HomeMy WebLinkAbout05.G- Finance 5.G
DOC ID: 4677 A
CITY OF SAN BERNARDINO — REQUEST FOR COUNCIL ACTION
Agreement/Contract Amendment
From: Brent Mason M/CC Meeting Date: 10/17/2016
Prepared by: Veronica Martinez, (909)
384-5242
Dept: Finance Ward(s):
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 the Pun Group LLP. (#4677)
Current Business Registration Certificate:
Financial Impact:
Staff is proposing a three-year contract extension.
The entire cost of the proposed contract for the full five years is $960,000. This breaks
down to $200,000 per year for the first three years, and $180,000 for each of the last
two years. Funds for these services are included in the Finance Department's annual
budget and fees currently required for the purchase order to be cut for the 2015/16 audit
are included in the 2016/17 adopted budget.
Motion: Adopt the Resolution.
Synopsis of Previous Council Action:
10/17/2016 - FY 2014/15 Audit Report is sent to Mayor and Council to Receive and File
7/18/2016 - FY 2013/14 Audit was Received and Filed by Mayor and Council
12/7/2015 - Resolution 2015-263 was approved
Background:
The Pun Group, LLP was contracted by the City to perform the annual audits for the
2013/14 and 2014/15 fiscal years. The second year's audit, FY 2014/15 has been
completed and is being presented to the Mayor and City Council for its review and
acceptance. The Pun Group has executed both audits in a timely and efficient manner,
interacting exceptionally well with staff and as a solid partner in helping to right the
City's financial reporting shortcomings.
The completion of the 2014/15 financial report by the Pun Group is a very positive
result. Its completion signals that San Bernardino is again current with annual audited
financial reports for the first time since 2010. As the City stands needing to make a
decision as to what to do with the 2016 audit, which is due by March 31, 2017 in order
to be filed timely, continuing the relationship with Pun Group makes sense for many
reasons. First is overwhelmingly the most efficient means of getting the report done.
Secondly, it will be substantially more cost effective as they have already incurred their
expensive "start up costs" as reflected in the fees for the two years of audits already
completed (approximately $350,000 each year). Any new firm would necessarily repeat
Updated: 10/12/2016 by Georgeann "Gigi" Hanna A I Packet Pg. 278
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4677
those costs, as we did in moving from MGO for the 2013 audit to Pun Group for the
2014 and 2015 audits. Lastly, the City has a number of accounting, reporting and
r� control deficiencies as identified in the variety of audit reports issued in recent years.
Keeping the same firm on board for an extended period, as is being recommended,
enables staff to work closely with the auditor to cure those various issues which take a
great deal of time and effort.
For these reasons, the Pun Group is being recommended for a three year contract with
two one year extensions. The proposed fees for the three year extension are
substantially less than what was already paid for the first two years' audits by Pun
Group. They have proposed $200,000 per year for each of the three years. This is very
reasonable based on the City's continued status of being in bankruptcy and executing a
variety of complex agreements as we exit bankruptcy early in 2017. Then for each of
the one year optional extensions, as the City's finances should be "back to normal," they
have proposed a further reduced fee of $180,000 for each of the two years' audits. This
fee is then back to where audit fees should reasonably be for a City the size and
complexity of San Bernardino and given the level of work required for the City's audit
(auditor prepares financial statements and footnotes).
Supporting Documents:
Pun Audit Agreement Amendment No 1 Reso (DOCX)
agrmt. 4677 (PDF)
The Pun Group Agreement for Audit Services (PDF)
Resolution 2015-263 (PDF)
City of San Bernardino—Cost Proposal (PDF)
Updated: 10/12/2016 by Georgeann "Gigi" Hanna A Packet Pg.279
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RESOLUTION NO. a
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2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AUTHORIZING THE EXECUTION OF AMENDMENT NO. 1
3 TO THE AGREEMENT FOR AUDITING SERVICES BETWEEN THE CITY OF v
SAN BERNARDINO AND THE PUN GROUP LLP.
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5 BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE m
CITY OF SAN BERNARDINO AS FOLLOWS:
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SECTION 1. The City Manager is hereby authorized and directed to execute an m
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8 amendment to the Audit Services Agreement between the City of San Bernardino and The Pun a
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9 Group LLP, a copy of which is attached hereto marked Exhibit "A" and incorporated herein 0
10 by reference as fully as though set forth at length.
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11 SECTION 2. The Finance Department is hereby authorized to issue a Purchase Order o
12 to The Pun Group LLP, for audit services for an amount not to exceed $200,000 for the Fiscal z0
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Year 2015-16 financial audit and an amount not to exceed $200,000 for the Fiscal Year -Ea
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15 2016-17 financial audit, and an amount not to exceed of$200,000 for the Fiscal Year 2017-1 S Q
16 financial audit, with two additional one year options not to exceed $180,000 each year.
