HomeMy WebLinkAbout6/27/2007 - STAFF REPORTS - 2.I. tro
CITY COUNCIL STAFF REPORT
DATE: June 27, 2007 Consent Calendar
SUBJECT: APPROVAL OF MORELAND & ASSOCIATES TO PROVIDE
AUDITING SERVICES
FROM: David H. Ready, City Manager
BY: Department of Finance and Treasury
SUMMARY
The City and the Community Redevelopment Agency are required by law and the
Government Accounting Standards Board (GASB) to issue Comprehensive Annual
Financial Reports that are audited by an outside audit firm. The City has had the
same audit firm for the past 20 years and decided to solicit proposals at the end of
the current agreement. In April, the City issued a formal Request for Proposals
(RFP) for Audit Services. A total of seven (7) firms responded to the City's RFP and,
after an exhaustive evaluative process, staff is recommending the firm of Moreland
and Associates. This action will approve a contract with Moreland and Associates
for professional auditing services for an initial three (3) year contract with two (2) one
(1) year options at the City's discretion.
RECOMMENDATION:
1. Adopt Minute Order No. , Approving a Contract for
Professional Financial Auditing Services with Moreland and Associates,
Inc., in an amount not-to-exceed $231,610 for the initial three (3) year
term, with two (2) additional one (1) year options at the discretion of the
City Manager.
2. Authorize the City Manager to sign and execute the appropriate
documents.
STAFF ANALYSIS:
The City, the Community Redevelopment Agency and other components units are
required by law and by standards set up by the Government Accounting Standards
Board (GASB) to issue a Comprehensive Annual Financial Report that has been
audited by an outside auditing firm according to standards and procedures set up by
ITEM NOS
City Council Staff Report
June 27, 2007—page 2
Approval of Audit Services Contract with Moreland and Associates
GASB. The independent auditor plays an important and reassuring role in testing
and evaluating the city's system of internal controls and overall financial
management for signs of strength and weakness and reporting the results. They can
also serve as a valuable resource as government financial reporting continues to
evolve and government financial management becomes more complex and legally
constrained.
The current contract with Mayer Hoffman McCann P.G., Conrad Government
Services Division expired this year. Mayer, formerly Conrad & Associates, has
served as the City's auditors for the past twenty years.
Last year, the City Council directed staff to solicit proposals for audit services at the
end of the current contract term with Mayer Hoffman. In April, the City issued a
formal Request for Proposal for audit services. The City received seven (7)
proposals: Mayer Hoffman McCann P.C., Diehl Evans & Company, Moreland and
Associates, Rogers, Anderson, Malody & Scott; Vavrinek, Trine, Day & Co.; Moss,
Levy & Hartzheim; and Brown Armstrong Accountancy Corp. These proposals were
reviewed and scored by an evaluation committee consisting of the Director of
Finance and Treasurer, the Assistant City Manager for Administrative Services, the
Director of Community and Economic Development and the City Clerk.
After reviewing and scaring the proposals, the committee conducted interviews with
the two (2) highest scoring firms. Following the interviews, the committee
unanimously recommended the selection of Moreland & Associates to be the City's
auditors for the next three (3) years. The Assistant City Manager-Administrative
Services and the Purchasing Manager have negotiated the attached contract for
your review and approval.
Moreland & Associates is a large regional CPA firm providing auditing, consulting
and accounting services across the State of California. Over ninety-five percent of
their work involves services to local government clients-the balance are other not-
for-profit clients. Moreland currently provides audit services to 35 cities throughout
the State, including the cities of Cathedral City, Covina, Monterey, Simi Valley, Seal
Beach, San Clemente, Tustin and Del Mar. They also provide audit services to a
number of special districts including the Imperial Irrigation District and the Riverside
County Local Agency Formation Commission (LAFCO). Moreland has offices in
Newport Beach and San Marcos. The City will be served by the Newport Beach
Office. The engagement manager that will be assigned to oversee the City's audit
has over ten years of experience auditing public agencies and is a Certified Public
Accountant.
FISCAL IMPACT:
The three (3) year contract for the required audit services of the City's Financial
Statements is $185,098. The cost in FY 07-08 is $59,300. In addition to the required
City Council Staff Report
June 27, 2007-page 3
Approval of Audit Services Contract with Moreland and Associates
services, there are several optional services that the City may utilize, if desired.
These optional services, which are individually priced below, total $46,512 over the
three (3) year period. The total cost, including the optional services, would be
$231,610. Listed below is the breakdown of the different services and the cost by
year.
YEAR 2007 2008 2009 Total
Required Services
Audit of Financial Statements $ 37,800 $ 39,300 $ 40,884 $ 117,984
Redevelopment Agency Audit 8,000 8,320 8,653 24,973
Single Audit (Grants) 8,000 8,320 8,653 24,973
Financing Authority Audit 4,000 4,160 4,326 12,486
Street Report 1,500 1,560 1,622 4,682
TOTAL REQUIRED $ 59,300 $ 61,660 $ 64,138 $ 185,098
Optional Services
City State Controller's Report $ 5,000 $ 5,200 $ 5,408 $ 15,608
RDA State Controller's Report 3,600 3,744 3,894 11,238
Golf Course Compliance Review 3,800 3,952 4,110 11,862
DDA Reviews 2,500 2,600 2,704 7,804
TOTAL OPTIONAL $14,900 $ 15,496 $ 16,116 $ 46,512
TOTAL ALL SERVICES $ 74,200 $ 77,156 $ 80,254 $ 231,610
The City has budgeted for the required services in various accounts in the Fiscal Year
07/08 budget. Staff is not recommending any of the optional services at this time. If
staff elects to use any of the optional services, a separate budget amendment will be
submitted to the City Council for approval.
Craig . Graves, Director of Finance and Trp L. Butzliff, sistant City
T re Iv n n'strative Services
rea r g y
David H. Ready, City Nl�ger
Attachments:
1. Minute Order
2. Professional Services Agreement with Moreland and Associates
MINUTE ORDER NO.
APPROVE CONTRACT FOR PROFESSIONAL
FINANCIAL AUDITING SERVICES WITH
MORELAND & ASSOCIATES, INC., IN AN
AMOUNT NOT TO EXCEED $231,610 FOR THE
INITIAL THREE YEAR TERM, WITH TWO
ADDITIONAL ONE YEAR OPTIONS AT THE
DISCRETION OF THE CITY MANAGER_
I, James Thompson, City Clerk of the City of Palm Springs, hereby certify that
this Minute Order approving a contract for Professional Financial Auditing
Services with Moreland &Associates, Inc_, in an amount not to exceed $231, 610
for the initial three year term, with two additional one year options at the
discretion of the City Manager, was adopted by the City Council of the City of
Palm Springs, California, in a meeting thereof held on the 27th day of June 2007.
James Thompson, City Clerk
PROFESSIONAL SERVICES AGREEMENT
FINANCIAL AUDITING SERVICES
THIS PROFESSIONAL SERVICES AGREEMENT (hereinafter "Agreement") is made
and entered into, to be effective this day of 2007, by and between the
CITY OF PALM SPRINGS, a Califorria charter city and municipal corporation, (hereinafter
referred to as "City") and MORELAND & ASSOCIATES, INC., a California corporation,
(hereinafter referred to as "Consultant"). City and Consultant are sometimes hereinafter
individually referred to as "Party" and are hereinafter collectively referred to as the"Parties."
RECITALS
A. City has determined that there is a need for professional Financial Auditing
services for Government Accounting Standards Board (GASB) mandated Comprehensive
Annual Financial Reports (the"Project").
B- Consultant has submitted to City a proposal to provide Financial Auditing
services to City for the Project pursuant to the terms ol'this Agreement.
C. Consultant is qualified by virtue of its experience, training, education, reputation,
and expertise to provide these services and has agreed to provide such services as provided
herein.
D. City desires to retain Consultant to provide such professional services.
NOW, THEREFORE, in consideration of the promises and mutual obligations,
covenants, and conditions contained herein, and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
AGREEMENT
1. SERVICES OF CONSULTANT
1.1 Scope of Services. In compliance with all terms and conditions of this
Agreement, Consultant agrees to perform the professional services set forth in the Scope of
Services described in Consultant's signed, original proposal dated May 11, 2007, entitled
"Proposal for Audit Services, City of Palm Springs," which is attached hereto as Exhibit "A"
and is incorporated herein by reference (hereinafter referred to as the "Services" or "Work"). As
a material inducement to the City entering into this Agreement, Consultant represents and
warrants that Consultant is a provider of first class work and professional services and that
Consultant is experienced in performing the Work and Services contemplated herein and, in light
of such status and experience, Consultant covenants that it shall follow the highest professional
standards in performing the Work and Services required hereunder. For purposes of this
Agreement, the phrase "highest professional standards" shall mean those standards of practice
recognized as high quality among well-qualified and experienced professionals performing
similar work under similar circumstances.
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1.2 Contract Documents. The Agreement between the Parties shall consist of the
following: (1) this Agreement; (2) the City's Request for Proposals; and, (3) the Consultant's
signed, original proposal dated May 11, 2007, entitled "Proposal for Audit Services, City of
Palm Springs" submitted to the City ("Consultant's Proposal"), which shall all be referred to
collectively hereinafter as the "Contract Documents." The Consultant's Proposal and the City's
Request for Proposals, which are both attached hereto as Exhibits "A" and `B," respectively, are
hereby incorporated by reference and are made a part of this Agreement. The Scope of Services
is included as part of the Consultant's Proposal. All provisions of the Scope of Services, the
City's Request for Proposals, and the Consultant's Proposal shall be binding on the Parties.
Should any conflict or inconsistency exist in the Contract Documents, the conflict or
inconsistency shall be resolved by applying the provisions in the highest priority document,
which shall be determined in the following order of priority: (1")the teens of this Agreement;
(2"d) the provisions of the City's Request for Proposal (Exhibit `B"); (3'a) the provisions of the
Consultant's Proposal (Exhibit"A").
1.3 Compliance with Law. Consultant warrants that all Services rendered hereunder
shall be performed in accordance with all applicable federal, state, and local laws, statutes, and
ordinances and all lawful orders, rules, and regulations promulgated thereunder.
1.4 Licenses, Permits, Fees, and Assessments. Consultant represents and warrants
to City that it has obtained all licenses, permits, qualifications, and approvals of whatever nature
that are legally required to practice its profession and penforn the Work and Services required by
this Agreement. Consultant represents and warrants to City that Consultant shall, at its sole cost
and expense, keep in effect at all times during the term of this Agreement, any license, permit,
qualification, or approval that is legally required for Consultant to perform the Work and
Services under this Agreement. Consultant shall have the sole obligation to pay for any fees,
assessments, and taxes, plus applicable penalties and interest, which may be imposed by law and
arise from or are necessary for the Consultant's performance of the Work and Services required
by this Agreement, and shall indemnify, defend, and hold harmless City against any such fees,
assessments, taxes penalties, or interest levied, assessed, or imposed against City hereunder.
1.5 Familiarity with Work, By executing this Agreement, Consultant warrants that
Consultant (a) has thoroughly investigated and considered the Scope of Services to be
performed, (b) has carefully considered how the Services should be performed, and (c) fully
understands the facilities, difficulties, and restrictions attending performance of the Services
under this Agreement. If the Services involve work upon any site, Consultant warrants that
Consultant has or will investigate the site and is or will be fully acquainted with the conditions
there existing, prior to commencement of any Services hereunder. Should the Consultant
discover any latent or unknown conditions that will materially affect the performance of the
Services hereunder, Consultant shall immediately inform the City of such fact and shall not
proceed except at Consultant's risk until written instructions are received from the City.
1.6 Care of Work. Consultant shall adopt reasonable methods during the tern of the
Agreement to furnish continuous protection to the Work and the equipment, materials, papers,
documents, plans, studies, and/or other components thereof to prevent losses or damages, and
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shall be responsible for all such damages, to persons or property, until acceptance of the Work by
the City, except such losses or damages as may be caused by City's own negligence.
1.7 Further Responsibilities of Parties. Both Parties agree to use reasonable care
and diligence to perform their respective obligations under this Agreement. Both Parties agree to
act in good faith to execute all instruments, prepare all documents, and take all actions as may be
reasonably necessary to carry out the purposes of this Agreement.
1.8 Additional Services. City shall have the right at any time during the performance
of the Services, without invalidating this Agreement, to order extra work beyond that specified in
the Scope of Services or make changes by altering, adding to, or deducting from such Work. No
such extra work may be undertaken unless a written order is first given by the City to the
Consultant, incorporating therein any adjustment in (i) the Maximum Contract Amount, as
defined below, and/or (ii) the time to perform this Agreement, which adjustments are subject to
the written approval of the Consultant. Any increase in compensation of up to twenty-five
percent (25%) of the Maximum Contract Amount or S25,000, whichever is less, or in the time to
perform of up to thirty(30) days, may be approved by the City Manager, or his designee, as may
be needed to perform any extra work. Any greater increases, occurring either separately or
cumulatively, must be approved by the Palm Springs City Council. It is expressly understood by
Consultant that the provisions of this section shall not apply to the services specifically set forth
in the Scope of Services or reasonably contemplated therein, regardless of whether the time or
materials required to complete any work or service identified in the Scope of Services exceeds
any time or material amounts or estimates provided therein.
2. COMPENSATION
2.1 Maximum Contract Amount. For the Services rendered pursuant to this
Agreement, Consultant shall be compensated by City in accordance with the Schedule of
Compensation, which is included in the Consultant's Proposal (Exhibit "A") entitled "Sealed
Dollar Cost Bid Schedule for City of Palm Springs Professional Auditing Services RFP 08-07
dated May 11, 2007", and is incorporated herein by reference, but not exceeding the maximum
contract amount of Two Hundred Thirty One Thousand Six Hundred Ten Dollars, ($231,610)
(hereinafter referred to as the "Maximum Contract Amount") for the initial three year tern for all
nine annual and optional tasks, except as may be provided pursuant to Section 1.8 above. The
method of compensation shall be as set forth in Exhibit "A — Sealed Dollar Cost Bid Schedule."
Compensation for necessary expenditures for reproduction costs, telephone expenses, and
transportation expenses must be approved in advance by the Contract Officer designated
pursuant to Section 4.2 and will only be approved if such expenses are also specified in the
Schedule of Compensation. The Maximum Contract Amount shall include the attendance of
Consultant at all Project meetings reasonably deemed necessary by the City. Consultant shall not
be entitled to any increase in the Maximum Contract Amount for attending these meetings.
