HomeMy WebLinkAboutCC AG PKT 2011-04-25 #EAGENDA STAFF REPORT
DATE: April 25, 2011
TO: Honorable Mayor and City Council
THRU: Jill R. Ingram, Acting City Manager
FROM: Robbeyn Bird, CPA
Director of Administrative Services
SUBJECT: AGREEMENT FOR ANNUAL AUDITING SERVICES
SUMMARY OF REQUEST:
Staff requests City Council adopt Resolution No. 6125 approving the agreement
for annual auditing services between Lance, Soll, and Lunghard, LLP and the
City of Seal Beach for three consecutive years, beginning with the fiscal year
ending June 30, 2011 and authorize the Acting City Manager to execute the
agreement.
BACKGROUND AND ANALYSIS:
On February 14, 2011, the City Council authorized staff to issue a Request for
Proposal (RFP) for annual auditing services. Staff received five proposals in
response to the RFP.
The City of Seal Beach is required to have an audit of their financial records
completed each year. It is City practice to go out for bid for these services every
three to five years. In response to the City's request for proposal, proposals
were received from five highly qualified accounting firms. The following is a
recap of the bids received:
Agenda Item E
Mayer,
Rogers,
Lance Soil &
Macias, Gini,
Hoffman,
McGladrey &
Anderson,
Lunghard
O'Connell
McCann
Pullen
Malody Scott
FY 10/11 44,985
46,522
36,450
77,500
34,300
FY 11/12 44,985
47,221
36,815
79,800
34,980
FY 12/13 44,985
47,930
37,182
82,300
35,746
Totals $134,955
$141,673
$110,447
$239,600
$105,026
Agenda Item E
Page 2
Staff reviewed the proposals and invited the three most qualified and responsive
firms for interviews: Lance, Soil & Lunghard LLP, Mayer Hoffman McCann PC,
and Rogers, Anderson, Malody & Scott, LLP.
The firm of Lance, Soil & Lunghard, LLP (LSL) is a local firm whose business
primarily consists of governmental auditing and related services. They
participate in and conduct formal education and training for their clients. LSL's
firm policy requires that all of their staff auditors meet the requirement of 40
hours of continuing education every year, with at least 24 hours in governmental
accounting and auditing completed in a two year period. The proposed audit
team far exceeds this requirement for governmental accounting and auditing
training. Their references include many large and small governmental entities
throughout the state. LSL prides themselves on their "talented and experienced
team of professionals" which has the ability to meet all deadlines and provide
assistance to staff through out the year. During the interview the firm indicated
that due to their familiarity with the City of Seal Beach from their previous audit
engagement with the City,. the audit transition would be seamless.
The firm of Mayer Hoffman McCann PC (MHM) is the 8 th largest National CPA
firm whose Irvine office has focused on governmental auditing for the past 30
years. They are currently the City's audit firm. The firm has come under scrutiny
recently due to the scandal in the City of Bell. To allay the concerns of the public
regarding their audit practices they engaged an independent CPA firm (Carr,
Riggs, & Ingram, LLC) to evaluate the quality of the audit work performed by
MHM with respect to its local government audit practice in California. In March
2011, the independent firm issued its report and concluded that the audit work
performed by MHM with respect to its local government audit practice in
California conformed to professional auditing standards and the MHM's own
system of quality control (a copy of this report is contained within their proposal).
To further ensure a new perspective, the firm is proposing a change in the -
management of the audit by rotating the Shareholder in charge of the City's
audit.
The firm of Rogers, Anderson, Malody, & Scott LLP is a small local firm who has
a staff of 25 members who devote approximately 75% of their time to municipal
engagements. They participate in continuing professional education classes
which are sponsored by various organizations such as the GFOA, AICPA, and
CSMFO.
After careful consideration staff has selected Lance, Soil, and Lunghard, LLP to
perform annual auditing services fiscal years 2010/11, 2011/12, and 2012/13.
Lance, Soil, and Lunghard, LLP is a highly respected firm within the field of
government accounting and auditing. They have a proven track record as
reflected by the list of accomplishments and references contained in their
proposal (page 11). Staff contacted several of the references listed on the
"Client List" in the proposal and confirmed without exception, that Lance, Soil,
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and Lunghard is a highly reputable government accounting and auditing firm with
exemplary performance, experience, accountability, and creditability.
FINANCIAL IMPACT:
Lance, Soil, and Lunghard LLP fees for services to be provided are outlined in
the attached proposal in the amounts of $44,985 for fiscal year 2010/11, $44,985
for fiscal year 2011/12 and $44,985 for fiscal year 2012/13. There are adequate
funds budgeted for the annual audit.
RECOMMENDATION:
Staff recommends Council adopt Resolution No. 6125 approving the agreement
for annual auditing services between Lance, Soil, and Lunghard LLP and the City
of Seal Beach for three consecutive years, beginning with the fiscal year ending
June 30, 2011, and authorize the Acting City Manager to execute the agreement.
SUBMITTED BY:
Gl,f Yl
lRo6beyn Bird, CPA
Director of Administrative Services
NOTED AND APPROVED:
"ill. Ingram,
Acting City Manager
Prepared by: Linda Magnuson, Interim Assistant City Manager
Attachments:
A. Resolution No. 6125
B. Agreement for Auditing Services
C. Exhibit "A" - Proposal for Auditing Services
D. Exhibit "B" - Hourly Rate Schedule
Attachment "A"
Resolution No. 6125
A RESOLUTION OF THE SEAL BEACH CITY
COUNCIL APPROVING AN AGREEMENT
BETWEEN THE CITY OF SEAL BEACH AND
LANCE, SOLL AND LUNGHARD LLP FOR
ANNUAL AUDIT SERVICES
RESOLUTION NUMBER 6125
A RESOLUTION OF THE SEAL BEACH CITY COUNCIL
APPROVING AN AGREEMENT BETWEEN THE CITY OF SEAL
BEACH AND LANCE, SOLL AND LUNGHARD LLP FOR
ANNUAL AUDIT SERVICES
The City Council of the City of Seal Beach hereby resolves as follows:
SECTION 1. The Council hereby approves the three year agreement between
the City of Seal Beach and Lance, Soil and Lunghard LLP for auditing services in
the amount of $44,985 per year.
SECTION 2. The Council hereby directs the Acting City Manager to execute the
contract on behalf of the City.
SECTION 3. The City Clerk shall certify to the passage and adoption of this
resolution.
PASSED, APPROVED and ADOPTED by the Seal Beach City Council at a
regular meeting held on the 25th day of April 2011 by the following vote:
AYES: Council Members:
NOES: Council Members:
ABSENT: Council Members:
ABSTAIN: Council Members:
Mayor
ATTEST:
City Clerk
STATE OF CALIFORNIA }
COUNTY OF ORANGE } SS
CITY OF SEAL BEACH }
I, Linda Devine, City Clerk of the City of Seal Beach, do hereby certify that the
foregoing resolution is the original copy of Resolution Number 6125 on file in
the office of the City Clerk, passed, approved, and adopted by the Seal Beach
City Council at a regular meeting held on the 25th day of April . 2011.
City Clerk
Attachment "B"
Agreement for Auditing Services
AGREEMENT TO PROVIDE PROFESSIONAL
AUDITING SERVICES
Between
City of Seal Beach
211 - 8th Street
Seal Beach, CA 90740
0
Lance, Soil, and Lunghard, LLP
Certified Public Accountants
203 N. Brea Blvd., Suite 203
Brea, California 92821
714- 672 -0022
This Professional Service Agreement ( "the Agreement ") is made as of April 25,
2011 by and between Lance, Soll and Lunghard, LLP, Certified Public Accountants, and
the City of Seal Beach ( "City ").
RECITALS
A. The City desires to conduct a comprehensive, independent, annual audit
of the City's finances.
B. The Consultant represents that it has the necessary professional skills and
experience to satisfactorily complete the audit in a timely manner.
NOW THEREFORE, in consideration of the Parties' performance of the
promises, covenants, and conditions stated herein, the Parties hereto agree as follows.
AGREEMENT
1. Scope of Services
1.1 Consultant shall provide auditing services ( "Services ") for fiscal year 2010-
11, fiscal year 2011 -12 and fiscal year 2012 -13 as set forth in the certain "Proposal to
Perform Professional Auditing Services" dated March 15, 2011 ( "Proposal "). A true and
correct copy of the Proposal is attached hereto as Exhibit A. To the extent that there is
any conflict between the Proposal and this Agreement, this Agreement shall control.
1.2 Consultant shall perform all Services under this Agreement in accordance
with the standard of care generally exercised by like professionals under similar
circumstances and in a manner reasonably satisfactory to City.
1.3 In performing this Agreement, Consultant shall comply with all applicable
provisions of federal, state, and local law.
1.4 Consultant will not be compensated for any work performed not specified
in the Proposal unless the City authorizes such work in advance and in writing.
2. Term
2.1 This term of this Agreement shall be for a period of three years beginning
with the fiscal year ending June 30, 2011, unless previously terminated or extended as
provided by this Agreement.
2.2 Option Year One The City at its sole option may extend the term of this
Agreement until June 30, 2014.
2.3 Option Year Two If extended pursuant to Section 2.2, the City at its sole
option may further extend the term of this Agreement until June 30, 2015.
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3. Consultant's Compensation
3.1 For all Services satisfactorily rendered, City will pay Consultant at the
hourly rates set forth in Exhibit B.