17 SECTION 3. The authorization granted hereunder shall expire and be void and of no 0
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further effect if the Agreement for is not executed by both parties and returned to the Office of c
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the City Clerk within sixty(60) days following the effective date of this Resolution.
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2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF -a
SAN BERNARDINO AUTHORIZING THE EXECUTION OF AMENDMENT NO. 1
3 TO THE AGREEMENT FOR AUDITING SERVICES BETWEEN THE CITY OF v
SAN BERNARDINO AND THE PUN GROUP LLP. c
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5 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor °N
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and Common Council of the City of San Bernardino at a meeting
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thereof, held on the day of , 2016, by the following vote, to wit:
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9 Council Members: AYES NAYS ABSTAIN ABSENT
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10 MARQUEZ o
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11 BARRIOS o
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VALDIVIA
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14 SHORETT
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15 NICKEL
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16 RICHARD v
17 MULVIHILL
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20 Georgeann Hanna, City Clerk 0
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21 The foregoing Resolution is hereby approved this day of 12016. d
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23 R. Carey Davis, Mayor
24 City of San Bernardino a
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25 Approved as to form: Q
26 Gary D. Saenz, City Attorney a
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By:
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AMENDMENT NO. 1 TO CONSULTANT SERVICES AGREEMENT
BETWEEN THE CITY OF SAN BERNARDINO AND
THE PUN GROUP, LLP
THIS AMENDMENT NOA is made and entered into as of October 17, 2016 by and between the CITY
OF SAN BERNARDINO, (hereinafter referred to as City), and THE PUN GROUP, LLP ("CONSULTANT'). Q
In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows: o
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1. This Amendment is made with respect to the following facts and purposes: a
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a. On December 7, 2015, the City of San Bernardino entered into an Agreement for Auditing Services
for Fiscal Year 2013-2014 and Fiscal Year 2014-15 for a total amount not to exceed Seven Hundred
and Three Thousand dollars ($703,000) and authorized a purchase order to the Consultant.
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b. The parties now desire to amend the agreement and add an additional amount of Two Hundred
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Thousand dollars($200,000)for Audit Services for the Fiscal Year 2015-16, and Two Hundred
Thousand dollars($200,000)for Audit Services for Fiscal Year 2016-2017, and Two Hundred m
Thousand dollars ($200,000)for Audit Services for Fiscal Year 2017-18 with two fiscal year options of
One Hundred Eighty Thousand dollars ($180,000) each. These Audits will continue to move the City
of San Bernardino forward and keep the City in line with the bankruptcy plan of action. cn
2. Section 2.0 Compensation And. Billing of the Agreement is hereby amended to increase the amount a
that the City agrees to pay the Consultant to an amount not to exceed Two Hundred Thousand dollars o
($200,000)for FY 2015-16 Audit, and a not to exceed amount of Two Hundred Thousand dollars
($200,000)for FY 2016-17 Audit, and a not to exceed amount of Two Hundred Thousand dollars P3
($200,000)for FY 2017-18 Audit,with two one year options of One Hundred Eight Thousand dollars 0
($180,000) each for FY 2018-19 and FY 2019-20 Audits.The City shall pay Consultant for services o
rendered pursuant to this Agreement at the time and in the manner set forth herein. Amendment No. 1
shall be for an amount not to exceed Six Hundred Thousand dollars ($600,000) for Audit Consultant z
services for the FY 2015-16, FY 2016-2017, and FY 2017-18 Audits with two one year options of One =
Hundred Eighty Thousand dollars ($180,000) each.
3, Except for the changes specifically set forth herein, all other terms and conditions of the Agreement
shall remain in full force and effect. a
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AMENDMENT NO. 1 TO CONSULTANT SERVICES AGREEMENT
BETWEEN THE CITY OF SAN BERNARDINO AND
THE PUN GROUP, LLP
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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. o
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CITY OF SAN BERNARDINO The Pun Group, LLP a
A Municipal Corporation Auditors
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Mark Scott, City Manager Kenneth H. Pun, CPA, CGMA, )
Managing Partner Q
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ATTEST:
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Georgeann Hanna, City Clerk d
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APPROVED AS TO FORM: y
Gary D. Saenz, City Attorney °
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Exhibit A a
FINANCIAL AUDITING SERVICES AGREEMENT BETWEEN THE CITY OF SAN
BERNARDINO AND THE PUN GROUP, LLP ,
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THIS AGREEMENT for Auditing Services is made and entered into on this 7t' day of
December,2015 by and between the City of San Bernardino, a charter city("CITY"),and The Pun
Group, LLP, Certified Public Accountants ("AUDITORS"). m
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WITNESSETH : U
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A. WHEREAS, CITY proposes to have AUDITORS perform the services described `o
herein below; and a
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B. WHEREAS, AUDITORS represent that they have that degree of specialized
expertise contemplated within California Government Code, Section 37103,and hold all necessary
licenses to practice and perform the services herein contemplated; and o
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C. WHEREAS, CITY and AUDITORS desire to contract for financial auditing
services as described in the Scope of Services, attached hereto as Exhibit "A"; and c
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D. WHEREAS, no official or employee of CITY has a financial interest, within the
provisions of California Government Code, Sections 1090-1092, in the subject matter of this
Agreement.
