HomeMy WebLinkAboutCC AG PKT 2007-09-24 #H
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AGENDA REPORT
DATE:
September 24, 2007
TO:
Honorable Mayor and Members of the City Council
THRU:
David N. Carmany, City Manager
FROM:
June Y otsuya, Assistant City Manager
SUBJECT:
Approval of Amendment to Agreement for Auditing Services
SUMMARY OF REQUEST:
City Council is requested to approve an amendment to an agreement with Moreland &
Associates, Inc. to provide auditing services to the City of Seal Beach.
DISCUSSION:
The City of Seal Beach currently contracts with Moreland & Associates to perform annual audits
of its fmancial statements for governmental activities, business-type activities, general fund and
major special fund programs. The current agreement dated April!!, 2005 is for a period of three
years, with an option to extend for two additional years at the City's discretion.
Earlier this year, an impropriety was discovered in the City's Administrative Services
Department that resulted in the termination of the Administrative Services Director. The City
Manager determined that a forensic audit and review of the department's internal controls was
necessary for the health and welfare of the City.
Based on the City Manager's authority to contract for services up to $20,000, the City Manager
engaged the services of Moreland & Associates through signing of the Moreland & Associates,
Inc. Proposal Letter dated June 8,2007. Fees for-this service would be billed on the hourly rates
noted in the letter plus out of pocket costs. Work commenced on June 18,2007.
The forensic audit proved to be more extensive than was originally anticipated. The auditors
originally estimated that the field work would be completed within three weeks. The audit has in
fact taken three months to complete with the final report audit due by the end of this month.
Therefore, City staffhas prepared an amendment to the existing Agreement with Moreland &
Associates, Inc. for the forensic audit and compensation for the project.
Agenda Item IT
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September 24, 2007
City Council Agenda Report-Amendment to Agreement for Auditing Services
Page 2
FINANCIAL IMPAcr:
Cost to complete the forensic audit and to provide any follow-up services related to the audit is
estimated at $80,000.00. A budget amendment will be required to cover the additional
contribution amount. TIris amendment would decrease the General Fund's undesignated fund
balance for FY 2007-08 from $10,553,849.00 to $10,473,849.00.
RECOMMENDATION:
Staff recommends that City Council:
I. Approve Resolution Number _ Authorizing Budget Amendment Number 08-
05 for the Increase in Administrative Services Contract Professional Services line
item.
2. Approve Resolution Number Approving Amendment to Agreement
Between City of Seal Beach and Moreland & Associates, Inc. for Auditing
Services.
Submitted by:
~~~
Juf(e Y 015 Assistant City Manager
NOTED AND APPROVED:
Attachment:
Amendment to Agreement with Moreland & Associates, Inc.
Moreland & Associates, Inc. Proposal Letter dated June 8, 2007
Agreement with Moreland & Associates, Inc. dated April II , 2007
Resolution Authorizing Budget Amendment
Resoluqon Authorizing Approval
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AMENDMENT TO CITY OF SEAL BEACH
AGREEMENT FOR AUDITING SERVICES
This Amendment to Agreement for Auditing Services ("Agreement") is made and entered into this
day of , 2007 by and between the City of Seal Beach ("City") and
Moreland & Associates ("Auditor").
RECITALS
City and Auditor entered into an Agreement dated April 11, 2005 for auditing services.
City seeks to engage Auditor for a specific project in addition to obligations contained in the original
Agreement with the City.
Auditor is fully qualified and desires to perfonn these services for City as an independent contractor.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, the
parties agree as follows:
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1.
2.
Include as Attachment 3, Moreland & Associates, Inc. Proposal Letter dated June 8, 2007.
Amend Section 2. CITY'S OBLIGATIONS immediately following first paragraph to include:
"For and in consideration of AUDITOR furnishing services as defined in Attachment :3,
Moreland & Associates, Inc. Proposal Letter dated June 8. 2007 defining scope of service for
a forensic audit, CITY shall pay and AUDITOR shall receive in full compensation a total sum
not to exceed $80,000 for services rendered in relation to the specific project."
3.
Amend Section 3. AUDITOR'S OBLIGATIONS to include second paragraph as follows:
"AUDITOR also agrees with CITY to furnish those services as set forth in Attachment 3,
Moreland & Associates, Inc. Proposal Letter dated June 8, 2007 attached hereto and
incorporated herein by reference, and to perfonn as required by this Agreement and the said
specifications." - '
All other tenns and conditions shall remain in effect.