3.2 In no event will the City pay Consultant more than:
Initial Term $44,985 for all services rendered in connection with the FY 2010 -11
budget.
Option Year One $44,985 for all services rendered in connection with the FY 2012 -13
budget.
Option Year Two $44,985 for all services rendered in connection with the FY 2013 -14
budget.
3.3 Any additional work authorized by the City pursuant to Section 1.4 will be
compensated at the hourly rates set forth in Exhibit B.
3.4 Consultant will not receive reimbursement for any expenses incurred by
Consultant.
4. Method of Payment
4.1 Consultant shall submit to City monthly invoices for all services rendered
pursuant to this Agreement. Such invoices shall be submitted within 15 days of the end
of the month during which the services were rendered and shall describe in detail the
services rendered during the period, the days worked, number of hours worked, the
hourly rates charged, and the services performed for each day in the period. City will
pay Consultant within 30 days of receiving Consultant's invoice. City will not withhold
any applicable federal or state payroll and other required taxes, or other authorized
deductions from payments made to Consultant.
4.2 Upon 24 -hour notice from City, Consultant shall allow City or City's agents
or representatives to inspect at Consultant's offices during reasonable business hours
all records, invoices, time cards, cost control sheets and other records maintained by
Consultant in connection with this Agreement. City's rights under this Section 4.2 shall
survive for two years following the termination of this Agreement.
5. Termination
5.1 This Agreement may be terminated by City, without cause, or by
Consultant based on reasonable cause, upon giving the other party written notice
thereof not less than 30 days prior to the date of termination.
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5.2 This Agreement may be terminated by City upon 10 days' notice to
Consultant if Consultant fails to provide satisfactory evidence of renewal or replacement
of comprehensive general liability insurance as required by this Agreement at least 20
days before the expiration date of the previous policy.
5.3 Consultant agrees to cease all work under this Agreement on or before
the tenth day of receiving such notice.
5.4 In the event that City terminates or cancels this Agreement due to no fault
or failure of performance by Consultant, City will pay Consultant for all Services
satisfactorily rendered through the date of termination. In no event shall Consultant be
entitled to receive more than the "not -to- exceed" figures set forth in Section 3.2 for the
applicable fiscal year. Consultant shall have no other claim against City by reason of
such termination.
6. Party Representatives; Project Manager
. 6.1 City Manager, or designee, is the City's representative for purposes of this
Agreement.
6.2 Bryan S. Gruber is the Consultant's primary representative for purposes of
this Agreement.
6.3 Debbie A. Harper is Consultant's Project Manager, who will have the
overall responsibility and will supervise the work performed by Consultant pursuant to
this Agreement.
7. Notices
7.1 All notices permitted or required under this Agreement shall be deemed
made when personally delivered or when mailed 48 hours after deposit in the United
States Mail, first class postage prepaid and addressed to the party at the following
addresses:
To City: City of Seal Beach
211 Eighth Street
Seal Beach, CA 90740
Attn: City Manager
To Consultant: Lance, Soll & Lunghard LLP
203 N. Brea Boulevard, Suite 203
Brea, CA 92821
Attn: Bryan S. Gruber
Actual notice shall be deemed adequate notice on the date actual notice
occurred, regardless of the method of service.
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8. Independent Contractor; Consultant's Personnel
8.1 Consultant is an independent contractor and not an employee of the City.
All services provided pursuant to this Agreement shall be performed by Consultant or
under its supervision. Consultant will determine the means, methods, and details of
performing the services. Any additional personnel performing services under this
Agreement on behalf of Consultant shall also not be employees of City and shall at all
times be under Consultant's exclusive direction and control. Consultant shall pay all
wages, salaries, and other amounts due such personnel in connection with their
performance of services under this Agreement and as required by law. Consultant shall
be responsible for all reports and obligations respecting such additional personnel,
including, but not limited to: social security taxes, income tax withholding,
unemployment insurance, disability insurance, and workers' compensation insurance.
8.2 Consultant represents that it has, or will secure at its own expense, all
personnel required to perform the services under this Agreement. All of the services
required under this Agreement will be performed by Consultant or under its supervision,
and all personnel engaged in the work shall be qualified to perform such services.
Consultant reserves the right to determine the assignment of its own employees to the
performance of Consultant's services under this Agreement, but City reserves the right,
for good cause, to require Consultant to exclude any employee from performing
services on behalf of the City.
8.3 Consultant shall indemnify and hold harmless City and its elected officials,
officers, employees, servants, designated volunteers, and agents serving as
independent contractors in the role of City officials, from any and all liability, damages,
claims, costs and expenses of any nature to the extent arising from Consultant's
personnel practices. City shall have the right to offset against the amount of any fees
due to Consultant under this Agreement any amount due to City from Consultant as a
result of Consultant's failure to promptly pay to City any reimbursement or
indemnification arising under this Section.
9. Subcontractors
No portion of this Agreement shall be subcontracted without the prior written
approval of the City. Consultant is fully responsible to City for the performance of any
and all subcontractors.
10. Assignment
Consultant shall not assign or transfer any interest in this Agreement whether by
assignment or novation, without the prior written consent of City. Any purported
assignment without such consent shall be void and without effect.
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11. Insurance
11.1 Consultant shall not commence work under this Agreement until it has
provided evidence satisfactory to the City that Consultant has secured all insurance
required under this Section. Consultant shall furnish City with original certificates of
insurance and endorsements effecting coverage required by this Agreement on forms
satisfactory to the City. The certificates and endorsements for each insurance policy
shall be signed by a person authorized by that insurer to bind coverage on its behalf,
and shall be on forms provided by the City if requested. All certificates and
endorsements shall be received and approved by the City before work commences.
The City reserves the right to require complete, certified copies of all required insurance
policies, at any time.
11.2 Consultant shall, at its expense, procure and maintain for the duration of
the Agreement, insurance against claims for injuries to persons or damages to property
that may arise from or in connection with the performance of this Agreement. Insurance
is to be placed with insurers with a current A.M. Best's rating no less than A:VIII,
licensed to do business in California, and satisfactory to the City. Coverage shall be at
least as broad as the latest version of the following: (1) General Liability: Insurance
Services Office Commercial General Liability coverage (occurrence form CG 0001); (2)
Automobile Liability: Insurance Services Office Business Auto Coverage form number
CA 0001, code 1 (any auto); and (3) Professional Liability. Consultant shall maintain
limits no less than: (1) General Liability: $2,000,000 per occurrence for bodily injury,
personal injury and property damage and if Commercial General Liability Insurance or
other form with a general aggregate limit is used, either the general aggregate limit shall
apply separately to this Agreement/location or the general aggregate limit shall be twice
the required occurrence limit; (2) Automobile Liability: $1,000,000 per accident for bodily
injury and property damage; and (3) Professional Liability: $1,000,000 per
claim /aggregate.
11.3 The insurance policies shall contain the following provisions, or Consultant
shall provide endorsements on forms supplied or approved by the City to state: (1)
coverage shall not be suspended, voided, reduced or canceled except after 30 days
prior written notice by certified mail, return receipt requested, has been given to the City;
(2) any failure to comply with reporting or other provisions of the policies, including
breaches of warranties, shall not affect coverage provided to the City, its directors,
officials, officers, (3) coverage shall be primary insurance as respects the City, its
directors, officials, officers, employees, agents and volunteers, or if excess, shall stand
in an unbroken chain of coverage excess of the Consultant's scheduled underlying
coverage and that any insurance or self- insurance maintained by the City, its directors,
officials, officers, employees, agents and volunteers shall be excess of the Consultant's
insurance and shall not be called upon to contribute with it; (4) for general liability
insurance, that the City, its directors, officials, officers, employees, agents and
volunteers shall be covered as additional insureds with respect to the services or
operations performed by or on behalf of the Consultant, including materials, parts or
equipment furnished in connection with such work; and (5) for automobile liability, that
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the City, its directors, officials, officers, employees, agents and volunteers shall be
covered as additional insureds with respect to the ownership, operation, maintenance,
use, loading or unloading of any auto owned, leased, hired or borrowed by the
Consultant or for which the Consultant is responsible.
11.4 All insurance required by this Section shall contain standard separation of
insureds provisions and shall not contain any special limitations on the scope of
protection afforded to the City, its directors, officials, officers, employees, agents, and
volunteers.
11.5 Any deductibles or self- insured retentions shall be declared to and
approved by the City. Consultant guarantees that, at the option of the City, either: (1)
the insurer shall reduce or eliminate such deductibles or self - insured retentions as
respects the City, its directors, officials, officers, employees, agents, and volunteers; or
(2) the Consultant shall procure a bond guaranteeing payment of losses and related
investigation costs, claims and administrative and defense expenses.
12. Indemnification, Hold Harmless, and Duty to Defend
Consultant shall defend, indemnify, and hold the City, its officials, officers,
employees, volunteers and agents serving as independent contractors in the role of City
officials (collectively "Indemnitees ") free and harmless from any and all claims,
demands, causes of action, costs, expenses, liability, loss, damage or injury, in law or
equity, to property or persons, including wrongful death, in any manner arising out of or
incident to any acts or omissions of Consultant, its employees, or its agents in
connection with the performance of this Agreement, including without limitation the
payment of all consequential damages and attorneys' fees and other related costs and
expenses, except for such loss or damage arising from the sole negligence or willful
misconduct of the City. With respect to any and all such aforesaid suits, actions, or
other legal proceedings of every kind that may be brought or instituted against
Indemnitees, Consultant shall defend Indemnitees, at Consultant's own cost, expense,
and risk, and shall pay and satisfy any judgment, award, or decree that may be
rendered against Indemnitees. Consultant shall reimburse City and its directors,
officials, officers, employees, agents and /or volunteers, for any and all legal expenses
and costs incurred by each of them in connection therewith or in enforcing the indemnity
herein provided. Consultant's obligation to indemnify shall not be restricted to insurance
proceeds, if any, received by Consultant, the City, its directors, officials, officers,
employees, agents or volunteers. All duties of Consultant under this Section shall
survive termination of this Agreement.