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NOW, THEREFORE, for and in consideration of the mutual covenants and conditions
contained herein, the parties hereby agree as follows:
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1.0. SERVICES PROVIDED BY AUDITORS
1.1. Scope of Services. For the remuneration stipulated,AUDITORS shall provide the co
professional services described in the Scope of Services attached hereto as Exhibit "A" and
incorporated herein by this reference. If a conflict arises between the Scope of Services and this `t
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Professional Services Agreement (hereinafter "Agreement"), the terms of the Agreement shall 0
govern.
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1.2. Professional Practices. All professional services to be provided by AUDITORS
pursuant to this Agreement shall be provided by skilled personnel and in a manner consistent with Q
the standards of care, diligence and skill ordinarily exercised by professional consultants in similar o
fields and circumstances in accordance with sound professional practices. AUDITORS also
warrant that they are familiar with all laws that may affect their performance of this Agreement
and shall advise CITY of any changes in any laws that may affect AUDITORS' performance of a
this Agreement. AUDITORS further represents that no CITY employee will provide any services
under this Agreement.
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Exhibit A a
1.3. Warranty. AUDITORS warrant that they shall perform the services required by
this Agreement in compliance with all applicable Federal and California employment laws ,
including,but not limited to,those laws related to minimum hours and wages; occupational health cv
and safety; fair employment and employment practices; workers' compensation insurance and d
safety in employment; and all other Federal, State and local laws and ordinances applicable to the
services required under this Agreement. AUDITORS shall indemnify and hold harmless CITY m
from and against all claims, demands, payments, suits, actions, proceedings, and judgments of
every nature and description including reasonable attorneys' fees and costs,presented, brought, or
recovered against CITY for, or on account of any liability under any of the above-mentioned laws,
arising from or related to AUDITORS 's performance under this Agreement.
1.4. Non-discrimination. In performing this Agreement,AUDITORS shall not engage c
in, nor permit its officers, employees or agents to engage in, discrimination in employment of Y
persons because of their race, religion, color, national origin, ancestry, age, mental or physical
disability, medical condition, marital status, sexual gender or sexual orientation, except as c
permitted pursuant to Section 12940 of the Government Code. Violation of this provision may v
result in the imposition of penalties referred to in Labor Code, Section 1735. o
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1.5 Non-Exclusive Agreement. AUDITORS acknowledge that CITY may enter into
agreements with other consultants for services similar to the services that are subject to this
Agreement or may have its own employees perform services similar to those services
contemplated by this Agreement.
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1.6. Delegation and Assignment. This is a personal service contract,and the duties set n
forth herein shall not be delegated or assigned to any person or entity without the prior written
consent of CITY. AUDITORS may engage a subcontractor(s) as permitted by law and may
employ other personnel to perform services contemplated by this Agreement at AUDITORS 's sole
cost and expense.
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1.7 Conflicts of Interest. During the term of this Agreement, AUDITORS shall at all
times maintain a duty of loyalty and a fiduciary duty as to the CITY and shall not accept payment Q
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from or employment with any person or entity which will constitute a conflict of interest with the °
CITY.
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1.8 CITY Business, Certificate. AUDITORS shall obtain and maintain during the 2
term of this Agreement, a valid CITY Business Registration Certificate pursuant to Title 5 of the Q
City of San Bernardino Municipal Code and any and all other licenses, permits, qualifications, o
insurance and approvals of whatever nature that are legally required of AUDITORS to practice
their profession, skill or business.
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2.0. COMPENSATION AND BILLING
2.1. Compensation. AUDITORS shall be compensated for work performed and the City
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Exhibit A aL
shall be billed once per month. The total not to exceed fee for audit services is $329,000 for the
financial audit for Fiscal Year 2013-14 and the total not to exceed fee for audit services is
$374,000 for the financial audit for Fiscal Year 2014-15. The total contract amount shall not
exceed$703,000.
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2.2. Additional Services. AUDITORS shall not receive compensation for any services m
provided outside the Scope of Services unless the CITY, prior to AUDITORS performing the
additional services, approves such additional services in writing. It is specifically understood that �?
oral requests and/or approvals of such additional services or additional compensation shall be
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barred and are unenforceable.
