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HomeMy WebLinkAbout05.I- Finance 5 RESOLUTION (ID # 3614) DOC ID: 3614 C CITY OF SAN BERNARDINO — REQUEST FOR COUNCIL ACTION Agreement/Contract Amendment From: Nita McKay M/CC Meeting Date: 12/15/2014 Prepared by: Veronica IIVI ILiileZ, (909) 384-5242 Dept: Finance Ward(s): All Subject: Resolution of the Mayor and Common Council of the City of San Bernardino Authorizing the Execution of Amendment No. 1 to the Agreement for Auditing Services Between the City of San Bernardino and Macias, Gini & O Connell LLP. (#3614) Current Business Registration Certificate: No Financial Impact: Account Budgeted Amount: «$218,086» Account No. «001-090-0053-5502.» Account Description: <<General Government Professional/Contractual Services>> Please note this balance does not indicate available funding. It does not include non- encumbered reoccurring expenses or expenses incurred, but not yet processed. Motion: Adopt the Resolution. Synopsis of Previous Council Action: 2/26/2014 -Audit Committee approved the Proposal from Macias, Gini & O Connell LLP (MGO) to be taken to the Mayor and Common Council for Approval. 3/17/2014 - Resolution #2014-57 was adopted Authorizing Audit Services for FY Ending June 30, 2013 with an estimated amount of$218,086. Background: In June, 2013, the City of San Bernardino, issued Request for proposals (RFP) F-14-04 for the provision of Professional Auditing Services. On February 26, 2014, the City's Audit Committee met to discuss the FY 2012-13 audit and met with the recommended Principals of MGO, Certified Public Accountants LLP. Financial Impact: i The first year extension for auditing fiscal year 2013-2014 has also been estimated to be $218,086 to include but not limited to the following: Annual Financial Statements; San Bernardino Successor Agency; Single Audit Report (includes 6 major programs); GANN Limit Review; and Appropriations Limit. RECOMMENDATION P Updated: 12/10/2014 by Georgeann "Gigi" Hanna C acket Pg.95 , 3614 That the Mayor and Common Council adopt the resolution authorizing Amendment No. 1 to the agreement between the City of San Bernardino and the auditing firm of MGO, Certified Public Accountants LLP for an additional estimated amount of$218,086, as per MGO's Cost Proposal (Exhibit B). City Attorney Review: Supporting Documents: Reso Amendment 1 MGO Auditors (DOCX) agrmt 3614 (PDF) Estimated Cost Summary Exhibit B (PDF) MGO Original Staff Report (PDF) MGO Original Resolution 2014-57 (PDF) MGO Original Service Agreement(PDF) Updated: 12/10/2014 by Georgeann "Gigi" Hanna C Packet Pg.96 APON RESOLUTION NO. c, RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF 5, 2 SAN BERNARDINO, AUTHORIZING THE EXECUTION OF AMENDMENT NO. 1 ¢ Z TO THE AGREEMENT FOR AUDITING SERVICES BETWEEN THE CITY OF R V SAN BERNARIDNO AND MACIAS, GINI & O CONNELL LLP. 4 U- o 5 NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON o 6 COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: 7 SECTION 1. The City Manager is hereby authorized and directed to execute an 3 8 amendment to the Audit Services Agreement between the City of San Bernardino and Macias, d as 9 Gini & O Connell, a copy of which is attached hereto marked Exhibit "A" and incorporated a m 10 herein by reference as fully as though set forth at length. N 11 r 12 SECTION 2. The Finance Department is hereby authorized to issue a Purchase Order 0 13 to Macias, Gini&O Connell for audit services for an estimated total amount of$218,086. r 6 1 14 SECTION 3. The authorization granted hereunder shall expire and be void and of no as 15 further effect if the Agreement for is not executed by both parties and returned to the Office of 16 E the City Clerk within sixty(60) days following the effective date of this Resolution. ¢ 17 �+ 18 /// M 19 /// o 20 0 c� 21 22 E 23 24 a 0 25 /// 26 E 27 /// o r 28 ¢ Packet;Pg.97 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF 1 SAN BERNARDINO, AUTHORIZING THE EXECUTION OF AMENDMENT NO. 1 w TO THE AGREEMENT FOR AUDITING SERVICES BETWEEN THE CITY OF 2 SAN BERNARIDNO AND MACIAS, GINI & O CONNELL LLP. a �a Z �U I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor 4 and Common Council of the City of San Bernardino at a meeting �o 5 0 6 thereof,held on the day of , 2014,by the following vote, to wit: L 7 Council Members: AYES NAYS ABSTAIN ABSENT 3 c d 8 E MARQUEZ L 9 a 10 BARRIOS d 11 VALDIVIA in Y_ 12 SHORETT a ° 13 NICKEL 6 14 Z JOHNSON d 15 E MULVIHILL = 16 E a 17 T- 18 Georgeann Hanna, City Clerk L 19 The foregoing Resolution is hereby approved this day of , 2014. ° 20 0 21 R. Carey Davis, Mayor r 22 City of San Bernardino E 23 Approved as to form: 24 Gary D. Saenz, City Attorney E ° N 25 � 26 By. E 27 s is 28 a ,.Packet Pg.98 AMENDMENT NO. 1 TO CONSULTANT SERVICES AGREEMENT BETWEEN THE CITY OF SAN BERNARDINO AND MACIAS, GINI&0 CONNELL LLP a� THIS AMENDMENT NO. 1 is made and entered into as of December 15,2014 by and between the CITY 2 OF SAN BERNARIDNO, (hereinafter referred to as City), and MACIAS,GINI & 0 CONNELL LLP N ("CONSULTANT"). In consideration of the mutual covenants and conditions set forth herein,the parties agree as follows: w 1. This Amendment is made with respect to the following facts and purposes: a a. On March 17, 2014, the City of San Bernardino entered into an Agreement for Auditing Services for Fiscal Year 2012-2013 for an estimated amount of Two Hundred Eighteen Thousand Eighty Six LL L ($218,086) and authorized a purchase order to the Consultant. ° b. The parties now desire to amend the agreement and add an additional estimated amount of Two 0 Hundred Eighteen Thousand Eighty Six($218,086)for Audit Services for the additional Fiscal Year 2 2013-2014. This Audit will bring the City of San Bernardino up to date and in line with the r bankruptcy plan of action. d 2. Section 2.0 Compensation And Billing of the Agreement is hereby amended to increase the amount that the City agrees to pay the Consultant an estimated amount of Two Hundred Eighteen Thousand Eighty Six dollars($218,086). City shall pay Consultant for services rendered pursuant to this Agreement at the time and in the manner set forth herein. Amendment No. 1 shall be for an estimated 2 amount of Two Hundred Eighteen Thousand Eighty Six($218,086)for Audit Consultant services for the FY 2013-2014 Audit. 