13. Ownership and Confidentiality of Work Product
13.1 All reports, drafts, documents or other material, whether in written or
electronic form (collectively "Work Product "), developed by Consultant in connection
with all services provided pursuant to this Agreement shall be and remain the property
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of City without restriction or limitation upon its use or dissemination by City. Consultant
shall deliver to the City all Work Product upon termination of this Agreement.
13.2 Consultant, in the course of its duties, may have access to financial,
accounting, statistical, and /or personnel data of private individuals and employees of
City. Consultant covenants that all data, documents, discussion, or other information
developed or received by Consultant or provided for performance of this Agreement are
deemed confidential and shall not be disclosed by Consultant without prior written
authorization by City. City shall grant such authorization if the law requires disclosure.
Consultant shall surrender and return all such data to City immediately upon the
termination of this Agreement. Consultant's covenant under this section shall survive
the termination of this Agreement.
13.3 Notwithstanding the foregoing, pursuant to authority given by law or
regulation, Consultant may be requested to make certain audit documentation available
to a Cognizant or Oversight Agency or its designee, a federal agency providing direct or
indirect funding, or the U.S. Government Accountability Office for purposes of a quality
review of the audit, to resolve audit findings, or to carry out oversight responsibilities.
Consultant will notify City of any such request. If requested, access to such audit
documentation will be provided under the supervision of Consultant's personnel.
Furthermore, upon request, Consultant may provide copies of selected audit
documentation to the aforementioned parties. These parties may intend, or decide, to
distribute the copies or information contained therein to others, including other
governmental agencies.
14. Equal Opportunity
Consultant affirmatively represents that it is an equal opportunity employer.
Consultant shall not discriminate against any subcontractor, employee, or applicant for
employment because of race, religion, color, national origin, handicap, ancestry, sex,
sexual orientation, or age. Such non - discrimination includes, but is not limited to, all
activities related to initial employment, upgrading, demotion, transfer, recruitment or
recruitment advertising, layoff, or termination.
15. Labor Certification
By its signature hereunder, Consultant certifies that it is aware of the provisions
of Section 3700 of the California Labor Code that require every employer to be insured
against liability for Workers' Compensation or to undertake self- insurance in accordance
with the provisions of that Code, and agrees to comply with such provisions before
commencing the performance of the Services.
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16. Licenses and Compliance with Laws
16.1 Consultant will obtain all necessary licenses, permits and other approvals
to perform the Services and will pay all fees or taxes required for the issuance of the
same.
16.2 Consultant shall comply with all applicable federal, state and local laws,
ordinances, codes and regulations.
17. Entire Agreement
This Agreement contains the entire agreement of the parties with respect to the
subject matter hereof, and supersedes all prior negotiations, understandings, or
agreements. This Agreement may only be modified by a writing signed by both parties.
18. Severability
The invalidity in whole or in part of any provisions of this Agreement shall not
void or affect the validity of the other provisions of this Agreement.
19. Governing Law
This Agreement shall be governed by and construed in accordance with the laws
of the State of California.
20. No Third Party Rights or Beneficiaries
No third party shall be deemed to have any rights hereunder against either party
as a result of this Agreement.
21. Waiver
No waiver of any default shall constitute a waiver of any other default or breach,
whether of the same or other covenant or condition. No waiver, benefit, privilege, or
service voluntarily given or performed by a party shall give the other party any
contractual rights by custom, estoppel, or otherwise.
22. Prohibited Interests
22.1 Consultant maintains and warrants that it has not employed nor retained
any company or person, other than a bona fide employee working solely for Consultant,
to solicit or secure this Agreement. Further, Consultant warrants that it has not paid nor
has it agreed to pay any company or person, other than a bona fide employee working
solely for Consultant, any fee, commission, percentage, brokerage fee, gift or other
consideration contingent upon or resulting from the award or making of this Agreement.
For breach or violation of this warranty, City has the right to rescind this Agreement
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without liability. For the term of this Agreement, no member, officer or employee of City,
during the term of his or her service with City, shall have any direct interest in this
Agreement, or obtain any present or anticipated material benefit arising therefrom.
22.2 Consultant and its officers, employees, associates and subcontractors, if
any, will comply with all conflict of interest statutes of the State of California applicable
to Consultant's services under this Agreement, including, but not limited to, the Political
Reform Act (Government Code Section 81000, et. seq.) and Government Code Section
1090. During the term of this Agreement, Consultant and its officers, employees,
associates and subcontractors shall not, without the prior written approval of the City,
perform work for another person or entity for whom Consultant is not currently
performing work that would require Consultant or one of its officers, employees,
associates or subcontractors to abstain from a decision under this Agreement pursuant
to a conflict of interest statute. Consultant agrees that a clause substantially similar to
this section shall be incorporated into any subcontract, which Consultant executes in
connection with the performance of this Agreement.
22.3 Consultant warrants and maintains that it has no knowledge that any
officer or employee of City has any interest, whether contractual, noncontractual,
financial, proprietary, or otherwise, in this transaction or in the business of Consultant,
and that if any such interest comes to the knowledge of Consultant at any time during
the term of this Agreement, Consultant shall immediately make a complete, written
disclosure of such interest to City, even if such interest would not be deemed a
prohibited "conflict of interest" under applicable laws as described in this Subsection.
23. Discrimination and Equal Employment Opportunity
In the performance of this Agreement, Consultant shall not discriminate against
any employee, subcontractor or applicant for employment because of race, color, creed,
religion, sex, marital status, national origin, ancestry, age, physical or mental handicap,
medical condition or sexual orientation. Consultant will take affirmative action to ensure
that subcontractors and applicants that are employed, and that employees are treated
during employment, without regard to their race, color, creed, religion, sex, marital
status, national origin, ancestry, age, physical or mental handicap, medical condition or
sexual orientation.
24. Attorneys' Fees
If either party commences an action against the other party arising out of or in
connection with this Agreement, the prevailing party in such litigation shall be entitled to
have and recover from the losing party all of its attorneys' fees and other costs incurred
in connection with such action.
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25. Time Is Of the Essence
Time is hereby expressly declared to be of the essence of this Agreement and of
each and every provision hereof; and each and every provision hereof is hereby
declared to be and made a material, essential and necessary part of this Agreement.
26. Severability
Wherever possible, each provision of this Agreement shall be interpreted in such
a manner as to be valid under applicable law. If any provision of this Agreement is
determined by a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force and effect.
27. Exhibits
All exhibits referenced in this Agreement are hereby incorporated into the
Agreement as if set forth in full herein. In the event of any material discrepancy
between the terms of any exhibit so incorporated and the terms of this Agreement, the
terms of this Agreement shall control.
28. Corporate Authority
The persons executing this Agreement on behalf of the Parties warrant that they
are duly authorized to execute this Agreement on behalf of said Parties and that by their
execution, the Parties are formally bound to the provision of this Agreement.
IN WITNESS WHEREOF, the Parties hereto, through their respective
authorized representatives have executed this Agreement as of the date and year first
above written:
CITY OF SEAL BEACH
By:
Jill R. Ingram, Acting City Manager
Attest:
By:
Linda Devine, City Clerk
CONSULTANT
.�
,z�
Approved as to Form:
By:
Quinn Barrow, City Attorney
Name: O f-YA S 6 2 ur &)e
Its: ' f �'rN F K
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Attachment "C"
Exhibit "A
Proposal for Auditing Services
PROPOSAL TO PROVIDE
PROFESSIONAL AUDITING SERVICES
Prepared by:
Lance, Soll & Lunghard, LLP
Certified Public Accountants
203 N. Brea Blvd, Suite 203
Brea, California 92821
(714) 672 -0022
LS L
CERTIFIED PUBLIC ACCOUNTANTS
March 15, 2011
Contact Person:
Bryan S. Gruber, CPA, Partner
bryan.gruber @lslcpas.com
Alternate Contact Person:
Richard K. Kikuchi, CPA, Partner
richard.kikuchi @lslcpas.com
CITY OF SEAL BEACH
PROPOSAL TO PROVIDE PROFESSIONAL AUDITING SERVICES
TABLE OF CONTENTS
Page No.