2.3. Method of Billing. AUDITORS may submit invoices to CITY for approval. ¢
Said invoices 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 invoices within forty-five (45) days L
from the date CITY receives said invoices. The invoices shall describe in detail, the services c
performed and the associated time for completion. Any additional services approved and U
performed pursuant to this Agreement shall be designated as "Additional Services" and shall
identify the number of the authorized change order,where applicable, on all invoices. c
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2.4. Records and Audits. Records of AUDITORS's services relating to this Agreement a
shall be maintained in accordance with generally accepted auditing standards and shall be made
available to CITY for inspection and/or audit at mutually convenient times for a period of three(3)
years from the Effective Date. ¢
3.0. TERM AND NOTIFICATION.
3.1. Term. This Agreement shall commence on the Effective Date and continue
through the completion of the Fiscal Years 2013-14 and 2014-15 financial audits, which is d
estimated to be completed on or before June 30, 2016, unless the Agreement is previously Cn
terminated as provided for herein.
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3.2 Termination. CITY or AUDITORS may terminate the services provided under w
Section 1.1 of this Agreement upon thirty(3 0) days written notice to the other party. In the event
of termination, AUDITORS shall be paid the reasonable value of services rendered to the date of E
termination.
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3.3 Documents. In the event of termination of this Agreement, all documents o
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by AUDITORS in their performance of this Agreement shall be delivered to the CITY P
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 a
CITY's sole risk and without liability or legal expense to AUDITORS.
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Exhibit A
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4.0. INSURANCE ,
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4.1. Minimum Scope and Limits of Insurance. AUDITORS shall obtain and maintain a
during the term of this Agreement all of the following insurance coverages:
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(a) Commercial general liability, including premises-operations,
products/completed operations, broad form property damage, blanket
contractual liability, independent contractors, personal injury with a policy
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limit of not less than One Million Dollars($1,000,000.00),combined single
limits, per occurrence and aggregate. a
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(b) Automobile liability for owned vehicles, hired, and non-owned vehicles,
with a policy limit of not less than One Million Dollars ($1,000,000.00),
combined single limits,per occurrence and aggregate. o
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(c) Workers' compensation insurance as required by the State of California.
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4.2. Endorsements. The commercial general liability insurance policy shall contain or c
be endorsed to contain the following provisions: E
(a) Additional insureds: "The City of San Bernardino and its elected and E
appointed boards, officers, agents, and employees are additional insureds Q
with respect to this subject project and contract with City. n
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(b) Notice: "Said policy shall not terminate, nor shall it be materially changed
or cancelled, nor the coverage reduced, until thirty (30) days after written
notice is given to City." (,
(c) Other insurance: "Any other insurance maintained by the City of San a
Bernardino shall be excess and not contributing with the insurance provided L
by this policy." 0
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4.3. Certificates of Insurance. AUDITORS shall provide to CITY certificates of d
insurance showing the insurance coverages and required endorsements described above,in a form a,
and content approved by CITY, prior to performing any services under this Agreement. Q
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4.4. Non-limiting. Nothing in this Section shall be construed as limiting in any way, t�
the indemnification provision contained in this Agreement, or the extent to which AUDITORS
may be held responsible for payments of damages to persons or property.
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Exhibit A a.
5.0. GENERAL PROVISIONS
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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 m
in interest at the time of such modification. The terms of this Agreement shall prevail over any a
inconsistent provision in any other contract document appurtenant hereto, including exhibits to
this Agreement. N
5.2. Notices. Any notices, documents, correspondence or other communications a
concerning this Agreement or the work hereunder may be provided by personal delivery,facsimile o
or mail and shall be addressed as set forth below. Such communication shall be deemed served or
delivered: a) at the time of delivery if such communication is sent by personal delivery; b) at the
time of transmission if such communication is sent by facsimile; and c) 48 hours after deposit in c
the U.S. Mail as reflected by the official U.S. postmark if such communication is sent through U
regular United States mail.
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IF TO CONSULTANT: IF TO CITY: z
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Kenneth H. Pun, CPA, CGMA City Manager
The Pun Group, LLP City of San Bernardino
200 E. Sandpointe Ave., Suite 600 300 North "D" Street Q
Santa Ana, CA 92707 San Bernardino, CA 92418 n
Telephone (949) 777-8801 Telephone: (909) 384-5122
Facsimile: (949) 777-8850 Facsimile: (909) 384-5138
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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 `t
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exercise of any of its rights or remedies hereunder or the enforcement of any of the terms, w
conditions, or provisions hereof. The costs, salary and expenses of the City Attorney and
members of his office in enforcing this contract on behalf of the CITY shall be considered as d
"attorneys' fees" for the purposes of this Agreement.