Consultant hereby acknowledges that it accepts the risk that the services identified in the Scope
of Services may be more costly and/or time-consuming than Consultant anticipates, that
Consultant shall not be entitled to additional compensation therefore, and that the provisions of
Section 1.8 shall not be applicable to the services identified in the Scope of Services. The
maximum amount of city's payment obligation under this section is the amount specified herein.
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If the City's maximum payment obligation is reached before the Consultant's Services under this
Agreement are completed, consultant shall nevertheless complete the Work without liability on
the City's part for further payment beyond the Maximum Contract Amount.
2.2. Method of Payment. Unless some other method of payment is specified in the
Schedule of Compensation (Exhibit "A", Sealed Dollar Cost Bid Schedule), in any month in
which Consultant wishes to receive payment, no later than the tenth (10) working day of such
month, Consultant shall submit to the City, in a form approved by the City's Finance Director, an
invoice for services rendered prior to the date of the invoice. Such requests shall be based upon
the amount and value of the services performed by Consultant and accompanied by such
reporting data including an itemized breakdown of all costs incurred and tasks performed during
the period covered by the invoice, as may be required by the City. City shall use reasonable
efforts to make payments to Consultant within forty-five (45) days after receipt of the invoice or
a soon thereafter as is reasonably practical- There shall be a maximum of one payment per
month.
2.3 Chan es in Scope. In the event any change or changes in the Scope of Services
is requested by the City, the Parties shall execute a written amendment to this Agreement, setting
forth with particularity all terms of such amendment, including, but not limited to, any additional
professional fees. An amendment may be entered into: (a) to provide for revisions or
modifications to documents or other work product or work when documents or other work
product or work is required by the enactment or revision of law subsequent to the preparation of
any documents, other work product, or work; and/or (b) to provide for additional services not
included in this Agreement or not customarily furnished in accordance with generally accepted
practice in Consultant's profession.
2.4 Appropriations, This Agreement is subject to and contingent upon funds being
appropriated therefore by the Palm springs City Council for each fiscal year covered by the
Agreement. If such appropriations are not made, this Agreement shall automatically terminate
without penalty to the City.
3. SCHEDULE OF PERFORMANCE
3.1 Time of Essence. Time is of the essence in the performance of this Agreement.
The time for completion of the services to be perfonned by Consultant is an essential condition
of this Agreement. Consultant shall prosecute regularly and diligently the Work of this
Agreement according to the agreed upon schedule in the Consultant's Proposal (Exhibit"A").
3.2 Schedule of Performance. Consultant shall commence the Services pursuant to
this Agreement upon receipt of a written notice to proceed and shall perfomn all Services within
the time period(s) established in the agreed upon schedule in the Consultant's Proposal, which is
attached hereto as Exhibit "A" and is incorporated herein by reference. When requested by
Consultant, extensions to the time period(s) specified in the Schedule of Performance may be
approved in writing by the Contract Officer, but such extensions shall not exceed one hundred
eighty (180) days cumulatively; however, the City shall not be obligated to grant such an
extension.
IL USERSMITUULIC 07RPPS\RFP09-07\M0IUi1�N1)AOM 1 4
3.3 Force Maieure. The time period(s) specified in the Schedule of Performance for
performance of the Services rendered pursuant to this Agreement shall be extended because of
any delays due to unforeseeable causes beyond the control and without the fault or negligence of
the Consultant (financial inability excepted), including, but not limited to, acts of God or of the
public enemy, unusually severe weather, fires, earthquakes, floods, epidemics, quarantine
restrictions, riots, strikes, freight embargoes, wars, and/or acts of any governmental agency,
including the City, if Consultant, within ten (10) days of the commencement of such delay,
notifies the City Manager in writing of the causes of the delay. The City Manager shall ascertain
the Pacts and the extent of delay, and extend the time for performing the Services for the period
of the enforced delay when and if in the judgrnent of the City Manager such delay is justified.
The City Manager's determination shall be final and conclusive upon the Parties to this
Agreement. In no event shall Consultant be entitled to recover damages against the City for any
delay in the performance of this Agreement, however caused, Consultant's sole remedy being
extension of the Agreement pursuant to this section.
3.4 Term. Unless earlier terminated as provided elsewhere in this Agreement, this
Agreement shall commence upon the effective date of this Agreement and continue in full force
and effect until completion of the Services for an initial term of three (3) years with two (2)
additional one (1) year options by mutual written agreement of the Parties, and pursuant to
Section 3.2 above, unless extended by mutual written agreement of the Parties.
4. COORDINATION OF WORK
4.1 Representative of Consultant. The following principal of Consultant is hereby
designated as being the principal and representative of Consultant authorized to act in its behalf
with respect to the Services to be performed under this Agreement and make all decisions in
connection therewith: Michael C. Moreland, Partner. It is expressly understood that the
experience, knowledge, education, capability, expertise, and reputation of the foregoing principal
is a substantial inducement for City to enter into this Agreement. Therefore, the foregoing
principal shall be responsible during the term of this Agreement for directing all activities of
Consultant and devoting sufficient time to personally supervise the services performed
hereunder. The foregoing principal may not be changed by Consultant without prior written
approval of the Contract Officer.
4.2 Contract Officer. The Contract Officer shall be such person as may be
designated by the City Manager of City, and is subject to change by the City Manager. It shall
be the Consultant's responsibility to ensure that the Contract Officer is kept fully informed of the
progress of the perfornance of the Services, and the Consultant shall refer any decisions which
must be made by City to the Contract Officer. Unless otherwise specified herein, any approval
of City required hereunder shall mean the approval of the Contract Officer. The Contract Officer
shall have authority to sign all documents on behalf of the City required hereunder to carry out
the terms of this Agreement.
4.3 Prohibition Against Subcontracting or Assignments. The experience,
knowledge, capability, expertise, and reputation of Consultant, its principals and employees,
were a substantial inducement for City to enter into this Agreement. Therefore, Consultant shall
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not assign the performance of this Agreement, nor any part thereof, nor any monies due
hereunder, voluntarily or by operation of law, without the prior written consent of City.
Consultant shall not contract with any other entity to perform the Services required under this
Agreement without the prior written consent of City. if Consultant is permitted to subcontract
any part of this Agreement by City, Consultant shall be responsible to City for the acts and
omissions of its subcontractor(s) in the same manner as it is for persons directly employed.
Nothing contained in this Agreement shall create any contractual relationships between any
subcontractor and City. All persons engaged in the Work will be considered employees of
Consultant. City will deal directly with and will make all payments to Consultant. In addition,
neither this Agreement nor any interest herein may be transferred, assigned, conveyed,
hypothecated, or encumbered voluntarily or by operation of law, whether for the benefit of
creditors or otherwise, without the prior written consent of City. Transfers restricted hereunder
shall include the transfer to any person or group of persons acting in concert of more than twenty
five percent (25%) of the present ownership and/or control of Consultant, taking all transfers into
account on a cumulative basis. In the event of any such unapproved transfer, including any
bankruptcy proceeding, this Agreement shall be void. No approved transfer shall release
Consultant or any surety of Consultant from any liability hereunder without the express written
consent of City-
4.4 Independent Contractor.
A- The legal relationship between the Parties is that of an independent
contractor, and nothing herein shall be deemed to make Consultant a City employee. During the
performance of this Agreement, Consultant and its officers, employees, and agents shall act in an
independent capacity and shall not act as City officers or employees. The personnel performing
the Services under this Agreement on behalf of Consultant shall at all times be under
Consultant's exclusive direction and control. Neither City nor any of its officers, employees, or
agents shall have control over the conduct of Consultant or any of its officers, employees, or
agents, except as set forth in this Agreement. Consultant, its officers, employees, or agents shall
not maintain an office or any other type of fixed business location at City's offices. City shall
have no voice in the selection, discharge, supervision, or control of Consultant's employees,
servants, representatives, or agents, or in fixing their number, compensation, or hours of service.
Consultant shall pay all wages, salaries, and other amounts due its employees in connection with
this Agreement and shall be responsible for all reports and obligations respecting them, including
but not limited to social security income tax withholding, unemployment compensation,
workers' compensation, and other similar matters. City shall not in any way or for any purpose
be deemed to be a partner of Consultant in its business or otherwise a joint venturer or a member
of any joint enterprise with Consultant.
B- Consultant shall not incur or have the power to incur any debt, obligation,
or liability against City, or bind City in any rnnauner-
C. No City benefits shall be available to Consultant, its officers, employees,
or agents in connection with any performance under this Agreement. Except for professional
fees paid to Consultant as provided for in this Agreement, City shall not pay salaries, wages, or
other compensation to Consultant for the perfonnance of Services under this Agreement. City
11 T5r25lW 1TUL3LIC`072FP5`2f-P 08-071MOR8I.AND A(;M 1 6
shall not be liable for compensation or indemnification to Consultant, its officers, employees, or
agents, for injury or sickness arising out of performing Services hereunder. If for any reason any
court or governmental agency determines that the City has financial obligations, other than
pursuant to Section 2 and Subsection 1.8 herein, of any nature relating to salary, taxes, or
benefits of Consultant's officers, employees, servants, representatives, subcontractors, or agents,
Consultant shall indemnify City for all such financial obligations.
5. INSURANCE
5.1 Types of Insurance. Consultant shall procure and maintain, at its sole cost and
expense, in a form and content satisfactory to City, the insurance described herein for the
duration of this Agreement, including any extension thereof, or as otherwise specified herein,
against claims which may arise from or in connection with the perfonnance of the Work
hereunder by Consultant, its agents, representatives, or employees. In the event the City
Manager determines that the Work or Services to be performed under this Agreement creates an
increased or decreased risk of loss to the City, the Consultant agrees that the minimum limits of
the insurance policies may be changed accordingly upon receipt of written notice from the City
Manager or his designee. Consultant shall immediately substitute any insurer whose A.M. Best
rating drops below the levels specified herein. Except as otherwise authorized below for
professional liability (errors and omissions) insurance, all insurance provided pursuant to this
Agreement shall be on an occurrence basis_ The minimum amount of insurance required
hereunder shall be as follows:
A. Errors and Omissions Insurance. Consultant shall obtain and maintain in
full force and effect throughout the tern of this Agreement, standard industry form professional
liability (errors and omissions) insurance coverage in an amount of not less than one million
dollars ($1,000,000.00) per occurrence and two-million dollars (52,000,000.00) annual
aggregate, in accordance with the provisions of this section.
(1) Consultant shall either: (a) certify in writing to the City that
Consultant is unaware of any professional liability claims made against Consultant and is
unaware of any facts which may lead to such a claim against Consultant; or (b) if Consultant
does not provide the certification pursuant to (a), Consultant shall procure from the professional
liability insurer an endorsement providing that the required limits of the policy shall apply
separately to claims arising from errors and omissions in the rendition of services pursuant to this
Agreement.
(2) If the policy of insurance is written on a "claims made" basis, the
policy shall be continued in full force and effect at all times during the tern of this Agreement,
and for a period of three (3) years from the date of the completion of the Services provided
hereunder. In the event of termination of the policy during this period, Consultant shall obtain
continuing insurance coverage for the prior acts or omissions of Consultant during the course of
performing Services under the terms of this Agreement. The coverage shall be evidenced by
either a new policy evidencing no gap in coverage, or by obtaining separate extended "tail"
coverage with the present or new carrier or other insurance arrangements providing for complete
coverage, either of which shall be subject to the written approval by the City Manager,
ILNSERS,WPPOBLICOWN RrPO-OTMURELANDAGMT 7
(3) In the event the policy of insurance is written on an "occurrence"
basis, the policy shall be continued in full force and effect during the term of this Agreement, or
until completion of the Services provided for in this Agreement, whichever is later. In the event
of termination of the policy during this period, new coverage shall immediately be obtained to
ensure coverage during the entire course of performing the Services under the terms of this
Agreement.
B. Workers' Compensation Insurance. Consultant shall obtain and maintain,
in full force and effect throughout the term of this Agreement, workers' compensation insurance
in at least the minimum statutory amounts, and in compliance with all other statutory
requirements, as required by the State of California- Consultant agrees to waive and obtain
endorsements from its workers' compensation insurer waiving subrogation rights under its
workers' compensation insurance policy against the City and to require each of its
subcontractors, if any, to do likewise under their workers' compensation insurance politics. If
Consultant has no employees, Consultant shall complete the City's Request for Waiver of
Workers' Compensation Insurance Requirement fonn.
C. Commercial General Liability Insurance. Consultant shall obtain and
maintain, in full force and effect throughout the term ol'this Agreement, a policy of commercial
general liability insurance written on a per occurrence basis with a combined single limit of at
least one million dollars ($1,000,000.00) and two million dollars ($2,000,000.00) general
aggregate for bodily injury and property damage including coverages for contractual liability,
personal injury, independent contractors, broad form property damage, products and completed
operations-
D. Business Automobile Insurance- Consultant shall obtain and maintain, in
full force and effect throughout the term of this Agreement, a policy of business automobile
liability insurance written on a per occurrence basis with a single limit liability in the amount of
one million dollars (S1,000,000.00) bodily injury and property damage. The policy shall include
coverage for owned, non-owned, leased, and hired cars.
E. Employer Liability Insurance- Consultant shall obtain and maintain, in
full force and effect throughout the term of this Agreement, a policy of employer liability
insurance written on a per occurrence basis with a policy limit of at least one million dollars
($1,000,000.00) for bodily injury or disease.
5.2 Deductibles and Self-insured Retentions. Any deductibles or self-insured
retentions must be declared to and approved by the City Manager prior to commencing any work
or services under this Agreement- Consultant guarantees payment of all deductibles and self-
insured retentions. City reserves the right to reject deductibles or self-insured retentions in
excess of 510,000, and the City Manager may require evidence of pending claims and claims
history as well as evidence of Consultant's ability to pay claims for all deductible amounts and
self-insured retentions proposed in excess of$10,000.
5.3 Other Insurance Requirements. The following provisions shall apply to the
1Pn
rt usEaswrrurirrrc,a7arrsnirros-n7\Moiicr.nNnnrnir 8 - �
insuraarce policies required of Consultant pursuant to this Agreement:
5.3.1 For any claims related to this Agreement, Consultant's coverage shall be primary
insurance as respects City and its officers, council members, officials, employees,
agents, and volunteers. Any insurance or self-insurance maintained by the City
and its officers, council members, officials, employees, agents, and volunteers
shall be in excess of Consultant's insurance and shall not contribute with it-
5.3.2 Any failure to comply with reporting or other provisions of the policies, including
breaches of warranties, shall not affect coverage provided to City and its officers,
council members, officials, employees, agents, and volunteers.