Executed as of the day and year first above-written.
Auditor:
City Representative:
ATTEST:
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City Manager
APPROVED AS TO FORM:
City Clerk
City Attorney
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JI.JN-ll9-2l!IB'i' 14:35
CITY IF 5EFL BEACH
562 493 98S'7 P ,lil2I1!I3
MorelAnd 61 "~J k
CEIlII'IED PlJIILIC ACCOUNll\NI'8
111111 DCM! 81IlI!IIl: SlAlEIIIl
NE!llPORI'BEIGi, ~_
170 IWICHEIlCIS DRI\II!, 8IJIIE lIlIII
....1oWICIllI.0I\ _
'!UP\1ClNE1MII d1.aDll1i
JuDe 8, 2007
Mr, David N. CaImany
City Manager
City ofScaI Beach
211 Eighth SI.nleI:
Seal Beacb, CA 90740
Dear Mr. Caruumy:
We are pI CllIHll to prIlIIllIIt you this propOSlillllltcr to provide seMces to the City of Seal Beach
fOr !he bensic audit and review of iDtemal CODtroIa sumnmdins disbunaaumts and payroll.
The funlIISic II1Zcnt will moas an the dfsbutsemllllt BI1d payroll .... of tIuI City. The intcmal
control rcMllW will COlK\CIDlI'IIte an disburaemllllt, receipts, jll1lnl8l mes, payroll and the general
Icdglll' syaUIIII,
We wiD review IIIIIi IIIIIlyzo all disbursllll1llllta from PllbnIary 6, 2006 tIuougb May 25, 2007. We
will also mricw tbI: PlI}'IUU IllIIgenr tor lhis lime period fbt any 1II1USlIa1 ac:tivity. We will
iDtlniew the appropriate std to pin an 1II1derstantliD of the C81ablisbcd proccduree, the
exc:eptions to the established prooedmtll smi I11lIb I'fICDmII1eIIdIltioD where pot8lllial dllficiCIICic:s
exist. c
Thll feels fOr tbis lI8rYice wil1 be based an our hourly 1'ItllII DOted. below plus out of pocket costs.
We can be available to bcain this proje on .Jll1Ul18, 100'7, W. .miciplltll approximateJy 1hrec
weeks to complete tbis prqject in the fillkl. Wfl will keep you in1brmcd of our JlI'Oaress.
L8veI. of Work PcrfoI1llcd
Hourly
Rlltes
Partacr
Mlmspr
SCIIior AccollDt8nt
Assistant Accountant
Clerical
S 162
119
86
76
38
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J1..N-I!I9-2BiI'i' 14: 36
CIlY CF SERL EEACH
562 493 9I35'i' P. B:Ye3
Mr. David N. CamIlmy
City Manlier
City of Seal Beach
'June 8, 2007
Page 2
If you agree with tho terms of our proposal 88 described in this lcttm', plDIISo sian 011O copy
IIld retum it to 11&.
Very truly yoUl'l,
MORELAND &; ASSOCIATES, INe.
~~--.CJ'
Kathryn BClllIlllU, Partner
Accepted by the City of Seal BIllK:h
c!J*-.., ~
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Mr. David N. Camwiy, City Msnagcr
Date:
'.~.D 7
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AGREEMENT FOR AUDITING SERVICES
THIS AGREEMENT is made and entered into this J,m-- day of 11.ru.'~
2005, by and between the CITY OF SEAL BEACH, a municipal co~:
hereinafter referred to as "CI1Y" and Moreland & Associates, Inc., certified public
accountants, hereinafter referred to as "AUDITOR."
WITN ESS ETH:
WHEREAS, on February 2, 2005, CITY invited bids for an independent audit
of its financial statements and records; and
WHEREAS, pursuant to said invitation, AUDITOR submitted a bid which was
accepted by CITY for said professional service; and
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WHEREAS, AUDITOR is recognized as a competent and qualified certified
public accountant, duly authorized to practice and licensed as such by the
California State Board of Accountancy.
NOW THEREFORE, for and in consideration of the mutual promises,
obligations, and covenants contained herein, the parties herein agree as follows:
1. TERM. The term of this Agreement shall be for a period of three (3)
consecutive years, beginning with the fiscal year ending June 3D, 2005, with an
option to extend for two additional years at the City's discretion.