Letterof Transmittal ............................................................................... ..............................1
Profile of Organization, Technical Qualifications, and Approach
Regional Accounting Firm .................................................................. ............................... 3
Locationof Offices ............................................................................. ............................... 3
Numberof Personnel ......................................................................... ............................... 3
Rangeof Activities ............................................................................. ............................... 3
GFOAAwards Program .................................................................. ............................... 4
Federal Single Audit - OMB Circular A -133 .................................... ............................... 4
References of Governmental Clients ................................................. ............................... 4
Specialized Audit Services and Experience ....................................... ............................... 4
Formal Education and Training Available to Clients .......................... ............................... 4
DisciplinaryAction .............................................................................. ............................... 5
Approachto Audit ............................................................................... ............................... 5
Proposed Segmentation of the Engagement
Level of Staff and Number of Hours to be Assigned ....................... ............................... 5
DrawingSample Sizes .................................................................... ............................... 5
Extent of Information Technology in the Engagement .................... ............................... 6
Analytical Procedures ..................................................................... ............................... 6
Approach to Determining Laws and Regulations Subject to Audit .. ............................... 6
Approach to Understanding City's Internal Control Structure ......... ............................... 6
Expectation of Assistance from City Staff ....................................... ............................... 7
Identification of Anticipated Potential Audit Problems ..................... ............................... 7
Anticipated Time Schedule ................................................................ ............................... 7
Why the City Should Select our Firm ................................................. ............................... 7
Priority Given to Seal Beach .............................................................. ............................... 8
PeerReview ....................................................................................... ............................... 8
Summary of the Firm's Individual Audit Staff Technical Qualifications
Personnel Assigned to the Audit ........................................................ ............................... 8
StaffAuditors ...................................................................................... ............................... 9
ContinuingEducation ......................................................................... ............................... 9
Basis for Increases /Decreases ............................................................. ............................... 9
Scope ..................................................................................................... ............................... 9
Personal, Professional or Financial Relationships
With any Officer or Employee of the City ................................. .............................10
Fees ........................................................................................................ .............................10
CITY OF SEAL BEACH
PROPOSAL TO PROVIDE PROFESSIONAL AUDITING SERVICES
TABLE OF CONTENTS
Page No.
Appendices
Appendix A - Listing of Governmental Audit Clients .......................... .............................11
Appendix B — Personnel Resumes
Bryan S. Gruber, CPA, Partner /IT Specialist ................................ .............................12
Richard K. Kikuchi, CPA, Concurring Partner .............................. .............................14
Debbie A. Harper, CPA, Audit Manager ....................................... .............................16
Nicole Lugotoff, Audit Senior ........................................................ .............................18
Appendix C - Peer Review Report ..................................................... .............................19
Appendix D — Proposed Auditing Fees ............................................ ............................... 20
h .C
CERTIFIED PUBLIC ACCOUNTANTS
• Brandon W. Burrows, CPA
e David E. Hale, CPA, CFP
A Professional Corporation
* Donald G. Slater, CPA
• Richard K. Kikuchi, CPA
• Susan F. Matz, CPA
m Shelty K. Jackley, CPA
• Bryan S. Gruber, CPA
March 15, 2011
City of Seal Beach
Robbeyn Bird, CPA
Director of Administrative Services/Treasurer
211 Eighth Street
Seal Beach, CA 90740
Lance, Soll & Lunghard, LLP is pleased to respond to your Request for Proposal for Professional
Auditing Services. As a leader in the field of governmental accounting and auditing, we appreciate
this opportunity given us to present our professional qualifications. Because of our extensive
municipal experience, dedication to excellence and determination to retain the brightest and most
talented professionals, we are certain that Lance, Soll & Lunghard, LLP is the most qualified
accounting firm to provide professional auditing services to the City of Seal Beach.
The annual services that would be provided for the City of Seal Beach, for the fiscal years ending
June 30, 2011 through June 30, 2013, would be as follows:
1. Perform a financial audit of the Basic Financial Statements of the City of Seal Beach. We
understand that Lance, Soll & Lunghard, LLP will be required to prepare this report. These
financial statements will be included within a Comprehensive Annual Financial Report
(CAFR) which may be submitted under the National awards programs. Our audit would
express an opinion as to whether the financial statements and associated notes conform to
accounting principles generally accepted in the United States of America.
2. Perform a financial audit of the Component Unit Financial Statements of the Seal Beach
Redevelopment Agency. We understand we will prepare these financial statements and our
opinion would indicate adherence to generally accepted accounting principles. A separate
compliance audit would be performed and an opinion issued as required by Section 33080.1
of the Health and Safety Code. This audit would be done in accordance with Guidelines for
Compliance Audits of California Redevelopment Agencies of the State Controller's Office.
3. Perform a Single Audit of all federal grants received by the City of Seal Beach utilizing
auditing standards generally accepted in the United States of America. This audit would be
performed according to the requirements of OMB Circular A -133, Government Auditing
Standards issued by the GAO and the AICPA Industry Audit Guide.
4. Perform agreed- upon - procedures pertaining to the City's GANN Limit (Appropriations Limit)
and render a letter annually to the City regarding compliance.
Lance, Soil & Lunghard, LLP 203 North Brea Boulevard • Suite 203 • Brea, CA 92821 • TEL: 714.672.0022 • Fax: 714.672.0331 www.lslcpas.com
41185 Golden Gate Circle • Suite 103 • Murrieta, CA 92562 • TEL: 951.304.2728 • Fax: 951.304.3940
LS E 000
CERTIFIED PUBLIC ACCOUNTANTS
City of Seal Beach
Robbeyn Bird, CPA
Director of Administrative Services/Treasurer
March 15, 2011
5. Perform a review and make recommendations on the internal control structure, which
consists of the Control Environment, Accounting System and Control Procedures. Annually,
we will prepare and issue the SAS 115 "management letter". Also, we shall make an
immediate and written report of any irregularities and illegal acts or indication of illegal acts
coming to our attention.
The sections that follow describe the benefits your organization would receive from Lance, Soll &
Lunghard, LLP. We are committed to provide the services discussed above in accordance
with the timetable specified in your request for proposal. This proposal is a firm and irrevocable
offer for the fiscal years ending June 30, 2011 through June 30, 2013 for ninety days. For purposes
of this proposal, Bryan S. Gruber, Partner is authorized to make representations for our firm. I can
be reached at the address above or by phone at (714) 672 -0022.
Very truly your
Bryan S. Gruber, Partner
LANCE, SOLL & LUNGHARD, LLP
2
PROFILE OF THE ORGANIZATION, TECHNICAL QUALIFICATIONS, AND APPROACH
Lance, Soll & Lunghard, LLP is a regional public accounting firm that has met the auditing needs
of governmental entities throughout California for over 80 years. This experience has led to the
development of efficient procedures that provide numerous client benefits. Our clients have grown to
understand that an audit from Lance, Soll & Lunghard, LLP provides them with a wealth of
knowledge, confidence and value added services. For this and many other reasons, Lance, Soll &
Lunghard, LLP has consistently been named one of the "Top Accounting Firms" in Orange County
by the Orange County Business Journal.
LOCATION OF OFFICES
We have three offices in the Southern California area which provide services to the western
region of the United States. Our headquarters are located in Orange County in the City of Brea,
California and we also operate two other offices located in Walnut, California and Murrieta,
California. All services provided to the City of Seal Beach will come from the Orange
County office in the City of Brea, California.
NUMBER OF PERSONNEL
We presently have seven partners. Professional staff consists of seven managers, twelve
seniors and eight associates. Governmental staff consists of two partners, four managers, seven
seniors and six staff auditors.
Local government expertise is led by the following partners:
Richard K. Kikuchi, C.P.A., Partner
Bryan S. Gruber, C.P.A., Partner
RANGE OF ACTIVITIES
Our activities overall cover auditing, compilation and review services, management services and
income tax preparation. Approximately 60% of our practice deals with governmental auditing and
related services. Generally, our municipal services break down into the following major
classifications:
Financial Auditing:
Governmental Entities (See Appendix A for an additional breakdown)
Federal Single Audits
Management Services:
Agreed Upon Procedures
Internal audits
Compliance Reviews (Franchise Fee, TOT, Lease Agreements, etc.)
Professional Staffing
Report preparation:
State Controller's Report and Statement of Indebtedness
Street Report
3
Profile of Organization, Technical Qualifications, and Approach (Continued)
GFOA Award Programs
We prepare the financial statements and footnote disclosures for most of our clients that
have received the GFOA award. All of our governmental partners, managers and seniors
have been closely involved in the preparation of these reports. See Appendix A for a
complete list of our clients presently receiving the GFOA award.
Federal Single Audit — OMB Circular A -133
We perform single audit services for all of our cities that have federal grants and meet the
requirements as stipulated under OMB Circular A-1 33. These engagements fully comply with
OMB Circular A-1 33 and include preparing the Schedule of Federal Expenditures along with
all required opinions. Our procedures in this area were reviewed by the State Controller's
Office acting in their capacity as cognizant agency and we were given high marks for our
approach and documentation. See Appendix A for a complete list of our clients we currently
or have in the past performed a single audit.
REFERENCES OF GOVERNMENTAL CLIENTS
As previously mentioned, we have over 80 years of experience auditing local governments
(including cities, special districts, redevelopment agencies, joint powers authorities and single
audits performed under OMB Circular A -133).
A complete listing of current audit clients, along with phone numbers of contact personnel and
references as to services provided, is contained in Appendix A to this proposal. We welcome
you contacting any or all of these to get their opinion on the services we provide.
SPECIALIZED AUDIT SERVICES AND EXPERIENCE
We provide a variety of services in addition to the standard financial audit including various
compliance audits, agreed -upon procedure engagements, operational audits, internal control
assessments, and revenue audits including transient occupancy tax, franchise tax, and various
other revenue sources. We work with local governments to add value using our many years of
experience working with similar entities on these types of engagements.
A few examples include multi -year internal auditing contracts with the City of Burbank and the
Orange County Sanitation District with the last audits being performed in fiscal year 2010. We
also performed a variety of agreed -upon procedure engagements in fiscal year 2010 for the City
of Coronado, San Diego County Water Authority, City of Ontario, City of West Hollywood, and
the City of Big Bear Lake.