5.3.3 All insurance coverage and limits provided by Consultant and available or
applicable to this Agreement are intended to apply to each insured, including
additional insureds, against whom a claim is made or suit is brought to the full
extent of the policies. Nod-ring contained in this Agreement or any other
agreement relating to the City or its operations shall limit the application of such
insurance coverage.
5.3.4 None of the insurance coverages required herein will be in compliance with these
requirements if they include any limiting endorsement which substantially impairs
the coverages set forth herein (e.g., elimination of contractual liability or
reduction of discovery period), rniless the endorsement has first been submitted to
the City Manager and approved in writing.
5.3.5 Consultant agrees to require its insurer to modify insurance endorsements to
delete any exculpatory wording stating that failure of the insurer to mail written
notice of cancellation imposes no obligation, or that any party will "endeavor" (as
opposed to being required) to comply with the requirements of the endorsements.
Certificates of insurance will not be accepted in lieu of required endorsements,
and submittal of certificates without required endorsements may delay
conunencement of the Project- it is Consultant's obligation to ensure timely
compliance with all insurance submittal requirements as provided herein.
5.3.6 Consultant agrees to ensure that subcontractors, and any other parties involved
with the Project who are brought onto or involved in the Project by Consultant,
provide the same minimum insurance coverage required of Consultant.
Consultant agrees to monitor and review all such coverage and assumes all
responsibility for ensuring that such coverage is provided in conformity with the
requirements of this section. Consultant agrees that upon request, all agreements
with subcontractors and others engaged in the Project will be submitted to the
City for review-
5.3.7 Consultant acknowledges and agrees that any actual or alleged failure on the part
of the City to inform Consultant of non-compliance with any insurance
requirement in no way imposes any additional obligations on the City nor does it
11 WSGRSMPPUBLICl07RFPS�RFP n8-0TMGRGLANDAGMT 9 f 6-I`- :.I z�l
waive any rights hereunder in this or any other regard.
5.3.8 Consultant shall provide proof that policies of insurance required herein expiring
during the term of this Agreement have been renewed or replaced with other
policies providing at least the same coverage. Proof that such coverage has been
ordered shall be submitted prior to expiration. Endorsements as required in this
Agreement applicable to the renewing or new coverage shall be provided to City
no later than ten (10) days prior to expiration of the lapsing coverage.
5.3.9 Requirements of specific insurance coverage features or limits contained in this
section are not intended as limitations on coverage, limits, or other requirements
nor as a waiver of any coverage normally provided by any given policy. Specific
reference to a given coverage feature is for purposes of clarification only as it
pertains to a given issue, and is not intended by any party or insured to be limiting
or all-inclusive.
5.3.10 The requirements in this section supersede all other sections and provisions of this
Agreement to the extent that any other section or provision conflicts with or
impairs the provisions of this section.
5.3.11 Consultant agrees to provide immediate notice to City of any claim or loss against
Consultant arising out of the Work perforned under this Agreement and for any
other claim or loss which may reduce the insurance available to pay claims arising
out of this Agreement. City assumes no obligation or liability by such notice, but
has the right (but not the duty) to monitor the handling of any such claim or
claims if they are likely to involve City, or to reduce or dilute insurance available
for payment of potential claims_
5.3.12 Consultant agrees that the provisions of this section shall not be construed as
limiting in any way the extent to which the Consultant may be held responsible
for the payment of damages resulting from the Consultant's activities or the
activities of any person or person for which the Consultant is otherwise
responsible.
5.4 Sufficiency of insurers. Insurance required herein shall be provided by
authorized insurers in good standing with the State of California. Coverage shall be provided by
insurers admitted in the State of California with an A.M. Best's Key Rating of B-i+, Class VII, or
better, unless such requirements are waived in writing by the City Manager or his designee due
to unique circumstances.
5.5 Verification of Coverage. Consultant shall famish City with both certificates of
insurance and endorsements, including additional insured endorsements, affecting all of the
coverages required by this Agreement. The certificates and endorsements are to be signed by a
person authorized by that insurer to bind coverage on its behalf. All proof of insurance is to be
received and approved by the City before work commences. City reserves the right to require
Consultant's insurers to provide complete, certilied copies of all required insurance policies at
11'N5G2S\WPPD6LIC\07RFMRFP 08-OTMG2GLAND AGMT 10 ��
any time. Additional insured endorsements are not required for Errors and Omissions and
Workers' Compensation policies.
Verification of Insurance coverage may be provided by: (1) an approved General and/or
Auto Liability Endorsement Form for the City of Palm Springs or (2) an acceptable Certificate of
Liability Insurance Coverage with an approved Additional Insured Endorsement with the
following endorsements stated on the certificate:
1. "The City of Palm Springs, its officials, employees, and agents are named as an
additional insured--- " ("as respects City of Palm Springs Contract No. __" or 'for may and all
work performed with the City"may be included in this statement).
2- "This insurance is primary and non-contributory over any insurance or self-
insurance the City may have---" ("as respects City of Palm Springs Contract No._" or 'for any
and all work performed with the City" may be included in this statement).
i. "Should any of the above described policies be canceled before the expiration
date thereof, the issuing company will mail 30 days written notice to the Certificate Holder
named." Language such as, "endeavor to" mail and "but failure to mail such notice shall impose
no obligation or liability of any kind upon the company, its agents or representative" is not
acceptable and must be crossed out.
4. Both the Workers' Compensation and Employers' Liability policies shall contain
the insurer's waiver of subrogation in favor of City, its elected officials, officers, employees,
agents, and volunteers.
In addition to the endorsements listed above, the City of Palm Springs shall be named the
certificate holder on the policies. All certificates of insurance and endorsements are to be
received and approved by the City before work commences. All certificates of insurance must
be authorized by a person with authority to bind coverage, whether that is the authorized
agent/broker or insurance underwriter. Failure to obtain the required documents prior to the
corutnencement of work shall not waive the Consultant's obligation to provide them.
6. INDEMNIFICATION
To the fullest extent permitted by law, Consultant shall indemnify, defend (at
Consultant's sole cost and expense), protect and hold harmless City and its officers, council
members, officials, employees, agents and volunteers and all other public agencies whose
approval of the Project is required, (individually "Indemnified Party'; collectively "Indemnified
Parties") against any and all liabilities, claims,judgments, arbitration awards, settlements, costs,
demands, orders, and penalties (collectively "Claims"), including but not limited to Claims
arising from injuries or death of persons (Consultant's employees included) and damage to
property, which Claims arise out of, pertain to, or are related to the negligence, recklessness, or
willful misconduct of Consultant, its agents, employees, or subcontractors, or arise froth
Consultant"s negligent, reckless, or willful performance of or failure to perform any term,
provision, covenant, or condition of this Agreement ("Indemnified Claims"), but Consultant's
14 USERSBVPPUBLIC,07RPPS\RrP08-07,MORELANDAOM I
liability for Indemnified Claims shall be reduced to the extent such Claims arise from the
negligence, recklessness, or willful misconduct of the City, its officers, council members,
officials, employees, or agents.
Consultant shall reimburse the Indemnified Parties for any reasonable expenditures,
including reasonable attorneys' fees, expert fees, litigation costs, and expenses that each
Indemnified Party may incur by reason of Indemnified Claims. Upon request by an indemnified
Party, Consultant shall defend with legal counsel reasonably acceptable to the Indemnified Party
all Claims against the Indemnified Party that may arise out of, pertain to, or relate to Indemnified
Claims, whether or not Consultant is named as a party to the Claim proceeding. The
determination whether a Claim "may arise out of, pertain to, or relate to Indemnified Claims"
shall be based on the allegations made in the Claim and the facts known or subsequently
discovered by the Parties. In the event a final judgment, arbitration award, order, settlement, or
other final resolution expressly determines that Claims did not arise out of, pertain to, nor relate
to the negligence, recklessness, or willful misconduct of Consultant to any extent, then City shall
reimburse Consultant for the reasonable costs of defending the indemnified Parties against such
Claims, except City shall not reimburse Consultant for attorneys' fees, expert fees, litigation
costs, and expenses that were incurred defending Consultant or any parties other than
Indemnified Parties against such Claims.
Consultant's indemnification obligation hereunder shall survive the expiration or earlier
termination of this Agreement until all actions against the Indemnified Parties for such matters
indemnified hereunder are fully and finally barred by the applicable statute of limitations or, if an
action is timely filed, until such action is final. This provision is intended for the benefit of third
party Indemnified Parties not otherwise a party to this Agreement.
7. REPORT'S AND RECORDS
7.1 Accountiniz Records. Consultant shall keep complete, accurate, and detailed
accounts of all time, costs, expenses, and expenditures pertaining in any way to this Agreement.
Consultant shall keep such books and records as shall be necessary to properly perform the
Services required by this Agreement and to enable the Contract Officer to evaluate the
perfonnance of such Services. The Contract Officer shall have full and free access to such books
and records at all reasonable times, including the right to inspect, copy, audit, and make records
and transcripts from such records.
7.2 Reports. Consultant shall periodically prepare and submit to the Contract Officer
such reports concerning the performance of the Services required by this Agreement as the
Contract Officer shall require. Consultant hereby acknowledges that the City is greatly
concerned about the cost of the Work and Services to be performed pursuant to this Agreement.
For this reason, Consultant agrees that if Consultant becomes aware of any facts, circumstances,
techniques, or events that may or will materially increase or decrease the cost of the Work or
Services contemplated herein or, if Consultant is providing design services, the cost of the
project being designed, Consultant shall promptly notify the Contract Officer of such .fact,
circumstance, technique, or event and the estimated increased or decreased cost related thereto
and, if Consultant is providing design services, the estimated increased or decreased cost
H'U%F1ZSVJTU5LIC�07RFPS RFP 08.07\MORCLANDAGMT. 12 ���
estimate for the project being designed.
7.3 Ownership of Documents. All drawings, specifications, reports, records,
documents, memoranda, correspondence, computations, and other materials prepared by
Consultant, its employees, subcontractors, and agents in the performance of this Agreement shall
be the property of City and shall be promptly delivered to City upon request of the Contract
Officer or upon the termination of this Agreement, and Consultant shall have no claim for farther
employment or additional compensation as a result of the exercise by City of its full tights of
ownership of the documents and materials hereunder. Any use of such completed documents for
other projects and/or use of incomplete documents without specific written authorization by the
Consultant will be at the City's sole risk and without liability to Consultant, and the City shall
indemnify the Consultant for all damages resulting therefrom. Consultant may retain copies of
such documents for its own use. Consultant shall have an unrestricted right to use the concepts
embodied therein. Consultant shall ensure that all its subcontractors shall provide for assignment
to City of any documents or materials prepared by them, and in the event Consultant fails to
secure such assignment, Consultant shall indemnify City for all damages resulting therefrom.
7.4 Release of Documents. All drawings, specifications, reports, records,
documents, and other materials prepared by Consultant in the performance of services under this
Agreement shall not be released publicly without the prior written approval of the Contract
Officer. All infonnation gained by Consultant in the perl'onnance of this Agreement shall be
considered confidential and shall not be released by Consultant without City's prior written
authorization.
7.5 Audit and Inspection of Records. After-receipt of reasonable notice and during
the regular business hours of City, Consultant shall provide City, or other agents of City, such
access to Consultant's books, records, payroll documents, and facilities as City deems necessary
to examine, copy, audit, and inspect all accounting books, records, work data, documents, and
activities directly related to Consultant's performance under this Agreement. Consultant shall
maintain such books, records, data, and documents in accordance with generally accepted
accounting principles and shall clearly identify and make such items readily accessible to such
parties during the term of this Agreement and for a period of three (3) years from the date of
final payment by City hereunder.
8. ENFORCEMENT OF AGRE) MENT
8.1 California Law and 'Venue. This Agreement shall be construed and interpreted
both as to validity and as to performance of the Parties in accordance with the laws of the State
of California. Legal actions concerning any dispute, claim, or matter arising out of or in relation
to this Agreement shall be instituted in the Superior Court of the County of Riverside, State of
California, or any other appropriate court in such County, and Consultant covenants and agrees
to submit to the personal jurisdiction of such court in the event of such action.
8.2 Interpretation. This Agreement shall be construed as a whole according to its
I I I ISHIZS\WPPUBLIC`07RFPq,RPP 08-07 MORELAND AGMT. 13 JDQ
fair language and common meaning to achieve the objectives and purposes of the Parties. The
terms of this Agreement are contractual and the result of negotiation between the Parties.
Accordingly, any rule of construction of contracts (including, without limitation, California Civil
Code Section 1654) that ambiguities are to be construed against the drafting party, shall not be
employed in the interpretation of this Agreement. The caption headings of the various sections
and paragraphs of this Agreement are for convenience and identification purposes only and shall
not be deemed to limit, expand, or define the contents of the respective sections or paragraphs.
8.3 Termination. City may terminate this Agreement for its convenience at any
time, without cause, in whole or in part, upon giving Consultant thirty (30) days written notice.
Upon such notice, City shall pay Consultant for Services performed through the date of
tennination. Upon receipt of such notice, Consultant shall immediately cease all work under this
Agreement, unless the notice provides otherwise. Thereafter, Consultant shall have no further
claims against the City under this Agreement. Upon termination of the Agreement pursuant to
this section, Consultant shall submit to the City an invoice for work and services performed prior
to the date of termination. In addition, the Consultant reserves the right to terminate this
Agreement at any time, with or without cause, upon sixty (60) days written notice to the City,
except that where termination is due to material default by the City, the period of notice may be
such shorter time as the Consultant may detennine.
8.4 Default of Consultant.
A. Consultant's .failure to comply with any provision of this Agreement shall
constitute a default.
B- If the City Manager, or his designee, determines that Consultant is in
default in the performance of any of the tenns or conditions of this Agreement, he/she shall
notify Consultant in writing of such default. Consultant shall have ten (10) days, or such longer
period as City may designate, to cure the default by rendering satisfactory performance. In the
event Consultant fails to cure its default within such period of time, City shall have the right,
notwithstanding any other provision of this Agreement, to terminate this Agreement without
further notice and without prejudice of any remedy to which City may be entitled at law, in
equity, or under this Agreement- Consultant shall be liable for any and all reasonable costs
incurred by City as a result of such default. Compliance with the provisions of this section shall
not constitute a waiver of any City right to take legal action in the event that the dispute is not
cured, provided that nothing herein shall limit City's right to terminate this Agreement without
cause pursuant to Section 8.3.