3. Except for the changes specifically set forth herein, all other terms and conditions of the Agreement o shall remain in full force and effect. 6 Z w c Ill E _ E a 111 .- M lil r M 111 E L f _ 1 Ill V 111 a 111 Packet Pg.99 AMENDMENT NO. 1 TO CONSULTANT SERVICES AGREEMENT BETWEEN THE CITY OF SAN BERNARDINO AND MACIAS, GINI &0 CONNELL LLP a� IN WITNESS WHEREOF,the parties hereto have caused this Agreement to be executed by and through N their respective authorized officers, as of the date first above written. _ w CITY OF SAN BERNARDINO MACIAS, GINI &0 CONNELL LLP Q A Municipal Corporation Auditors _ U- Allen J. Parker, City Manager Signature 0 0 c� w ATTEST: 3 E a) aD Georgeann Hanna, City Clerk a U_ �a APPROVED AS TO FORM: Gary Saenz, City Attorney a o By: 64� 6 Z w a� E c a E v T Cl) r CD M E L _ E U r w Q Packet Pg. 100 EXHIBIT B COST PROPOSAL -a 3 Allm' Indusive Estimated CostSummary, LL Fiscal Year L Ended , 4_June t Annual Financial Statements $ 129,719 $ 129,719 $ 129,719 $ 389,157 3 San Bernardino Successory Agency 21,267 21,267 21,267 63,801 Single Audit Report** 59,135 59,135 59,135 177,405 E GANN Limit Review 3,715 3,715 3,715 11,145 L Appropriations Limit 4,250 4,250 4,250 12,750 Q Tota, ii ated fee,for audit services $_ 218;086-'',- $�' `21808b d **Includes 6 Major Programs. Q 0 0 z c d HourlyRates. E Hourly Rates < 2013 2014 2015 u war. ,.., to Par"finer �$ 332 $ 332 $ 332 Director 264 264 264 m Manager 162 162 162 Senior 111 111 111 1 x Semi Senior(s)/Staff 1 1021 1021 1021 W � ca E iN 0 U d tv E U) W .EC t) w Q Proud ib U Boring AC=nUMntr Packet Pg. 101 RESOLUTION (ID# 2966) DOC ID: 2966 A CITY OF SAN BERNARDINO — REQUEST FOR COUNCIL ACTION Agreement/Contract From: David Cain M/CC Meeting Date: 03/17/2014 N Prepared by: Veronica Martinez, (909) E 384-5242 ; a Dept: Finance Ward(s): All _ Subject: U- Resolution of the Mayor and Common Council of the City of San Bernardino Authorizing the Execution of an Agreement Between the City of San Bernardino and the Auditing 0 Firm of Macias, Gini & O Connell Llp (MGO, Certified Public Accountants LLP) for the 2 Provision of Financial Auditing Services. (#2966) Current Business Registration Certificate: No a� Financial Impact: Account Budgeted Amount: $218,086 allocated in FY 2013/2014 budget Account No. a <<Insert Account No.>> d Account Description: General Government Professional/Contractual Services •2 d Balance after approval of this item: <<Insert Amount>> Please note this balance does not indicate available funding. It does not include non- a encumbered reoccurring expenses or expenses incurred, but not yet processed. o Motion: Adopt the Resolution. _. 6 Synopsis of Previous Council Action: ? 2/26/2014 - Audit Committee approved the Proposal from Macias, Gini & O Connell LLP E (MGO)to be taken to the Mayor and Common Council for approval. E SUBJECT a to Resolution of the Mayor and Common Council authorizing an agreement between the City of San Bernardino and the auditing firm of Macias, Ginn& O Connell LLP (MGO) for the c provision of financial auditing services. BACKGROUND Cn In June, 2013, the City of San Bernardino, issued Request for proposals(RFP) F-14-04 for the provision of Professional Auditing Services. 0 0 The Request for Proposal Process 0 w On June 27, 2013 requests for proposals were sent to seven(7) qualified CPA firms as well as being posted on the City's website and provided to the Chamber of Commerce. Additionally, the request for proposal was advertised in both the local newspaper and the City's website. Only w a Updated.- 3/10/2014 by Georgeann "Gigi" Hanna A Pa ;`Packet Pg ° : 102 2966 three responses and one firm declined to bid. The three responding firms were Badawi & Associates from Oakland, California;MGO Certified Public Accountants from Los Angeles, CD California; and Pun &McGeady LLP from Irvine, California. Proposed cost for each firm is as follows: a� U) MGO Certified Public Accountants Badawi &Associates Pun&McGeady LLP LA, Ca Oakland, Ca Irvine, Ca a $218,086 $51,750 $374,000 U- Staff met to evaluate the proposals, and reviewed each of the three proposals. Staff and the o City's Financial Advisor interviewed the Partner from MGO, Certified Public Accountants LLP. O The evaluation criteria stated in the RFP were reviewed for each of the responding Finns. In the g areas of understanding of work scope, demonstrated skills and credentials, related experience and references, quality of the RFP response and approach to performing the audit, and pricing, all � finns were considered adequate. E After full review and discussion, staff selected MGO, Certified Public Accountants LLP and recommended that the Principals of MGO, Certified Public Accountants LLP,meet with the a City's Audit Committee. On February 26, 2014, the City's Audit Committee met to discuss the FY 2012-13 audit and U) meet with the recommended Principals of MGO, Certified Public Accountants LLP. Q 0 The decision to recommend a change in audit firms at this time is due to the current auditor's contract has ended. With the regulations regarding governmental accounting being specialized z6 and change often, it is important to go through the RFP process periodically to ensure the City is = getting the most advantageous independent audit services available. Based on these E considerations, their experience and qualifications, ability to meet deadlines, overall qualifications of the firm and of the staff members to be assigned to the audit of the City,their identification and plan of action of the challenges the City is going through during the a bankruptcy process, it was determined by the Audit Committee and City Staff that MGO, Certified Public Accountants LLP be recommended for a one year audit contract,with 2 optional one year extensions. 