amendment No. I to the Agreement if the Agency is in breach of this Amendment No.
I to the Agreement and does not correct such breach within a period often (10) days (or
such longer period as the Auditors may authorize in writing) after notice is given by
Auditors specifying such failure of breach. If the Auditors terminate this Amendment
No. I to the Agreement pursuant to this Subsection C of Section 6, the Agency shall
compensate the 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 A, and such payment
shall constitute full satisfaction of the Agency's obligations under this Amendment No.
I to the Agreement.
7. NOT OBLIGATED TO THIRD PARTIES. The Agency shall not be obligated or liable
hereunder to any party other than the Auditors.
8. PROHffiITION AGAINST SUBCONTRACTING OR ASSIGNMENT. The experience,
knowledge, capability and reputation of the Auditors, its principals and employees were a
substantial inducement for the Agency to enter into this Amendment No. I to the Agreement.
Therefore the Auditors shall not contract with any other entity to perform in whole or in part
the services required hereunder without the express written approval of the Agency. In
addition, neither this Amendment No. I to the 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 the
Agency. Transfers restricted hereunder shall include the transfer to any person or group of
persons acting in concert of more than twenty-five percent (25%) of the present ownership
and/or control of the Auditors, taking all transfers into account on a cumulative basis. In the
event of any such unapproved transfer, including in any bankruptcy preceding this
Amendment No. I to the Agreement shall be void. No approved transfer shall release any
surety of the Auditors of any liability hereunder without the express consent of the Agency.
9. INDEPENDENT CONSULTANT. Neither the Agency 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 Agency shall have no
voice in the selection, discharge, supervision or control of the Auditors' employees, servants,
representatives or agents, or in fixing their number, compensation or hours of service. The
Auditors agree to maintain continuity of managerial personnel assigned to the engagement
except for reasons beyond the Auditors' control. The Auditors shall perform all services
required herein as an independent contractor of the Agency and shall remain at all times to the
Agency a wholly independent consultant with only such obligations as are consistent with that
role. The 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 the Agency. The Agency shall not in any way or for
any purpose become or be deemed to be a partner of the Auditors in its business or otherwise
of a joint venture or a member of any joint enterprise with the Auditors.
10. INSURANCE. The Auditors shall procure and maintain, at its cost, comprehensive general
liability and property damage insurance, including automobile and excess liability insurance,
?'JI.grndaslAgenda Attachmrnts\Agrmts.Amend 2009\05-04-09 RAMS_Amendment No.I.MC 3
against all claims for injuries against persons or damages to property resulting from the
Auditors' negligent acts or omissions rising out of or related to the Auditors' performance
under this Amendment No. I to the Agreement. The Auditors shall also carry Workers'
Compensation Insurance in accordance with State Workers' Compensation laws. The Auditors
agree to maintain professional liability insurance to protect the Agency from the Auditors'
negligent acts, errors or omissions of a professional nature. If any claim related to the
performance hereunder be asserted against either party hereto, the party claimed against shall
receive all reasonable assistance from the other. The requirements herein for subrogation may
be waived by the Agency with respect to such professional liability insurance.
The insurance required hereunder shall be kept in effect during the term of this Amendment
No. I to the Agreement and shall not be subject to reduction in coverage below the limits
established herein, nor cancellation or termination without thirty (30) days prior written notice
by registered letter to the Agency. The insurer shall waive the right of subrogation against the
Agency, its officers, employees and agents, and the coverage shall be primary for losses
arising out of the Auditors' performance hereunder and neither the Agency nor its insurers
shall be required to contribute to any such loss. A certificate evidencing the foregoing and
naming the Agency as an additional insured shall be delivered to and approved by the Agency
prior to commencement of the services hereunder. The procuring of such insurance or the
delivery of policies or certificates evidencing the same shall not be construed as a limitation of
the Auditors' obligation to indemnify the Agency, its officials and employees.