C. If tennination is due to the failure of the Consultant to fulfill its
obligations under this Agreement, City may, after compliance with the provisions of Section
8.43, take over the work and prosecute the sarne to completion by contract or otherwise, and the
Consultant shall be liable to the extent that the total cost for completion of the Services required
hereunder exceeds the Maximum Contract Amount (provided that the City shall use reasonable
efforts to mitigate such damages), and City may withhold any payments to the Consultant for the
purpose of set-off or partial payment of the amounts owed the City as previously stated. The
withholding or failure to withhold payments to Consultant shall not lirnit Consultant's liability
11 OSERSMPP0111.1007RUS�RPP 08-07,MOREL6,ND ACMT 14 y y
for completion of the Services as provided herein.
8.5 Waiver. 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 whorn enforcement
of a waiver is sought. Any waiver by the Parties of any default or breach of any covenant,
condition, or term contained in this Agreement, shall not be construed to be a waiver of any
subsequent or other default or breach, nor shall failure by the Parties to require exact, full, and
complete compliance with any of the covenants, conditions, or terms contained in this
Agreement be construed as changing the terms of this Agreement in any manner or preventing
the Parties from enforcing the full provisions hereof.
8.6 Ri hts and Remedies Cumulative. Except with respect to rights and remedies
expressly declared to be exclusive in this Agreement, the rights and remedies of the Parties are
cumulative and the exercise by either Party of one or more of such rights or remedies shall not
preclude the exercise by it, at the same or different times, of any other rights or remedies for the
same default or any other default by the other Party.
8.7 Legal Action. In addition to any other rights or remedies, either Party may take
legal action, in law or in equity, to cure, correct or remedy any default, to recover damages for
any default, to compel specific performance of this Agreement, to obtain declaratory or
injunctive relief, or to obtain any other remedy consistent with the purposes of this Agreement.
8.8 Attorney Fees. In the event any dispute between the Parties with respect to this
Agreement results in litigation or any non-judicial proceeding, the prevailing Party shall be
entitled, in addition to such other relief as may be granted, to recover from the non-prevailing
Party all reasonable costs and expenses, including but not limited to reasonable attorney fees,
expert consultant fees, court costs and all fees, costs, and expenses incurred in any appeal or in
collection of any judgment entered in such proceeding. To the extent authorized by law, in the
event of a dismissal by the plabrti££ or petitioner of the litigation or non judicial proceeding
within thirty (30) days of the date set for trial or hearing, the other Party shall be deemed to be
the prevailing Party in such litigation or proceeding.
9. CITY OFFICERS AND EMPLOYEES: NON-DISCRIMINATION
9.1 Non-liability of City Officers and Employees. No officer or employee of the
City shall be personally liable to the Consultant, or any successor-iu-interest, in the event of any
default or breach by the City or for any amount which may become due to the Consultant or to
its successor, or for breach of airy obligation of the terms of this Agreement.
9.2 Conflict of Interest. No officer or employee of the City shall have any financial
interest, direct or indirect, in this Agreement nor shall any such officer or employee participate in
any decision relating to the Agreement which effects his financial interest or the financial interest
of any corporation, partnership, or association in which lie/she is, directly or indirectly, interested
in violation of any state statute or regulation. Consultant warrants that is has not paid or given
and will not pay or give any third party any money or other consideration in exchange for
obtaining this Agreement.
11.USERSV1111UULIC,U71U PS,RrP OB-OTMORELANU AGNI 1 15
9.3 Covenant Against Discrimination. In connection with its performance under
this Agreement, Consultant shall not discriminate against any employee or applicant for
employment because of race, religion, color, sex, age, marital status, ancestry, or national origin.
Consultant shall ensure that applicants are employed, and that employees are treated during their
employment, without regard to their race, religion, color, sex, age, marital status, ancestry, or
national origin. Such actions shall include, but not be limited to, the following: employment,
upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination;
rates of pay or other forms of compensation; and selection for training, including apprenticeship.
10. MISCELLANEOUS PROVISIONS
10.1 Patent and Copyright Infringement.
A. To the fullest extent permissible under law, and in lieu of any other
warranty by City or Consultant against patent or copyright infringement, statutory or otherwise,
it is agreed that Consultant shall defend at its expense any claim or suit against City on account
of any allegation that any item furnished under this Agreement, or the normal use or sale thereof
arising out of the performance of this Agreement, infringes upon any presently existing U.S.
letters patent or copyright and Consultant shall pay all costs and damages finally awarded in any
such suit or claim, provided that Consultant is promptly notified in writing of the suit or claim
and given authority, information and assistance at Consultant's expense for the defense of same,
and provided such suit or claim arises out of, pertains to, or is related to the negligence,
recklessness or willful misconduct of Consultant. However, Consultant will not indemnify City
if the suit or claim results from: (1) City's alteration of a deliverable, such that City's alteration
of such deliverable created the infringement upon any presently existing U.S. letters patent or
copyright; or (2) the use of a deliverable in combination with other material not provided by
Consultant when it is such use in combination which infringes upon an existing U.S. letters
patent or copyright.
B. Consultant shall have sole control of the defense of any such claim or suit
and all negotiations for settlement thereof, Consultant shall not be obligated to indemnify City
under any settlement made without Consultant's consent or in the event City fails to cooperate in
the defense of any suit or claim, provided, however, that such defense shall be at Consultant's
expense. If the use or sale of such item is enjoined as a result of the suit or claim, Consultant, at
no expense to City, shall obtain for City the right to use and sell the item, or shall substitute an
equivalent item acceptable to City and extend this patent and copyright indemnity thereto.
10.2 Notices. All notices or other communications required or pennitted hereunder
shall be in writing, and shall be personally delivered, sent by pre-paid First Class U.S. Mail,
registered or certified mail, postage prepaid, return receipt requested, or delivered or sent by
facsimile with attached evidence of completed transmission, and shall be deemed received upon
the earlier of (i) the date of delivery to the address of the person to receive such notice if
delivered personally or by messenger or overnight courier; (ii) five (5) business days after the
date of posting by the United States Post Office if by mail; or (iii) when sent if given by
facsimile. Any notice, request, demand, direction, or other communication sent by facsimile
r�rl
n�Uscas,wrruarIc,oar-rsarrns.nrmoitL,;i.nNnncMr 16 -
must be confirmed within forty-eight (48) hours by letter mailed or delivered. Other forms of
electronic transmission such as e-mails, text messages, instant messages are not acceptable
manners of notice required hereunder. Notices or other communications shall be addressed as
follows:
To Citv: City of Palrn Springs
Attention: City Manager& City Clerk
3200 E. Tahquitz Canyon Way
Palm springs, California 92262
Telephone: (760) 323-8204
Facsimile: (760) 323-8332
To Consultant: Moreland & Associates, Inc.
Attention: Michael C. Moreland, Partner
1201 Dove Street, Suite 680
Newport Beach, CA 92660
Telephone (949) 221-0025
Facsimile: (949) 221-0035
10.3 Entire Agreement. This Agreement constitutes the entire agreement between the
Parties and supersedes all prior negotiations, arrangements, agreements, representations, and
understandings, if any, made by or among the Parties with respect to the subject matter hereof
No amendments or other modifications of this Agreement shall be binding unless executed in
writing by both Parties hereto, or their respective successors, assigns, or grantees.
10.4 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be determined to be invalid by a final judgment or decree of a
court of competent jurisdiction, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the reminder of that provision, or the remaining
provisions of this Agreement unless the invalid provision is so material that its invalidity
deprives either Party of the basic benefit of their bargain or renders this Agreement meaningless.
10.5 Successors in interest. This Agreement shall be binding upon and inure to the
benefit of the Parties' successors and assignees.
10.6 Third Party Beneficiary. Except as may be expressly provided for herein,
nothing contained in this Agreement is intended to confer, nor shall this Agreement be construed
as conferring, any rights, including, without limitation, any rights as a third-party beneficiary or
otherwise, upon any entity or person not a party hereto.
10.7 Recitals. The above-referenced Recitals are hereby incorporated into the
Agreement as though fully set forth herein and each Party acknowledges and agrees that such
Party is bound, for purposes of this Agreement, by the same.
11 TSERYWPcaLIC'07U-rs arr ov-onMoacLAND acMT. 17 nr�'%
10.8. Corporate Authority. Each of the undersigned represents and warrants that (i)
the Party for which he or she is executing this Agreement is duly authorized and existing, (ii) he
or she is duly authorized to execute and deliver this Agreement on behalf of the Party For which
he or she is signing, (iii) by so executing this Agreement, the Party :For which he or she is signing
is formally bound to the provisions of this Agreement, and (iv) the entering into this Agreement
does not violate any provision of any other Agreement to which the Party for which he or she is
signing is bound.
IN WITNESS WHEREOF, the Parties have executed and entered into this Agreement as
of the date first written above.
"CITY"
CITY OF PALM SPRINGS,
a California charter law city and municipal
corporation
David 11. Ready
City Manager
ATTEST:
(SEAL)
JAMES THOMPSON,
City Clerk
APPROVED AS TO FORM:
DOUGLAS C. HOLLAND,
City Attorney
"CONSULTANT"
Moreland &Associates, Inc-
Michael C. Moreland, President
By:
Kathryn Beseau, Vice President
14 ❑SERS\WPpUl3LIC\07RFPS,RFP09-07\NIORCLANDAGMT 18 �,��J1
EXHIBIT "A"
PROPOSAL FOR AUDIT SERVICES
FOR
THE CITY OF PALM SPRINGS
PREPARED AND SUBMITTED
BY
MORE LAND & ASSOCIATES, INC.
DATED MAY 11, 2007
524762.1 `'�
ro I,
PROPOSAL FOR AUDIT S40 �vk` S
CITY OF PALM SPRINGI
MAY 11, 2007
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TITLE PAGE
RFP SUBJECT: AUDIT PROPOSAL
CITY OF PALM SPRINGS
RFP No. 08-07
NAME OF PROPOSING FIRM: MORELAND &ASSOCIATES, INC.
LOCAL ADDRESS: 1201 DOVE STREET, SUITE 680
NEWPORT BEACH, CA 92660
i
TELEPHONE NUMBER: (949) 221-0025
NAME OF CONTACT PERSON: MICHAEL C. MORELAND
EMAIL OF CONTACT PERSON: mmoreland@moreland-assoc.com
DATE: MAY 11, 2007
i
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N 1
HTABLE OF • 1
H 1
H 1
H H
H H
H SECTION PAGE H
N N
11 Letter H
H Independence 4N
H N
H LiGense to Practice in California 411
11Firm Qualifications . Experience 4H
HI H
HPartner, Qualifications and ExperienceSimilar Engagements with Other Government Entities 16
H 11
HSpecific Audit Approach 17 H
H H
H Identification of Potential Audit Problems 23 H
N Response - H
H H
11 Appendix - - Quality Control - •• 11
H H
Appendix Certificate of -
N H
H H
H H
H H
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H H
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j 1201 DOVE STREEC SURE 680
oreland & g&oa4&j J11m. NEWPORT BEACH,CALIFORNIA 92660
M
CERTIFIED PUBLIC ACCOUNTANTS 576 RANCHEROS DRIVE.SUITE 260
SAN MAROOS,CA 92069
TELEPHONE(949)221-0025
May l l, 2007
Mr- Craig A. Graves
Director of Finance/Treasurer
City of Palm Springs
3200 East Tahquitz Canyon Way
Palm Springs, CA 92262
Dear Mr. Graves:
We are pleased to present this proposal of audit services to the City of Palm Springs. We have
addressed each of the specifications included in your Request for Proposal. We have also
provided significant information about our service approach to auditing.
For the year ended June 30, 2006, we audited the financial statements of twenty-eight California
cities, twenty-five redevelopment agencies, and many other governmental entities. Our success in
providing professional services to your specialized industry is in part due to our dedication to the
development and implementation of the accounting and auditing issues relating to governmental
accounting. Our knowledge of your industry is best demonstrated by the fact that for the past
fifteen years, over ten percent of the "outstanding" awards in financial reporting issued by the
California Society of Municipal Finance Officers (CSMFO) were issued to our clients, Additionally,
approximately ten percent of the Certificates of Achievement for Excellence in Financial Reporting
issued by the Government Finance Officers Association (GFOA) to California cities during the past
fifteen years were issued to our clients. We are very proud of our part in these achievements.
We are the best qualified firm to perform this engagement because we understand that we provide a
service to our clients. We provide an audit approach that satisfies all of the technical requirements
without forgetting that we provide a service. You will have easy access to each of the audit team
members. I will personally supervise all phases of audit planning, detailed audit testing and report
preparation. We encourage you to verity our level of service as well as the availability of Ms.
Nipa Shah, the engagement manager, and myself with the references provided in our proposal.
We think you will be pleased at how highly our clients praise the quality of service we provide.
Throughout the year you should feel comfortable in calling us for advice, as we are never too busy
to meet the needs of our clients. Our clients rely on us to help keep them up-to-date on new
developments affecting their industry, because they recognize our commitment to serving the
needs of local government.
Briefly stated, the scope of services includes the following for each of the three years ending June
30, 2009 with an option to extend for two additional one year periods:
- A financial audit of the basic financial statements in the City's Comprehensive Annual Financial
Report including the typing of the CAFR and providing one photo-ready original to the City.
- A financial and compliance audit of the Community Redevelopment Agency of the City of Palm
Springs.
�-�n-nsrn�n
Mr. Craig A. Graves
Director of Finance/Treasurer
City of Palm Springs
May 11, 2007
Page 2
- An expansion of the City's financial audit to meet the requirements of the Single Audit Act,
including the requirements of Circular OMB Circular A-133, Audits of State and local
Governments, and Non-Profit Organizations and preparation of the Data Collection Form.
- A Report on Internal Control Over Financial Reporting and on Compliance and Other Matters
Based on an Audit of Financial Statements Performed in Accordance with Government Auditing
Standards. This letter will include significant deficiencies and material weaknesses, if any, and
is either included in the Single Audit Report or issued separately.
- The application of agreed-upon procedures in connection with the annual calculation of the
appropriations limit as required by Section 1.5 of Article XII IS of the California Constitution.
- On an as-needed basis, perform a compliance review of the agreement between the City and
the management company operating the City's municipal golf course.
- Review and summarize the Community Redevelopment Agency's Disposition and Development
Agreements to ensure transactions are properly recorded.
A management letter addressed to the City Manager containing our comments and
recommendations for improving the accounting procedures and the systems of internal control
(control deficiencies not considered significant/material weaknesses).