0 CL FINANCIAL IMPACT The amount for the first year of audit services, for fiscal year ending June 30, 2013, is estimated N to be$218,086 to include but not limited to the following: Annual Financial Statements; San = Bernardino Successor Agency; Single Audit Report(includes 6 major programs); GANN Limit Review; and Appropriations Limit. The first year extension for fiscal year ending June 30, 2014 O has been estimated to be $218,086 and the second one year extension for the fiscal year ending June 30, 2015 is also been estimated to be$218,086. Funding for audit services has been included in the FY 2013-14 General Government budget for professional/contractual services. E RECOMMENDATION w Updated:3/10/2014 by Georgeann "Gigi" Hanna A Pa Packet�g. 103 t 2966 That the Mayor and Common Council adopt the resolution authorizing the execution of an agreement by and between the City of San Bernardino and the auditing firm of MGO, Certified Public Accountants LLP. City Attorney Review: N rn Supporting documents: reso 2966 (PDF) a agrmt 2966 (PDF) MGO Exhibit A Scope of Work and Pricing (PDF) _ LL I- 0 0 0C G Y _ d E d L Q V Q� N Q O T O Z _ d E _ E a V- M O Q. d W w- N _ 0 0 C7 _ d E t V R w Q Updated: 3/10/2014 by Georgeann "Gigi" Hanna A Pa Packet g.-'-104'- 5Id N RESOLUTION NO. 2014-5 7 1 � RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF n 2 SAN BERNARDINO AUTHORIZING THE EXECUTION OF AN AGREEMENT 3 BETWEEN THE CITY OF SAN BERNARDINO AND MACIAS, GINI&O CONNELL L.L.P. (MGO, CERTIFIED PUBLIC ACCOUNTANTS LLP)FOR THE a 4 PROVISION OF FINANCIAL AUDITING SERVICES. 5 _ 6 NOW THEREFORE,BE IT RESOLVED BY THE MAYOR AND COMMON o COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: 0 7 c� 8 SECTION 1. The City Manager is hereby authorized and directed to execute the r 3 9 Financial Auditing Service Agreement with MGO Certified Public Accountants LLP, a copy d 10 of which is attached and incorporated herein as Exhibit"A". as L 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 rn 13 an estimated amount of$218,086. 14 a 0 15 SECTION 3. The authorization granted hereunder shall expire and be void and of no 6 Z 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 E a 19 24 21 o. 0 m 22 23 24 _ •L 0 25 26 ; 27 E 28 r a Packet Pg. 105 Id 2014-57 N V 1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF 2 SAN BERNARDINO AUTHORIZING THE EXECUTION OF AN AGREEMENT a� BETWEEN THE CITY OF SAN BERNARDINO AND MACIAS, GINI & O Y 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 c LL 6 and Common Council of the City of San Bernardino at a joint regular meeting ° O thereof,held on the 17thday of March ,2014,by the following vote,to wit: 8 Council Members: AYES NAYS ABSTAIN ABSENT 9 10 MARQUEZ x E d 11 BARRIOS x a m 12 VALDIVIA x co d 13 SHORETT x � 14 a NICKEL x o 15 16 JOHNSON x z° c 17 MULVIHILL _� E 18 �, E 19 George Hanna, ty Clerk 20 The foregoing Resolution is hereby approved this day of March ,2014. c 21 a 22 23 R. Carey D is, Mayor City of San Bernardino Approved as to form: 0 25 Gary D. Saenz, City Attorney 0 26 27 By: ' E 28 w a Packet Pg. 106 I L • JIMLI Stren thenyoar C *t than ironclad audi*t, Proposal for Professional Auditing services(F-14-04) July 23,2013 Propared for YOU by: James V.Godsey,CPA/Partner Call:.213.408:8666 Email:jgodseyC5;rmgocpa.com 777 Soulh Figueroa Street,Suite 2500 Los Angeles,CA 9U017 _ I s WN nr 4,.1 L n .; SPECIFIC AUDIT APPRC)ACH col we d r � Q yourneleaft, S LL We will provide an audit plan that is • Annual Rnandal 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 O 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 r Frequent communication is required the City's basic financial statements, Overview 3 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 4) appropriate management personnel on generally accepted government San Bernardino(Successor Agency) y a regular basis to report the progress of auditing standards(GAGAS).In was formed January 31,2012,as a our audits,and any preliminary findings. addition,we will express an"in- result of the dissolution of California Q We expect the City to communicate any relation-to"opinion on the supporting redevelopment agencies,and is 4) 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 m and/or other documents needed to the BFS. the Successor Agency is the receipt co complete our work. of property tax apportionment =a • Single Audit:We will perform a distributions every six months based Q In the event that circumstances warrant Single Audit in accordance with the on the approved recognized obligation o more extensive and detailed services federal Single Audit Act of 1984, payment schedule(ROPS)submitted to T_ ' beyond those in the contractual Single Audit Act Amendments of the California Department of Finance o agreement,we shall provide in writing 1996;the provisions of U.S.Office (DOF),and payments of enforceable Z and in advance the reasons for the of Management and Budget(OMB) obligations,including debt service. _ W additional services together with our Circular A-133,Audits of States, Approach a estimate of costs.No additional work will Local Governments and Non-Profit = i Our audit will include the following:be performed without advance approval Organizations and the related • g' a b i Will i -We winqure about by the City. compliance supplement for