2. CITY'S OBLIGATIONS. For and in consideration of AUDITOR
fumishing service(s) specified in this Agreement CITY shall pay and AUDITOR
shall receive in full compensation a total sum not to exceed $35,000, $36,400, and
$37,900 for the fiscal years ending June 30, 2005, 2006, and 2007, respectively.
Payments to AUDITOR shall be made within thirty (30) days after receipt by
CITY of invoices from AUDITOR, which shall be rendered not more often than
monthly. Special examinations, surveys, or detailed reports of any nature outside
the scope of this Agreement shall be billed separately by AUDITOR and must be
specifically authorized in writing by CITY in advance of such additional services
proposed to be provided.
3. AUDITOR'S OBLIGATIONS. For and in consideration of
payments and agreements hereinafter mentioned to be made and performed by
ClTY, AUDITOR agrees with CITY to fumish those services as set forth in
e Attachment 1, Request for Proposal for Auditing Services, attached hereto and
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incorporated herein by reference, and to perform as required by this Agreement
and the said specifications.
4. INSURANCE. AUDITOR shall procure and maintain for the entire
term of this Agreement, valid insurance against claims for injuries to persons or
damages to property which may arise from or in connection with the performance of
the work hereunder by AUDITOR, or AUDITOR'S agents, representatives,
employees, or subcontractors. AUDITOR shall further maintain professional liability
insurance in the amount of one-million dollars ($1,000,000.00) to protect CITY for
AUDITOR'S negligent acts, errors, and/or omissions of a professional nature.
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5. HOLD HARMLESS AND INDeMNIFICATION. AUDITOR, agrees to
indemnify, defend, and hold harmless CITY, its officials, officers, employees,
representatives, and agents from and against all claims, lawsuits, liabilities, or
damages of whatever nature including without limitation all consequential damages
arising out of or in connection with, or relating in any manner to work performed by
AUDITOR, his agents, employees and subcontractors, and employees thereof
pursuant to this Agreement. AUDITOR shall investigate and indemnify CITY and
do whatever is necessary to protect CITY, its officials, officers, employees, agents,
and representatives as to any such claims, lawsuits, liabilities, or damages.
6. AMENDMENTS. Any amendment, modification, or variation from the
terms of this Agreement shall be in writing and shall be effective only upon written
approval by the CITY'S Director of Financial Management.
7. TERMINATION. If, at any time during the term of this Agreement,
CITY determines that AUDITOR is not faithfully abiding by any term or condition
contained herein, CITY may notify AUDITOR in writing of such defect or failure to
perform; which notice must give AUDITOR a ten (10)-day notice of time thereafter
in which to perform said work or cure the deficiency. If AUDITOR has not
performed the work or cured the deficiency within the ten (10) days specified in the
notice, such shall constitute a breach of this Agreement and CITY may terminate
this Agreement. immediately .by written notice to the AUDITOR to said effect.
Thereafter, neither party shall have any further duties, obligations, responsibilities
or rights under this Agreement except, however, any and all obligations of
AUDITOR'S surety shall remain in full force and effect, and shall not be
extinguished, reduced, or in any manner waived by the termination hereof. In said
event, AUDITOR shall be entitled to the reasonable value of its services performed
from the beginning of the period in which the breach occurs up to the day it
received CITY'S Notice of Termination, less any offset from such payment
representing the CITY'S damages from such breach. CITY reserves the right to
delay any such payment until completion or confirmed abandonment of the project,
as may be determined in the CITY'S sole discretion, so as to permit a full and
complete accounting of costs. In no event, however, shall AUDITOR be entitled to
receive in excess of the compensation quoted in its bid.
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8. INCORPORATION BY REF~RENCE. The Request for Proposal for
Auditing Services, Attachment 1 hereto, and the proposal submitted by Moreland &
Associates, Inc., on February 28, 2005-, Attachment 2 hereto, are hereby
incorporated by reference and made a part of this Agreement.
9. COMPLETE AGREEM,ENT. This written Agreement, including all
writings specifically incorporated herein by reference, shall constitute the final,
complete, and exclusive agreement between the parties hereto. No oral
agreement, understanding, or representation not reduced to writing and specifically
incorporated herein or executed as an amendment hereto, shall be of any force or
effect, nor shall any such oral agreement, understanding, or representation be
binding upon the parties hereto.