A letter to the City Council containing required communications about the audit process.
Provide if necessary, a written report of all irregularities and illegal acts or indications of illegal
acts during the audit process to the City Manager, City Attorney and the Director of Finance.
Keep the City informed of state and national developments affecting accounting, auditing and
financial reporting including providing guidance on implementation of GASB requirements.
Optional services which will be provided as requested to the City and its component units are as
follows:
- Prepare the City's Annual State Controller's Report.
- Prepare the Annual State Controllers Report for the Redevelopment Agency,
- Prepare the Annual Street Report.
- Prepare the financial statements for the Financing Authority of the City of Palm Springs.
It is noted that the firm will be responsible for preparing and word processing all financial and
compliance reports.
We have the experience and the resources to complete the above scope of services within your
timing requirements. In addition, it is our practice to provide continuity of staff during the entire
term of the agreement, at the partner, manager, and senior accountant level.
As you read through our proposal, we hope you will recognize the philosophy we follow regarding
our relationship with clients. We believe this is what sets us apart from our competition. Our
philosophy can be summarized in the following concepts:
We recognize that our product is a service.
We are careful to consider the comfort level of our client's staff while maintaining professional
skepticism.
We recognize that our work is accomplished by working with City staff, yet our client is the City
Council.
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Mr. Craig A. Graves
Director of Finance/Treasurer
City of Palm Springs
May 11, 2007
Page 3
Thank you for providing us the opportunity to present this proposal, as we would very much like to
become the auditors for the City of Palm Springs. We are committed to performing the work within
the given time period. This is a firm and irrevocable offer for the fiscal years 2006-07, 2007-08 and
2008-09. 1 am entitled to represent Moreland & Associates, Inc., empowered to submit this
proposal, and authorized to sign a contract with the City of Palm Springs. We sincerely look
forward to working with you and other City staff and the City Council. We would be pleased to
provide any additional information or answer any questions you may have regarding our proposal.
Very truly yours,
MORELAND &ASSOCIATES, INC.
Michael C. Moreland, Partner
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INDEPENDENCE
i Our firm and each staff member are independent of the City of Palm Springs and each of
its component units and thus meet the independence requirement as defined by generally
j accepted auditing standards and the U.S. Government Accountability Office's Government
Auditing Standards.
i We have not provided any services to the City of Palm Springs or its component units
which would impair our independence in the past five years. However, the firm shall
provide written notice of any professional relationships entered into during the period of
this agreement.
LICENSE TO PRACTICE IN CALIFORNIA
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The firm and all assigned key professional staff are properly licensed to practice in
California and have complied with the continuing education requirements concerning
auditing of governmental entities.
FIRM QUALIFICATIONS AND EXPERIENCE
ABOUT OUR FIRM
Moreland & Associates, Inc. is a large regional firm of certified public accountants
providing auditing, accounting, consulting, and temporary personnel services to numerous
governmental clients. Our services are provided from offices in Newport Beach and San
Marcos by sixty-five professionals and six support staff. Services to the City of Palm
Springs will be provided by our Newport Beach office. Our firm and all of our employees
are strongly committed to governmental accounting. All of our professional audit staff
have municipal government auditing experience. All are employed on a full-time basis.
Over ninety-five percent of our work involves services to local government clients. The
engagement partner, Mr. Moreland, is very active In all professional organizations in
California which deal with municipal finance. Much of his involvement is detailed in his
resume, which is included in the next section of our proposal. All of the staff identified in
this proposal are quite active in their commitment to governmental accounting, as
indicated in their resumes.
QUALITY CONTROL REVIEW
Our firm has enrolled in the Quality Control Review Program offered by the American
Institute of Certified Public Accountants. Our most recent quality review was completed in
June 2006 and included specific government engagements. We received an unqualified
opinion. A copy of the report is included in Appendix A.
Moreland & Associates, Inc. has not had any federal or state desk reviews or field
reviews of its audits during the past five years. There is not now nor has there ever
been any regulatory action or disciplinary action taken against Moreland & Associates,
Inc.
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CERTIFIED PUBLIC ACCOUNTANTS 4
CURRENT GOVERNMENTAL CLIENTS AND DIRECTLYRELATED EXPERIENCE
The following is a list of the financial audits of governmental entities that we performed
for the year ended June 30, 2006_ Nearly all of the audits were performed in accordance
j with the standards applicable to financial audits contained in Government Auditing
Standards. Approximately thirty-five of the audits were expanded to include the
requirements of the Single Audit Act, including the requirements of OMB Circular A-133
and the preparation of the Data Collection Form. All of the redevelopment agency audits
also included a compliance audit in accordance with the requirements of the "Guidelines
for Compliance Audits of California Redevelopment Agencies", issued by the State
Controller's Office. Approximately twenty-five of the clients will receive awards in
financial reporting from the GFOA and/or the CSMFO.
l CITIES
- Cities of Agoura Hills, Cathedral City, Compton, Covina, Chula Vista, Del Mar, East
Palo Alto, Fountain Valley, Garden Grove, Half Moon Bay, Hughson, La Canada
Flintridge, La Habra, Lawndale, Monterey, Monterey Park, Rolling Hills Estates, San
Buenaventura, San Clemente, San Ramon, Santa Ana, Santa Fe Springs, Seal
Beach, Seaside, Simi Valley, Stanton, Tustin, and Westlake Village. Eleven of these
cities have been clients for over five years and the remaining seventeen cities have
selected us as their auditors for a three or more year period.
- Community Redevelopment Agencies of the Cities of Agoura Hills, Cathedral City,
Compton, Covina, Chula Vista, East Palo Alto, Fountain Valley, Garden Grove, Half
Moon Bay, Hughson, La Canada Flintridge, La Habra, Lawndale, Monterey,
Monterey Park, San Buenaventura, San Clemente, San Ramon, Santa Ana, Santa
Fe Springs, Seal Beach, Seaside, Simi Valley, Stanton, and Tustin.
SPECIAL DISTRICTS
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j - Imperial Irrigation District.
Altadena Library District.
- Mesa Consolidated Water District.
- Municipal Water District of Orange County (MWDOC).
Western Riverside County Regional Wastewater Authority.
- Midway City Sanitary District.
Sewer Authority Mid-Coastside.
Palos Verdes Peninsula Transit Authority.
- Palos Verdes Library District.
Placentia Library District,
Orange County Local Agency Formation Commission (LAFCO).
- Agoura Hills and Calabasas Community Center Authority.
Metro Cities Fire Authority.
- Orange County-City Hazardous Materials Emergency Response Authority,
- Emerald Bay Service District.
Moreland & cc?� Joe.
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- Orange County Cemetery District.
- Riverside County Local Agency Formation Commission (LAFCO).
- San Bernardino County Local Agency Formation Commission (LAFCO).
- Three Arch Bay Community Services District_
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OTHER GOVERNMENT AGENCIES
- California Avocado Commission.
- West San Gabriel Valley Consortium.
- Southeast Area Social Services Funding Authority.
- Santa Barbara County Association of Governments.
- L.A. IMPACT.
OTHER SERVICES
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Our ability to provide consulting services is best demonstrated by our many years of
successfully serving the governmental industry as described in our resumes. We
provide a wide variety of consulting services to our government clients. The following is
a partial list of previously provided services, which demonstrate the range of services
we provide.
City of West Covina - We performed a management audit of all activities within the
Finance Department.
- City of El Segundo - Reviewed records supporting business licenses at selected
businesses within the City.
- City of Fullerton - Reviewed golf course revenues in order to determine compliance
with the City's golf course management agreement.
- City of Oceanside - The annual review of card room revenues. The periodic
application of agreed-upon procedures relating to the outside management of a
mobile home park.
- City of Santa Fe Springs - Reviewed tax increments allocated by the County of Los
Angeles to each Redevelopment Agency Project Area since inception of the project
areas.
- County of Orange Treasurer — We perform certain agreed-upon procedures
quarterly and annually to determine compliance with the County's investment policy
and other matters-
- California Avocado Commission - Assisted staff in the documentation of accounting
and budgeting policies and procedures.
- City of Hawaiian Gardens — Monthly and quarterly monitoring of casino operations.
City of Compton — Monthly and quarterly monitoring of casino operations
- City of Oxnard - Annually we review documentation supporting billings to the City by
an outside recycling and transfer station. We perform periodic audits of.the financial
statements of the golf course management company.
- West San Gabriel Valley Consortium - We performed a management and operations
audit of all of the major operating functions of the Consortium. We also developed
procurement policies and procedures, and a cost allocation plan.
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CERTIFIED PUB410 ACCOUNTANTS 6
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We performed a study to determine if the internal control procedures were adequate
i and functioning properly within the Parks and Recreation Department of a large city.
The major systems reviewed were cash receipts/revenues, purchasing/accounts
payable /contracting, and payroll for contract employees.
j - We have reviewed franchise payments and/or contract compliance from various
cable and disposal companies for the Cities of Encinitas; Escondido, Fountain
Valley, Huntington Beach, Oceanside, Temecula, Yorba Linda and other cities.
- We have reviewed Transient Occupancy Tax payments from some or all
hotels/motels for the Cities of Bell Gardens, Encinitas, Escondido, Healdsburg,
Laguna Beach, Monterey Park, Pomona, Santa Ana, Santa Fe Springs, Seal Beach,
Solana Beach, Solvang, Tustin and many other cities.
- We have provided internal auditing services to the Cities of Burbank and Manhattan
Beach and the County of Orange.
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Recently, the General Accounting Office provided detailed guidance regarding auditor
independence when performing an audit in accordance with Government Auditing
Standards. The standard for nonaudit services is based on two principles:
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- Auditors should not perform management functions or make management decisions.
- Auditors should not audit their own work or provide nonaudit services in situations
where amounts or services involved are significant/material to the subject matter of
the audit.
While these two principles are not new, the application of these principles to specific
nonaudit services has changed considerably as a result of the new guidance. Of course
there are many nonaudit services such as the evaluation of internal controls or the
application of agreed-upon procedures that we can continue to provide to audit clients.
Should the need arise for nonaudit services during our tenure as auditors, we will
discuss the scope of work with you and assist you in determining the most appropriate
course of action for the City.
` THE ANNUAL CALCULATION OF THE APPROPRIATIONS LIMIT
Michael Moreland was a member of the League of California Cities Gann Appropriation
Limit Task Force. The Task Force developed new guidelines for the computation of the
annual appropriations limit as a result of the passage of Proposition 111. Mr. Moreland,
on behalf of the California Society of Certified Public Accountants, assisted the Task
1 Force by developing the appropriate procedures and reporting in connection with the
f application of agreed-upon procedures relating to the annual calculation of the
appropriations limit as part of the annual financial audit process.
MANAGEMENT LETTERS
1 We issue management letters every year in connection with nearly all of our
governmental clients. Unless there are unusual circumstances, the management letters
are issued at the conclusion of the audit concurrent with the issuance of the audited
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financial statements.
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CERTIFIED PUBLIC ACCOUNTANTS
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Our management letters contain observations and recommendations that are meaningful
to our clients. They are intended to be constructive and are in fact viewed in a very positive
manner by our clients. Management letters are always reviewed in draft form with
appropriate client personnel before they are issued.
FEDERAL AND STATE GRANTS AND THE SINGLE AUDIT
Today, nearly all governmental entities are receiving significant revenues from Federal
and State grants. We have audited countless federal and state grants in connection with
the governmental clients we have served. We have also audited numerous federal and
state grants in connection with not-for-profit entity audits.
Our working papers will be retained for seven years. They will be available to the City,
federal agencies, state agencies and other parties at the direction of the City. In
addition, we will respond to the reasonable inquiries of successor auditors and allow
them to review working papers relating to matters of continuing accounting significance.
ASSISTANCE IN GOVERNMENTAL DEBT OFFERINGS
Today, because of the changing debt market and the changes in financing vehicles
available to local government, governmental entities almost always utilize debt
consultants in developing a financing strategy and the appropriate debt documents.
When requested, we assist our clients in the review of the official statement in
connection with municipal debt issues. We also issue consent letters upon request.
Many in the firm have assisted in local government debt issues.
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FRANCHISE AUDITS
As mentioned above, we have reviewed franchise fees based on gross receipts in
connection with cable and refuse companies for many cities including Encinitas,
Fountain Valley, Huntington Beach, Laguna Mills, Lake Forest, Mammoth Lakes,
Mission Viejo, Newport Beach, Oceanside, Oxnard, Temecula, West Covina, and Yorba
Linda. Additionally, we have performed tests of gross receipts on behalf of numerous
cities in connection with various recreational activities or sporting events such as golf,
( tennis, horseback riding, swimming and auto racing.
AVAILABILITY
Throughout the year you and your staff should feel comfortable calling us for advice.
We should be viewed as another resource available to you in carrying out your financial
i and administrative duties. We will contact City staff throughout the year to discuss how
current accounting pronouncements may affect your accounting or financial reporting.
We believe our ability to quickly respond to your needs and to keep you informed should
be a significant consideration in selecting us as your auditors. Please verify our level of
service and the availability of Mr. Moreland with the references provided below. Our
staff is, of course, available to provide accounting, auditing or consulting services
throughout the year.
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ASSISTANCE IN RECEIVING AWARDS
Mr. Moreland and Ms. Beseau developed a class "Train the Reviewers" for the
California Society of Municipal Finance Officers for the reviewers of GASB Statement
No. 34 Comprehensive Annual Financial Reports; which they taught in both Northern
and Southern California for two years. In 1990, Mr. Moreland developed a program
entitled "How to Prepare an Award-Winning CAFR" for the California Society of
Municipal Finance Officers. He participated in presenting the program on seven
occasions to over two hundred attendees.
Each year, four of our staff participate in the review of annual financial reports under the
California Award Program. For over fifteen years, Mr. Moreland has been a member of
the final committee reviewing reports under the California Award Program. During the
past several years, we have assisted approximately fifty cities in receiving "outstanding"
awards under the California Award Program. Most of these cities have also received
Certificates of Achievement from the GFOA. For the year ended June 30, 2005, all of
our clients that applied to the CSMFO received "outstanding" awards in financial
reporting. All of the staff identified in our proposal have experience in preparing award-
winning CAFR's.
IMPLEMENTATION OF GASB PRONOUNCEMENTS
Although you have already implemented GASB Statement No. 34, we would like to
highlight our expertise in this area. Mr. Moreland was a member of the GASB Task
Force on the New Reporting Model. He was the only CPA practitioner in California to be
a member of the Task Force. The Task Force met one or two days each year in New
York with the Governmental Accounting Standards Board and their staff to advise the
Board on the project and to react to suggestions and positions taken by the Board.