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5.4. Governing Law. This Agreement shall be governed by and construed under the c
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 a
Bernardino County, California.
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5.5. Assignment. AUDITORS shall not voluntarily or by operation of law assign,
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Exhibit A a
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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 v
Agreement. Regardless of CITY's consent, no subletting or assignment shall release AUDITORS
of AUDITORS's obligation to perform all other obligations to be performed by AUDITORS
hereunder for the term of this Agreement. m
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5.6. Indemnification and Hold Harmless. AUDITORS shall protect, defend,
t indemnify and hold harmless CITY and its elected and appointed officials, boards, commissions,
officers, attorneys, agents and employees from any and all claims, losses, demands, suits,
administrative actions, penalties, liabilities and expenses, including reasonable attorney fees, a
damage to property or injuries to or death of any person or persons or damages of any nature o
including, but not limited to, all civil claims or workers' compensation claims arising from or in
any way related to AUDITORS's performance under this Agreement, except when caused solely
by the CITY's negligence. o
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5.7. Independent Contractor. AUDITORS, at all times while performing under this
Agreement, are and shall be acting at all times as an independent contractor and not as an agent or o
employee of CITY. AUDITORS shall secure,at their expense, and be responsible for any and all ?
payment of wages, benefits and taxes including, but not limited to, Income Tax, Social Security, a)
State Disability Insurance Compensation, Unemployment Compensation, and other payroll
deductions for AUDITORS and their officers, agents,and employees, and all business licenses, if
any are required, in connection with the services to be performed hereunder. Neither Q
AUDITORS nor its officers, agents and employees shall be entitled to receive any benefits which
employees of CITY are entitled to receive and shall not be entitled to workers' compensation
insurance, unemployment compensation, medical insurance, life insurance, paid vacations, paid
holidays, pension, profit sharing or social security on account of AUDITORS and its officers',
agents' and employees' work for the CITY. This Agreement does not create the relationship of
agent, servant, employee partnership or joint venture between the CITY and AUDITORS.
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5.8. Conflict of Interest Disclosure. AUDITORS or its employees may be subject to the Q
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 d
that will have a foreseeable financial effect on such interest.
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AUDITORS shall conform to all requirements of the Act. Failure to do so c
constitutes a material breach and is grounds for termination of the Agreement by CITY,
5.9. Responsibility for Errors. AUDITORS shall be responsible for their work and a.
results under this Agreement. AUDITORS, when requested, shall furnish clarification and/or
explanation as may be required by the CITY's representative, regarding any services rendered
under this Agreement at no additional cost to CITY. In the event that an error or omission E
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Exhibit A a.
attributable to AUDITORS occurs, then AUDITORS shall, at no cost to CITY, provide all other c
AUDITORS professional services necessary to rectify and correct the matter to the sole
satisfaction of CITY and to participate in any meeting required with regard to the correction. v
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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. m
5.11. Costs. Each party shall bear its own costs and fees incurred in the preparation and
negotiation of this Agreement and in the performance of its obligations hereunder except as
expressly provided herein.
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5.12. No Third PartBeneficiary Rights. This Agreement is entered into for the sole c
benefit of CITY and AUDITORS and no other parties are intended to be direct or incidental
beneficiaries of this Agreement and no third party shall have any right in, under or to this L ca
Agreement. o
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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 d
accurate description of the content thereof and shall not in any way affect the meaning or Z
interpretation of this Agreement.
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5.14. Amendments. Only a writing executed by all of the parties hereto or their E
respective successors and assigns may amend this Agreement. Q
5.15. Waiver. The delay or failure of either party at any time to require performance or
compliance by the other of any of its obligations or agreements shall in no way be deemed a waiver
of those rights to require such performance or compliance. No waiver of any provision of this
Agreement shall be effective unless in writing and signed by a duly authorized representative of
the party against whom enforcement of a waiver is sought. The waiver of any right or remedy
with respect to any occurrence or event shall not be deemed a waiver of any right or remedy with
respect to any other occurrence or event, nor shall any waiver constitute a continuing waiver. Q
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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
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affect the validity or enforceability of the remaining terms and provisions hereof or of the a,
offending provision in any other circumstance, and the remaining provisions of this Agreement Q
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shall remain in full force and effect.
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5.17. Counterparts. This Agreement may be executed in one or more counterparts,each
of which shall be deemed an original. All counterparts shall be construed together and shall °'
constitute one agreement.