Single Planning Q Audits of State and Local Governments, any communications received Scope oESeMces 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 M 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 o. financial statements of the risk assessment of current activities d • City's Annual Financial Metropolitan taken as a whole. and changes in legislation. Statement Audit • Opinion on the Metropolitan's Testing-We will compare the • Annual Single Audit compliance with laws,regulations, names of payees paid during N • Redevelopment Agency contracts and grant agreements the fiscal year to those approved Successor Agency that have a direct and material on the ROPS and confirm that M • GANN Limit Review effect on each major Federal award. balances of cash,debt and Z • 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 0U' fiscal year. Further,we will test for 2 Other Meetings reporting and compliance. compliance with certain laws and We will assist in the preparation of: regulations,including Assembly a) Bills 1x26 and 1484,that may have • Summary schedule of prior audit y findings a material impact on the Successor cwo • Corrective action plan Agency financial statements. Q • Data collection form t•ma•ree•*VdVgA=V=W : Packet Pg..108 APPROACH SPECIFIC AUDI]- y d V • Reporting-We will obtain • Attendance at Board of Directors OthwRequired services-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 5 Successor Agency and review primarily meetings of the Audit and that may occur throughout the course of Q for appropriateness of activity Ethics Committee,whenever requested providing audit services to our clients. 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 c the DOF and the results of any Council.In addition to the City Council, levels of government,as well as at the U. meet and confers with the State for or committee meetings.If required, regional level.We will acquire prompt o possible contingency disclosures them MGO representatives will attend and pertinent responses to inquiries that in the notes to the financial or participate in other staff meetings may arise from a technical or procedural 0 statements.. upon the request of City's General standpoint,over the development of our 0 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 m agreed-upon procedures to test Senior Management,findings and to provide exceptional communication m and report on the City's GANN recommendations noted during the and audit services to you.We will present a> appropriation limitation calculation in course of our audit that improve or matters or topics which may be of Q accordance with attestation standards correct,as necessary,any accounting interest to the accounting and financial d 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 m accounting. Topics that maybe covered Cn • Agreed Upon Procedures to report • We will address systems of internal include updates on generally accepted on the City's Proposition 911 control;accounting and financial accounting principles(GAAP),generally Q Appropriations Limit Compliance systems,functions,procedures accepted auditing standards(GAAS), p Report:We will perform agreed-upon and processes,especially related OMB Circular revisions,recent GASB V_ procedures to test and report on the to cost effectiveness,compliance pronouncements,changes in business Z 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 0 with attestation standards established recommendations from the prior year. also provide information encompassing v by the American Institute of Certified It is our policy to discuss all findings GAAP and GRAS related topics. I = Public Accountants. and recommendations with the appropriate management personnel Required Communications Q • Annual Letter of Recommendations prior to inclusion in our letter. Professional standards require us to Management: MGO will prepare to communicate any instances of and submit an annual Letter of irregularities and illegal acts or M indications of illegal acts to the City's Recommendation to Management at the conclusion of each of the annual staff and City Council(Council). Also, o CL financial statement audits. The professional standards require that fi ' letter will summarize any significant we communicate other information observations orfindings noted by specifically related to the audit ' R MGO during the conduct of the annual engagement. We will ensure that our N audit together with MGO's related communications to the Council meet recommendations for improvements these requirements. rn •L or Management corrective actions.We ! O will submit such letters to Management O more frequently than annually if the O circumstances dictate. C E t 0 r Q 30 rn.aroae.•�+.sa .0" ket P6.111:11 66 rn APPROACH G) SPECIFIC AUDIT v m to M ou Our team intends to commit at least the number of hours detailed in the chart at right. A more detailed breakdown of the a hours"by component unit is included in the Cost proposal- We would be happy to assist the City with additional projects, Q as requested,above and beyond the hours committed for the audits. 75 L) c c u- Annual Bernardino SingleAudit GANN Limit •.. 4- r� ' O s Planning and Interim Fieldwork 3 Project Partner 20 2 2 - - 24 Technical Review Partner 5 - - - - 5 Engagement Director 30 3 3 1 1 38 ■' IT Consulting Director 20 - - - - 20 d i Engagement Manager 30 3 8 1 2 44 Audit Seniors) 45 5 15 1 1 6T Q Semi Seniors)and Staff 30 5 25 1 1 62 y •WINS1111M film IN . 