Throughout the project, the Task Force reviewed concept papers, drafts of documents
prepared by the Board and their staff, and generally served as a sounding board for
considered ideas. The project resulted in the issuance of GASB Statement No. 34.
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Since the issuance of GASB Statement No. 34, Mr. Moreland has made presentations
on the subject to the Alameda County City Managers Association, the Southern
California Chapter of the American Public Works Association (three times), the Annual
Conference of the California chapter of the American Public Works Association, and
the Orange County Municipal Public Works Association. Additionally, he has made
presentations on GASB Statement No. 34 to the San Diego Chapter, two Los Angeles
Chapters and the Orange County Chapter of the California Society of Municipal Finance
Officers. Mr. Moreland advised the American Institute of Certified Public Accountants
i (AICPA) in revisions to their State and Local Government Industry Audit Guide to
incorporate issues relating to GASB Statement No. 34.
fAs new GASB statements are issued, the California Committee on Municipal
Accounting (CCMA) develops white papers to assist finance directors and their auditors
implement the new requirements in California. Mr. Moreland, as Co-Chairman of
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CCMA, actively participates in the development of all white papers and other documents
providing guidance in governmental accounting and auditing issued by CCMA. His
expertise is available to you regarding the implementation of any new GASB
Statements.
ACCESS TO NATIONAL RESOURCES
As a member of the GASB Task Force on the New Reporting Model, Mr. Moreland
worked closely for over five years with all the members of the GASB Board and nearly
all of the technical staff of the GASB. Another member of the Task Force was Stephen
Gauthier, Director of GFOA's Technical Services Center.
As Chairman of the California Committee on Municipal Accounting and Chairman of the
California Society of Certified Public Accountants Governmental Accounting and
Auditing Committee, Mr. Moreland has made several oral presentations to the GASB on
the governmental accounting issues which are most important in California. Through
these organizations, he has responded to all documents released by the GASB seeking
public comment.
Because of these close relationships, we were able recently to arrange three personal
meetings between client personnel and a GASB Board member. On several occasions
each year, our management group will discuss unusual accounting issues with technical
staff at the GASB and/or the GFOA. They provide an additional resource that is
available to you should the need arise. These resources are available to assist with the
implementation of any future GASB Statements.
PARTNER, SUPERVISORY AND STAFF QUALIFICATIONS AND EXPERIENCE
Our audit team members have extensive, direct experience in auditing California cities.
We believe our individual qualifications will assure you of receiving the type of service
we describe in this proposal. We encourage you to contact the references provided
below. We are confident that all of our clients are positively impressed with the level of
service we provide.
It is our practice to provide continuity of staff during the entire term of the agreement at
the partner, manager, and senior accountant level. Except for unusual circumstances,
all three of these positions will be filled by staff who served the City during the prior
year. It is our understanding that the City retains the right to approve or reject any
replacements.
As shown in Figure 1, at the end of this section, our audit team will be organized under
the direction of Mr. Michael Moreland_ He will assume overall responsibility for services
provided to the City. He will be supported by Ms. Nipa Shah who will manage the staff
working in the field. Mr. David Cotellesse will be the senior accountant in charge of the
fieldwork, and Ms. Kathryn Beseau will be the quality control reviewer. Their resumes
are presented below.
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CERTIFIED PUBLIC ACCOUNTANTS 10
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RESUME OF MICHAEL MORELAND ENGAGEMENT PARTNER
Mr. Michael Moreland will assume overall responsibility for services
provided to the City. He has over twenty-five years of experience in
providing auditing and consulting services to local government clients in
California. He has audited approximately twenty percent of the cities of
California.
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Some of the clients he has served include:
Cities of Bell Gardens, Burbank, Compton, East Palo Alto,
Escondido, Encinitas, Fountain Valley, Fullerton, Garden Grove, Glendale, Half
Moon Bay, Huntington Beach, Los Angeles, Monterey, Oceanside, Poway, San
Marcos, Santa Ana, Santa Barbara, Santa Clarita, Seaside, Solana Beach, Stanton
and Ventura
Counties of Los Angeles, Orange, San Bernardino and San Diego
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Irvine Ranch Water District
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Orange County Sanitation District
Santa Barbara County Association of Governments
For the past fifteen years, Mr. Moreland has been either the Chairman of the California
Society of Certified Public Accountants State Governmental Accounting and Auditing
Committee, or Chairman of the California Committee on Municipal Accounting. These
two organizations determine how new accounting principles are applied in California.
Mr. Moreland was the only CPA practitioner in California to be a member of the GASB
Task Force on the New Reporting Model. Throughout the project, the Task Force
reviewed concept papers, and drafts of documents prepared by the Board and their
f staff, and generally served as a sounding board for ideas considered by the Board. The
project resulted in the issuance of GASB Statement No. 34,
IMr. Moreland is very active in the CSMFO. He regularly attends and is a frequent
speaker at monthly section meetings and the annual conference. He has been a
regular instructor of five different programs in governmental accounting offered by the
I Career Development Committee of the CSMFO. He is also a member of the Final
Review Committee that insures consistency in the determination of awards under the
f California Award program.
Mr. Moreland received a Bachelor of Business Administration degree in Accounting
from Loyola Marymount University and holds CPA certificates from the State of
California and several other states. He receives far in excess of forty hours of
continuing professional education each year.
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CERTIFIED PUBLIC ACCOUNTANTS
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RESUME OF NIPA SHAH ENGAGEMENT MANAGER
Ms, Nipa Shah will manage the day-to-day services provided to the City.
She has managed the financial audits of many of our government
clients, including the Cities of Agoura Hills, Covina, La Mirada, Monterey
Park, Palos Verdes Estates, Simi Valley, and Stanton as well as the
Orange County Sanitation District, and the Mesa Consolidated Water
District. As a result of these assignments, Ms. Shah is very familiar with
the activities of a California City and redevelopment agency. Her duties
as an audit manager include:
- Establish priorities and time and performance standards and prepare budgets.
- Monitor the overall progress of financial and compliance audits and the staff utilized on
the audits.
- Prepare or review written reports of findings and participate in the oral presentations to
management of the audited entities.
- Research and resolve technical problems and sensitive reporting issues.
- Review completed audits for-
; - compliance with auditing standards, generally accepted in the United States of
America,
- compliance with accounting principles, generally accepted in the United States of
America,
- soundness of reasoning and judgment,
- reasonableness of recommendations to client management.
- Promote consistency in procedures and reporting.
- Prepare or conduct in-house training programs in governmental accounting and
auditing.
- Actively participate in those professional organizations which have an impact on
governmental accounting and auditing.
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Ms. Shah received a Bachelor of Science degree in Accounting from the University of New
Brunswick. She also has a graduate degree in Public Accountancy from McGill University,
f Montreal, P.Q. Ms. Shah is a Certified Public Accountant in the State of California and has
been with our firm over ten years. Each year Ms. Shah receives approximately forty hours
of continuing education designed to meet the AICPA and GAO requirements for continuing
education.
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CERTIFIED PUEILIC ACCOUNTANTS 12
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RESUME OF DAVID COTELLESSE SENIOR ACCOUNTANT
Mr. David Cotellesse will be the senior accountant in charge of the
audit of the financial statements of the City- Mr. Cotellesse has been
( the Senior Accountant in charge of the audits of the financial
statements of the Cities of Bell Gardens, Cathedral City, Half Moon
Bay, Stanton and the Municipal Water District of Orange County. He
i has also been in charge of many of the audits of the Orange County
Health Care Agency Subrecipients. He has applied agreed-upon
procedures at numerous hotels/motels relating to Transient Occupancy Taxes in
connection with projects at the County of San Diego and the Cities of Escondido,
Encinitas and Monterey Park- As a result of his experience, Mr. Cotellesse is very
familiar with governmental accounting and the operations of a California city and
1 redevelopment agency.
Mr. Cotellesse has strong oral and written communication skills. He works well with
other staff members and clients at all levels of management. He has excellent
analytical skills, initiates projects and acts as a team leader. Mr. Cotellesse also has
strong computer skills.
Mr. Cotellesse received a Bachelor of Science degree in Business Administration from
Eastern Michigan University and is working towards completion of the requirements to
become a Certified Public Accountant in the State of California. He receives about forty
hours of continuing professional education each year, designed to meet the U.S.
Government Accountability Office requirements for continuing education-
RESUME OF KATHRYN BESEAU QUALITY CONTROL REVIEWER
Ms. Kathryn Beseau will perform the quality control review of all reports
issued to the City. She has over twenty years of governmental
accounting experience. Ms- Beseau is currently the Chair of the
Governmental Accounting and Auditing Committee of the Orange County
Chapter of the California Society of Certified Public Accountants. Ms.
Beseau developed and is teaching an Intermediate Governmental
l Accounting course in cooperation with the CSMFO. Ms. Beseau has
been a reviewer for the CSMFO award program and• developed and
taught a "Train the Reviewer" course for reviewers of GASB Statement No. 34 compliant
CAFR's.
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Prior to joining the firm, Ms. Beseau was the Controller of the Irvine Ranch Water District
for over ten years- Managing a staff of twenty-five, she was responsible for all accounting,
rate setting and financial software of the District-
Ms. Beseau received a Bachelor of Science degree in Accounting from California State
University, Fullerton. She is a Certified Public Accountant in the State of California and
receives over forty hours of continuing education each year designed to meet the U.S.
1 Government Accountability Office requirements for continuing education.
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CERTIFIED PUBLIC ACCOUNTANTS 13
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OTHER ASSIGNED STAFF
We will assign sufficient staff to the engagement to ensure the work is completed in a
timely manner. Many of our professional staff have worked in government, so they have
a good understanding of the level of service you expect from your auditors_ There will
I be on-site supervision by Mr. Cotellesse of all staff assigned to the engagement.
MAINTAINING A HIGH QUALITY STAFF
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Our staff at all levels are continually expanding their knowledge of the governmental
industry through formal in-house training programs, programs offered by the CSMFO,
the California Society of Certified Public Accountants, and other professional
organizations, and through on-the-job training. We believe this mixture of training
( techniques will provide you with a quality staff that is up-to-date on the issues affecting
governmental accounting and auditing.
Our firm has been providing classes in introductory governmental accounting, the
preparation of award-winning CAFR's, and the implementation of GASB Statement 34
throughout California. We have a contract with CSMFO to present classes in
( Intermediate Governmental Accounting, and a training program for the reviewers of
CAFR's prepared in accordance with GASB Statement No. 34. We have also provided
group or individual training classes for our clients.
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Moreland CERTIFIED PUBLIC ACCOUNTANTS 14
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ORGANIZATIONAL CHART
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Figure 1
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CER7IFIE�PLIB4IC ACCOUNTANTS 15
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�.':.'F.. 9Wa =----�.;.mow- � '`"'.�.., Aunpl�Tw,,•,+a„ .
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SIMILAR ENGAGEMENTS WITH OTHER GOVERNMENT ENTITIES
As indicated above, we currently audit the financial statements of twenty-eight California
cities and twenty-five redevelopment agencies- We selected the following five clients for
j you to contact because they closely relate to the proposed engagement and because they
I demonstrate our depth of experience. All of these cities participate in the GFOA and
CSMFO award programs, and all have redevelopment agencies and multiple enterprise
operations.
TotalEngagement
client Scope of Work Date Partner Hours
'City of Compton Annual audit for the City, CRA 2004- Michael Moreland 2,500
financial and compliance audits present
Ms. Barbara Kilroy for the City's CRA, and
City Manager AQMD,as well as for SLTPP
(310) 605-5577 and OCJP funds, and single
audit, State Controller's report,
agreed-upon procedures for
appropriations limit, and other
special pro'ects.
City of - • -n Grove Annual audit for " M " 11"- Michael Moreland 1,500
financial and compliance audit, present
Mr. Kingsley Okereke single audit, agreed-upon
Finance Director procedures for appropriations
(714) 741-5060 limit, agreed-upon procedures
for golf course, many other
special
City of Santa Ana Annual audit for the City, 2006- Kathryn 13eseau
financial and compliance audit, present
I Ms. Pamela Arends- AQMD financial and compliance
King audit single audit, State
,Assistant Director of Controller's Report, agreed-
Finance& Management upon procedures for
Service appropriations limit, and other
714 647-542,0 prqjects-
City of Monterey Annual audit forthe City, ` / " 004- Michael Moreland 850
financial and compliance audit, present
Mr- Do
Finance ■ - • . Powers• and P . • Municipal
Servicessingle audit
and agreed-upon procedures for
appropriations
City of Covina Annual audit for the City, RDA 2003- Michael Moreland 800
financial and compliance audit, present
Mr. William Stawarski single audit, agreed-upon
Finance Director procedures for appropriations
626) 858-7242 limit.
Moreland & �&ocictk Ae
CERTIFIED PUBLIC ACCOUNTANTS 16+
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SPECIFIC AUDIT APPROACH
YOUR OBJECTIVES
You are selecting auditors to perform an audit of the financial statements of the City of
Palm Springs for each of the three years ending June 30, 2009 with an option to extend for
two additional one year periods. Each annual audit will include the following:
r
- A financial audit of the basic financial statements in the City's Comprehensive Annual
Financial Report including the typing of the CAFR and providing one photo-ready
original to the City.
- A financial and compliance audit of the Community Redevelopment Agency of the City
of Palm Springs.
- An expansion of the City's financial audit to meet the requirements of the Single Audit
Act, including the requirements of Circular OMB Circular A-133, Audits of State and
Local Governments, and Non-Profit Organizations and preparation of the Data
Collection Form.
A Report on Internal Control Over Financial Reporting and on Compliance and Other
Matters Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards. This letter will include significant deficiencies and
material weaknesses, if any, and is either included in the Single Audit Report or issued
separately.
- The application of agreed-upon procedures in connection with the annual calculation of
the appropriations limit as required by Section 1.5 of Article XIIIB of the California
Constitution.
- On an as-needed basis, perform a compliance review of the agreement between the
City and the management company operating the City's municipal golf course.
- Review and summarize the Community Redevelopment Agency's Disposition and
Development Agreements to ensure transactions are properly recorded.
- A management letter addressed to the City Manager containing our comments and
recommendations for improving the accounting procedures and the systems of internal
control (control deficiencies not considered significant/material weaknesses).
- A letter to the City Council containing required communications about the audit process.