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Exhibit A a
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5.18. Corporate Authority. The persons executing this Agreement on behalf of the parties
hereto warrant that they are duly authorized to execute this Agreement on behalf of said parties and
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that by doing so, the parties hereto are formally bound to the provisions of this Agreement. v
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Exhibit A a
FINANCIAL AUDITING SERVICES AGREEMENT BETWEEN THE CITY OF SAN
BERNARDINO AND THE PUN GROUP, LLP ,
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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. m
CITY OF SAN BERNARDINO, AUDITORS
A Municipal Corporation
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Allen J. Parker, City Manager Kenneth H. Pun, CPA, CGMA,
Managing Partner L
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APPROVED AS TO FORM: Z
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Gary D. Saenz, City Attorney
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RESOLUTION NO.2015-263
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2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF a
SAN BERNARDINO AUTHORIZING THE EXECUTION OF AN AGREEMENT o
3 BETWEEN THE CITY OF SAN BERNARDINO AND THE PUN GROUP, LLP, _
CERTIFIED PUBLIC ACCOUNTANTS FOR THE PROVISION OF FINANCIAL a
4 AUDITING SERVICES.
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6 NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON
COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: v
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g SECTION 1. The City Manager is hereby authorized and directed to execute the
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9 Financial Auditing Service Agreement with The Pun Group, LLP, Certified Public
10 Accountants, a copy of which is attached and incorporated herein as Exhibit "A".
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SECTION 2. The Finance Department is hereby authorized to issue a Purchase Q
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13 Order to The Pun Group, LLP, Certified Public Accountants for Financial Auditing Services
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14 for an amount not to exceed $329,000 for the Fiscal Year 2013-14 financial audit and an o
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15 amount not to exceed $374,000 for the Fiscal Year 2014-15 financial audit. The Finance
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Department is also authorized to amend the Fiscal Year 2015-16 operating budget to include Z
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an appropriation for $374,000 for auditing services from the fund balance of the General E
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20 SECTION 3. The authorization granted hereunder shall expire and be void and of no
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21 further effect if the Service Agreement for Financial Auditing Services is not completed N
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23 within sixty (60) days following the effective date of the Resolution. N
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1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF J
2 SAN BERNARDINO AUTHORIZING THE EXECUTION OF AN AGREEMENT =.
BETWEEN THE CITY OF SAN BERNARDINO AND THE PUN GROUP, LLP, a
3 CERTIFIED PUBLIC ACCOUNTANTS FOR THE PROVISION OF FINANCIAL
AUDITING SERVICES. a
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I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor
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and Common Council of the City of San Bernardino at a joint regular meeting thereof,held on
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7 the 7t"day of December, 2015,by the following vote,to wit: m
Council Members: AYES NAYS ABSTAIN ABSENT m
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10 MARQUEZ _X --
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11 BARRIOS X - a
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12 VALDIVIA X °
13 SHORETT X t°
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NICKEL X — v
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16 JOHNSON X z°
17 MULVIHILL X d
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19 George Hanna, C. C, City Clerk
20 // da _of Decemb 2015.
The foregoing Resolution is hereby approved this
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23 R. Carey Davi Mayor N
City of San B rnardino =
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Approved as to form: Ch Ch
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Gary D. Saenz, City Attorney 0:
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By: -�.
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PROPOSAL
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CITY OF SAN BERNARDINO o
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Proposal to Perform Professional Auditing Services Q
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For the fiscal years ending June 30, 2016 through 2018, with o
the option to extend for (2) years in one-year increments o
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SEPTEMBER 28, 2016
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mneth H. Pun, CPA, CGMA
anaging Partner
200 East Sandpointe Avenue, Suite 600, Santa Ana, CA 92707 c
Phone: (949) 777-8801 1 Fax: (949)777-8850 1 Email: ken.pun @pungroup.com THC Q
California CPA License Number: PAR 7601 Tai I1� i
Federal Identification Number: 46-4016990 l 1 V GROUP
AC k, O U N f A N f s Packet P9. 295
CITY OF SAN BERNARDINO
Proposal to Perform Professional Auditing Services a
TABLE �' "tip �
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Letterof Transmittal..................................................................................................................................................... 1
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SectionPrice.......................................................................................................................................................... 3 M
Certification..................................................................................................................................................... 3
Total All-Inclusive Maximum Price.................................................................................................................. 3 v
Rates by Partner, Manager, Supervisory and Staff........................................................................................4
Mannerof Payment.........................................................................................................................................4 3
Benefits of Choosing The Pun Group, LLP.................................................................................................................. 5 m
Thankyou .................................................................................................................................................................... 5 aWi
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THE C
IN GROUP °
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September 28, 2016
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City of San Bernardino r
300 North "D" Street v
San Bernardino, CA 92418 =
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Dear Sir/Madam:
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Thank you for the opportunity to submit our cost proposal to the City of San Bernardino (the "City") pursuant to your a)
request for the fiscal years ending June 30, 2016 through 2018, with the option to extend for (2) years in one-year
increments. The proposed engagement provides us with a unique opportunity to build on the collective 0
accomplishments our relationship has produced, including the completion of two significant year-end audits:
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• FY 2013-2014 audit, completed by June 28, 2016 Q
• FY 2014-2015 audit, completed by September 26, 2016 o
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Our professionalism, attention to detail and ability to successfully navigate the various challenges inherent in these P
assignments provides considerable insight into the expertise of The Pun Group, LLP. Moreover, it symbolizes the c
commitment we have to protecting the financial health and well being of the City of San Bernardino. Through our U
joint efforts, we have established a foundation for the future and we look forward to building on that relationship in o
the years to come.