FORMAL EDUCATION AND TRAINING AVAILABLE TO CLIENTS
It is our goal to act as a valuable resource to our clients through a variety of channels with one
being an annual seminar on new GASB pronouncements and other governmental accounting
and auditing topics. We view this as an excellent opportunity to keep our clients informed and
also to provide CPE credit.
4
Profile of Organization, Technical Qualifications, and Approach (Continued)
DISCIPLINARY ACTION
There have been no disciplinary actions against our organization since its inception. All of our
Single Audit reports are desk reviewed either by the Federal cognizant agency or the State
Controller's Office acting as the Oversight Agency. We have never had a report rejected by any
of these agencies. In fact, we are highly regarded and recognized by the staff of the State
Controller's Office as a firm that always submits top quality reports.
APPROACH TO AUDIT
Proposed Segmentation of the Engagement
We utilize a standardized governmental audit program which we will tailor to the City of
Seal Beach's operations. The tailoring is necessary to accommodate specific client
circumstances and to recognize differences in local statutes, ordinances, and similar unique
characteristics. Our audit programs are organized using the financial statement (balance
sheet) category approach. This approach takes full advantage of our accumulated
experience. The primary benefit is that the risk of omitting important procedures is
substantially reduced. We believe that this approach tends to be the most effective and
efficient for an entity such as the City of Seal Beach. In a standardized program, the audit
procedures are listed in the most logical sequence, and that improves efficiency. The
savings in effort and time gained by using a standardized audit program can free an
auditor's attention for unusual or difficult situations that may arise. The audit programs are
designed to increase audit efficiency by linking financial statement assertions, audit
objectives, and procedures that are basic to most governmental audit engagements.
Level of Staff and Number of Hours to be Assigned
The level of personnel assigned to the engagements and number of hours estimated to be
spent on each proposed segment is as follows:
Segment
Partner
Manager
Senior
12.00
City CAM
25.00
40.00
80.00
Agency Statements
2.00
4.00
10.00
Single Audit
1.00
2.00
5.00
GANN Limit
1.00
1.00
1.00
Total Hours
29.00
47.00
96.00
Drawing Sample Sizes
Staff Total
180.00
325.00
24.00
40.00
12.00
20.00
1.00
4.00
217.00
389.00
For the purpose of tests of controls and tests of compliances with laws and regulations, we
use audit sampling. Tests of controls are procedures directed towards determining the
effectiveness of the design or operation of an internal structure policy or procedures.
Normally, audit sampling is used for tests of controls that involve inspection of documents
and reports indicating performance of the policy or procedures and, in many cases,
re- performance of the application of the policy or procedures. These sampling procedures
test the operating effectiveness of an internal control structure policy or procedures by
determining how the policy or procedure was applied, the consistency with which it was
applied during the audit period, and by whom it was applied.
5
Profile of Organization, Technical Qualifications, and Approach (Continued)
Extent of Information Technology in the Engagement
LSL performs paperless audits utilizing Caseware Auditing Software and IDEA Data Analysis
Software. We extensively use notebook computers in the field, with spreadsheet software for
financial statement preparation and analytical procedures.
Our traditional approach is to "audit around" the computer, which means that we verify
output by agreeing it, through our audit tests and software, with corresponding source input
transactions. We do not use audit software that runs directly through the City's computer
system, such as a test deck. We do use portable computers in the field, with specialized
software for financial statement preparation and analytical procedures. Like other aspects of
the internal control structure, computer controls are documented in our memoranda and
questionnaires. Bryan S. Gruber will serve as the IT Specialist on this engagement.
Analytical Procedures
We use analytical procedures throughout our audit testing. Analytical procedures, such as
current year to prior year and budget to actual, allow us to easily identify any unusual items
or inconsistencies in your financial reporting. Analytical procedures are also used as an
overall review of the financial information in the preliminary and final stages of the audit.
These procedures are designed to assist us in planning our audit and in assessing the
propriety of the conclusions reached and in the evaluation of the overall financial statement
presentation. The procedures to be utilized consist of determining percentage increases and
decreases between significant revenue, expenditure and balance sheet accounts, reading
the financial statements and related notes, and we focus on overall relationships within the
financial statements. Once determined, these are reviewed to determine if the changes
appear reasonable or require further analysis. For all significant differences, explanations
are obtained as to why the situation occurred and additional substantive procedures may be
applied and related evidence gathered to resolve concerns and questions.
Approach to Determining Laws and Regulations Subject to Audit
The Laws and Regulations that will be subject to audit test work are determined from the
municipal code of the Commission (we would ask for access to a volume of the Code during
our fieldwork), applicable sections of Governmental Code for the State of California and our
extensive experience with governmental entities.
Approach to Understanding City's Internal Control Structure
To gain an understanding of the City of Seal Beach's internal control structure, we will
perform procedures as required by the new Auditing Standards, primarily SAS 104 -111.
This will include completing forms taken from the Local Government Publication of
Practitioners Publishing Company. These forms meet the technical standards of the AICPA
and allow us to document the major transaction classes, purpose of funds, the structure of
the City and to quantify materiality. We will review and make recommendations on the
internal control structure, which consists of Control Environment, Accounting System and
Control Procedures. We will review internal controls in the area of cash; investments;
revenues and receivables; expenditures and accounts payable; payroll; inventories; property
and equipment, debt and debt service; insurance and claims. In addition, during the
performance of the Single Audit, we will review areas of internal controls over federal grants,
L
Profile of Organization, Technical Qualifications, and Approach (Continued)
including general requirements; specific requirements; claims for advances and
reimbursements and amounts claimed or used for matching. Based on the result of our
review, we will issue a formal internal control report (SAS 115 Letter) that will identify any
significant deficiencies and or material weaknesses. This report is required by the
Government Auditing Standards issued by the Comptroller General of the United States,
as well as the Single Audit Act. In addition, we will also issue a separate communication
letter directly to the governing board. This letter would communicate any significant
deficiencies or material weaknesses in the internal control system and other matters thatwe
feel should be communicated to the governing board. All internal control issues will initially
also be discussed with management of the City of Seal Beach.
Expectation of Assistance from City Staff
In preparation of the audit we provide the City with a thorough list of items needed for the
audit. The list requests such items as the final trial balance, reconciliations of accounts, and
supporting documentation for calculations and amounts reported in the financial statements.
Identification of Anticipated Potential Audit Problems
We do not anticipate any significant potential audit problems. However, our approach to
resolving audit problems, once they have been identified, is to draw upon our internal
resources to get the job done. Most of our clients have us prepare the financial statements
and assist them in handling complicated accounting matters. Therefore, we have the
resources to handle most problems encountered.
With regard to City staff time, we recognize that the City of Seal Beach's finance department
staff is being fully utilized and thus we would attempt to resolve audit problems with the
assistance of City staff.
ANTICIPATED TIME SCHEDULE
We will perform an initial interim audit in May or June for approximately four workdays with two
or three auditors. In September we will conduct our final audit in which we also anticipate
approximately four workdays with two or three auditors. It is our firm goal to provide the fund
financial statements on the last day of fieldwork along with grouping schedules and journal
entries and within 10 -14 days provide a draft of the complete financial statements for your
review. We are committed to meeting the timeline detailed out in your request for proposal.
WHY THE CITY SHOULD SELECT OUR FIRM
Our biggest asset is the people we have at Lance, Soil & Lunghard. We have assembled a
talented and experienced team of professionals for the City of Seal Beach that will make your
audit a success. Our people are strong technically and will work with the City to be a technical
resource on governmental accounting and auditing on an ongoing basis throughout the year.
Secondly, our use of technology including auditing and financial statement preparation software
provide a dramatic impact on audit quality, efficiency, and timeliness. Lastly, we recognize that
completing an audit and submitting your financial statement for the award program is a lot of
work and we have to work effectively together to complete this process. We believe our people,
communication and work ethic make us the best firm to work with in this process.
7
Profile of Organization. Technical Qualifications, and Approach (Continued)
PRIORITY GIVEN TO SEAL BEACH
We value the relationships we have with our clients and look to exceed client expectations to the
best of our abilities. When it comes to placing a priority on clients we feel that due to our size
and the extensive experience of our staff, none of our clients come in second place because
there is always an engagement team member available. In this proposal we have dedicated two
partners, a manager, and a senior who are always available to you throughout the year.
PEER REVIEW
We are members of the American Institute of Certified Public Accountant's Private Companies
Practice Section, which has the requirement for peer review along with Generally Accepted
Government Auditing Standards. We have participated in the peer review program since its
inception and have undergone several peer reviews. The first review was conducted by Arthur
Young & Company (now Ernst & Young) and the most recent by R.H. Johnston Accountancy
Inc. Overall, they confirmed what we already knew, that our approach and procedures are in
compliance with technical and professional pronouncements. All of these peer reviews covered
govemmental engagements Our most recent peer review, conducted by R.H. Johnston
Accountancy Inc., is included in Appendix C to this proposal.
SUMMARY OF THE FIRM'S INDIVIDUAL AUDIT STAFF TECHNICAL QUALIFICATIONS
PERSONNEL ASSIGNED TO THE AUDIT
The most critical component in the successful completion of an audit is the personnel assigned
to carry out the responsibilities. We have assembled a Lance, Soil & Lunghard, LLP Team
composed of individuals with the optimum mix of talents. The individuals assigned have
experience in performing the tasks for which they are responsible, as well as familiarity with all
municipal accounting operations. In addition, each has developed extensive skills in a variety of
other complementary subjects through their work with clients in other industries. Thus, the
experience gained on previous assignments can be applied and tailored to the unique needs of
your organization.