- Provide if necessary, a written report of all irregularities and illegal acts or indications of
illegal acts during the audit process to the City Manager, City Attorney and the Director
of Finance.
- Keep the City informed of state and national developments affecting accounting,
jauditing and financial reporting including providing guidance on implementation of
GASB requirements.
OPTIONAL SERVICES
Prepare the City's Annual State Controllers Report.
1 - Prepare the Annual State Controller's Report for the Redevelopment Agency-
- Prepare the Annual Street Report.
- Prepare the financial statements for the Financing Authority of the City of Palm Springs.
Moreland & 44doa4", Aw.
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CERTIFIED PUBLIC ACCOUNTANTS 17
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Each annual audit will be performed in accordance with auditing standards generally
accepted in the United States of America, as adopted by the AICPA, and will conform with
guidelines set forth in the AICPA's Industry Audit Guide, Audits of State and Local
Governments (GASB 34 Edition). Also, the annual audit will comply with the standards
applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. We will assist you in the preparation of financial
statements in accordance with the most recent applicable pronouncements of the
j Governmental Accounting Standards Board. Additionally, we will work with you in
preparing a CAFR that continues to meet the reporting requirements for a Certificate of
Achievement for Excellence in Financial Reporting issued by the Government Finance
i Officers Association and an "outstanding" award in financial reporting issued by the
California Society of Municipal Finance Officers, if you qualify for participation in the
CSMFO Award program.
In connection with the annual audit, we will review the systems of internal control and
accounting procedures in order to develop our audit tests and to.provide the City with a
management letter containing our comments and recommendations for improving the
accounting procedures and the systems of internal control. Significant deficiencies and
material weaknesses, if any, will be included in our Report an Internal Control Over
Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial
Statements Performed in Accordance with Government Auditing Standards. This is one of
the letters included in the Single Audit Report, or issued separately.
We will initiate an exit conference to discuss drafts of our management letter and the
various financial and compliance reports with appropriate City personnel. Following the
audit, we will meet to discuss any suggestions that either of us may have for improving the
conduct of the annual audit process or any other matters of interest. Annually, we will
issue a letter to the City Council regarding the conduct of the annual audit. We are always
available for meetings or discussions with City staff, and/or the City Council in order to
meet your needs.
( We will follow the audit approach described below in order to meet all of your objectives
and timing requirements.
OUR APPROACH TO YOUR OBJECTIVES
Our audit approach will emphasize service to the City. Service not only in terms of a
qualified staff of auditors efficiently and effectively performing the necessary audit tests,
but also service as an attitude maintained by the entire audit team. All of our planning,
audit tests and dealings with you and your staff will be performed from an independent,
objective viewpoint, yet we will never forget that our product is a service. We understand
that the annual audit will result in a certain amount of additional work and inconvenience;
on the part of City staff. However, we are confident that our service-oriented audit
approach will eliminate many of the common problems experienced in governmental
audits, such as:
Morelalid & djbac%lei,
GERTIFIed PUBLIC ACCOUNTANTS 18
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- New staff each year,
- Inexperienced staff who do not understand governmental accounting,
Auditors who feel free to interrupt your staff any time, and
f - Management letter comments made without a thorough understanding of the related
costs or even the practicality of the recommendation.
We know these common complaints and can avoid them because of four very important
facts, namely:
- Our audit team members maintain their up-to-date knowledge of the governmental
industry at the same meetings and seminars that you and your staff attend,
Many of our audit staff have worked in government, so they better understand your
audit needs and what you expect in terms of service,
Our audit team members have spent many years successfully serving the local
government industry, and
- Our service approach to you will be supervised by Mr. Michael Moreland, who,
because of his years of serving local government clients, thoroughly understands
the duties and responsibilities of your staff.
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AUDIT APPROACH- PLANNING AND INTERIM AUDIT WORK
iDuring July of this year, and May or June of future years, management of our audit team
will have an entrance conference with the Director of Finance/Treasurer and other
appropriate City staff. The purpose of this meeting will be to ensure a good working
relationship and to discuss the scope and timing of the annual audit, the documents
needed for our permanent files, the detailed audit plan, and the list of schedules that City
staff normally prepares in connection with the year-end closing. Perhaps the most
important objective of the pre-audit conference is to establish a relationship in which we all
feel comfortable in asking questions and expressing our views. We devote a considerable
amount of time to planning each year, because we find that well-planned audits are
completed in a timely manner.
We will schedule approximately one week of interim audit work each year. We will
prepare flow charts and other documentation of the internal control structure and of the
major systems, such as revenue and cash receipts, purchasing and cash disbursements,
payroll and personnel, capital assets, grant compliance, and investment activities. This
information is gained through discussions with appropriate City staff, and the review of
available documented policies and procedures_ Our knowledge of your overall internal
control structure and of your major systems will be used to tailor our standard audit
programs to your specific systems. During the interim work in subsequent years, we will
note changes in the system, if any.
Moreland 8i 6a do rr�.e6, Inc.
I CEFTIFIEO PUBLIC ACCOUNTANTS .�9
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At this point we will utilize the prior year financial statements, the current year budget and
our knowledge of your systems to determine materiality for audit purposes. This level of
I materiality and our evaluation of risks will be employed during the final audit work to
decide on the extent of testing of year-end account balances. The review of these
( documents will also assist us in identifying changes from the prior year in the operations of
I the City.
( Each year we will select a sample of transactions to determine to what extent the systems
are functioning as described to us. The extent of our sample size will depend upon our
assessment of your internal control structure. The selection of transactions for testing will
( be made using a combination of random, systematic and haphazard sampling techniques_
We will test the strengths of the systems to be sure they are functioning as intended. We
will identify weaknesses, if any, so that they can be included along with our
recommendations in our annual management letter. During the interim audit work we will
also arrange for typing of confirmations, finalize the schedule for the completion of the final
audit work, complete the listing of client prepared schedules, and perform those tasks
which can be efficiently accomplished prior to the end of the year.
During August each year we will contact you to determine that the year-end closing is well
planned. We will also discuss any matters that may impact our audit procedures or your
financial reporting.
AUDIT APPROACH-FINAL AUDIT WORK
The final audit work will begin each year in early October with an entrance conference with
the Director of Finance/Treasurer and other appropriate City staff. Fieldwork will begin
with an analytical review of revenues and expenditures. This review will include a
comparison of prior year financial statements and current year budget to the year-end trial
balance to identify those accounts which will require further audit work based on
materiality levels. The primary objective of the final audit work is to audit the final numbers
that will appear in the financial statements. Upon completion of fieldwork and posting of
any audit adjustments, we will perform a final analytical review of audited balances to
determine if our materiality levels have changed as the result of year-end adjustments and
to ensure that sufficient test work has been completed. The fieldwork will be completed by
late October. Our management review will be completed in the field during the same time
period so that at the conclusion of the fieldwork we have agreement on both the format
and the content of the various financial reports_ An exit conference will be held at the end
of fieldwork to summarize the results of the fieldwork and to review significant findings.
fWe suggest meeting with appropriate City staff on a regular basis. This will avoid being
disrupted by questions, one at a time. We find that our workday is far more productive
when we can plan ahead, and we are sure that well planned days are your most .
Ii productive also.
Moreland p&Dus%coo c�iw, Sic.
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As part of the annual audit, we will evaluate the internal control structure in order to
determine the nature and extent of our audit procedures. Frequently, this evaluation
process leads to worthwhile suggestions for improving the internal control structure as well
as the efficiency and effectiveness of accounting operations and procedures- All of our
recommendations will be discussed at an exit conference with the Director of
Finance/Treasurer and other relevant City personnel and, if appropriate, presented in
writing at the completion of our audit- We are available each year to attend relevant
meetings of the City Council.
APPROACH TO THE SINGLE AUDIT
Our approach to the Single Audit will begin with the identification of Major Federal
Financial Assistance Programs from the list of Federal Assistance Program
expenditures that City staff will provide. We will require a preliminary listing in
connection with our interim audit work. At that time we will identify the major accounting
cycles such as cash receipts, purchasing and cash disbursements, payroll procedures,
investment procedures, etc. which affect Federal programs.
We will prepare flow charts and/or other documentation of these accounting cycles and
identify the internal control procedures that the City has established- We will then
perform tests of transactions for each of these accounting cycles in order to satisfy
ourselves that the internal controls are functioning as intended.
We will then work with City staff to identify the systems you have established to monitor
compliance with the requirements of the Major Federal Financial Assistance Programs.
Next we will select transactions, reports, files, etc. to test that the compliance systems
are functioning as intended.
We will complete the additional audit procedures in connection with the single audit
during the financial audit process. Much of this work will be accomplished in connection
with the interim audit work. It will be completed during the final audit work so that we
can discuss drafts of the various financial and compliance reports at the same time that
we are discussing the other financial reports.
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REPORTS TO BE ISSUED- SINGLE AUDIT
During the final audit work, we will complete any additional testing of Major Federal
Financial Assistance Programs that may be necessary as a result of reviewing the final
schedule of expenditures. We will then prepare drafts of the required reports for your
review. After reviewing and discussing drafts of the required reports, you should prepare
responses to any findings or questioned costs. The reports will be revised to include your
l responses and will be delivered along with the other reports.
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CERTIFIED PUBLIC ACCOUNTANTS 21
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KNOWLEDGE OF APPLICABLE LAWS AND REGULATIONS
We have a copy of the California Government Code and the Health and Safety Code in
our offices for use as needed during the annual audit_ We have included references to
the more common laws, rules and regulations in our standard audit program. In
addition, we utilize the "Single Audit Information Service" to maintain our knowledge of
the applicable laws relating to Federal programs. We will utilize our knowledge of
Federal, State, and local laws, rules, and regulations as they pertain to our financial and
compliance audit work.
PAPERLESS AUDIT APPROACH
For all new audit engagements we are using a paperless audit approach. This approach
allows us to expand our audit coverage while streamlining our audit effort. The 'system
lends itself to analytical review procedures, develops audit lead schedules and produces a
financial statement at the end of the fieldwork. This twenty-first century approach to
auditing means greater audit coverage with far less delays in completing the audit process.
LEVEL OF STAFFING
We estimate the combined level of staffing for the year ending June 30, 2007, including
hours for optional services listed, is as follows:
Planning and Interim Audit Work
Partner 12
Manager 41
Senior Staff 188
Staff 120
Clerical 2
Total Planning and Interim Audit Work 363
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Final Audit Work
Partner 36
Manager 76
Senior Staff 220
Staff 152
Clerical 20
1 Total Final Audit Work 504
Total Engagement 867
Moreland & Adcda i, Arm
CERTIFIED PUBLIC ACCOUNTANTS 22
KEY DATES FOR COMPLETION OF THE JUNE 30, 2007 AUDIT
Presented below are suggested key dates for the completion of the June 30, 2007 audit:
June, 2007 Selected by the City Council.
' 00
Jul
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October 1 to October 19, Final audit work and management review as
2007 described ab.ve,
November 9, 2007 Deliver draft copies of all financial and compliance
reports.
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ASSISTANCE BY CITY STAFF
We will require assistance in connection with the annual audit by City staff in the following
areas:
Clerical assistance such as typing of confirmations, pulling of invoice packages,
and reproduction of agreements and other documents for our files.
Technical assistance in familiarizing our staff with the controls you have established
to monitor compliance with Federal program requirements.
Technical assistance in familiarizing our staff with the flow of information through
the major and minor accounting cycles such as cash receipts, Gash disbursements,
payrolls, accounting for grants, etc. Also, technical assistance in connection with
the overall activities of the Finance Department such as the preparation and
approval of journal entries, the reports generated by your computerized accounting
system, and the schedules generated in connection with the year-end closing.
Since we will be assigning staff who are very experienced in governmental accounting and
,auditing, the time required of City staff will not be excessive.
IDENTIFICATION OF ANTICIPATED POTI=-NTIAL AUDIT PROBLEMS
We do not anticipate any potential audit problems. If problems were to arise during the
audit, we will immediately notify the City and, if requested, assist the City. in finding a
solution.
Moreland
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CEFFIFIIE�D PUBLIC ACCOUNTANTS 23
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RESPONSE TO CITY STANDARD TWO-PARTY AGREEMENT
fWe will maintain the City's insurance requirements during the term of the engagement
as described in Exhibit B of the Request for Proposal. After being selected as the City's
auditors, we will name the City as an additional insured. We are providing a copy of our
certificate of insurance for your review. It is included in Appendix B.
We request Section 8.3 of your City's Standard Two-party Agreement be modified to
reflect that audit working papers will remain the property of the Consultant.
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Moreland �Ak";X d j �ne. �
CERTIFIED PU$LIC ACCOUNTANTS 24
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APPENDIX A
Latest External Quality Control Review Report
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EPJessie C. Powell, CN
POWELL & SPAFFOPD, LLP - Polria D. Spaf{ori, CPS
CERTIFIED PU,LIC ACCOUNTANTS Lieem JL,iL,
J C hl:.l PAL,
To the Shareholders
Moreland& Associates, Inc.
Certified Public Accountant
We have reviewed the system of quality control for the accounting and auditing practice of Moreland &
Associates, Inc. (the firm) in effect for the year ended December 31, 2005, A system of quality control
.encompasses the firm's organizational structure,the policies adopted and procedures established to provide it
with reasonable assurance of conforming with professional standards. The elements of quality control are
described in the Statements on Quality Control Standards issued by the American Institute of Certified Public
Accountants(A)CPA), The firm is responsible for designing a system of quality control and complying with it
to provide the firm reasonable assurance of conforming with professional standards in all material respects.
Our responsibility is to express an opinion on the design of the system of quality control and the firm's
compliance with its system of quality control based on our review.
Our review was conducted in accordance with standards established by the Peer Review Board ofthe AICPA.
During our review,we read required representations from the firm,interviewed firm personnel,and obtained
an understanding of the nature of the firm's accounting and auditing practice, and the design of the firm's
system of quality control sufficient to assess the risks implicit in its practice. Based on our assessments, we
selected engagements and administrative files to test for conformity with professional standards and
compliance with the firm's system of quality control. The engagements selected represented a reasonable
cross-section of the firm's accounting and auditing practice with emphasis on higher-risk engagements. The
engagements selected included among others, engagements performed under Governmental Auditing
Standards. Prior to concluding the review, we reassessed the adequacy of the scope of the peer review
procedures and met with firm management to discuss the results of our review. We believe that the procedures
we performed provide a reasonable basis for our opinion.