The amount of insurance required hereunder shall be as follows:
I. Workers Compensation to statutory limits:
2. Commercial General Liability:
Each occurrence
Personal injury
Aggregate limit
3. Hired Auto and Non-Owned Auto Liability:
Each occurrence
$1,000,000
$1,000,000
$2,000,000
Aggregate limit
4. Professional Liability:
Each claim and in the aggregate
$1,000,000
$1,000,000
$1,000,000
11. NOTICE. All written notices to the parties hereto shall be sent by United States mail, postage
prepaid by registered or certified mail addressed as follows:
AGENCY:
Emil A. Marzullo, Interim Executive Director
Redevelopment Agency of the City of San Bernardino
201 North "E" Street, Suite 301
San Bernardino, California 92401
AUDITORS:
Terry Shea, Partner
Rogers, Anderson, Malody and Scott, L.L.P.
290 North "D" Street, Suite 300
San Bernardino, California 9240 I
P-iAgendasiAgenda AttxhmcntsiAgnnts-Amend 2009\05-04_09 RAMS.Amendment No.1 doc 4
12. AUTHORITY TO EXECUTE AGREEMENT. Both the Agency and the Auditors do covenant
that each individual executing Amendment No. I to the Agreement on behalf of each party is a
person duly authorized and empowered to execute agreements for such party.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and
year first written above.
AGENCY
Redevelopment Agency of the City of San Bernardino,
a public body, corporate and politic
Dated:
By:
Emil A. Marzullo, Interim Executive Director
By:
Agency Counsel
AUDITORS
Rogers, Anderson, Malody and Scott LLP
Certified Public Accountants
Dated:
By:
Terry Shea, Partner
P:\Agendas\Agenda AnadunentslAgmts-Amend 2009\05-04-{J9 RAMS-Amendment No I_doc 5
ROGERS, ANDERSON, MALODY & SCOTT, LLP
APte'7J,)< 'A"
JAY H ZEFlCHER. CPA
ROBERT 8 MEMORY, CPA
PHilLIP Ii WALLER, CPA
BRENDA l OOlE. CPA
TERRY P SHEA C" A
KIRK A FRANKS, CPA
MATTHEW B WILSON, CPA
SCOTT W MANNO, CPA
LEENA ShANBHAG CPA
fiI~
CERTIFIED PUBLIC ACCOUNTANTS
NANCY O'RAFFERTY, C A
BRAD A WELEBIR, C A
TIMOTHY P HORN, C A
KATIE L MlllSOM_ C A
JOHN J BADIA, C A
January 16, 2009
City of San Bernardino Economic
Development Agency
The Members of the Community
Development Commission
201 North "E" Street, Suite 301
San Bernardino, CA 92401
We are pleased to confirm our understanding of the services we are to provide the City of San
Bernardino Economic Development Agency (the EDA) for the years ended June 30, 2009 and
2010. We will audit the financial statements of the governmental activities, each major fund,
and the aggregate remaining fund information, which collectively cornprise the basic financial
statements, of the EDA as of and for the years ended June 30, 2009 and 2010. 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
EDA's basic financial statements. As part of our engagement, we will apply certain limited
procedures to the EDA'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:
1. Management's Discussion and Analysis.
2. Major fund budgetary comparison schedules
Supplementary information other than RSI, such as combining fund schedules, individual fund
schedules and individual fund budgetary comparison schedules, may also accompany the
EDA'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 statements:
1. Combining fund schedules.
2. Budgetary comparison schedules.
MEMBERS
;MERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS
PCPS THE AICPA All, lANCE FOR CPA FIRMS
VANIR lOWER. 290 NORTH "0" STREET. SUITE 30n
SAN BERNARDINO. CA 9240,'
,C:'09: 889 ('8,' J . -9091924-6736 . FAX {909! 889. SJh I
~Vebslre' www ram';coi'/ nel
CAliFORNIA SOClf I Y Uf
CERTIFIED PUBLIC I\C(OU~JTANTS
The Members of the Community Development Commission
City of San Bernardino EDA
January 16, 2009
Page 2
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 the provisions of
applicable laws, regulations, contracts, agreements, and grants, and noncompliance with
which could have a material effect on the financial statements in accordance with
Government Auditing Standards.