The partners at Lance, Soil & Lunghard, LLP are routinely an integral part of the audit process
and will be overseeing and supervising staff personnel in the field. For the City of Seal Beach,
the personnel assigned to the engagement would be as follows:
Partner /IT Specialist
Concurring Partner
Audit Manager
Senior
Professional Staff
Bryan S. Gruber, CPA
Richard K. Kikuchi, CPA
Debbie A. Harper, CPA
Nicole Lugotoff, License in Process
1 to 2
Resumes for these individuals are located in Appendix B.
Summary of the Firm's Individual Audit Staff Technical Qualifications (Continued)
STAFF AUDITORS
The firm's policy of assigning seniors to an engagement requires that the senior have at least
two years of municipal auditing experience. He or she must have demonstrated a high degree of
understanding of municipal accounting and auditing, as well as of the firm's overall client
philosophy. Having been assigned to the engagement before is also an important factor in
assigning a senior to an engagement. Any changes in personnel at the senior level or above will
be approved by the City of Seal Beach Lance, Soil & Lunghard, LLP's philosophy is to provide
quality audit services with minimal disruption to City staff. Ourfocused efforts to obtain and
retain quality staff have further enabled us to provide this to our clients.
CONTINUING EDUCATION
As a firm policy, and in compliance with the continuing education requirements promulgated by
the AICPA, General Accounting Office and the California Society of CPAs, all our staff auditors
(certified and non - certified) meet the requirement of 40 hours of continuing education every
year, with at least 24 hours in governmental accounting and auditing in a two year period. For
our educational programs, we utilize in -house seminars, California Society of CPAs attendance
courses, AICPA training video tapes, and self -study AICPA/California Society of CPAs materials.
Our formal education program was reviewed by independent firms during our peer review
process and no exceptions were noted.
BASIS FOR INCREASES /DECREASES
Our services are quoted at a not -to- exceed maximum, however if there were changes to the scope
of the audit that would increase the scope we would negotiate a separate fee for those services. If
there were a decrease in the scope of the audit we would negotiate a fee reduction for the portion of
work and hours attributed to the work removed from the scope.
SCOPE
Perform a financial audit of the Basic Financial Statements of the City of Seal Beach. We
understand that Lance, Soil & Lunghard, LLP will be required to prepare this report. These financial
statements will be included within a Comprehensive Annual Financial Report (CAFR) which may be
submitted under the National awards programs. Our audit would express an opinion as to whether
the financial statements and associated notes conform to accounting principles generally accepted
in the United States of America. All working papers and reports will be retained (at our
expense) for a minimum of seven (7) years, unless we are notified by the City of Seal Beach
of the need to extend that retention period.
Perform a financial audit of the Component Unit Financial Statements of the Seal Beach
Redevelopment Agency. We understand we will prepare these financial statements and our opinion
would indicate adherence to generally accepted accounting principles. A separate compliance audit
would be performed and an opinion issued as required by Section 33080.1 of the Health and Safety
Code. This audit would be done in accordance with Guidelines for Compliance Audits of California
Redevelopment Agencies of the State Controller's Office.
0
Scope (Continued)
Perform a Single Audit, if required, of all federal grants of the City of Seal Beach utilizing generally
accepted government auditing standards. This audit would be performed according to OMB Circular
A -133, Government Auditing Standards issued by the GAO and the AICPA Industry Audit Guide.
Our reports will be included in a separate financial statement apart from the statements prepared for
the award programs and will include the following:
• Report on Compliance and on Internal control over Financial Reporting Based on an Audit
of Financial Statements Performed in Accordance with Government Auditing Standards.
• Report on Compliance with Requirements Applicable to Each Major Program and Internal
Control over Compliance in Accordance with OMB Circular A -133.
• Schedule of Expenditures of Federal Awards.
• Schedule of Findings and Questioned Costs.
We will review and make recommendations on the internal control structure, which consists of
Control Environment, Accounting System and Control Procedures. We will review internal controls in
the area of cash; investments; revenues and receivables; expenditures and accounts payable;
payroll; inventories; property and equipment, debt and debt service; insurance and claims. In
addition, during the performance of the single audit, we will review areas of internal controls over
federal grants, including general requirements; specific requirements; claims for advances and
reimbursements and amounts claimed or used for matching. Based on the result of our review, we
will issue a formal internal control report that will identify any significant deficiencies or material
weaknesses. This report is required by the Government Auditing Standards issued by the
Comptroller General of the United States, as well as the Single Audit Act. In addition, we will also
issue a separate management letter directly to the City of Seal Beach's governing board. The letter
would communicate any significant deficiencies or material weaknesses in the internal control
system and other matters that we feel should be communicated to the governing board. All internal
control issues would also be discussed with management of the City.
Perform agreed- upon - procedures pertaining to the City's GANN Limit (Appropriations Limit) and
render a letter annually to the City regarding compliance.
We will also provide the City of Seal Beach with additional financial services, collectively known as
retainer services. This will include services not strictly within the purview of the audit, including but
not limited to rendering assistance in ensuring that appropriate financial controls and procedures are
in place and maintained; providing the City with payroll tax advice and other pertinent tax law
changes; updating City staff with the latest development in governmental accounting and reporting
issues; and assisting the City in implementing new GASB requirements. These services will be
provided up to a maximum of 40 hours per year at no additional cost to the City of Seal Beach.
PERSONAL, PROFESSIONAL OR FINANCIAL RELATIONSHIPS WITH ANY OFFICER
OR EMPLOYEE OF THE CITY
We do not have any personal, professional or financial relationship with any officer or employee
of the City of Seal Beach.
FEES
Our proposed auditing fees are located in Appendix D.
10
Appendix A
LSL LISTING OF GOVERNMENTAL AUDIT CLIENTS
Service Codes:
F - Financial Audit
S - Single Audit of Federal Grants in accordance with OMB Circular A -133
* - Participates in Award Programs and has received or anticipates receiving outstanding award
11
Client
Contact Person
Service
Code
Years
Telephone
*
Azusa
Mr. A. Kreimeier, Finance Director
F,S
14
626- 812 -5291
Banning
Ms. M. Green, Accounting Manager
F, S
13
951 - 922 -3118
Bell Gardens
Ms. K. Krause, Finance Director
F, S
7
562- 806 -7708
Big Bear Lake
Ms. K. Smith, Finance Manager
F, S
14
909 -866 -5831
California City
Ms. K. Bailey Finance Director
F,S
34
760 - 373 -8661
Canyon Lake
Ms. L. Moss, City Manager
F
16
909 -244 -2955
*
Cathedral City
Mr. K Biersack, Fiscal Officer
F,S
2
760 - 770 -0378
*
Chino Hills
Ms. J. Lancaster, Finance Director
F, S
14
909 - 364 -2600
*
Claremont
Mr. A. Pirrie, Acting Finance Director
F, S
7
909 - 399 -5460
Clearlake
Mr. M. Vivrette, Finance Director
F
3
707 - 994 -8201
*
Colton
Ms. B. Johnson, Finance Director
F, S
11
909 - 370 -5000
Coronado
Ms. L. Suelter, Finance Director
F, S
5
619 - 522 -7300
Duarte
Ms. K. Petersen, Finance Director
F
5
626 - 357 -7931
East Kern Airport District
Mr. S. Witt, General Manager
F, S
34
661- 824 -3341
*
Escondido
Mr. G Rojas, Finance Director
F, S
2
760 - 839-4322
*
Emeryville
Ms. K. Reid, Accounting Manager
F, S
8
510 - 596-4352
*
Fontana
Ms. L. Strong, Director of Admin. Services
F, S
18
909 - 350 -6778
*
Foothill Transit Authority
Mr. R. Hasenohrl, Finance Director
F, S
7
626 - 967 -2274
*
Glendora
Ms. E. Stoddard, Accounting Manager
F, S
8
626 - 914 -8238
Greater Los Angeles Vector Control
Mr. K Bayless, District Manager
F
2
562- 758 -6501
*
Hawthorne
Ms. L Emmich, Finance Manager
F S
14
310 - 970 -7923
Hidden Hills
Ms. C. Pa lia, City Clerk
F-
26
1 818 - 888 -9281
Imperial Beach
Mr. M. McGrane, Finance Director
F
8
619- 628 -1361
Irwindale
Mr. L. Nomura, Finance Director
F
16
626 -430 -2200
*
La Mirada
Mr. K Prel ovisk, Finance Director
F, S
8
562 - 943 -0131
*
La Quinta
Mr. J. Falconer, Finance Director
F, S
5
760 - 777 -7150
Lancaster
Ms. B. Boswell, Finance Director
F, S
21
661 - 723 -6000
*
Malibu
Ms. R. Feldman, Finance Director
F
8
310 -456 -2489
*
Manhattan Beach
Mr. B. Moe, Finance Director
F
9
310 -802 -5553
*
Menifee
Mr. W. Welch, Accountant
F
2
951 - 672 -6777
*
Monrovia
Mr. M. Alvarado, Director of Admin. Services
F, S
11
626 - 932 -5510
Montclair
Mr. R. Beltran, Assist. Finance Director
F, S
40
909 - 625 -9418
*
Murrieta
Ms. J. Canfield, Finance Director
F, S
20
951 - 698 -1040
*
Ontario
Mr. G. Yee, Director of Admin. Services