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As our history together shows, The Pun Group, LLP brings the essential knowledge and experience necessary to z
serve as the City's public accounting firm, and the work plan to ensure a smooth audit process. We are secure in d
affirming our commitment because our Government Practice remains a large part of the firm. Our primary E
strengths are highlighted as follows:
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• Industry Experience: The Pun Group, LLP is the choice of over 100 governmental agencies throughout Q
California. Our depth of resources and specific government experience are substantial, and we are r.
committed to deploying these resources and our experience on behalf of the City. We understand the W
current environment, laws and regulations and have extensive experience in serving cities with similar --
sized and complex agencies—which means you won't have spent your most valuable time to train us your N
business. o
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• Engagement Professionals: While many accounting firms can perform an audit, not all can build a great n.
working relationship with their clients. The Pun Group, LLP prides itself on developing lasting, personal c
relationships with our clients. Our hands-on Partner and Manager involvement as well as low turnover of c,)
personnel are critical elements to our success and highly beneficial to the City. We are committed to 0�
ensuring the engagement team assigned to the City is consistent throughout the term of the contract. c
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• Leadership: Our Partners are recognized leaders in the industry, financial professionals with top-line E
credentials and professional certifications. All bring a passion for the public sector and the work you do. op
That said, we also understand the financial realities and pressures under which you operate. That's why we
place a premium on value. That not only translates into better management of fees and utilization of talent, rn
but a level of service that exceeds client expectations. c
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200 East Sandpointe Avenue,Suite 600,Santa Ana,California 92707 Q
Tel:949-777-8800 -Toll Free:855-276-4272• Fax:949-777-8850
www.pungroup.com Packet Pg.297
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City of San Bernardino
Page 2
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By sharing our specialized knowledge in government accounting and other value-added services, - including but 0
not limited to, our Free 8-Hour CPE on Government Accounting and Auditing -our Partners personal touch on each c
engagement and well-informed recommendations on operational efficiency, are key to success. a
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1 will serve as your primary contact for contract negotiations. I am the managing partner of the Firm and have been
authorized to legally bind the Firm. My contact information follows:
Name: Mr. Kenneth H. Pun, CPA, CGMA v
Position: Managing Partner
Address: 200 East Sandpointe Avenue, Suite 600
Santa Ana, California 92707 3
Telephone: (949)777-8801
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Email: ken.pun @pungroup.com w
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This letter is an acknowledgement of the Firm's understanding of the work to be performed. In addition,
this proposal shall be firm for a period of(90) ninety days following the date of this submission. N
Thank you for the opportunity to present our proposal to you. We look forward to answering any questions and Q
further discussing our qualifications and demonstrating our commitment to the City. L
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Sincerely, ca
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The Pun Group, LLP U
i' Certified Public Accountants and Business Advisors
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Kenneth H. Pun, CPA, CGMA
Managing Partner a
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2 Packet Pg.298
CITY OF SAN BERNARDINO
Proposal to Perform Professional Auditing Services
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SECTION I - PRICE
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Certification
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We are committed to the performance of a high quality audit at the most reasonable fee level possible, both initially
and throughout the engagement. Also, our partners will provide advice and consultation as needed, at no additional �.