. Internal control related to major programs and an opinion (or disclaimer of opinion) on
compliance with laws, regulations, and the provisions of contracts or grant agreements that
could have a direct and material effect on each major program in accordance with the Single
Audit Act Amendments of 1996 and OMB Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations, if applicable
The reports on internal control and compliance will each include a statement that the report is
intended for the information and use of the audit committee, management, 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 U.S. generally accepted auditing standards; the
standards for financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States; the Single Audit Act 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 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.
Our Responsibilities under Generally Accepted Auditing Standards
We are responsible for forming and expressing an opinion about whether the financial
statements, which have been prepared by management with the oversight of those charged with
governance, are presented fairly, in all material respects, in conformity with generally accepted
accounting principles. Our audit of the financial statements does not relieve management or
those charged with governance of their responsibilities.
The Members of the Community Development Commission
City of San Bernardino EDA
January 16, 2009
Page 3
We are also responsible for performing the audit in accordance with generally accepted auditing
standards and for designing the audit to obtain reasonable, rather than absolute, assurance
about whether the financial statements are free of material misstatement. An audit of financial
statements includes consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal control over financial
reporting.
We are responsible for communicating specific matters required by law or regulation, by
agreement with the entity, or by additional requirements applicable to the engagement and for
communicating significant audit-related matters that the auditor judges to be relevant to those
charged with governance in overseeing the financial reporting process. The auditor is not
required to design procedures for the purpose of identifying other matters to communicate.
Management Responsibilities
Management is responsible for establishing and maintaining internal controls, including
monitoring ongoing activities; 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 EDA;
and the respective changes in financial position and, where applicable, cash flows in conformity
with U.S. generally accepted accounting principles; and for federal award program compliance
with applicable laws and regulations and the provisions of contracts and grant agreements.
Management is responsible for the basic financial statements and all accompanying information
as well as all representations contained therein.
You are responsible for management decisions and functions. As part of the audit, we will
prepare a draft of your financial statements, schedule of expenditures of federal awards, and
related notes. In accordance with Government Auditing Standards, you will be required to
review and approve those financial statements prior to their issuance and have a responsibility
to be in a position in fact and appearance to make an informed judgment on those financial
statements. Further, you are required to designate a qualified management-level individual to be
responsible and accountable for overseeing our services.
Management is responsible for making all financial records and related information available to
us, including identifying significant vendor relationships in which the vendor has the
responsibility for program compliance and for the accuracy and completeness of that
information. Management's responsibilities include adjusting the financial statements to correct
material misstatements and for 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.
The Members of the Community Development Commission
City of San Bernardino EDA
January 16, 2009
Page 4
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 EDA 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.
Management is responsible for establishment and maintenance of a process for tracking the
status of audit findings and recommendations. Management is also responsible for identifying
for us previous audits or other engagements or 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
or other engagements 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, and the timing and format related thereto.
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 EDA or to acts by management or employees acting on behalf of the EDA.
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 immaterial misstatements or violations of laws or governmental
regulations that do not have a direct and material effect on the financial statements or major
programs. However, we will inform 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.
The Members of the Community Development Commission
City of San Bernardino EDA
January 16, 2009
Page 5
Our procedures will include tests of documentary evidence supporting the transactions recorded
in the accounts, and may include tests of the physical existence of inventories, and direct
confirmation of receivables and certain other assets and liabilities by correspondence with
selected individuals, creditors, and financial institutions. We will request written representations
from your attorneys as part of the engagement, and they may bill you for responding to this
inquiry. At the conclusion of our audit, we will also require certain written representations from
you about the financial statements and related matters.