F, S
13
909 - 395 -2000
Orange County LAFCO
Ms. C Emery, Assistant Executive Officer
F
4
714 - 834 -2556
*
Palm Springs
Mr. G. Kiehl, Finance Director
F, S
2
760 - 323 -8229
*
Rancho Cucamonga
Ms. T. Layne, Finance Officer
F, S
34
909 - 989 -1851
l Rolling
Hills
Mr. J. Walker, Finance Director
F
3
310 - 377 -1521
Riverside County LAFCO
Mr. G. S iliotis
F
4
951- 369 -0631
San Bern County LAFCO
Ms. K. Rollin s- McDonald
F
4
909 - 383 -9900
San Carlos
Ms. R. Mendenhall, Acting Admin Svcs Dir
F,S
New
650 - 802 -4221
*
San Diego County Water Authority
Ms. L. Wade, Controller
F, S
6
858 - 522 -6600
San Dimas
Ms. B. Bishop, Finance Director
F, S
51
909- 394 -6200
San Marino
Ms. L. Bailey, Finance Director
F
19
626- 300 -0700
*
Simi Valley
Ms. L. Gar , Dep Dir /Fiscal Services
F, S
4
805 - 583 -6747
*
South Pasadena
Mr. C. Thai, Finance Director
F
9
626-403 -7250
*
Temecula
Ms. G. Roberts, Finance Director
F, S
4
951 - 694 -6430
*
Thousand Oaks
Mr. J. Adams, Interim Finance Director
F, S
4
805-449 -2235
*
Three Valleys Water District
Mr. R. Hansen, General Manager
F
4
909 - 626 -4631
*
Vista
Mr. D. Nielsen, Finance Manager
F
3
760 - 639 -6170 x1023
*
Walnut
Ms. C. Londo, Finance Director
F
40
909 - 595 -7543
*
West Hollywood
Mr. P. Arevalo, City Manager
F, S
21
323 -848 -6400
*
Wildomar
Mr. G. Nord uist, Finance Director
F
3
951 - 677 -7751
*
Yorba Linda
Ms. P. Parisien, Accounting Manager
F, S
12 1
714- 961 -7142
Service Codes:
F - Financial Audit
S - Single Audit of Federal Grants in accordance with OMB Circular A -133
* - Participates in Award Programs and has received or anticipates receiving outstanding award
11
Appendix B
BRYAN S. GRUBER, CPA
ENGAGEMENT PARTNER /IT SPECIALIST
Education: Bachelor of Arts Degree in Business Administration
with an emphasis in Accounting — California State
University, Fullerton 2004
License: Certified Public Accountant — California 2008
Continuing Total hours were 132 in last three years of which 74
Education: were in governmental accounting and auditing
subjects. Mr. Gruber has met the Governmental
Auditing Standards requirement for governmental
CPE.
Memberships: California Society of Certified Public Accountants
American Institute of Certified Public Accountants
Government Finance Officers Association
California Society of Municipal Finance Officers
Association of Local Government Auditors
Experience: Over seven years experience in governmental audits including CAFR audits,
redevelopment agency audits and Single Audits. He has also made numerous
presentations to City Councils, Boards of Directors and Audit Committees. He
has been involved in the following municipal engagements:
Mr. Gruber has also been involved in the following engagements:
Three Valleys Municipal Water District
City of Palm Springs
City of Cathedral City
City of Duarte
City of Claremont
City of Montclair
City of El Monte
City of California City
City of Clearlake
Orange County LAFCO
City of Temecula
City of La Quinta
Greater LA Vector Control
City of Azusa
City of Lancaster
City of Fontana
City of La Mirada
City of South Pasadena
City of Rolling Hills
City of San Dimas
Achievements: Mr. Gruber has been involved with teaching current audit and accounting
related material at Lance, Sol[ & Lunghard, LLP's in house training seminars.
12
Appendix B
Bryan S. Gruber, CPA, Engagement Partner /IT Specialist (Continued)
He has made numerous presentations at local chapter meetings for CSMFO on
current accounting and auditing material.
He also currently serves as a technical reviewer for. the Government Finance
Officers Association (GFOA).
Serves as firm IT Specialist for his involvement in IT related controls, data
mining and analysis, and auditing software.
13
Appendix B
RICHARD K. KIKUCHI, CPA
CONCURRING PARTNER
Education: Bachelor of Arts Degree in Business Administration
with an emphasis in Accounting - California State
University, Fullerton 1985
License: Certified Public Accountant - California 1991
Continuing Total hours were 142 in last three years of which
Education: 64 were in governmental accounting and auditing
subjects. Mr. Kikuchi has met the Governmental
Auditing Standards requirement for governmental
CPE
Memberships: California Society of Certified Public Accountants
American Institute of Certified Public Accountants
California Society of Municipal Finance Officers
(Associate Member)
Government Finance Officers Association
(Associate Member)
Experience
Over twenty years experience in governmental audits.
He is currently involved on the following major municipal engagements.
City of Azusa
City of Big Bear Lake
City of Colton
City of Imperial Beach
City of Yorba Linda
City of Monrovia
City of Malibu
San Diego County Water Authority
Orange County Sanitation District
South Bay Cities Council of Governments
City of Canyon Lake
City of Yorba Linda
City of Temecula
City of Coronado
City of Murrieta
City of La Quinta
City of Manhattan Beach
City of Menifee
City of Wildomar
Foothill Transit Authority
• This work entailed the preparation of the Comprehensive Annual Financial
Report for those entities involved in the award programs of the California
Society of Municipal Finance Officers and the Government Finance Officers
Association of the United States and Canada.
• Mr. Kikuchi has the responsibility for overseeing federal single audits for
these and other clients of our firm. These audits have met the requirements
of the OMB and have been desk reviewed by the State Controller's Office.
14
Appendix B
Richard K. Kikuchi, CPA, Concurring Partner (Continued)
Achievements: Mr. Kikuchi recently sat on the California State Board of Accountancy's
Qualifications Committee, which is an advisory committee established to
examine and to make recommendations for all applicants for the license of
Certified Public Accountant.
He currently serves as a technical reviewer for the Government Finance
Officers Association (GFOA) and the California Society of Municipal Finance
Officers ( CSMFO).
Mr. Kikuchi sat on the CSMFO Special Districts Technical Committee and
teaches an Introductory Governmental Accounting course through the CSMFO
Career Development Committee.
15
Appendix B
DEBBIE A. HARPER, CPA
AUDIT MANAGER
Education: Bachelor of Arts Degree in Business Administration
with an emphasis in Accounting - California State
University, Fullerton 2000
License: Certified Public Accountant — California 2005
Continuing Total hours were 132 in last three years of which 68
Education: were in governmental accounting and auditing
subjects. Ms. Harper has met the Governmental
Auditing Standards requirement for governmental
CPE.
Memberships: California Society of Certified Public Accountants
American Institute of Certified Public Accountants
California Society of Municipal Finance Officers
(Associate Member)
Government Finance Officers Association
(Associate Member)
Experience: Over ten years experience in governmental audits. Ms. Harper has
demonstrated her talent in the area of municipal accounting and auditing.
During her time with the firm, Ms. Harper has performed all phases of our
municipal audits and made numerous presentations to City Councils, Boards of
Directors and Audit Committees. She has been involved on the following
engagements:
City of Yorba Linda
Ms. Harper has served as the Audit Manager on the City of Yorba Linda audit
from fiscal years 2004 -2005 through present. As the audit manager, it has
been her responsibility to oversee the Financial Audit for the City and
Redevelopment Agency, the Single Audit in accordance with A -133 as well as
various agreed -upon procedures on the Golf Course revenues. The City of
Yorba Linda receives the GFOA Award for Excellence in Financial Reporting
each year.
City of Simi Valley
Ms. Harper has served as the Audit Manager for the City of Simi Valley for
fiscal year 2007 -2008 through present. The City of Simi Valley is a complex
city with various component units including the Ventura County Waterworks
16
Appendix B
Deborah A. Harper, CPA, Audit Manager (Continued)
District No. 8 and the Simi Valley Community Development Agency. As the
audit manager, it has been Ms. Harper's responsibility to oversee all areas of
the Financial Audit, the audit of the Simi Valley Community Development
Agency and the Single Audit in accordance with A -133. The City of Simi Valley
receives the GFOA Award for Excellence in Financial Reporting each year.
City of Glendora
Ms. Harper has served as the Audit Manager for the City of Glendora for fiscal
year 2004 -2005 through present. As the audit manager, it has been Ms.
Harper's responsibility to oversee all areas of the Financial Audit for the City
and Redevelopment Agency, the Investment Review audit, and the Single
Audit in accordance with A -133. The City of Glendora receives the GFOA
Award for Excellence in Financial Reporting each year. During her time with
the City they have implemented new financial reporting software which involved
continuous communication between Ms. Harper _ and the City providing
feedback to any questions that might involve changing the City's internal
control policies and procedures.
Ms. Harper has also been involved in the following engagements:
City of Claremont
City of Emeryville
City of La Mirada
City of Yorba Linda
Foothill Transit
San Diego County Water Authority
City of Banning
City of Diamond Bar
City of Glendora
City of Monrovia
City of Simi Valley
City of Temecula
City of Imperial Beach
OC Vector Control District
Achievements: Ms. Harper has developed and conducts various Lance, Soil & Lunghard, LLP
municipal training courses for new associates and members of the firm.