cost to the City of San Bernardino. U
Name of Firm: The Pun Group, LLP
Certified Public Accountants and Business Advisors
200 Sandpointe Avenue, Suite 600 m
Santa Ana, California 92707
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Certification: Kenneth H. Pun is entitled to represent the Firm, empowered to submit the bid, and m
authorized to sign a contract with the City of San Bernardino. Cn
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Kenneth H. Pun, CPA, CGMA Managing Partner o
The Pun Group, LLP U
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Total Alt-inclusive Maximum Price c
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Following are our total fixed fees the fiscal years ending June 30, 2016 through 2018, with the option to extend for
(2)years in one-year increments. E
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Option Years m
Work to be performed: FY 2015-2016 FY 2016-2017 FY 2017-2018 FY 2018-2019 FY 2019-2020
Audited Financial Statements of the City/CAFR $ 170,000 $ 170,000 $ 170,000 $ 150,000 $ 150,000 ti
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GANN $ - $ - $ - $ - $
Single Audit-3 Major Programs $ 30,000 $ 30,000 $ 30,000 $ 30,000 $ 30,000 (n
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. .l All-inclusive Maximum Price: $ 2ii i00 200,000 200,000 180,000 180,000 0
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*Based on the information provided by the City of San Bernardino and our understanding of the engagement, the UI
City is subject to the Single Audit Act in accordance with OMB Uniform Grant Guidance. The Single Audit fees are 0
based on three (3) major programs. If the City of San Bernardino applies for additional funding subsequent to the
preparation of this proposal, the fee to audit additional major programs will be $10,000 each. The number of c
programs determined to be "major" will be based on OMB Uniform Grant Guidance. The Engagement Team will
discuss this with the City's Management before starting Single Audit work. m
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**In the event extraordinary circumstances warrant more intensive and detailed services beyond those in the
contractual agreement, the Firm will provide in writing, and in advance, the reasons for the additional services c
together with the Firm's estimate of costs. No work will be performed without advance approval by the City.
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3 Packet Pg. 299
CITY OF SAN BERNARDINO
Proposal to Perform Professional Auditing Services Q
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Rates by Partner, Supervisory, and Staff
Below is the Firm's standard hourly billing rates, delineated by staffing levels:
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Standard Hourly Billing Rates M
Position FY 2015-16
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Partner(s) $ 250
Senior Manager(s) $ 225
Manager(s) $ 200 m
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Supervisor(s) $ 175
SeniorAccountant(s) $ 150
StaffAccountant(s) $ 125
Clerical $ 100
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The Firm's policy is to maintain flexible billing rates in order to meet the needs of clients and help them control .°
costs. In the interest of continuing our long-term relationship, we will absorb all costs required to familiarize
ourselves with the operations and accounting systems, as well as, travel and printing costs. Additionally, our
Partners will be available to provide advice and consultation as necessary to the City of San Bernardino. These o
costs will also be absorbed by the Firm. U
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Any supplemental reports, audits, or agreed-upon procedures not covered by this proposal may be added in a `-
written agreement prior to commencing audit work. The Firm and the City will discuss and approve the scope and Z
associated costs of these tasks. Any additional work will be performed at the above quoted hourly rates.
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Manner of Payment
Engagement Team members are required to maintain timesheets detailing the date, number of hours, and work Q
performed for every audit task. The Firm will collect these timesheets and bill the City of San Bernardino, at the rl-
rates outlined in the Total All-Inclusive Maximum Price section, in four stages: (1) at the conclusion of the planning W
phase, (2) at the conclusion of the interim phase, (3) at the conclusion of the Year-End phase, (4) and after
presentation and acceptance of the final audit reports. Interim billings will cover a period not less than a calendar
month. The billing amounts generally break down as follows: a
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Performed Work Proposal U)
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For Planning 10% O
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For Interim work 40% 'a
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For Year-End work 40% L
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At Presentation and Acceptance of Final Reports 10% m
Total 100% M
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4 Packet Pg. 300
CITY OF SAN BERNARDINO
Proposal to Perform Professional Auditing Services
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Benefits of Choosing The Pun Group, LLP
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The Pun Group, LLP is recognized for its professionalism, integrity, and providing clients with effective resolutions
for their unique circumstances and issues. Our Firm prides itself on being able to provide personalized client
services, and with that sentiment in mind, we have carefully chosen our engagement teams. The Pun Group's main
objective is always to provide the City with solutions and directions, led by highly experienced and capable partners Y
who can successfully implement the work and produce the results you expect. This philosophy and mindset allows to
us to provide a superior level of service. c
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We trust that this proposal has given you the information you need about the Firm, the Engagement Team
members, overall audit approach, cost-saving measures, and audit fees. We are committed to exceeding your m
expectations, and we look forward to continue bringing our experience and expertise to the City of San Bernardino
and providing you with the excellent level of service that you expect and deserve.
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Thank You �a
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Thank you for giving us the opportunity to introduce the Firm and submit our qualifications to provide you with audit
services. Please direct inquiries to: �
Mr. Kenneth H. Pun, CPA, CGMA
Managing Partner U
200 East Sandpointe Avenue, Suite 600 0
Santa Ana, California 92707
ken.pun @pungroup.com c
(949) 777-8801 Z
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Sincerely, _
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The Pun Group, LLP 0
Certified Public Accountants and Business Advisors a'
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200 East Sandpointe Avenue, Suite 600, Santa Ana, California 92707 PUN ti �l 'l d �'
Phone: (949)777-8800 1 Fax: (949)777-8850 www.pungroup.com
ACCOUN Packet Pg. 303