180 18 53 4 5 260 V Year-End Fieldwork N Project Partner 20 1 5 - - 26 " Technical Review Partner 5 - - - - 5 Engagement Director 40 3 - 5 1 - 1 50 Q IT Consulting Director 15 15 Project Manager 60 4 25 1 2 92 Audit Seniors) 75 15 75 3 3 171 p Semi Seniors and Staff 190 20 290 10 10 520 Z r • • •10 405 43 400 15 16 879 E Report Production/Presentation -a Project Partner 20 2 2 1 1 26 = Technical Review Partner 15 2 4 1 1 23 E Engagement Director 20 3 - - - 23 Q IT Consulting Director 1 - - 1 1 3 Project Manager 40 4 10 1 1 56 Audit Senior(s) 50 5 15 1 2 73 M Semi Senior(s and Staff 60 - 20 1 2 83 • •. •• • • - 206 16 51 6 8 287 Q m N M •L O � 0 V R G V W Q crone mas�nca + Packet,Pd: 110 Q IDENTIFICATION OF POTENTIAL AUDIT PROBLEMS V ►, d r Litigation,Contingencies and Chapter 9 ® IViunicipall3ankruptcyFiling a 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 0 been put in place as of June 30,2013 in an effort to evaluate the adequacy of management disclosures. Areas of impart = include the following: LL L • Collective bargaining agreements * Secured and unsecured debt obligations O • General obligations of the City O • Use of special revenues and special assessments to pay general obligation debt and _ ® • Obligations for Retirement and OPEB .r c Going Concern " E Audit standards require that the independent auditor conclude on the ability of the entity to continue in business for a m 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. 4) Recent Developments in Accounting and Reporting N 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 Q about these as well as other developments in an effort to be prepared in advance for their implementation. o c 0 The Governmental Accounting Standards Board(GASB)standards that are required to be implemented for the City's 2013 6 CAFR include the following: Z w c • GASB Statement No.60,Accounting and Financial Reporting for Service Concession Arrangements(GASB No.60); m • GASB Statement No.61,The Financial Reporting Entity:Omnibus,an amendment of GASB Statements No. 14 and No.34 (GASB No.61); • GASB Statement No.62, Codification ofAccounting and Financial Reporting Guidance Contained in Pre-November30, Q 1969 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 c Liabilities(GASB No.65). M m 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 U) questionnaire to the City to help them with deciding whether a service concession arrangement exists and ask about where i 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. c O 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. d GASB No.62-Despite the number of paragraphs that this pronouncement covers,there should only be a minor amount t of work to do when implementing GASB No.62. GASB No.62 codifies all FASB and AICPA pronouncements issued before Y November 30,1989. Some of the minor work that may need to be done include: Q P.oaa7baes 9AC-CEUN Packet Pg 111 . ice. , • ..• N NI V • Removing the paragraph in the summary of significant accounting policies contained in the notes to the basic financial N 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 rnc8 sta.^.lord • Re-reading the lease accounting paragraphs(212-271)given the complexity of some of these topics such as safe 3 leaseback transactions,subleases and leases between related parties given the guidance is different from GASB No.13, Q Accounting for Operating Leases with Scheduled Rent Increases. Ca L) Early implement GASS 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 _ 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. O Once the City takes care of these requirements,it may want to tackle one of the more controversial and newsworthy O standards. In June 2012,GASB approved Statement No.68,Accounting and Financial Reporting for Pensions,an GAS8 No.68,which primarily relates to reporting by governments that provide 7. � pensions to their employees such as the City,and is effective for fi amendment of GASB Statement No.2 scal years beginning after June 15,2014. Key changes y include: • Separating how the accounting and financial reporting is determined from how pensions are funded, a) a) • Employers with defined benefit pension plans(including cost-sharing employers)will recognize a net pension liability,as `as defined by the standard,in their government-wide,proprietary and fiduciary fund financial statements. Q • 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 U 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 0 Q 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 r actuarial cost methods, o • Requiring more extensive note disclosures and required supplementary information. z c ar 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 a) c of net pension liability. As the auditors of CalPERS,we have been discussing the implementation challenges with CaIPERS, E E provided numerous webinars and training sessions prior to the standards issuance and will be speaking at the upcoming Q CSFMO Conference to discuss the potential impact of these new accounting and reporting on the local governments' v financial statements. co r L O Q Nd � O rOn V E U Y 42 Packet Pg. 112 5.1. IDENTIFICATION OF POTENTIAL AUDIT ••e- N m U_ d Yenow Book c The federal government spends more than$600 billion annually in the form of grants and cooperative agreements. o OMB and the federal agencies have been talking for some time about how grant policies can be reformed to increase Q 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 v Guidance is the culmination of the information gathering process that began when OMB issued the Advance Notice on this topic area in early 2012. c LL The following describes some of the key areas of change covered in the Proposed Guidance: o O Single Audit Threshold for Audit Proposed to Increase to$750,000. O Changes to the Major Program Determination Process-Type A/B Threshold.The OMB is proposing to"tinker" Y 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. (D E at Changes to the Major Program Determination Process—High-Risk Type A Programs.The criteria for Type A CD programs to qualify as high-risk are being revised such that for a Type A program to be designated as high-risk it must Q have,in the most recent period,failed to receive an unqualified opinion;had a material weakness in internal control;or a) had questioned costs exceeding five percent of the program's expenditures. d Changes to the Major Program Determination Process-Type B Programs.The proposed guidance would reduce N Pf the number of high-risk Type B programs that must be tested as major programs from at least one-half to at least one- 'a fourth of the number of low-risk type A programs.Additionally,small Type B programs would be considered those that Q are a flat 25%of the Type A/B program threshold. 