10. CONTRACT ASSIGNMENT. AUDITOR shall not assign, transfer,
convey, or otherwise dispose of this Agreement, or its right, title, or interest, or its
power to execute such an Agreement to any individual or business entity of any
kind without the prior written consent of CllY.
11. INDEPENDE....NT CONTRACTOR.
AUDITOR is, and at all times hereafter shall be, an independent
contractor of CIlY during the entire term of this Agreement
AUDITOR specifically recognizes and acknowledges said status as
an independent contractor and not as an employee of CITY. All
personnel of AUDITOR shall be employees of AUDITOR and not
employees of CllY. AUDITOR shall pay all salaries and wages,
employer's social security taxes, unemployment insurance and
similar taxes relating to employees and shall be responSible for all
withholding taxes.
b. AUDITOR shall comply with all Federal and State staMes and
regulations relating to the employer/employee relationship including,
but not limited .to, minimum wage, non-discrimination, equal
opportunity, workers compensation, hazardous/unsanitary or
dangerous surroundings, the Fair Labor Standards Ad. 29 USCA
Section 201 et m., and the Immigration Reform and Control Act of
1986 * USCA Section 245(a} et sea.
a.
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12. AI'fTI-DISCRIMlNATlON. In the performance of the terms of this
Agreement, AUDITOR agrees that it will not engage in discrimination in
employment of persons because of the age, race, color, sex, national origin or
ancestry, or religion of such persons. Violation of this provision may result in the
imposition of penalties referred to in Labor Code Section 1735.
13. NOTICE. All written notices to the parties hereto shall be sent by
United States mail, postage prepaid by registered or certified mail addressed as
follows:
CITY:
City of Seal Beach
Attn: Director of Administrative Servicesfrreasurer
211 8111 Street
Seal Beach, CA 90740
AUDITOR:
Attention:
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All notices sent pursuant to this Agreement shall be deemed received (1)
immediately if served by personal delivery, and (2) on the fifth day after deposited in
the custody of the U.S. Postal Service if served by mail.
14. ATTORNEYS FEES. In the event an action is commenced by either
party to enforce any rights under this Agreement, the prevailing party shall be
entitled to recover reasonable attomey's fees and court costs, in addition to any
other relief granted by the Court.
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15.
CONFI.,.ICT OF INTERI;ST.
a. All infonnation gained by AUDITOR in perfonnance of this Agreement
shall be considered confidential and shall not be released by AUDITOR without
CITY'S prior written authorization excepting that infonnation which is a public record
and subject to disclosure pursuant to the Public Records Act, government Code
Section 6250 et~. AUDITOR, its officers, employees, agents, or subcontractors,
shall not voluntarily provide declarations, letters of support, testimony at
depositions, response to interrogatories or other infonnation conceming the project
or cooperate in any way with a party who may be adverse to CITY or whom
AUDITOR reasonably should know may be adverse in any subsequent litigation.
AUDITOR shall incur no liability under this Agreement for materials submitted by it
which are later released by CITY, its officers, employees, or agents. AUDITOR
shall also incur no liability for statements made by it at any pUblic meeting, or for
any document released by it for which prior written CITY authorization was
obtained.
If AUDITOR or any of its officers, employees, consultants, or subcontractors
does voluntarily provide infonnation in violation of this Agreement, CITY has the
right to reimbursement and indemnity from AUDITOR for any damages caused by
AUDITOR'S conduct-including attorney's fees.
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AUDITOR shall promptly notify CITY should AUDITOR, its officers,
employees, agents or subcontractors be served with any Summons, Complaint,
Subpoena, Notice of Deposition, Request for Documents, Interrogatories, Request
for Admissions or other discovery requests from any party regarding this agreement
and the wort< perfonned thereunder. CITY retains the right, but not the obligation,
to represent AUDITOR and/or to be present at any deposition, hearing, or similar
proceeding. AUDITOR agrees to cooperate fully with CITY and to provide CITY
with the opportunity to review any response to discovery requests provided by
AUDITOR. However, CITY'S right to review any such response does not imply or
mean the right by CITY to control, direct, or rewrite said response.
CITY warrants that AUDITOR will have fully met the requirements of this
provision by obtaining CITY'S written approval prior to providing documents,
testimony, or declarations; Consulting with CITY before responding to a Subpoena
or court order; in the case of depositions upon providing Notice to CITY of same; or
providing CITY opportunity to review discovery responses prior submission. For
purposes of this section, a written authorization from CITY shall include a "faxed"
letter.