Audit Procedures-Internal Controls
Our audit will include obtaining an understanding of the EDA 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, if applicable, 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 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 perfonm tests of the EDA'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.
The Members of the Community Development Commission
City of San Bernardino EDA
January 16, 2009
Page 6
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 test 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 EDA's major programs.
The purpose of those procedures will be to express an opinion on the EDA'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.
If applicable, at the conclusion of the engagement, we will complete the appropriate sections of
and sign 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 EDA, 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 a corrective action plan) along with the Data Collection Form to the designated
federal 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 submit.
The audit documentation for this engagement is the property of Rogers, Anderson, Malody and
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.
The Members of the Community Development Commission
City of San Bernardino EDA
January 16, 2009
Page 7
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 $37,150 for 2009 and $38,270 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.
We appreciate the opportunity to be of service to the City of San Bernardino EDA and believe
this letter accurately summarizes the significant tenms 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
,~J/
.
RESPONSE:
This letter correctly sets forth the understanding of the City of San Bernardino Economic
Development Agency.
By:
Title:
Date:
/,\uClcnment M.
Ft\l;:'-.[li',,:::,
TIMPSON GARCIA
l.c.r:'
.-,\VI,"'..:L' ; :I~~'~un. ~I", . 16';; -- I" 7-1;
i.c'V'::nc' \V ,-,,1r<:.1 ...:p.\,; l./~'''--I 9';.0,
CPA.., ,'~'ll (ll"SUlT;'~ I S
,'-',,;-:,\"::'.c,
:>_'~lIW; S f\,l:~t'sh:r('. Ci'i\
.l'~o.' Lo.',' K.1W.lS.JKI. (I ',A,
August 16, 2006
'"",:1:.)[-:1':: .\lov ;.,':\
Ed~.lII.'.l~..l"'..>n. CYA.
(:).'\;'SI...:I -:-A,'~-~
To the Owners
Rogers, Anderson, Malady & Scott, LLP
'.V<iII.1I1c :ky:,-,_ ,--j',\
:c; ;,.\1 '\:...~~1L'\::S T;~Ar ,-l:;
:.Z ;)Jv:s
We have reviewed the system of quality control for the accounting and auditing practice of Rogers, Anderson, Malody
& Scott, LLP (the ftrm) in effect for the year ended November 30,2005, A system of quality control encompasses the
finn'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 (AlCP A). The ftrm is responsible
for designing a system of quality control and complying with it to provide the firm reasonable assurance of confonning
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 AlCPA. During
our review, we read required representations from the firm, interviewed firm personnel and obtained an understanding
of the nature of the finn's accounting and auditing practice, and the design of the firm's system of quality control
sufftcient to assess the risks implicit in its practice. Based on our assessments, we selected engagements and
administrative ftIes to test for conformity with professional standards and compliance with the ftrrn's system of quality
control. The engagements selected represented a reasonable cross-section of the ftrrn'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 Standards. Prior to concluding the review, we
reassessed the adequacy of the scOpe of the peer review procedures and met with ftrrn management to discuss the
results of our review. We believe that the procedures we performed provide a reasonable basis for our opinion.
In performing 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, Malody &
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 AlCPA and was complied with during the
year then ended to provide the firm with reasonable assurance of conforming with professional standards,
~ -~'
I c..:.~ UJ-,.. U C~, L1. P
Members 0f
70 \tVJshrr.gton Street. SUitt> 300
O-Jkl.:lnd, CA 9'f607~__n05
.~:L1.d.}': .2325 or 800. 9-tl.~ n 7
f:J:\ 510.463_2979
A .
/~
A '.v,:[',:",;~~ ~~I'.~drK ,-,I :"-.;,'1",,,.,:,".,1' 'r"',
~v\v\v. tlmpsongJrClJ .("om