17
Appendix B
NICOLE L. LUGOTOFF
AUDIT SENIOR
Education: Bachelor of Arts Degree in Business Administration with an emphasis in
Accounting — California State Polytechnic University, Pomona 2007
License: Certified Public Accountant — In Process
Continuing Total hours were 123 in last three years of which 107 were in governmental
Education: accounting and auditing subjects. Ms. Lugotoff has met the Governmental
Auditing Standards requirement for governmental CPE.
Experience: Over three years experience in governmental audits. Ms. Lugotoff has
progressed in an outstanding manner. During her time with the firm, Ms.
Lugotoff has performed all phases of our municipal audits, including CAFR
audits, redevelopment agency audits and Single Audits. She has been
involved in the following municipal engagements:
Ms. Lugotoff has also been involved in the following engagements:
City of Azusa
City of Coronado
San Diego County Water Authority
Three Valleys Municipal Water District
City of Lancaster
City of Big Bear Lake
City of San Dimas
City of Banning
City of Imperial Beach
City of Claremont
City of South Pasadena
City of Manhattan Beach
Foothill Transit Authority
City of Menifee
Achievements: Ms. Lugotoff has been involved with teaching current audit and accounting
related material at Lance, Soil & Lunghard, LLP's in house training seminars.
18
R.H. JOHNSTON ACCOUNTANCY INC. Appendix C
A Professional Corporation
21300 Victory Boulevard, Suite 750
Woodland Hills, California 91367
(818) 346 -9800
Fax(818)346 -0609
System Review Report
October 28, 2010
To the Partners of Lance, Soll & Lunghard, LLP
and the Peer Review Committee of the California Society of CPAs
We have reviewed the system of quality control for the accounting and auditing practice of Lance,
Soll & Lunghard, LLP (the firm) in effect for the year ended May 31, 2010. Our peer review was
conducted in accordance with the Standards for Performing and Reporting on Peer Reviews
established by the Peer Review Board of the American Institute of Certified Public Accountants.
The firm is responsible for designing a system of quality control and complying with it to provide
the firm with reasonable assurance of performing and reporting in conformity with applicable
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 therewith based on our review.
The nature, objectives, scope, limitations of, and the procedures performed in a System Review are
described in the standards at www.aicpa.org/prsummary.
As required by the standards, engagements selected for review included engagements performed
under Government Auditing Standards, and an audit of employee benefit plan.
In our opinion, the system of quality control for the accounting and auditing practice of Lance, Soll
& Lunghard, LLP in effect for the year ended May 31, 2010, has been suitably designed and
complied with to provide the firm with reasonable assurance of performing and reporting in
conformity with applicable professional standards in all material respects. Firms can receive a rating
ofpass, pass with defcciency(ies) or fail. Lance, Soll & Lunghard, LLP has received a peer review
rating of pass.
i
19
eae
LS E 0®0
100
CERTIFIED PUBLIC ACCOUNTANTS
LANCE, SOLL & LUNGHARD, LLP
PROPOSAL TO PROVIDE PROFESSIONAL AUDITING SERVICES
City CAFR
For the Period Endin g June 30,
Hours
Hourly
Rate
2011
2012
2013
Total
Fees:
Partner
25
220
$ 5,500
$ 5,500
$ 5,500
$ 16,500
Manager
40
135
5,400
5,400
5,400
16,200
Supervisory staff
80
110
8,800
8,800
8,800
26,400
Staff
180
100
18,000
18,000
18,000
54,000
Subtotal fees
325
37,700
37,700
37,700
113,100
Expenses:
Included
Meals and lodging
-
-
-
-
Transportation
-
-
-
-
Other (specify)
-
-
-
Subtotal expenses
1
-
-
-
-
Total all inclusive maximum price
$ 37,700
$ 37,700
$ 37,700
$ 113,100
Agency Basic Financial Statements
For the Period Ending June 30,
Hours
Hourly
Rate
2011
2012
2013
Total
Fees:
Partner
2
220
$ 440
$ 440
$ 440
$ 1,320
Manager
4
135
540
540
540
1,620
Supervisory staff
10
110
1,100
1,100
1,100
3,300
Staff
24
100
2,400
2,400
2,400
7,200
Subtotal fees
40
4,480
4,480
4,480
13,440
Expenses:
Included
Other (specify)
-
-
-
-
Subtotal expenses
-
-
-
-
Total all inclusive maximum price
1
$ 4,480
$ 4,480
$ 4,480 1
$ 13,440
20
L S Leo a�Q
000
.00
CERTIFIED PUBLIC ACCOUNTANTS
LANCE, SOLL & LUNGHARD, LLP
PROPOSAL TO PROVIDE PROFESSIONAL AUDITING SERVICES
Single Audit
For the Period Ending June 30,
Hours
Hourly
Rate
2011
2012
2013
Total
Fees:
Partner
1
220
$ 220
$ 220
$ 220
$ 660
Manager
2
135
270
270
270
1 810
Supervisory staff
5
110
550
550
550
1,650
Staff
12
100
1,200
1,200
1,200
3,600
Subtotal fees
20
2,240
2,240
2,240
6,720
Expenses:
Included
Meals and lodging
-
-
-
Transportation
-
-
-
-
Other (specify)
-
-
-
Subtotal expenses
-
-
-
-
Total all inclusive maximum price 1
1
1 $
2,240
$ 2,240
$ 2,240 1
$ 6,720
GANN Appropriations Limit Agreed -upon Procedures
For the Period Endin g June 30,
Hours
Hourly
Rate
2011
2012
2013
Total
Fees:
Partner
1
220
$ 220
$ 220
$ 220
$ 660
Manager
1
135
135
135
135
405
Supervisory staff
1
110
110
110
110
330
Staff
1
100
100
100
100
300
Subtotal fees
4
565
565
565
1,695
Expenses:
Included
Meals and lodging
-
-
-
Transportation
-
-
-
Other (specify)
-
-
-
Subtotal expenses
-
-
-
-
Total all inclusive maximum price
$ 565
$ 565
$ 565
$ 1,695
21
Attachment "D"
Exhibit "B"
Hourly Rate Schedule
0000
0000
00
CERTIFIED PUBLIC ACCOUNTANTS
LANCE, SOLL & LUNGHARD, LLP
PROPOSAL TO PROVIDE PROFESSIONAL AUDITING SERVICES
City CAFR
For the Period Ending June 30,
Hours
Hourly
Rate
2011
2012
2013
Total
Fees:
Partner
25
220
$ 5,500
$ 5,500
$ 5,500
$ 16,500
Manager
40
135
5,400
5,400
5,400
16,200
Supervisory staff
80
110
8,800
8,800
8,800
26,400
Staff
180
100
18,000
18,000
18,000
54,000
Subtotal fees
325
37,700
37,700
37,700
113,100
Expenses:
Included
Meals and lodging
-
-
-
-
Transportation
-
-
-
-
Other (specify)
-
-
-
-
Subtotal expenses
-
-
-
-
Total all inclusive maximum price
$ 37,700
$ 37,700
$ 37,700
$ 113,100
Agency Basic Financial Statements
For the Period Endin g June 30,
Hours
Hourly
Rate
2011
2012
2013
Total
Fees:
Partner
2
220
$ 440
$ 440
$ 440
$ 1,320
Manager
4
135
540
540
540
1,620
Supervisory staff
10
110
1,100
1,100
1,100
3,300
Staff
24
100
2,400
2,400
2,400
7,200
Subtotal fees
40
4,480
4,480
4,480
13,440
Expenses:
Included
Other
-
-
-
-
Subtotal expenses
-
-
-
-
Total all inclusive maximum price
$ 4,480
1 $ 4,480
$ 4,480
$ 13,440
20
0000
0000
00
CERTIFIED PUBLIC ACCOUNTANTS
LANCE, SOLL & LUNGHARD, LLP
PROPOSAL TO PROVIDE PROFESSIONAL AUDITING SERVICES
Single Audit
For the Period Endin g June 30,
Hours
Hourly
Rate
2011
2012
2013
Total
Fees:
Partner
1
220
$ 220
$ 220
$ 220
$ 660
Manager
2
135
270
270
270
810
SUDervisory staff
5
110
550
550
550
1,650
Staff
12
100
1,200
1,200
1,200
3,600
Subtotal fees
20
2,240
2,240
2,240
6,720
Expenses:
Included
Meals and lodging
-
-
-
-
Transportation
-
-
-
-
Other (specify)
-
-
-
-
Subtotal expenses
-
-
-
-
Total all inclusive maximum price
$ 2,240
$ 2,240
$ 2,240
$ 6,720
GANN Appropriations Limit Agreed-upon Procedures
For the Period Endin g June 30,
Hours
Hourly
Rate
2011
2012
2013
Total
Fees:
Partner
1
220
$ 220
$ 220
$ 220
$ 660
Manager
1
135
135
135
135
405
Supervisory staff
1
110
110
110
110
330
Staff
1
100
100
100
100
300
Subtotal fees
4
565
565
565
1,695
Expenses:
Included
Meals and lodging
-
-
-
-
Transportation
-
-
-
-
Other (specify)
-
-
-
-
Subtotal expenses
-
-
-
-
Total all inclusive maximum price
$ 565
$ 565 1
$ 565
$ 1,695
21