0 Percentage of Coverage Changes.The percentage of coverage required in a single audit is proposed to be reduced O from the current 50%(normal)and 25%(low-risk auditees)to 40%(normal)and 20%(low-risk auditees). z CD Criteria for Low-Risk Auditee Status.The criteria for low-risk auditee status has been revised.For example,it would E now more clearly include data collection form submission within required timeframes as a criteria and adds a criteria c 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. Q 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. .,., QR L O Q. Findings.More detail will be required to be reported in auditor findings.However,the questioned cost threshold for a) reporting will be increased from$10,000 to$25,000. m Streamlining of Related Circulars and Guidance.The proposal streamlines eight existing OMB Circulars into one U) document including Circular A-133 and the various Cost Principles.Additionally,the Proposed Guidance would `Q 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: O 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. c Administrative Requirements.A number of changes are being proposed in this area as well.The GAQC will be E E analyzing this area within the Proposed Guidance over the upcoming weeks to determine any impact on auditors performing single audits. w � Q Pr ATOBeDVrbtRceonrt-t& Packet Pg. 113 ..O.0 (D n CoStEffective, U_ Z m L !!!!!! Value for Fees. 0 Our fee philosophy is to foster long-term client relationships by offering fair and competitive pricing.We have 0 developed a pricing model which will allow us to provide the requisite experience,commitment and quality for s your engagement Our proposal is based on the information provided based on Request for Proposal 3 No.F-14-04 and the City's financial statements for the fiscal year 2011,as the fiscal year 2012 financial statements 13 have yet to be issued.While we believe that our estimated fees are reasonable,due to the status of the fiscal year - aa) 2012 financial statements and the nature of a restructuring under Chapter 9 we are not proposing a maximum not E to exceed fee. L Our professionals have a proven reputation for demonstrating an uncompromising dedication to responsive, y value-added service.We believe our proposed fees reflect the MGO Team's experience along with our sensitivity to the budgetary concerns you are facing.Our proposed fees summarized below for completion of audit services (D assume the following: N 4 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. Q 0 o V z James V.Godsey,CPA MGO Partner c d Q to M O Q U) C L O 0 SV W t_ c� G V a f pop" Packet Pg. 114 5.Ld ■ COST .. m � d AlImInclusive Estimated CostSummary, Fiscal Year Ended C LL 0 Annual Financial Statements $ 129,719 $ 129,719 $ 129,719 $ 389,157 O San Bernardino Successory Agency 21,267 21,267 21,267 63,801 O 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 d To# I es rnat d fee,fo�`audrt sennces` $' m 218;086 _ _ 7s 21$;086 :$� ,x.;218,(386 . �'654;256:� d d L *"Includes 6 Major Programs. Q m 2 d 0 Q 0 � faurl Rates. 1 z i � F- Hourly Rates E 2013 2014 2015 c P" L x ';�� G) artner .. .; . 332 33 $� X32 E t- . a Director 264 264 264 Senior - 111 111 111 emSe $� - a ., 102 ' X02°° 102= d a: w Cn ■ a ■ o ■ ■ V ■ a 2 ■ rr"d Tom*Bwtm Acomntmts Packet Pg. 115 a� Ar s' RESOLUTION NO. 2014-57 � 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& O Q CONNELL L.L.P. (MGO, CERTIFIED PUBLIC ACCOUNTANTS LLP)FOR THE 4 PROVISION OF FINANCIAL AUDITING SERVICES. 5 i NOW THEREFORE,BE IT RESOLVED BY THE MAYOR AND COMMON o 6 COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: 0 7 t 8 SECTION 1. The City Manager is hereby authorized and directed to execute the 3 c 9 Financial Auditing Service Agreement with MGO Certified Public Accountants LLP, a copy E L 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 s' 12 Cn Purchase Order to MGO Certified Public Accountants LLP for Financial Auditing Services for 13 an estimated amount of$218,086. o 14 15 SECTION 3. The authorization granted hereunder shall expire and be void and of no Z 16 further effect if the Service Agreement for Financial auditing Services is not completed within E 17 sixty(60)days following the effective date of the Resolution. E 18 a 19 20 T 21 N O 22 o w 23 24 25 o 26 27 U t0 Q Packet Pg: 116 51xe " 2014-57 N d V d 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, Ginn & O 3 CONNELL L.L.P. (MGO, CERTIFIED PUBLIC ACCOUNTANTS LLP) FOR THE a 4 PROVISION OF FINANCIAL AUDITING SERVICES. c 5 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor U- L 0 6 and Common Council of the City of San Bernardino at a joint regular meeting 0 7 � thereof,held on the 17thday of March ,2014,by the following vote,to wit: g 3 Council Members: AYES NAYS ABSTAIN ABSENT 9 10 MARQUEZ x a 11 BARRIOS _x 12 VALDIVIA x in 13 SHORETT x a 14 ° NICKEL x 15 z° 16 JOHNSON x d E 17 MULVIHILL x d E 18 19 George Hanna, Clerk 20 7--/ The foregoing Resolution is hereby approved this day of March 2014. 