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b. AUDITOR covenants that neither they nor any officer or principal of
their firm have any interests, nor shall they acquire any interest, directly or indirectly
which will conflict in any manner or degree with the performance of their services
hereunder. AUDITOR further covenants that in the performance of this Agreement,
no person having such interest shall be employed by them as an officer, employee,
agent, or subcontractor. AUDITOR further covenants that AUDITOR has not
contracted with nor is performing any services directly or indirectly, with the
developer(s) andJor property owner(s) and/or firm(s) and/or partnerships owning
property in the CITY or the study area and further covenants and agrees that
AUDITOR and/or its subcontractors shall provide no service or enter into any
contract with a any developer(s) and/or property owner(s) and/or firm(s), and/or
partnership(s) owning property in the CITY and/or stuely area prior to completion of
this Agreement.
16. AUTHQRITY TO EXECUTE AGREEMENT. Both CITY and
AUDITOR hereby represent and covenant that each individual executing this
Agreement on behalf of each party is a person duly authorized and empowered to
execute agreements for such party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
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AUDITOR:
B~'
ATTEST:
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VI~
. Clerk
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APPROVED~
f)971
Quinn Barrow
City Attorney
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RESOLUTION NUMBER
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF SEAL BEACH, CALIFORNIA, AUTHORIZING A
BUDGET A..'\fENDMENT, NO. 08-05 FOR 2007108 TO
INCREASE ADMINISTRATIVE SERVICES (CONTRACf
PROFESSIONAL SERVICES) FOR THE FOR&'i'SIC AUDIT
WHEREAS, the fiscal year 200712008 budget requires budgetary amendments as outlined
below:
THE CITY COUNCIL OF THE CITY OF SEAL BEACH DOES HEREBY RESOLVE:
Section 1. The City Council hereby revises the budget for Contract Professional Services by
adding thereto $80,000 as follows:
Contract Prof Svcs
001.{)17-44000
REVISEDI
ADOPTED
BUDGET
$114,500
PROPOSED
BUDGET
$194,500
BUDGET (cliff)
AMENDMENT
$80,000
DEPT
ACCOUNT
PASSED, APPROVED AND ADOPTED by the City Council of Seal Beach, at a regular
meeting held on the 24th day of Scotember . 2007 by the following vote:
AYES: Councilmembers
e NOES: Councilmetnbel$
ABSENT: Councilmembers
ABSTAIN: Councilmembers
Mayor
ATI'EST:
City Clerk
STATEOFCALIFORNIA I
COUNTY OF ORANGE I SS
CITY OF SEAL BEACH I
I, Linda Devine, City Clerk for the City of Seal Besch, Califomia, do hereby certify that the
foregoing resolution is the original copy of Resolution Number on file in the office of
the City Clerk, passed, approved, and adopted by the City Council of the City of Seal Besch, at a
regular meeting held on the 24th day of Scotcmber .2007.
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City Clerk
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RESOLUTION NUMBER
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF SEAL BEACH, CALIFORNIA, APPROVING
AMENDMENT TO AGREEMENT FOR AUDITING
SERVICES
THE CITY COUNCIL OF THE CITY OF SEAL BEACH DOES HEREBY RESOLVE:
Section 1.
The City Council hereby approves the AmOl1dment to Agreement between the
City of Seal Beach and Moreland & Associates, Inc. for auditing services.
Section 2.
The Council hereby directs the City Manager to execute the Amendment to
Agreement with Moreland & Associate., Inc.
PASSED, APPROVED AND ADOPTED by the City Council of Seal Beach, at a regular
meeting held on the 24th day of SeDtember , 2007 by the foUowing vute:
AYES: Councilmembers
NOES: Councilmembers
ABSENT: Councilmembers
ABSTAIN: Councilmembers
e Mayor
ATTEST:
City Clerk
STATEOFCALIFORNIA }
COUNTY OF ORANGE } SS
CITY OF SEAL BEACH }
I, Linda Devine, City Clerk for the City of Seal Beach, California, do hereby certify that the
foregoing resolution is the original copy of Resolution Number on me in the office uf
the City Clerk, passed, approved, and adopted by the City Council of the City uf Seal Beach, at a
regular meeting held on the 24th day of' SOll'"",her . 2007.
City Clerk
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