In performing our review, we obtained an understanding of the system of quality control for the firm's
accounting and auditing practice. In addition,we tested compliance with the firm's quality control policies and
procedures to the extent we considered appropriate. These tests covered the application of the firm's policies
and procedures on selected engagements. Our review was based on selected tests therefore it would not
necessarily detect all weaknesses in the system of quality control or all instances of noncompliance with it.
There are inherent limitations in the effectiveness of any system of quality control and therefore noncompliance
with the system of quality control may occur and not be detected- Projection of any evaluation of system of
quality control to future periods is subject to the risk that the system of quality control may become inadequate
because of changes in conditions, or because of the degree of compliance with the policies or procedures may
deteriorate.
664 W UiKh Court • San Ber-nnAino.CA 92410 • Q0. Box 8,547 • Pedlonl,C4 9-7375
ielepLone 909-885-7721 o Fax 909-885-7541
in our opinion, the system of quality control for the accounting and auditing practice of Moreland &
Associates, Inc., in effect for the year ended December 31,2005,has been designed to meet the requirements
of the quality control standards for an accounting and auditing practice established by the AIGPA and was
complied with during the year then ended to provide the firm with reasonable assurance of complying with
professional standards.
As is customary in a system review,we have issued a letter under this date that sets forth comments that were
not considered to be of sufficient significance to affect the opinion expressed in this report.
June 6,2006
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SEALED DOLLAR COST BID T "LES
FOR
CITY OF PALM SPRING
FOR
PROFESSIONAL AUDITING SrRVICES
RFP 08-07 MAY 11, 2007
P (COPY)
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1201 DOVE STREET,SUITE 630
�+ ,.] �` ,�/q,� NEWPORT BEACH,CALIFORNIA 92660
or eland J, & [J +'J.�Q.� Jn y, (949)221.0025
IL CERTIFIED PUBLIC ACCOUNTANTS 570 RANCHEROS DRIVE,SUITE 260
SAN MARCOS,CA 92069
(760)7523360
May 11, 2007
Mr. Craig A. Graves
Director of Finance/Treasurer
City of Palm Springs
3200 East Tahquitz Canyon Way
Palm Springs, CA 92262
Dear Mr. Graves:
Attached are the forms supporting our proposal of fees and the hourly rates to be used in
computing our fees for the three years ending June 30, 2009, with an option to extend for two
additional one year periods. Hourly rates and maximum fees will increase 4% each year to
cover increased salary and other costs.
Fees for our services are billed on a monthly basis as the work progresses. Fees for additional
services are billed at the hourly rates in effect at the time the services are provided. A summary
of fees for the three years ending June 30, 2009 is provided below. The individual tasks reflect
those described in the Request for Proposal.
Nature of Services to be Provided 2007 2008 2009
Task 1, Including Tasks A, B & C $ 37,800 $ 39,300 $ 40,884
Task 2 8,000 8,320 8,653
Task 3 8,000 8,320 8,653
Task 4 3,800 3,952 4,110
Task 5 2,500 2,600 2,704
Task 6 (Optional) 5,000 5,200 5,408
Task 7 (Optional) 3,600 3,744 3,894
Task 8 (Optional) 1,500 1,560 1,622,
Task 9 (Optional) 4,000 4,160 4,326
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Totals $ 74200 $ 77,156 $ 80,254
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Total Price 2007 Audit in Words: Seventy-four thousand two hundred dollars and no cents
Total Price 2008 Audit in Words: Seventy-seven thousand one hundred and ffN six dollars and no cents,
Total Price 2009 Audit in Words: Eighty thousand two hundred and fifty four dollars and no cents
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Mr. Craig A. Graves
Director of Finance/Treasurer
City of Palm Springs
May 11, 2007
Page 2
The hourly rates to be used for each of the three years ending June 3.0, 2009 as follows:
Hourly Rates
Classification 2007 2008 2009
Partner $ 150 $ 156 $ 162
Manager 110 114 119
Senior Accountant 80 83 86
Assistant Accountant 70 73 76
Clerical 35 36 37
Thank you for the opportunity to present this proposal. We hope that we were able to convey to
you our knowledge of your industry and the quality of service which we provide to all of our
clients. Please do not hesitate to contact us should you have any questions. The undersigned
is entitled to represent the firm, empowered to submit this bid, and authorized to sign a contract
with the City of Palm Springs.
Very truly yours,
MORELAND &ASSOCIATES, INC.
Michael C. Moreland, Partner
MCM: sr
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COST SCHEDULE OF PROFESSIONAL FEES AND EXPENSES
FOR THE AUDIT OF THE FY 2006-2007 THROUGH 2O08-2009
FINANCIAL STATEMENTS (RFP TASK# 1 INCLUDING A, B & C)
Hourly Hourly Hourly Total$ Total$ Total$
Rates Rates Rates FY 2006- FY 2007- FY 2008-
Hours 2007 2008 2009 2,007 2,008 2,009 Total
Partners 30 $150 $156 $162 $ 4,500 $ 4,680 $ 4,860 $ 14,040
Managers 60 110 114 119 6,600 6,840 7,140 20,580
Supervisory Staff 180 80 83 86 14,400 14,940 15,480 44,820
Staff 135 70 73 76 9,450 9,855 10,260 29,565
Clerical 8 35 36 37 280 288 296 864
Total for Services 35,230 36,603 38,036 109,869
Other:
Waals, Loding&Transportation 2,570 2,697 2,848 8,115
Estimated Number of Hours Required from City to Develop Permanent File:
24 From City ClerWs Office
24 From Finance Department
i Total All-inclusive MWmum Price(2007-2009 total): ffi 37,800 $39,300 $ 40,884 $ 117,984
Total All-inclusive Ma>amum Price(2007-2009 total) IN WORDS: One hundred seventeen thousand nine
hundred eighty four dollars and no cents
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Responding to Request for Proposals No. 08-07 for Professional Auditing Services for the City of
Palm Springs the undersigned Proposer proposes and agrees to perform the auditing services in
good order and in accordance with the specifications. I/We will provide the above specified
services for the City of Palm Springs, and will accept as full payment the above all-inclusive
maximum amount.
(Signature of Authorized Representative)
MICHAEL C. MORELAND
(Printed Name of the Authorized Representative)
MORELAND &ASSOCIATES, INC. MAY 11, 2007
(Name of Firm) & (Date)
* Addendum # 1, 2 &3 is/are hereby acknowledged. o ^��
COST SCHEDULE FOR THE PALM SPRINGS
REDEVLOPMEN_T AGENCY AUDIT REPORT (RFP TASK#2)
Hourly Hourly Hourly Total$ Total$ Total$
Rates Rates Rates FY 2006- FY 2007- FY 2003-
Hours 2007 2008 2009 2007 2008 2009 Total
Partners 5 $ 150 $ 156 $ 162 $ 750 $ 780 $ 810 $ 2,340
Managers 12 110 114 11$ 1,320 1,368 1,428 4,116
Supervisory Staff 40 80 83 86 3,200 3,320 3,440 9,960
Staff 24 70 73 76 1,680 1,752 1,824 5,256
Clerical 4 35 36 37 140 144 148 432
Total for Services 7,090 7,364 7,650 22,104
Other:
Meals, Lading &Transportation 910 956 1,003 2,869
Total Price for the Palm Springs
Redevlopment Agency Audit Report: $ 8,000 $ 8,320 $ 8,653 $ 24,973
Total Price IN WORDS: Twenty-four thousand nine hundred seventy-three dollars and no cents
COST SCHEDULE FOR THE SINGLE AUDIT REPORT(RFP TASK#3)
Hourly Hourly Hourly Total$ Total$ Total $
Rates Rates Rates FY 2006- FY 2007- FY 2008-
Hours 2007 2008 2009 2007 2008 2009 Total
Partners 5 $ 150 $ 156 $ 162 $ 750 $ 780 $ 810 $ 2,340
Managers 12 110 114 119 1,320 1,368 1,428 4,116
Supervisory Staff 40 80 83 86 3,200 3,320 3,440 9,960
Staff 24 70 73 76 1,680 1,752 1,824 5,256
Clerical 4 35 36 37 140 144 148 432
Total for Services 7,090 7,364 7,650 22,104
Other:
Meals, Loding &Transportation 910 956 1,003 2,869
Total Price for the Palm Springs
Single Audit Report: $ 8,000 $ 8,320 $ 8,653 $ 24,973
Total Price IN WORDS: Twenty-four thousand nine hundred seventy-three dollars and no cents
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COST SCHEDULE FOR THE PREPARATION OF THE
GOLF COURSE COMPLIANCE REVIEW(RFP TASK#4)
Hourly Hourly Hourly Total$ Total$ Total$
Rates Rates Rates FY 2006- FY 2007- FY 2008-
Hours 2007 2008 2009 2007 2008 2009 Total
Partners 2 $ 150 $156 $162 $ 300 $ 312 $ 324 $ 936
Managers 5 110 114 119 550 570 595 1,715
Supervisory Staff 16 80 83 86 1,280 1,328 1,376 3,984
Staff 16 70 73 76 1,120 1,168 1,216 3,604
Clerical 2 35 36 37 70 72 74 216
Total for Services 3,320 3,450 3,585 10,355
Other.
Meals, Loding &Transportation 480 502 525 1,507
Total Price for the Golf Course
Compliance Review: $ 3,800 $ 3,952 $ 4,110 $ 11,862
Total Price IN WORDS: Eleven thousand eight hundred sixty-two dollars and no cents
COST SCHEDULE FOR THE PREPARATION OF THE
REVIEW OF DISPOSITION AND DEVELOPMENT AGREEMENTS (RFP TASK#5)
Hourly Hourly Hourly Total$ Total$ Total$
Rates Rates Rates FY 2006- FY 2007- FY 2008-
Hours 2007 2008 2009 2007 2008 2009 Total
I
Partners 4 $ 150 $ 156 $ 162 $ 600 $ 624 $ 648 $ 1,872
Managers 8 110 114 119 880 912 952 2,744
Supervisory Staff 8 80 83 86 640 664 688 1,992
Staff - 70 73 76 - - - -
Clerical 35 36 37 - - -
f Total for Services 2,120 2,200 2,288 6,608
Other:
Meals, Loding &Transportation 380 400 416 1,196
Total Price for the Review of
Disposition and Development Agreement: $ 2,500 $ 2,600 $ 2,704 $ 7,804
Total Price IN WORDS: Seven thousand eight hundred and four dollars and no cents
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COST SCHEDULE FOR THE PREPARATION OF THE
ANNUAL STATE CONTROLLER'S REPORT FOR THE CITY(OPTIONAL TASK#6)
Hourly Hourly Hourly Total$ Total$ Total$
Rates Rates Rates FY 2006- FY 2007- FY 2008-
Hours 2007 2008 2009 2007 2008 2009 Total
Partners - $ 150 $ 156 $ 162 $ - $ - $ - $
Managers 6 110 114 119 660 684 714 2,058
Supervisory Staff 50 80 83 86 4,000 4,150 4,300 12,450
Staff - 70 73 76 - - -
Clerical 35 36 37 - -
Total for Services 4,660 4,834 5,014 14,508
Other:
Meals, Loding &Transportation 340 366 394 1,100
Total Price for the Annual State
Controller's Report for the City: $ 5,000 $ 5,200 $ 5,408 $ 15,608
Total Price IN WORDS: Fifteen thousand six hundred and eight dollars and no cents
COST SCHEDULE FOR THE PREPARATION OF THE
ANNUAL STATE CONTROLLER'S REPORT FOR THE
COMMUNITY REDEVLOPMENT AGENCY(OPTIONAL TASK#7)
i
Hourly Hourly Hourly Total $ Total$ Total$
Rates Rates Rates FY 2006- FY 2007- FY 2008-
Hours 2007 2008 2009 2007 2008 2009 Total
I Partners - $ 150 $ 166 $ 162 $ - $ - $ - $ -
Managers 4 110 114 119 440 456 476 1,372
Supervisory Staff 36 80 83 86 2,880 2,988 3,096 8,964
Staff - 70 73 76 - - - -
Clerical 35 36 37 - - -
Total for Services 3,320 3,444 3,572 10,336
Other:
Meals, Loding &Transportation 280 300 322 902
Total Price for the Review of
Disposition and Development Agreement: $ 3,600 $ 3,744 $ 3,894 $ 11,238
Total Price IN WORDS: Eleven thousand two hundred thirty-eight dollars and no cents
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COST SCHEDULE FOR THE PREPARATION OF THE
ANNUAL STREET REPORT(OPTIONAL TASK#$)
Hourly Hourly Hourly Total$ Total$ Total$
Rates Rates Rates FY 2006- FY 2007- FY 2008-
Hours 2007 2008 2009 2007 2008 2009 Total
Partners - $ 150 $ 156 $ 162 $ - $ - $ - $
Managers 2 110 114 119 220 228 238 686
Supervisory Staff 14 80 83 86 1,120 1,162 1,204 3,486
staff - 70 73 76 - - - -
Clerical 35 36 37
Total for Services 1,340 1,390 1,442 4,172
Other:
Meals, Loding &Transportation 16O 170 180 510
Total Price for the Annual Street
Report: $ 1,500 $ 1,560 $ 1,622 $ 4,682
Total Price IN WORDS: Four thousand six hundred and eighty-two dollars and no cents
COST SCHEDULE FOR THE CITY OF PALM SPRINGS
FINANCING AUHTORITY AUDIT REPORT(OPTIONAL TASK#9)
Hourly Hourly Hourly Total$ Total $ Total $
Rates Rates Rates FY 2006- FY 2007- FY 2008-
Hours 2007 2008 2009 2007 2008 2009 Total
Partners 2 $ 150 $ 166 $162 $ 300 $ 312 $ 324 $ 936
Managers 8 110 114 119 $80 912 952 2,744
Supervisory Staff 24 80 83 86 1,920 1,992 2,064 5,976
Staff 8 70 73 76 560 584 608 1,752
Clerical 4 35 36 37 140 144 148 432
j Total for Services 3,800 3,944 4,096 11,840
Other:
Meals, Loding &Transportation 200 216 230 646
Total Price for the Review of
Disposition and Development Agreement: $ 4,000 $ 4,160 $ 4,326 $ 12,486
iTotal Price IN WORDS: Twelve_thousand four hundred and eighty-six dollars and no cents
I C���
EXHIBIT "B"
CITY OF PALM SPRINGS REQUEST FOR PROPOSALS (##08-07)
FOR
PROFESSIONAL AUDITING SERVICES
(ON FILE IN THE OFFICE OF THE CITY CLERK, CITY OF PALM SPRINGS)
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