21 0 22 23 R. Carey D is, Mayor City of San Bernardino 24 25 Approved as to form: , Gary D. Saenz, City Attorney o 26 0 c� 27 By: ' o 28 Y a Packet Pg. 117 1014-57 FINANCIAL AUDITING SERVICES AGREEMENT BETWEEN THE CITY OF SAN N BERNARDINO AND MACIAS,GINI & O 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, v Gini& O Connell LLP (MGO, Certified Public Accountants LLP) ("AUDITORS"). a WITNESSETH : o c A. WHEREAS, CITY proposes to have AUDITORS perform the services described 12 herein below;and 0 B. WHEREAS,AUDITORS represents that it has that degree of specialized expertise contemplated within California Government Code,Section 37103,and holds all necessary licenses 3 to practice and perform the services herein contemplated; and C. WHEREAS, CITY and AUDITORS desire to contract for financial auditing c, 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 N provisions of California Government Code, Sections 1090-1092, in the subject matter of this Agreement. Q 0 NOW, THEREFORE, for and in consideration of the mutual covenants and conditions contained herein, the parties hereby agree as follows: 6 Z c 1.0. SERVICES PROVIDED BY AUDITORS E c 1.1. Scope of Services. For the remuneration stipulated,AUDITORS shall provide the E professional services described in the Scope of Services attached hereto as Exhibit "A" and Q incorporated herein by this reference. If a conflict arises between the Scope of Services and this to Professional Services Agreement (hereinafter "Agreement"), the terms of the Agreement shall govern. d E 1.2. Professional Practices. All professional services to be provided by AUDITORS L pursuant to this Agreement shall be provided by skilled personnel and in a manner consistent with Q 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 N 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. 0 0 0 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, E r w a Packet Pg. 118 2014-5y f E, 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 co as required under this Agreement. AUDITORS shall indemnify and hold harmless CITY from and Y 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 Q 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. c U_ 1.4. Non-discrimination. In performing this Agreement,AUDITORS shall not engage ,o in, nor permit its officers, employees or agents to engage in, discrimination in employment of 0 persons because of their race, religion, color, national origin, ancestry, age, mental or physical g 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 3 result in the imposition of penalties referred to in Labor Code, Section 1735. E 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 Q Agreement or may have its own employees perform services similar to those services 2 contemplated by this Agreement. U) w 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 c consent of CITY. AUDITORS may engage a subcontractor(s) as permitted by law and may r employ other personnel to perform services contemplated by this Agreement at AUDITORS's sole c z cost and expense. _ E 1.7 Conflicts of Interest. During the term of this Agreement, AUDITORS shall at all c times maintain a duty of loyalty and a fiduciary duty as to the CITY and shall not accept payment E from or employment with any person or entity which will constitute a conflict of interest with the CITY. r co M 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 E City of San Bernardino Municipal Code and any and all other licenses, permits, qualifications, d insurance and approvals of whatever nature that are legally required of AUDITORS to practice its Q profession, skill or business. 2.0. COMPENSATION AND BILLING co 2.1. Compensation.AUDITORS shall be compensated for work performed and the City S shall be billed once per month. Total estimated fee for audit services is approximately$218,086. o 0 0 2.2. Additional Services. AUDITORS shall not receive compensation for any services j provided outside the Scope of Services unless the CITY, prior to AUDITORS performing the c E 2 U Q I Packet P g. 119 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. (n, r 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 W and the associated time for completion. Any additional services approved and performed LL pursuant to this Agreement shall be designated as "Additional Services" and shall identify the 0 I number of the authorized change order, where applicable, on all invoices. O c� 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 0 period of three(3)years from the Effective Date. a 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. Q 0 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 z0 of termination, AUDITORS shall be paid the reasonable value of services rendered to the date of d termination. E c 3.3 Documents. In the event of termination of this Agreement, all documents E prepared by AUDITORS in its performance of this Agreement shall be delivered to the CITY Q 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. E 4.0. INSURANCE d L Q 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: Cn (a) Commercial general liability, including premises-operations, c products/completed operations, broad form property damage, blanket contractual liability, independent contractors,personal injury with a policy 0 limit of not less than One Million Dollars($1,000,000.00),combined single limits,per occurrence and aggregate. I � ` E 3 v to Y w Q Packet Pg: 120 2014-57 5.Lf N Q1 (b) Automobile liability for owned vehicles, hired, and non-owned vehicles, 2 with a policy limit of not less than One Million Dollars ($1,000,000.00), N combined single limits,per occurrence and aggregate. c Y (c) Workers' compensation insurance as required by the State of California. a 4.2. Endorsements. The commercial general liability insurance policy shall contain or be endorsed to contain the following provisions: _ U_ L (a) Additional insureds: "The City of San Bernardino and its elected and ,0 appointed boards, officers, agents, and employees are additional insureds 0 with respect to this subject project and contract with City." Y (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." L a� (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." as Y 4.3. Certificates of Insurance. AUDITORS shall provide to CITY certificates of M insurance showing the insurance coverages and required endorsements described above,in a form o and content approved by CITY,prior to performing any services under this Agreement. 0 z 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 E may be held responsible for payments of damages to persons or property. E 5.0. GENERAL PROVISIONS a T 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 E 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 a this Agreement. � 5.2. Notices. Any notices, documents, correspondence or other communications N 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 0 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 w regular United States mail. E a Y Y Q Packet Pg. 121''. d IF TO CONSULTANT: IF TO CITY: in c MGO Certified Public Accountants LLP City Manager 777 South Figueroa Street, St-e-21500 300 i14ofth"D" Street a Los Angeles, CA 90017 San Bernardino, CA 92418 0 Telephone: (213) 408-8666 Telephone: (909)384-5122 c Facsimile: (909) 384-5138 = LL L O 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 terns, conditions, or provisions hereof The costs, salary and expenses of the City Attorney and °' E members of his office in enforcing this contract on behalf of the CITY shall be considered as 0) "attorneys' fees" for the purposes of this Agreement. a, a 5.4. Governing Law. This Agreement shall be governed by and construed under the 2 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. a o 5.5. Assigiunent: AUDITORS shall not voluntarily or by operation of law assign, z° 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 a hereunder for the term of this Agreement. d 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, E 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 a including, but not limited to, all civil claims or workers' compensation claims arising from or in any way related to AUDITORS's performance tinder this Agreement, except when caused solely by the CITY's negligence. �a c 5.7. Independent Contractor. AUDITORS, at all times while performing under this 2 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, w c d 5 E a Packet Pg: 722 2014-57 w State Disability Insurance Compensation, Unemployment Compensation, and other payroll 2 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 co 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 3 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. U- L O 4� 5.8 Conflict of Interest Disclosure:AUDITORS or its employees may be subject to the O 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 3 that will have a foreseeable financial effect on such interest. d 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. 2 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 Q under this Agreement at no additional cost to CITY. In the event that an error or omission o attributable to AUDITORS occurs,then AUDITORS shall, at no cost to CITY, provide all other r AUDITORS professional services necessary to rectify and correct the matter to the sole z° satisfaction of CITY and to participate in any meeting required with regard to the correction. d E 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. E 5.11. Costs. Each party shall bear its own costs and fees incurred in the preparation and r negotiation of this Agreement and in the performance of its obligations hereunder except as expressly provided herein. d E 5.12. No Third Party Beneficiary Rights.. This Agreement is entered into for the sole d benefit of CITY and AUDITORS and no other parties are intended to be direct or incidental Q beneficiaries of this Agreement and no third parry shall have any right in, under or to this Agreement. d 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 P description of the content thereof and shall not in any way affect the meaning or interpretation of o this Agreement. o 0 c W E 6 v tQ r w Q Packet Pg. 123 " 2014-57 N 5.14. Amendments. Only a writing executed by all of the parties hereto or their respective successors and assigns may amend this Agreement. N 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 Q 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 u- respect to any other occurrence or event, nor shall any waiver constitute a continuing waiver. w 0 CD 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 3 offending provision in any other circumstance, and the remaining provisions of this Agreement a shall remain in full force and effect. L 5.17. Counterparts: This Agreement may be executed in one or more counterparts,each d of which shall be deemed an original. All counterparts shall be construed together and shall U constitute one agreement. in 5.18. Corporate Authority.The persons executing this Agreement on behalf of the parties Q hereto warrant that they are duly authorized to execute this Agreement on behalf of said parties and o that by doing so,the parties hereto are formally bound to the provisions of this Agreement. 6 Z 1!/ C d E a� E Nt M C d E N L Q d U a� .M Lm 0 0 c� r _ E s 7 v f0 w Q Packet Pg."124, 4 2014-57 ��51 f R N FINANCIAL AUDITING SERVICES AGREEMENT BETWEEN THE CITY OF SAN BERNARDINO AND MACIAS,GINI& O CONNELL LLP N ai 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. Q CITY OF SAN BERNARDINO, AUDITORS A Municipal Corporation LL Alle . arker,City Manager Sig afore w 3 w Jim Godsey, CPA, CGMA,Partner L ATTEST: Q co d Georgeann"Gie Hanna, Ci Clerk Q 0 APPROVED AS TO FORM: Z c Gary D. Saenz, E City Attorney = a� E Q to M c E d L G1 Q d V d E 0 0 r c t 8 v c� w Q Packet Pg.,t125